By: Ralph R. Smith, 3rd

The Age Discrimination in Employment Act (“ADEA”) is a federal law that prohibits employment discrimination against employees over the age of 40.  One of the lingering questions under the law has been what happens when an employer adopts an employment policy that, while seemingly benefiting a group of employees over 40 years old, also simultaneously adversely affects other employees much older than 40.  For years, in these kinds of situations, federal appeals courts have held that there can never be such a thing as subgroup age discrimination under the ADEA, meaning that in the above example, the older subgroup of harmed employees could not claim age discrimination.  Recently, however, in Karlo v. Pittsburgh Glass Works, 2017 U.S. App. LEXIS 406 (3rd Cir. January 10, 2017), the federal Third Circuit Court of Appeals gave new life to this legal theory, and held that such a claim of age discrimination is now indeed cognizable under the ADEA in subgroup situations.

The legal question that the Third Circuit had to decide in Karlo was whether a subgroup disparate impact claim could be brought under the ADEA. Disparate impact is a way of proving discrimination where a facially neutral employment policy has an adverse impact on a class of employees protected under the discrimination laws. In Karlo, a group of employees over 50 years of age claimed that their layoff from respondent was improper age discrimination because a disproportionate number of employees over 50 years old were laid off while persons who were over 40 but under 50 years old were not. Relying upon past United States Supreme Court precedent holding that the ADEA prohibits all forms of age discrimination, not just age discrimination that happens to affect only persons who are over 40 years old age, the Third Circuit held in Karlo that disparate impact claims can be brought to prove age discrimination under the ADEA, even when the group that is benefited by the subject employer’s practice happens to be over 40 years old.

The Third Circuit’s decision has now created a “split” amongst how federal appeals courts have ruled on this issue. This means that the present decisional law on this issue is not uniform throughout the country. When this happens, the United States Supreme Court will often have to decide the issue to create the necessary uniformity on the standard to be applied by the federal courts. Therefore, until that eventually happens, employers must be more cognizant of how sometimes even a facially neutral employment policy that ostensibly makes no wrongful distinctions amongst employees may result in age discrimination because the policy harms older employees in a disproportionate way compared to other older employees. Because of this possibility, employers must not only make sure that their employment policies not expressly discriminate against older employees, but the impact of how such policies may apply and affect other older employees must also be evaluated so that such policies do not unintentionally discriminate against members of that protected class.

Because disparate impact claims are complicated and often difficult to recognize, employers are wise to seek sound advice from an experienced labor and employment lawyer whenever there is suspicion or concern that a neutral employment policy is having a harmful impact on a group of employees protected under federal or state anti- discrimination laws.

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