EEOC Goes After AT&T On Class Action Age Discrimination Case

Age Discrimination Claimed For Failure to Rehire Former Employees

The Equal Employment Opportunity Commission (EEOC) had hearings last month on recent and alarming developments in age discrimination including the effect on older workers of widespread layoffs, threats to employee benefits, and controversial recent court decisions.

In keeping with its commitment to aggressively enforce the Age Discrimination in Employment Act (ADEA) the Commission announced on Thursday that it filed an age discrimination lawsuit against AT&T and a number of its subsidiaries.

A successful outcome, which is no doubt years away, would be a huge victory for older workers.

About The Case

AT&T, like many companies, offered various retirement incentive programs over the last few years, in order to reduce its workforce. In those types of programs, employees who meet the qualifications (usually a combination of age and years of service) are offered enhanced severance packages if they voluntarily leave the company.

Some of those employees later applied for openings at the company, but were not hired because they had previously participated in the program.

Since October of 2006, AT&T has maintained a policy which prohibited hiring employees who retired under these plans.

The suit maintains the AT&T’s no-hire policies have a disparate impact on employees and applicants for employment who are age 40 and over in violation of the ADEA.

The suit further maintains that AT&T has no legitimate reason or purpose for this policy.

Disparate Impact Lawsuits

Generally speaking, there are two types of employment discrimination cases involving protected classes (age, race, gender, national origin, religion, disability, veteran status) of individuals.

1. Disparate treatment cases:

  • involve proof that an individual was treated differently/discriminated against because of his/her protected characteristic
  • requires proof (with either direct or circumstantial evidence) of intentional discrimination

2. Disparate impact cases :

  • involve the company’s use of a neutral policy which adversely/more harshly affects a protected group
  • proof of intentional discrimination is not required
  • the plaintiff need only prove that the policy, while neutral on it’s face, has a disparate impact on a protected group when applied to current or prospective employees
  • employer must prove a legitimate business reason (a reasonable factor other than age) for the discriminatory policy

Disparate impact litigation was widely used in the 1970’s to combat race discrimination, particularly in the South. It has also been used to challenge various policies and practices which have adversely affected women in the workplace.

It wasn’t until fairly recently that the Supreme Court recognized the use of a disparate impact analysis as a way to prove age discrimination.

Therefore, there are very few cases on this topic, and none that I know of which has challenged a company’s policy of not hiring former  employees who accepted severance packages, voluntarily retired, and then later applied for open positions.

What’s Next

What happens next is that there will be an effort to certify a class of individuals affected by this no rehire policy. I think there is little doubt that the AT&T policy does have an adverse affect on individuals over 40.

The battleground will be fought over whether AT&T will be able to justify a legitimate business reason for its conduct.

I also expect that there are contract issues galore. Individuals were, I assume, required to sign provisions which stated that they would not apply for work at AT&T in the future as part of their agreements.

I would not be surprised if AT&T claimed breach of contract and tried to get the severance back as well as any other benefits the employees received because they signed the agreements.

Many companies use voluntary severance programs, and use policies identical to those used by AT&T.

Therefore, the outcome of this case could result in a tremendous benefit to older workers if the plaintiffs prevail.  It could also potentially change the way in which companies downsize in the future.

The core policy issues are these:

  • Should older employees who are downsized through a corporate voluntary separation program be prohibited from applying for jobs when the company for which they used to work starts to hire new employees? 
  • Should the former employees be able to apply for open positions for which they are qualified?
  • If so, should the employees have to return the additional severance pay they got when they signed the separation agreement which they otherwise would not have received?

This will indeed be a very important case to follow. I, for one, am glad that the EEOC decided to take this on.


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