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Reverse Age Discrimination Claims

In General Dynamics v. Cline, 124 S. Ct. 1236 (2004), the Supreme Court ruled that an employer did not violate the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. §§ 621-634, when it instituted a program that provided retiree health care benefits only to workers over 50 years of age, but denied participation in that program to workers between ages 40 and 49. The Court rejected the Sixth Circuit’s decision that ADEA allowed 40 to 49 year old workers to sue for participation in the General Dynamics program based upon a theory of so-called “reverse age discrimination.”

At first blush, the Supreme Court’s holding in Cline sounds rather unexceptional. Of course Congress intended to protect older workers from being treated worse than younger workers, and not vice versa. However, to reach this decision, the Supreme Court confronted a statute which, on its face, did not say that it prohibited only discrimination based on “old age” but broadly based on “age.” In addition, the Equal Employment Opportunity Commission (“EEOC”) had concluded in interpretative guidance that ADEA did allow for a reverse age discrimination claim.1 Finally, an exchange during floor debate in Congress by one of the ADEA’s sponsors suggested that Congress also understood the ADEA to prohibit all discrimination based on age, not solely discrimination based on “old age.”

To resolve a conflict among the circuit courts of appeals on this issue, the Supreme Court engaged in a wide ranging analysis of the ADEA’s fundamental prohibition against “discrimination because of age.” In this analysis, the Supreme Court interpreted the term “age” in the statutory prohibition to mean “old age” and not “chronological age.”2 At the same time, the Court recognized that the term “age” had different meanings when used in other parts of the ADEA. The Supreme Court also rejected the EEOC’s interpretative guidance as being “clearly wrong” and entitled to no deference.

Although Cline rejected the existence of a reverse age discrimination claim under the ADEA and in the context of one employer’s delivery of an employee benefit that favored older workers, employers should understand that the Supreme Court’s ruling does not resolve whether or not a “reverse age discrimination claim” may exist in other contexts under state human rights laws. While Cline may be highly persuasive in cases arising under such statutes, it remains an open question whether state courts will follow the reasoning of Cline.

In this article, we analyze the Cline decision and discuss its impact on so-called “reverse age discrimination” claims and the workplace generally.

Background

The ADEA prohibits discrimination in employment by private employers and the federal government on the basis of age — against individuals who are 40 years of age or older — unless age is a bona fide occupational qualification reasonably necessary to the normal operation of the employer’s business. Although most courts prior to Cline had rejected the existence of a reverse discrimination claim under the ADEA, courts previously had recognized the existence of reverse discrimination claims under other federal anti-discrimination statutes. In McDonald v. Santa Fe Trail Transportation Co., 427 U.S. 273 (1976), the Supreme Court recognized that whites have standing to sue under both § 1981 and Title VII for race discrimination in employment. Likewise, in Diaz v. Pan American World Airways, Inc., 442 F.2d 385 (5th Cir. 1971), the Court of Appeals for the Fifth Circuit found that an employer had violated Title VII when a male applicant was denied consideration for a job as a flight attendant because he was male.

In the case of age discrimination, however, courts — including the First, Seventh, and Ninth Circuits — have refused to adopt such interpretations of other discrimination statutes nor the EEOC’s interpretation recognizing the “reverse discrimination” theory.3 In Hamilton v. Caterpillar, Inc., 966 F.2d 1226, 1228 (7th Cir. 1992), the court decided that employees too young to qualify for early retirement pension benefits did not have a cause of action under the ADEA. The court held that the ADEA did not authorize reverse discrimination suits. Similarly, in Lawrence v. Irondequoit, 246 F. Supp. 2d 150 (W.D.N.Y. 2002), plaintiffs claimed that their employer engaged in “reverse discrimination” when it passed a resolution changing the fully paid coverage it provided to current retired employees’ retirement health care benefits. Retirees that were 80 years or older by July 1, 2001 kept their full benefit coverage, whereas the benefit program was discontinued for younger retirees. The court held that ADEA was not meant to protect instances of “reverse discrimination” the way Title VII prevents discrimination against men as well as women.4

Prior to the Sixth Circuit decision in Cline, Mississippi Power & Light Co. v. Local Union Nos. 605 & 985, IBEW, 945 F. Supp. 980, 985 (S.D. Miss. 1996), allowed a claim under the ADEA for individuals denied disability benefits given to others between the ages of 60 and 65 with 30 years of service.

In Cline, the Sixth Circuit adopted the EEOC’s interpretation and reversed a district court’s dismissal of Cline’s suit alleging that older workers received more favorable treatment than younger workers. Accordingly, the Sixth Circuit’s ruling brought to the surface the conflict among the courts regarding reverse discrimination suits under the ADEA.

The Cline Decision

Prior to July 1, 1997, General Dynamics provided health care benefits to retired workers with 30 years of service. Then in early 1997, General Dynamics and the United Auto Workers reached a collective bargaining agreement eliminating the company’s obligation to provide health care benefits to subsequently retiring employees. The agreement, however, provided an exception for current employees at least 50 years old at the time of the agreement. Respondents were current and former employees, who would have been eligible for retiree health care benefits under the prior agreement, but did not qualify after the July 1, 1997 agreement. The respondents claimed that the agreement discriminated against them “because of . . .[their younger] age,” in violation of the ADEA.

The District Court dismissed the claim, relying on Seventh Circuit’s decision, holding that the ADEA does not protect younger workers against older workers and that reverse age discrimination has never been actionable under ADEA. The Court of Appeals for the Sixth Circuit reversed, reasoning that the plain language of ADEA makes it clear that a prohibition on age discrimination for individuals over 40 included discrimination in favor of an older worker. The Sixth Court relied on the EEOC regulation, and maintained that if Congress intended to restrict the application of ADEA to cases pitting an older worker against a younger worker, the Congress would have done so on the face of the law.

The Supreme Court rejected the Sixth Court’s reasoning and found against the employees. First, the Court rejected the claim that ADEA’s prohibition demanded a broad construction of the “discrimination . . . because of . . . age” language. The petitioners argued that “age” in that clause referred to chronological age, which would prohibit discrimination against individuals over the age of 40 regardless of whether the discrimination occurred because of the individual’s relatively shorter or longer chronological age. The Court rejected this argument and instead called for a “natural reading of the whole provision,” and upon delving into the text, history, structure, and purpose of ADEA, concluded that Congress meant to provide protection against arbitrary age discrimination for older workers against younger workers.

To arrive at this conclusion, the Supreme Court distinguished the usage of “age” throughout the text of the ADEA, and clarified that the ADEA does not possess the same meaning throughout. The Court advised that “age” should be read contextually, and that the phrase “discrimination . . . because of . . . age” should be read the same way that ordinary people in common usage might think of age discrimination, with consideration of the context a phrase gathers from words around it. The Court reasoned that, in the context of America’s immersion in “youth culture” in the recent decades, “social history emphatically reveals an understanding of age discrimination as aimed against the old, and the statutory reference to age discrimination in this idiomatic sense is confirmed by legislative history.”5

Furthermore, the Court stated, the term “age” in ADEA was not comparable to “race” or “sex” in Title VII or § 1981. Courts have interpreted language referring to “race” and “sex” in those anti-discrimination statutes to refer to all races, not just the black or minority races, and to both sexes, not just the female sex.6 The Court reasoned that “race” or “sex” in everyday usage required modifiers to confer narrow application (e.g., “race” did not mean “black race”; “sex” did not mean “female sex”). However, prohibition of age discrimination in ordinary language was consistent with a narrower meaning of “age” to refer to “old age.” Thus under the “common usage” test, the Supreme Court distinguished statutory interpretation of age discrimination statutes such as ADEA from race and sex discrimination statutes.

As for previous standards adopted by agency pronouncements, the Court rejected the EEOC’s interpretation of the ADEA as “clearly wrong” and did not accord deference to the agency’s views.

The Dissent

Justices Scalia’s and Thomas’ dissents focused on what they viewed as the objectionable new interpretive methods employed by the majority to arrive at its decision.

Justice Scalia objected to the majority’s dismissal of the EEOC’s interpretation of the ADEA as “clearly wrong.” He stated that the majority’s analysis was truncated and avoided the textual ambiguity in the ADEA.

Justice Thomas, joined by Justice Kennedy, dissented in a lengthier objection to the methodology for statutory interpretation used by the Court. This dissent claimed that the Court created a “new tool for statutory interpretation . . . giv[ing] this newly created ‘social history’ analysis dispositive weight.” Justice Thomas advocated adherence to the customary method of statutory interpretation, by which the statute’s “plain language” would settle the question at issue unless it was shown that some ambiguity existed. Justice Thomas argued that the majority’s use of the “social history” of age discrimination to inform its statutory interpretation was contrary to the way Title VII had been read since 1976 in the context of race and sex discrimination cases.

The dissent rejected the majority’s rationale that the “common usage” of the words “age,” “race,” and “sex” allowed for different interpretations of respective anti-discrimination statutes. Rather, the dissent wrote, “the court concludes that the ‘common usage’ of ‘age discrimination’ refers exclusively to discrimination against the relatively old only because the ‘social history’ of the phrase as a whole mandates such a reading.”7

State Law Cases

Although the Supreme Court in Cline held that ADEA does not provide a cause of action to younger workers denied benefits in favor of older workers, some state courts have allowed “reverse age discrimination” claims under more broadly worded state human rights laws.

For example, the New Jersey Supreme Court recognized that a 25 year old employee can invoke the anti-age-discrimination provision of the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to 42, as a basis for his claim that he was improperly discharged because of his youth. See Bergen Commercial Bank v. Sisler, 157 N.J. 188 (N.J. Sup. Ct. 1998). The Court of Appeals of Michigan also held that state age discrimination statute protected plaintiff who alleged she was discriminated against on the basis of her youth. See Zannis v. Medaphis Physican Services Corp., 240 Mich. App. 472 (Mich. Ct. App. 2000).

Practical Considerations

Although state laws may continue to provide rules of decision contrary to the one announced in Cline, the Supreme Court’s holding in Cline will have most vitality in the context of employee benefit plans that may be governed by the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 (“ERISA”). In the ERISA context, state anti-discrimination laws generally are preempted. See Shaw v. Delta Airlines, 463 U.S. 85, 99 (1983).

In its argument to the Supreme Court, General Dynamics pointed out that certain benefit arrangements commonly used by employers sometimes included age-based qualification standards, including the following types of benefits:8

  • Flextime arrangements;
  • Favorable tax provisions in employee stock option plans;
  • Stock ownership plans;
  • Early retirement plans;
  • General retirement programs; and
  • Employee healthcare benefit plans.

To the extent such benefit arrangements are governed by ERISA, employers using age-based qualification standards should be comforted by Cline inasmuch as such arrangements can no longer be challenged under the ADEA solely because they favor older workers. However, to the extent such benefit arrangements are not protected by ERISA preemption, employers should carefully consider the effect of state human rights laws.

  1. 29 C.F.R. § 1625.2(a).

  2. Cline, 124 S. Ct. at 1242.

  3. See Schuler v. Polaroid Corp., 848 F.2d 276 (1st Cir. 1988); Stone v. Travelers Corp., 58 F.3d 434 (9th Cir. 1995).

  4. Lawrence, 246 F. Supp. 2d at 161.

  5. Cline, 124 S. Ct. at 1246 (emphasis added).

  6. See McDonalds, 427 U.S. at 278-279; Diaz, 442 F.2d at 386.

  7. Cline, 124 S. Ct. at 1256.

  8. Donald Verrilli, Oral Argument before the United States Supreme Court (Nov. 12, 2003) (Transcript available at 54-031209-007T).

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