Appellate Court Holds That Applicants May Bring Disparate Impact Claim Under ADEA

Kollman & Saucier
Kollman & Saucier

In 2005, the Supreme Court concluded that the Age Discrimination in Employment Act of 1967 (ADEA), which prohibits discrimination against individuals who are at least 40 years old, provides not only for (1) disparate treatment claims, in which there is intentional discrimination by an employer because of protected status, but also for (2) disparate impact claims, in which facially neutral employment practices “fall more harshly on one group than another.” Smith v. City of Jackson, 544 U.S. 228, 239 (2005) (citations omitted).

Following Smith, it remained unclear as to who could bring a disparate impact claim under the ADEA. In a case of first impression, the Eleventh Circuit (which includes Florida, Georgia, and Alabama) held that job applicants could bring such claims. Villarreal v. R.J. Reynolds Tobacco Co., No. 15-10602 (11th Cir. Nov. 30, 2015).

Section 4(a) of the ADEA, in a section titled “Employer Practices,” makes it unlawful for employers

  • To fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age; [or]
  • To limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age[.]

29 U.S.C. §§ 623(a) (emphases added).

The key argument for the court to resolve in Villarreal was whether section 4(a)(2) protects the broad class of “any individual” (in concert with section (a)(1), which clearly protects against discriminatory hiring decisions as well as decisions made during employment) or whether “any individual” is limited by the earlier phrase “his [i.e., an employer’s] employees,” which is not contained in section (a)(1). Under the first of these two approaches, applicants would be protected, while under the second, they would not be.

Richard Villarreal, then 49 years old, applied in 2007 to be a Territory Manager with R.J. Reynolds, the second-largest tobacco company in the United States. He never heard back about his application. Unbeknownst to Villarreal at the time, R.J. Reynolds utilized “resume review guidelines” that, among other things, instructed recruiters and hiring managers to target candidates who were “2-3 years out of college” and “stay away from” those with “8-10 years” of prior sales experience. Two-and-a-half years later, after a class-action attorney got his hands on a copy of these guidelines and reached out to Villarreal with the information, Villarreal filed an EEOC charge alleging age discrimination in May 2010. He then applied unsuccessfully five more times for the same Territory Manager position.

After the EEOC declined to take further action, Villarreal sued the company under both theories of disparate treatment and disparate impact. R.J. Reynolds moved to dismiss some of his claims as untimely and also argued that the ADEA only allows current employees to bring disparate impact claims. The district court agreed with R.J. Reynolds and dismissed the disparate impact claim. Villarreal appealed.

In a 2-1 opinion, the Eleventh Circuit reversed, allowing Villarreal’s claims to proceed.  Finding the statutory text and other canons of interpretation ambiguous, the majority looked to the EEOC’s longstanding interpretation and deferred to it as reasonable. Current regulations state in part that “[a]ny employment practice that adversely affects individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a ‘reasonable factor other than age.’” 29 C.F.R. § 1625.7(c) (emphasis added). Combined with the fact that the EEOC’s preamble to the final regulations discussed several examples involving job applicants, the court concluded that the law protects all individuals over 40 (including job applicants), not just current employees. Finding further that Villarreal had no way of knowing of R.J. Reynolds’s “secret preferences” until 2010, when he was contacted by the class-action attorney, the Court permitted his claims to proceed.

In a strong dissent, Judge Vinson would have found that the ADEA’s text only protects employees, without a need to look to the EEOC. Supported by Justice O’Connor’s dictum in Smith, as well as three circuit courts and two district courts that have all stated that applicants for employment are not protected, Judge Vinson explained that Villarreal’s suit should have been dismissed. R.J. Reynolds will likely seek Supreme Court review of the decision.

The case serves as a reminder of employers should be sure to maintain and regularly review their hiring guidelines and related materials (such as interview questions, applicant scoring and testing criteria) to minimize the risk of facing discrimination claims from job applicants, regardless of whether they are ultimately hired.

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