Everyone knows that employers covered by the Age Discrimination in Employment Act (ADEA) cannot intentionally refuse to hire job applicants because they are 40 years old or older, and that it is generally unlawful to post a job advertisement that says “people over the age of 40 need not apply.” Such practices constitute impermissible “disparate treatment” under the statute.  But what about age-neutral hiring practices that may have a “disparate impact” on older applicants, such as posting advertisements for candidates with only “one to three years of experience,” or recruiting for entry-level professional positions exclusively on university campuses?  These and other common practices may also be unlawful, according to a recent decision by the U.S. Court of Appeals for the Seventh Circuit.

The Supreme Court held in Smith v. City of Jackson, 544 U.S. 228 (2005), that the ADEA prohibits employment practices that have a disparate impact on existing employees, unless the employer can prove that the practice is based on a “reasonable factor other than age.”  But whether the ADEA similarly protects job applicants from disparate impact remains unsettled.  The ADEA’s disparate impact provision (29 U.S.C. § 623(a)(2)) refers to “employees,” unlike the statute’s disparate treatment provision (29 U.S.C. § 623(a)(1)), which refers more broadly to “individuals.”  This difference led the Eleventh Circuit, sitting en banc, to conclude in Villareal v. R.J. Reynolds Tobacco Co., 839 F.3d 958 (11th Cir. 2016) (en banc), cert. denied, 137 S. Ct. 2292 (2017), that age-neutral recruiting practices that merely disparately impact older applicants do not violate the ADEA.

Parsing the statutory language differently, the Seventh Circuit on April 26, 2018, became the first federal court of appeals to hold that job applicants can, in fact, bring disparate impact claims under the ADEA. In Kleber v. CareFusion Corp., No. 17-1206 (7th Cir. Apr. 26, 2018), a divided panel reinstated the claim of a 58-year-old attorney with extensive experience who applied and was not selected for an in-house job advertised as requiring “3 to 7 years (no more than 7 years) of relevant legal experience.”

The Seventh Circuit’s ruling is potentially far-reaching, since other common hiring practices, including internship programs for recent graduates, and recruiting at colleges and universities, also have a tendency to disadvantage older workers. Whether these practices, or “experience caps” such as the one at issue in Kleber, can be justified by a “reasonable factor other than age” (RFOA) remains to be seen.  Under the EEOC’s regulations, the RFOA defense requires proof that a practice is “both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose,” in light of all the circumstances, including the potential harm to older workers. 29 C.F.R. § 1625.7(e).

Kleber generated a lengthy majority opinion as well as a dissent, and CareFusion has petitioned the full Seventh Circuit for en banc review. Villareal produced no less than four separate opinions at the en banc stage.  Although the Supreme Court denied certiorari in Villareal, the circuit split created by Kleber, if it persists, makes it more likely that the Court will take up the question of disparate impact protections for older applicants under the ADEA in the future.

Kleber applies only within the Seventh Circuit (Illinois, Indiana, and Wisconsin).  However, one California district court has also held that job applicants can bring  disparate impact claims under the ADEA, see Rabin v. PricewaterhouseCoopers LLP, 236 F. Supp. 3d 1126 (N.D. Cal. 2017), and  the Equal Employment Opportunity Commission (EEOC), which has nationwide jurisdiction, has taken the same position.  Employers throughout the country should therefore examine their hiring practices to determine whether practices that tend to disadvantage older workers are supported by a legitimate business purpose and are otherwise reasonable.

On February 26, 2018, in a landmark decision continuing the expansion of Title VII’s protection, the Second Circuit Court of Appeals became the second federal appeals court to hold that Title VII prohibits discrimination on the basis of sexual orientation in the workplace. The decision in Zarda v. Altitude Express, Inc. aligns the Second Circuit with the Seventh Circuit in the ongoing evolution of Title VII and its application to sexual orientation discrimination. Both cases involved en banc decisions by the entire court.

Donald Zarda was a former skydiving instructor who alleged that he was fired due to his sexual orientation. He filed an EEOC charge claiming that his discharge was on account of his sexual orientation and gender in violation of Title VII, and repeated the claim in federal court, claiming that he was discharged because his behavior did not conform to gender stereotypes.  Zarda sometimes disclosed to his female clients that he was gay as he prepared them for tandem skydiving jumps during which he would be strapped in tightly to the client.  Although Zarda thought that approach would ease concerns about any inappropriate behavior, one of his clients and her boyfriend complained to his former employer.  The company fired Zarda shortly thereafter.

After acknowledging that the EEOC has maintained since 2015 that sexual orientation discrimination is protected by Title VII and the Seventh Circuit’s same conclusion, the Second Circuit held that “sexual orientation discrimination is motivated, at least in part, by sex and is thus a subset of sex discrimination,” overturning is own prior decisions. The Court’s decision focused on three main factors.  First, the Court concluded that sexual orientation discrimination is a function of sex, comparable to sexual harassment and other perceived evils previously recognized as violating Title VII.  Second, “sexual orientation discrimination is predicated on assumptions about how persons of a certain sex can or should be.”  The Court held that Title VII has long been interpreted (including by the Supreme Court) as prohibiting employment decisions based on stereotypes.  Sexual orientation discrimination, the Court found, is grounded in the concept of gender stereotypes—“real men should date women”—and the Court therefore ruled such discrimination as a subset of sex discrimination.  Finally, sexual orientation discrimination is a form of associational discrimination that is in violation of Title VII, similar to anti-miscegenation policies.  According to the Court, an employee’s sexual orientation is rooted in his or her association with someone of the same sex, which is itself discrimination based on the employee’s own sex.

It is unclear at this time whether Zarda will be appealed to the Supreme Court.  As courts’ interpretation of Title VII continues to evolve, employers in jurisdictions that recognize a cause of action for sexual orientation discrimination should stay vigilant about ensuring that their employees are not subjected to such discrimination in the workplace.  This is especially true on the federal level for employers in states covered by the Second Circuit (New York, Vermont, and Connecticut) and Seventh Circuit (Illinois, Indiana, and Wisconsin) decisions.  And employers in these and other states should remain mindful of state and local laws that provide similar protections.  We encourage employers to review their policies and practices to ensure that they comply with federal, state and local laws in this emerging area of workplace law.

For more information or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.