Last Friday, the EEOC published its Final Regulations on Disparate Impact and Reasonable Factors other than Age under the ADEA.  The Final Regulation clarifies that an employment practice that has an adverse impact on individuals 40 and older is discriminatory unless the practice is justified by a “reasonable factor other than age” and that the individual challenging the allegedly unlawful employment practice bears the burden of isolating and identifying the specific employment practice responsible for the adverse impact.  The employer has the burden of establishing facts showing that a reasonable factor other than age (RFOA) exists.

The EEOC issued the Final Regulations in order to conform existing regulations to recent Supreme Court decisions and to provide guidance about the application of the RFOA defense.  The RFOA determination is a fact intensive analysis. Section 1625(e)(1) of the revised regulations provides that an RFOA is one that “is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances.”  Moreover, the Regulations set forth a non-exhaustive list of factors relevant to whether an employment practice is reasonable and is based on factors other than age.  These factors include:

  • The extent to which the factor is related to the employer’s stated business purpose (i.e., the legitimate business purpose that the employer had at the time of the challenged employment practice);
  • The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which the employer gave managers and supervisors training about how to apply the factor in a way so as to avoid discrimination;
  • The extent to which the employer attempts to minimize subjectivity and avoid age-based stereotyping, particularly where the criteria being evaluated are known to be subject to negative age-based stereotypes;
  • The extent to which the employer assessed the adverse impact of its employment practice on older workers; and
  • The degree of harm to individuals within the protected age group, in terms of both the scope of the injury to the individuals affected and the numbers of persons adversely affected, the availability of measures to reduce harm, and the extent to which the employer weighed the harm to older workers against both the costs and efficiencies of using other measures that will achieve the employer’s stated business purpose.

Significantly, the RFOA analysis does not adopt Title VII’s requirement that the employer must adopt a less discriminatory alternative.  However, the availability of less discriminatory options is manifestly relevant to the issue of reasonableness.  According to the EEOC, “[a] chosen practice might not be reasonable if an employer knew of and ignored an equally effective option that would have had a significantly less severe impact on older workers.  On the other hand, “an employer’s choice not to use an alternative that only marginally reduces the impact might be reasonable under the ADEA.”

The RFOA is an important defense for an employer in an ADEA case.  Employers should take into consideration the factors in the new regulations to properly utilize this defense.