High Court Rules Employers Can Discriminate Against Younger Workers

Thursday, April 1, 2004 - 01:00


Summary


Most people assume that the Age Discrimination in Employment Act protects older workers from discrimination in favor of younger workers.But it was just a matter of time before younger workers went to the United States Supreme Court complaining of "reverse" age discrimination because their employer conferred a special benefit upon older employees.That is precisely what happened at General Dynamics, when a collective bargaining agreement eliminated that employer's long-standing obligation to provide health benefits to retired employees, yet retained the benefits for current employees who were 50 or older.


In a six to three decision issued on February 24, the Supreme Court held that the Age Discrimination in Employment Act does not prohibit treating older workers more favorably and, as such, reverse age discrimination lawsuits cannot be brought under the ADEA.General Dynamics Land Systems Inc. v. Dennis Cline et al., 02-1080 U.S. (2004).

Discussion


In 1997, General Dynamics and the United Auto Workers negotiated a new collective bargaining agreement that no longer required the company to provide full health benefits to retired workers who accumulated 30 years of seniority.An exception was carved out for current employees who were at least 50 years old and had been with the company for at least 30 years as of July 1, 1997.They would still receive the health benefits upon retirement.


Dennis Cline and 195 other General Dynamics employees between the ages of 40 and 49 sued for reverse age discrimination.The employees argued that they were denied a privilege of employment solely on account of their age, in violation of the ADEA.Cline's position was particularly compelling because he had been with the company for 34 years, and was 48 years old at the time that he was permanently excluded from receiving health benefits upon retirement.


The Equal Employment Opportunity Commission agreed with the employees.The EEOC advocated the position that it took in 1981 when it adopted a regulation that reads, in relevant part, as follows:"It is unlawful in situations where this Act applies, for an employer to discriminate in hiring or in any other way by giving preference because of age between individuals 40 and over.Thus, if two people apply for the same position, and one is 42 and the other is 52, the employer may not lawfully turn down either one on the basis of age, but must make such decision on the basis of some other factor." 29 C.F.R. §1625.2(a) (2003).


The District Court for the Northern District of Ohio agreed with the EEOC and dismissed the lawsuit, stating that no court had ever granted relief under the ADEA for reverse age discrimination.The District Court held that the ADEA was designed to protect older workers who were discriminated against in favor of younger workers, and not to protect workers over 40 who were treated differently because they were young relative to their counterparts in the protected class.


In a divided panel decision, the Sixth Circuit reversed the District Court's ruling and held that reverse discrimination was actionable under the ADEA.The Sixth Circuit relied upon the plain language of Section 623(a)(1) of the ADEA, which prohibits discrimination of "any individual . . . because of such individual's age." The court reasoned that the statute is unambiguous, and if Congress had meant to protect only older workers relative to younger workers in the protected class, the legislation would have said so.


The Supreme Court reversed the Sixth Circuit, finding that the ADEA was designed to protect workers over 40 from discrimination because they are old relative to other workers.In an opinion drafted by Justice David Souter, who was joined by Chief Justice William Rehnquist and Justices John Paul Stevens, Sandra Day O'Connor, Ruth Bader Ginsburg and Stephen Breyer, the Court held that the ADEA does not prohibit an employer from favoring an older employee over a younger one.


The Court first looked to the history and purpose of the ADEA.It noted that the statute was enacted based on a 1965 study by then-Secretary of Labor Willard Wirtz, who concluded that age discrimination was a serious problem, albeit different from other kinds of discrimination covered by Title VII.Because there are legitimate economic reasons for preferring younger workers (for instance, the costs of employing older workers are higher), the ADEA's objectives are different from those of Title VII.Instead of intending to wipe out all discrimination based on age, the ADEA's goals are "to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment."


The majority opinion observed that all of the ADEA's findings and statements of objectives, with one limited exception, focus on the growing effects of age discrimination on individuals as they become older.It therefore concluded that the purpose of the ADEA was to protect older workers from discrimination that works to the advantage of relatively young workers.With the exception of the Sixth Circuit, all other courts of appeal and district courts that have considered this issue have interpreted the law in the same manner.


The Supreme Court rejected each of the arguments proffered by Cline and the EEOC.It first addressed the argument that the statute's plain language protects all workers over 40 from age discrimination, regardless of their relative age.The Court noted that the word "age" is used differently in the ADEA - sometimes referring to the years a person has lived, and elsewhere referring to advanced years.Thus, the majority concluded that the Court was bound to read the statutory language in context.It determined that when the word "age" is coupled with the word "discrimination" it refers to discrimination that hurts older people relative to younger ones.


The Court then addressed the argument that the ADEA's intent to prohibit all forms of age discrimination is evident in comments made at a Senate hearing on the ADEA by Senator Ralph W. Yarborough, a sponsor of the statute.Yarborough stated that "[t]he law prohibits age being a factor in the decision to hire, as to one age over the other, whichever way [the] decision went." While the Supreme Court had previously given weight to Senator Yarborough's views on the ADEA because he was a sponsor, it declined to do so in this case, stating that his comments were "not enough to unsettle our reading of the statute . . . What matters is that the Senator's remark . . . is the only item in all the 1967 hearings, reports and debates going against the grain of the common understanding of age discrimination."


Finally, the Court rejected the argument that it should give deference to the EEOC'sinterpretation of the ADEA.It stated simply that the EEOC's position was "clearly wrong."


Justice Thomas, joined by Justice Kennedy, wrote a detailed dissenting opinion.Thomas, the former head of the EEOC, argued that the plain language of the ADEA supports Cline's and the EEOC's position.He reasoned that "[t]he phrase 'discriminate . . . because of such individual's age,' 29 U.S.C. § 623(a)(1), is not restricted to discrimination because of relatively older age." He then concluded that his reading of the ADEA is supported by the EEOC's interpretation of the Act, as well as the comment made by Senator Yarborough in the 1967 hearings.


A major thrust of Thomas' dissent is that the Court's decision conflicts with many prior Supreme Court decisions permitting reverse discrimination claims under Title VII, even though such lawsuits were clearly not contemplated by Congress when it enacted Title VII.Thomas stated that, in light of this irreconcilable conflict, the majority's opinion suggests "the Court has been treading down the wrong path with respect to Title VII since at least 1976," when it decided McDonald v. Santa Fe Trail Transp. Co., 427 U.S. 273.


Thomas argued that the McDonald decision, which held that Title VII prohibits reverse race discrimination, is contrary to the majority's decision in General Dynamics.In McDonald, the Supreme Court relied on the broad language of Title VII to support its view that the statute prohibits the discharge of "any individual" because of his or her race.The Court also relied upon the EEOC's interpretation of Title VII as "not limited to discrimination against members of any particular race."Because the General Dynamics majority took a different approach - rejecting both the argument that the ADEA was designed to protect against all forms of age discrimination and the EEOC's interpretation of the ADEA - Thomas concluded that the majority's view runs afoul of the McDonald decision.


Justice Scalia also filed a short dissenting opinion, criticizing the majority for brushing aside the EEOC's decision.

Conclusion


The General Dynamics decision confirms that employers will not run afoul of the ADEA if they favor older employees over younger ones.However, it is important to keep in mind that some states have their own anti-discrimination laws which include age as a protected category.While the General Dynamics decision will offer guidance to state courts, it may not necessarily be determinative where state age discrimination laws differ from the ADEA. Statutes that are more broadly worded than the ADEA are more likely to support a reverse age discrimination claim than the ADEA, and to result in a different outcome than the General Dynamics case.


In order to avoid violating state anti-discrimination laws, companies should fully assess relevant state laws before creating new policies or embarking upon programs that favor older employees.

Julia Lapis Blakeslee is a labor and employment law associate who focuses her practice on discrimination, wage and hour, wrongful termination, labor unions, and breach of contract claims in the Los Angeles office of Winston & Strawn LLP.

Please email the author at jblakeslee@winston.com with questions about this article.