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.