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Legal Updates

EEOC Amends Regulations To Allow Employers To Favor Older Workers

The United States Equal Employment Opportunity Commission (“EEOC”) has amended its regulations to clarify that employers may favor older workers over younger ones, even when both groups of workers are over 40 and, thus, protected by the Age Discrimination in Employment Act (“ADEA”).

The EEOC’s new rule states:  “Favoring an older individual over a younger individual because of age is not unlawful discrimination under the ADEA, even if the younger individual is at least 40 years old.  However, the ADEA does not require employers to prefer older individuals and does not affect state, municipal, or local laws that prohibit such preferences.”

The impetus for the EEOC’s new rule is a 2004 decision of the United States Supreme Court, General Dynamics Land Systems, Inc. v. Cline.  In Cline, all employees of a particular employer were entitled to retiree health benefits pursuant to a collective bargaining agreement.  However, the collective bargaining agreement was renegotiated to provide retiree health benefits only to those employees who were age 50 or older by a specified date.  On that date, a group of approximately 200 workers who were in their 40s sued the employer for age discrimination under the ADEA.  By virtue of their age, these employees were old enough to be covered by the ADEA, which protects employees who are 40 and older, but too young to be entitled to the retiree health benefits provided under the collective bargaining agreement.

The question presented by Cline—whether the ADEA allows employers to give more favorable treatment to older protected workers than to younger ones—was straightforward.  However, the way the case traveled through the legal system shows that the answer to this question was far from clear.  The case was filed with the EEOC, which agreed with the employees that the new collective bargaining agreement violated the ADEA.  When the case failed to settle, the employees filed suit in the U.S. District Court for the Northern District of Ohio.  Disagreeing with the EEOC, the court held that the ADEA does not prohibit “reverse age discrimination” and dismissed the case.  The employees appealed to the U.S. Court of Appeals for the Sixth Circuit.  The Sixth Circuit reversed the District Court decision, concluding that the ADEA protects all employees 40 and older against age discrimination, not just the older against the younger.  The U.S. Supreme Court granted the employer’s petition to review the case and decided that the Sixth Circuit was mistaken.  In a 6-3 decision, the Court determined that the ADEA’s text, structure, purpose, history and relationship to other laws show that Congress did, in fact, intend to permit favoritism of this kind for the benefit of relatively older workers.  The EEOC’s new rule brings its regulations in line with Cline and provides important clarity to those who file charges with the EEOC.

That said, employers interested in pursuing plans that may favor older protected employees relative to their younger counterparts—plans that are permitted by Cline and the EEOC’s new regulations – must consider their potential liability under the laws of the states, municipalities and localities where they do business.  In Massachusetts, for example, the courts often follow cases interpreting the ADEA when interpreting the state anti-discrimination law, but this is not required, and the specific issue addressed in Cline and the new EEOC regulations has yet to be addressed.  This raises the possibility of complying with federal law but violating state law, which may prove to be just as costly, or even more costly, to the employer.  Of course, this issue is particularly acute for employers that operate in multiple states and localities.

Please feel free to contact us if you have questions about your compliance obligations under federal, state and local anti-discrimination laws or if you would like to discuss the impact of the new EEOC regulations on your business practices and goals.