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Anti-Aging Suit Skirts Small Businesses

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April 1, 2005 -- The Supreme Court loosened the rules on age discrimination cases Wednesday, ruling that older workers do not need to prove their employers' discriminatory actions were intentional.

In a 5-3 decision, the court ruled that workers over 40 years old could sue when an employer's decision has a "disparate impact" on them. The decision reverses the existing law, which required workers to prove intent.

With nearly half of America's 147-million-person workforce over 40 years old, the court's decision is timely. But for the majority of U.S. businesses, the decision will not change things a bit.

The majority of American businesses will not qualify under the new ruling, which only applies to the Age Discrimination in Employment Act (ADEA), a law that affects companies with twenty or more employees. That means that some two-thirds of U.S. businesses, which boast 20 or fewer employees, will face no repercussion from the ruling.

While the court's decision favors workers, employers can defend challenged policies on "reasonable factors other than age," wrote Justice John Paul Stevens. An employer, for example, could give younger workers bigger raises, if the bigger raises keep them from being recruited away by competitors, which is exactly what happened in the case the court ruled on, Smith v. City of Jackson. For this reason not much will change, said Stephen Bokat, general counsel of the U.S. Chamber of Commerce.

"I don't think this case will cause a landslide of cases," said Bokat.

While there may not be a landslide of new cases, the number of cases that settle may increase, said Karen Harned, executive director at the National Federation of Independent Business Legal Foundation. Since it will be easier for a discrimination case to go to trial, small businesses that lack resources will settle.

"There is going to be more opportunity for litigation," said Harned.

Last updated: Apr 1, 2005




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