Defenses to an Action For Employment Discrimination Under The Age Discrimination in Employment Act (ADEA)
The Defense of Bona Fide Occupational Qualification
Under 29 U.S.C. § 623(f)(1) an employer may take action that would otherwise be prohibited where "age is a bona fide occupational qualification [('BFOQ')] reasonably necessary to the normal operation of the particular business." The BFOQ defense is also available in Title VII cases, and the same standard applies. See W. Air Lines, Inc. v. Criswell, 472 U.S. 400, 414-17 (1985) (interpreting ADEA's BFOQ exception in light of Title VII's BFOQ exception); see also Smith v. City of Jackson, 544 U.S. 228, 234 (2005) (noting that certain "language in the ADEA . . . was derived in haec verba from Title VII." (internal quotation omitted)).
The Defense of Bona Fide Seniority System
The Defendant’s treatment of the plaintiff was based upon a bona fide seniority system may excuse actions where:
1. the seniority system had legitimate goals and was not designed to discriminate on the basis of age;
2. the seniority system used the employee's length of service as the primary consideration in selecting the employees who would perform certain acts or jobs; and
3. the seniority system did not place the plaintiff in a position where a reasonable person in that position would believe that plaintiff had no choice but to retire.
The ADEA provides an affirmative defense for age discrimination undertaken as part of a bona fide seniority system. 29 U.S.C. § 623(f)(2)(A). See generally Hazen Paper Co. v. Biggins, 507 U.S. 604, 611, 616 (1993) ("[I]t is incorrect to say that a decision based on years of service is necessarily age-based[.]").
Because Title VII provides a similar bona fide seniority system defense, the first two elements are based on the parallel Title VII instruction. See Hiatt v. Union Pac. R.R. Co., 65 F.3d 838, 842 (10th Cir. 1995) (analogizing § 623(f)(2)(A) to similar language in Title VII). See also Pullman-Standard v. Swint, 456 U.S. 273, 289 (1982) (discussing Title VII seniority exception).
The ADEA was substantially amended in 1978 to add a provision prohibiting the use of a seniority system to "require or permit . . . involuntary retirement[.]" 29 U.S.C. § 623(f)(2)(A). The committee is unable to find Ninth Circuit authority construing the post-1978 version of this provision, and the pre-1978 cases invariably concern involuntary retirement. See, e.g., United Air Lines, Inc. v. McMann, 434 U.S. 192, 195-203 (1977) (construing text and history of former version of statute); E.E.O.C. v. Santa Barbara County, 666 F.2d 373, 375 n.6 & 377 (9th Cir. 1982).
Because there is no authority construing the provision, and because the literal text of "require or permit . . . involuntary retirement" is less than clear, the language of the third element is adopted from a Ninth Circuit case construing identical involuntary retirement language in 29 U.S.C. § 623(f)(2)(B), the ADEA's employee benefit plan defense. See Kalvinskas v. Cal. Inst. of Tech., 96 F.3d 1305, 1308 (9th Cir. 1996) (holding that an employee benefits plan "require[s] or permit[s] the involuntary retirement of an individual," when "a reasonable person in [the plaintiff's] position would feel he had no choice but to retire.").
The ADEA applies the after-acquired evidence doctrine in the same manner as Title VII. See McKennon v. Nashville Banner Pub. Co., 513 U.S. 352, 358-59 (1995); O'Day v. McDonnell Douglas Helicopters Co., 79 F.3d 756, 759-60 (9th Cir. 1996). Thus, the parallel Title VII instruction, Instruction 10.5C (Civil Rights—Title VII—Defense—After-Acquired Evidence) should be given with appropriate modifications.
If an employer takes an adverse employment action such as discharging an employee for a discriminatory reason, later-discovered evidence that the employer could have used to discharge the employee for a legitimate reason does not immunize the employer from liability; however, the employer does not have to offer reinstatement or front pay and only has to provide back pay "from the date of the unlawful discharge to the date the new information was discovered." McKennon, 513 U.S. at 362 (1995) (ADEA case); see also Rivera v. Nibco, Inc., 364 F.3d 1057, 1071 n.16 (9th Cir. 2004); O'Day, 79 F.3d at 761-62 (9th Cir. 1996). The employer must prove by a preponderance of the evidence that it would have fired the employee because of the after-acquired evidence. Id. at 761.
In Title VII cases, the defense of after-acquired evidence is similar to, but not the same as, an employer's affirmative defense to a charge that a protected characteristic was a "motivating factor" in an adverse employment decision, because both defenses provide limitations on remedies without absolving an employer of liability. However, this is not the case in ADEA cases, because the "same decision" defense in a mixed motive ADEA case is a complete defense, not merely a limitation on remedies.
If age related disparate treatment afforded to the plaintiff resulted from the plaintiff's participation in a bona fide employee benefit plan, it may be excused where:
1. The action occurred as part of the defendant's policy of providing its workers with non-wage benefits under an employee benefit plan;
2. the benefit plan was bona fide, that is, it existed and provided for and paid benefits to employees;
3. the defendant was actually following the plan at the time it is alleged to The action; and
4. the defendant's employee benefit plan did not place the plaintiff in a position where a reasonable person in that position would believe that plaintff had no choice but to retire; and
5 The action is justified by significant cost considerations.
Some benefits cost more to provide to older workers than to younger ones. The law allows employers to provide less in benefits to older workers when (a) the employer spends approximately the same amount for benefits for older and younger workers, and (b) the extent of the difference in benefits is necessary to keep the cost approximately equivalent. Thus, a plan is justified by significant cost considerations when any age- related differential in employee benefits exists only to the extent necessary to achieve approximate equivalency in costs between older and younger workers.
The ADEA exempts certain employer actions taken pursuant to a "bona fide employee benefit plan" from general liability under the statute. See 29 U.S.C. § 623(f)(2)(B). Prior to 1989, the Ninth Circuit used a four-element test in applying this provision. EEOC v. Orange County, 837 F.2d 420, 421 (9th Cir. 1989) ("To qualify for exemption under section (f)(2), [a] plan must fulfill four criteria: 1) it must be the sort of 'plan' covered by the section, 2) it must be 'bona fide,' 3) the [employer]'s action must be in observance of the plan, and 4) the plan must not be a subterfuge to evade the purposes of the Act.").
Subsequent to the establishment of the Ninth Circuit test, the Supreme Court substantially redefined the "subterfuge" element, and placed the burden on the plaintiff to show that the plan "was intended to serve the purpose of discriminating in some non- fringe-benefit aspect of the employment relation." Pub. Employees Ret. Sys. v. Betts, 492 U.S. 158, 181 (1989). Then, in 1990, Congress amended the statute, effectively abrogating the holding of Betts in two respects. The amendment: (1) removed the word "subterfuge" from the text of the statute and replaced it with the definition that had been used by the EEOC prior to Betts; and (2) clarified that the employer claiming the defense bears "the burden of proving that such actions are lawful"—thus establishing that the provision is, contrary to the characterization in Betts, an affirmative defense. See Older Workers Benefit Protection Act ("OWBPA"), Pub.L. 101-433, Title I, § 103, Oct. 16, 1990, 104 Stat. 978. After the 1990 amendment, there is little Ninth Circuit law interpreting the bona fide employee benefit provision. However, Congress was clear that the amendment was meant to return the law to its pre-Betts state. See OWBPA § 101 ("Congress finds that, as a result of the decision of the Supreme Court in . . . Betts, . . . legislative action is necessary to restore the original congressional intent in passing and amending the [ADEA]."). Thus, the general state of the law pre-Betts is persuasive and some version of the four-element test should apply. See Orange County, 837 F.2d at 421; EEOC v. Borden's Inc., 724 F.2d 1390, 1395 (9th Cir. 1984), disapproved by Betts, 492 U.S. at 172.
As to the first element, it appears reasonable to retain the relatively broad definition of "employee benefit plan" as discussed in Betts. Betts relied on an EEOC regulation's definition of these benefits as "fringe"—i.e. other than monetary compensation—and gave the examples (then in the statute) of retirement, pension, and insurance plans. See also Am. Assoc. Ret. Pers. v. Farmers Group, Inc., 943 F.2d 996, 1003 (9th Cir. 1991) (following Betts; distinguishing "wages" from "benefits"). The OWBPA did not alter the substance of that definition.
The second element is straightforward. "'[B]ona fide' . . . has been held to mean no more than that the plan exists and pays substantial benefits." Borden's, 724 F.2d at 1395. The third element is a question of historical fact. The text of the statute also provides that no affirmative defense is available (even if cost justified) if a plan "require[s] or permit[s] the involuntary retirement of an individual." 29 U.S.C. § 626(f)(2). This section has been construed to mean that discrimination that occurs pursuant to a benefits plan must not lead a reasonable person in the position of the plaintiff to believe that he has "no choice but to retire." Kalvinskas v. Cal. Inst. of Tech., 96 F.3d 1305, 1308 (9th Cir. 1996). As the statute requires the employer to prove the legality of its conduct, when relevant, the court should instruct the jury on this additional fourth element.
The final element was clearly altered by the OWBPA. Instead of using the word "subterfuge," Congress used the definition of subterfuge applied by the EEOC prior to Betts. Thus, the fifth element now requires that the plan be "justified by significant cost considerations." 29 C.F.R. § 1625.10 (incorporated by reference in 29 U.S.C. § 623(f)(2)(B)(i)). More specifically, an age-based differential in employee benefits is exempted under the ADEA only "to the extent necessary to achieve approximate equivalency in cost for older and younger workers." Id.
The Defense of Reasonable Factor Other Than Age
If the defendant’s test, requirement, practice, or selection criterion is based on a reasonable factor other than the plaintiff's age, it may escape liability where:
1. the test, requirement, practice, or selection criterion is based on a factor other than the age of the plaintiff or those similarly situated;
2. The factor is a legitimate interest of the defendant's business; and
3. the test, requirement, practice, or selection criterion is reasonably related to achieving factor.
Distinctions "based on reasonable factors other than age" ("RFOA") are not unlawful under the ADEA. 29 U.S.C. § 623(f)(1). Thus, in a disparate impact case, the defendant is entitled to an instruction on this defense if the evidence can support a finding that the defendant's test, requirement, or practice is based on a factor other than age. See generally Smith v. City of Jackson, 544 U.S. 225, 239 (2005) ("It is . . . in cases involving disparate-impact claims that the RFOA provision plays its principal role by precluding liability if the adverse impact was attributable to a nonage factor that was 'reasonable.'").
In a disparate treatment case, instruction on RFOA as an affirmative defense will be unnecessary because the plaintiff already bears the burden of proving that the employer's decision was, in fact, based on age. See id. at 1544 ("In most disparate- treatment cases, if an employer in fact acted on a factor other than age, the action would not be prohibited under [the ADEA] in the first place."). Instructing the jury on RFOA in a disparate treatment case may cause confusion regarding the allocation of the burden of proof.
Unlike the "business necessity" defense applicable to disparate impact cases under Title VII, RFOA requires only that the factor have a reasonable relationship to a legitimate business purposes. The employer is not required to tailor the factor narrowly to minimize its disparate impact on older workers. See Smith, 544 U.S. at 243. Thus, the instruction requires the defendant to show: (1) a factor other than age; (2) a legitimate business purpose; and (3) a reasonable relationship between the two. See id. (non-age consideration disparately impacting older workers is a "reasonable factor other than age" when it "respond[s] to the [employer's] legitimate goal").
Source: Ninth Circuit Manual of Model Jury Instructions (Civil)