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Age Discrimination

Adea Is Further Clarified

Several cases further clarified the application of the ADEA. In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S. Ct. 1647, 114 L. Ed. 2d 26 (1991), the Supreme Court upheld compulsory ARBITRATION under the ADEA. When Robert Gilmer was hired by Interstate/Johnson Lane Corporation, he was required to register with the New York Stock Exchange, which compelled him to agree to arbitrate any controversy regarding employment or termination. He was fired at age 62 and filed a complaint with the EEOC. He then filed an age discrimination suit against Interstate, which moved to compel arbitration of the dispute.

In a decision that seems to reflect the Court's growing encouragement of ALTERNATIVE DISPUTE RESOLUTION, Justice BYRON R. WHITE dismissed Gilmer's arguments that compulsory arbitration was inconsistent with the purposes of the ADEA and that he was in an unequal bargaining position with Interstate. The Court held that an ADEA claim can be subjected to compulsory arbitration without triggering any "inherent conflict" with the ADEA's underlying purposes. The Court further pointed out that Gilmer was a professional businessman who signed the arbitration agreement voluntarily and with full knowledge.

Federal and State Employees Stevens v. Department of the Treasury, 500 U.S. 1, 111 S. Ct. 1562, 114 L. Ed. 2d 1 (1991), clarified the statutory time limits for federal employees to file an age discrimination claim. Charles Z. Stevens III, an INTERNAL REVENUE SERVICE (IRS) employee, filed an age discrimination complaint with the IRS's administrative unit. His complaint was rejected because it had not been filed within 30 days of the alleged discriminatory conduct. His subsequent complaint filed with the TREASURY DEPARTMENT was also dismissed, and the EEOC affirmed that dismissal. Stevens filed suit in U.S. district court, only to have his suit dismissed on the ground that it was not timely, a decision that was affirmed by the U.S. Court of Appeals for the Fifth Circuit. The Supreme Court disagreed with the lower courts' interpretation of the statute and held that the ADEA requires federal employees to give the EEOC notice of intent to sue not less than 30 days before the suit is filed, rather than within 30 days, and within 180 days of the alleged discriminatory conduct. These small but significant clarifications of statutory interpretation made it easier for federal employees to seek redress under the ADEA.

The legal landscape for age discrimination complaints became more challenging for plaintiffs who work for state government after the Supreme Court decided Kimel v. Florida Board of Regents, 528 U.S. 62, 120 S.Ct. 631, 145 L.Ed.2d 522 (2000). In this case, a group of Florida university professors and librarians who were over 40 alleged that the university system had failed to adequately compensate them as compared to younger employees. The plaintiffs sued under the ADEA and a state CIVIL RIGHTS ACT.

The state of Florida, instead of litigating the merits of the lawsuit, challenged the constitutionality of the ADEA as applied to state governments. It argued that under the ELEVENTH AMENDMENT it was immune from federal age discrimination lawsuits. Prior court decisions had found that Congress had validly exercised its power under the Constitution's Article I COMMERCE CLAUSE to enact the ADEA. However, this power did not extend to lawsuits filed by private individuals. Instead, Congress could abrogate a state's SOVEREIGN IMMUNITY by invoking the FOURTEENTH AMENDMENT as its authority.

The Supreme Court concluded that Congress had not demonstrated that the Fourteenth Amendment authorized the application of the ADEA to state governments. States could lawfully discriminate on the basis of age if the discrimination is "rationally related to a legitimate state interest." In addition, the Court found no facts in the record to show that Congress needed to act against state governments for age discrimination. In light of this ruling, state employees must use state CIVIL RIGHTS laws involving age discrimination to press their claims.

Hazen Paper v. Biggins In 1993, the Supreme Court clarified the standards by which a business decision will be found to be a "pretext" for discrimination, and what conduct constitutes "willful" violation of the ADEA. In Hazen Paper Co. v. Biggins, 507 U.S. 604, 113 S. Ct. 1701, 123 L. Ed. 2d 338 (1993), a 62-year-old employee, Walter Biggins, sued his employer and its two owners, alleging age discrimination in the decision to fire him after almost ten years of employment. Biggins sought relief by claiming "disparate treatment" because of his age. In a claim of disparate treatment, the employee must prove that the employer intended to discriminate against the employee based on an impermissible criterion, his or her age. Biggins alleged that, since the firing occurred just weeks before his ten-year anniversary, when he would have been fully vested in the company's PENSION plan, the dismissal was due to his age. The company maintained that Biggins's outside activities created a risk of exposing trade secrets and that his refusal to sign a nondisclosure, noncompetition agreement prompted its decision to fire him.

The Supreme Court attempted to address several questions presented by the case. Did Biggins prove a case of disparate treatment based on age? Is discrimination based on pension status necessarily equivalent to discrimination based on age? What constitutes willfulness under the ADEA?

On the first issue, the Court found that the element of intent to discriminate because of age, necessary to prove a claim of disparate treatment, was absent. A decision to fire Biggins because he was close to vesting in the pension plan did not satisfy the proof requirements because it was not motivated by the prohibited presumptions about older workers, namely, that they are less productive and less competent than younger employees. Biggins failed to show that these stereotypes "had a determinative influence" on Hazen's decision.

Employers may not require the retirement of a worker unless they can demonstrate that the employee's age is relevant to the operation of the business.

Next, the Court found that Biggins did not prove that Hazen's reason for terminating him was a pretext for age discrimination. Justice SANDRA DAY O'CONNOR, writing for a unanimous Court, stated that "an employer does not violate the ADEA just by interfering with an older employee's pension benefits that would have vested by virtue of the employee's years of service." The Court found that pension status is not the same as age under the ADEA and that employers may make business decisions based on an employee's years of service without necessarily violating the ADEA. Biggins did prove that his firing was a pretext for discrimination because of his pension status. It did not follow, however, that he was fired because of his age. Age and pension status, according to the Court, are "analytically distinct" factors in determining a claim under the ADEA. The Court concluded that proof of discrimination based on an employee's pension status is not, absent further evidence, the legal equivalent of proof of discrimination based on age.

Addressing the question of whether Hazen acted willfully so as to incur LIQUIDATED DAMAGES under the ADEA, the Court reaffirmed its position that a violation is willful only if the employer knew or showed reckless disregard for whether its actions violated the act. Using this test, the employer will not incur liquidated damages if it makes an age-based decision that it believes, in GOOD FAITH and nonrecklessly, is permitted.

Biggins makes it more difficult for an ADEA plaintiff to prevail. The plaintiff must now show direct evidence of age discrimination. Indirect, empirical correlations, such as pensions and seniority, is not enough to prove the claim.

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