Applicants Can Sue PricewaterhouseCoopers for Unintended Age Bias

PricewaterhouseCoopers LLP must defend against claims by a proposed class of rejected 40-and-over job seekers, a federal judge in California ruled. The applicants say the accounting giant’s hiring and other employment practices inadvertently favor younger applicants and deter older ones ( Rabin v. PricewaterhouseCoopers LLP , 2017 BL 49868, N.D. Cal., No. 16-cv-02276, 2/17/17 ).

The decision rejects an opposing conclusion reached in October by the U.S. Court of Appeals for the Eleventh Circuit but embraces the view of the Equal Employment Opportunity Commission. It also signals a potential showdown among federal courts as to who may bring such “disparate impact” discrimination claims under the Age Discrimination in Employment Act.

That is unless the U.S. Supreme Court addresses the issue first—it’s been asked to look at the Eleventh Circuit’s ruling. If the justices decide to review that case, they may be required to wade into the question of how much deference lower courts owe to the EEOC’s view of the issue.

Parties React to Ruling

Here, PwC failed with its argument that job applicants don’t have the right to sue for disparate-impact bias and that such claims may only be brought by workers who were actually hired, the U.S. District Court for the Northern District of California said Feb. 17.

Disparate-impact claims allege unintended biased effects from policies or practices that are not explicitly discriminatory. The lawsuit against PwC challenges the company’s use of a tool for recruiting college students that can only be accessed by applicants with a current college affiliation.

The Eleventh Circuit in October heard a similar claim involving R.J. Reynolds Tobacco Co. in which the company allegedly used “resume review guidelines” and targeted job candidates who were “2-3 years out of college.” A full panel of that court held only workers who already have been hired may bring disparate-impact claims and that job applicants may only sue for intentional age discrimination—disparate-treatment bias.

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“We’re pleased that the Court followed decades of Supreme Court precedent in confirming that applicants can challenge age discrimination using the conventional disparate impact theory,” the firm told Bloomberg BNA Feb. 21 in an e-mail. “Congress was careful to ensure coverage for all ‘individuals,’ not just employees, and the Supreme Court has repeatedly recognized that the ADEA should be read like other civil rights statutes like Title VII and the Fair Housing Act to include these types of claims.”

That approach “is perfectly consistent with Congress’s aim in empowering private individuals to combat the problem of long-term unemployment of older workers—to achieve that aim, Congress made sure that applicants can challenge unlawful employment restrictions,” the firm added.

Different Read of ADEA’s Plain Language

In expressly rejecting PwC’s attempted reliance on the Eleventh Circuit’s decision in Villarreal v. R.J. Reynolds Tobacco Co., U.S. District Judge Jon S. Tigar read the text of the ADEA differently than the Villarreal majority read it.

The section of the law providing a claim for disparate-impact bias uses the phrase “any individual” rather than the narrower “employee” in identifying who the provision protects, Tigar said. Moreover, the term “employees” is used elsewhere in the section, he said.

It can be assumed that Congress’ “variation in language was a deliberate choice” and that the “intent was to include all ‘individuals’ within” the disparate-impact section’s protections, Tigar held.

That reading is supported by Supreme Court cases signaling that disparate-impact claims may be brought by age-40-and-over job applicants, the judge found.

EEOC’s View Owed Deference

The ADEA language at issue also might be considered ambiguous, given that the Eleventh Circuit majority has interpreted it in a different way and other courts might also do so, Tigar said. But even if that’s true, the law should be viewed as allowing job applicants who are 40 or older to sue for the alleged discriminatory effects of a facially neutral employment policy like PwC’s college student recruitment tool, the judge ruled.

When a statute’s meaning is unclear, “courts grant increased deference” to the position of the federal agency tasked with enforcing the law, Tigar said. In this case, the enforcing agency is the EEOC, which “has long interpreted the ADEA as permitting disparate impact claims by job-seekers,” he wrote.

PwC offered no compelling argument for not following the EEOC’s long-established view, he said.

The law’s legislative history further supports rejection of the position that older job applicants may only sue for disparate-treatment discrimination, the court added. Congress’ focus in passing the ADEA in 1967 was partly on the barriers to employment older workers face, not just discrimination they may be subjected to after being hired, the court said.

Jahan Sagafi in San Francisco and Adam T. Klein in New York, all of Outten & Golden LLP; Jennifer L. Liu of the Liu Law Firm P.C. in San Francisco; and Daniel B. Kohrman, Laurie A. McCann and Dara Swartz Smith of AARP Foundation Litigation in Washington represent the proposed class. Michael P. Esser in San Francisco and Emily Nicklin, Gabor Balassa, Christina L. Briesacher, Joshua Z. Rabinovitz and Mark W. Premo-Hopkins in Chicago, all of Kirkland & Ellis LLP, represent PricewaterhouseCoopers.