Forty (Not Three) Is the Magic Number

By: Susan Nickerson
Setnor Byer Insurance & Risk, Director of Human Resources

The Equal Employment Opportunity Commission (EEOC) recently provided the nation’s employers with yet another piece of disturbing news: workplace discrimination charge filings with the EEOC soared to an unprecedented level during fiscal year 2008, which ended on September 30th. Needless to say, this is not the news many have been hoping for during these difficult economic times. In fact, it is possible that these difficult economic times may actually be responsible for these new highs (or, perhaps more accurately, new lows).

During fiscal year 2008, 95,402 charges of discrimination were filed with the EEOC. As the perspective provided by the following statistics reveals, this number is actually larger than it seems.

• Since 1996, the number of charge filings has not exceeded 85,000.

• The last time the total number of charges exceeded 90,000 was in 1994.
• The 2008 figure represents a 15% increase from 2007.
• The sheer number of charge filings in 2008 has never before been seen.

While these statistics provide insight into the current state of affairs, the reasoning behind the increase is not so easily identified. Some suggest the poor economy compels otherwise non-litigious individuals to sue their employer to survive financially. Others believe cutbacks in human resources and employee training budgets have increased the incidents of discrimination in the workplace because managers are no longer taught about the laws they must follow and HR personnel (if they remain) no longer have the resources to teach, implement, and police unlawful employment practices.

Nevertheless, at the end of the day, the reason may simply be a consequence of percentages: more people are being laid off, so more “adversaries” (i.e., former employees) are being created every day. Regardless of reason, employers must be aware of their legal obligations and their employees’ legal rights.

According to the EEOC, allegations based on race, sex, and retaliation continued as the most frequently filed charges. However, though lower in frequency, charges based on age exhibited nearly the largest annual increase of all filings. Given the consequences of an age discrimination lawsuit, this increase merits special attention to the law underlying age-based charges: the Age Discrimination in Employment Act (ADEA).

The ADEA, which generally applies to employers having twenty or more employees, makes it unlawful for an employer to:

• fail or refuse to hire, or to discharge, any individual, or otherwise discriminate against any individual with respect to the individual’s compensation, terms, conditions, or privileges of employment, because of such individual’s age;

• limit, segregate, or classify employees in any way which would or tend to deprive any individual of employment opportunities, or otherwise adversely affect the individual’s status as an employee, because of such individual’s age; or
• reduce the wage of any employee to comply with the ADEA.

At what age does an individual become entitled to these protections? Many people are surprised to discover that the protections afforded by the ADEA are limited to individuals who are at least 40 years of age. So even though 40 may be the new 30 in terms of lifestyle, in the context of the ADEA, turning 40 constitutes coming of age.

Since claims under the ADEA are on the rise, employers should be familiar with the elements of an age discrimination claim. Essentially, an aggrieved employee must establish that he or she:

• belonged to a protected age class (e.g., over 40);

• suffered an adverse employment action, such as being laid off;
• was qualified for his or her position; and
• was replaced by a younger individual.

If an employee successfully establishes these elements, then the employer must establish a legitimate, non-discriminatory reason for the adverse employment action. If successful, the burden then falls on the employee to prove that the employer’s articulated reason for the adverse action is only pretext for intentional discrimination. If necessary, these issues will be left for a jury to resolve.

Needless to say, relying on a jury to limit the consequences of an adverse judgment is not necessarily the most effective risk management technique. Employers must fight the impulse to forego human resources training to reduce expenses. The true cost of such a decision may very well dwarf any potential savings. Moreover, the current litigation frenzy provides yet another reason to maintain employment practices liability insurance.

The 2008 EEOC charge statistics paint a frightening picture for employers across the country. The consequences of facing a discrimination charge could be devastating to an already struggling business. Employers must make every effort to recognize potential ‘danger zones’ when dealing with their workforce, especially if lay-offs are expected. Employers choosing to disregard the current environment, as well as their legal obligations under the several anti-discrimination laws may soon discover that for every one of those 95,402 petitioners who filed a charge with the EEOC, there was a respondent.

Please click here to learn more about preventing a discrimination lawsuit or click here to get more information about purchasing employment practices liability insurance.