Third Circuit Allows Subgroup Disparate-Impact Age Discrimination Claims

Is 50 the new 40 in age discrimination disparate-impact claims?

It’s been a little more than a year since the Third Circuit decided Karlo v. Pittsburgh Glass Works. In Karlo, a subgroup of employees age 50 or older alleged age discrimination in favor of younger employees who were age 40 or older – and thus also within the class of employees protected by the Age Discrimination in Employment Act (ADEA).

What is a subgroup disparate-impact claim?

In addition to prohibiting intentional discrimination against older workers (“disparate treatment”), the ADEA prohibits facially neutral practices that harm older workers more than younger workers (“disparate-impact“), unless the employer can show that the practice is based on “reasonable factors other than age.”

A so-called “subgroup disparate-impact” claim alleges age discrimination against older workers, even though the majority of workers retained after a layoff are over 40. In other words, a “subgroup” of employees over the age of 50, within the protected class of workers over the age of 40, may claim that a reduction-in-force disproportionately impacted them due to their age.

Why is the Karlo case important?

In deciding Karlo, the Third Circuit allowed subgroup disparate-impact claims to proceed in the states under its jurisdiction, including New Jersey and Pennsylvania (as well as Delaware and the U.S. Virgin Islands).

In recognizing 50-and-older disparate-impact claims, the circuit court in Karlo relied on the United States Supreme Court decision in O’Connor v. Consolidated Coin Caterers Corp., which involved an ADEA disparate-treatment case. The plaintiff in O’Connor was 56 years old when he was fired and replaced with a younger worker, who was over 40. The Supreme Court held that the ADEA prohibits age discrimination – not 40 years old-and-over discrimination. An ADEA disparate-treatment claim therefore does not require that the older worker be replaced by a worker younger than 40 years of age.

The disparate-treatment and disparate-impact provisions in the ADEA use the same operative phrase, “because of such individual’s age.” Therefore, the Third Circuit in Karlo applied the Supreme Court’s interpretation of the ADEA’s disparate-treatment provision to the ADEA’s disparate-impact provision, finding subgroup disparate-impact claims are cognizable.

Pursuing a subgroup disparate-impact claim after Karlo

Under Karlo, a “specific, facially neutral policy that significantly disfavors employees over fifty years old supports a claim of disparate impact” under the ADEA.

Expert evidence, including statistical evidence, may be admitted to show that an employer’s action or policy creates a disparate impact “because of the individual’s age” by favoring younger members of the protected class and disfavoring employees older than 50.

Courts are beginning to grapple with the implications of Karlo on subgroup disparate-impact claims. The takeaway is that, in New Jersey and Pennsylvania, if employees over the age of 50 are disproportionately impacted by an employer’s policy or action in relation to younger employees, even if some of those employees are over the age of 40, a claim for age discrimination may be actionable. A claim may be brought if a worker 50-years-old or older is replaced by a worker who is 40-years-old or older.

Other statutes also protect older workers, including the Older Workers Benefit Protection Act (OWBPA), which will be discussed in a subsequent post.

What should you do if your employment is affected by a policy or action that impacts older workers?

If you believe that you may have been affected by an employment action or policy that has a disparate impact on older workers, it is crucial to contact an experienced employment lawyer. Murphy Law Group focuses exclusively on employment law and representing employees in Pennsylvania and New Jersey. Email us at murphy@phillyemploymentlawyer.com or call (267) 273-1054 for a free consultation.