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Age discrimination: developments and trends.

With a proper understanding of the law, plaintiff lawyers will find representing victims of age discrimination can be rewarding.

Andrew Aging comes to see you about a potential discrimination claim against his employer. In the initial interview, you find that Andrew and his wife both work for the state. His wife was terminated and filed an age discrimination claim.

Shortly after, the employer retaliated against Andrew by calling him an "old fart" and an "old hack salesman." Andrew says he was hired three years earlier when he was 58 years old and the supervisor who hired him is retaliating against him.

As a result of the retaliation actions, Andrew quit his job. He took several office documents before he left to help him prove his case. If the employer had found out about the missing documents, Andrew would have been fired. Luckily, the supervisor didn't find out until three weeks after Andrew's departure.

Andrew wants to know what, if any, tax consequences would flow from the settlement he feels sure will follow from filing a retaliation-based age discrimination lawsuit. What advice do you give him?

This scenario touches on numerous changes made in the Age Discrimination in Employment Act (ADEA) over the past few years. While Andrew may appear to have a solid case, many facts could limit or bar his claims. Your ability to help Andrew and clients like him depends on your knowledge of recent developments in ADEA law --developments that are making these cases harder for employees to win.

This article, which assumes a familiarity with the ADEA, examines these developments as well as emerging trends and doctrines in age discrimination cases. Some of the issues discussed are new and specific to the ADEA. Others are merely developments in the ever-changing landscape of employment discrimination law.

What's new?

Burden of proof. This is perhaps the most fundamental aspect of any ADEA case. While Title VII evidentiary burdens have been clear for years, courts continue to wrestle with what the exact burdens are in an age discrimination claim.

A sharply divided U.S. Supreme Court set the stage for addressing the issue in a 1993 ruling.(1) The opinion contained conflicting language on whether disproving the defendant's proffered reason, or pretext, for dismissal will alone permit the trier of fact to infer the ultimate issue of intentional discrimination.(2)

In O'Connor v. Consolidated Coin Caterers Corp., the 1996 Court continued to avoid the issue of how the normal employment evidentiary framework would apply to an ADEA case.(3) For the first time, the Court added to the evidentiary analysis the issue of "age differences" between the employee and the employee's replacement.

To prove a prima facie case of discrimination, the Court held, a plaintiff need not show that his or her replacement was under age 40 (and, therefore, not among the class of people age 40 and above protected by the ADEA). This seemed favorable to employees, but the Court also indicated that the replacement would have to be "substantially younger" than the plaintiff to prove a prima facie case.(4)

Circuit courts have added to the confusion as they have tried to define "substantially younger." Some circuits hold that three years is sufficient, while others hold that five years is not enough.(5) And at least one circuit has held that a claim will not necessarily fail because the plaintiff's replacement is older than the plaintiff if there is other evidence indicating that age was a determining factor in termination.(6)

Even in circuits that have evidentiary standards based on the Supreme Court's recent opinions, courts could reach inconsistent results. Therefore, attorneys should be prepared (especially before a summary judgment motion is filed) to demonstrate a prima facie case as well as disprove the proffered reason for termination.

Of course, when the plaintiff has direct evidence of discrimination, there is no need for this evidentiary analysis.(7) Direct evidence is evidence that, if believed, proves the underlying discrimination without any inferences. An example would be a case where a supervisor testified he was instructed to fire an employee because of the employee's age.

State employees. The circuit courts have issued conflicting opinions regarding age discrimination by state employers following a recent split decision by the Supreme Court. The Court reversed itself by holding that the exercise of power by Congress under the Commerce Clause cannot abrogate sovereign immunity granted to the states by the Eleventh Amendment. Instead, Congress must act according to its power under the Fourteenth Amendment.(8)

The Court set forth a two-prong test to determine whether a federal law could survive Eleventh Amendment scrutiny. First, in passing the law, Congress must have shown a clear intent to abrogate state sovereign immunity. Second, Congress must have acted pursuant to its power under [sections]5 of the Fourteenth Amendment, not the Commerce Clause, when passing the legislation.

Since that decision, the circuit courts have split on whether the ADEA was enacted pursuant to Congress's power under the Commerce Clause or the Fourteenth Amendment. Most circuits agree that Congress intended to abrogate state immunity when enacting the ADEA and its amendments.(9) However, some have ruled against plaintiffs in sharply divided panels.(10)

The issue is now ripe for consideration by the Supreme Court, and practitioners should be aware of it when considering a state employee's claim like Andrew's.

After-acquired evidence. In 1995, the Supreme Court overruled the majority of circuit courts that said after-acquired evidence of an employee's wrongdoing bars a wrongful termination suit. The Court held that an employee is not denied all relief under the ADEA when an employer uncovers prior wrongdoing that would merit the employee's termination.(11)

However, the Court did hold that the misconduct can limit the employee's remedies. The critical question in these cases is, Would the employee have been fired once the wrongdoing was discovered? The employer bears the burden of demonstrating that it would have terminated the employee had it been aware of the misconduct.

When an employer discovers evidence of wrongful conduct after the employee has been fired that would have resulted in termination had the employer discovered it before, the employee's recovery is reduced.(12) When a defendant proves after-acquired evidence of misconduct, the employee may lose a right to reinstatement and front pay. Most courts hold that back pay would be limited to the date the misconduct was discovered.

Therefore, relevant dates in a case involving after-acquired evidence of misconduct are the date the employee was terminated and the date the evidence was discovered. For example, if the employer finds out a month after the termination that the employee intentionally harmed the business, the employee would be limited to one month of back pay. This new development in law can severely limit recovery in an age discrimination claim. In our example, Andrew could recover only three weeks of lost wages, which would not justify the expense of suit.

Stray remarks. The "stray remarks" doctrine is another emerging weapon to undermine age discrimination claims. An employer's age-related remarks are relevant to determine whether age discrimination has occurred. However, when these comments are vague, remote in time from the alleged discriminatory act, and made by someone who was remote from the plaintiff in the administrative hierarchy, they are considered no more than "stray remarks."(13)

The trial lawyer should look for supervisors' clear age-derogatory comments directed at the employee, made close in time to the alleged discriminatory conduct.

Courts looking at one isolated statement made by a non-decision-making individual have found it insufficient to demonstrate age discrimination. If isolated comments are made over one year before the alleged discriminatory decision is made, courts usually conclude that the remarks are remote in time.(14)

Statements are deemed vague when they cannot be connected to the plaintiff. One neutral comment and a self-serving affidavit are also insufficient to demonstrate age discrimination.(15)

Plaintiff lawyers should remember that, for the purposes of summary judgment, alleged discriminatory comments are deemed to have been made. This is because it is the function of the jury as the traditional finder of fact, and not the court, to weigh conflicting evidence and inferences and determine witness credibility.(16)

Remarks are not considered stray when they include specific discriminatory comments made over a long period of time. At a staff meeting, one plaintiff was told, "You just can't remember, you're getting too old."(17) The court found that this comment was directed at the plaintiff and was age-related. In addition, the court found that comments made near the time of the plaintiff's termination satisfied the burden of proving discrimination.

Other comments may have less impact. A comment made about a peer is not proof of age discrimination. Comments are less likely to be relevant when they occur in a social setting.

But "it is not necessary that the plaintiffs present videotapes of explicit exclamations like 'we don't want old people in our company' to prove age discrimination"(18) Even indirect comments about a plaintiff's age can be probative of an unlawful discriminatory intent.

Counsel should also be on the lookout for age-related comments regarding job performance. For example, a comment that an employee is "over the hill" says little about an employee's abilities. But the statement that an employee is "too old to learn about computers" would more likely demonstrate age discrimination.

In our hypothetical case, the comments made to Andrew may not be sufficient to constitute age discrimination.

Same actor. Another emerging doctrine used by defendants is the "same actor" inference. This comes into play when a supervisor hires someone and within a short period of time fires that same person. In a case like this, the trier of fact can infer that age discrimination was not at play.

The "same actor" inference arises when the person who did the hiring is the one who did the firing.(19) The critical focus is on "the person" involved in each decision. It follows that the inference does not cover every employee of a defendant corporation. In our case, the same person who hired Andrew also constructively fired him. Therefore, his claim could be barred.

Jury instructions. Some courts have shied away from a detailed analysis of a prima facie case when giving jury instructions. Instead, the courts have instructed juries to consider the ultimate question of whether the defendant terminated the employee because of his or her age.(20) The employer can be held liable only if age was a determining factor in the decision.

Liquidated damages. Several cases have clarified the ADEA's "liquidated damages" provision. Liquidated damages are available for a willful violation of the act.(21)

A willful violation occurs when an employer either knew its conduct was prohibited by the act or showed reckless disregard for this fact. When the employer in good faith believed that the statute permitted a particular age-based decision or did not recklessly avoid following its dictates, liquidated damages will not be awarded.

The liquidated damages provision of the ADEA is not like the usual punitive or exemplary damage award in that the plaintiff does not have to prove that the employer's conduct was egregious. However, the fact the employer was aware its conduct might implicate the ADEA is not enough to support a liquidated damages award.(22)

A plaintiff attorney should try to establish through depositions that the decision maker did not believe the ADEA allowed the decision that was made. An argument can also be made that since a violation of the ADEA is never based on negligence and is always intentional, liquidated damages should always be awarded unless the employer in good faith believed its conduct was permitted by the ADEA.(23)

Tax issues. In 1996, Congress enacted the Small Business Job Protection Act. This act amended 104(a)(2) of the Internal Revenue Code. Awards or settlement money received as a result of an employment discrimination suit used to be excluded from taxable income. The act now allows this exclusion only when the employer's conduct has caused the plaintiff to suffer physical injuries or sickness. Most employment settlements are now taxable.(24)

Efforts are being made to change this harsh result. A bill was introduced in the last Congress to restore the income tax exclusion for nonphysical injury damages in all cases.(25) This bill would have restored the original tax provision. A second bill addressed only cases based on employment discrimination.(26) It addressed the problems created by the 1996 act and those resulting from recent Supreme Court decisions relating to age discrimination.

Until new legislation is enacted, plaintiff lawyers must assume that any settlement or award will be taxable.

Older Workers Benefits Protection Act (OWBPA). Last year, the Supreme Court resolved a conflict among the circuits regarding whether contract principles apply to releases executed under the OWBPA.(27) Under that act, an employee can waive a right to an ADEA claim by executing a release of liability.

The Supreme Court made it clear that because the act was passed by Congress and includes a checklist for employers, usual contract principles do not apply to releases executed pursuant to it.

Any release that does not comply with the OWBPA cannot be used to bar an employee's ADEA claim. This is true even when the employee does not return any money received in exchange for the release. Plaintiff attorneys should look carefully at the release provisions before deciding whether to accept a case.

Any waiver made without benefit of a lawyer's advice must be made "knowingly and voluntarily" to be covered. A waiver meets this requirement if it

* is written in a manner calculated to be understood by the employee;

* specifically refers to ADEA claims;

* does not refer to claims that may arise after the waiver is executed;

* includes consideration beyond that to which the employee already is entitled;

* includes a provision advising the employee to consult with an attorney;

* allows the employee 21 days to consider the agreement; and

* provides the employee with a period of seven days to revoke the agreement.

In addition, when a waiver is requested as part of an incentive program, the employee must be given 45 days to consider it. He or she must be given additional information, including the ages and titles of all eligible employees who are selected for the program and the ages of all individuals in the same job classifications who are not eligible or selected.(28)

If the company did not comply with these requirements, there is no valid release of ADEA claims. The employee may keep any money paid for the release and still sue.

Disparate impact. The Court has avoided directly addressing how the disparate impact doctrine relates to the ADEA, although it has done so with other types of discrimination. For example, Title VII case law holds that evidence of a facially neutral employment practice that nevertheless has a discriminatory effect can substantiate a finding of unlawful discrimination.(29)

The Supreme Court has hinted that disparate treatment is what Congress meant to prohibit with the ADEA. As a result, most circuit courts do not allow evidence of disparate impact to prove that a defendant's conduct violated the ADEA.(30)

Constructive discharge. The ADEA requires a plaintiff filing a claim under it to have been "discharged.(31) Employees who resign may still satisfy the "discharge" requirement of a prima facie ADEA case through constructive discharge.

To do this, an employee must show the employer made the working conditions so intolerable that a reasonable employee would feel compelled to resign. Although this finding would depend on the facts of each case, courts consider evidence of

* demotion;

* reduction in salary;

* reduction in job responsibilities;

* reassignment to menial work;

* reassignment to work under a younger supervisor;

* harassment or humiliation by the employer calculated to encourage the employee's resignation; and

* early-retirement offers on terms that would make the employee worse off whether the offer was accepted or not.(32)

Normally, before filing suit for constructive discharge, an employee must first pursue any available internal grievance procedure or file a discrimination complaint with the U.S. Equal Employment Opportunity Commission (EEOC). The plaintiff bears the burden of proving constructive discharge. The plaintiff usually also has to show that he or she tried to fight the discrimination on the job.

Evidence of discrimination alone is usually not sufficient to establish constructive discharge. The circuits disagree on this issue, but most also require evidence of these "aggravating factors."(33)

In our case, Andrew's facts should be looked at carefully to see whether aggravating factors were present before he quit.

Reductions in force. Case law continues to more clearly define the requirements for proof of age discrimination in reduction-in-force cases. Often, an employee's salary and seniority are taken into account. Although evidence that an employee had a high salary and seniority is not enough to establish an age discrimination case,(34) plaintiff attorneys should not shy away from including these issues as proxies.

As the Seventh Circuit has noted, "Wage discrimination is age discrimination only when wage depends directly on age, so that the use for one is a pretext for the other."(35) A high similarity between the two may not be sufficient. Any statistical analysis along these lines must properly take into account the employee's performance evaluations and job qualifications.(36)

In a reduction-in-force situation, the critical comparison is not between the plaintiff and the replacement, but between the plaintiff and similarly situated younger employees. Evidence that similarly situated younger employees were not discharged is some evidence of age discrimination. A jury may even infer that by retaining a younger, lower-paid employee, the employer was trying to reduce the average age and pay of its employees.(37)

Retaliation. The ADEA also prohibits retaliation against employees who have opposed company practices or participated in EEOC investigations and enforcement proceedings. Retaliation is proved by demonstrating the following:

* The plaintiff engaged in a protected act (testified in or filed an ADEA action).

* The employer imposed on the plaintiff an adverse employment action.

* The employer took the adverse employment action because the plaintiff engaged in the protected activity--the employer had a retaliatory motive.

An employee can typically satisfy the causal element by showing the protected activity preceeded the adverse action and the employer was aware of it before taking the action. Once this is established, the employer must produce evidence of a nonretaliatory reason for its action.

A short period of time between the protected activity and the adverse action enhances the plaintiff's case. However, the employee must still prove that the employer's offered reason is baseless.

A retaliation claim must be based on action directed toward the person who was involved in the protected activity. For example, when an employee's spouse works for the same employer and is retaliated against because the employee filed an age discrimination claim, the spouse has no retaliation protection under the ADEA.(38) So, our hypothetical client, Andrew, should not be so sure about settling that retaliation-based claim against his employer.

Miscellaneous changes. Courts have clarified many other ADEA issues in the last couple of years. For example, a corporation may be liable for the discriminatory acts of its subsidiary when the parent corporation is a final decision maker in connection with the employment involved in the litigation.(39) In these cases, the corporation and the subsidiary are considered to be a single employer.

When an employer deems a plaintiff "overqualified," this does not constitute age discrimination in itself.(40)

There is no liability for an individual supervisor under the ADEA.(41)

Changing landscape

While these new developments have changed the landscape of age discrimination litigation, practitioners should not ignore the well-established rules of trying age-related claims. Case selection, remedies, and other general principles should be given extensive consideration.

As employers grow more sophisticated in covering up age discrimination, plaintiff lawyers must continue to stay abreast of the cutting-edge defenses when evaluating a claim. Practitioners must have a clear understanding of the legal issues involved.

The topics discussed should put ammunition in the hands of plaintiff lawyers wishing to help older workers who are tossed out of the workplace. With a proper understanding of the law and a willingness to work hard, plaintiff lawyers will find age discrimination cases rewarding.


(1.) St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502 (1993).

(2.) Id. at 510-11.

(3.) 517 U.S. 308 (1996).

(4.) Id. at 313.

(5.) Carter v. DecisionOne Corp., 122 F.3d 997, 1001 (11th Cir. 1997) (per curiam); Schiltz v. Burlington N. R.R., 115 F.3d 1407, 1413 (8th Cir. 1997); see also Hartley v. Wisconsin Bell, Inc., 124 F.3d 887 (7th Cir. 1997).

(6.) See Greene v. Safeway Stores, Inc., 98 F.3d 554, 559 (10th Cir. 1996).

(7.) Price v. Marathon Cheese Corp., 119 F.3d 330, 336 (5th Cir. 1997).

(8.) Seminole Tribe v. Florida, 517 U.S. 44 (1996), overruling Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989).

(9.) Coger v. Board of Regents, No. 97-5134, 1998 U.S. App. LEXIS 19857 (6th Cir. Aug. 17, 1998); Scott v. University of Miss., 148 F.3d 493,499-500 (5th Cir. 1998); Varner v. Illinois State Univ., 150 F.3d 706, 711 (7th Cir. 1998); Goshtasby v. Board of Trustees, 141 F.3d 761 (7th Cir. 1998); Hurd v. Pittsburgh State Univ., 109 F.3d 1540 (10th Cir. 1997); Keeton v. University of Nev. Sys., 150 F.3d 1055 (9th Cir. 1998).

(10.) Kimel v. State of Fl. Bd. of Regents, 139 F.3d 1426, 1433 (11th Cir. 1998); Humaenansky v. Regents of Univ. of Minn., 152 F.3d 822 (8th Cir. 1998).

(11.) McKennon v. Nashville Banner Publ'g Co., 513 U.S. 352 (1995).

(12.) Patterson v. P.H.P. Healthcare Corp., 90 F.3d 927, 934 (5th Cir. 1996), cert. denied, 117 S. Ct. 767 (1997).

(13.) Price, 119 F.3d 330,337; Turner v. North Am. Rubber, Inc., 979 F.2d 55, 59 (5th Cir. 1992); Guthrie v. Tifco Indus., 941 F.2d 374, 378-79 (5th Cir. 1991), cert. denied, 503 U.S. 908 (1992).

(14.) See, e.g., Guthrie, 941 F.2d 374, 379.

(15.) Bodenheimer v. PPG Indus., 5 F.3d 955, 958-59 (5th Cir. 1993).

(16.) See Ray v. Iuca Special Mun. Separate Sch. Dist., 51 F.3d 1246, 1251 (5th Cir. 1995).

(17.) Brown v. CSC Logic, Inc., 82 F.3d 651, 656 (5th Cir. 1996).

(18.) EEOC v. Manville Sales Corp., 27 F.3d 1089, 1095 (5th Cir. 1994), cert. denied, 513 U.S. 1190 (1995).

(19.) See Faruki v. Parsons S.I.P., Inc., 123 F.3d 315, 320 n.3 (5th Cir. 1997).

(20.) Woodhouse v. Magnolia Hosp., 92 F.3d 248, 257 (5th Cir. 1996); see also Miller v. Butcher Distribs., 89 F.3d 265, 267 (5th Cir. 1996).

(21.) Iuca Special Mun. Separate Sch. Dist., 51 F.3d 1246, 1252.

(22.) Woodhouse, 92 F.3d 248, 256.

(23.) Id.

(24.) See Commissioner v. Schleier, 515 U.S. 323 (1995).

(25.) H.R. 2802, 105th Cong. (1997) (introduced by Rep. Barney Frank (D-Mass.)).

(26.) H.R. 2792, 105th Cong. (1997) (introduced by Rep. Gerald Solomon (R-N.Y.)).

(27.) Oubre v. Entergy Operations, Inc., 118 S. Ct. 838 (1998).

(28.) 29 U.S.C. [sections] 626(f)(1)(A)-(H) (1994).

(29.) Griggs v. Duke Power Co., 401 U.S. 424 (1971).

(30.) See, e.g., Maier v. Lucent Techs., Inc., 120 F.3d 730, 735 (7th Cir. 1997); DiBiase v. SmithKline Beecham Corp., 48 F.3d 719 (3d Cir.), cert. denied, 516 S. Ct. 916 (1995); Lyon v. Ohio Educ. Ass'n & Prof'l Staff, 53 F.3d 135 (6th Cir. 1995).

(31.) 29 U.S.C. [sections] 623(a)(1) (1994).

(32.) See, e.g., Barrow v. New Orleans S.S. Ass'n, 10 F.3d 292, 297 (5th Cir. 1994).

(33.) Cargile v. Star Enter., 872 F. Supp. 1514, 1516-17 (M.D. La. 1994); see also Barrow, 10 F.3d 292, 297.

(34.) Armendariz v. Pinkerton Tobacco Co., 58 F.3d 144 (5th Cir. 1995), cert. denied, 516 U.S. 1047 (1996).

(35.) Anderson v. Baxter Healthcare Corp., 13 F.3d 1120 (7th Cir. 1994) (quoting Metz v. Transit Mix, Inc., 828 F.2d 1202, 1212 (7th Cir. 1987) (Easterbrook, J., dissenting)).

(36.) Nitschke v. McDonnell Douglas Corp., 68 F.3d 249,252 (8th Cir. 1995); Hutson v. McDonnell Douglas Corp., 63 F.3d 771, 777-78 (8th Cir. 1995).

(37.) See, e.g., Uffelman v. Lone Star Steel Co., 863 F.2d 404, 408 (5th Cir.), cert. denied, 490 U.S. 1098 (1989).

(38.) Holt v. JTM Indus., 89 F.3d 1224, 1226 (5th Cir. 1996), cert. denied, 117 S. Ct. 1821 (1997).

(39.) Lusk v. Foxmeyer Health Corp., 129 F.3d 773 (5th Cir. 1997); Schweitzer v. Advanced Telemarketing Corp., 104 F.3d 761, 764 (5th Cir. 1997).

(40.) EEOC v. Insurance Co. of N. Am., 49 F. 3d 1418, 1420-21 (9th Cir. 1995).

(41.) Stults v. Conoco, Inc., 76 F.3d 651, 655 (5th Cir. 1996).

John Graves practices with Ross, Hudgens & Graves in Longview, Texas.
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