The Age Discrimination in Employment Act protects employees over the age of 40 from adverse action taken by an employer because of the individual’s age. However, in a recent Third Circuit decision, Karlo v. Pittsburgh Glass Works, the court held that disparate impact claims brought by subgroups of employees, in this case employees over the age of 50, are cognizable. In particular, subgroups of employees over the age of 40 may bring disparate impact claims against their employer for allegations of disparate treatment relative to younger employees, even if those employees are over the age of 40. This decision could have wide ranging ramifications for employers and their efforts to abide by the ADEA.
In Karlo, the plaintiff’s claim was based on a reduction in force which caused multiple employees over the age of 50 to lose their jobs. The employer’s “policy favored younger members of the protected class[.]” A claim based on a disparate impact to a 40 and over subgroup “may proceed when a plaintiff offers evidence that a specific, facially neutral employment practice caused a significantly disproportionate adverse impact based on age.” To demonstrate such impact, plaintiffs may use “various forms of evidence, including forty-and-older comparisons, subgroup comparisons, or more sophisticated statistical modeling[.]”
In its opinion, the Third Circuit overturned the District Court and held that “the ADEA prohibits disparate impacts based on age, not forty-and-older identity.” Under the Third Circuit’s decision, a facially neutral policy that favors 40-year-olds over 50-year-olds could potentially expose an employer to a suit under the ADEA. Basing its decision on the Supreme Court’s ruling in O’Connor v. Consolidated Coin Caterers Corp., the court held that “[a] specific, facially neutral policy that significantly disfavors employees over fifty years old supports a claim of disparate impact under the plain text of [the ADEA]. Although the employer’s policy might favor younger members of the forty-and-over cohort, that is an ‘utterly irrelevant factor,’ in evaluating whether a company’s oldest employees were disproportionately affected because of their age.”