ADEA Update

By Elizabeth Mata Kroger

The Age Discrimination in Employment Act (ADEA) is the federal statute that prohibits employers with 20 or more employees from refusing to hire, discharge, or otherwise discriminate against any individual because of age.1 The ADEA covers compensation, terms, conditions and other privileges of employment including health care benefits. The act specifically prohibits age-based discrimination by covered employers against employees age 40 or older. The purpose of the ADEA is to promote the employment of older persons and to prohibit arbitrary discrimination in employment based on age.
Since the ADEA’s enact-ment in 1967, employees age 40 and over have been protected from intentional discrimination based on age. However, what was not clear after the statute’s enactment was whether the ADEA also provided protection against employer practices which, although not intentionally discriminatory, have an adverse effect on older workers. These actions are sometimes referred to as “adverse impact” claims and are recognized as theories of discrimination filed under Title VII of the Civil Rights Act of 1964. Last year, the United States Supreme Court finally addressed the issue in the context of the ADEA in favor of older workers in its ruling in Smith v. City of Jackson.2 In holding that disparate-impact claims are actionable under the ADEA, Smith disagreed with holdings in the Fifth, Seventh and Eleventh Circuits that they were not actionable. Smith was therefore a significant opinion for labor and employment practitioners in the Fifth Circuit.
Although there have been no developments under the ADEA since Smith that match its import, the following recent opinions from federal Courts of Appeals represent some interesting interpretations of the ADEA, including whether U.S. employment agencies working on behalf of foreign employers are covered by the ADEA with respect to foreign job opportunities, the conditions precedent for filing an ADEA claim, and under what conditions an award of front pay is appropriate.

ADEA Does Not Apply to Foreign Entities Operating on Foreign Soil–and U.S. Employment Agencies Recruiting on Their Behalf
In a case of first impression, the Fifth Circuit ruled that U.S. companies who recruit on behalf of foreign entities for jobs with foreign employers on foreign soil are not covered by the ADEA. In Johnson v. Aramco Services Co.,3 Peter Johnson, age 57, applied through Aramco Services Company (Aramco), a Delaware Corporation, for a job working in Saudi Arabia with the Saudi Arabian Oil Company (SAO), a Saudi Arabian entity. Aramco is a wholly-owned subsidiary of SAO and provides a range of services to SAO including recruiting. Johnson sued both entities alleging that he was not hired because of his age. Johnson did not dispute the dismissal of SAO from the suit based on the prohibition against the extraterritorial application of the ADEA, but argued that Aramco was subject to the ADEA because it constituted a U.S. “employment agency” that was expressly covered by the ADEA.4
Aramco countered that because SAO was not a covered employer under the ADEA, the action against Aramco was not actionable. In other words, Aramco was not the “employer” at issue and was not liable merely by virtue of the recruiting activities provided to an employer not covered by the ADEA. The Fifth Circuit agreed. The court held that the unequivocal admonition against extra-territorial application of the ADEA contained in the statute prohibited the imposition of liability on Aramco for an employment action concerning a foreign employer on foreign soil.5

Cooperation with the EEOC’s Investigation Required Before a Claimant May File Suit
Employees seeking to file a federal action for age discrimination under the ADEA must first file a charge of discrimination with the Equal Em-ployment Opportunity Commission (EEOC).6 The exhaustion of these ad-ministrative remedies is a jurisdictional prerequisite to filing suit. However, it is not enough to simply file a claim. According to a recent opinion of the Tenth Circuit Court of Appeals, a private sector employee must also cooperate with the EEOC for the employee to exhaust his or her administrative remedies under the ADEA.7 The Tenth Circuit explained that “perfect cooperation” was not required:

Rather, a claimant must merely cooperate as part of a good faith attempt to allow the EEOC a reasonable opportunity to reach the merits of his or her charge. It is only when a plaintiff’s non-cooperation effectively prevents the EEOC’s investigation and conclusion efforts such that the EEOC proceeding essentially becomes a sham or meaningless proceeding that a charging party’s non-cooperation will amount to a failure to exhaust administrative remedies.8

The court in Shikles went on to rule that because the plaintiff failed to cooperate with the EEOC and, therefore, failed to exhaust his administrative remedies, the district court lacked subject matter jurisdiction over his ADEA claim.

Exhaustion of Administrative Remedies Not Required Before EEOC May File an Action on Behalf of Aggrieved Employees
If the EEOC brings a lawsuit on behalf of a group of individuals, those individuals are not required to exhaust their administrative remedies by first filing with the EEOC a charge of discrimination, according to the Seventh Circuit in Equal Emp. Opportunity Comm’n v. Sidley Austin LLP.9 In 1999, Sidley & Austin demoted 32 of its equity partners to “counsel” or “senior counsel.” The EEOC began an investigation to determine whether the demotions violated the ADEA and ultimately filed an ADEA suit against Sidley & Austin on behalf of the demoted partners.10 In response, Sidley & Austin moved for partial summary judgment, asserting that the EEOC could not recover monetary damages on behalf of individuals who failed to file timely ADEA discrimination charges with the EEOC. The district court denied the motion, and Sidley & Austin filed an interlocutory appeal. The Seventh Circuit affirmed the denial of the motion for partial summary judgment, citing the United States Supreme Court’s opinion in EEOC v. Waffle House, Inc.11 as controlling.12 In Waffle House, the Supreme Court ruled that the EEOC’s claim for monetary relief for a victim of an alleged violation of the Americans with Disabilities Act was not barred by the victim’s earlier agreement to arbitrate any employment disputes. The reason there was no bar did not relate to the enforceability of the arbitration clause; instead, it was not binding on the EEOC because its enforcement authority is not derivative of individuals’ legal rights even when it is seeking to make them whole. The Seventh Circuit extended the reasoning in Waffle House to the Sidley & Austin facts: “Similary, the [EEOC] is not bound by the failure of the Sidley ex-partners to exhaust their remedies; the Commission has no duty to exhaust.”13

High Burden of Proof to Recover Front Pay Under the ADEA
The Seventh Circuit recently ruled that a patent lawyer who prevailed on his ADEA claims and was awarded over $500,000 in back pay damages (which was doubled because the jury found a willful violation of the ADEA) was not entitled to an award of front pay. In Mattenson v. Baxter Healthcare Corp.,14 the plaintiff, Mattenson, who was age 51 at the time of termination and an experienced patent lawyer, testified that he unsuccessfully applied for jobs with all the companies and law firms that patent medical devices. Because he was unable to find a comparable job, Mattenson directed his economic expert to calculate front pay on the assumption that he would never earn any more money.15 The district court refused to award front pay, and Mattenson appealed. The Seventh Circuit agreed with the denial of front pay, reasoning that front pay was an equitable, not legal, remedy to be decided by the judge, not the jury. In this case, the Seventh Circuit concluded that although Mattenson would likely not find another job paying $240,000 annually, he could not insist that his employer pay him the full sum until his retirement age at 65 “in order that he can play golf eight hours a day.”16 The court determined that even though Mattenson could not find another job prosecuting specific types of patent applications, he likely could find a job in a law firm or in a business firm involved in medical products, a field in which he had vast experience plus an educational background that included a master’s degree in biomedical engineering.17 In a ruling that is sure to please defense lawyers, the court stated that Mattenson “was required to present persuasive evidence of inability to find a substitute job; the fact that he contacted 23 firms without success does not satisfy that burden, given the range of opportunities open to someone with his background and experience.”18

Tenth Circuit Rules that Faulty OWBPA Notice Means Workers’ Age Bias Claims Not Barred
The Older Worker Benefit Protection Act (OWBPA) was passed as an amendment to the ADEA in 1990. The OWBPA governs benefit plans for older workers as well as requirements for employees’ waiver of rights under the ADEA.19 In fact, the OWBPA imposes numerous technical requirements for obtaining a release of claims under the ADEA. The OWBA provides that for a release to be considered “knowing and voluntary,” it must, at a minimum, meet eight specific requirements.20 One of these requirements provides that an employer must supply certain specific information when it seeks a waiver of ADEA claims “in connection with an exit incentive or other employment termination program offered to a group or class of employees.”21
To obtain a valid release of ADEA claims in connection with a termination program offered to a group of employees, employers must inform the individual in writing, as to 1) any class, unit, or group of individuals covered by the program (i.e., the “decisional unit”), any eligibility factors for the grogram, and any applicable time limits; and 2) the job titles and ages of all individuals eligible or selected for the program, and the ages of those in the same job classification or organizational unit who are not eligible or selected.22 In Kruchowski v. Weyerhaeuser Co.,23 the Tenth Circuit originally interpreted this provision in a manner that required greater disclosure information related to the group termination program than many employers frequently provide. The Tenth Circuit, however, withdrew its first opinion and substituted it with a new opinion that, despite invalidating the releases in question, does not go as far as the original opinion in requiring more disclosure concerning eligibility factors considered by employers in selecting individuals for lay-off.24
The court in Kruchowski revived the claims of 16 former employees of Weyerhaeuser after finding that even though the release signed by the laid-off workers was not ambiguous or misleading, the employer’s failure to follow the OWBPA’s technical requirements rendered the release of ADEA claims invalid.25 Specifically, the Tenth Circuit stated that the company gave the defendants inaccurate information in its releases when it defined the “decisional unit” for purposes of the lay-off selection as all salaried employees employed at a specific mill.26 In actuality, the decision unit consisted of those salaried employees reporting to the mill manager.27 The court held that the employer “presented no evidence that plaintiffs knew or should have known that the ‘decisional unit’ was other than that specified in the information provided.”28 In invalidating the waivers, the court did not consider any evidence that showed that the erroneous information impacted the plaintiffs’ ability to knowingly enter into the release; rather, the case rested on the defendant’s failure to meet the technical requirements of the OWBPA. Although the law identifies eight broad requirements that must be met by valid releases, the Tenth Circuit held that the absence of (or error in) one of these requirements invalidates the waiver.29

Conclusion
This year, the earliest members of the Baby Boomer generation (those born between 1946 and 1964) turn 60. As U. S. citizens live and work longer, the U. S. workforce continues to age. With the average age of the workforce on the rise, there will be no shortage of future claims under the ADEA. Opinions such as the Supreme Court’s in Smith v. City of Jackson and those of certain circuit courts like Sidley Austin and Kruchowski suggest a trend toward eliminating, or at least relaxing, some historical procedural barriers to filing actions under the ADEA. Baby Boomers will therefore derive the immediate benefit of some of these holdings. At a minimum, the Baby Boomer generation is sure to have a continued impact on the interpretation and enforcement of the ADEA.

Elizabeth Mata Kroger is a labor and employment law partner with Martin, Disiere, Jefferson & Wisdom, L.L.P. She is board certified in Labor and Employment Law by the Texas Board of Legal Specialization.

Endnotes
1. 29 U.S.C. §§ 621-634. 2. 125 S. Ct. 1536 (2005). 3. 164 Fed. Appx. 469, 2006 W.L. 45849 (5th Cir. 2006). 4. 164 Fed. Appx. at 471, 2006 W.L. 45849 at ¶2. 5. Id. at 472. 6. Shikles v. Sprint/United Mgmt Co., 426 F.3d 1304 , 1305 (10th Cir. 2005). 7. Id. at 1307. 8. Id. at 1311. 9. 437 F.3d 695 (7th Cir. 2006). 10. Id. at 695. 11. 534 U.S. 279 (2002) 12. Sidley Austin LLP, 437 at 695. 13. Id. at 695. 14. 438 F.3d 763 (7th Cir. 2006). 15. Id. at 771. 16. Id. 17. Id. 18. Id. 19. Older Worker Benefit Protection Act of 1990, P.L. 101-433, 104 Stat. 9780 (1990) (codified in part at 29 U.S.C. § 626(f)(1).). 20. 29 U.S.C. § 626(f)(1)(A)-(H). 21. 29 U.S.C. § 636(f)(1)(H). 22. 29 U.S.C. § 626(f)(2)(H)(i)-(ii). 23. 423 F.3d 1139 (10th Cir. 2005). 24. ___ F.3d ___ (10th Cir. May 2, 2006), 2006 W.L. 1149526. 25. 2006 W.L. 1149526 *5. 26. Id. at * 3. 27. Id. 28. Id. at *4. 29. Id. at *5.

Text is punctuated without italics.

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