Supreme Court Requires Employers to Prove Reasonable Factors Other Than Age in an ADEA Disparate Impact Case

Employers laying off employees in a reduction in force must be prepared to prove that the factors that the employer used in making its decision about which employees to lay off were "reasonable factors other than age" (RFOA). In Meacham v. Knolls Atomic Power Laboratory, the Supreme Court held that in a disparate impact case under the Age Discrimination in Employment Act (ADEA), the employer bears the burden of production and persuasion when it relies on an affirmative defense that its decision was based on RFOA. In Meacham, the employer selected employees for layoff based on a point system where managers scored their subordinates on "performance, flexibility, critical skills," and provided points for years of service. This point system resulted in a selection for layoff "so skewed according to age [that it] could rarely occur by chance." (Thirty of the 31 employees laid off were at least 40 years old.) The employees also showed that the most subjective factors—flexibility and critical skills—had the "firmest statistical ties to the outcomes." The Court recognized that requiring employers to prove that their choices were reasonable (the burden of persuasion) will make it harder and costlier to defend than merely requiring the burden of production.

Employers should review their decision-making process when selecting employees for workforce reductions, especially when relying on subjective factors. Employers should also conduct a statistical analysis regarding the impact on employees within the protected class (over the age of 40) when conducting a workforce reduction. Ballard Spahr's Labor, Employment and Immigration Group can provide counsel on this issue. For more information, contact Frank A. Chernak at 215.864.8234 or chernakf@ballardspahr.com.

Supreme Court Rules that California’s Law Limiting the Use of State Funds is Preempted by the NLRA

The nation's highest court issued a ruling yesterday that may limit a state's ability to use its spending powers to circumvent federal labor laws, finding that a California law that limited the use of state funds was preempted by the National Labor Relations Act (NLRA). The Supreme Court, by a decision of 7-2, struck down a California law that prohibited state grantees from using state funds to "assist, promote or deter union organizing" on NLRA preemption grounds in Chamber of Commerce of the United States of America v. Brown. The Court explained that Section 8(c) of the NLRA, which protects speech by both unions and employers from regulation by the National Labor Relations Board, revealed congressional intent to encourage free debate on issues between labor and management and that this section expressly precludes regulation of speech about unionization, as long as the speech is not coercive. With similar legislation having been introduced in other states, this decision is applauded by employer groups because it confirms that employers have an equal opportunity to educate their employees about the impact of joining a union and signals that states will be limited in their ability to pass legislation that restricts these federally protected rights.

Ballard Spahr's Labor and Employment Group can provide advice to companies that may be affected by this ruling. For more information, contact any member of the Labor and Employment Group.


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