Firing Older Workers Because They Are Paid More

Firing Older WorkersIt used to be that one of the benefits of working with the same company for an extended period of time was a steady increase in pay over those years. In times of recession, however, this makes it much more likely that older workers will be the first to get downsized, due to them typically earning more than their younger contemporaries. The more money an employee is paid, the larger the savings to the company when he is downsized. Does the practice of terminating older employees due to their higher wages violate the Age Discrimination in Employment Act (ADEA)? In light of the Supreme Court’s ruling in Gross v. FBL Financial Services, Inc., probably not.

What the Gross Ruling Means for ADEA Plaintiffs

In Gross, the Supreme Court addressed how ADEA cases should be handled when the employer acts with “mixed motives” — where the employee’s age is only one of several factors in an employer’s adverse employment decision. In Title VII discrimination cases, an employee can prevail in a “mixed motives” cases by showing that discrimination was a “substantial motivating factor” in the employer’s adverse decision. Even if a Title VII plaintiff proves that discrimination was just a motive in the employer’s decision, that employee could receive declaratory relief (basically just a declaration from the court that discrimination occurred) and be awarded attorney’s fees. Thanks to the Gross decision, ADEA plaintiffs are not treated nearly as favorably as Title VII plaintiffs.

In Gross, the Court held that in order to prevail, an ADEA plaintiff must prove that “but for” unlawful discrimination, the adverse employment action would not have occurred. It is not enough that age discrimination be a “substantial motivating factor” in the employer’s decision. It must be the decisive factor.

The Gross ruling makes it near-impossible for a downsized older employee to prevail in an ADEA case if he was paid more than his younger counterparts. An employer can always argue that the employee’s pay was the decisive factor in its decision, no matter how much the employee’s age may have played into its decision.

Isn’t It Reasonable to Fire the Higher Paid Workers First?

A reasonable argument could be made that employers have every right to downsize or cut the pay of their higher paid workers in order to save money and clear the way for hiring more workers for less pay. After all, if employers were forced to retain their highest paid employees in hard economic times, their businesses could fail — leaving all workers, young and old, out of work.

Unfortunately, the an employee’s age tends to have a strong positive correlation to his or her earnings, so older workers often take the brunt of such cost-cutting measures. In theory, layoffs which disproportionately affect older workers could be attacked under the ADEA via a “disparate impact” theory, which allows employees to sue over facially non-discriminatory policies that have a significantly disproportionate impact on a protected class. In practice, however, disparate impact claims brought under the ADEA are weaker than those brought under Title VII, making ADEA claims based on a policy of firing higher-paid workers, for all intents and purposes, unwinnable.

Under Title VII, a defendant must prove that a policy which has a disparate impact on a protected class is a “business necessity” (a fairly high standard) in order to defeat the plaintiff’s claim. Under the ADEA, the employer need only show that the policy at issue is “reasonable.” It is unlikely that any court would find a policy of “firing higher-paid employees first” to be unreasonable.

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As the law currently stands, employers appear free to fire older workers, as long as they are higher paid than their younger counterparts, even if the employer is motivated in large part by age discrimination. This may change in the future, however, as new legislation has been proposed to effectively overturn the Supreme Court’s ruling in Gross.

The Protecting Older Workers Against Discrimination Act

Sen. Tom Harkin from Iowa is attempting to pass legislation that will effectively overturn the Gross ruling and place the ADEA on equal footing with Title VII with respect to “mixed motives” cases. The Protecting Older Workers Against Discrimination Act proposes to allow ADEA plaintiffs to prevail in “mixed motives” cases as long as they can show that age was a “substantial motivating factor” in the employer’s adverse employment decision.

The Protecting Older Workers Against Discrimination Act has been mired in the Senate for years (where all good legislation goes to die), so it may be a while before it passes, if ever. While passage of this act will not prevent employers from firing older workers due to their higher pay, it will prevent employers from discriminating against employees based on age with impunity as long as those employees happened to be paid more. As with the Lilly Ledbetter Fair Pay Act, which corrected the Supreme Court’s botched interpretation of Title VII, The Protecting Older Workers Against Discrimination Act could correct its botched interpretation of the ADEA.

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