Supreme Court Says Employers Have Burden to Prove the ADEA Defense that 'Reasonable Factor Other Than Age' Caused Disparate Impact

The United States Supreme Court held last week that employers must affirmatively prove the Age Discrimination in Employment Act's (ADEA) "reasonable factor other than age" (RFOA) defense in disparate impact cases. Meacham v. Knolls Atomic Power Lab., __ U.S. __, Slip. Op. (June 19, 2008). The RFOA defense provides that "[i]t shall not be unlawful for an employer … to take any action otherwise prohibited under [the ADEA's operative anti-discrimination subsections] where the differentiation is based on reasonable factors other than age." 29 U.S.C. § 623(f)(1). After Meacham, once plaintiffs isolate and identify a specific employment practice that is alleged to cause a statistically significant disparate impact on older workers, the employer must prove, not just articulate, the reasonableness of a non-age factor. For employers, Meacham will make defending ADEA disparate impact claims more difficult, although how much more difficult is unclear.

The Meacham litigation arose from a reduction in force at the Knolls Atomic Power Laboratory. Knolls involuntarily laid off 31 employees, 30 of whom were over 40. A group of the over-40 employees sued under the ADEA and state law, claiming disparate treatment and disparate impact. The plaintiffs took issue with two of the criteria Knolls used in selecting employees for layoff — "flexibility" and "critical skills." The plaintiffs' expert opined that Knolls' criteria, though facially neutral, disproportionately selected employees over 40 for layoff. The case was litigated through trial and two appeals to the Second Circuit and a previous appeal to the Supreme Court. The Supreme Court took up only one issue: Who has the burden of proof in a disparate impact age discrimination case where the employer invokes the RFOA defense?

The Supreme Court held that employers defending ADEA disparate impact claims must prove, not just articulate, the defense that the disparity was the result of a "reasonable factor other than age." Moreover, the court stated that the defense of "business necessity," on which the employee ultimately has the burden of persuasion, has "no place" in ADEA disparate impact cases. Slip op. at 12. If the plaintiffs have established a statistical disparate impact and have isolated and identified specific employment practices allegedly responsible for the disparity, the employer must not only advance a factor other than age that could have caused the disparity, the employer must prove the reasonableness of that factor. Id. at 15-17.

Any decision that places the burden of proof on the defendant in any part of a discrimination case is an unwelcome surprise to employers. The court tried to soften the blow by emphasizing that "the only thing at stake in this case is the gap between production and persuasion." Id. at 16. Whether that statement is any consolation depends on one's viewpoint. Some might argue that Meacham will have little impact "on the ground" since juries cannot be expected to understand and/or precisely apply the nuances of "proving" versus "articulating." If so, Meacham will be more important to scholars than to practitioners. On the other hand, if Meacham affects courts' analyses of ADEA disparate impact summary judgment motions, it could make it more difficult for employers to obtain summary judgment. If so, and even if that is its only real impact, Meacham does, as the court noted, make these cases "harder and costlier to defend."