Supreme Court Rules For Employer In Age Discrimination Police Pay Dispute

On October 1, 1998, the City of Jackson, Mississippi adopted a pay plan granting raises to all City employees. The stated purpose of the plan was to “attract and retain qualified people, provide incentive for performance, maintain competitiveness with other public sector agencies, and ensure equitable compensation to all employees regardless of age, sex, race, and/or disability.”

On May 1, 1999, the City revised the plan which was motivated, at least in part, by the City’s desire to bring the starting salaries of police officers up to the regional average, and granted raises to all police officers and police dispatchers. Those who had less than five years of tenure received proportionately greater raises when compared to their former pay than those who had more seniority.

A group of police officers over the age of 40 filed a lawsuit under the Age Discrimination in Employment Act (ADEA) claiming both that the City deliberately discriminated against them because of their age and that they were “adversely affected” by the plan because of their age. It was the second claim – one called a “disparate impact” claim under the law – that made its way to the Supreme Court.
There were two issues before the Court. The first dealt with whether a disparate impact theory could ever be viable under the ADEA. The second issue, to be decided by the Court only if it ruled that a disparate impact age discrimination claim could ever be viable, involved the standard of proof necessary to show a disparate impact.

The Court began by describing what a “disparate impact” case involves. In the Court’s view, an employee raises a “disparate impact” claim whenever the employee alleges that a facially neutral employment practice has a significant adverse impact on a protected class of employees. In the City of Jackson case, the employees claimed that a facially neutral employment practice – giving of different raises – had an adverse impact on the protected class of age.

The Court found that disparate impact claims could be raised under the ADEA. The Court cited the legislative history behind the ADEA as supporting its position, and referred approvingly as well to rules of the Department of Labor that “consistently interpreted the ADEA to authorize relief on a disparate impact theory.”

In turning to the second of the two issues before it, however, the Court created a legal test for proving “disparate impact” that all but eliminates the viability of using the theory in any future cases under the ADEA. In the Court’s view, all an employer need show to justify a decision that has a disparate impact on the basis of age is that it made its decision on “a reasonable factor other than age.” The Court specifically held that unlike other discrimination statutes, which require an employer to show a “business necessity” for the particular employment practice in question, the ADEA did not have a “business necessity” element. As the Court put it: “Unlike the business necessity test, which asks whether there are other ways for the employer to achieve its goals that do not result in a disparate impact on a protected class, the reasonableness inquiry includes no such requirement.”

Examining the specifics of the City of Jackson case, the Court easily found that the City based its differential raises on a “reasonable factor other than age.” The Court termed it “unquestionably reasonable” to raise employees’ salaries by different amounts to match those in different communities. The Court concluded: “We hold that the City’s decision to grant a larger raise to lower echelon employees for the purposes of bringing salaries in line with that of surrounding police forces was a decision based on a reasonable factor other than age that responded to the City’s legitimate goal of retaining officers.”

Smith v. City of Jackson, Mississippi, 125 S.Ct. 1536 (2005)

This article appears in the May 2005 issue