Court Dismisses Older Employee’s Age Complaint

March 1, 2007

On February 8, 2007, the United States Court of Appeals for the Seventh Circuit affirmed the dismissal of an older employee’s federal age discrimination complaint. The court decided that the employee failed to present sufficient evidence in support of his claim. In so doing, the court revisited the ways in which employees can prove discrimination under the “direct” and “indirect” methods of proof. It is helpful for employers to have a basic understanding of what kind of evidence employees generally need to present to a court before they can get their cases to trial.

Facts, Inc., an Internet-based insurance services company, hired Willard L. Hemsworth, II in November 1999 as its Senior Vice President of Marketing. He was 53 years old and had more than 25 years of marketing and sales experience at his time of hire. Prior to that time, Quotesmith founder, chairman, president and CEO Robert Bland was responsible for the company’s marketing efforts. Bland was 45 years old when Quotesmith hired Hemsworth.

Quotesmith hired Hemsworth, an experienced marketing executive, because the company planned to expend its marketing budget in 2000 from $14 million to $20 million dollars. Bland interviewed Hemsworth along with Quotesmith HR director Karen Piccoli. During the interview, Hemsworth disclosed his age to the company.

At his time of hire, Hemsworth and the company agreed to a two year employment contract through December 31, 2001, that would automatically renew for an additional year unless either party provided a 60 day written notice of termination. The company terminated Hemsworth after his contract expired at the end of 2001.

The Lawsuit
Hemsworth alleged that Quotesmith terminated his employment in violation of the federal Age Discrimination in Employment Act (“ADEA”). The ADEA prohibits an employer from discharging an individual because of age. To establish a claim under the ADEA, an employee must show that age actually motivated the employer’s decision. In other words, age must have actually played a role in the employer’s decision-making process and had a determinative influence on the outcome.

Quotesmith reportedly terminated Hemsworth because the company was then experiencing financial losses requiring significant cost-cutting. The company asserted it had to lay-off a large number of employees and reduce its marketing and operations activities to meet its cost-cutting requirements.

Conversely, Hemsworth argued that the company’s business plan was to lose money to expand its customer base. Hemsworth claimed the company could afford such a plan because it had a recent public stock offering.

Hemsworth also pointed to the fact that 84% of the employees eliminated in a 2001 reduction in force were over the age of 40. He also pointed to a conversation between Quotesmith’s general legal counsel and its HR director in 2001 in which a comment was made that eliminating the employment of such a large percentage of employees over 40 “was a problem.” He noted a comment from Bland to another member of management in 2000 after Hemsworth experienced a mild stroke to the effect that Hemsworth “looked old and tired” when he returned to work. Hemsworth also pointed to an age inappropriate commend by another member of management staff during another employee’s evaluation.

Analyzing the evidence, the court noted that an employee can attempt to demonstrate discrimination claims through either the “direct” or “indirect” methods of proof. The distinction between the two is somewhat vague. Direct proof includes near admissions by the employer that its decisions were based on age (e.g., “you’re too old to work here”) as well as circumstantial evidence which suggests discrimination through a longer chain of inferences.

Circumstantial evidence demonstrating intentional discrimination includes: (1) suspicious timing, ambiguous oral or written statements, or behavior toward or comments directed at other employees in the protected age group; (2) evident that similarly situated employees outside the protected class received systematically better treatment; and (3) evidence that the employee was qualified for the job in question but was passed over in favor of a person outside the protected age class and the employer’s reason is an excuse for discrimination.

Conversely, indirect proof involves a subset of circumstantial evidence (including the different treatment of similarly situated employees). In this case, Hemsworth had to show that: (1) he was over 40; (2) he was performing his job satisfactorily; (3) he suffered a materially adverse employment action; and (4) his job duties were absorbed by employees who were not members of his protected class. If Hemsworth could meet that burden, the company would have to show a legitimate, nondiscriminatory reason for its actions. Then, Hemsworth would have to show that Quotesmith’s explanation was a lie.

In the present case, there was no direct admission from Quotesmith that it terminated Hemsworth because of age. Hemsworth’s circumstantial evidence was: (1) Bland’s comment to another executive about Hemsworth’s “old and tired” appearance following his stroke; (2) the general legal counsel’s comment that laying off a large number of older employees could be a problem; (3) the age-related comment by a member of management staff when evaluating another employee; and (4) the large percentage of employees over 40 who were laid off in 2001.

The court noted that isolated comments that are no more than stray remarks in the workplace are insufficient to establish that a particular decision was motivated by discriminatory intent. However, a particular remark can provide an inference of discrimination when the remark was: (1) made by the decision-maker; (2) around the time of the decision; and (3) in reference to the termination or other adverse employment action. The court did not feel that any of the comments at issue met this test.

The also was unconvinced by Hemsworth’s statistical evidence because it did not provide sufficient context for comparison. In order to be considered, the statistics must look at the same part of the company where the plaintiff worked; include only other employees who were similarly situated with respect to performance, qualifications, and conduct; the employee at issue and other employees must have shared a common supervisor; and, treatment of the other employees must have occurred during the same reduction in force as when the employee was discharged. Therefore, the court rejected Hemsworth’s claims under the direct method.

As to the indirect method, the court noted Hemsworth’s marketing duties were reabsorbed by Bland, an individual who was also within the protected age class because he was over 40 years of age. Therefore, the court dismissed his lawsuit.¬†Hemsworth v., Inc., Case No. 06-1885 (7th Cir. Feb. 8, 2007).

Bottom Line
Prior to terminating any employee, you should think carefully about what kind of circumstantial evidence an employee may argue supports a possible discrimination claim against your company. Will the employee be able to point to suspicious timing, ambiguous oral or written statements, or behavior toward or comments directed at employees in a protected class? Can the employee identify any similarly situated employees outside the protected class who received systematically better treatment? Conversely, what evidence will you point to in defense of such arguments? Have you done the necessary to document that evidence in order to avoid future credibility disputes with the employee? Consider doing so with assistance from your employment attorney.

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