Pension & Benefits News En banc court says ADEA provides no disparate impact claim for outside job applicants
Thursday, February 7, 2019

En banc court says ADEA provides no disparate impact claim for outside job applicants

By Pension and Benefits Editorial Staff

Departing from a prior panel decision, a divided Seventh Circuit held that the plain language of the ADEA protects employees from disparate impact age discrimination but does not extend the same protection to outside job applicants. Sitting en banc, the Seventh Circuit affirmed dismissal of an ADEA disparate impact claim by an attorney who was rejected for a senior inhouse counsel position under the employer’s seven-year experience cap. The majority found that the plain language of ADEA Section 4(a)(2), which refers to "status as an employee," made clear that Congress protected employees from disparate impact age discrimination but did not extend the same protection to outside job applicants. The court noted that its conclusion was reinforced by the ADEA’s broader structure and history. Judges Easterbrook and Hamilton each wrote dissenting opinions, with the latter joined by Judges Wood and Rovner.

Impact of seven-year experience cap. A 58-year-old attorney with significant experience applied for a senior counsel position with CareFusion, a health care products company. The job post stated the employer was seeking "a business person’s lawyer" and listed as a qualification, "three to seven years (no more than seven years) of relevant legal experience." The attorney did not get an interview, and a 29-year-old applicant was hired. Filing disparate treatment and disparate impact claims under ADEA Sections 4(a)(1) and 4(a)(2) respectively, the attorney claimed the seven-year experience cap was intended to weed out older applicants. Dismissing the disparate impact claim, the district court held that the ADEA provision did not cover outside job applicants. The attorney then voluntarily dismissed his disparate treatment claim and appealed.

Section 4(a)(2) and "status as an employee." ADEA Section 4(a)(2) makes it unlawful for an employer "to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age." 29 U.S.C. § 623(a)(2).

In Smith v. City of Jackson, a Supreme Court plurality held that Section 623(a)(2) prohibits practices that have a disparate impact on older employees. Thus, the question here was whether it also protects outside job applicants from such practices.

Prior panel decision. In an April 2018 ruling, a divided Seventh Circuit panel held that while the provision does not explicitly refer to job applicants or hiring, "its broad language easily reaches employment practices that hurt older job applicants as well as current employees." The panel found this in line with the ADEA’s purpose and 50 years of case law interpreting the ADEA and other statutes, including the Supreme Court’s reading of Title VII in Griggs v. Duke Power Co. Judge Bauer dissented, finding the "ordinary reading of the language" of Section 623(a)(2) showed that Congress intentionally excluded job applicants.

En banc court says no ADEA disparate impact claim. Granting en banc review, a majority of the Seventh Circuit affirmed the district court, holding that the plain language of Section 4(a)(2) makes clear that Congress protected employees, but not outside job applicants, from disparate impact age discrimination. The court pinpointed language proscribing actions depriving or tending to deprive "any individual of employment opportunities or otherwise adversely affect[ing] his status as an employee."

Plain language decides it. This language, said the court, "demonstrates that the requisite impact must befall an individual with ‘status as an employee.’ Put most simply, the reach of § 4(a)(2) does not extend to applicants for employment, as common dictionary definitions confirm that an applicant has no ‘status as an employee.’"

On even closer scrutiny, the court found that the phrase "or otherwise" in the catchall provision "serves to stitch the prohibitions and scope of § 4(a)(2) into a whole, first by making clear that the proscribed acts cover all conduct ‘otherwise affect[ing] his status as an employee,’ and, second, by limiting the reach of the statutory protection to an individual with ‘status as an employee.’" Though the plaintiff pinpointed the term "any individual" to argue that the section applied to job applicants too, the appeals court said that the section must be read as a whole, and doing so made clear that "any individual" was limited to someone with "status as an employee."

ADEA structure and history supports conclusion. Though the decision was grounded in plain language, the court further noted that it was reinforced by the ADEA’s broader structure and history. For one thing, the neighboring provision, 4(a)(1), made it unlawful to "fail or refuse to hire or to discharge any individual," indicating the conspicuous absence of "fail or refuse to hire" from 4(a)(2) was intended.

The appeals court also found the plaintiff’s reliance on Griggs, a Title VII case, misplaced. Nowhere in Griggs did the Court say its holding extended to job applicants, which made sense because the plaintiffs were employees. Moreover, the year after Griggs, Congress amended the Title VII provision at issue to add language expressly including "applicants for employment," and there would have been no need for that if the provision had always covered applicants.

"The Supreme Court endorsed this precise course of analysis," continued the appeals court, "giving effect to ‘Congress’s decision to amend Title VII’s relevant provisions but not make similar changes to the ADEA’ in Gross v. FBL Financial Servs., Inc.," where the Court held that an ADEA plaintiff must show age was the but-for cause of an adverse action. Gross teaches that you cannot ignore differences in language between the two enactments. And so it was here, said the court, that Congress’ choice to add "applicants" to Title VII but not to amend Section 4(a)(2) of the ADEA in the same way was meaningful.

Easterbrook dissent. In dissent, Judge Easterbrook opined that the ADEA lacks a plain meaning, comparing this situation to the Supreme Court’s decision in Robinson v. Shell Oil Corp. that the word "employees" in Title VII includes ex-employees. Here too, said Easterbrook, the judiciary must look outside one subsection to tell whether "individual" includes applicants. To Easterbrook, neither text nor purpose resolved the issue, so the court should stop with precedent in Griggs, which treated the word "individual" in Title VII as including job applicants.

Hamilton dissent. In the lengthiest of the judges’ analyses, Judge Hamilton, joined by Judges Wood and Rovner, explained in Part I that the statutory text was ambiguous, and the best reading of the disparate-impact provision is that it protects both outside job applicants and current employees. In Part II (also joined by Judge Easterbrook for this Part only), Judge Hamilton explained that protecting outside job applicants tracks the Supreme Court’s reading, in Griggs, of identical statutory language in Title VII. In Part III, Hamilton explained that protecting both outside applicants and current employees is also consistent with the purpose of the ADEA and "avoids drawing an utterly arbitrary line." Hamilton noted that neither the defendant nor the amici offered a plausible policy reason why Congress chose to allow disparate impact claims by current employees, including internal job applicants, while excluding outside job applicants.

SOURCE: Kleber v. CareFusion Corp., (CA-7), No. 17-1206, January 23, 2019.

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