decisionmaking process “are not capable of separation for analysis, the decisionmaking process may be analyzed as one employment practice.” 42 U.S.C. §2000e-2(k)(1)(B)(i)).
Second, the Court held that the ADEA statutory authorization for an employer to rely on “reasonable factors” other than age imposes a lower standard than the “business necessity” test used in Title VII. Indeed, in Smith v. City of Jackson, Mississippi, the Court found that an employer was entitled to summary judgment on claims that its pay increase plan had a disparate impact on employees older than 40 because the use of seniority and rank in order to raise employees’ salaries to make them competitive with surrounding communities was “reasonable.” The Court emphasized: “Unlike the business necessity test, which asks whether there are other ways for the employer to achieve its goals that do not result in a disparate impact on a protected class, the reasonableness inquiry includes no such requirement.”
On balance, the Smith decision provides greater protections for both employees (in those circuits which had rejected disparate impact claims) and employers, who benefit from the Court’s clearly holding that the use of “reasonable” factors other than age does not have to satisfy the business necessity test. However, there are substantial questions regarding the application and scope of the RFOA defense, including what criteria will be used to decide what factors other than age are reasonable.
While these uncertainties are being clarified by the federal courts, it is crucial for employers to take steps to protect their policies from disparate impact challenges. Existing policies should be evaluated to determine whether there is a risk of a disparate impact challenge, and, if there is, the reasons for adopting those policies should be reviewed. Before new policies are adopted, they should be evaluated for both their potential impact on older employees, and the business purposes for the policies should be documented.
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