In criticizing the EEOC's former rule, the Court held that in an ADEA disparate impact case (as opposed to disparate treatment claims), the employer did not have to prove business necessity; it only needs to prove that the practice was based on an RFOA. The Court also said that the RFOA defense is easier to prove than the business necessity defense but did not otherwise explain RFOA, which prompted the new EEOC guidance and regulation.
In their rule, the EEOC provides a non-exhaustive list of factors for employers to consider in determining whether an employment factor is based on RFOA's. This list includes:
- The extent to which the factor is related to the employer's stated business purpose;
- The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination;
- The extent to which the employer limited supervisors' discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;
- The extent to which the employer assessed the adverse impact of its employment practice on older workers; and
- The degree of the harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.
The EEOC issued a quick Q&A section on the new regulations and is available here.