Articles Posted in Age Discrimination

On March 29, 2012, the United States Equal Employment Opportunity issued new regulations regarding the Age Discrimination in Employment Act (ADEA). Specifically, the regulations relate to the “reasonable factors other than age” defense to disparate-impact claims. A disparate impact claim is when a company has a policy that appears to be neutral on its face, but in practice it disproportionately harms a legally protected group. A policy that has a disparate impacted based on age violates the ADEA unless it is based on reasonable factors other than age.

Under the new regulations, an employee who claims a company’s policy or practice has a disparate impact based on age is required to identify the specific policy he claims has a disparate impact on older workers. However, the employer has the burden to prove it has a reasonable basis for the policy other than age.

The regulations define “reasonable” to mean that an objectively reasonable employer would conclude the policy (1) is reasonably designed to meet a legitimate business purpose, and (2) was applied in a way that reasonably achieves that purpose. Some of the factors relevant to determining whether a factor on than age is reasonable include:Stressed_Mature_Business_Man.jpg

  1. The extent to which the policy is related to the employer’s stated business purpose;
  2. The degree to which the employer accurately defined and applied the policy, and provided guidance and training to the individuals who will apply it, in order to avoid age discrimination;
  3. The extent to which the employer limited the discretion of supervisors when they apply the policy;
  4. The degree to which the company evaluated the policy’s impact on older employees; and
  5. The extent to which the policy harms older workers in terms of the degree of harm and the number of employees who are harmed; and the degree to which the employer took steps to minimize the harm, compared to the cost of taking those steps

The regulations further clarify that the defense is only available in disparate impact case. It is not available in disparate treatment cases, meaning cases in which an employee claims his employer intentionally discriminated against him because of age.

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Late last month, a Federal Judge in the Southern District of New York ruled that a job candidate can continue with his age discrimination claim against a prospective employer based on a discriminatory hiring decision made by independent contractors who had the apparent authority to make hiring decisions on the employer’s behalf. Apparent authority is when a company’s actions lead someone else to incorrectly believe that he or she is an employee or agent of the company. This decision follows an earlier decision by the Second Circuit Court of Appeals in the same case, which recognized that Employers Can Be Held Liable for Discriminatory Hiring Decisions Made By Independent Contractors.

The case, Halpert v. Manhattan Apartments, Inc., involves Michael Halpert, who was applying for a position as a “shower” for Manhattan Apartments, Inc. He was interviewed by Robert Brooks, a salesperson who worked for Manhattan Apartments as an independent contractor. Mr. Brooks did not have the authority to hire employees on behalf of Manhattan Apartments.

During Mr. Halpert’s job interview, Mr. Brooks indicated that Mr. Halpert was “too old” for the job. Several days later, Manhattan Apartments’ receptionist said the company was not hiring Mr. Halpert because “we were looking for someone younger.” Mr. Brooks then repeated that Mr. Halpert was not qualified for the job because of his age.

Mr. Halpert sued Manhattan Apartments, claiming it failed to hire him because of his age in violation of the Age Discrimination in Employment Act (ADEA). After the Second Circuit ruled that an employer could potentially be held liable for the actions of an independent contractor, Manhattan Apartments filed a motion for summary judgment, arguing that Mr. Halpert was not its employee or agent, and there was not enough evidence to prove Mr. Brooks had the apparent authority to hire employees on its behalf.

However, the District Court disagreed. It found there was enough evidence for a jury to conclude that Manhattan Apartments had the apparent authority to hire Mr. Halpert. This evidence includes the fact that Manhattan Apartments allowed Mr. Brooks to use its offices, to answer his phones by saying “Manhattan Apartments, Inc.,” and to use business card that identify himself as a “Licensed Assc. Broker” for “Manhattan Apartments Inc.” It also included the fact that Manhattan Apartments’ receptionist explained the decision not to hire Mr. Halpert by saying that “we were looking for someone younger.” It therefore denied Manhattan Apartments’ motion for summary judgment to potentially give Mr. Brooks an opportunity to prove his case at a trial.

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Earlier this month, New Jersey’s Appellate Division reduced a punitive damages award in an age discrimination case in which the jury had awarded $10 million, to slightly less than $2.5 million. Punitive damages are awarded to punish a defendant when its actions are especially egregious.

The Evidence of Age Discrimination

Nicholas Saffos worked for Avaya, Inc. and its predecessors, AT&T and Lucent Technologies, for more than 20 years. In 2002, Avaya hired M. Foster Werner, Jr., as the head of Mr. Saffos’ department. Mr. Saffos quickly noticed that Mr. Werner was firing employees who were over 40 years old, and replacing them with younger workers. He also noticed that Mr. Werner was favoring the younger employees in his department.

In 2003, Mr. Werner suddenly began criticizing Mr. Saffos’ job performance and examining his work, even though he had received positive performance reviews in the past. In August 2003, Mr. Werner placed Mr. Saffos on a Performance Improvement Plan (“PIP”). Avaya fired him 30 days later. At the time, Mr. Saffos was 49 years old. Avaya hired a 33-year-old to replace him. Mr. Saffoshas other evidence of age discrimination, including the fact that the average age of an employee in the department decreased by 10 years during the first two years that Mr. Werner was in charge.

The Jury Award

After a trial, a jury found in Mr. Saffos’ favor and awarded him $250,000 for emotional distress, $325,500 for past lost wages (“back pay”), $167,500 for future lost wages (“front pay”), and $10 million on punitive damages. However, the trial judge reduced the punitive damages to a little over $3.7 million, which was five times the other damages the jury had awarded because he believed the jury’s award was unreasonably high. Both sides appealed.

The Appellate Court Reduced the Punitive Damages Award

On appeal, in Saffos v. Avaya Inc., the Appellate Division reduced the punitive damages even further. It stated that although courts are not required to limit punitive damages to 5 times the actual damages, the trial judge acted properly when he used that as a guideline to find the punitive damages award was disproportionate to the harm Mr. Saffos experienced and disproportionate to the damages he recovered.

However, it ruled that emotional distress damages often include a punitive element, and the $250,000 the jury awarded to Mr. Saffos for emotional distress already included a punitive element since Mr. Saffos did not suffer any physical harm as a result of the emotional distress, and he did not need any psychiatric treatment. As a result, it concluded that the emotional distress damages should not have be included when calculating the punitive damages as 5 times the jury’s award. The Appellate Division therefore reduced the punitive damages award to just under $2.5 million, which is 5 times the economic damages the jury awarded.

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The United States Equal Employment Opportunity Commission (EEOC) recently sued the Port Authority of NY & NJ, claiming the Port Authority violated the Equal Pay Act (“EPA”) by paying non-supervisory female lawyers less than their male counterparts. The EPA is a federal law that prohibits employers from considering gender as a basis for paying employees different wages for the same work. The lawsuit also alleges that the Port Authority violated the Age Discrimination in Employment Act (“ADEA”) by firing older attorneys and replacing them with younger attorneys. The ADEA is a federal law that prohibits age discrimination in employment.

According to the EEOC’s press release, the Port Authority paid male attorneys more than female attorneys for work requiring the same skill, effort and responsibility. The EEOC claims the gender pay disparity occurred regardless of the attorney’s job assignment, years of service, or date of admission to the bar.

The allegations stem from the Port Authority’s decision to fire two female attorneys over the age of 40 as part of a purported “reduction in force.” Earlier this year, the EEOC attempted to reach an amicable settlement with the Port Authority, but those efforts failed. It then filed the lawsuit in the United States District Court for the Southern District of New York.

As Louis Graziano, the attorney handling the case for the EEOC, stated:

Achieving a work force that embodies equal pay for equal work and eliminates sex-based pay discrimination has been the objective of federal law for nearly 50 years. This lawsuit makes it clear that the unfortunate reality – that at some workplaces women still earn less than men, even though they are performing the same work and have the same qualifications – continues to plague the workplace and will not be tolerated.

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In June 2009, I discussed the New Jersey Appellate Division’s age discrimination ruling that it is illegal for an employer not to renew an employment contract because the employee is over 70 years old. The New Jersey Supreme Court recently agreed, and affirmed the Appellate Division’s decision.

Specifically, in Nini v. Mercer County Community College, New Jersey’s highest court ruled that a company’s decision not to renew an employment contract is more like firing a current employee than deciding not to hire a job candidate. As a result, the Court concluded that even though the New Jersey Law Against Discrimination (LAD) allows employers to refuse to hire employees because they are over 70 years old, that exception does not apply when a company decides not to renew an employee’s contract after he or she turns 70.

In explaining its decision, the New Jersey Supreme Court stated that the purpose of the LAD is to protect New Jersey citizens “from all forms of discrimination in employment and, in particular, to protect our older citizens from being forced out of the workplace based solely on age.” It also indicated that the over 70 exception is meant to allow employers to avoid the cost of training new employees who have “limited long-term prospects.” However, that does not apply to an employee who already has been working for the company and does not need training.

Supreme Court Rules Employer Has Burden to Prove Adverse Employment Action Based on Reasonable Factors Other Than Age

The Age Discrimination in Employment Act of 1967, 29 U.S.C. 621, et seq. (“ADEA”), is a federal law that prohibits discrimination in employment because of age. On June 19, 2008, the United States Supreme Court made it easier for employees to prevail in disparate impact claims under the ADEA, by placing an important burden of proof on the employer. A disparate impact case under the ADEA is when an individual seeks to prove that his or her employer illegally discriminated against him or her because of age, even though it did not necessarily intend to discriminate, because it used a specific test, requirement, or practice that disproportionately harmed employees who are at least 40 years old.

In that case, Meacham v. Knolls Atomic Power Laboratory, the Supreme Court interpreted a provision of the ADEA that permits an employer to take an adverse employment action against an employee, even if the employment action is “otherwise prohibited” by the ADEA, as long as the adverse action is “based on reasonable factors other than age.” The Supreme Court ruled that if an employer seeks to rely on that defense, it has the burden to prove that its decision was based on a reasonable factor other than age.

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