There is a big decision out of the Third Circuit that creates a circuit split with three other circuits. On January 10, 2017, the Third Circuit issued an opinion in Karlo v. Pittsburg Glass Works, LLC, No. 15-3435. The Third Circuit held that subgroup claims are allowed in ADEA disparate impact cases, creating a circuit split on the issue. A subgroup claim is when a group of workers tries to establish disparate impact by proving that a subset of older workers were disparately impacted by a decision. For example, in a reduction in force, the employees might argue that workers 50 and older were impacted by the reduction in force compared to workers younger than 50. If you want to read more about this issue read my article (cited by the 3d Circuit), Sandra F. Sperino, The Sky Remains Intact: Why Allowing Subgroup Evidence is Consistent with the Age Discrimination in Employment Act, 90 Marq. L. Rev. 227 (2006).
The Third Circuit takes a textual approach to the ADEA, arguing that the statutory language does not require all individuals 40 and older to be treated in the same negative way. Rather, the statute prohibits discrimination on the basis of age, not class membership (citing O’Connor v. Consolidated Coin Caterers, Corp.). As the Third Circuit noted, the ADEA prohibits age discrimination “as opposed to 40 or over discrimination.” The Court held that interpretation of the text of the ADEA relevant to disparate treatment claims should be applied to the same language used for disparate impact claims.
The Third Circuit buttressed its argument by citing Connecticut v. Teal. It noted that allowing subgroup claims was consistent with the Supreme Court’s decision that the bottom-line defense is not proper. As the Third Circuit noted, “The ADEA does not permit the victim of a facially discriminatory policy to be told that he has not been wronged because other persons aged forty or older were preferred.” The Court further reasoned that “[m]andating a forty-and-older comparison group would allow an employer to adopt facially neutral policies which had a profoundly disparate impact on individuals over age 50 or 55, so long as younger individuals within the protected class received sufficiently favorable treatment.”