Third Circuit Creates Circuit Split by Allowing Older Subgroup ADEA Disparate Impact Claim

The Third Circuit created a circuit split when it decided in Karlo v. Pittsburgh Glass Works, LLC, No. 15-3435 (3d Cir. Jan. 10, 2017) that a subgroup of older employees had a cognizable disparate impact claim under the Age Discrimination in Employment Act (“ADEA”) (which protects employees 40 years of age and older from age discrimination in employment.

Here, the Plaintiffs were terminated pursuant to a reduction in force. Plaintiffs argued, among other things, that the reduction in force negatively impacted employees age 50 and older. However, employees younger than 50, but protected by the ADEA (over 40, were not negatively impacted by the reduction in force.

The Third Circuit relied heavily on two Supreme Court decisions: O’Connor v. Consolidated Coin Caterers Corp., 517 U.S. 308 (1996) and Connecticut v. Teal, 457 U.S. 440 (1982). In O’Connor, the Court held that the “discrimination prohibited by the ADEA is discrimination because of an individual’s age. … The fact that one person in the protected class has lost out to another person in the protected class is thus irrelevant, so long as he has lost out because of his age.” Thus, a prima facie showing of age discrimination under the ADEA does not require the plaintiff’s replacement to be outside the protected age group.

In Teal, the Court held that an employer is liable for race discrimination where any piece of the hiring/promotion process has a disparate impact on a protected class of employees even if the “bottom line” results of the process is racially balanced. Furthermore, the “principal focus of the statute is the protection of the individual employee, rather than the protection of the minority group as a whole.” Even under a disparate impact analysis, Title VII protects the rights of individual employees, not the rights of the class.

The Third Circuit rejected three Circuit Courts’ decisions going the other way.

The Second Circuit in Lowe v. Commack Union Free School District[1], 886 F.2d 1364 (2d Cir. 1989) predates O’Connor and is concerned with the evidentiary and practical implications of subgroup claims, according to the Third Circuit. In that case, Plaintiffs asked the court to compare the effect of hiring procedures on teacher candidates over 50 years of age with the effect on teacher candidates under 50 years of age and the Second Circuit refused to do so stating that this could lead to “any plaintiff [taking] his or her own age as the lower end of a sub-protected group and [arguing] that said sub-group is disparately impacted.”

The Sixth Circuit in Smith v. Tenn. Valley Auth., 924 F.2d 1059 (6th Cir. 1991) also predates O’Connor. Similarly, the Sixth Circuit in its unpublished decision stated that to establish a prima facie case of disparate impact age discrimination, the plaintiff would have to produce statistics to show that a particular employment practice “resulted in the hiring of a larger share of workers under the age of forty than over the age of forty.”

The Eighth Circuit in EEOC v. McDonnell Douglas Corp., 191 F.3d 948 (8th Cir. 1999) distinguishes O’Connor stating that the Supreme Court only addressed disparate treatment clams under the ADEA, not disparate impact claims, and therefore its decision was not relevant to the Eight Circuit’s analysis. The Eighth Circuit agreed that subgroup disparate impact claims were not cognizable under the ADEA.

The Karlo decision is significant: it expands the ways plaintiffs can establish a prima facie case; it requires employers to more carefully examine their employment practices to ensure subgroups within the protected class are not disparately impacted; and it appears to recognize that since employees are living longer and are healthy longer, age 40+ may not have the same stigma in the employment context as it once did.

Footnotes:

[1] This case was of particular interest to me since I personally am a product of the Commack public schools, and proudly send my children to Commack public schools. We love all our teachers, regardless of whether they are in the ADEA protected class or not!