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EEOC final ADEA rule lists RFOA considerations for determining defense, but clarifies they are not elements

The U.S. Equal Employment Opportunity Commission’s (EEOC) final regulation setting forth the “reasonable factors other than age” (RFOA) defense in disparate impact cases brought under the Age Discrimination in Employment Act (ADEA) clarifies that the “reasonable factors” are not required elements of the defense. Rather they are considerations “manifestly relevant to determining whether an employer demonstrates the RFOA defense,” according to the commission. The long-awaited final rule, Disparate Impact and Reasonable Factors Other Than Age Under the Age Discrimination in Employment Act, will be published in the federal register on March 30 — it is effective 30 days later.

Proposed rulemaking. The final rule conforms the EEOC’s regulations to recent Supreme Court decisions regarding disparate impact claims and takes into account comments offered in response to two prior proposed rulemakings. In Smith v City of Jackson, the Court found disparate impact claims cognizable under the ADEA, but held there is no liability when the impact is due to reasonable factors other than age. The EEOC issued a proposed rule on March 31, 2008 (73 FR 16807), that would revise 29 CFR 1625(d) to state that an employment practice that has an age-based adverse impact on individuals within the protected age group is discriminatory unless justified by a “reasonable factor other than age,” and that the individual challenging the practice has the burden of isolating and identifying the particular practice responsible for the adverse impact. The proposed rule would also revise Sec. 1625.7(e) to state that the employer has the burden of showing that a reasonable factor other than age exists factually. In Meacham v. Knolls Atomic Power Lab, the Court held, consistent with the commission’s position, that the employer carries the burden of persuasion on the RFOA defense.

The final rule re-designates 29 CFR 1625(d) as 29 CFR 1625(c), and Sec. 1625.7(e) as Sec. 1625.7(d), retaining the substantive language of the proposed rule.

The commission published a second proposed rule on February 18, 2010 (75 FR 7212), which, addressing the meaning of “reasonable factors other than age,” would revise Sec. 1625.7(b) to state that RFOA determination was based on the facts and circumstances of the particular situation. It also defined a “reasonable factor” as objectively reasonable when viewed from the position of a reasonable employer in like circumstances; stated that the RFOA defense is only available when the challenged practice is not age-based; and provided a non-exhaustive list of factors relevant in determining whether an employment practice is reasonable and whether a factor is “other than age.”

In response to comments, the EEOC made some changes to the proposed rule for Sec. 1625.7(b), including a clarification that the listed “factors are not required elements or duties, but considerations that are manifestly relevant to determining whether an employer demonstrates the RFOA defense.”

RFOA determination. The final rules revises the ADEA regulations at Secs. 1625(b) through (e). Section 1625(e)(1) provides that a reasonable factor other than age is one that “is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances.” The question of whether a differentiation is based on a non-age factor “must be decided on the basis of all the particular facts and circumstances surrounding each individual situation.”

To successfully assert the RFOA defense under the final rule, “an employer must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer.”

Of particular interest to employers, is the non-exhaustive list of considerations set forth in the final rule at Sec. 1625(e)(2) that may be taken into account to determine whether an employment practice is based on a reasonable factor other than age:

  • 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.

Additional information. For further information on the commission’s final rule, contact EEOC Attorney-Advisors Dianna B. Johnston, Aaron Konopasky, or Davis L. Kim at (202) 663-4640 (voice) or (202) 663-7026 (TTY).