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Prejudicial treatment or denial of rights based on age.
As the baby boom generation, the largest demographic group in U.S. history, reached middle age and looked toward retirement, laws governing the treatment of older U.S. citizens took on greater importance than ever before. Between 1970 and 1991, the number of workers over the age of 40 in the U.S. workforce rose from 39,689,000 to 53,940,000. It is no surprise, then, that major developments, both legislative and judicial, occurred in the area of age discrimination in employment.
Congress outlawed discrimination by employers against employees or applicants over the age of 40, with the Age Discrimination in Employment Act of 1967 (ADEA) (29 U.S.C.A. § 621 et seq.). Amendments to the act in 1974, 1978, and 1986 (29 U.S.C.A. § 623 et seq.) raised and then eliminated the mandatory retirement age for most workers and extended the act's coverage to most employers. The ADEA does permit employers to set maximum age limits for employees if the employer can show that age is a bona fide occupational qualification (BFOQ) and is reasonably necessary for the operation of the business. Although the ADEA did not originally apply to government employers, Congress extended the act to cover federal, state, and local governments in 1974. However, it no longer applies to state governments.
The Equal Employment Opportunity Commission (EEOC) is charged with enforcing the ADEA. Complainants must first file a claim with the EEOC or their state's employment or human rights commission before pursuing a lawsuit. The EEOC attempts to resolve the dispute through voluntary compliance on the part of the employer, conciliation, or other persuasive measures. If the EEOC decides to bring an action against the employer, the employee's right to sue is extinguished. However, the employee need not exhaust his or her administrative remedies—that is, wait for a final determination from the EEOC—before filing suit.
Landmark Discrimination Cases
A number of landmark cases have interpreted the ADEA since its passage. Western Air Lines v. Criswell, 472 U.S. 400, 105 S. Ct. 2743, 86L. Ed. 2d 321 (1985), set out the guidelines for defending an age limit based on the BFOQ exception. Western required flight engineers, who are members of the flight crew but generally do not operate flight controls, to retire at age 60. When this policy was challenged, the airline maintained that the age limit was a BFOQ necessary to ensure safety. The Supreme Court disagreed, and in a unanimous decision announced a two-pronged test to be applied when evaluating a BFOQ based on safety: (1) whether the age limit is reasonably necessary to the overriding interest in public safety; and (2) whether the employer is justified in applying the age limit to all employees rather than deciding each case on an individual basis.
In another case the same year, the Supreme Court found TWA guilty of age discrimination for refusing to transfer pilots to the position of flight engineer after they reached age 60, the Federal Aviation Administration's (FAA's) mandatory retirement age for pilots (Trans World Airlines v. Thurston, 469 U.S. 111, 105 S. Ct. 613, 83 L. Ed. 2d 523 ). TWA had allowed younger pilots who had become disabled to transfer automatically to the position of flight engineer, but did not allow pilots and copilots past the age of 60 to do the same. The Court held that the airline must give the same opportunity to retiring pilots and copilots as it had given to younger disabled pilots. However, the Court denied the pilots' request for double damages, which are allowed in cases of "willful violation" of the ADEA, stating that a violation is willful only if the employer knew that its conduct was prohibited by the ADEA or showed a "reckless disregard" for whether the act applied.
Older workers seeking redress under the ADEA received mixed opinions in 1989. Public Employees Retirement System of Ohio v. Betts, 492 U.S. 158, 109 S. Ct. 2854, 106 L. Ed. 2d 134 (1989), overturned a series of courts of appeals decisions as well as EEOC and Labor Department regulations that required employers to justify any age-based distinctions in employee benefit plans by showing a "substantial business purpose." Betts shifted the burden of proof to the plaintiff to show that the disputed plan was a "subterfuge" for discrimination.
Congressional response to Betts was a compromise between employee advocates and business interests. A 1990 amendment to the ADEA, known as the Older Workers Benefit Protection Act (OWBPA) (29 U.S.C.A. § 626), prohibits discrimination against older employees in the provision of fringe benefits unless the benefit differences are due to age-based differences in cost.
Shortly after the Betts decision, the Supreme Court relaxed the procedural rules governing class actions alleging age discrimination, in Hoffmann-LaRoche v. Sperling, 493 U.S. 165, 110S. Ct. 482, 107 L. Ed. 2d 480 (1989). The Sperling decision made it easier for plaintiffs to join a class action suit against an employer after the suit has been filed.
During the late 1980s and early 1990s, businesses trying to survive in a sluggish economy began reducing their workforces, a practice known as downsizing. When layoffs or early retirements affected older workers disproportionately, age discrimination claims escalated.
Many companies offered attractive earlyretirement packages in return for an employee's waiver of rights to any legal claims. During the 1980s, courts generally allowed such waivers as long as the employee's acceptance was knowing and voluntary and the employee received valuable consideration in return. In Cirillo v. Arco Chemical Co., 862 F.2d 448 (1988), for example, the U.S. Court of Appeals for the Third Circuit held that because the plaintiff had knowingly and voluntarily signed a waiver of his right to sue, and in return had received a higher-than-average severance package, the waiver did not violate the ADEA. Likewise, in Lancaster v. Buerkle Buick Honda Co., 809 F.2d 539, cert. denied, 482 U.S. 928, 107 S. Ct. 3212, 96 L. Ed. 2d 699 (1987), the U.S. Court of Appeals for the Eighth Circuit found that the plaintiff, by virtue of his years of business experience, was well equipped to understand the waiver he signed. Similar reasoning prevailed in Runyan v. National Cash Register Corp., 787 F.2d 1039 (6th
Cir. 1986) (en banc), cert. denied, 479 U.S. 850, 107 S.Ct. 178, 93 L. Ed. 2d 114 (1986), where the court upheld a waiver because the employee who signed it was an experienced labor lawyer.
The ADEA specifically recognizes the validity of waivers in the OWBPA, and establishes strict guidelines for employers to follow in executing them. The waiver must use simple, understandable language that clearly delineates the terms of the agreement and leaves no question that the employee is giving up any right to pursue a lawsuit (29 U.S.C.A. § 626[f]). Several cases in 1993 and 1994 that invalidated waiver agreements illustrate how important it is for an employer to follow the guidelines to the letter. Oberg v. Allied Van Lines, Inc., 11 F. 3d 679 (7th Cir. 1993), held that a waiver agreement that did not meet the requirements of the OWBPA was void and could not be ratified even though the employee accepted and retained the severance package offered in exchange for the waiver. The same reasoning applied to invalidate the waiver agreement in Soliman v. Digital Equipment Corp., 869 F. Supp. 65 (D. Mass. 1994).
The Supreme Court has also upheld that employers must follow the letter of the law when asking employees to waive their rights to file an age discrimination complaint in return for severance pay. In Oubre v. Entergy Operations, Inc., 522 U.S. 422, 118 S.Ct. 838, 139 L.Ed.2d 849 (1998), the worker accepted a severance package and signed a release that stated she would not sue the company for any reason related to her termination. She accepted the severance payments but soon after filed an age discrimination lawsuit. The company argued that the release was valid and that she had not attempted to return her severance payments.
The Supreme Court ruled that the company had failed to meet the minimum notice requirements set out in the OWBP. Specifically, the employer had not given the worker enough time to consider her options; it had failed to give her seven days after she signed the release to change her mind; and the release made no specific reference to claims under the ADEA.
ADEA is Further Clarified
Several cases further clarified the application of the ADEA. In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S. Ct. 1647, 114 L. Ed. 2d 26 (1991), the Supreme Court upheld compulsory arbitration under the ADEA. When Robert Gilmer was hired by Interstate/Johnson Lane Corporation, he was required to register with the New York Stock Exchange, which compelled him to agree to arbitrate any controversy regarding employment or termination. He was fired at age 62 and filed a complaint with the EEOC. He then filed an age discrimination suit against Interstate, which moved to compel arbitration of the dispute.
In a decision that seems to reflect the Court's growing encouragement of alternative dispute resolution, Justice Byron R. White dismissed Gilmer's arguments that compulsory arbitration was inconsistent with the purposes of the ADEA and that he was in an unequal bargaining position with Interstate. The Court held that an ADEA claim can be subjected to compulsory arbitration without triggering any "inherent conflict" with the ADEA's underlying purposes. The Court further pointed out that Gilmer was a professional businessman who signed the arbitration agreement voluntarily and with full knowledge.
Federal and State Employees Stevens v. Department of the Treasury, 500 U.S. 1, 111 S. Ct. 1562, 114 L. Ed. 2d 1 (1991), clarified the statutory time limits for federal employees to file an age discrimination claim. Charles Z. Stevens III, an Internal Revenue Service (IRS) employee, filed an age discrimination complaint with the IRS's administrative unit. His complaint was rejected because it had not been filed within 30 days of the alleged discriminatory conduct. His subsequent complaint filed with the Treasury Department was also dismissed, and the EEOC affirmed that dismissal. Stevens filed suit in U.S. district court, only to have his suit dismissed on the ground that it was not timely, a decision that was affirmed by the U.S. Court of Appeals for the Fifth Circuit. The Supreme Court disagreed with the lower courts' interpretation of the statute and held that the ADEA requires federal employees to give the EEOC notice of intent to sue not less than 30 days before the suit is filed, rather than within 30 days, and within 180 days of the alleged discriminatory conduct. These small but significant clarifications of statutory interpretation made it easier for federal employees to seek redress under the ADEA.
The legal landscape for age discrimination complaints became more challenging for plaintiffs who work for state government after the Supreme Court decided Kimel v. Florida Board of Regents, 528 U.S. 62, 120 S.Ct. 631, 145 L.Ed.2d 522 (2000). In this case, a group of Florida university professors and librarians who were over 40 alleged that the university system had failed to adequately compensate them as compared to younger employees. The plaintiffs sued under the ADEA and a state Civil Rights Act.
The state of Florida, instead of litigating the merits of the lawsuit, challenged the constitutionality of the ADEA as applied to state governments. It argued that under the Eleventh Amendment it was immune from federal age discrimination lawsuits. Prior court decisions had found that Congress had validly exercised its power under the Constitution's Article I Commerce Clause to enact the ADEA. However, this power did not extend to lawsuits filed by private individuals. Instead, Congress could abrogate a state's sovereign immunity by invoking the Fourteenth Amendment as its authority.
The Supreme Court concluded that Congress had not demonstrated that the Fourteenth Amendment authorized the application of the ADEA to state governments. States could lawfully discriminate on the basis of age if the discrimination is "rationally related to a legitimate state interest." In addition, the Court found no facts in the record to show that Congress needed to act against state governments for age discrimination. In light of this ruling, state employees must use state civil rights laws involving age discrimination to press their claims.
Hazen Paper v. Biggins In 1993, the Supreme Court clarified the standards by which a business decision will be found to be a "pretext" for discrimination, and what conduct constitutes "willful" violation of the ADEA. In Hazen Paper Co. v. Biggins, 507 U.S. 604, 113 S. Ct. 1701, 123 L. Ed. 2d 338 (1993), a 62-year-old employee, Walter Biggins, sued his employer and its two owners, alleging age discrimination in the decision to fire him after almost ten years of employment. Biggins sought relief by claiming "disparate treatment" because of his age. In a claim of disparate treatment, the employee must prove that the employer intended to discriminate against the employee based on an impermissible criterion, his or her age. Biggins alleged that, since the firing occurred just weeks before his ten-year anniversary, when he would have been fully vested in the company's pension plan, the dismissal was due to his age. The company maintained that Biggins's outside activities created a risk of exposing trade secrets and that his refusal to sign a nondisclosure, noncompetition agreement prompted its decision to fire him.
The Supreme Court attempted to address several questions presented by the case. Did Biggins prove a case of disparate treatment based on age? Is discrimination based on pension status necessarily equivalent to discrimination based on age? What constitutes willfulness under the ADEA?
On the first issue, the Court found that the element of intent to discriminate because of age, necessary to prove a claim of disparate treatment, was absent. A decision to fire Biggins because he was close to vesting in the pension plan did not satisfy the proof requirements because it was not motivated by the prohibited presumptions about older workers, namely, that they are less productive and less competent than younger employees. Biggins failed to show that these stereotypes "had a determinative influence" on Hazen's decision.
Next, the Court found that Biggins did not prove that Hazen's reason for terminating him was a pretext for age discrimination. Justice sandra day o'connor, writing for a unanimous Court, stated that "an employer does not violate the ADEA just by interfering with an older employee's pension benefits that would have vested by virtue of the employee's years of service." The Court found that pension status is not the same as age under the ADEA and that employers may make business decisions based on an employee's years of service without necessarily violating the ADEA. Biggins did prove that his firing was a pretext for discrimination because of his pension status. It did not follow, however, that he was fired because of his age. Age and pension status, according to the Court, are "analytically distinct" factors in determining a claim under the ADEA. The Court concluded that proof of discrimination based on an employee's pension status is not, absent further evidence, the legal equivalent of proof of discrimination based on age.
Addressing the question of whether Hazen acted willfully so as to incur liquidated damages under the ADEA, the Court reaffirmed its position that a violation is willful only if the employer knew or showed reckless disregard for whether its actions violated the act. Using this test, the employer will not incur liquidated damages if it makes an age-based decision that it believes, in good faith and nonrecklessly, is permitted.
Biggins makes it more difficult for an ADEA plaintiff to prevail. The plaintiff must now show direct evidence of age discrimination. Indirect, empirical correlations, such as pensions and seniority, is not enough to prove the claim.
Reverse Age Discrimination?
Age discrimination is not limited to the workplace, nor is it experienced only by those over age 40. In 1994, the state of New York successfully sued five car rental agencies for refusing to rent vehicles to licensed drivers between the ages of 18 and 25 (People by Koppell v. Alamo Rent A Car, Inc., 162 Misc. 2d 636, 620 N.Y.S.2d 695 ). A few months earlier, New York City had become the first city in the United States to prohibit discrimination against the young in public places; a violation of the new law could bring a fine of up to $100,000.
In January 1994, coverage of the ADEA was extended to tenured faculty at colleges and universities. The result was that many tenured professors continued to teach after the age of 70, the typical mandatory retirement age before ADEA. With enrollments shrinking and fewer faculty positions opening up, younger people found it more and more difficult to obtain teaching positions in higher education, raising the specter of a "reverse discrimination" challenge.
Beyer, James R. 1993. "Biggins Leaves ADEA Issues Unresolved." National Law Journal (July 19).
Bodensteiner, Jill R. 1994. "Post OWBPA Developments in the Law Regarding Waivers to ADEA Claims." Washington University Journal of Urban and Contemporary Law 46 (summer).
Fick, Barbara. 1997. American Bar Association Guide to Workplace Law. New York: Times Books.
Gregory, Raymond F. 2001. Age Discrimination in the American Workplace: Old at a Young Age. Piscataway, N.J.: Rutgers Univ. Press.
Johns, Roger J., Jr. 1994. "Proving Pretext and Willfulness in Age Discrimination Cases after Hazen Paper Company v. Biggins." Labor Law Journal 45 (April).
Kulatz, Karen. 1993. "Trading Substantive Values for Procedural Values: Compulsory Arbitration and the ADEA." University of Florida Journal of Law and Public Policy 5 (spring).
Lawrence, Emily J. 1992. "Clarifying the Timing Requirements for Federal Employees' Age Discrimination Claims." Boston College Law Review 33 (March).
Payton, Janet G. 2003. "Age Discrimination Checklist." Corporate Counsel's Quarterly 19 (January).