3046-AA76 201110 The Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions 3046 Equal Employment Opportunity Commission EEOC Disparate Impact and Reasonable Factors Other Than Age Under the Age Discrimination in Employment Act Prior to the Supreme Court's decision in Smith v. City of Jackson, 544 U.S. 228 (2005), Commission regulations interpreted the ADEA to require employers to prove that actions that had an age-based disparate impact were justified as a business necessity. Although the Court, in Smith, agreed with the EEOC that disparate impact claims were cognizable under the ADEA, it held that the defense was not business necessity but reasonable factors other than age (RFOA). The Smith Court did not specify whether the employer or employee bore the burden of proof on the RFOA defense. On March 31, 2008, the Commission issued a Notice of Proposed Rulemaking (NPRM) to conform Commission ADEA regulations to Smith, also taking the position that the employer bore the burden of proving the defense. Because current EEOC regulations do not define the meaning of "RFOA," the NPRM also asked whether regulations should provide more information on the meaning of "reasonable factors other than age" and, if so, what the regulations should say. 73 FR 16807 (March 31, 2008). Subsequently, the Supreme Court held in Meacham v. Knolls Atomic Laboratory, 554 U.S. 84, 128 S. Ct. 2395 (2008), that employers have the RFOA burdens of production and persuasion. After consideration of the public comments, and in light of the Supreme Court decisions, the Commission issued a second NPRM on February 18, 2010 to address the scope of the RFOA defense. A final rule will be issued addressing the issues covered in both NPRMs and conforming to both Smith and Meacham. The RIN associated with the NPRM titled "Reasonable Factors Other Than Age Under the Age Discrimination in Employment Act" (RIN 3046-AA87) has been merged with this item (RIN 3046-AA76), which will be the RIN used to identify the final rule. Other Significant Previously Published in The Unified Agenda Final Rule Stage No No 29 CFR 1625.7(d) 29 USC 628 Yes Current EEOC regulations interpret the ADEA as prohibiting an employment practice that has a disparate impact on individuals within the protected age group unless it is justified as a business necessity. The Supreme Court's holding in Smith v. City of Jackson validated the Commission's position that disparate impact analysis applies in ADEA cases. The holding, however, differed from the Commission's position that the business necessity test was the appropriate standard for determining the lawfulness of a practice that had an age-based disparate impact. The EEOC is revising its regulation to reflect the Smith decision. Moreover, as noted above, a related item (RIN #3046-AA87) entitled "Reasonable Factors Other Than Age Under the Age Discrimination in Employment Act" has been merged with this item. In this final rule, the EEOC is also revising its regulations to address the scope of the RFOA defense. The ADEA authorizes the EEOC "to issue such rules and regulations it may consider necessary or appropriate for carrying out this chapter ...." 29 U.S.C. section 628. The Commission has considered all alternatives proposed by the public comments. Based on the information currently available, the EEOC does not anticipate that the rule will have significant economic effects. The purpose of the rule is to help explain the implications of recent Supreme Court decisions and the type of conduct that would support an RFOA defense in court. It therefore does not directly require any action on the part of covered entities. The regulation makes clear that the employer's burden is to prove the RFOA, rather than the more stringent business necessity, defense. Further, the rule instructs covered entities what to do if they want to ensure that their practices are based on reasonable factors other than age. The rule does not expand the coverage of the ADEA to additional employers or employees, and does not include reporting, recordkeeping, or other requirements for compliance. Costs would result primarily from voluntary modifications to covered entities' business practices made to protect against disparate-impact liability. Modifications may include performing disparate impact analyses of business practices before they are adopted, providing guidance to decisionmakers on how to implement the practice, and evaluating other options to mitigate harm. The costs will be minimal, because these actions are required, for purposes of establishing the RFOA defense, only to the extent that a reasonable employer would perform them under the circumstances. Many covered entities already routinely perform them. To the extent that the regulation motivates employers to take additional actions, free resources minimize the cost of doing so. This revision, informed by the comments of stakeholders, will be beneficial to courts, employers, and employees seeking to interpret, understand, and comply with the ADEA. The rule does not affect risks to public health, safety, or the environment. NPRM 03/31/2008 73 FR 16807 NPRM Comment Period End 05/30/2008 Final Action 12/00/2011 Includes Retrospective Review under E.O. 13563. No Businesses Governmental Jurisdictions Organizations Federal Local State Tribal No No No 3046-AA87 Related to Dianna Johnston B. 3046 Equal Employment Opportunity Commission EEOC 202 663-4657 202 663-4679 dianna.johnston@eeoc.gov 131 M Street NE., Washington DC 20507 Lyn McDermott 3046 Equal Employment Opportunity Commission EEOC 202 663-4663 202 663-4679 lyn.mcdermott@eeoc.gov 131 M Street NE, Washington DC 20507