Third Circuit Expands Age Discrimination Claims: What It Means for Your Nonprofit

A recent case in the Third Circuit expands the scope of potential age discrimination claims where younger workers replace older workers, even when the replacement workers are over 40 years of age. The Age Discrimination in Employment Act (ADEA) prohibits age discrimination against people who are 40 years of age or older. The law does not prohibit treating an older worker better than a younger worker, even if both are 40 years of age or older.

The Recent Decision

In “Karlo vs. Pittsburgh Glass Works, LLC,” the Third Circuit found that the ADEA allows claims by older groups of workers against younger groups of workers, even if people in the younger group are over 40 years of age. In “Karlo,” the employer was an automotive glass manufacture that was downsizing its workforce. According to court records, the workers who are named plaintiffs in the case all worked for the
defendant, which supplied materials to the auto industry.

In 2008 when the industry started to tank, thr defendant engaged in numerous reductions in its workforce. The company ultimately fired about 100 salaried employees at some 40 locations/divisions. The individual directors had a great deal of individual latitude in deciding who should stay and who should go. The company didn’t train directors in how to implement the reductions in force, and there were no written guidelines or policies.

The plaintiffs in question were each let go and each was over 50 years of age. The company held several reductions in force (RIFs) and allowed supervisors to set the terms of the layoffs. The plaintiffs alleged that the RIFs resulted in the termination of a disproportionate number of employees over 50 years of age.

The Court found that the RIF violated the ADEA, even though a 40-year-old worker replaced the worker bringing the case. This case held that in the Third Circuit, an employee in his 50s can sue his or her employer when a policy disfavors the employee, even if the employer’s policy favors workers in their 40s who would also fall under the protections of the ADEA.

Circuit Courts across the country are split on this issue. Some jurisdictions allow claims by older workers against younger workers in a protected class and some do not. This issue is likely to be raised to the Supreme Court for determination of the split in the courts. Until then, employers who are considering a RIF should make sure to analyze statistically if the policy will impact workers over an age range at the expense of workers in another age range, even if both groups are 40 years of age or older. This Third Circuit decision applies to nonprofit organizations, just as it does private businesses.

Protection From Potential Age Discrimination Claims

Until this issue is addressed by the U.S. Supreme Court, employers in both the nonprofit and public sectors must exercise caution in response to the “Karlo” decision. In light of “Karlo,” employers should:

1. Ensure that policies concerning seniority and any need for layoffs or RIF are in writing and up to date.

2. If a RIF is necessary, make sure to check the numbers. Statistically, employees impacted by the RIF should fall over a wide age range.

3. Limit supervisor subjectivity in making decisions about who is retained and who is subject to the RIF.  Instead, develop a written criteria and stick to it.

4. Maintain documentation concerning the reason(s) any employee is laid off or subject to a RIF.

5. In any RIF, be sure to check and follow any applicable rules for union employees. The fact that a union rule or seniority system was followed in a RIF can provide valuable evidence to disprove allegations of age discrimination.

Keeping these tips in mind will lessen the likelihood of potential age-related litigation. It will also allow you to promote a diverse workforce, which will hopefully boost employee morale.