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New EEOC Regulation Subject U.S. Employers to More Scrutiny

Seyfarth Shaw (03/30/12)

The U.S. Equal Employment Opportunity Commission has released new Age Discrimination in Employment Act regulations indicating increased scrutiny of employers seeking to downsize or otherwise lower employment-related costs, spelling out how actions that adversely affect older workers must be justified. The U.S. Supreme Court decision in the case of Smith v. City of Jackson (2005) stated that a “reasonable factor other than age” must be the reason for such an action, which the EEOC has expanded to require employers to show that such actions are both rational and reasonable in design.

The five factors that must be considered when determining whether an employer has acted “reasonably” are: “the extent to which the factor is related to the employer’s stated business purpose; the extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination; the extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes; the extent to which the employer assessed the adverse impact of its employment practice on older workers; and the degree of the harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.”

However, the EEOC says that the list is nonexhaustive but also that employers may not have to prove that they took all of the factors into consideration. Thus, it remains to be seen whether the regulations will be challenged in court and whether they will hold up, nor is it clear whether the regulations are retroactive and what employers must do to comply.