Bullying versus harassment

It is generally agreed that the anti-discrimination laws do not create a general code of workplace civility. Employees are generally expected to endure the usual tribulations of the workplace, such as the sporadic use of abusive language, offhand comments or jokes, occasional or simple teasing, normally petty slights, minor annoyances, and the simple lack of good manners. Harassing conduct is only actionable if it is objectively and subjectively severe or pervasive so as to alter the terms and conditions of one’s employment.

In light of this standard, consider the following set of facts, which arose in Hidy Motors, Inc. v. Sheaffer (Ohio Ct. App. 7/31/90), an age harassment claim brought by a 67-year-old car salesman:

• When the general manager would walk behind Sheaffer he would repeatedly say, “Come on old man, pick up your feet.”
• After Sheaffer told the general manager that a couple wanted to go home and think about buying a car, the general manager told him, “Come on old man, get your f****** head out of your f****** ass and go out there and slam them.”
• Referring to Sheaffer, the general manager directed another sales person to help the “old man” close a deal.
• In discussing a disagreement over a sales bonus, the general manager told Sheaffer, “Old man, I don’t give a f*** what you think. That’s the way it is going to be.”
• After a child spilled some water on the floor, the general manager told Sheaffer, “I’ve heard that’s what happens when you get your age - you can’t control yourself.”

Based on this conduct, the appellate court reversed the trial court’s summary dismissal of the age harassment claim and sent Sheaffer’s claim back for trial.

There is no doubt that this particular general manager has an interesting management style, and is probably what one would call a bully. But, should a few instances of a 67-year-old employee being called “old man” support a harassment claim? There is a clear line between general bullying/boorish management and actionable harassment. I question whether this case falls on the right side of that line.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

EEOC enters the fray on proper waivers of discrimination claims

As unemployment heads towards 10%, layoffs have unfortunately become the norm for many employers. As predicted, the EEOC has seen both a spike in age discrimination charges and requests by employers for laid-off employees to sign waivers in exchange for severance packages. I’ve previously provided guidance to employers to help navigate the tricky waters of lawful age discrimination waivers under the Older Workers Benefit Protection Act: Refresher on age discrimination waivers and Defining the proper "decisional unit" is key in legitimacy of RIFs. This week, the EEOC entered the fray by publishing a short Q&A to help employers and employees understand waivers of discrimination claims in severance agreements.

While this EEOC guidance is more geared to employees, it offers some good nuggets of information for employers considering offering severance packages to terminated employees:

1. Severance is not mandatory. No law requires a company to offer a laid-off or otherwise terminated employee severance. Nevertheless, in all but the most egregious of terminations, employers should consider severance pay in exchange for a signed release if for no other reason than the peace of mind that a comprehensive waiver provides. I can reasonably assure employers the that total cost of severance paid out to all employees in a year will be less than the cost of defending one discrimination lawsuit.

2. Any waiver must be “knowing and voluntary.” Is the agreement clearly written in a manner understandable to the employee? Was the employee given enough time to think about whether to accept the severance offer and sign the agreement? Was the employee encouraged to talk to a lawyer before signing? Was the employee given the chance to negotiate terms? Was the employee offered something above and beyond that which is already owed to him or her?

3. Agreements cannot bar EEOC charges. No severance agreement can prohibit an employee from filing a charge with the EEOC, or limit an employee’s right to testify, assist, or participate in an investigation, hearing, or proceeding conducted by the EEOC. Any provision in a waiver that attempts to waive these rights is invalid and unenforceable. An agreement can, however, waive an employee’s right to any monetary remuneration from a successful EEOC proceeding.

Most importantly, employers act at their own peril by offering severance agreements to employees without having them prepared, or at a minimum reviewed, by an attorney before presentation to the employee. The EEOC has done employers a disservice by giving some form language for severance agreements, which may or may not fit an employer’s specific need. It may save a few dollars to use a form found on the Internet without first consulting an attorney. It will cost exponentially more to hire a lawyer to fix a mistake after the fact, especially if the mistake does not come up until an ex-employee files a lawsuit because of a loophole or error in a severance agreement.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

No buts about it: Supreme Court rejects mixed motives for age discrimination cases

Employees have three traditional methods to prove intentional discrimination: (1) direct evidence (comments that evidence a discriminatory animus made by a decision-maker in close temporal proximity to the challenged employment decision); (2) indirect evidence (which uses the McDonnell Douglas burden-shifting formula); and (3) a mixed-motive (discrimination was a motivating or a substantial factor in the employer’s action, and the employer cannot show that it would have taken the same action regardless of that impermissible consideration).

This morning, in Gross v. FBL Financial Services, Inc. [PDF], the Supreme Court held that there is no such thing as a mixed-motive in age discrimination cases under the ADEA. To succeed on an disparate treatment claim under the ADEA, a plaintiff must now prove that age was the “but-for” (that is, the only) cause of the challenged adverse employment action:

We hold that a plaintiff bringing a disparate-treatment claim pursuant to the ADEA must prove, by a preponderance of the evidence, that age was the “but-for” cause of the challenged adverse employment action. The burden of persuasion does not shift to the employer to show that it would have taken the action regardless of age, even when a plaintiff has produced some evidence that age was one motivating factor in that decision.

Because age discrimination plaintiffs must now prove “but for” causation, it is more important than ever for employers to meticulously document employees’ performance problems and other disciplinary action. A well-documented personnel file will make it that much more difficult for a plaintiff to prove that age was the sole reason motivating the termination or other action.

Ohio Supreme Court confirms 180-day statute of limitations for most age discrimination claims

Ohio has what can best be described as a disjointed statute for age discrimination claims. Chapter 4112 of the Ohio Revised Code has four different provisions that cover age discrimination:

4112.14(B)	While a six-year statute of limitations applies to claim under this section, it provides limited remedies – lost wages and benefits, reinstatement, costs, and attorneys’ fees.
4112.02(N)	An age-discrimination claim under this section must be brought within 180 days of the alleged unlawful practice. Unlike 4112.14(B), it allows for the full list of available remedies, including compensatory and punitive damages.
4112.05	Allows for an individual to file an administrative charge with the OCRC, but acts as an absolute bar to filing a civil action in court for age discrimination.
4112.99	Provides an independent civil action to seek redress for any form of discrimination identified in Chapter 4112, including age discrimination.

 

In January 2008, the Hamilton County Court of Appeals held, in Meyer v. United Parcel Serv., Inc., that 4112.99 creates its own independent cause of action for age discrimination, which is subject to its own six-year statute of limitations. At the time, I argued that the Meyer case was an anomaly, and that the conventional 180-day statute of limitations for claims under 4112.02(B) was likely still good law. Yesterday, the Ohio Supreme Court agreed with my instincts and reversed the Meyer decision. In Meyer v. United Parcel Serv., Inc. (6/2/09) [PDF], the Ohio Supreme Court held that 4112.99 does not create its own cause of action, but instead any age claim brought under 4112.99 is merely subject to the specific provisions of 4112.02 and 4112.14.

Thus, a plaintiff only has 180 days to pursue an age claim and seek full remedies. Thereafter, any age claim brought up to six years hence would be restricted to 4112.14(B)’s limited damages. A plaintiff can still plead an age claim under 4112.99, but ultimately will have to elect either 4112.02 or 4112.14 as the statute under which the claim is being brought.

While Meyer may not break new ground, employers should nevertheless breathe a sigh of relief that the appellate court’s anomalous opinion was reversed. Employers will continue to enjoy Ohio’s very short window for individuals to seek a full slate of damages for age discrimination. 

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

“Who wants to see a 56-year-old stripper?”

Those were my wife’s words when I told her last night what I’d be writing about today. The EEOC is suing a Houston strip club for firing a 56-year-old dancer. According to the Houston Chronicle [h/t: ABA Journal]:

Mary Bassi, who was 56 at the time of her termination, worked at Cover Girls, where she was allegedly subjected to disparaging remarks. According to the lawsuit, which was filed last week in federal court, she was frequently called “old” by managers and endured comments about experiencing menopause and showing signs of Alzheimer’s disease.

According to Connie Wilhite, the EEOC lawyer in charge of the case, “It doesn’t matter what industry you work in. You are still protected by anti-discrimination laws.” While I agree that every individual has the right to be free from unlawful job discrimination regardless of one’s chosen occupation, I seriously question whether this lawsuit is a judicious use of our government’s resources. After all, to translate my wife’s question into legal terms, can anyone really dispute that age is a bona fide occupational qualification for a strip club employee?

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Layoffs = lawsuits

This headline from the New York Times says it all: “Layoffs Herald a Heyday for Employee Lawsuits.”

More workers are being let go as corporate layoffs that began in earnest last year have accelerated in recent weeks. And more often, people are looking around and complaining that they have been unfairly or improperly dismissed.

Potential lawsuits from layoffs come in all shapes and sizes: WARN Act violations for lack of notice, discriminatory selection for the layoff, or the use of selection criteria that discriminatorily impacts one group over another. According to the New York Times article one plaintiffs firm in New York has started its own WARN Act practice group that has filed two dozen different cases against employers in the last 18 months.

In all layoffs, companies should consider paying some amount of severance to affected employees in exchange for a release of claims. It’s painful for some businesses to consider paying severance to a group of employees being let go because the company can no longer keep them as employees. And, the higher up the corporate ladder the layoff reaches the greater amount of severance pay will be necessary to buy an employee’s release. The alternative, however, is potentially exponentially more expensive – years of protracted litigation brought by employees or groups of employees.

If a company is going to offer severance, it should insist on receiving a signed release in return. Just make sure that the release complies with the Older Workers Benefit Protection Act (OWBPA). Otherwise, at least as far as far as a federal age discrimination claim, the release will not be worth the paper on which it is written.

For more on releases under the OWBPA, see:

• Refresher on age discrimination waivers

• Defining the proper "decisional unit" is key in legitimacy of RIFs

[Hat tip: Minding the Workplace]

Reverse age discrimination should not be a concern in layoffs

Last week, BusinessWeek ran the following headline: Employers Avoid Axing Oldies but Goodies. The crux of the story is that the current wave of layoffs is hitting younger employees much harder than in the past. Seniority is being protected because of legal concerns in laying off the over-40 set, and because of the need to keep experienced people in place to help navigate these difficult times. According to the article, hard numbers back this trend:

• Unemployment claims for those 55 and older jumped to 4.9% in December 2008, a 1.8% rise over the prior year.
• In contrast, for those aged 25-54 the rate climbed to 6.3% in December, a 2.3% jump from December 2007.
• Meanwhile, there are 2.8 million less people ages 25-54 employed in December 2008 as compared to December 2007.
• In contrast, there are 878,000 more employees age 55 and over employed this year as compared to last year.

Yet, the article ends with the following word of caution:

Still, companies must tread carefully to avoid showing favoritism based on age. They could wind up facing reverse-discrimination suits from younger workers who feel targeted.

Nothing could be further from the truth. In General Dynamics Land Systems v. Cline (2004), the U.S. Supreme Court conclusively ended the debate over whether one can bring a claim for reverse age discrimination. In that case, the employer provided retiree health benefits only to those people who were over age 50. 196 employees ages 40-49 claimed that since the contract expressly excluded employees between the ages of 40 and 49, providing benefits only to retirees 50 and over was illegal age discrimination. Thus, the Court was asked to decided if the ADEA prohibits “reverse discrimination” against workers over 40 by providing greater benefits to workers over 50 than to younger workers who are still over 40.

The Court rejected the notion of “reverse age discrimination.” The ADEA’s “text, structure, purpose, history, and relationship to other federal statutes show that the statute does not mean to stop an employer from favoring an older employee over a younger one.” According to the Court, the ADEA is “a remedy for unfair preference based on relative youth, leaving complaints of the relatively young outside the statutory concern.”

In structuring any layoff, it is always wise to verify that the affected group does not contain a disproportionate percentage of “protected group” employees. In conducting that analysis, though, one should not be concerned about whether the layoff disproportionately favors older workers over younger workers.

A few predictions for 2009

Since I ended 2008 with a look back at the top stories of the past year, I thought I’d start 2009 with a look forward at what to expect in the new year.

1. Sexual Orientation will Become a Protected Class.

Under current federal and Ohio law, it is not illegal to discriminate in employment on the basis of sexual orientation. President Obama will seek to change this omission. One need only look to Change.gov, President Obama’s administration’s website, to glean that he will target the elimination of discrimination based on sexual orientation and gender identity:

The Obama-Biden Transition Project does not discriminate on the basis of race, color, religion, sex, age, national origin, veteran status, sexual orientation, gender identity, disability, or any other basis of discrimination prohibited by law.

The Employment Non-Discrimination Act would add sexual orientation and gender identity to the litany of classes protected from discrimination in employment by Title VII. Note that in the 6th Circuit, discrimination on the basis of real or perceived gender identity is already illegal as sex discrimination. Eliminating discrimination on the basis of sexual orientation should pass with ease. The facet of the ENDA that focus of gender identity is much more controversial, but at least in Ohio, is largely unnecessary in light of Smith v. Salem. Nevertheless, the ENDA should become law this year.

2. Family Responsibility Issues Will Receive Special Attention from President Obama.

In September, Governor Strickland and Senator Sherrod Brown persuaded union leaders to remove the Ohio Healthy Families Act from November’s ballot. If passed, it would have required all businesses with 25 or more employees to grant all employees seven paid sick days per year, with a prorated amount for part-time employees. The same measure will be introduced on a national level in this Congress, it will pass, and President Obama will sign it into law.

President Obama also favors making certain key changes to the FMLA. He will seek to loosen the definition of “employer” from 50 or more employees to 25 or more employees. He will also seek to expand the categories of covered leave to include elder care, children’s school activities, domestic violence, and sexual assault. It is a safe bet that some of these FMLA amendments will become law at some point in the next four years, if not this year.

3. Employment Litigation Will be Hot in 2009.

2009 will test my theory that the strength of the economy is inversely proportional to the number of lawsuits filed against employers. By all accounts, the economy will continue to slump well into 2009. As more employees lose their jobs, whether by layoff, plant closures, or good old fashioned terminations, they will look to the OCRC/EEOC and the courts for help. I expect age discrimination, WARN Act, and wage and hour claims to fuel this litigation boom.

4. The Employee Free Choice Act will Face an Uphill Battle.

A Senate filibuster blocked the EFCA on its last consideration. As the Democrats will not reach the magic super-majority of 60 Senators necessary to block a Republican filibuster, this controversial law will face stiff opposition. Despite all of the doom and gloom prognostications, I do not believe that the EFCA will become law in its current form. The only way it would ever defeat a Republican filibuster is if it was presented in a compromised, watered-down form.

Nevertheless, it is not too early for businesses to start planning for the possibility of card-check union recognition. The best defense against a labor union is a combination of positive employee relations, an open door for employees to air grievances, and a fair, even-handed management. If the EFCA becomes law, it will too late to fight a union once the cards are signed. The only way to combat an organizing drive, especially one that you do not know about, is to proactively make your work environment one that employees will not want to unionize.

Is administrative exhaustion a statutory or jurisdictional requirement?

It is axiomatic that a plaintiff must file a charge with the EEOC before filing a complaint alleging discrimination in federal court, and that the EEOC charge must contain a written statement sufficiently precise to identify the parties, to describe generally the action or practices complained of, and identify the specific type of discrimination alleged. Allen v. Highlands Hosp. (6th Cir. 10/21/08), which I discussed yesterday, may alter this conventional wisdom in a significant way. It held that exhaustion is a statutory element of a plaintiff’s discrimination claim, but not a jurisdictional requirement to filing suit.

In Allen, the plaintiffs’ EEOC charges alleged age discrimination, but not the specific disparate impact theory pursued in the case. The Hospital argued that the disparate-impact claim should be dismissed because the plaintiffs failed to exhaust their EEOC administrative remedies, and that identifying the specific claim of discrimination before the EEOC with sufficient precision is a jurisdictional prerequisite to maintaining that claim in federal court.

The 6th Circuit overturned its prior precedent and disregarded the employer’s argument. Six years ago, in Weigel v. Baptist Hosp. of E. Tenn. (6th Cir. 7/15/02), the 6th Circuit held that “federal courts do not have subject matter jurisdiction to hear [ADEA] claims unless the claimant explicitly files the claim in an EEOC charge or the claim can be reasonably expected to grow out of the EEOC charge.” In Allen, however, the court reversed court and held “that although administrative exhaustion is still a statutory prerequisite to maintaining claims brought under the ADEA, the prerequisite does not state a limitation on federal courts’ subject matter jurisdiction over such claims.”

The distinction between a jurisdictional and statutory requirement is significant. A jurisdictional requirement would serve as an absolute bar to any plaintiff pursuing a claim without exhaustion. By making this requirement statutory, the 6th Circuit makes available arguments such as equitable tolling, which would enable a plaintiff to stay in federal court even if the charge was filed late.

Practically, this ruling should have a minimal effect on discrimination claims in Ohio. Ohio’s state employment discrimination statute has no exhaustion requirement at all. Under Ohio Rev. Code 4112.99, an aggrieved employee can proceed directly to court without first filing any charge whatsoever with any administrative agency. Thus, in Ohio discrimination claims, exhaustion rarely becomes an issue. Where this decision may have some effect is in age discrimination claims. Age claims under Ohio law are subject to a short 180-day statute of limitations, as compared to all other forms of employment discrimination, which have a six-year filing period. An employee, however, has 300 days to file an age discrimination charge with the EEOC. For an employee who misses the shorter 180-day filing period under 4112.99, an EEOC charge and later federal lawsuit under the ADEA is always an option. Thus, this decision could impact those employees who miss the relatively short state statute and have to go the EEOC for relief to enable a federal court filing under the ADEA.

Cost cutting does not necessarily equate to age discrimination

Layoffs have become all the rage. Just yesterday, one of Cleveland’s larger employers, National City Bank, announced that it will be cutting 4,000 employees nationwide. Often, when companies look to cut costs, they will shed more senior employees in favor of hiring less costly employees, who are often, but not necessarily, younger. This strategy is exactly what Highlands Hospital Corp. employed that resulted in an age discrimination claim by two terminated employees. In Allen v. Highlands Hosp. (6th Cir. 10/21/08), the 6th Circuit reaffirmed that a plaintiff cannot support an age discrimination disparate impact claim by simply relying upon a general policy or practice, but must isolate and identify a specific employment practice that disproportionately impacts employees who are at least 40 years old.

Jo Ann Allen (age 63) and Debra Slone (age 53) were both employees of Highlands Hospital. The hospital’s CEO, Harold Warman, decided to terminate both of them for violating its patient privacy policy. Specifically, Allen and Slone removed the x-rays of Allen’s granddaughter without the patient’s written permission and signed a backdated documents to try to cover their tracks.

Allen and Slone sued the hospital for age discrimination. Among other claims, they alleged that Warman’s cost-cutting measures had a disparate impact on their age. Warman had been systematically terminating employees based on seniority to facilitate the hiring of new, less costly employees.

Contrary to the disparate impact claim, the statistics showed that Warman’s program did not necessarily disproportionately affect older employees at the hospital:

Date	Total # of Employees	Employees Age 40 and Older	Employees Younger than Age 40
July 1998	672	273	399
Dec. 2002	488	253	235
Dec. 2004	530	267	263

 

In July 1998, 40% of the hospital’s total employees, including Allen and Slone, were age 40 or older. By December 2002, that ratio increased to 52%, which also included Allen and Slone. Two years later, that number had slightly decreased to just over 50%.

A disparate impact claim involves employment practices that are neutral on their face but in application fall more harshly on one group over another. Plaintiffs that allege disparate impact discrimination under the ADEA must isolate and identify a specific employment practice that is allegedly responsible for the statistical disparities. it is not sufficient for a plaintiff to simply point to a generalized policy that leads to a perceived impact.

Allen and Slone argued on that the effect of the policy demanding the termination of the highest paid employees had a illegal impact based on age. The Court found, however, that the plaintiffs failed to isolate and identify “a specific employment practice that disproportionately impacts employees who are at least 40 years old”:

As we have already explained, the plaintiffs have at best alleged that HHC desired to reduce costs associated with its highly paid workforce, including those costs associated with employees with greater seniority. But the plaintiffs have not established that this corporate desire evolved into an identifiable practice that disproportionately harms workers who are at least 40 years old. Because Allen and Slone have simply “point[ed] to a generalized policy,” as opposed to specific practice, they have therefore failed to raise a genuine question of material fact with respect to their disparate impact claim.

Coupled with the compelling statistical evidence, the appellate court affirmed the district court’s dismissal of the age discrimination claim.

Disparate impact claims are much more seldom litigated than disparate treatment claims. Because it is likely that mass layoffs will increase as the health of the economy decreases, it is also likely that these types of claims will pick up in frequency. Because of the possibility of a disparate impact claim with a mass layoff, companies should consider conducting pre and post-layoff statistical analyses to ensure that otherwise neutral selection criteria do not unfair impact one group over another. A little planning can go a long way to preventing the type of lawsuit that plagued Highlands Hospital in this case.

[Thanks to Steve Sutton for sending this decision to me]

Employers go 2 out of 4 at the Supreme Court today

The Supreme Court this morning released a quartet of opinions that impact employers. Continuing this Court's somewhat surprising trend, the employer came out on the winning end of only half of these cases.

In MetLife v. Glenn, the Court ruled that the fact that a claim administrator of an ERISA plan also funds the plan benefits is a "conflict of interest" that must be weighed in a judicial review of the administrator's benefit determination. I have always been troubled by benefit plans that both pay benefits and make the decision whether to pay. To the extent that such plans will no longer have the protection of the arbitrary and capricious standard upon judicial review of their decisions, I applaud the Court's decision.

In Kentucky Retirement Systems v. EEOC, the Court ruled that a benefit plan's use of age as a potential factor in the distribution of retirement benefits to disabled workers does not establish a prima facie case of age discrimination. For the background on this case, see Supreme Court considers use of age as factor in disability retirement benefits. I think the Court got it partially right. It seems to me that retirement eligibility is a proxy for age, but the employer in this case did not use the factor arbitrarily or discriminatorily.

In Meacham v. Knolls Atomic Power Laboratory, the Court ruled that when an employee alleges disparate impact under the ADEA, the employer bears the burden of persuasion on the "reasonable factors other than age" defense. Again, I think the Court got this right. If the employer is raising the defense, the employer should have the burden of proving it.

Finally, in Chamber of Commerce v. Brown, the Court ruled that federal labor law prohibits state from regulating or limiting an employer's right to speak out about labor union organizing by their employees.

[Hat-tip: SCOTUSblog]

Defining the proper "decisional unit" is key in legitimacy of RIFs

Today, we'll finish up our series on releases and waivers of age discrimination claims by looking at how courts examine the scope of the decisional unit for purposes of making the requisite disclosures under the Older Workers Benefits Protection Act ("OWBPA") for a group reduction. For the previous two posts, see Offering of severance package found to be evidence of a constructive discharge, and Refresher on age discrimination waivers.

According to the 6th Circuit in Raczak v. Ameritech Corp., the purpose of OWBPA is to ensure that "workers who signed a waiver had a clear idea of what they were giving up, particularly that they had the ability to assess the value of the right to sue for a possibly valid discrimination claim." Thus, a valid waiver under the OWBPA in a group reduction must include information - ages and job titles - of everyone in the decisional unit, whatever that decisional unit may be, and the status of each individual with respect to whether the employee was selected for termination or retention. The law requires employers engaging in a group layoff to give employees need data to conduct a meaningful analyses to determine whether an employer engaged in age discrimination before agreeing to sign a severance agreement. They key in determining whether employees are truly comparing apples to apples is the scope of the "decisional unit" the employer uses to compile is list of affected and unaffected employees.

The OWBPA's regulations (29 C.F.R. § 1625.22) define the term "decisional unit" as follows:

[D]ecisional unit is that portion of the employer's organizational structure from which the employer chose the persons who would be offered consideration for the signing of a waiver and those who would not be offered consideration for the signing of a waiver. The term "decisional unit" has been developed to reflect the process by which an employer chose certain employees for a program and ruled out others from that program.

The regulations offer several examples to assist companies in selecting the proper decisional unit:

• If an employer is attempting to reduce its workforce at a particular facility and undertakes a decision-making process by which some of the employees at the facility are selected for a program and others are not, then the facility will be the decisional unit.
• If the employer seeks to reduce the number of employees at a facility by exclusively considering a particular portion or sub-group of its operations at a facility, then the decisional unit would be that sub-group or portion of the workforce at the facility.
• The decisional unit may be larger than one facility if an employer is attempting to combine operations from several facilities and considers employees in several facilities for termination.

Thus, they key factors for deciding the proper scope of the decisional unit include the identity of the decision maker and the employees actually considered for the RIF. Several cases provide additional examples of these principles in action:

Burlison v. McDonald's Corp.

McDonald's engaged in a nationwide corporate reorganization. It charged each regional manager with the task of determining which employees to keep for each new region. McDonald's offered each RIFed employee a severance package in exchange for a release of all claims. In its effort to comply with the OWBPA, McDonald's provided with each severance agreement a region-specific information sheet. Each of the 5 plaintiffs (all of whom were over 40) signed the releases and accepted the severance packages. Two years later, however, they sued for age discrimination, claiming that the releases were void because McDonald's had engaged in a nationwide RIF, for which the OWBPA required that it provide them nationwide information, and not just information limited to their region. The 11th Circuit found that because the decisions as to who to terminate were made on the regional level, the region was the proper decisional unit. Because the local managers made the decision, the nationwide unit had no relevance to the plaintiffs.

Kruchowski v. Weyerhaeuser Co.

While the employees in Burlison were rebuked for arguing for an overly broad decisional unit, the employer in Kruchowski v. Weyerhaeuser Co. was punished for selecting a unit that was too wide for the actual scope of the RIF. The plaintiffs were 16 of the 31 employees selected for a RIF at the defendant's mill. The OWBPA notice advised the RIFed employees that the "decisional unit" was all salaried employees at the mill. The court of appeals found that the waivers were invalid because the Notice misidentified the decisional unit as all salaried employees. The actual unit was all salaried employees who directly reported to the mill manager. 15 salaried employees did not report to the mill manager, yet were included in the Notice. According to the court: "Defendant itself ignored its structure and decision-making hierarchy when the notified plaintiffs of the 'decisional unit.'" Because the decisional unit of which the plaintiffs were notified and the actual decisional unit were two separate groups, the waiver was void.

Conclusion

RIFs are not do-it-yourself projects for businesses. They raise myriad employment law issues, not the least of which is the scope of the proper decisional unit for purposes of making disclosures under the OWBPA. It is crucial to get these waivers absolutely right, or companies risk paying severance and still getting sued for age discrimination. Don't put yourself in that position - seek professional help before carrying out a RIF.

Refresher on age discrimination waivers

Yesterday, we looked at Coryell v. Bank One Trust, which found that the offering of a severance package could constitute evidence of a constructive discharge. Even though the employee was losing his job as part of a corporate reorganization, the court believed a question existed as to whether he had any meaningful choice but to accept the severance package.

As I mentioned yesterday, the lawsuit could have been avoided if the company required Coryell to sign a severance agreement that included a valid release of claims as a condition to receive the severance package. In fact, I'd go so far as to say that it would take a very rare case for me to feel comfortable with an employee receiving severance of any kind without signing a release in return.
Severance agreements for employees age 40 or over present their own set of problems. The Older Workers Benefit Protection Act (OWBPA), which amended the federal Age Discrimination in Employment Act, requires that any releases and waivers of federal age discrimination claims be "knowing and voluntary." Simple enough, right?. What release is not entered into knowingly and voluntarily? Not so fast. The OWBPA specifically defines what a "knowing and voluntary" waiver means, and it is not as simple as it might sound:

1. The waiver must be part of an agreement between the employee and the employer.
2. The waiver must be written in a manner calculated to be understood by the employee.
3. The waiver must specifically refer to rights or claims arising under the ADEA.
4. The employee cannot be waiving any rights or claims that arise after the date he or she signs the agreement.
5. In exchange for the release, the employee must receive consideration in addition to that which he or she is already entitled.
6. The employee must be advised, in writing, to consult with any attorney before signing the agreement.
7. The employee must be given 21 days to consider whether to sign the agreement.
8. The agreement must provide for a period of at least 7 days following its execution for the employee to revoke the agreement, and the agreement cannot become effective or enforceable until that revocation period has expired.

If the release and waiver is provided as part of some severance program offered to a group of employees (such as a reduction in force), these requirements change. The 21 day period within which to consider the agreement is extended to 45 days. Moreover, at the start of that 45 day period (i.e., at the same time the employer gives the severance agreement to the employees), the employer must also disclose, in writing:

1. The eligibility criteria for inclusion in the group.
2. The job titles and ages of all individuals eligible or selected for the program.
3. The ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program.

Meeting these criteria is vitally important. The absence of even one of these factors invalidates the entire release as to the employee's federal age discrimination claim. Thus, even if an employee signs a severance agreement, the employee is free to bring a federal age discrimination claim if one of the above eight elements is missing from the agreement. To make matters worse, under Oubre v. Entergy Operations and current EEOC regulations, an employee is not required to tender back the severance pay as a condition to bringing an age discrimination claim under an invalid waiver. As Dan Schwartz points out in his Connecticut Employment Law Blog: "Employers are advised to seek legal counsel before using a model agreement."

Tomorrow, we'll examine the disclosures required in a group separation, and look at some cases from Ohio and elsewhere that talk about how to define the scope of the job classification for purposes of making these disclosures.

Offering of severance package found to be evidence of a constructive discharge

With the exception of a "for cause" termination, I am firm believer that most terminations should be communicated with an offer of some amount of severance pay. It not only cushions the blow for the employee who may be losing his or her job through no fault of his or her own, but also presents an opportunity for the employer to get something positive out of bad situation. For one thing, an offer of severance should always be tied to a release by the employee of any and all possible claims against the employer. Thus, the employer is buying certainty that the employee will not sue. The severance agreement also gives employers the chance to gain benefits such as a cooperation clause and promises as to non-disparagement and confidential information.

Courts should be protecting severance agreements as good policy in promoting harmonious employer/employee relationships. Yet, in Coryell v. Bank One Trust, the Franklin County Court of Appeals held that an employee who accepts a severance package in lieu of termination can claim a constructive discharge sufficient to satisfy the 2nd element of the prima facie case of age discrimination (the suffering of an adverse action).

As part of a reorganization of Bank One, James Coryell (age 49) accepted a severance package that provided him with 52 weeks salary and benefits continuation. The severance documents expressly stated that Coryell could continue to seek a new position with the company. Coryell testified that he believed he had no better option than accepting the severance package. Although Coryell did continue to look for an internal position, he ultimately obtained an job with a different company during the pay continuation period. Coryell alleged that after his separation he was replaced by a 42-year-old, which constituted age discrimination.

Coryell pursued his age discrimination claim under the indirect method of proof, which requires a prima facie showing that:

1. the plaintiff is a member of the statutorily protected class;
2. the plaintiff suffered an adverse employment action;
3. the plaintiff was qualified for the position; and
4. the plaintiff was replaced by a substantially younger person or that a comparable, substantially younger person was treated more favorably.

The trial court found, as a matter of law, that Coryell was "neither directly nor constructively discharged because he chose between meaningful options when he accepted the severance package." Because he was not discharged, it concluded that he could not establish the second element of his prima facie case, that he suffered an adverse employment action.

Coryell is not the first time an Ohio court has faced the issue of whether an employee who accepts a severance package can claim discharge. In Barker v. Scovill, the Ohio Supreme Court found that an employee who was offered termination with severance pay "made a conscious ,well-informed, uncoerced decision [and] should not now be allowed to cry foul." In Caster v. Cincinnati Milacron, the Hamilton County Court of Appeals found that an employee who was offered either the opportunity to obtain other employment with the company, 12 weeks layoff with the potential for recall, or permanent severance with a $100,000 payout, and who chose the latter, could not claim termination.

The Coryell court, however, distinguished those precedents and found that Banc One constructively discharged him by offering the severance package.

When a plaintiff chooses termination in lieu of other options, courts will not construe his decision as an actual discharge. Rather, the plaintiff must show that he was constructively discharged, i.e., that his or her choice of termination was involuntary or coerced. Courts generally apply an objective test to determine whether a plaintiff was constructively discharged, asking "whether the employer's actions made working conditions so intolerable that a reasonable person under the circumstances would have felt compelled to resign." ...

Here, in support of his contention that he was constructively discharged, Coryell argues that appellees stripped him of his title, position, responsibilities, functions, supervisory role, and involvement in day-to-day operations and management, leaving him with no real position. ... We agree with Coryell that this evidence creates a question of fact as to whether Coryell had any meaningful choice but to accept the severance package.

This case is a cautionary tale for all employers. If you are going to offer a severance package, make sure to get something of value in return. The best return on the investment is a clear, comprehensive, and enforceable release of all potential claims by the employee against the company. Once the employee releases the age discrimination claim, it becomes irrelevant if the employee had meaningful choice but to accept the severance package, or was constructively discharged.

Waivers of age discrimination claims present their own unique problems - namely a federal statute known as the Older Workers Benefit Protection Act. The OWBPA has specific requirements a release of federal age discrimination claims must meet to be valid and enforceable. Tomorrow, we'll take a look at the OWBPA and try to give a short refresher course on its key provisions.

Supreme Court issues 2 decisions expanding scope of retaliation claims

Last December, I asked the question, "How far to the right has the Supreme Court swung?" This morning, the U.S. Supreme Court issued 2 decisions that suggest that it might not have gone as far to the right as first thought. Each of today's cases expands the scope of retaliation claims under federal employment discrimination statutes. In each case, the Court went beyond the plain language of the statutes to find a retaliation claim.

In CBOCS West, Inc. v. Humphries, the Court ruled 7-2 (with Justices Thomas and Scalia dissenting) that 42 U.S.C. 1981 permits a claim for retaliation when an employee complains of race discrimination.

In Gomez-Perez v. Potter, the Court ruled 6-3 (with Chief Justice Roberts, and again, Justices Thomas and Scalia, dissenting) that the ADEA prohibits federal employers, as opposed to private employers, from retaliating against employees who file complaints alleging age discrimination.

What is interesting about both of these decisions is that neither section 1981 nor the amendments to the ADEA that impose federal sector liability include the word "retaliate." Nevertheless, the Court has read that word into the meaning of the statutes by finding that "discrimination based on race/age" necessarily encompasses retaliation.

These opinions will have little impact on employers in Ohio. Unless you are the federal government, Gomez-Perez v. Potter will not affect you at all.

CBOCS West, Inc. v. Humphries will have limited practical impact for Ohio employers. Because of this case, it is now clear that an employee can bring a race retaliation claim without first filing a charge of discrimination with the EEOC under Title VII. Of course, this is already the case in Ohio under R.C. 4112.99. Moreover, claims under 42 U.S.C. 1981 are subject to a 4-year statute of limitations, 2 years shorter than the time period an employee has to bring a state law retaliation claim under 4112.99.

What is important to Ohio businesses from these cases is that they continue to demonstrate that the Roberts Court may not be as pro-employer as one might have hoped. Under Chief Justice Roberts, pro-employee decisions are out-pacing pro-employer decisions at a 2-1 clip. Several more employment cases are on the Court's docket, including the important issue of whether Title VII's retaliation provision protects 3rd parties who participate in an internal investigation without a pending EEOC charge. The direction of the Court's employment law pendulum is very much in play, and will continue to swing as these decisions are handed down.

Surpeme Court defers to EEOC on the definition of a "Charge" of age discrimination

The U.S. Supreme Court has issued its second employment decision in as many days, as today it has issued its opinion in Federal Express v. Holowecki. [The opinion is available for download from the Court here.]

Recall that Holowecki raised the procedural issue of what constitutes a "charge" of discrimination submitted to the Equal Employment Opportunity Commission under the Age Discrimination in Employment Act. The plaintiff submitted an Intake Questionnaire, with an accompanying affidavit, to the EEOC, which alleged that Fed Ex had committed age discrimination. She did not, however, file a Charge of Discrimination until 6 months later. In the interim, the EEOC neither assigned a charge number, nor informed Fed Ex that it had received the Intake Questionnaire. The issue was whether the Intake Questionnaire constituted a "Charge" sufficient to start the proceedings with the EEOC.

A 7-2 majority of the Court deferred to the EEOC's regulations and policy statements, and held that the Intake Questionnaire was a "Charge" because it could be reasonably construed as a request for the EEOC to take remedial action to protect the employee's rights or otherwise settle a dispute between the employer and the employee.

My problem with this ruling is that Fed Ex never had any meaningful way to respond to the Intake Questionnaire. That form was never sent to it, and it had no notice that a proceeding had even been initiated until after the actual charge was filed 6 months hence. Thus, an employee can proceed to federal court on an age discrimination class action lawsuit, without the employer, who had no notice that a charge had even been filed with the EEOC, having the benefit of trying to settle the claim pre-lawsuit. During the EEOC's conciliation process, the stakes are decidedly much lower than they are once an actual lawsuit is filed. For one thing, claimants usually are not represented by counsel at the EEOC. The same is rarely true in federal court. This decision prejudices employers who will be denied any opportunity to resolve a case via the EEOC's informal conciliation process. The majority attempts to cure this problem by suggesting that the trial court stay the case to allow for mediation. That stay, however, ignores the crucial differences between a mediation before as compared to after a federal court case has been filed.

In concluding his dissent, Justice Thomas hits a home run in summarizing the key problems with the majority opinion:

The implications of the Court's decision will reach far beyond respondent's case. Today's decision does nothing—absolutely nothing—to solve the problem that under the EEOC's current processes no one can tell, ex ante, whether a particular filing is or is not a charge. Given the Court's utterly vague criteria, whatever the agency later decides to regard as a charge is a charge—and the statutorily required notice to the employer and conciliation process will be evaded in the future as it has been in this case. The Court's failure to apply a clear and sensible rule renders its decision of little use in future cases to complainants, employers, or the agency.

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This decision will have limited impact in Ohio, because employees have a private right of action under Ohio law without first going to the EEOC. However, because age discrimination claims under Ohio Revised Code 4112.99 are subject to a short 180-day statute of limitations, the Holowecki decision could impact those employees who miss that relatively short statute and have to go the EEOC for relief to enable a federal court filing under the ADEA.

Retaliation decision underscores importance of termination discussions

A couple of weeks ago, the 6th Circuit held that where an adverse employment action occurs very close in time after an employer learns of a protected activity, such temporal proximity between events is significant enough to constitute evidence of a causal connection for the purposes of satisfying a prima facie case of retaliation (see 6th Circuit holds that temporaral proximity alone is sufficient to show a causal nexus in retaliation cases). Today, that same court, in Imwalle v. Reliance Medical Products, illustrates the converse of Mickey v. Zeidler Tool & Die, what additional evidence will prove a nexus when temporal proximity alone is not enough. It also highlights the importance of carefully watching one's words in termination meetings, and how saying the wrong thing can come back to haunt you.

Imwalle concerns a corporate president who was terminated from his long-tenured position 3 months after he filed an age and national origin discrimination charge with the EEOC. During the termination meeting, the COO told Imwalle: "I know that you know that Haag-Streit (HS) never committed discrimination in the past, at present, and will not in the future. I therefore canot [sic] understand why you raise such a claim. We are not discriminatory, just not."

The Court relied heavily on that statement in affirming the jury's verdict in Imwalle's favor on his retaliation claim:

[T]he fact that Ott made this statement about Imwalle's discrimination complaints at such a critical moment raises questions about Haag-Streit's true motivation for firing Imwalle.

On the one hand, the statement can be taken at face value, made solely for the purpose of assuring Imwalle that his firing had nothing to do with the alleged discrimination on the part of Haag-Streit because such discrimination purportedly did not exist. But another plausible explanation for Ott's statement is that Imwalle's discrimination claim had caused both frustration and resentment on the part of Haag-Streit, and that Ott's statement was designed to mislead Imwalle and discourage him from suing. Ott obviously felt strongly enough about the accusations of discrimination to prepare a written statement and read it as the first order of business at the meeting he called to let Imwalle go.

Furthermore, the timing of the statement, literally moments before Imwalle was notified that he was no longer President of Reliance or of HSH US and that his employment agreement was being terminated, clearly shows that Imwalle’s complaint of discrimination was at the forefront of Ott's mind.

While it's difficult to know what the COO's true motivation was, it's easy to understand how a jury could interpret the phrase, "I cannot understand why you raise such a claim," uttered while terminating Imwalle, as retaliatory. If the COO's intent was retaliation, then he did an awful job of hiding it. If, however, his intent was innocent, he should have chosen his words much more carefully. Use his mistake as a valuable lesson -- be careful what you say in a termination meeting, and even more careful what is written down. The words can, and will, be used, twisted, and construed against you.

Ohio appellate court puts age discrimination statute of limitations in doubt

Ohio's age discrimination statute of limitations has always been one of the quirks of Ohio employment law. All discrimination claims under R.C. Chapter 4112 have a six-year statute of limitations, except for age claims. Until recently, it has been well established that an age claim brought under R.C. 4112.99 had a 180-day statute of limitations. Meyer v. United Parcel Serv., Inc., decided last month by the Hamilton County Court of Appeals, rejects that longstanding conventional wisdom, and holds that plaintiffs have six years to bring such age claims.

One can bring an action for age discrimination under four different provisions within R.C. Chapter 4112:

• First, R.C. 4112.02(N) prohibits discrimination in employment on the basis of age and provides for "any legal or equitable relief that will effectuate the individual's rights." An age-discrimination claim under this statute must be brought within 180 days of the alleged unlawful discriminatory practice.
• Second, R.C. 4112.14(B) provides a remedy for age-based discrimination in the hiring and termination of employees "which shall include reimbursement to the applicant or employee for the costs, including reasonable attorney's fees, of the action, or to reinstate the employee in the employee's former position with compensation for lost wages and any lost fringe benefits from the date of the illegal discharge and to reimburse the employee for the costs, including reasonable attorney's fees, of the action." A six-year statute of limitations applies to these claims.
• Third, R.C. 4112.99 provides an independent civil action to seek redress for any form of discrimination identified in R.C. Chapter 4112. The statute makes violators of R.C. Chapter 4112 "subject to a civil action for damages, injunctive relief, or any other appropriate relief."
• Finally and alternatively, a plaintiff may file a charge administratively with the OCRC under R.C. 4112.05., but such a filing acts as an absolute bar to instituting a civil action in court.

When filing an age claim, one must elect which statute one is filing under.

At least as far back as the Ohio Supreme Court decided Bellian v. Bicron Corp. in 1994, it has been well established that an age claim under R.C. 4112.99 is subject to the 180-day statute of limitations in R.C. 4112.02(N). See Oker v. Ameritech Corp. ("An age-discrimination claim brought pursuant to R.C. Chapter 4112 must be initiated within the one-hundred-eighty-day statute of limitations period set forth in former R.C. 4112.02(N)."); McNeely v. Ross Correctional Inst. ("Whether an age discrimination claim is premised on R.C. 4112.02 or 4112.99, a plaintiff must file the claim within 180 days of the alleged discriminatory act.").

The Hamilton County Court of Appeals, however, has put this conventional wisdom in doubt. In Meyer v. United Parcel Serv., Inc., that court concluded that because R.C. 4112.99 provides an independent cause of action, it is separate from R.C. 4112.02(N), and therefore subject to the same six-year statute of limitations as other claims brought under R.C. 4112.99. The Court based its rationale on the recent Ohio Supreme Court decision in Leininger v. Pioneer National Latex holding that Ohio does not recognize a common-law tort claim for wrongful discharge based on the public policy against age discrimination:

Recently, in Leininger v. Pioneer National Latex, the Ohio Supreme Court held that Ohio does not recognize a common-law tort claim for wrongful discharge based on the public policy against age discrimination, "because the remedies in R.C. Chapter 4112 provide complete relief for a statutory claim for age discrimination." In reaching its holding, the court reiterated its prior holding that had rejected the argument that the specific-remedies provisions of subsections within the chapter prevail over the more general provisions of R.C. 4112.99. The court noted that "R.C. 4112.08 requires a liberal construction of R.C. Chapter 4112. Although R.C. 4112.02(N), 4112.08, and 4112.14(B) all require a plaintiff to elect under which statute (R.C. 4112.02, 4112.05, or 4112.14) a claim for age discrimination will be pursued, when an age discrimination claim accrues, a plaintiff may choose from the full spectrum of remedies available. Leininger's argument also does not take into account the scope of R.C. 4112.99's remedies. In Elek v. Huntington Natl. Bank (1991), 60 Ohio St. 3d 135, 573 N.E.2d 1056, we stated that R.C. 4112.99 provides an independent civil action to seek redress for any form of discrimination identified in the chapter. Id. at 136. A violation of R.C. 4112.14 (formerly R.C. 4101.17), therefore, can also support a claim for damages, injunctive relief, or any other appropriate relief under R.C. 4112.99. This fourth avenue of relief is not subject to the election of remedies."

Meyer's logic is a tortured reading of Leininger, which expressly found that R.C. 4112.02(N) and R.C. 4112.99 are subject to the same statute of limitations for age claims:

Although R.C. 4112.14 was the only statutory claim available to Leininger at the time she filed her complaint due to the expiration of the statute of limitations for claims under R.C. 4112.02 and 4112.05, this fact does not justify limiting our examination of the available remedies under the chapter as a whole. In determining whether a common-law tort claim for wrongful discharge based on Ohio's public policy against age discrimination should be recognized, we need to look at all the remedies available to a plaintiff at the time the claim accrued.

There is certainly some appeal to the argument that it does not make any sense that age claims and all other discrimination claims have different statutes of limitations. On the other hand, R.C. Chapter 4112 has three distinct remedial statutes for age discrimination, more than any other type of discrimination. The point is that if we are going to change the statute of limitations, it should be done by the legislature, and not by an appellate court diverging from 14 years of precedent. To again quote the Leininger decision: "Leininger contends that the short statute of limitations of R.C. 4112.02 ... detracts from the remedial scheme of R.C. Chapter 4112. The period within which a claim must be brought, however, is a policy decision best left to the General Assembly."

The Meyer case is most likely an anomaly. Regardless, if you are practicing in Hamilton County, you should be aware that employees have six-years to file their age claims in that court. This issues bears watching to see if any other appellate districts follow suit, or if the Supreme Court takes up this issue to resolve this recent divergence of opinion.

Supreme Court to hear retaliation (Crawford v. Nashville) and ADEA disparate impact (Meacham v. Knolls Atomic Power) cases

The U.S. Supreme Court has granted cert. in two more employment cases to be heard this term.

Crawford v. Metropolitan Government of Nashville, which is out of the 6th Circuit, asks if Title VII's anti-retaliation provision protects an employee from being fired because she cooperated with her employer's internal sexual harassment investigation.

Vicki Crawford claimed that her termination after she participated in a sexual harassment investigation constituted retaliation. The 6th Circuit disagreed, holding that participation in a purely internal, in-house investigation, in the absence of any pending EEOC charge, is not a protected activity. The Court reasoned that a contrary result would chill employers' investigations because they would not interview witnesses for fear of potential retaliation liability. Crawford, not surprisingly, is arguing the converse, that such protection is needed so that employees' willing participation in such investigations is not chilled. The EEOC, along with the 3rd, 5th, 8th, and 11th Circuits, disagree with the 6th Circuit's holding.

On first blush, it seems that the employee has the better of the argument. Employees already perceive that they can be fired if the company doesn't like what they have to say. It's hard enough as is to get employees to voluntarily cooperate, and assurances of no retaliation are usually necessary to get them to open up at all. A ruling for the employer in this case would make internal investigations all that much harder to conduct. To quote from the cert. petition:

Workers of ordinary prudence would be likely to avoid cooperating with a sexual harassment internal investigation if they knew they could be fired for doing so, certain as most will be that such cooperation will anger the alleged harasser, who usually is a supervisor and who all too often is the witness's own supervisor. Employees would have a disincentive to cooperate, if their participation in internal investigations is not protected. Placing a voluntary witness into this kind of legal limbo would impede remedial mechanisms by denying interested parties' access to the unchilled testimony of witnesses. (internal quotations and citations omitted).

Meacham v. Knolls Atomic Power Laboratory asks whether an employee alleging disparate impact under the ADEA bears the burden of persuasion on the "reasonable factors other than age" defense. More on this case as we get closer to oral argument.

Supreme Court considers use of age as factor in disability retirement benefits

Yesterday, the Supreme Court heard oral argument in Kentucky Retirement Systems v. EEOC. The issue is whether a benefit plan's use of age as a potential factor in the distribution of retirement benefits to disabled workers establishes a prima facie case of age discrimination. Kentucky’s disability retirement plan at issue awards benefits based in part on how close a disabled worker is to reaching normal retirement. For example, it disqualifies those who have already reached normal retirement age, and otherwise calculates disability retirement benefits so that an eligible older employee receives a lower monthly benefit payment than a younger disabled employee who is similar to in every relevant way other than age. It therefore affects older workers differently than younger workers, even though its goal is to provide workers with the same retirement benefits he or she would achieved by working until eligible for normal retirement.

The EEOC sued on behalf of a 61-year-old disabled employee. Because he was over age 55 and eligible for normal retirement, he received normal retirement benefits based on his years of service. The EEOC claimed that this policy constituted age discrimination because had he been under age 55 and not eligible for retirement, he would have received higher disability retirement benefits based on the 20 years of service he would have been granted under the plan.

The 6th Circuit decision from which the State of Kentucky appealed found that the EEOC established a prima facie case of age discrimination based on the facially discriminatory language of the plan, and further that when a plan is facially discriminatory one need not offer any further proof of discriminatory animus to establish a prima facie case.

The State argued that the plan is not facially discriminatory because it differentiates on the basis of retirement eligibility, and not age. The EEOC has countered that the plan is facially discriminatory because it uses age as a factor to the disadvantage of older workers.

Kentucky also argues that as age is a necessary component of any retirement plan, only plans that use age in an arbitrary manner can be considered discriminatory on the basis of age. The EEOC, on the other hand, counters that the the at-issue plan is arbitrary because its use of age to provide a claimed necessary safety net for younger workers is based on "stereotypical assumptions of the kind the ADEA seeks to eradicate."

Instead of reinventing the wheel on yesterday's oral argument, I'll merely point everyone to Professor Paul Secunda's thorough summary at the Workplace Prof Blog.

It is very difficult to get a read on what the Court is going to do with this case. If I had a vote, I would reject Kentucky's argument that there is a difference between retirement eligibility and age. The former certainly seems like a proxy for the latter, and both are facially discriminatory. Nevertheless, I would reverse the 6th Circuit, because the use of age in this context simply is not arbitrary. One simply cannot design a disability retirement plan without taking age into consideration.