04/ 08/ 2005
by Beth Gaudio
NFIB Legal Foundation
Make sure your company’s policies are age-appropriate
Last week the Supreme Court issued an important decision regarding the Age Discrimination in Employment Act of 1967. In Smith v. City of Jackson, Mississippi, the Court ruled that persons who sue for age discrimination do not need to prove that an employer intentionally discriminated based on age. Instead, plaintiffs simply need to show that a workplace policy has a “disparate impact” on older workers. Because of concern that the Smith decision will spur additional ADEA litigation, employers need to be extra vigilant for age bias claims. There is no time like the present to evaluate your business’s employment policies.
Federal Law
The ADEA applies to private employers with 20 or more employees and prohibits age discrimination against individuals who are 40 years of age or older. The law covers all phases of the employment relationship, including help-wanted ads, interviewing, hiring, compensation, promotion, discipline, job evaluations, demotion, training, job assignments and termination.
It is important to remember that the law applies to both employees and job applicants. Employers may not include age preferences, limitations or specifications in job notices or advertisements. Obviously this means that employers cannot make statements like, “People older than 40 need not apply,” but more subtle references to age are also inappropriate. For instance, if a storeowner was looking for a new store clerk, he could not put out job notices or advertisements with statements like, “younger applicants preferred,” or “looking for a young responsible worker.” And in job interviews, never ask an applicant their date of birth. If you need a date of birth to do a criminal background check, do background checks on applicants only after you have decided to hire them. Call the applicants or send a letter that says, "We have decided to hire you, contingent on passing the criminal background and driving records check. In order to do that, we need your date of birth." This way, it is clear that your decision to hire is not based on age.
State Law
Many states also prohibit discrimination on the basis of age. State laws tend to include employers with fewer than 20 employees, so your business might have to comply with state law even if you are not covered by the federal ADEA. To find out more about the age discrimination law in your state, contact your state labor department or your attorney.
Protecting Yourself Under Smith v. City of Jackson
In Smith v. City of Jackson, the Supreme Court ruled that the ADEA permits “disparate- impact” claims. This kind of indirect discrimination occurs where a rule, work policy or decision is made which applies to all persons equally and appears to be non-discriminatory, but which in practice significantly reduces the chances of a particular person or group of persons from complying with it. For example, using selection criteria that requires a specific number of years of previous experience may constitute disparate-impact age discrimination.
The Smith v. City of Jackson decision did not leave employers totally defenseless. An employer can still defeat an ADEA claim by showing that the challenged policy was based on “reasonable factors other than age.” In fact, the Court found in Smith that the policy at issue was not discriminatory. In the end, even though the Supreme Court held that plaintiffs do not need to prove intentional discrimination, it accepted the city’s argument that the two-tiered policy for police officer pay raises was a “business necessity” that should be preserved.
Besides reviewing your business’s policies to ensure they are age neutral, you should also institute certain record-keeping requirements: retain all payroll records for at least three years after an employee’s termination and keep employee benefit plans and any written, seniority, or merit system procedures for at least one year after an employee’s termination. And on another administrative note, the notice Equal Employment Opportunity is the Law must be posted where employees can readily see it. A copy of this notice is available in the NFIB Legal Foundation's Federal Employment Law Handbook.
If an employee does complain about a discriminatory practice, the most important thing you can do is to take the complaint seriously, no matter how angry it makes you or how fictional you think the complaint is. Investigate the complaint thoroughly and, if you find any merit to the complaint, quickly remedy the situation.
For more detailed information about employment discrimination, please visit the NFIB Legal Foundation’s Web site to obtain a copy of the Federal Employment Law Handbook, a resource that was specifically developed for small-business owners.
