Employees are no longer required to provide proof of intent to discriminate in order to win a suit alleging age bias, according to a Supreme Court ruling in late March.
The 5-to-3 decision held that employees over 40 need only show that a policy has a discriminatory impact on older workers, regardless of the employer's motivation for creating the policy.
However, employers still have some recourse to defend themselves if they can prove that the policy in question was created based on "reasonable factors other than age."
In the case, Smith v. City of Jackson, a group of older police officers in Jackson, Miss., fought the city's move to give disproportionately large raises to younger officers. The court said the city's need to raise junior salaries in order to become more competitive with other police departments was a reasonable motivation, so the officers lost.
The employment practices liability insurance market is bound to feel the sting. Says Richard V. Rupp, vice president and EPLI product manager for Professional Indemnity Agency, a managing general agency headquartered in Mt. Kisco, N.Y., "It's too early to tell, but it's either going to be reflected in the retention, or deductible that the insured gets, or it's going to be reflected in pricing."
Employers should take care with personnel decisions that affect large numbers of older workers, and possibly even alter policies that could appear discriminatory.
"Companies needing to trim costs should approach worker layoffs with extreme sensitivity or they could find themselves involved in some very costly lawsuits," warns Loretta Worters, a spokeswoman for the Insurance Information Institute in New York City. Consistent business practices and thorough documentation are the keys to averting such lawsuits, she says.
About 75 million people--roughly half the nation's workforce--are covered by the decision.
May 1, 2005
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