Third Circuit Extends Disparate Impact Claims Under the ADEA to Subgroups

On January 10, 2017, the Third Circuit, in Karlo v. Pittsburgh Glass Works, LLC, No. 15-3435 (3d Cir.), extended the score of claims of discrimination under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621, et seq., to groups of persons all over the age of 40.  Historically, the protected group has been defined as employees over the age of 40.  The Third Circuit now says that employees aged 50 and older can be discriminated against where they were terminated, pursuant to a reduction in force, which favored employees over 40 but under 50 years old.

Normally, a plaintiff can establish a claim under the ADEA by showing either that an employer’s policy explicitly discriminates against employees over the age of 40, or by showing that an otherwise neutral policy disparately impacts employees over the age of 40.  The Third Circuit now stated that the ADEA “simply establishes ‘the age at which ADEA protection begins.’  The appropriate disparate impact statistics should be guided by the trait protected by the statute, not the population of employees inside or outside the statute’s general scope.”  In other words, the Third Circuit held that the ADEA protects employees 40-years-old and older against discrimination favoring any other age group, without regard for the age of the favored group.  The Third Circuit acknowledged that its decision is at odds with decisions from the Second, Sixth and Eighth Circuit Courts of Appeals.  Those Circuits previously ruled that sub-groups over 40 could not make out claims of disparate impact against other employees who were also above the age of 40.

Allowing such claims raises the issue that plaintiffs will be able to more easily prove age discrimination claims, by allowing over-40 employees to define a sub-group conveniently based on statistical evidence.  This ruling also will make it more difficult for employers to impose workforce reductions because employers will now have to consider the impact of previously neutral policies on every possible age-group of employees.  It is difficult determine if this ruling will be extended to other ADEA analysis – or statues protecting against other forms of discrimination.