Precedent Overturned for Disparate Impact Claims Under ADEA
On October 5, 2016, the full 11-judge United States Court of Appeals for the 11th Circuit issued a significant split decision interpreting the Age Discrimination in Employment Act (ADEA). The decision is Villarreal v. R.J. Reynolds Tobacco Co., 839 F.3d 958, 2016 BL 331711 (11th Cir. 2016) (en banc) (Villarreal).
In Villarreal, the Court of Appeals reversed a 2015 decision of a three-judge panel of the court. A majority of the full court reached an opposite result from the panel and determined that the governing provision of the ADEA barring disparate impact age discrimination by employers does not permit job applicants to bring claims of age discrimination under the ADEA against prospective employers. Disparate impact claims would arise in situations where an employer’s policies and procedures lack a discriminatory intent and are purportedly neutral on their face, but nevertheless have a discriminatory effect.
In addition, the full court reached an opposite result from the panel by finding that the plaintiff’s claim—filed 2.5 years after he first applied for a position with the defendant company—was time-barred by the ADEA’s 180-day statute of limitations period.1 The panel had permitted the plaintiff’s claim under the doctrine of equitable tolling, in which a statute of limitations will not bar a claim if, despite the use of due diligence, the plaintiff did not or could not discover the injury until after the expiration of the limitations period. The full court instead required the plaintiff to prove both due diligence and extraordinary circumstances to support equitable tolling and determined that the plaintiff had not met that proof burden.
The plaintiff, Richard Villarreal, first applied in November 2007 for a position with the defendant employer, R.J. Reynolds Tobacco Company (Reynolds), as a territory manager (a regional sales representative) by submitting an online application. At the time of that application, the plaintiff was 49 years old and thus in the protected age category under the ADEA. Reynolds never responded to Villarreal’s application. Over two years later, in April 2010, lawyers contacted the plaintiff and informed him that Reynolds had discriminated against him on the basis of age. The following month he filed a charge of unlawful age discrimination with the Equal Employment Opportunity Commission (EEOC). While his charge was pending with the EEOC, Villarreal applied for a territory manager position five more times and was rejected each time.
With the assistance of third-party recruiting services, Reynolds had used a set of what were termed “resume review guidelines” in screening applicants for territory manager positions. These guidelines listed a number of characteristics Reynolds sought in its new hires. Included in the guidelines were instructions to hiring managers to target candidates who are “2-3 years out of college” and to “stay away from” candidates with “8-10 years” of prior sales experience.
Villarreal filed his lawsuit in the United States District Court for the Northern District of Georgia, raising both disparate treatment (discriminatory intent) and disparate impact claims after the EEOC declined to take further action and issued him a right-to-sue letter. The District Court dismissed his disparate impact claims entirely upon finding that the ADEA allows suits for disparate impact claims to be brought only by current employees, rather than applicants such as Villarreal. That court further dismissed as untimely all claims related to hiring decisions that occurred more than 180 days prior to the date the EEOC charge was filed. On appeal, as noted above, the three-judge panel of the 11th Circuit ruled in Villarreal’s favor and permitted him to proceed with his disparate impact discrimination claim. The defendants then sought a full court (en banc) review of the panel’s decision.
Overview of Full Court of Appeals Decision
With regard to whether the ADEA allows disparate impact claims, the Court of Appeals considered first whether the applicable provision in the statute barring disparate impact discrimination is clear or ambiguous. That provision, section 4(a)(2), prohibits employer conduct that “would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee [emphasis added].” The court’s majority rejected the plaintiff’s argument that the term “any individual” covers both applicants and current employees. It concluded that in the context of the entire provision, it unambiguously refers only to “any individual” with current employee status. Furthermore, the court observed that the term covers only current employees because other provisions of the ADEA specifically mention job applicants, thereby demonstrating that Congress knew how to reference job applicants and chose not to do so in section 4(a)(2).
Upon finding that the plain language in section 4(a)(2) does not extend protection against discrimination to applicants, the court’s majority declined to give deference to the EEOC’s longstanding interpretation of the provision at issue even though the EEOC is the agency tasked with enforcing the ADEA. The EEOC’s current ADEA disparate impact regulations do not distinguish between prospective and existing employees.2 Indeed, the preamble to those regulations makes clear that the term “individuals” covers both employees and applicants and gives a number of examples of cases involving job applicants. By contrast, the dissenting judges did find the language of section 4(a)(2) to be ambiguous and argued that the EEOC’s regulations are a reasonable interpretation of the statute that are entitled to receive the court’s deference.
The majority then turned to the plaintiff’s equitable tolling argument in support of allowing consideration of his discrimination charges that were filed, as noted, about two years beyond the 180-day statute of limitations period. The plaintiff alleged that he was entitled to equitable tolling because he did not know—nor could he have known—that he had been discriminated against until he learned in April 2010 about the resume review guidelines and the defendant’s hiring practices. However, the majority found that Villarreal was not entitled to equitable tolling. It stated that the party seeking tolling must prove (1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way and prevented timely filing.3 The majority found Villarreal is not entitled to equitable tolling because he did nothing for more than two years between his initial application and the communication from the lawyer. In response to Villarreal’s argument that any inquiry would have been futile, the majority indicated that even assuming that futility is an exception to the diligence requirement, it would not apply when a plaintiff does nothing to investigate the status of his application, as opposed to the reasons for his rejection.
It remains to be seen whether the determination by the full court in Villarreal that job applicants are foreclosed from filing claims of disparate impact age discrimination under the ADEA will have broad impact beyond the three states of the 11th Circuit (Florida, Georgia, and Alabama), where the court’s decision is binding. In other federal circuits, the EEOC may continue to enforce its interpretation of section 4(a)(2) as covering job applicants, rather than follow Villarreal.
At least by reversing the three-judge panel’s ruling on tolling, the en banc Villarreal decision will likely preclude the filing of a substantial number of discrimination claims of all types (i.e., race, sex, religion, national origin, and disability, in addition to age at least on the basis of intentional discrimination), perhaps even several years after job seekers have applied for positions and learn only later they have been unsuccessful.
Nevertheless, employers may still want to review their facially neutral application screening procedures and other hiring processes to gain assurance that they are not adversely impacting protected minority groups.
 If there is a fair employment practices agency in the plaintiff’s area that enforces a state or local law that prohibits the same type of discrimination as is alleged under federal law, the deadline for filing a discrimination charge with the federal EEOC is extended to 300 days.↵
 The EEOC regulation implementing section 4(a)(2) of the ADEA, 29 CFR §1625.7(c), states that, "[a]ny employment practice that adversely affects individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a 'reasonable factor other than age.'" The regulation extends disparate impact liability to all "individuals within the protected age group." The EEOC argued in an amicus curiae brief filed in support of the plaintiff that the regulation therefore established the agency's view that section 4(a)(2) protects any individual an employer discriminates against, regardless of whether that individual is an employee or job applicant.↵
 This is a higher proof standard than the “reasonably prudent” standard the three-judge panel had applied, whereby a decision to toll the limitations period would be based on whether the facts supporting a cause of action for discrimination became apparent or should have become apparent to a reasonably prudent person.↵