On March 30, 2005, in a decision that will change the landscape of age discrimination litigation, the U.S. Supreme Court ruled in Smith v. City of Jackson that workers age 40 and older may prove discrimination under the Age Discrimination in Employment Act (ADEA) using a “disparate impact” theory. Prior to this holding, a claimant could only obtain recovery under the ADEA by claiming that an employer, or prospective employer, made an adverse employment decision that was motivated by an intent to discriminate against the claimant because she/he was at least 40 years of age. This case now allows a claimant to recover if it can be shown that an employer used a neutral business practice (not motivated by discriminatory intent) that had an adverse impact on people age 40 and over. The claimant need not establish that the employer intended to discriminate.
The Facts of the Case
In Smith, the plaintiffs were police and public safety officers employed by the City of Jackson. In order to attract and retain qualified people, the city adopted a plan that granted raises to all police officers and police dispatchers under which officers with fewer than five years of service received proportionately higher raises than those with more seniority. Most officers who were over the age of 40 had more than five years of service, and a group of older officers filed suit under the ADEA claiming both that the city had deliberately discriminated against them because of their age (“disparate treatment claim”), and that they were adversely affected by the plan because of their age (“disparate impact claim”).
The evidence established that the average percentage increase for the entire class of officers with less than five years of tenure was somewhat higher than the percentage for those with more seniority, and because older officers tended to occupy more senior positions, on average they received smaller increases when measured as a percentage of their salary. The city explained this by stating that it needed to raise the salaries of junior officers to make them competitive with comparable positions in the market.
A majority of the court held that the ADEA allows disparate impact claims. Narrowing the potential reach of an ADEA disparate impact claim, however, an employer can escape liability even if the plaintiff can show a statistical differentiation that adversely impacts people age 40 and over, if the otherwise prohibited business practice is based on reasonable factors other than age, such as seniority.
The eight justices who took part in the decision unanimously held that the plaintiffs had not shown that they were disparately impacted by the city’s policies. The plaintiffs had not “identified any specific test, requirement, or practice within the pay plan that has an adverse impact on older workers.” The employee is “responsible for isolating and identifying the specific employment practices that are allegedly responsible for any observed statistical disparities.”
Practical Considerations
While many commentators may see the court’s decision as a significant plaintiff’s victory, one must keep in mind that the court found unanimously against the plaintiffs in this case. Even if a plaintiff can identify a specific business practice that caused the disparity, the employer can still prevail if it can show that its practice was based on reasonable factors. The court upheld an employment policy that used seniority, or time in service, as a criterion because it was not based on the age of the employees.