Virginia Business Law Update : Virginia Business Lawyers & Attorneys : PCT Law Group : Litigation Defenses, Contract Disputes, Business Formation : Northern Virginia, Arlington, Fairfax, Alexandria

A proposed rule introduced by the Equal Employment Opportunity Commission (EEOC) on February 18, 2010, if adopted, will provide guidance and meaning to the “reasonable factors other than age” defense in the federal Age Discrimination in Employment Act (ADEA).

The ADEA, unlike Title VII, states that it is not unlawful for an employer to take an action “otherwise prohibited” by the statute against an employee where “the differentiation is based on reasonable factors other than age” (RFOA). The Supreme Court interpreted this provision in Smith v. City of Jackson and Meacham v. Knolls Atomic Power Laboratory, which involved disparate impact discrimination claims.

The Supreme Court in Smith held that employees bringing claims under the ADEA can rely on the disparate impact theory, and thus, proof of age-motivation is not required. The Smith decision also stated that employers can defend such a case based on a reasonable factor other than age; however, the Court did not provide which party had the burden of persuasion on this issue.  Subsequently, in Meacham, the Supreme Court held that the employer - not the employee - has the burden of proving the RFOA defense.

The EEOC’s proposed rule seeks to provide guidance on what constitutes “reasonable factors other than age” consistent with the decisions in Smith and Meacham. It’s non-exhaustive list of relevant factors to be considered in determining whether an employment practice is reasonable are as follows:

--  Whether the employment practice and the manner of its implementation are common business practices;
--  The extent to which the factor is related to the employer’s stated business goal;
--  The extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g., training, guidance, instruction of managers);
--  The extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
--  The severity of the harm to individuals within the protected age group, in terms of both the degree of injury and the numbers of persons adversely affected, and the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
--  Whether other options were available and the reasons the employer selected the option it did.

It is important to note that this standard is lower than Title VII’s business-necessity test but higher than the Equal Pay Act’s “any other factor” test.

The EEOC is accepting public comment on the proposed rule until April 19, 2010.

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