On November 16, the Commission approved the draft final rule which addresses the "reasonable factor other than age" defense. The rule was approved by a 3-2 vote along party lines. The draft now goes to the Office of Management and Budget for review. Once approved, the rule will be voted on again by the Commission.
The final draft rule adopts a tort standard of reasonableness in reviewing an employer's attempt to use the "RFOA" defense. The factors to be used in determining reasonableness and whether a factor is "other than age" are set out in the Commission's background paper discussing the reason for the rule.
For employers, training and oversight of supervisors will become critical once the rule is enacted. Subjective decisions by supervisors in selection of employees for termination or lay off will be closely reviewed as will the training about permissible factors in reaching a decision and how to apply those factors. In addition, the employer's consideration of other options with be reviewed along with the reasons that such options were not utilized. The rule examines whether the employer took steps to assess the adverse impact of its practice on older workers; the severity of the harm to older workers; and the extent to which the employer took preventative or corrective steps to minimize the severity of the harm in light of the burden of undertaking such steps.
When the rule is enacted, employers can expect the EEOC to aggressively review charges and litigate cases where employers have not established a methodology in its decision making and in its implementation of the decision. Whether the courts will give deference to this rule remains to be seen, but the rule appears to move the "RFOA" defense to a stricter standard closer to that applied in the "business necessity" defense. Reductions in force or other employment actions which affect older workers will require planning and documentation so that employers can utilize the defense.
The changes that employers had anticipated to occur in labor and employment law during the Obama administration continue to come about by agency action and not by legislation. The EEOC had a very busy year this year, and next year will be the same. Expect further review and possible actions on the issues of discrimination against the unemployed and the use of credit checks and criminal convictions in background screening.