The rule responds to two Supreme Court decisions in which the Court criticized one part of the Commission’s existing ADEA regulations. The Court upheld EEOC’s longstanding position that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, even if the harm was not intentional. However, it disagreed with the part of the regulations that said if an employee proved in court that an employment practice disproportionately harmed older workers, the employer had to justify it as a “business necessity.”
The Court said that, in an ADEA disparate impact case, the employer did not have to prove business necessity; it need only prove that the practice was based on an RFOA (see "Supreme Court Mandates Tougher ADEA Evidence Standard"). The Court also said that the RFOA defense is easier to prove than the business necessity defense but did not otherwise explain RFOA.
The EEOC proposed a new RFOA definition in March 2010 (see "EEOC Defines Reasonable Factors other than Age").
The final rule does two things:
- It makes the existing regulation consistent with the Supreme Court’s holding that the defense to an ADEA disparate impact claim is RFOA, and not business necessity; and
- It explains the meaning of the RFOA defense to employees, employers and those who enforce and implement the ADEA.
The rule applies to all private employers with 20 or more employees, state and local government employers, employment agencies, and labor organizations. Although the ADEA applies to the federal government as an employer, the rule does not apply to federal employers by virtue of section 633a(f) of the ADEA.
The final rule is here. A Q&A about the final rule is at http://www.eeoc.gov/laws/regulations/adea_rfoa_qa_final_rule.cfm.