OK to Favor Older Employees over Younger Ones?

The General Dynamics Case

In General Dynamics Land Systems, Inc. v. Cline, a collective bargaining agreement between General Dynamics and the United Auto Workers eliminated the company's obligation to provide health benefits to subsequently retired employees, except as to then-current workers who were at least 50 years old. Several employees who were then at least 40 and thus protected by the ADEA were under 50 and thus would be deprived of the health benefits upon retirement. They filed a lawsuit in U.S. District Court against General Dynamics alleging, inter alia, a violation of the ADEA. The district court dismissed the claim on grounds that the ADEA does not protect the younger against the older. The employees appealed to the U.S. Court of Appeals for the Sixth Circuit, which, in a split decision, reversed the district court. The Sixth Circuit held that the ADEA's prohibition against discrimination against “any individual … because of such individual's age” was so clear on its face that if Congress had intended to limit its coverage to protect only older workers against younger workers it would have said so. The Sixth Circuit drew support from the position taken by the U.S. Equal Employment Opportunity Commission (EEOC) in an interpretive regulation, 29 C.F.R. ' 1625.2(a), that provides, “if two people apply of the same position, and one is 42 and the other 52, the employer may not lawfully turn down either one on the basis of age, but must make such decision on the basis of some other factor.” The Sixth Circuit acknowledged that its decision conflicted with prior decisions from other federal circuits, including a decision written from the First Circuit by now Justice Stephen Breyer, Schuler v. Polaroid Corp., as well as a decision from the Seventh Circuit, Hamilton v. Caterpillar, Inc.

The Supreme Court's Opinion

The Supreme Court reversed the Sixth Circuit. The Court's opinion was based on its reading of the history of the ADEA. The Court noted that Congress chose not to include age within the discrimination forbidden by Title VII of the Civil Rights Act of 1964, being aware that there were legitimate reasons as well as invidious ones for making employment decisions based on age. Instead, Congress called for a study of the issue by the Secretary of Labor, who concluded that age discrimination was a serious problem, but one different from discrimination because of race. The Secretary of Labor spoke of disadvantages to older individuals from arbitrary and stereotypical employment distinctions, including then-common practices of age ceilings on hiring, but examined the problem in light of rational considerations of increased pension cost and, in some cases, legitimate concerns about an older person's ability to do the job. When he ultimately took the position that arbitrary discrimination against older workers was widespread and persistent enough to call for a federal legislative remedy, he placed his recommendation against the background of common experience that the potential cost of employing someone rises with age, so that the older an employee is, the greater the inducement to prefer a younger substitute. The Court noted that the Secretary's report contained no suggestion that reactions to age level off at some point and was devoid of any indication that he had noticed unfair advantages accruing to older workers at the expense of their juniors.

According to the Court, Congress then asked the Secretary for a specific proposal, and extensive hearings before the House of Representative and the Senate ensued. The Court noted that the testimony during both hearings dwelled on unjustified assumptions about the effect of age on ability to work, and that the hearings specifically addressed higher pension and benefit costs as heavier drags on hiring workers the older they got. Thus, according to the Court, the record reflected the common facts that an individual's chances to find and keep a job get worse over time; as between any two people, the younger is in the stronger position, the older is more apt to be tagged with demeaning stereotype. Again, the Court found nothing in the hearing record suggesting that any workers were registering complaints about discrimination in favor of their seniors.

The Court also noted that no such suggestion exists in the introductory provisions of the ADEA, which stress the impediments suffered by “older workers … in their efforts to retain … and especially to regain employment,” the [burdens] of arbitrary age limits regardless of potential for job performance,” the costs of “otherwise desirable practices [that] may work to the disadvantage of older persons,” and “the incidence of unemployment, especially long-term unemployment [which] is, relative to the younger ages, high among older workers.” The Court further noted that the ADEA's statutory objects were “to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment.”

Thus, the Court concluded, with the exception of one point, all of the findings and statements of objectives were either cast in terms of the effects of age as intensifying over time, or were couched in terms that refer to “older” workers, explicitly or implicitly relative to “younger” ones. The single subject on which the ADEA speaks less specifically is that of “arbitrary limits” or “arbitrary age discrimination.” However, noted the Court, these were “unmistakable” references to the Secretary of Labor's finding that “[a]lmost three out of every five employers covered by [a] 1965 survey have in effect age limitations (most frequently between 45 and 55) on new hires that they apply without consideration of an applicant's other qualifications.” Consequently, the Court held, the ADEA's ban on “arbitrary limits” applies to age caps that exclude older applicants, necessarily to the advantage of younger ones.

With that statutory history background, the Court concluded that the operative provision ADEA provision at issue in the case, that prohibits employers from discrimination “because of such individual's age,” is intended to protect a relatively older worker from discrimination that works to the advantage of the relatively younger. The Court observed that it is not remarkable that the legislative record is devoid of any evidence that younger workers were suffering at the expense of their elders, let alone that a social problem required a federal statute to place a younger worker in parity with an older one. According to the Court, “common experience” is to the contrary, and the legislative history simply confirms that Congress used the phrase “because of [an] individual's age” the same way that ordinary people in common usage might speak of age discrimination any day of the week. The Court also noted that this same, idiomatic sense of the statutory phrase was confirmed by the ADEA's restriction of the protected class to those aged 40 and above. The Court reasoned that if Congress had been worrying about protecting the younger against the older, it would not likely have ignored everyone under 40.

Finally, the Court handily dismissed the Sixth Circuit's reliance on the EEOC's regulation stating that it would be unlawful for an employer to turn down either a 42-year-old or a 52-year-old on the basis of age. According to the Court, the EEOC was clearly wrong, and thus, its reading of the ADEA is entitled to no deference.

Conclusion

The Supreme Court's decision in the General Dynamics case represents a significant victory for employers because it enables them to use age as a basis for favoring older workers over younger workers, thus imbuing them with more freedom to make employment decisions, and for older employees whom the ADEA was enacted to protect. However, before making employment decisions that favor older employers over younger ones, employers should check the relevant anti-discrimination statutes in their states and localities to ensure that those statutes are consistent with the Supreme Court's holding in the General Dynamics case.

On Feb. 24, 2004, the U.S. Supreme Court issued an important decision concerning whether the Age Discrimination in Employment Act (ADEA) prohibits employers from engaging in “reverse discrimination” by favoring older workers over younger workers. In General Dynamics Land Systems, Inc. v. Cline, the Supreme Court held that the ADEA does not prohibit employers from favoring older employers over younger ones. Because this decision resolves a conflict in various federal circuit courts of appeal, the Supreme Court's opinion eliminates any uncertainty concerning this issue at the federal level.

Statutory Background

Enacted in 1967, the ADEA prohibits discrimination “because of [an] individual's age.” As the Supreme Court noted, this provision, in the abstract, is susceptible to two different interpretations. Under one interpretation, it prohibits employers from favoring younger workers over older workers. Under another interpretation, because the reference to “age” carries no express modifier, it can be read to prohibit employers from favoring any employee over another because of age regardless of whether the favored employee is younger or older.

The General Dynamics Case

In General Dynamics Land Systems, Inc. v. Cline, a collective bargaining agreement between General Dynamics and the United Auto Workers eliminated the company's obligation to provide health benefits to subsequently retired employees, except as to then-current workers who were at least 50 years old. Several employees who were then at least 40 and thus protected by the ADEA were under 50 and thus would be deprived of the health benefits upon retirement. They filed a lawsuit in U.S. District Court against General Dynamics alleging, inter alia, a violation of the ADEA. The district court dismissed the claim on grounds that the ADEA does not protect the younger against the older. The employees appealed to the U.S. Court of Appeals for the Sixth Circuit, which, in a split decision, reversed the district court. The Sixth Circuit held that the ADEA's prohibition against discrimination against “any individual … because of such individual's age” was so clear on its face that if Congress had intended to limit its coverage to protect only older workers against younger workers it would have said so. The Sixth Circuit drew support from the position taken by the U.S. Equal Employment Opportunity Commission (EEOC) in an interpretive regulation, 29 C.F.R. ' 1625.2(a), that provides, “if two people apply of the same position, and one is 42 and the other 52, the employer may not lawfully turn down either one on the basis of age, but must make such decision on the basis of some other factor.” The Sixth Circuit acknowledged that its decision conflicted with prior decisions from other federal circuits, including a decision written from the First Circuit by now Justice Stephen Breyer, Schuler v. Polaroid Corp., as well as a decision from the Seventh Circuit, Hamilton v. Caterpillar, Inc.

The Supreme Court's Opinion

The Supreme Court reversed the Sixth Circuit. The Court's opinion was based on its reading of the history of the ADEA. The Court noted that Congress chose not to include age within the discrimination forbidden by Title VII of the Civil Rights Act of 1964, being aware that there were legitimate reasons as well as invidious ones for making employment decisions based on age. Instead, Congress called for a study of the issue by the Secretary of Labor, who concluded that age discrimination was a serious problem, but one different from discrimination because of race. The Secretary of Labor spoke of disadvantages to older individuals from arbitrary and stereotypical employment distinctions, including then-common practices of age ceilings on hiring, but examined the problem in light of rational considerations of increased pension cost and, in some cases, legitimate concerns about an older person's ability to do the job. When he ultimately took the position that arbitrary discrimination against older workers was widespread and persistent enough to call for a federal legislative remedy, he placed his recommendation against the background of common experience that the potential cost of employing someone rises with age, so that the older an employee is, the greater the inducement to prefer a younger substitute. The Court noted that the Secretary's report contained no suggestion that reactions to age level off at some point and was devoid of any indication that he had noticed unfair advantages accruing to older workers at the expense of their juniors.

According to the Court, Congress then asked the Secretary for a specific proposal, and extensive hearings before the House of Representative and the Senate ensued. The Court noted that the testimony during both hearings dwelled on unjustified assumptions about the effect of age on ability to work, and that the hearings specifically addressed higher pension and benefit costs as heavier drags on hiring workers the older they got. Thus, according to the Court, the record reflected the common facts that an individual's chances to find and keep a job get worse over time; as between any two people, the younger is in the stronger position, the older is more apt to be tagged with demeaning stereotype. Again, the Court found nothing in the hearing record suggesting that any workers were registering complaints about discrimination in favor of their seniors.

The Court also noted that no such suggestion exists in the introductory provisions of the ADEA, which stress the impediments suffered by “older workers … in their efforts to retain … and especially to regain employment,” the [burdens] of arbitrary age limits regardless of potential for job performance,” the costs of “otherwise desirable practices [that] may work to the disadvantage of older persons,” and “the incidence of unemployment, especially long-term unemployment [which] is, relative to the younger ages, high among older workers.” The Court further noted that the ADEA's statutory objects were “to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment.”

Thus, the Court concluded, with the exception of one point, all of the findings and statements of objectives were either cast in terms of the effects of age as intensifying over time, or were couched in terms that refer to “older” workers, explicitly or implicitly relative to “younger” ones. The single subject on which the ADEA speaks less specifically is that of “arbitrary limits” or “arbitrary age discrimination.” However, noted the Court, these were “unmistakable” references to the Secretary of Labor's finding that “[a]lmost three out of every five employers covered by [a] 1965 survey have in effect age limitations (most frequently between 45 and 55) on new hires that they apply without consideration of an applicant's other qualifications.” Consequently, the Court held, the ADEA's ban on “arbitrary limits” applies to age caps that exclude older applicants, necessarily to the advantage of younger ones.

With that statutory history background, the Court concluded that the operative provision ADEA provision at issue in the case, that prohibits employers from discrimination “because of such individual's age,” is intended to protect a relatively older worker from discrimination that works to the advantage of the relatively younger. The Court observed that it is not remarkable that the legislative record is devoid of any evidence that younger workers were suffering at the expense of their elders, let alone that a social problem required a federal statute to place a younger worker in parity with an older one. According to the Court, “common experience” is to the contrary, and the legislative history simply confirms that Congress used the phrase “because of [an] individual's age” the same way that ordinary people in common usage might speak of age discrimination any day of the week. The Court also noted that this same, idiomatic sense of the statutory phrase was confirmed by the ADEA's restriction of the protected class to those aged 40 and above. The Court reasoned that if Congress had been worrying about protecting the younger against the older, it would not likely have ignored everyone under 40.

Finally, the Court handily dismissed the Sixth Circuit's reliance on the EEOC's regulation stating that it would be unlawful for an employer to turn down either a 42-year-old or a 52-year-old on the basis of age. According to the Court, the EEOC was clearly wrong, and thus, its reading of the ADEA is entitled to no deference.

Conclusion

The Supreme Court's decision in the General Dynamics case represents a significant victory for employers because it enables them to use age as a basis for favoring older workers over younger workers, thus imbuing them with more freedom to make employment decisions, and for older employees whom the ADEA was enacted to protect. However, before making employment decisions that favor older employers over younger ones, employers should check the relevant anti-discrimination statutes in their states and localities to ensure that those statutes are consistent with the Supreme Court's holding in the General Dynamics case.