EEOC Passes Draft Final Rule on ADEA Reasonable Factors Other than Age Defense

Wednesday, December 21, 2011

On November 16, the Equal Employment Opportunity Commission (EEOC) passed a draft final rule that limits employer defenses in age discrimination cases.  Passed by a 3-2 vote, the rule could make it easier for older workers to prosecute disparate impact lawsuits by removing an employer’s “business necessity” defense from the Age Discrimination in Employment Act (ADEA).  

In particular, the rule eliminates business necessity from the ADEA’s “reasonable factors other than age” defense.  In its place, the EEOC will apply a general reasonability standard borrowed from tort law.  Under the reasonability standard, the EEOC will look at an employer’s entire decision-making process, rather than a particular factor like business necessity, to evaluate an employer’s policy. 

The Commission drafted the new rule to make EEOC regulations consistent with Supreme Court opinions in Smith v. City of Jackson, 544 U.S. 228 (2005) andMeacham v. Knolls Atomic Power Laboratory, 554 U.S. 84 (2008).  In these cases, the Supreme Court held that the “business necessity” defense has no role in ADEA disparate impact cases.

Before the rule takes effect, the regulation must be reviewed by the White House Office of Management and Budget (OMB).  The OMB review process takes approximately 90 days.  During the review, the OMB’s Office of Information and Regulatory Affairs (OIRA) will conduct a cost-benefit analysis of the regulation.  Interested parties can communicate their views on the regulation to OIRA by setting up a meeting with OIRA or by submitting written comments to the Administrator via fax at (202) 395-7245.  If the OMB approves the rule, the EEOC then must pass the final version of the rule before it becomes effective. 

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