4/16/10: NTEU has submitted comments to the Equal Employment Opportunity Commission (EEOC) on proposed regulations clarifying the meaning of a defense in certain cases brought under the Age Discrimination in Employment Act (ADEA). Disparate impact claims are made under the ADEA when an employment practice has the effect of discriminating against older employees, whether intentional or not. To avoid liability for disparate impact discrimination, an employer must show that the disproportionately adverse effect on older employees is the result of “reasonable factors other than age” (RFOA). The EEOC’s proposed regulations clarify the meaning of the RFOA defense and address how it should be applied.

As noted in a May 30, 2008 chapter presidents’ memo, NTEU is particularly interested in the EEOC’s proposed ADEA regulations because of our concern about how the RFOA defense is applied to cases involving so-called “pay-for-performance” programs. Indeed, NTEU submitted comments to the EEOC in May 2008 to express our concern that, in the Union’s experience, older employees are often disadvantaged under such subjective systems.

We support the EEOC’s efforts in its proposed regulations to develop relevant factors that should be considered in deciding whether the RFOA defense has been established. We agree with the EEOC that such factors must be viewed objectively from the perspective of a “reasonable employer,” i.e., a prudent employer mindful of its responsibilities under the law. We further agree that a two-pronged test must be used to determine whether an employment practice is an objectively reasonable one. First, the employer must demonstrate that the employment practice was reasonably designed to further or achieve a legitimate business purpose. Second, the employer must show that the means used to achieve that goal are objectively reasonable. In NTEU’s view, this is a sensible approach to ensuring that employers develop and administer employment practices that conform to their obligations under discrimination law.

In response to the concerns expressed by NTEU in May 2008, the EEOC has also proposed regulations that specifically address the use of the RFOA defense in the context of subjective employment practices. The preface to the proposed regulations explicitly discusses issues that arise when employers give supervisors unchecked discretion to make subjective decisions. We applaud the EEOC for this response to NTEU’s concerns and wholeheartedly endorse the adoption of these proposed regulations. We also support strongly EEOC’s proposal identifying a list of factors relevant in determining whether the subjective means by which an employer achieves the legitimate goals of its system are reasonable. In particular, we endorse consideration of the extent to which supervisors are given guidance or training about how to administer the system in a nondiscriminatory manner.

In sum, NTEU supports the EEOC’s proposed regulations concerning the definition and application of the RFOA defense under the ADEA. The EEOC is required by law to evaluate all comments before promulgating final versions of amended regulations. We will keep you posted on developments in this regulatory process.