7th Circuit: ADEA Provides Limited Protection for Job Applicants

April 5, 2019

On January 23, 2019, the U.S. 7th Circuit Court of Appeals (whose decisions apply to all Wisconsin employers) ruled that the Age Discrimination in Employment Act (ADEA) does not allow disparate impact claims by external job applicants. Disparate impact claims involve policies or practices that apply to everyone but can still be unlawful discrimination because they have a negative impact on a particular group based on a protected category, such as age. In a split decision, the court’s majority held 8-4 that the plain language of the ADEA makes clear that Congress intended the Act to protect only current employees, not job applicants, from policies or practices that have a disparate impact based on age.

What is Disparate Impact Discrimination?

Most employment discrimination cases aren’t based on direct evidence because most employers generally won’t explicitly indicate they’re making an employment decision for a prohibited reason. It’s the rare case in which an employer says, “I’m not hiring you because of your race or gender.” As a result, courts long ago developed legal constructs for how employees can prove discrimination.

The two main theories developed by the courts are disparate treatment discrimination and disparate impact discrimination. In a disparate treatment case, an employee uses circumstantial evidence to show the employer intentionally discriminated against her by treating similarly situated employees outside her protected class (say, white employees if she’s black) more favorably than it treated her. If the employer cannot offer a legitimate nondiscriminatory reason for its actions, the inference is that it acted on the basis of an improper reason. That’s inferred even though there’s no direct evidence that its actions were based on improper reasons.

Disparate impact discrimination, on the other hand, is considered “unintentional” discrimination, which means the employer didn’t purposefully act on the basis of an improper reason. Instead, courts will look at the effect of an employment practice or policy to see whether it impermissibly affects members of a protected class more negatively than others outside the class.

The seminal disparate impact case involved a policy requiring job applicants to have a high school diploma even though the diploma wasn’t actually needed to perform the job they were seeking. Because fewer African Americans in the labor pool of applicants seeking the specific position had high school diplomas at the time, the court found the requirement had a disparate impact on them and prohibited the employer from requiring applicants to have a high school diploma. Another example would be an unnecessary lifting requirement that could have the disparate impact of excluding more female applicants than male applicants.

Facts and Procedural History

The case before the 7th Circuit arose after Dale Kleber, an attorney, applied for a senior in-house counsel position in CareFusion’s legal department. The job required applicants to have three to seven years (but no more than seven years) of relevant legal experience. CareFusion hired a 29yearold who met but didn’t exceed the work experience requirement. Kleber, who was 58 years old when he applied for the job and had more than seven years of experience, wasn’t interviewed for the position or hired.

Kleber filed suit in federal court, pursuing disparate treatment and disparate impact claims under the ADEA. The district court dismissed his disparate impact claim, relying on 7th Circuit precedent holding that the text of the ADEA doesn’t extend disparate impact protection to external job applicants. Kleber voluntarily dismissed his disparate treatment claim but appealed the dismissal of his disparate impact claim to the 7th Circuit.

On appeal, a divided panel of three judges initially reversed the lower court’s dismissal of the disparate impact claim. However, after the entire panel of judges reviewed the case, the 7th Circuit affirmed the lower court’s dismissal.

Court’s Reasoning

The majority of the court held that the plain language of the ADEA provision that permits disparate impact claims doesn’t extend the law’s protection to job applicants. The court reached that conclusion by comparing the language of the disparate treatment provision (governing intentional age discrimination) with the language of the disparate impact provision.

The disparate treatment provision makes it unlawful for an employer “to fail or refuse to hire or discharge any individual or otherwise discriminate against him . . . because of [his] age.” By comparison, the disparate impact provision makes it unlawful for an employer to take action that “would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as [an] employee because of [his] age.” The court found the language of the disparate impact provision limited its reach to individuals with “status as an employee.”

The court also found it significant that the language in the disparate treatment provision specific to a failure or refusal to hire makes it clear that its scope includes someone seeking to be hired. According to the majority, similar language covering applicants is absent from the disparate impact provision; therefore, Congress intended for the side-by-side provisions to carry different meanings.

The court rejected Kleber’s argument that a U.S. Supreme Court case decided in 1971 under Title VII of the Civil Rights Act of 1964 should apply to his claim under the ADEA. The court recognized the case as precedent for allowing internal candidates to file disparate impact claims under Title VII. However, it distinguished the case on the basis that a year after it was decided, Congress changed the language of Title VII to provide protections for “applicants for employment.” The 7th Circuit noted no such change was made to the ADEA.

The dissenting judges didn’t find the plain language of the disparate impact provision to be so clear. They also disagreed with the majority’s limited reading of the 1971 Supreme Court case and the significance the majority placed on the changes Congress made to Title VII’s language following that case. Kleber v. CareFusion Corp. (7th Cir., Jan. 23, 2019).

Bottom Line

This ruling offers some protection to employers in the 7th Circuit that applies limitations on work experience like the one used by CareFusion when recruiting and hiring candidates. Keep in mind, however, that the ruling applies only to disparate impact ADEA claims asserted in the 7th Circuit by external job candidates. Current and former employees can continue to assert disparate impact age discrimination claims (e.g., claims that arise from a reduction in force). The ruling also leaves intact the protection from disparate treatment in recruiting and hiring for older workers (an intentional refusal to hire because of age).

The Kleber decision is a good reminder that you should not only be on guard against treating similarly situated employees differently without a legitimate nondiscriminatory reason but also consider whether an employment practice or policy creates a disparate impact. Even though the ADEA, as interpreted by the 7th Circuit, doesn’t protect job applicants from the disparate impact of employers’ policies or practices, you should nonetheless be aware of the potential for particular policies or practices to have a disparate impact on job applicants and consider the necessity of maintaining or implementing them.

The line between disparate treatment claims and disparate impact claims can become blurred. As a result, you should generally make decisions based on reasonable needs rather than arbitrary limits.

For more information about "7th Circuit: ADEA Provides Limited Protection for Job Applicants," contact Leslie A. Sammon at lsammon@axley.com or 608.283.6798.