At a time when charges of age discrimination are soaring, the U.S. Supreme Court may have given a break to employers and their employment practices liability insurers with their recent ruling that a worker has the burden to prove age was a key factor in a negative employment decision.

The decision was close, however, with the 5-4 ruling favoring employers in Gross v. FBL Financial.

The underlying case leading to the high court's ruling on the standard of proof for a suit under the Age Discrimination in Employment Act of 1967 involved Jack Gross, an employee of FBL Financial, who was demoted from his position as a claims administration director in 2003.

Mr. Gross filed suit in an Iowa district court in April 2004, alleging that his reassignment to the position of claims project coordinator violated the ADEA, which makes it unlawful for an employer to take adverse action against an employee because of their age.

While Mr. Gross presented evidence at trial to suggest that his demotion was based at least in part on his age, FBL defended its decision on the grounds that it was part of a corporate restructuring and that his new position was better suited to his skills.

Writing for the majority in the Supreme Court ruling, which vacated a judgment by the 8th Circuit Court of Appeals, Justice Clarence Thomas said “the burden of persuasion does not shift to the employer to show that it would have taken the action regardless of age, even when a plaintiff has produced some evidence that age was one motivating factor in that decision.”

“A plaintiff bringing an ADEA disparate-treatment claim must prove, by a preponderance of the evidence, that age was the 'but-for' cause of the challenged adverse employment action,” he wrote.

Distinguishing the ADEA from Title VII–which applies to cases of discrimination based on race, color, religion, sex or national origin–Judge Thomas' opinion noted that the ADEA's text “does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor.”

“Moreover, Congress neglected to add such a provision to the ADEA when it amended Title VII” in this regard, “even though it contemporaneously amended the ADEA in several ways,” he wrote.

“We cannot ignore Congress' decision to amend Title VII's relevant provisions but not make similar changes to the ADEA. When Congress amends one statutory provision but not another, it is presumed to have acted intentionally,” he wrote.

The timing of this decision would appear to be beneficial to employers and their employment practices liability insurers who are currently facing a significant jump in age discrimination claims arising from a growing number of layoffs tied to the economic downturn.

Lawyers and insurance experts who spoke to NU last month noted that while there are some mitigating factors keeping a lid on the severity of EPL claims, frequencies are climbing.

As evidence, they pointed to charge statistics for 2008 released by the U.S. Equal Employment Opportunity Commission earlier this year, which show that age discrimination charges grew more than any other category–jumping nearly 29 percent to over 24,000.

In contrast, the biggest category of employment discrimination charges, relating to race, grew only 11 percent.

“We call it the baby boomer generational issue as we underwrite,” said Cathy Padalino, vice president and EPL product manager for Chubb & Son in Warren, N.J., noting that a rise in claims from aging baby boomers would be a factor for EPL insurers to deal with even absent current economic conditions.

Ms. Padalino, who spoke to NU in May, added that in today's economy, “just simply based upon the demographic makeup of the baby boomer generation, the odds are higher and higher as the clock ticks that someone [losing his or her job] is going to be of [that] protected class.”

Jack McCalmon, a partner with the law firm of Titus, Hillis, Reynolds, Love, Dickman & McCalmon, PLC in Tulsa, Okla., said that “typically, when [companies] lay off, they want to cut salary and overhead costs,” noting that older employees make more money and typically have higher benefit costs. “They're going to cut the people who are the most costly,” and even though it's illegal to do so, “that tends to be older workers,” he said.

Sen. Patrick Leahy, D-Vt., issued a statement criticizing the ruling, saying it reminded him “of the court's wrong-headed ruling in Ledbetter. In fact, it was these same five justices who misconstrued an employment discrimination statute in that case and also overturned a jury verdict in favor of the employee.”

Earlier this year, President Barack Obama signed legislation reversing the court's Ledbetter decision, which held that if employees did not file claims of sex-based discrimination (under the Equal Pay Act of 1963) within 180 days of their employer's decisions to pay them less, they were barred forever from challenging the discriminatory paychecks that followed.

Special Reports /

U.S. Supreme Court Rules For Employers In Age Bias Case

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