Other plaintiffs target facially neutral employment practices that they claim have a disparate impact on older applicants. For example, plaintiffs in another ongoing case allege that PricewaterhouseCoopers discriminates against older applicants in a variety of ways, including by filling entry-level positions exclusively through on-campus recruiting. Rabin v. PricewaterhouseCoopers, 236 F. Supp. 3d 1126 (N.D. Cal. 2017). Plaintiffs argue that the company's failure to post entry-level openings on its website discriminates against older applicants who cannot take advantage of on-campus recruiting opportunities.

Protection of Applicants

The Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§621-634, declares it unlawful for an employer (1) to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to compensation, terms, conditions, or privileges of employment, because of such individual's age; (2) to limit, segregate, or classify employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect hisher status as an employee, because of such individual's age; or (3) to reduce the wage rate of any employee in order to comply with this chapter. 29 U.S.C. §623(a). By declaring unlawful an employer's failure or refusal “to hire … any individual … because of such individual's age,” ADEA permits applicants to bring claims of intentional discrimination. 29 U.S.C. §623(a)(1) (emphasis added).

Courts disagree as to the meaning of §623(a)(2), which applicants point to as the basis for their right to assert disparate impact claims. In a disparate impact claim, plaintiffs allege that facially neutral employment practices have a discriminatory impact on individuals because of their age. For example, an experience cap is neutral because it applies without regard to age, but it may disproportionately eliminate older applicants who, on average, have greater experience than younger applicants. Section 623(a)(2) declares that it is unlawful for an employer “to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's age.” In Smith v. City of Jackson, Mississippi, 544 U.S. 228 (2005) the Supreme Court held that §623(a)(2) authorizes disparate impact claims. But the plaintiffs in Smith were current employees. Accordingly, whether applicants can bring disparate impact claims remains unsettled.

Two circuit courts recently disagreed as to whether §623(a)(2) protects applicants. In 2016 in Villarreal v. R.J. Reynolds Tobacco Co., 839 F.3d 958, 961 (11th Cir. 2016), the U.S. Court of Appeals for the Eleventh Circuit found that §623(a)(2) does not authorize applicants to bring disparate impact claims. There, the employer rejected the plaintiff's job application in part because the job description identified the “targeted candidate” as someone “2-3 years out of college.” The court looked to the text of ADEA and held that only current employees can allege disparate impact discrimination. Parsing the text, the court found that because applicants have no “status as an employee” to be affected by the employer's actions, §623(a)(2) does not protect them.

This year, the Seventh Circuit analyzed the issue in Kleber v. CareFusion Corp., 888 F.3d 868, 870 (7th Cir. 2018) (opinion vacated), an opinion the court subsequently vacated after granting an en banc rehearing. A 58-year-old applicant alleged discrimination based on a job posting for someone with “3 to 7 years (no more than 7 years) of relevant legal experience,” which position the employer filled with a 29-year-old applicant. Id. at 871. Prior to vacating, the court found that §623(a)(2) does protect outside applicants. The court indicated that a purely textual analysis weighed in favor of precluding applicants from recovering, but reasoned that extending the protections of §623(a)(2) to applicants is the “better reading of the statutory text” and “consistent with the purpose of the Act,” citing to studies of the effect of age limits in hiring that had prompted ADEA.

An en banc panel reheard the case on Sept. 6, 2018. If the panel decides in line with the original Seventh Circuit opinion, the Eleventh Circuit opinion in Villarreal may become an outlier, as the Seventh Circuit in Kleber pointed to pre-Smith cases in other circuits that accepted disparate impact ADEA claims by applicants. Kleber, 888 F.3d at 882.

Recommendations

Regardless of the outcome of the circuit split, employers should consider the risks associated with claims of age discrimination in hiring (both intentional and unintentional) when assessing their hiring and recruitment practices. As the workforce ages and workers delay retirement for a variety of reasons, older applicants may enter or remain in the applicant pool at a growing rate. Employers also should remember that, although federal courts may disagree as to what protections federal law extends to applicants, state laws could be more specific and provide broader protections. Moreover, having an age-diverse workforce can work to the benefit of the employer, as older applicants are often both talented and qualified.

Employers should ensure that they are not intentionally discriminating by eliminating older applicants based on unfounded assumptions. For example, employers should not assume that older workers will retire soon after hiring, are less physically or intellectually capable than younger applicants, cannot use the technology necessary for the job, or cannot appeal to younger customers or clients. The use of neutral criteria can aid employers in avoiding these assumptions.

Employers also should assess whether their neutral hiring and recruitment practices tend to exclude older workers. Practices such as experience caps, subjective criteria for applicants tied to generational differences, and recruitment strategies could all come under scrutiny. To say that these practices may come under scrutiny is not to say that they are discriminatory, but even justifiable practices could be costly to defend. Employers should first assess whether their practices are necessary to and successful in achieving a business purpose. For example, employers may use job experience caps based on assumptions that applicants with more experience either will be unsatisfied by the job or will require a higher salary than the employer intends to pay. With on-campus recruitment strategies, employers take advantage of a consolidated pool of educated applicants looking for entry-level positions.

A conservative approach might entail employers finding other ways to achieve the same goals. For example, instead of using experience caps to eliminate overly qualified applicants who may be unsatisfied by the position, employers could explain the responsibilities in the job posting, making clear that the position includes entry-level tasks. Employers also could list a target salary to deter applicants who may require a higher salary based on their greater experience. Similarly, rather than assuming only soon-to-be college graduates are interested in entry-level positions and exclusively filling those positions through on-campus recruiting, employers could post all open positions on their website. To ensure that this is a meaningful practice, employers would have to consider applications received through the website equally with resumes gathered through on-campus recruitment.

None of this is to suggest that courts will find employers who engage in these neutral practices liable for age discrimination. Employers can argue that their hiring and recruitment practices are based on reasonable factors other than age, despite an inadvertent disparate impact on older applicants. See Smith, 544 U.S. at 241 (2005). An employer can establish this defense by demonstrating that the practice is reasonably designed to achieve a legitimate business purpose. 29 C.F.R. §1625.7 (2012). A court may look to a variety of factors in assessing the defense, including the relationship of the practice to the business purpose, the accuracy and neutral application of the practice, the employer's limitation of discretion in applying the practice, the employer's assessment of the impact of the practice on older workers, and the degree of harm to older workers.

Because ADEA's “reasonable factor other than age” defense does not require that an employer consider and implement alternative practices without, or with a lesser, disparate impact, the burden is lower than with other types of discrimination to demonstrate that the employer is not liable. See Smith, 544 U.S. at 243. Nevertheless, employers should evaluate their hiring and recruitment practices and ensure that they serve a reasonable business purpose. Employers can then decide to consider alternative practices in a conservative effort to avoid litigation, or rest assured that they can defend their practices in the event of a lawsuit.

Endnotes:

[1] The EEOC released a report to mark the 50th anniversary of the Age Discrimination in Employment Act, reminding readers of the benefits of an age-diverse workforce. The report identified discrimination in hiring as a significant problem for older workers reentering the workforce or changing employers at a later age. U.S. Equal Emp. Opportunity Comm'n, The State of Age Discrimination and Older Workers in the U.S. 50 Years After the Age Discrimination in Employment Act (ADEA), June 2018.

[2] The number of workers age 55 and older has doubled in the last 25 years as Baby Boomers age, and this will continue to grow. Id. at nn. 91-92.

Jeffrey S. Klein and Nicholas J. Pappas are partners at Weil, Gotshal & Manges, in the employment litigation practice group. Lauren E. Richards, an associate in the group, assisted in the preparation of this article.