SMITH v CITY OF JACKSON, MISSISSIPPI
If it affects workers over 40, it may be illegal.
The Supreme Court rules on SMITH v CITY OF JACKSON, MISSISSIPPI.
It was a surprising ruling—one that will have a far-reaching effect on employers nationwide. On March 30, 2005, the Supreme Court held in a 5-3 decision that the appearance of neutrality is not enough; regardless of intent, workplace practices that have a disproportionate impact on workers over age 40 violate the Age Discrimination in Employment Act (ADEA).
Are the procedures under Title VII and the ADEA synonymous as to disparate impact?
There has been a long-running dispute among Circuit Courts on the question of disparate impact under the ADEA. Three circuit courts of appeal—the Second, Eighth and Ninth Circuits—allow disparate-impact claims under the ADEA; the First, Third, Seventh, Tenth and Eleventh Circuits do not. Ironically, their basis for argument is virtually identical: the Second, Eight and Ninth Circuits have held that the language of the ADEA closely parallels the language of Title VII, while their five counterparts have held that the text of the ADEA differs from that of Title VII significantly. Title VII prohibits discrimination in the workplace based upon a protected class, defined as age, sex, race, color, national origin and religion.
Adams v. Florida Power Corp., 255 F.3d 1322 (2001), in which the Eleventh Circuit denied the availability of a disparate-impact claim under the ADEA, clearly illustrates the thinking of the Eleventh Circuit and its allies in this matter. The decision in Adams was based upon three things: the language of the ADEA, the legislative history of the ADEA, and, perhaps most important, the language in the opinion stated in Haven Paper Co. V. Biggins, 507 U.S. 604, 113 S.Ct. 1701 (1993). The Adams Court expressed, "while the Haven Court left open the question of whether a disparate-impact claim can be brought under the ADEA, language in the opinion suggests that it cannot." See Adams, 255 F.3d 1326.
In Hazen Paper Co. v Biggins, the Supreme Court specifically refused to comment, stating that "we have never decided whether a disparate-impact theory of liability is available under the ADEA." 507 U.S. at 610.
With their ruling in Smith, the Supreme Court has now commented eloquently.
At question: Does discrimination have to be intentional to be illegal?
The City of Jackson, Mississippi adopted a revised pay plan granting raises to all city employees in the Police and Fire Departments. Their stated goal was simply to bring starting salaries up to the regional average. Under the revised plan, officers and dispatchers with fewer than five years tenure received proportionately greater raises than employees who had more than five years tenure; naturally, the majority of those with longer tenure were more than 40 years old. Thirty police officers and public safety dispatchers over the age of 40 filed suit pursuant to the ADEA.
The Plaintiffs made two claims: (1) disparate treatment, in that the pay plan was intentionally discriminatory; and (2) disparate impact, in that the pay plan was unintentionally discriminatory.
The trial court ruled for the city on both claims. The Fifth Circuit affirmed on the grounds that disparate-impact claims are categorically unavailable under the ADEA. In his opinion, Judge King stated, "After surveying the well-traversed arguments on either side of this debate, we hold that the ADEA was not intended to remedy age-disparate effects that arise from the application of employment plans or practices that are not based on age." The Fifth Circuit Court of Appeals compared the text of the ADEA to Title VII, noting that § 623(f)(1) of the ADEA allows employers to escape liability if the adverse employment action is "based on 'reasonable factors other than age'—an exception absent from Title VII…." The court found that this provision is a "clear textual difference" between the ADEA and Title VII. When considered with the whole text of the ADEA and the legislative intent, the Fifth Circuit determined that the ADEA was not intended to cover disparate-impact claims and affirmed the trial court.
The US Supreme Court affirmed the judgment on totally different grounds.
Effect is as important as intent
Writing for the majority, Justice John Paul Stevens described Congress' intent in drafting the ADEA as being to protect an employee from the effects of an employer's action—not just the employer's motivation when taking the action. He compared the language of the ADEA with that of Title VII, concluding "…we begin with the premise that when Congress uses the same language in two statutes having similar purposes…it is appropriate to presume that Congress intended the text to have the same meaning in both statutes."
He elucidated by stating that the unanimous interpretation of Title VII in the case Griggs v. Duke Power Co., 401 US 424 "is therefore a precedent of compelling importance."
In that case, the Supreme Court accepted the lower court's conclusion that the Duke Power Co. had not deliberately discriminated against the plaintiffs; however, the Court held that good faith was insufficient, and that Congress had "directed the thrust of the act to the consequences of employment practices, not simply the motivation."
Justice Stevens further observed that the RFOA provision (reasonable factors other than age) plays its principle role in disparate-impact claims, by precluding liability when the differentiation is based on reasonable factors—factors other than age itself.
Finally, he noted that both those responsible for drafting and those responsible for enforcing the ADEA have consistently interpreted the law "to authorize relief on a disparate-impact theory."
Based on these three factors, Justice Stevens wrote, "[We] now hold that the ADEA does authorize recovery in 'disparate-impact' cases…."
Justices Scalia, Souter, Ginsberg and Breyer concurred.
A new measure for employers; a resounding victory for older workers
The Supreme Court's allowance of disparate-impact cases under the ADEA will have lasting resonance for the American workforce. Employers will perforce keep and review statistical information relating to their employees before making any employment decisions. In order to justify a decision that appears to statistically favor younger employees, a company will have to document other reasonable factors that resulted in the statistical disparity. Importantly, this ruling will prohibit companies from terminating senior workers as a result of their salary, which is generally larger than that of their younger colleagues.
According to the Bureau of Labor Statistics last year, 72.8 million workers were over age 40; with the backing of Smith they can work towards retirement with far greater security. Baby boomers can rejoice.
Nevertheless, the Jackson Plaintiffs lost this case.
Despite recognizing disparate-impact claims for employees over 40, the Court in Smith ultimately ruled against the employees in favor of the City of Jackson.
Justice Stevens noted that the ADEA provides employers with an alternative defense to disparate-impact actions: If the employer can establish that the action was based upon reasonable factors other than age, then a claim based upon disparate impact will not succeed. In Smith v. City of Jackson, the Court found that the City's actions were "unquestionably reasonable."
The Plaintiffs did "little more than point out that the pay plan at issue is relatively less generous to older workers than to younger workers. They have not identified any specific test, requirement, or practice within the pay plan that has an adverse impact on older workers."
The City had argued that the pay increases were necessary for newer employees in order to retain the employees by bringing the salaries in line with the industry average. The Court held that the City's articulated basis for their decision was part of their legitimate goal of retaining employees. Thus, the City's decision was based on a "reasonable factor other than age." While there may have been other ways to accomplish this goal, including ways that did not have a disparate impact on older workers, the City was not legally compelled to search them out. Thus, the Court concluded, "[the] petitioners have not set forth a valid disparate-impact claim,"
However, the employees in Smith v City of Jackson have invoked significant additional employment protections for their peers nationwide.
© Melville Johnson, P.C. 2005
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