The United States Supreme Court has announced that the burden rests on employers to prove that they do not discriminate on the basis of age when a layoff disproportionately affects older workers. This means that, when planning and implementing a workforce reduction, it is essential that employers make certain that they can justify their decisions as being based on factors unrelated to the ages of the affected employees.
In Meachem v. Knolls Atomic Power Lab., No. 06-1505 (Slip Op. June 19, 2008), a 7-to-1 majority of the Supreme Court found that the "reasonable factor other than age" exemption under the ADEA¹ constitutes an affirmative defense, for which the employer bears the burdens of production and persuasion.
Knolls, a defense contractor, instituted a reduction-in-force to eliminate 31 jobs. To determine which of its employees would be considered for termination of employment, Knolls instructed its managers to grade their reports on three criteria: performance, flexibility and critical skills. The company added these scores to a separate factor for years of service with the organization, and those with the lowest scores would lose their jobs. While Knolls used seemingly neutral criteria in its selection process, the result was that 30 of the 31 affected employees were over the age of 40.
Most of them sued, claiming that the reduction in force disproportionately affected older workers in violation of the ADEA.
Knolls claimed that the criteria it used for the layoffs fell under the "reasonable factor other than age" language in the statute. The issue became whether Knolls or the employees bore the burden on this element in the context of a disparate impact claim.
The Supreme Court settled a split of authority in the lower courts by holding that, just like the other four exemptions under the ADEA, the "reasonable factor other than age" exemption was an affirmative defense, thereby placing the burdens of production and persuasion on the employer. The practical consequence of this decision for employers is that they need to prove that they did not discriminate against older workers; it is not the obligation of the affected employees to prove that the employer's selection process was biased.
No matter how even-handed an employer's procedures and selection criteria are, a reduction-in-force always creates a potential for a lawsuit, especially where one protected group is affected more than other employees.
We work with employers to help them minimize their risk when they are in the unfortunate position of having to let go of a number of employees. These reductions in force can be complicated, and we assist in identifying and attempting to resolve issues that can be the basis for expensive and time-consuming legal claims.
Please contact the Maslon Labor & Employment attorneys to discuss how this rule change may affect your workplace.
¹ The "ADEA" is the federal Age Discrimination in Employment Act, which prohibits age discrimination against persons who are at least 40 years old. See 29 U.S.C. § 622, et seq.
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