Corporate Reorganizations, Job Layoffs, and Age Discrimination: Has Smith v. City of Jackson Substantially Expanded the Rights of Older Workers Under the ADEA?

Abstract

The costs associated with wages and employee benefits make employees at the higher end of the wage scale, or who receive greater pension or health care benefits, attractive targets during corporate reorganizations and downsizing. Because such costs are often correlated with age, older workers can bear a disproportionate burden when companies trim their workforces or otherwise act to increase efficiencies or reduce expenses. Many older workers who have been adversely affected by such cost-conscience initiatives have sued their employers on a disparate-impact theory under the Age Discrimination in Employment Act. Under a disparate-impact theory, plaintiffs need not prove that their employers intend to discriminate; instead, they need only prove that a facially neutral policy or procedure has an adverse impact on certain “protected” groups that is not job related or justified by business necessity. Until 2005, however, the federal courts were split on the issue of whether the theory was available under the ADEA. In Smith v. City of Jackson, the Supreme Court settled the question: older workers may sue their employers under a disparate-impact theory under the ADEA. Although Smith thus provided older workers with a potential new weapon against age discrimination, the victory was pyrrhic at best. As the Court emphasized in its opinion, the ADEA contains a defense that is not contained in other civil rights laws, such as Title VII of the Civil Rights Act of 1964. The ADEA expressly permits employers to take otherwise prohibited actions when they act on a “reasonable factor other than age.” This article examines the impact of Smith, and particularly the Court’s emphasis on the “RFOA” provision, and argues that the ADEA still does not protect older workers from the harsh consequences of economically motivated employment decisions.

Keywords: Age Discrimination, ADEA, Smith V. City Of Jackson, Employment Discrimination, Disparate-Impact Theory, Employee Rights, Civil Rights Act, Labor Laws