How Impactful? Seventh Circuit Limits ADEA Claims by Job Applicants

On January 23, 2019, the Seventh Circuit Court of Appeals (the federal circuit covering Indiana, Illinois, and Wisconsin) issued a decision limiting the type of age discrimination claims that may be brought by applicants for employment. In Kleber v. CareFusion Corp., the court of appeals held that applicants for employment (as opposed to current or former employees) may not maintain "disparate impact" claims under the Age Discrimination in Employment Act (ADEA).

Notably, while Kleber represents a significant narrowing of the ADEA's protections for applicants, it does not hold that applicants have no protections under ADEA (as suggested by several major news outlets), and it does not mean that employers within the Seventh Circuit are insulated from ADEA claims by applicants. 

Disparate Impact vs. Disparate Treatment

In order to understand the ruling's bottom line, it is important to distinguish between "disparate treatment" ADEA claims (which are unaffected by the Kleber ruling) and the "disparate impact" claim at issue in this case.  

Generally speaking, a "disparate treatment" claim under ADEA (or other similar federal employment discrimination statutes such as Title VII of the Civil Rights Act of 1964) alleges that an applicant, employee, or former employee (who is at least 40 years old) was subjected to intentional discrimination on the basis of his or her age. Disparate treatment claims may be proven through "direct" or "circumstantial" evidence of age discrimination—for example, a negative comment about older workers during a job interview or evidence that a less-qualified and substantially younger applicant was hired over a more qualified older applicant. As noted by the court of appeals in Kleber, there is no question that the ADEA allows applicants to bring disparate treatment claims.

In contrast to disparate treatment, a disparate impact claim—such as the one at issue in Kleber—alleges that an employment policy or practice, which appears neutral on its face, disproportionately favors individuals outside of the protected classification. Typically, disparate impact claims rely on statistical evidence.

Kleber's Disparate Impact Claim

In Kleber, the 58-year-old plaintiff alleged that the employer, CareFusion, violated the ADEA by limiting the pool of applicants for an in-house counsel position to workers with fewer than seven years of experience. Because Kleber had more than seven years of experience, he was passed over in favor of a 29-year-old applicant.  

Kleber's claim was dismissed by the trial court for failure to state a claim under the ADEA. After a three-judge panel of the Seventh Circuit initially reversed the trial court in Kleber's favor, the case was re-heard by all 12 judges on the circuit. In an 8-4 decision based on a lengthy analysis of the statutory text, the full court of appeals changed course and upheld the trial court's dismissal. In doing so, the Seventh Circuit reached the same result that the Eleventh Circuit Court of Appeals (the only other federal court of appeals to address the issue directly) reached in a 2017 case.

Employer Takeaways

Although the U.S. Supreme Court declined to hear an appeal of the Eleventh Circuit case, it is certainly possible that the Court may eventually address the issue. Alternatively, Congress could amend the statute to mirror other federal discrimination laws that explicitly allow applicants to bring disparate impact claims. 

In the meantime, employers that may be tempted to adopt "neutral" hiring practices or policies that are likely to have a disparate impact on older applicants should think twice. 

Among other things, to the extent that a position is open to both outside applicants and current employees, a practice that might be lawful as applied to outside applicants may be illegal when applied to current employees, who do have the right to bring disparate impact claims under the ADEA. Additionally, many states and municipalities have employment discrimination laws that prohibit age discrimination. State and local courts or agencies could interpret these laws to allow for age-related disparate impact claims. Further, individual applicants may still be able to bring a disparate treatment claim if they can show they were passed over for a younger individual with the same or fewer qualifications. Finally, even if there is no risk of legal liability, the reputational damage to an organization that results from being branded as ageist could be more far more harmful (and costly) than a single EEOC charge or lawsuit alone. 

In sum, make sure your hiring practices only take into account qualifications that are relevant to the position and, as always, continue to hire the most qualified candidate, regardless of their age.

For more information, contact Manolis Boulukos or another member of our Labor, Employment and Immigration Group.