It would be ironic if it weren’t so sad. Just as market conditions are making older workers more attractive to an increasing number of employers, the U.S. Supreme Court hands down a decision that is likely to make older workers less attractive. That wasn’t the intention, of course, but sometimes the law of unintended consequences is tough to get around.
Last week, the high court ruled that employees over 40 seeking to file lawsuits alleging age discrimination don’t have to prove any intention by the employer to discriminate. An allegation that certain policies and practices have what the lawyers call a “disparate impact” on older workers is enough to get litigation started.
At the same time, the 5-3 decision made it a bit easier for employers to defend such lawsuits than lawsuits alleging other kinds of discrimination. Writing for the majority, Justice John Paul Stevens said that “a reasonable factor other than age” can furnish an adequate defense. In most discrimination cases only “business necessity,” a higher standard, can be used to defend against charges of intentional or unintentional discrimination.
In the case at hand, in fact, the court ruled against those bringing the suit. The city of Jackson, Miss., seeking to bring police salaries in line with the regional average, adopted a pay plan that gave those with less than five years experience proportionally higher raises than those with more experience, arguing they needed to do so to compete effectively for new officers and dispatchers. Older officers sued, claiming they were discriminated against, but the court decided the city’s plan was reasonable given the circumstances.
It’s easy to wonder whether the law itself is actually beneficial to older workers. A New York Times story last week noted that in today’s relatively robust economy many companies are actively seeking older and retired workers, in the belief they have lower turnover rates than younger workers, valuable life experience, and in many cases are better workers. Home Depot even offers a “snowbird special,” letting older people work in Florida during the winter and Maine or New Hampshire in the summer.
It’s more than possible that the federal age-discrimination law — especially with the lower threshold for filing lawsuits — will end up reducing opportunities for older workers rather than enhancing them. As Roger Pilon, director of constitutional studies at the libertarian Cato Institute, said, the Supreme Court interpretation means “there is likely to be more litigation, especially if it is launched as a class action. The costs of losing — as well as the litigation itself — will be higher so there will be greater pressure to settle.”
Money spent on lawyers, awards or settlements is money that can’t be spent to hire new employees. In addition, employers could easily start to view older workers as potential liabilities if the number of lawsuits brought by older workers alleging discriminatory practices starts to increase. Better not to hire them in the first place than to buy possible trouble, many may start to think.
Something similar seems to have happened with the Americans with Disabilities Act, passed in 1990 with the intention of increasing employment opportunities. After passage of the act, unemployment among the severely disabled actually increased. In 1986, according to the National Institute on Disability and Rehabilitation Research, 66 percent of unemployed people with disabilities wanted work but couldn’t find it. By 2001 the figure had climbed to 79 percent.
The best way to increase employment opportunities for older people and everyone else is to have a robust and growing economy. Increasing overhead costs for businesses, whether through litigation, regulation or taxation, is hardly the best way to ensure that happy outcome.