EEOC’s Final Rule on Disparate Impact and Reasonable Factors Other Than Age

On March 30, 2012, the EEOC published a Final Rule on Disparate Impact and “Reasonable Factors Other Than Age” (RFOA) under the Age Discrimination in Employment Act of 1967.  The changes make the existing ADEA regulation consistent with the Supreme Court’s holding that the defense to an ADEA disparate impact claim is RFOA  — not business necessity.  More after the break.

The final rule is consistent with the Supreme Court’s 2008 decision in Meacham v. Knolls Atomic Power Laboratory, and clarifies that the employer has both the burden of production and persuasion to establish the RFOA defense.  The EEOC also crystallizes its position that the RFOA defense requires more than a showing that the policy or practice has a rational basis. The RFOA defense, however, is intended to be a less-demanding standard than the business necessity defense of Title VII.

In addition to clarifying the burdens on employers, the new rule offers guidance on the meaning and application of “reasonable factors other than age.”  In general, the final rule defines an RFOA as “a non-age factor that is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances.”   Under the new regulation, to establish the RFOA defense, an employer must show (1) that the employment practice was both reasonably designed to further or achieve a legitimate business purpose, and (2) that it was administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer.

The regulation provides a non-exclusive list of considerations that the EEOC considers relevant in determining whether an employment practice is based on a reasonable factor other than age:

• The extent to which the factor is related to the employer’s stated purpose;

• The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including managers guidance or training about how to apply the factor and avoid discrimination;

• The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;

• The extent to which the employer assessed the adverse impact of its employment practices on older workers; and

• The degree of harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.

The regulation states that all of these considerations are relevant, but that the presence or absence of any listed consideration does not necessarily determine whether the defense applies.  Instead, whether an employment practice is based on reasonable factors other than age must be decided based on all of the particular facts and circumstances of any given situation.

The preceding information was provided by the EEOC’s FAQ’s on the ADEA changes.  More FAQ’s about the final rule can be found here.

The final rule in its entirety, including open comments and responses can be found here:

Disparate Impact and Reasonable Factors Other Than Age Under the Age Discrimination in Employment Act.

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