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In response to two U.S. Supreme Court decisions, the U.S. Equal Employment Opportunity Commission (EEOC) has released for public comment a proposed rule construing the “reasonable factor other than age” (RFOA) defense under the Age Discrimination in Employment Act (ADEA).

In Smith v. City of Jackson and Meacham v. Knolls Atomic Power Company, the Supreme Court held that the RFOA defense acts as a complete bar to disparate impact liability where an employer demonstrates that its facially neutral policy or practice, which had a disparate impact on older workers, was based on a reasonable factor other than the plaintiff’s age. Although the RFOA defense operates similarly to Title VII’s business necessity defense, this defense under the ADEA has traditionally been more “employer-friendly” because it preserves an employer’s right to make reasonable business decisions while protecting older workers from facially neutral employment criteria that arbitrarily limit their employment opportunities without requiring a showing of business necessity.

In what it describes as an effort to provide a more objective standard for determining whether an RFOA exists and clarify the scope of the defense, the EEOC seeks to revise paragraph 1625.7(b) of the existing regulations addressing the RFOA defense. Although the standard remains lower than Title VII’s business necessity defense, 1625.7(b)(1) makes it clear that the RFOA is not to be viewed under a “rational-basis” standard. Employers will be required to show that the challenged practice was reasonably designed to further or achieve a legitimate business purpose and was reasonably administered to achieve that purpose.

The EEOC proposes a “prudent employer” standard to determine whether or not an employer relied upon reasonable factors in making the challenged employment decision and included a list of non-exhaustive factors to consider, including: 

1. the commonality of the business practice used by the employer;
2. the manner in which the practice was administered;

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Posted by Brian Hall for Employer Law Report

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