5/30/08: NTEU today called on the Equal Employment Opportunity Commission (EEOC) to establish regulations that guard against arbitrary management decisions leading to discrimination based on age under the Age Discrimination in Employment Act (ADEA), particularly in alternative pay systems.

The NTEU recommendations were submitted to the EEOC in response to a Federal Register notice that, pursuant to a Supreme Court decision, the commission is proposing to revise its regulations governing the burden of proof for disparate impact claims made under the ADEA. Such claims are made under the law where an employment practice has the effect of discriminating against older employees, whether or not the employer intends to discriminate.

“This is a very important matter impacting the rights of federal employees to be treated fairly,” said NTEU President Colleen M. Kelley. “It is vital that EEOC regulations reflect an expansive view of critical employee protections.”

In 2006, the Supreme Court ruled essentially that any employment practice that has a disparate impact against older workers is discriminatory unless the practice is justified by what it called a ‘reasonable factor other than age.’ The EEOC, which sought comments from interested parties on the meaning of that phrase, has been applying a ‘business necessity’ standard in these kinds of cases.

NTEU has significant experience with disparate impact issues, including at the SEC and the Federal Deposit Insurance Corporation. Last year, NTEU won a major arbitration decision declaring the merit system pay at the SEC illegal because of its disparate impact on various groups of employees, including older workers.

An arbitrator ruled that the unilaterally-implemented SEC merit pay system based on subjective, generic criteria violated not only the ADEA but Title VII of the Civil Rights Act as well. He agreed with NTEU that the subjective and discretionary program discriminated against African- American employees above grade 8 as well as employees age 40 and older at all grades. That NTEU grievance covered 2003; additional pending grievances cover 2004 through 2007.

In its comments to the EEOC, NTEU argued that in order to successfully demonstrate that reasonable factors other than age are responsible for the disparate effects of subjective pay systems, employers should be required to demonstrate that the standards for awarding pay increases are as objective and job-related as possible and that there are substantial safeguards in place against arbitrary decision-making.

These are among NTEU’s specific recommendations for inclusion in the final regulations:

• “The most sensible definition” of reasonable factor other than age is that a practice which discriminates against older employees must be objectively reasonable when viewed from the standpoint of a reasonable employer;
• To be such an employer, an agency must demonstrate that the practice at issue was designed to further the employer’s legitimate business-related goal, and that the means used are reasonably likely to meet that objective;
• The employer must show that managers responsible for making pay decisions have received adequate training and guidance on the application of subjective standards; that it has effective procedures in place for reviewing management decisions; and that it has carefully monitored how pay increases are allocated.