Reverse Discrimination Case Decision Looms In HighCourt; Outlook Unclear Washington

Employers may face a new type of agediscrimination liability depending on the outcome of a case nowpending before the United States Supreme Court.

The case involves allegations by a group of workers in their 40sthat they are victims of reverse discrimination because theiremployer provided more general employee benefits to fellow workersage 50 and older.

In the caseGeneral Dynamics Land Systems v. Clinetheyounger workers argue that General Dynamics policy violates thefederal Age Discrimination in Employment Act.

However, the impact of the case on employment practicesliability insurance is unclear.

The Washington-based National Association of Manufacturers filedan amicus brief arguing that the case could have significantimplications for employers.

“None of the legislative history (of ADEA) suggests Congress wasat all concerned with opportunities and benefits denied employeesbecause they were too young,” said Quentin Riegel, NAMs vicepresident for litigation.

In its brief, NAM, along with a coalition of other businessgroups, argues that allowing this type of reverse discriminationclaim would significantly increase the pool of potential claimantsalleging age discrimination and the number of claims to whichemployers must respond.

Employers, NAM said, routinely make and implement millions ofemployment decisions each year, including hirings, promotions,terminations and transfers.

Each transaction, NAM said, is a potential subject of adiscrimination charge. The reverse discrimination charge at theheart of the General Dynamics case would allow jobapplicants who are substantially younger than the person selectedto establish a prima facie case of age discrimination, NAMsaid.

Already, NAM said, if an applicant is substantially older thanthe person selected for a job, the older candidate can establish aprima facie case of age discrimination.

“That means virtually every plaintiff will be able to establisha prima facie case of discrimination, thereby shifting the burdento the employer to articulate a legitimate, non-discriminatoryreason for the employment action that the plaintiff may attempt toshow is a pretext,” NAM said.

Joe Monteleone, vice president and claims counsel for HartfordFinancial Products, Hartford, Conn., agreed that from theprospective of the employer, there would be a potential increase indiscrimination claims.

But it is premature to say whether there actually would be anexplosion of claims should the high court allow this type ofreverse discrimination claim, he added.

Even if such claims are allowed, Mr. Monteleone said, the highcourt may provide some guidance on the right way to handle theseissues that employers could follow.

Mr. Monteleone added that EPL insurance remains a very valuablepart of a business insurance portfolio. He noted that currentpolicies would not have to be changed depending on the outcome ofthe case, since they already cover all forms of discrimination,whether traditional or reverse.

Moreover, he said, discrimination cases are not complex onesfrom the standpoint of a plaintiff seeking to get a claim before ajury. EPL insurance, Mr. Monteleone said, offers substantial valueto employers.

But Jim Crockett, manager of risk and employee benefits forDenver Water and a member of the New York-based Risk and InsuranceManagement Society, said he does not believe the outcome of thecase would necessarily make a difference regarding the decision ofa risk manager to purchase EPL coverage.

He noted that his company elected not to purchase the coverageeven though it was once hit with a reverse discrimination claim

The company was sued by a male claiming reverse discrimination,Mr. Crockett noted, when it hired a female for a position that hadbeen traditionally staffed by a male. The male claimant said thatgender was a factor in the hiring decision and prevailed in court,he said.

Each hiring decision, he said, is subject to an allegation of awrongful act, but human resources personnel are accustomed todocumenting files to demonstrate that hiring decisions do notviolate non-discrimination laws.

Even if the Supreme Court allows reverse age discriminationlawsuits, the documentation should not be a major problem foremployers, Mr. Crockett said.

Mr. Crockett noted that he is 62 years old. He said that if hewere looking for a job and was not hired in favor of a youngerperson, it would be difficult to convince him that age was not afactor in the hiring decision.

However, he said, proving discrimination is another matter.Employers look for reasons such as education and experience inmaking hiring decisions, Mr. Crockett said.

In the General Dynamics case, the 6^thCircuit Court of Appeals ruled that ADEA prohibits employers fromdiscriminating against workers over age 40, even if older workersreceive more favorable treatment.

The case involves a collective bargaining agreement betweenGeneral Dynamics and the United Auto Workers. Prior to the newagreement, General Dynamics was obliged to provide full retireehealth benefits to workers who had accumulated 30 years ofseniority.

But under the new agreement, the company only had to provideretiree health benefits to those who had 30 years of seniority andwho were age 50 or older as of the effective date of theagreement.

A group of employees who were between ages 40 and 49 sued thecompany under ADEA, which bars age discrimination against allworkers age 40 and over.

The plaintiffs argued they were part of ADEAs “protected class,”and thus a benefit program that treated them less favorable thanother workers, even older workers, was illegal.

A United States District Court ruled in favor of GeneralDynamics, stating that the intent of Congress in drafting ADEA wasnot to recognize reverse discrimination.

However, the 6^th Circuit reversed the lower court,citing the plain language of ADEA.

The plain language of ADEA bars discrimination against “anyindividual” based on age, the 6^th Circuit said.

ADEA “clearly and unambiguously” forbids employers from definingthe terms and benefits of any individuals employment based solelyon age, the court added.

Whatever the legislative history of ADEA, the court said, thereis no reason to examine it when the statutes language is plain andunambiguous.

It is not the role of courts, the 6^th Circuit said,to address perceived inadequacies in a statute.

Rejecting this type of reverse discrimination claim, the courtadded, would require a holding that the plain language of ADEA doesnot mean what it says.

If Congress wanted to limit the ADEA to protect only thoseworkers who are relatively older, the 6^th Circuit said,it clearly had the power and acuity to do so. But it did not.

The Supreme Court will hear the General Dynamics caseduring its 2003-2004 term.

Reproduced from National Underwriter Edition, June 16, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.