Deep Impact – 7th Circuit Holds that Disparate Impact Claims for Job Applicants Not Covered by ADEAYou might have seen all the buzz about the Seventh Circuit’s recent decision in Kleber v. CareFusion Corporation holding that job applicants were not covered by the Age Discrimination in Employment Act (ADEA). Does that mean you can refuse to hire someone because of their age? Not surprisingly, no, it does not mean that. Let’s take a minute to look at what happened.

What’s the Difference between Impact and Treatment Claims?

The difference between disparate treatment and disparate impact claims can be very important. Disparate treatment requires evidence of intentional acts taken to discriminate against an individual. Disparate impact claims cover facially neutral employment practices that have the effect of adversely impacting a protected class of individuals. For example, a plaintiff may prove a disparate treatment age claim with evidence that an employer made overt statements such as “We want to hire a younger person.” On the other hand, a plaintiff might prove a disparate impact claim by showing statistically that the application process tends to exclude females.

The Impact on Applicants

The difference between the two types of claims played out in the Seventh Circuit last week in an opinion looking at age discrimination claims under the ADEA. Dale Kleber, an attorney, applied for an in-house position at CareFusion seeking applicants with no more than seven years of experience. Kleber was 58 years old and had experience that exceeded that requirement. CareFusion did not hire Kleber, and instead went with a 29-year-old applicant who had fewer than seven years of experience. Kleber filed a claim against CareFusion under both disparate impact and disparate treatment claims. The district court dismissed his claim for disparate impact, and Kleber voluntarily dismissed his disparate treatment claim. Kleber then appealed.

The Seventh Circuit, like the court below, looked to the specific text in the ADEA statute discussing disparate impact claims. That part of the statute, unlike protections against disparate treatment, does not provide protections for applicants for employment. Instead, the only individuals who can file claims for disparate impact based on age are those already with the status of “employee.” The statute specifically protects applicants from intentional disparate treatment age discrimination, just not from disparate impact. In this case, Kleber apparently didn’t have direct evidence that he was refused employment due to his age. Since he instead was claiming that the seven-year experience limitation had the discriminatory impact of excluding older applicants, his claim failed under the ADEA.

Does This Mean We No Longer Have to Hire Old People?

Absolutely not. Intentionally discriminating against older (over 40) applicants is still illegal. However, if your company has a facially neutral requirement that may statistically exclude older applicants, such as CareFusion’s experience cap, the Seventh Circuit says that is not subject to a challenge using an adverse impact theory. However, employers should be wary of intentionally trying to fashion employment requirements that would exclude older applicants — that might push you into the disparate treatment realm.

Moving Up the Naughty List: Level of Progressive Discipline Can Be Non-Discriminatory Reason, Says Eighth CircuitMany employers have progressive discipline policies. Are they always followed? Probably not. Should they be? Absolutely, and Lindeman v. St. Luke’s Hospital of Kansas City, a recent case in the Eighth Circuit, demonstrates that being able to point to the use of a progressive discipline policy can help dispose of an ADEA/ADA case.

The Facts

Todd Lindeman worked in St. Luke’s Hospital of Kansas City where the progressive discipline policy had varying penalties for each infraction: verbal warning for the first; written warning for the second; suspension or second written warning for the third; and termination for any subsequent infraction. After a change in his supervisors, Mr. Lindeman quickly moved through the discipline system, incurring three infractions in a four-month period. Finally, Mr. Lindeman violated the patient confidentiality policy and was terminated as a result of this fourth infraction.

Mr. Lindeman, who was over age 40 and suffers from obsessive compulsive disorder, attention deficit disorder, and bipolar disorder, filed suit under the ADA and the ADEA. St. Luke’s moved for summary judgment stating that the reason for his termination—disclosure of confidential information in violation of hospital policies—was a legitimate, nondiscriminatory reason. The burden then shifted back to Mr. Lindeman to show that the reason was pretextual. Mr. Lindeman claimed that two other employees also revealed the confidential information but were not terminated. The district court granted summary judgment, noting that Mr. Lindeman had not shown that the other two employees were at the last stage of the progressive disciplinary policy, as he was. Mr. Lindeman appealed, and the Eighth Circuit affirmed.

Moral of the Story: Follow Your Policy

This may seem like a minor case on a minor issue, but it again points to the gospel that we preach over and over: If you have a policy—enforce it and enforce it consistently. You may find a disciplinary system beneficial, as the hospital did here, to show a non-discriminatory reason for treating employees differently. But it only works if you use it properly.

A Political Entity Can Be Liable, No Matter How Small: Supreme Court Holds ADEA Still Applies to Small County EmployerCan small municipalities make decisions based on age? Not according to the United States Supreme Court, which recently resolved a circuit split on the question of whether the Age Discrimination in Employment Act (ADEA) applied to state and federal political entities with fewer than 20 employees. In Mount Lemmon Fire District v. Guido, a unanimous court found that the ADEA applies to all federal and state entities, regardless of the size of those entities’ workforce.

Mount Lemmon Facts and the Supreme Court’s Rationale

To resolve a budget shortfall, Mount Lemmon terminated its two oldest firefighters, both of whom were over age 40. Those firefighters filed suit in federal court, alleging their termination violated the ADEA. Mount Lemmon moved to dismiss the lawsuit, arguing the ADEA did not apply to it because it had fewer than 20 employees. The district court agreed. The Ninth Circuit Court of Appeals reversed the district court, finding that the ADEA applied. Because the Sixth, Seventh, Eighth, and Tenth Circuits previously found otherwise, the Supreme Court granted review of the case, siding with the Ninth Circuit’s interpretation of the ADEA.

By way of background, the ADEA initially applied to private sector employers with 20 or more employees. In 1974, Congress amended the ADEA to cover state and local governments. The amended ADEA defined a covered “employer” as:

[A] person engaged in an industry affecting commerce who has twenty or more employees . . . The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State.

Prior to the Mount Lemmon ruling, smaller political entities were able to argue that the numerical threshold of 20 employees for ADEA claim exposure applied to them as it did private employers. The Supreme Court rejected that argument, finding that the ADEA’s:

“two-sentence delineation, and the expression ‘also means’ at the start of the second sentence, combine to establish separate categories: persons engaged in an industry affecting commerce with 20 or more employees; and State or political subdivisions with no attendant numerosity limitation.”

The Supreme Court also found that the ADEA’s 20-employee threshold did not apply to federal employers either. Therefore, all political entities, regardless of size, are subject to potential ADEA claims.

Seven justices joined the opinion, which was authored by Justice Ruth Bader Ginsburg, with Justice Brett Kavanaugh not participating.

Takeaways

Although this case applies to small political subdivisions, it is a good reminder for everyone to be careful about potential age or other discrimination claims related to reductions in force. We don’t have any information on what criteria Mount Lemmon used to pick these two firefighters to lay off, but it probably was not their age. The fact that the terminated employees were the oldest in the department was likely a coincidence. So, when looking to save some money and balance the budget, employers need to keep an eye on whether the decisions look like discrimination (age or otherwise) and be sure they can defend the decisions. Your employment counsel can help.