If an employment policy has the effect of favoring younger workers -- even though it does not explicitly discriminate against older workers -- is it illegal?
That's the key issue in Smith v. City of Jackson, Mississippi, the paramount employment case before the U.S. Supreme Court in its 2004-2005 term. For the half of American workers ages 40 or older, the court's decision will affect their ability to sue their employers for ageist policies under the Age Discrimination in Employment Act of 1967 (ADEA).
The ADEA protects workers against age bias in hiring and many aspects of employment, including compensation, job assignments, training, promotions and layoffs.
Details of the Case
In Smith v. City of Jackson, 30 officers and dispatchers in the Jackson police department, all at least 40 years old, sued the city, challenging a pay system that granted higher-percentage salary increases to workers with five or fewer years on the job. Nearly all workers who qualified for the larger increases were under age 40.
Smith et al.'s appeal to the Supreme Court is based on the legal theory of disparate impact, which says that a practice is discriminatory if its impacts on different classes of workers are different, even if there was no intention to treat the classes differently.
The case was dismissed in federal district court, and the Fifth Circuit Court of Appeals affirmed the dismissal, writing: "The ADEA was not intended to remedy age-disparate effects that arise from the application of employment plans or practices that are not based on age."
Translation: Although most workers who were denied the larger pay increases turned out to be older, the older workers can't claim age discrimination, because the pay policy refers to time on the job, not the workers' ages.
"It's a very significant case, long overdue for [a] decision by the Supreme Court," said Gregg Lemley, a partner in the St. Louis office of Bryan Cave.
Which Way Will the Court Decide?
Observers can only speculate which way the court will rule in Smith v. City of Jackson, but a consensus is emerging on which way the justices are leaning. "The court will likely uphold the Fifth Circuit decision and not allow disparate impact as a claim," Lemley said.
The current court is widely viewed as legally conservative. So the justices are unlikely to issue a ruling in favor of disparate impact, which would sanction a new way to sue under the ADEA, says Matthew Halpern, a partner in the Melville, New York, office of Jackson Lewis LLP.
Even advocates of older workers are somewhat skeptical of their prospects in this case.
"A few justices have sent pretty strong signals that disparate impact shouldn't apply," said Laurie McCann, a senior attorney in the litigation department of AARP in Washington, D.C. "But I'm still cautiously optimistic."
AARP filed a friend-of-the-court (amicus) brief in favor of the disparate impact theory.
Effects on Employers and Workers
There's substantial disagreement on how deeply the Supreme Court's decision could affect companies and their workers.
"I don't think it's going to have any noticeable impact on the employer," Halpern said.
But advocates for disparate impact foresee substantial damage to older workers if the court rejects this basis for claiming age bias.
Such a ruling could actually encourage employers to continue age discrimination, McCann wrote in an AARP preview of the 2004 Supreme Court term. "Unless the disparate impact theory is made available to challenge subtle forms of discrimination, employers will not be encouraged to examine policies which adversely affect older workers, but will instead cover their tracks," she said.
Check out the Equal Employment Opportunity Commission's website for information about age discrimination and how to file a charge against an employer.
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