Favoring Older
Workers Does Not Violate the ADEA
In
a recent decision, the United States Supreme Court held that the federal
Age Discrimination in Employment Act (ADEA) does not prohibit employers
from providing benefits favoring older employees. The ADEA prohibits
discrimination against workers who are 40 years of age and older. In this
case, employees who were over forty, and thus within the protected group,
complained that a policy providing better benefits to employees over 50
violated the ADEA. The Supreme Court disagreed, holding that the ADEA was
not meant to stop an employer from favoring an older employee over a
younger one.
Retirement Benefits Discontinued Except for those 50 and Over
In
General Dynamics Land Systems, Inc. v. Cline, 124 S.Ct. 367 (2004), a collective-bargaining agreement
between the employer and a union eliminated the employer's obligation to
provide post-retirement health benefits to its workers, except as to
then-current workers at least 50 years of age.
A
group of employees, including Cline, who were between the ages of 40 and 49
- - and thus within the age group covered by the ADEA- - brought a claim
before the Equal Employment Opportunity Commission (EEOC) that the
agreement violated the ADEA because it discriminated against them based on
their age. The EEOC tried to settle the matter with the company, but
failed. The group proceeded to court.
The
age discrimination claim initially failed in the district court, but the
Sixth Circuit Court of Appeals reversed. The Sixth Circuit took a drastic
departure from existing law and held that the ADEA's
clear meaning was to protect all persons over forty against discrimination
on the basis of age, including "reverse discrimination." The
Sixth Circuit's decision changed the way most employers understood the law
and called into question numerous retirement plans.
The
Supreme Court agreed to grant review.
Supreme Court Rejects Plaintiff's Claim
In
a 6-3 decision, the Supreme Court rejected the Sixth Circuit's
interpretation of the ADEA. The Court noted that in the abstract, the ADEA's prohibition against "discrimination because
of an individual's age" could be "open to an argument for a
broader construction, since reference to "age" carries no express
modifier and the word could be read to look two ways."
However,
the court went on to say that this expansive interpretation was wrong in
light of the plain text of the whole provision prohibiting discrimination,
the structure of the ADEA, its purpose, history and relationship to other
federal statutes. The Court further held that the EEOC's
interpretation was "clearly wrong" and thus was owed no
deference.
According
to the Court, the ADEA was clearly intended as a remedy protecting those of
older age from "arbitrary favor" for the younger. The statute was
not meant to stop an employer from favoring an older employee over a
younger one. Instead, complaints of "reverse age discrimination"
by the relatively young are outside the scope of the ADEA.
The
purpose behind enacting the ADEA was a concern that arbitrary
discrimination against older workers was widespread. There is no indication
in the reports leading up to the passage of the ADEA that Congress was
concerned with unfair advantages accruing to older employees at the expense
of their younger co-workers. The Congressional findings instead stress the
impediments to work suffered by older workers and the desire to promote
employment of older workers based on ability rather than age.
As
the Court stated, the 40-year-old threshold of the ADEA was chosen as a way
to identify a class requiring "protection against preference for their
juniors, not defining a class that might be threatened by favoritism toward
seniors." Congress was concerned with discrimination against the
older; as the Court puts it, "[t]he enemy of 40 is 30, not 50."
The
Court also noted that a contrary ruling would create "discord"
among the other federal statutes governing employer benefit plans.
Justice
Thomas, in dissent, found that the plain language of the statute prohibits
discrimination regardless of an individual's age.
Impact For Employers
This
decision is an important clarification of the ADEA and is the understanding
that most employers had of the ADEA prior to the Sixth Circuit's ruling.
The ruling gives employers more flexibility in designing programs
benefiting their older workers.
However,
it is unclear whether California's
anti-age discrimination laws will be interpreted in the same fashion. California courts
have, in recent history, given broad interpretation to the Fair Employment
and Housing Act. Moreover, while most plans covered by ERISA will be
decided under federal law and not state law, ERISA carries its own
complications. Employers should cautiously evaluate the impact that their
business decisions will have on older workers and seek the advice of
competent labor and employment counsel.
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