According to the Bureau of Labor Statistics, the average age of employees in the United States was 42.2 years old in 2018 and 40% of people ages 55+ were working or actively looking for work in 2014, with that percentage expected to increase.  With the number of older Americans in the workforce on the rise, the Age Discrimination in Employment Act of 1967 (the “ADEA”), which protects against employment discrimination of persons 40 years of age or older, is particularly crucial.  While it is clear that employers with more than fifty employees must comply with the ADEA with respect to employees, it is less clear whether certain provisions of the ADEA also apply to prospective employees.  Recently, the United States Court of Appeals for the Seventh Circuit decided that some of them do not.

In March, 2014, 58-year-old Dale Kleber applied for a senior in-house counsel position in CareFusion Corporation’s law department.  The job posting required 3 to 7 years’ experience, but noted that the applicant should have no more than 7 years’ experience.  Even though Kleber had more than 7 years’ experience, he applied for the position.  The position was ultimately given to a younger employee who was 29 years old and who had the requisite 3 to 7 years’ experience.

Kleber sued CareFusion Corporation on the basis of disparate impact discrimination under the ADEA, meaning the company discriminates against older applicants by imposing certain classifications or limitations on those who apply.  Section 4(a)(2) of the ADEA governs disparate impact discrimination and makes it unlawful for an employer to limit, segregate, or classify its employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect that individual’s status as an employee, because of such individual’s age.   Since the statute in question refers to “employees,” the Seventh Circuit held that the reach of the statute does not extend to applicants for employment and referred to Merriam-Webster’s Collegiate Dictionary definition of “applicant” and an analysis of Congressional intent in coming to this conclusion.  The Court concluded that in interpreting the text in its entirety, and comparing it to sections 4(a)(1) and 4(c)(2) of the ADEA, the provision at issue – disparate impact discrimination – only applies to individuals with status as an employee.

If you consider the purpose of anti-discrimination laws from a broader perspective, it may be hard to imagine how allowing even unintentional discrimination in the hiring process furthers that purpose.  The dissent seems to agree, stating that the “majority naively puts on blinders, considers only the language of the ADEA in isolation, and, as we’ll see, ignores precedent, legislative history, and practical consequences to offer one cramped reading for the scope of [the statute].”  The majority attempts to address this concern by stating that there are other protections for older job applicants – Section 4(a)(1) prevents an employer from disparately treating both job applicants and employees on the basis of age and section 4(c)(2) prevents a labor organization’s potential age discrimination against both job applicants and employees.  However, the dissenting Judges appear to disagree that these other provisions are enough.

For employers that think this Seventh Circuit decision may get them off the hook – think again.  It is important to note that the outcome of the Kleber decision only directly applies in the Seventh Circuit in cases in which disparate impact claims are asserted.  Moreover, this decision is at odds with Equal Employment Opportunity Commission (“EEOC”) guidelines and, as the dissent alludes to, poses questions as to what happens when an applicant is employed by a sister subsidiary of the employer or has a position with the employer through a temporary employment agency.

Thus, it is important to not lose sight of the fact that this law is evolving and as a result, age discrimination in hiring can still prove costly.  For example, in March 2017, the restaurant chain Texas Roadhouse paid $12 million to settle an EEOC lawsuit that sought relief for a class of applicants that alleged they had been denied front-of-the-house positions because of their age.  As part of the settlement, Texas Roadhouse is charged with changing its hiring and recruiting practices.  Similarly, in May 2018, another restaurant chain, Seasons 52, agreed to pay $2.85 million to settle a class action age discrimination lawsuit in which the EEOC alleged that applicants over age 40 had been denied jobs at thirty five Seasons 52 locations across the United States.  PricewaterhouseCoopers (“PwC”) was also recently sued based on allegations that older applicants are denied jobs and thus discriminated against in the hiring process because PwC focuses its employee recruiting efforts on college campuses and mostly hires employees directly out of college.  Clearly, as an employer, even being accused of such discrimination has negative consequences – even if the law ultimately turns out to be on your side.

There is no doubt that the law is unsettled nationally as it pertains to the ability of job applicants to bring claims for disparate impact age discrimination.  And this unsettled issue is likely not going away.  The Bureau of Labor Statistics projects that by 2024, the labor force will include about 41 million people aged 55 and older.  For this reason, companies should make it a priority to enact policies and procedures aimed at encouraging diversity in the recruiting and hiring process, especially for this protected category.

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