Prior to 2009, the City of Austin, Texas Public Safety Emergency Management Department was a separate non-civil-service agency encompassing the City’s airport, park, and municipal-court law-enforcement operations. The minimum base salary for Department employees was significantly lower than that of the Austin Police Department, and there was a wider range of compensation packages for Department officers with the same rank and seniority, owing in part to the fact that officers were eligible for a wider range of pay stipends for various certifications, education levels, and types of assignments.
In 2008, after negotiations with the Austin Police Association, which represents rank-and-file officers in APD, the City approved the consolidation of the Department into APD. Under the terms of the Consolidation Agreement, no Department employee could transfer to APD at a rank higher than “officer” and no Department employee could start with a base salary higher than that of an APD officer with 16 years’ experience. Furthermore, Department employees could include only up to three years of service as years of APD service. Given that APD officers need five years of APD service before they are eligible to sit for a promotion exam, this meant that no Department employee – regardless of previous rank or years of service – could be promoted to a higher rank for at least two years after the consolidation.
Several of the Department’s officers sued, contending that the Consolidation Agreement disparately impacted Department employees over 40 years of age by “stripping them of their years of service.” A jury returned a verdict in favor of the transferring officers, finding that (1) the City’s decision not to include years of service in setting the pay for Department employees transferring to APD had a significantly adverse effect on employees over 40 and (2) the City’s decision not to include years of service was not based on a reasonable factor other than age. The trial court then awarded the officers damages equal to back pay for the salary they would have received – including overtime– had their years of service been transferred to the APD pay scale. The trial court also ordered the City to place the officers on the APD pay scale in a manner consistent with their years of service at the Department.
The Texas Court of Appeals turned away the City’s challenge to the jury’s verdict. In particular, the City argued that employment practices based on years of service can never form the basis of an age-based disparate-impact claim. The Court held: “We find this argument unpersuasive. The United States Supreme Court and this Court have recognized that a disparate-impact theory of liability is available under the ADEA and Texas law. Given that disparate-impact claims necessarily assert that a facially neutral employment practice adversely affected older employees, it would be wholly illogical to say that employees can never bring a disparate-impact claim when the facially neutral policy relies on factors – like pension status or seniority – that are empirically correlated with age. An employer like the City is, of course, free to assert the affirmative defense that its use of seniority was a reasonable factor other than age. However, there is nothing in the case law to suggest that seniority is always a reasonable factor other than age for all age-based disparate-impact claims, and we decline to adopt such a per se rule.”
“The City also asserts that its policy of ensuring that no employee’s base salary decreased after consolidation demonstrates that its employment decisions within the Consolidation Agreement were based on reasonable factors other than age. However, the City fails to explain a logical connection between reducing the officers’ years of service – thereby adversely affecting their opportunities for promotion and raises – and ensuring that all employees maintained their current salaries. There is no evidence or testimony in the record to suggest that the reason the Consolidation Agreement stripped Department employees of their seniority was to ensure that all employees did not receive a reduction in pay. At most, the lump-sum payments to Department employees were designed to ameliorate some, but not all, of the adverse effects of consolidation. Thus, the jury could have reasonably concluded that the City failed to prove by a preponderance of the evidence that its decision to strip Department employees of their years of service was based on reasonable factors other than age.
City of Austin v. Chandler, 2014 WL 1568689 (Tex. App. 2014).