The big 4-0 is not just a milestone for employees; for employers it also triggers additional considerations in their hiring and firing decisions. The Age Discrimination Employment Act of 1967 (“ADEA”) prohibits most employers from discriminating against people who are 40 years of age or older. Employers may think they are complying with the ADEA if their hiring and firing policies do not take into account an employee’s age. However, if the policies have the effect of harming older workers more than younger workers (known as “disparate impact”) they could run afoul of the law. An employer can defend against a disparate impact claim by showing it relied on reasonable factors other than age (the “RFOA” defense).
Example of employment practice using RFOA
Here is an example of a practice where an employer could use the RFOA defense. A nursing home decided to reduce costs by terminating its highest paid and least productive employees. To ensure that supervisors accurately assessed productivity and did not base evaluations on age-based stereotypes, the employer instructed supervisors to evaluate productivity in light of objective factors such as the number of patients served, errors attributed to the employee and patient outcomes. Even if the practice did have a disparate impact on older employees, the employer could show that the practice was based on RFOA. It was reasonably designed and administered to achieve the employer’s objective without relying on age-based stereotypes.
Example of employment practice not using RFOA
The same employer asked managers to identify the least productive employees without providing any guidance about how to do so. As a result, older workers were disproportionately rated as least productive. The design and administration of the evaluation was not reasonable because the lack of objective factors increased the likelihood that older workers would be disadvantaged. Moreover, accuracy could have been improved and unfair harm decreased by taking a few steps, such as those discussed in the prior example.
As the examples show, employers are free to assess employees based on subjective criteria such as impressions of productivity and flexibility, as opposed to objective measures. However, employers should be aware that supervisors’ negative stereotypes about older workers can infect the assessments of such criteria, making the assessments less accurate. Employers should therefore take appropriate steps to reduce the likelihood that such bias will influence those assessments such as: (1) providing some objective measures of the criteria, or (2) instructing managers on how to more accurately make their evaluations and avoid age-based stereotypes.
In sum, the RFOA defense requires an individualized consideration of the facts and circumstances surrounding the particular situation.
To learn more about RFOA factors and other employment, labor and benefits law cutting-edge topics, visit www.barran.com to register for our free Award Winning Annual Seminar being held at the Convention Center in Portland, Oregon on September 27.
Laura Salerno Owens is an attorney with the Employment, Labor & Benefits firm of Barran Liebman LLP. She provides compliance advice to employers and she represents employers in single plaintiff and class action litigation. Questions about this article can be sent to lsalerno@barran.com.
