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On the Legal Front

Donald L. Zink
Personnel Management Decisions

Authors Note: I am substituting as guest author at the request of Arthur Gutman, who recently has been concentrating upon preparations for an unveiling, in remembrance of his father, who passed away approximately one year ago. I feel privileged and humbled that Art has entrusted me with this task, realizing that my comments cannot match the insightfulness that readers of his column have come to expect. I will review an age discrimination case decided by the Supreme Court in 2004 but not yet discussed in prior issues of TIP.

In its 20032004 term, the Supreme Court handed down two decisions that are of special interest to industrial-organizational psychologists who keep abreast of the ever changing scope and interpretation of employment law. In Pennsylvania State Police v. Suders, reviewed by Art Gutman in the October 2004 issue of TIP (Gutman, 2004), the Supreme Court held for the first time that Title VII included employer liability for violations resulting in the constructive discharge of an employee. In its other decision, the Court resolved a split in the courts below and held that claims of reverse discrimination were not viable under the Age Discrimination in Employment Act (ADEA).1

1 29 U.S.C. 29 621-634 (2000)

Reverse Discrimination and the ADEA

In 1997, General Dynamics Land Systems, Inc. (General Dynamics) negotiated a new contract with the United Auto Workers. In the newly bargained agreement, the company changed its retiree health care benefits for retirees. In the prior agreement, full health care benefits were provided for all retirees who retired with 30 or more years of employment. In the new agreement, full health care benefits would be provided only if an employee was at least 50 years old at the time the new CBA was signed.

Approximately 200 former and current employees of General Dynamics, all between 40 and 50 years of age, and therefore in the protected class, brought suit (General Dynamics v. Cline), alleging that they had been denied benefits to which they previously had been entitled, because of their age, and that they therefore had been discriminated against because of their age, in violation of the ADEA.

Congress passed the ADEA in 1967, 3 years after the passage of the Civil Rights Act of 1964. The stated purpose of the ADEA is:

[T]o promote employment of older persons based on their ability rather than age; to prohibit arbitrary discrimination in employment; to help employers and workers find ways of meeting problems arising from the impact of age on employment.

The statute further defines the protected class to be those workers or job applicants who are 40 years of age or older.

The ADEA, in language virtually identical to that of Title VII, provides that:

It shall be unlawful for an employer(1) to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, term, conditions, or privileges of employment, because of such individuals age.2

2 29 U.S.C. 623(a)(1).

In response to the claims brought in General Dynamics v. Cline, General Dynamics filed a motion to dismiss, arguing that giving more favorable treatment to older workers, in contrast to discriminating against them, did not violate the ADEA. The District Court granted General Dynamics motion to dismiss, finding the claim to be one of reverse discrimination and noting that no federal court had ever granted relief for a claim of reverse discrimination under the ADEA. In doing so, the District Court relied especially on an opinion of the Seventh Circuit in Hamilton v. Caterpillar, Inc. that the ADEA does not protect the younger against the older worker. The circumstances in Hamilton were similar to those in Cline. When Caterpillar closed two plants, it introduced an early retirement plan. The employees eligible for the plan were those 50 years of age or older. Plaintiffs, between 40 and 50 years of age, brought suit, alleging age discrimination because they were too young to participate in the plan. The Seventh Circuit reasoned that the ADEA did not allow for reverse discrimination suits because unlike race or sex discrimination claims, age discrimination claims could not be reversed and that [t]here [was] nothing to suggest that Congress believed age to be the equal of youth in the sense that the races and sexes are deemed to be equal.

Other earlier cases had reached similar conclusions. The First Circuit also had held that the ADEA only forbid discrimination where younger workers were preferred to older workers in Schuler v. Polaroid Corp. In that case, the employee sued for age discrimination when he was forced to participate in a severance plan when his job was eliminated. In dicta, the Court noted that the ADEA does not forbid treating older persons more generously than others. In Karlen v. City Colleges of Chicago, the plaintiff challenged an early retirement plan that provided less benefits for older workers. The Seventh Circuit stated in dicta the [ADEA] did not allow for reverse discrimination; if Congress had meant to protect younger workers, it would not have defined the protected class as it had.

The Sixth Circuit reversed the District Court. Although it acknowledged its conflict with the cases from the First and Seventh Circuits, it found that the language because of such individuals age was clear on its face and that if the statutory intent only had been to protect older workers against younger workers, Congress would have said so. The Sixth Circuit also took note of an interpretative regulation by the EEOC, which enforces the ADEA, which states that [I]f two people apply for the same position, and one is 42 and the other 52, the employer may not lawfully turn down either one on the basis of age.

3 29 C.F.R. 1625.2(a) (2003).

Before Cline, a reverse age discrimination case had never directly been considered by the Supreme Court. Prior decisions, however, indicated a stance that the ADEA only pertained to discrimination in favor of younger workers against older workers. For example, in Western Airlines v. Criswell, the Court observed that the legislative history of the ADEA emphasized that the psychological and physiological degeneration caused by aging varies with each individual and that many older workers performed at levels comparable to younger workers. In Hazen Paper Co. v. Biggins the Court stated it is the very essence of age discrimination for an older employee to be fired because the employer believes that productivity and competence decline with old age. And in OConnor v. Consolidated Coin Caterers Corp., the Court said that the fact that a replacement is substantially younger than the plaintiff permitted an inference of discrimination.

In a 63 decision (Justices Scalia, Thomas, and Kennedy dissenting), the Supreme Court reversed the Sixth Circuit, holding that although the ADEA forbid favoring younger over older employees, it did not forbid favoring the older over the younger. In so deciding the Court resolved the split among the Circuit Courts of Appeals.

The Courts decision is interesting to read (perhaps only to law students) because of its discussion of different canons of statutory interpretation. On the one hand, it generally is presumed that the same words in different parts of a statute have the same meaning. On the other hand, said the Court, there is a cardinal rule that statutory language must be read in context since a phrase gathers meaning from the words around it. Elaborating, the Court found that the term age had different meanings in different parts of the statute. Thus, according to the Court, in the context of discrimination, the use of in Section 623(a)(1) meant old age; whereas age as a bona fide occupational qualification, in Section 623(f)(1), an affirmative defense, meant comparative youth.

Because the Court did not find plain meaning in the statute, it engaged in a careful examination of the legislative and social history of the ADEA. According to the Court, age had been deliberately omitted from Title VII by Congress, and the issue of age discrimination was referred to the Secretary of Labor for special study, which found widespread discrimination against older workers. The Secretarys report distinguished age discrimination from discrimination because of race, because the latter reflected attitudes not related to the ability to do a job. According to the report, discrimination against older workers, on the other hand, reflected assumptions about the effect of age on their ability to do a job when there is in fact no basis for these assumptions. In the legislative hearings preceding the passage of the ADEA in 1967, Congress closely examined assumptions about age and the ability to work. The hearings focused especially upon demeaning stereotypes and the problem of increased costs associated with growing older, resulting in reduced opportunities for employment for older workers. The Court found it significant that in none of the hearings was there any suggestion that workers were complaining about discrimination in favor of older workers, at the disadvantage of younger employees.

The Court also noted the near unanimity among the Courts of Appeals and the District Courts in understanding discrimination under the ADEA only to mean preferring younger to older workers. It also took note that Congress had been silent as to this aspect of the ADEA, but it had not hesitated to change other judicial constructions of the statute.

In conclusion, the Court stated We see the text, structure, purpose, and history of the ADEA, along with its relationship to other federal statutes, as showing that the statute does not mean to stop an employer from favoring an older employee over a younger one.

The Dissents

In a brief dissent, Justice Scalia found that the language of the statute had plain meaning and supported the EEOCs interpretation that discrimination could occur when younger workers were treated less favorably than older workers. Because he found such an interpretation to be reasonable, he argued that because EEOC was charged with enforcing ADEA, its opinion should be deferred to and controlling. The Court rejected Justice Scalias interpretation, finding that the stance taken by the EEOC was clearly wrong.

Justice Thomas (joined by Justice Kennedy) dissented, also finding plain meaning in the statute. His main criticism was of the Courts analysis of social history, which he criticized as an unprecedented new tool of statutory interpretation. In particular, he criticized the conclusion that if Congress has in mind a particular, principal, or primary form of discrimination when it passes an antidiscrimination provision...then the phrase...only covers the principal or most common form of discrimination. He found this inconsistent with allowing suits for reverse race discrimination, as in McDonald v. Santa Fe Trail Transportation, though Congress only was concerned with discrimination primarily against Blacks when it passed Title VII. The Court countered his argument stating that age was not analogous to sex and race in Title VII because those word were general terms that in every day usage require modifiers to indicate any relatively narrow application.

In fact, an analysis of social history has significant precedent. For example, in United Steelworkers v. Weber, the Court examined the history of racial discrimination to support its decision to uphold a bargaining agreement that included a voluntary affirmative action plan designed to eliminate extreme racial imbalance in an almost exclusively White workforce. More recently, in Tennessee v. Lane, the Court examined the social history of discrimination against the disabled and noted that Title II of the Americans with Disabilities Act was enacted against a backdrop of pervasive unequal treatment in the administration of state services and programs.

Conclusions

In most respects, the status of the law after the Cline decision is not much changed. The Court already had indicated, as noted earlier, a disinclination to extend protection for age discrimination to younger workers in Hazen Paper and in OConnor. In addition, a large majority of the lower courts had held that the ADEA did not allow for claims of reverse age discrimination. The decision of the Supreme Court, of course, now makes that position binding. As a result, employers who favor older workers in layoff plans and retirement and retirement programs are now protected. 

Reverse age discrimination claims still may be possible under state law. In Oregon, for example, the floor for the protected class is 18 years of age.4 Other state courts have allowed reverse age discrimination claims based on state law. In Zanni v. Medaphis Physician Services, for example, the Michigan Appellate Court allowed a reverse age discrimination claim where an older, less qualified employee replaced a younger employee who had been terminated. Michigan law stated that employees could not be discriminated against because of their age and further defined age to mean chronological age. Thus, the Court found that Michigan law was not as restrictive as the ADEA. Other state courts have reached a similar conclusion.5

4 See Oregon Revised Statutes 659A.030 (2003).

See, e.g., Bergen Commercial Bank v. Sisler, 723 A.2d 944 (N.J. 1999; noting differences in ADEA and state law, and holding that state law allowed reverse discrimination claims).

On the other hand, some commentators view the Cline decision as narrowing the potential to bring suit under the ADEA by employees over 40 years of age (Paetzold, 2004). From this point of view, early retirement incentive programs (such as Cline) work to the disadvantage of intermediate old age employees. Such an employee might have strong incentives to retire early but at the loss of benefits if she worked until, say, age 60. At the same time, some older workers may be willing to work for less in order to protect benefits not available to younger workers. The disadvantages mainly will fall on those workers of intermediate older age.

References

     Gutman, A. (2004). The Supreme Courts ruling in Sudersthey missed the boat. The Industrial-Organizational-Psychologist, 42, 9299.
     Paetzold, R. L. (2004). Supreme Courts 200304 term employment law cases: Clarifying aspects of anti-discrimination law and ERISA. Employee Rights and Employment Policy Journal, 8, 195213
.

Cases Cited

     General Dynamics v. Cline, 540 U.S. 581 (2004).
     Hamilton v. Caterpillar, Inc., 966 F.2d 1226 (7th Cir. 1992).
     Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993).
     Karlen v. City Colleges of Chicago, 837 F.2d 314 (7th Cir. 1988).
     McDonald v. Santa Fe Trail Transportation, 427 U.S. 273 (1976).
     OConnor v. Consolidated Coin Caterers Corp., 517 U.S. 308 (1996).
     Schuler v. Polaroid Corp., 848 F.2d 276 (1st Cir. 1988).
     Tennessee v. Lane, 541 U.S. 509 (2004).
     Western Airlines v. Criswell, 472 U.S. 400 (1985).
     United Steelworkers v. Weber, 443 U.S. 194 (1979).
     Zanni v. Medaphis Physician Services Corp., 612 N.W.2d 845 (Mich. Ct. App. 2000).

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