4 Takeaways After The 7th Circ. Limits ADEA’s Scope

Laura Friedel, Labor & Employment Partner, is featured in Law360’s article, “4 Takeaways After The 7th Circ. Limits ADEA's Scope.” 

Law360 (January 25, 2019, 10:37 PM EST) — While the Seventh Circuit's recent ruling adopting a narrow view of the Age Discrimination in Employment Act may seem like a win for employers, experts say it could result in more state court suits where heftier damages are possible.

In an 8-4 ruling, the en banc Seventh Circuit held that the text of section 4(a)(2) of the ADEA covers only discrimination against current employees and that outside job seekers can't sue businesses for so-called disparate impact claims alleging that they use practices that adversely affect older individuals. The Seventh Circuit became the second appellate court in the country to adopt such a precedent after the Eleventh Circuit issued a similar ruling in 2016 that the U.S. Supreme Court later refused to take up.

But even though those rulings may seem like a win for employers in those circuits, businesses still must be wary of state laws that provide more rigid protections for job seekers.

Duane Morris LLP partner Jonathan Segal said state law is already "often favored" by age discrimination plaintiffs because it can offer the possibility of punitive damages and damages for pain and suffering, usually without caps, that can far exceed the double-damages allowed under the ADEA. Plaintiffs in the Seventh and Eleventh circuits may now turn to it more often, he said.

"Some employers might view this as a victory, but it may actually result in more state law cases that hurt employers," Segal said. "I think employers need to be thoughtful because of state law anyway, so to me this case only means that in two circuits you'll have more cases in state court. Ironically in those circuits, employers may have larger damages. But I think it goes beyond the legal, it goes to [employers'] values."

Here, Law360 looks at this and three other takeaways from the ruling.

Narrow View of ADEA

Enacted in 1967, the ADEA bars both intentional discrimination by employers against workers, which in legal parlance is called disparate treatment discrimination, as well as any practices that have a discriminatory effect on older individuals even if the practice appears neutral on its face. The latter is a disparate impact age discrimination claim.

The Seventh Circuit ruling — which included written dissents from Circuit Judges Frank H. Easterbrook and David F. Hamilton — stemmed from a lawsuit filed by Dale Kleber, a longtime attorney who was 58 years old when he applied for and was denied a general counsel job at medical technology company CareFusion in 2014.

The company eventually hired a 29-year-old for the position. Its job advertisement had sought someone with three to seven years of legal experience, according to court documents.

A three-judge panel ruled in April that the section of the ADEA that covers disparate impact claims encompasses claims by job applicants like Kleber. But on Wednesday, the full Seventh Circuit held the opposite. The majority said that section 4(a)(2) of the statute, when read in conjunction with the law's other provisions, can only be interpreted to mean that Congress didn't intend for it to cover applicants making disparate impact claims, it said.

In dissent, Judge Hamilton wrote that protecting both job applicants and current employees is "more consistent" with the ADEA's purpose of protecting older individuals. He also said that the idea "tracks" with the U.S. Supreme Court's reading of language in Title VII in a case called Griggs v. Duke Power Co.

"In [Griggs], the court found that this same disparate-treatment language protects not only current employees but also 'the job-seeker'— people like plaintiff Kleber," Judge Hamilton said. "We should read the same language the same way."

Dara Smith, senior attorney at the AARP Foundation's litigation team, which represented Kleber, said Friday that the AARP and Kleber disagreed with the ruling and "find it very disheartening that the court interpreted a civil rights law so narrowly, despite the statutory language and the great weight of Supreme Court precedent."

"Kleber and all older job seekers deserve all of the protections Congress intended to give them. As of now, we are considering our options for next steps," she added.

State Laws at Play

Since the ruling limits job applicants' ability to sue for disparate impact discrimination, attorneys said it could boost their reliance on state statutes if they believe they were victims of age bias.

David Morrison, a Chicago-based principal at Goldberg Kohn, told Law360 that state laws can include tougher requirements than federal laws and that some states could look to pass more restrictive laws in the future.  

"If a state had a law that you can't have a disparate impact applied to applicants, employers would be forced to follow that even if the federal law didn't apply because there's no real upside to being sued in state court for a class action even if they can't sue in federal court," Morrison said. "The interesting thing to look out for is in blue states like California and Illinois where an opinion like this catches the attention of lawmakers and encourages lawmakers to pass more restrictive state laws."

From employers' perspective, Morrison said that allowing courts to look only at disparate impact of recruiting practices could jeopardize employers' ability to engage in standard programs like college campus recruiting or internships.

Smith for one also said that businesses shouldn't forget that they must comply with state requirements.

"In many states, state law still has disparate impact protections for employees and job seekers alike, so employers will still want to be very careful not to violate state law despite the restrictions in federal law," Smith said.

But even on the federal level, Smith noted that since the ruling "definitely" only applies to disparate impact claims involving applicants who aren't current employees, intentional discrimination claims can still be pursued.

"Age discrimination in hiring is still illegal if you can show intent to discriminate or if it's a facially discriminatory provision," Smith said. "If age is not mentioned in the job description, then to bring a claim under federal law, plaintiffs will still have to show that employers put the restriction in place because they actually did intend to weed out older applicants. That is still a viable claim, it's just that the effect itself is not a cause of action. You'd have to actually show that they did it on purpose."

At Odds with EEOC

One notable aspect of the ruling is that it runs largely counter to the longstanding position that the U.S. Equal Employment Opportunity Commission has maintained that the ADEA allows older job applicants who feel they've been unfairly passed over because of a hiring policy to file charges with the agency and later sue, according to Segal.

"The EEOC's position is that the ADEA applies to applicants and employees," he said.

Given the fact that the Seventh and Eleventh circuits now hold positions in opposition to that of the federal anti-discrimination watchdog, Segal said it could change the way the EEOC goes about enforcement actions in those geographic regions.

"I think they would have trouble bringing a lawsuit on behalf of an older applicant in the Seventh and the Eleventh [circuits], but they could continue to process, find cause, and that can be used by an applicant in a state court proceeding," Segal said.

Age discrimination has been a recent priority for the EEOC, with the agency using the occasion of the ADEA's 50th anniversary to shine a spotlight on the issue of age bias and on barriers that older workers face.

Acting EEOC Chair Victoria Lipnic told Law360 in 2017 that ambiguities in the ADEA have allowed courts to narrow the law's reach at a time when the percentage of older workers on the job is growing, which has made the EEOC's job fighting age discrimination harder. One of the decisions she mentioned was the one by the Eleventh Circuit.

"I think the statute is ambiguous, and so when things are ambiguous, then you end up with different interpretations," Lipnic told Law360 at the time. "For an agency that is responsible for enforcing the age act … the Eleventh Circuit's decision is certainly limiting for our purposes."

But even if employers find they have a bit more leeway on hiring practices that may have an adverse impact on older applicants, they should still tread carefully, since any policy perceived as discriminatory — even if technically legal — could dim current workers' morale.

"If an employer takes a position that they don't have to worry about treating applicants [poorly] without regard to their age, what's the cultural message they're sending to their workforce? Isn't that going to potentially have an adverse impact on how older employees perceive their employer?" Segal said. "What you do with applicants will absolutely affect how employees see you. That may result in claims, [but] even if it doesn't it may result in employees being less engaged or looking to work in another place that they perceive not to have age bias."

Too Soon for a High Court Look

While the case could potentially be appealed to the Supreme Court, attorneys noted that the ruling might make it less likely that the high court decides to take up the issue any time soon.  

While the Seventh Circuit's initial panel decision that said job applicants could sue prospective employers under the ADEA created a split with the Eleventh Circuit's 2016 ruling, this week's en banc decision brought the two circuits back into harmony on the issue. That decreases the chances the high court will step in, according to Laura B. Friedel, chair of Levenfeld Pearlstein LLC's labor and employment practice.

"We're probably not having the Supreme Court weigh in on it, at least for a bit," Friedel said. "There are cases brewing up in California and Texas. We'll see how those courts look at it, but we don't have those [decisions] yet. We don't have a circuit split the way that we did for the last nine months or so."

 

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