by Art Gutman Ph.D., Professor, Florida Institute of Technology

My preview of the (then) proposed EEOC rules for the ADEA was posted in an Alert on 11/15/11. The next day, Eric Dunleavy attended the actual meeting in which these rules were finalized. Eric summarized the meeting in an Alert posted on 11/18/11, in which the ADEA rules were finalized in a 3-2 Commission vote that was totally partisan. Although it is tempting to focus on the partisan split, I think the more important issue is what the 2 Commissioners who voted against the rule objected to. As summarized by Eric, the key objections (by Baker & Lipnic) were threefold:

  1. the regulations were too burdensome on employers from a financial perspective,

  2. small business owners that do not have sophisticated Human Resource departments or strategic general counsel would not be able to easily meet the requirements of demonstrating RFOAs, and

  3. the employer requirement to take preventive or corrective steps was outside scope of the ADEA.”

I want to focus on the third objection. As Eric noted, in my preview, I stated that it reads very much like the Title VII requirement to consider alternatives with less adverse impact, which I called “an overstep likely to be tested in court.” As I noted in my preview, the proposed ADEA rules were in response to Supreme Court rulings in Smith v. City of Jackson (2005) and Meacham v. Knolls Atomic Power Lab (KAPL) (2008). Basically, the Smith ruling opened the doors to the RFOA defense for ADEA adverse impact claims, but caused confusion with respect to whether RFOA requires a burden to “explain” verses to “prove” the reasonable factor. Let me further explain why the (now) finalized ADEA regulations will, I think, see court action.

To do so, we need to look back at the Meacham case, which was a series of three rulings. As Eric and I explained (see http://www.siop.org/tip/Oct08/11gutman.aspx) in a 2008 column in The Industrial-Organizational Psychologist, KAPL instituted an involuntary reduction in force (IRIF) in conjunction with a voluntary separation plan (VSP) for employees with 20 or more years of service. 30 out of 31 (98%) of the laid off employees were over age 40. The 2nd Circuit reviewed this case twice. In Meacham I (2004), the court ruled (1) there was adverse impact; (2) KAPL “articulated” a nondiscriminatory reason for it (the older employers were rated lowest in “criticality of skills” & “flexibility for retraining”); but (3) there were suitable alternatives with less adverse impact (a hiring freeze & extension of the VSP to employees with less than 20 years of service). Hence, the plaintiffs won.

However, Meacham I was vacated and remanded in light of the Smith ruling, and a divided panel of the 2nd Circuit favored KAPL in Meacham II. Two judges ruled that the defense articulation in Meacham I was sufficient to satisfy the RFOA defense, leaving the plaintiffs with no choice but to prove that KAPL’s articulations were unreasonable. The dissenting judge argued that the burden in RFOA is “persuasive” and, therefore, that KAPL would have to affirmatively prove, rather than merely articulate, its reasons for using the IRIF criteria.

Then, the Supreme Court (in Meacham III) unanimously agreed with the dissenting judge, listing numerous reasons why statutory defenses such as RFOA (e.g., Bona Fide Occupational Qualification (BFOQ), Bona Fide Benefit Plan (BFBP), Bona Fide Seniority System (BFSS), etc.) are affirmative defenses. There was a dissent by Justice Thomas, but it had nothing to do with the logic behind statutory defenses.

Here’s my point. There is nothing in any of the “bona fide” or “reasonable factors” defenses that calls for alternatives. These are either/or. Thus, the BFOQ does not call for the most bona fide occupational qualification; the BFSS does not call for the most bona fide seniority system; the BFBP does not call for the most bona fide benefit plan; the RFOS (in the Equal Pay Act) does not call for the most reasonable factor other than sex …… and …. The RFOA does not call for the most reasonable factor other than age. Based on all available case law, they are either bona fide or reasonable, or they are not.

Another avenue illustrating my point are the reasonable accommodation statutory defenses in Title VII (for religious accommodation) and the ADA (for disabilities). All available case law points to reasonable being sufficient, and that even if plaintiffs believe there are more reasonable accommodations than are offered by employers, all the employers have to do is provide one that is reasonable, not one that is most reasonable in the eyes of the plaintiffs.

Enough said. Title VII requires equally valid alternatives with less or no adverse impact, and the attempt by the commission to generalize this to equally reasonable alternatives with less adverse impact in the ADEA is nowhere implied in the Meacham III ruling or in several decades of case law on statutory defenses in general. On the positive side, I agree with that portion of the newly revised EEOC ADEA rules that casts suspicion on RFOA defenses that cite “critical skills” and “flexibility for retraining”, as these can easily be stereotypical sources of adverse impact on older workers. So I do agree with the various examples given by the EEOC as to how critical skills and flexibility should be assessed.

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