They say “40 is the new 30,” and in the U.S. labor market that appears to be the trend. According to the Bureau of Labor Statistics, by 2024, the median age of the labor force will be 42.4, up from 37.7 in 1994. [Link] Yet under California’s Fair Employment and Housing Act, “40” is a protected class, just like race, gender or disability status. Government Code section 12940 et seq. prohibits an employer from taking adverse employment action against an employee who is 40 years or older because of that employee’s age.
In two recent appellate court decisions, employers were victorious in debunking claims that they engaged in unlawful age discrimination.
In Merrick v. Hilton Worldwide, Inc. [link], a 60-year-old former Hilton Hotel employee brought suit in federal court in San Diego claiming he was terminated from his position as Director of Property Operations at Hilton’s La Jolla Torrey Pines Hotel because of his age. Merrick was terminated as part of the hotel’s reduction-in-workforce that took place due to a decline in revenue. The company considered twenty-nine management level employees for lay off and chose Merrick because his position did not add revenue for the hotel (like food or beverage service), he had limited guest contact so the impact on guests was limited, and his position had in part already been outsourced. His compensation was more than $130,000 per year, so the hotel could eliminate only one position and reach its target payroll reduction goal.
In order to prove his case, Merrick was first required to show that (1) he was at least forty years old, (2) he was performing his job satisfactorily, (3) he was discharged, and (4) he was either replaced by a substantially younger employee with equal or inferior qualifications or he was discharged under circumstances otherwise giving rise to an inference of discrimination. Hilton argued that Merrick could not prevail because he was not replaced by a younger employee. The Assistant Director, fifteen years his junior, took over some of Merrick’s duties but other duties were outsourced.
The Ninth Circuit Court of Appeals rejected Hilton’s argument that an employee terminated during a reduction-in-workforce must show that he was replaced by a younger worker. The Court found that Merrick could put on evidence that the discharge occurred under circumstances that would infer age discrimination, such as evidence showing that the terminated employee’s duties were still being performed which would tend to show that the employer had a continuing need for the terminated employee’s skills and services.
Although the Court sided with Merrick in finding he had met his initial burden, the Court went on to find that Hilton showed a legitimate, business reason for the termination and Merrick did not submit sufficient evidence to demonstrate that the reason given by Hilton was a pretext for age discrimination. As the Court pointed out, the employer’s termination decision does not need to be wise or correct. It is not for the Court to second guess an employer’s business decision. Unwise business judgment does not equate to discriminatory motive. In order to prevail, the terminated employee has the burden to show that the employer’s reasoning is false or its true reasons are discriminatory.
Hilton articulated several reasons why Merrick was chosen over other employees to be laid off which had nothing to do with his age and were all legitimate business concerns for the company to consider.
Merrick tried to undermine Hilton’s reasoning by arguing that the company’s failure to transfer him to the Assistant Director position showed improper motive. However, the company’s reduction-in-force policy provided that qualified employees may apply for a transfer to an available position. Since the Assistant Director position was held by another employee, it was not available and Hilton’s refusal to oust another employee in order to keep Merrick was not discriminatory. None of Merrick’s other criticisms of Hilton’s decision were sufficient to raise an inference that he was terminated because of his age.
The Court noted that when a plaintiff alleges age discrimination “context is key.” The context the Court took note of included lost profits during an economic downturn, a series of layoffs over several years, and the fact that Merrick survived a prior reduction-in-force even though at that time he was over the age of 40. These circumstances did not lead to a rational inference that Hilton’s actual motive was discriminatory.
The California Court of Appeal also recently sided in favor of the employer in Robin Ford v. Chevron Corp.[link] It upheld the Los Angeles Superior Court’s dismissal of an age discrimination case against Chevron. Ford, a contractor for Chevron for 10 years, claimed she was passed over for several positions at Chevron because of her age (57). She alleged that despite being the most qualified applicant, less qualified younger candidates were hired for two work control specialist positions. As a contractor, Ford worked in a similar role for several years. Chevron claimed that she was not hired for either of the work control specialist positions because of her poor ranking after interviews and behavioral and performance issues as a contract employee.
The Court found that Ford had not shown evidence that Chevron’s decision not to hire her was unbelievable, pointing to documented incidents where she displayed behavioral issues and was unprofessional. Ford’s experience doing the type of work involved in the position she sought was not enough to overcome the documented evidence of prior behavioral problems. The Court noted that the fact that Chevron kept Ford on as a contractor after these incidents merely suggests that these prior incidents were not serious enough to warrant disciplinary action or termination but they could have disqualified her from the positions she sought when she was compared to the other candidates that did not have behavioral issues. It was not compelling that no formal disciplinary documentation was generated by Chevron; the incidents had been documented in emails.
Ford’s claim that she was also not selected for an administrative position because of her age was dismissed as well. She failed to submit any evidence as to what the actual requirements of the position were, how her qualifications fit them, or what the qualifications of the other candidates were. Because she failed to put forth evidence to show a prima facie case of age discrimination, Chevron did not need to show it had a legitimate, non-discriminatory reason to not select Ford for the administrative position.
Despite these recent victories, employers would be wise to evaluate their employment policies to ensure they are complying with anti-discrimination laws and that they are adequately documenting performance deficiencies. With an aging labor force and more employees in the protected “40 and over crowd,” it would not be surprising to see an uptick in age related claims in the coming years.