The Seventh Circuit recently ruled that an external job applicant cannot assert a claim of disparate impact under the Age Discrimination in Employment Act (ADEA). This means that (for now) employers in Illinois, Indiana and Wisconsin may recruit outside candidates with specific years of experience—without risking a disparate impact claim for age discrimination under federal law. A plaintiff alleging a claim of disparate impact discrimination asserts that an employment practice or policy which may appear neutral on its face has an unlawfully disproportionate effect on a protected group. This is an important ruling for employers—especially those that heavily recruit recent college graduates or seek candidates with limited experience. But, as explained below, employers should be wary of making drastic changes as a result of this recent decision.

Summary of the Kleber v. CareFusion Corp. Decision

In Kleber v. CareFusion Corp., Dale Kleber, a 58-year-old lawyer, unsuccessfully applied for a senior legal position with CareFusion. The job description required “3 to 7 years (no more than 7 years) of relevant legal experience.” Kleber, a former General Counsel of a Fortune 500 company, had well over seven years of experience. Yet he did not receive an interview. Over 100 candidates applied for the position, and CareFusion interviewed only ten—each with seven or less years of experience. CareFusion eventually hired a 29-year-old applicant.

Kleber argued that CareFusion’s requirement of no more than seven years of experience had a disparate impact on applicants 40 years or older and was also intended to “weed out older applicants like himself.” He sued CareFusion, asserting claims for both disparate impact and disparate treatment (intentional discrimination on the basis of his age). CareFusion argued that disparate impact claims under the ADEA are only available to employees—not outside applicants. The federal district court agreed with CareFusion and dismissed the disparate impact claim. Kleber then appealed to the Seventh Circuit. A split three-judge panel reversed the lower court, finding that disparate impact claims of external job applicants were consistent with the purpose of the ADEA. The full Seventh Circuit reheard the case en banc, and the full court ultimately determined that the text of the ADEA does not provide for disparate impact claims for external job applicants. The ruling was 8-4.

The Majority’s Reasoning

Under the ADEA, it is unlawful for an employer “to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.” Eight judges on the full Seventh Circuit reasoned that a plain reading of the entire statute limits the disparate impact provision to employees for several reasons. First, reading the text as a whole, the majority reasoned that “any individual” was a reference to someone with “status as an employee”—connecting the word, “individual,” with the personal pronoun, “his.” Second, the disparate treatment provisions of the ADEA, which precede the disparate impact language quoted above, explicitly includes the terms: “to fail or refuse to hire.” This language is absent from the disparate impact provisions of the ADEA. Therefore, the Seventh Circuit reasoned, the fact that the disparate impact provisions do not expressly reference hiring demonstrated the legislature’s intention to exclude disparate impact relief from external job applicants. 

The Seventh Circuit also noted that the disparate impact provisions (unlike other provisions in the act) did not explicitly reference employees “or applicant[s] for employment,” further evidence to the court that disparate impact relief was not intended to be available for external job applicants. Lastly, the Seventh Circuit noted that Title VII of the Civil Rights Act of 1964 (which prohibits employment discrimination based on race, color, religion, sex and national origin) was amended in 1972 to provide protections for job applicants. The ADEA was not similarly amended. Based on the interpretation of the terms of the ADEA, the Seventh Circuit agreed with the district court below and concluded that the ADEA does not contemplate a theory of recovery for external job applicants on claims of disparate impact age discrimination. 

Employer Takeaways

While this ruling may limit the exposure of disparate impact liability on the basis of age for some employers, the applicability of this decision is narrow. Applicants may still bring disparate treatment claims—which requires them to prove that an employer intentionally discriminated based on age. The Seventh Circuit’s ruling applies only to employers with operations within that circuit (Illinois, Indiana and Wisconsin). Moreover, states may have their own age discrimination laws that differ from the ADEA. For example, the ADEA applies to employers with 20 or more employees but the Illinois Human Rights Act prohibits age discrimination by employers with 15 or more employees. Employers with questions or concerns about their recruiting practices and hiring criteria in specific states should consult experienced employment counsel.

Taft’s Labor and Employment attorneys are ready to help existing and future clients navigate these legal issues and follow best practices. Feel free to call us with any questions about this ruling, or specific state and local laws, and how they may impact your business.