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In a typical disparate-impact case, an employer's practice is without respect to age and its adverse impact (though because of age) is attributable to a nonage factor; so action based on a factor other than age is the very premise for disparate-impact liability in the first place, not a negation of it or a defense to it. The defense of a reasonable factor other than age in a disparate-impact case is not focused on the asserted fact that a non-age factor was at work; a court assumes it was. The focus of the defense is that the factor relied upon was a reasonable one for the employer to be using. Reasonableness is a justification categorically distinct from the factual condition "because of age" and not necessarily correlated with it in any particular way: a reasonable factor may lean more heavily on older workers, as against younger ones, and an unreasonable factor might do just the opposite.
When the National Government ordered its contractor, respondent Knolls Atomic Power Lab. to reduce its work force, Knolls had its managers score their subordinates on "performance," "flexibility," and "critical skills"; these scores, along with points for years of service, were used to determine who was laid off. Of the 31 employees let go, 30 were at least 40 years old. Petitioners were among those laid off, and they filed the present suit asserting a disparate-impact claim under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. § 621 et seq. To show such an impact, petitioners relied on a statistical expert's testimony that results so skewed according to age could rarely occur by chance; and that the scores for "flexibility" and "criticality," over which managers had the most discretionary judgment, had the firmest statistical ties to the outcomes. The jury found for petitioners on the disparate-impact claim, and the Second Circuit initially affirmed. The U.S. Supreme Court vacated the judgment and remanded in light of its intervening decision in Smith v. City of Jackson, 544 U.S. 228, 125 S. Ct. 1536, 161 L. Ed. 2d 410. The Second Circuit then held for Knolls, finding its prior ruling untenable because it had applied a "business necessity" standard rather than a "reasonableness" test in assessing the employer's reliance on factors other than age in the layoff decisions, and because petitioner had not carried the burden of persuasion as to the reasonableness of Knolls' non-age factors. Writ of certiorari was granted.
Did the employees carry the burden of proving that the employer’s non-age factors were unreasonable?
The U.S. Supreme Court held that the burden was improperly placed on the employees to show that the employer's criteria were unreasonable, since reliance on reasonable factors other than age (RFOA) was an affirmative defense for which the employer bore both the burden of production and the burden of persuasion. The ADEA set out liability exemptions, including RFOA, in provisions separate from the age discrimination prohibitions and, while the employees were required to identify the challenged layoff factors, the employer that sought to benefit from the RFOA exemption was required to prove that the exemption applied. Accordingly, the judgment was vacated, and the case was remanded for further proceedings.