United States: Supreme Court Allows "Disparate Impact" Lawsuits but Severely Limits Plaintiffs’ Ability to Succeed in Such Suits

In Smith v. City of Jackson, Mississippi, decided March 30, 2005, the U.S Supreme Court held that "disparate impact" lawsuits are viable under the Age Discrimination in Employment Act (ADEA) as they have long been for race, national origin and sex discrimination claims under Title VII of the Civil Rights Act of 1964 (Title VII). However, the court also made it much more difficult for plaintiffs to win disparate impact age discrimination claims in comparison to disparate impact sex, race or national origin claims.

A disparate impact case is one in which a plaintiff alleges that an employer’s policy, practice or job requirement, which on its face does not mention a discriminatory factor such as age, race or sex, nonetheless has a disparate statistical impact on a particular protected category of individuals. In a disparate impact case, it is irrelevant whether the employer did or did not intend to discriminate against the disparately impacted group. Traditionally, in race, sex and national origin disparate impact cases, once a plaintiff proves that a particular policy, procedure or job requirement has a disparate impact on a protected category of employees, the employer can only win if it shows that the policy, procedure or job requirement is a "business necessity"—that is, it is vital to the employer’s business and there is no alternative policy, procedure or job requirement that would achieve the vital business objective without disparately impacting the protected category of individuals.

Examples of traditional sex, race and national origin disparate impact cases under Title VII are lifting requirements for firefighters (which disparately impact women, who often are physically weaker than men), height and weight requirements for police officers (which disparately impact women and certain ethnic groups, such as Asians, who tend to be smaller) and no beard policies for store clerks (which disparately impact African-American men, who often have a skin condition that is inflamed by shaving). In these situations, the employer must show that it is a business necessity that an employee satisfy the disputed job requirement in question and that no alternative exists that will not disparately impact the particular protected group of individuals. In the case of firefighters, who often are required to carry adults down ladders in the event of a fire, lifting requirements have been upheld. With regard to store clerks, courts often have found that the grooming requirement is not a business necessity, as such requirement does not go to the core functions of the job.

In the area of age discrimination, which is governed by the ADEA, the lower federal courts had been split over whether a disparate impact claim could be brought under the ADEA. In Smith, the Supreme Court resolved this issue by holding that the ADEA allows for disparate impact claims. In doing so, however, the court severely limited plaintiffs’ ability to win such suits. In particular, the court held that age discrimination plaintiffs who allege a disparate impact must show that a particular policy, procedure or job requirement disparately impacts older employees but, as opposed to Title VII’s "business necessity defense," an employer in a disparate impact age discrimination case will win merely if it shows that the policy, procedure or job requirement in question is based on any "reasonable factor other than age." Additionally, as opposed to Title VII, where the employer must show that there is no alternative measure that will satisfy the business necessity, the fact that alternatives are available to the employer in a disparate impact age discrimination case is irrelevant as long as the measure in question is based on a reasonable factor other than age.

The Smith case itself indicates how difficult bringing a disparate impact age discrimination case is for plaintiffs. In Smith, the City of Jackson, Mississippi instituted a policy whereby a larger wage increase was given to police officers with less than five years seniority, and this policy disparately impacted older police officers who typically have more seniority than younger officers. In dismissing the case, the Supreme Court held that the plaintiff police officers did not identify any specific "test, requirement or practice" within the wage policy that disparately impacted older workers and that, in any event, the City provided a reasonable basis other than age for its actions—that is, there was a need to make junior positions more financially competitive with comparable positions in the marketplace.

Thus, in the wake of the Smith decision, even assuming a plaintiff can show that a particular employer policy or job requirement adversely impacts older workers, an employer easily can defeat such a case merely by showing that the policy or requirement is based on a reasonable factor other than age. This is a very easy standard for employers to meet. For example, if an employer seeking to cut costs lays off higher paid employees (who tend to be older) or offers higher salaries to newly hired employees (who tend to be younger) in order to recruit in a difficult job market, such practice should be found by the courts to be based on a reasonable factor other than age and, thus, the employer should prevail. Accordingly, employers should not be alarmed by the Smith decision, as it only will subject an employer to liability if the employer institutes policies or job requirements that have no reasonable basis and, in fact, disparately impact older employees.

It also is important to remember that statistical imbalances are evidence of intentional discrimination. Thus, for years, prudent employers have monitored statistical imbalances in hiring, promotions, lay offs and the like, as plaintiffs long have been allowed to argue that such statistics, especially in combination with other evidence, can show an intent to discriminate.

The long and short of Smith is that it is not cause for great concern by employers. Rather, in response to Smith, employers should remain cognizant of policies, job requirements and the like that would tend to disparately impact older workers and be sure that such policies and requirements have a "reasonable" basis other than age.

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