Can a company decide to lay off older employees who do not hold critical job skills and who are not flexible enough—they cannot easily train for other assignments—if the company does not include age in its deliberations? The theory of disparate impact from the Civil Rights Act of 1991 does prohibit adverse employment outcomes against individuals of only one race, color, religion, sex or national origin even when the business plan creating the adverse impact is neutral on its face. However, if the employer can show that the neutral factor was job related and a business necessity, it may use that factor for employment decisions, unless the employee can demonstrate an alternative strategy, which an employer can adopt to achieve the same business objective. For example, in Griggs v. Duke Power Co. (401 U.S. 424, 1971) the Supreme Court held that the company could not refuse to hire and promote individuals who happened to be African Americans to positions outside of its labor division because they did not hold high school diplomas and scored below a cutoff on an academic achievement test. The company failed to show that the diploma or test was a business necessity for positions in operations, maintenance or laboratory testing.

In Smith v. City of Jackson (544 U.S. 228, 2005) a precedent-setting plurality of the justices extended disparate-impact claims to include age—protecting workers older than 40—and reaffirmed that, “The employee is responsible for isolating and identifying the specific employment practices that are allegedly responsible for any statistical disparities” (Smith at 241 citing Wards Cove Packing Co. v Atonio, 490 U.S. at 656 [1989]). However, language in the Age Discrimination in Employment Act (1967) referred to as the RFOA clause (Reasonable Factors Other than Age) requires the employee to demonstrate by a preponderance of the evidence that the neutral factor was not an RFOA (Smith, 544 U.S. at 240 [following Wards Cove, 1989]).

Therefore, it was acceptable for the City of Jackson to award proportionally higher raises to younger workers based upon absence of seniority and job position in order to make junior police officers’ salaries competitive to retain the officers’ services for Jackson. First, the plaintiff failed to identify the specific employment practice that produced the adverse impact, and second, it was unable to show that using seniority to make its positions attractive in the marketplace was an unreasonable factor other than age.

Proving tests’ worth

Why should age be different from race, color, religion, sex or national origin? In Smith, Justice Stevens acknowledged that age is different because a person’s age is more likely to be relevant to the ability to carry out work assignments. Therefore, the Second Circuit upheld the Knolls Atomic Power Laboratory's (KAPL) layoff of workers who scored below a cutoff on a subjective measure of employee flexibility and critical skill evaluation, in Meacham v. Knolls Atomic Power Lab (461 F.3d 134, 2006). Even though 30 out of 31 laid-off employees were over the age of 40, the court held that the employees had failed to show that the employer’s use of “flexibility” and “criticality” dimensions in involuntary reduction in force plans were unreasonable. Testimony from an industrial/organizational psychologist about the appropriateness of these measures supported the defendant. It did not help the plaintiffs that they identified two alternative business plans, a hiring freeze and an expansion of KAPL's voluntary separation plan, because the Supreme Court in Smith did not include this component of the “business necessity” test in the RFOA analysis. In other words, identifying alternative business plans do not independently factor into the reasonableness test for allegations of age discrimination in disparate impact cases.

Psychology’s role

Following the Supreme Court's new structure for disparate impact analysis in cases of age discrimination, the key jury decision is whether the employee demonstrated that the neutral policy was reasonable. The Smith case opens the door for psychological research to determine how jurors assess reasonableness of neutral factors in age-discrimination cases. Currently, there is very little law to assist the courts in making this determination so that studies of jury decision-making in age disparate impact cases have the potential to offer influential information in the policy debate. Experimental psychologists can influence trial outcomes, court procedure and the courts' balancing business needs against employee rights in this exciting area of law.

Judicial Notebook is a project of APA's Div. 9 (Society for the Psychological Study of Social Issues).