Age Discrimination - Disparate Impact    
by James W. Johnston, Esq.

A disparate impact age discrimination claim arises from a facially neutral employment policy that adversely affects employees who are over the age of 40. Unlike disparate treatment cases, employees claiming disparate impact discrimination are not required to prove that the employer had a discriminatory motive in enacting the employment policy.

Federal Law 

The primary federal statute prohibiting age discrimination in employment is the Age Discrimination in Employment Act (“ADEA”) The ADEA protects individuals who are 40 years of age or older from employment discrimination based on age. Under the ADEA, it is unlawful to discriminate against a person because of his/her age with respect to any term, condition, or privilege of employment -- including, but not limited to, hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training. 

Although disparate impact claims are actionable under the ADEA an employer can, in contrast to California state law, defeat ADEA liability by showing that the affected employee was terminated based on reasonable factors other than age. In this case we do not yet have enough information to fully assess the likelihood of overcoming of a “reasonable factors’ defense asserted by Circuit City. However, the substantial protections afforded to my client under state law makes the availability of a federal law remedy in this case irrelevant.

California Law

In Marks v. Loral Corp. (1997) 57 Cal.App.4th 30, the Fourth District Court of Appeals held that employers were permitted to choose employees with lower salaries for layoff, even if such a selection results in more younger employees being retained and more older workers being laid off. In direct response to this decision, the California Legislature enacted Government Code §12941.1 (later renumbered as §12941) which expressly rejects the holding in Marks and specifically prohibits using salary as a basis for differentiating between employees when terminating employment if the criterion adversely impacts older workers. The preamble to §12941 states:

“The Legislature hereby declares its rejection of the court of appeal opinion in Marks v. Loral Corp. (1997) 57 Cal.App.4th 30, and states that the opinion does not affect existing law in any way, including, but not limited to, the law pertaining to disparate treatment. The Legislature declares its intent that the use of salary as the basis for differentiating between employees when terminating employment may be found to constitute age discrimination if use of that criterion adversely impacts older workers as a group, and further declares its intent that the disparate impact theory of proof may be used in claims of age discrimination. The Legislature further reaffirms and declares its intent that the courts interpret the state's statutes prohibiting age discrimination in employment broadly and vigorously, in a manner comparable to prohibitions against sex and race discrimination, and with the goal of not only protecting older workers as individuals, but also of protecting older workers as a group, since they face unique obstacles in the later phases of their careers.”

Business Necessity Defense

Unlike the ADEA where an employer can defeat a disparate impact age discrimination claim simply by showing that reasonable factors other than age motivated the employment policy, under California law an employer must meet the much higher standard of proving the decision was based on a business necessity. More specifically, under California law an employer must prove that there exists an “overriding legitimate business purpose” such that the challenged decision is “necessary to the safe and efficient operation of the business,” and that it “effectively fulfills the business purpose it is supposed to serve.” Furthermore, the decision still would be impermissible if it is shown that an alternative decision could have been made which would have accomplished the business purpose equally well with a lesser discriminatory impact. 2 Cal. Code of Regs. §7286.7(b). 


James W. Johnston is an employment lawyer in Los Angeles, California who represents employees in wrongful termination, discrimination and sexual harassment cases.  He has been an attorney since 1986, and has been handling employment cases since 1988.  Employment Law Attorney in Los Angeles

515 S. Flower Street, 36th Floor
Los Angeles, California 90071
(213) 291-6977

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