TO: Business Leader

FROM: John J. Ferriter, Esquire

DATE: May 25, 2005

RE: Disparate Impact Cases ______________________________________________________________________________

The Supreme Court has now held that the ADEA authorizes recovery in disparate impact cases. Smith v. City of Jackson, No. 03-1160 (U.S. Mar. 30, 2005). Although noting that such actions are generally authorized, the Court held that the employees in the case before it did not set forth a valid disparate impact claim. The question in the minds of many experts is whether the decision is really a pro-employee victory, or whether the ruling presents no more than a theoretical recognition of age-based disparate impact claims.

According to the Court, two textual differences between the ADEA and Title VII make clear that the disparate impact theory?s scope is narrower under the ADEA than under Title VII. First, unlike Title VII, 4(f)(1) of the ADEA significantly narrows its coverage by permitting any ?otherwise prohibited? action ?where the differentiation is based on reasonable factors other than age [referred to as the RFOA provision].? The second difference involves the amendment to Title VII in the Civil Rights Act of 1991, which modified the Court?s ruling in Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989), that narrowly construed the scope of liability on a disparate impact theory. Because the relevant 1991 amendment expand Title VII?s coverage, but did not amend the ADEA or speak to age discrimination, Wards Cove?s pre-1991 interpretation of Title VII?s identical language remains applicable to the ADEA. Congress?s decision to limit the ADEA?s coverage by including the RFOA provision is consistent with the fact that age, unlike Title VII?s protected classifications, not uncommonly has relevance to an individual?s capacity to engage in certain types of employment.

 In the case before it, the Court held that the employees had done little more than point out that the pay plan was relatively less generous to older workers than to younger ones. They did not, as required by Wards Cove, identify any specific test, requirement, or practice within the pay plan that had an adverse impact on older workers. Further, based on the record before it, the Court concluded that the City?s plan was based on reasonable factors other than age. The City?s explanation for the differential between older and younger workers was its perceived need to make junior officers? salaries competitive with comparable positions in the market. Thus, the disparate impact was attributable to City?s decision to give raises based on seniority and position. Reliance on these factors, the Court held, was unquestionably reasonable given the City?s goal.

Although the press has hailed the decision as a victory for employees, it is open to question as to whether many employees will succeed on the type of claim recognized by the Supreme Court. Nevertheless, the decision is certain to increase the number of lawsuits against employers.

If you have any questions, please feel free to call Jack Ferriter at 413-535-4200 or email at jferriter@ferriter.com.