Split Developing On ADEA Disparate Impact Claims

A federal judge in California recently ruled that PricewaterhouseCoopers, LLC (“PwC”) must defend against a class action claim of unintentional age discrimination.  Rabin v. PricewaterhouseCoopers LLP, No. 16-cv-02276-JST (N.D. Cal. Feb. 17, 2017).

On April 17, 2016, Steve Rabin, on behalf of himself and other similarly situated unsuccessful job applicants, filed a putative class action alleging that PwC maintains hiring policies and other employment practices that result in the disproportionate employment of younger applicants.  The complaint also contends that these policies and practices deter older individuals from even applying for jobs at PwC.

The complaint includes a disparate impact claim under the Age Discrimination in Employment Act (“ADEA”).  Disparate impact analysis allows an employment discrimination plaintiff to prevail without a showing of intentional discrimination.  This is done by demonstrating that the employment practice or policy at issue has a disproportionately adverse effect on members of a protected class as compared to those outside the protected class, even though the practice or policy being applied does not appear to be discriminatory on its face. Where a disparate impact is shown, the employer must prove that the practice or policy in question has a demonstrable relevance to the requirements of the job at issue and is consistent with business necessity.

The lawsuit against PwC challenges, among other things, the company’s alleged emphasis on recruiting and hiring college students for entry-level positions through on-campus programs.  According to the complaint, entry-level jobs are rarely advertised or posted on PwC’s website.  Instead, applicants must conduct job searches either through a designated school recruiter or through PwC’s Campus webpage, which the complaint alleges is a recruiting tool that requires applicants to list their college affiliation and college year, which precludes individuals who are no longer in school from submitting an application.  This practice, the complaint alleges, results in the disproportionate hiring of younger applicants.

PwC filed a motion for judgment on the pleadings, arguing that the ADEA does not permit job applicants to bring disparate impact claims.  PwC relied heavily on the Eleventh Circuit’s decision in Villarreal v. R.J. Reynolds Tobacco Co., 839, F.3d 958 (11th Cir. 2016).  The Court in Villarreal focused on Section 4(a)(2) of the ADEA, which provides that it is unlawful for an employer “to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise affect his status as an employee, because of such individual’s age.”   Based on this language, which refers only to one’s status as an employee, the Court in Villarreal held that employees, but not job applicants, have the right to bring disparate treatment claims.  The Villarreal decision also noted that other sections of the ADEA specifically use the words “status as an employee or applicant for employment,” so that Congress’s decision to omit job applicants from Section 4(a)(2) must mean something.

United States District Judge Jon S. Tigar rejected PwC’s argument and the Eleventh Circuit’s reading of the ADEA.  He wrote, “the most natural reading of Section 4(a)(2) plainly describes what PwC allegedly did to plaintiffs.” He noted that Mr. Rabin is an individual allegedly deprived of employment opportunities and denied status as an employee because of something the employer did to limit him.  Judge Tigar thought it would turn the ADEA on its head to say that this plaintiff could not bring a disparate impact claim because he was never actually hired.  Judge Tigar found that Supreme Court precedent, the EEOC’s interpretation of the ADEA, and the legislative history of the ADEA all support his interpretation of statute’s text, which he concluded permits job applicants, not just employees, to bring disparate impact claims.

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