Q. What is the final rule that the EEOC issued regarding the Age Discrimination in Employment Act (ADEA)?
A. On March 30, 2012, the EEOC issued the final rule on disparate impact and reasonable factors other than age (RFOA) under the ADEA. The final rule clarifies that the ADEA prohibits policies and practices that harm older individuals more than younger ones, unless the employer can show that the policy or practice is based on a reasonable factor other than age.
The rule explains the RFOA defense to employers and makes the regulations consistent with two Supreme Court decisions. The rule applies to private employers that have 20 or more employees and became effective April 30.
An employer must prove the RFOA defense after an employee has identified a specific policy or practice and established that it harmed older employees substantially more than younger ones.
What defines an RFOA?
Q. What determines whether an employment policy or practice is based on an RFOA?
A. An employment policy or practice is based on an RFOA when it was reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the facts and circumstances that were known, or should have been known, to the employer.
The following are a list of relevant considerations:
1. The extent to which the factor is related to the employer’s stated business purpose.
2. The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination.
3. The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes.
4. The extent to which the employer assessed the adverse impact of its employment practice on older workers.
5. The degree of the harm to individuals within the protected age group, in terms of both the extent of injury and the number of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.
Employers are not required to show they used any or all of the considerations to establish the defense nor does the presence of one consideration automatically establish the defense.
How does the new rule affect employers?
Q. Can we expect this rule to have a significant effect on our operations? What should we do to prepare?
A. The rule may increase ADEA lawsuits and challenges to policies or practices that could have an adverse impact on older employees.
To minimize liability, employers should be prepared to defend their actions and decisions by documenting that:
- A legitimate business purpose is closely related to the policy or practice
- They have considered whether the policy or practice has a disparate impact on older workers and whether there are any alternatives.
Additionally, employers should provide training, especially to managers and human resources personnel, regarding age discrimination and harassment in the workplace and the proper procedures to handle related complaints.
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