Indiana Business Lawyer Blog

On April 6, 2020, the Supreme Court of the United States answered the question as to whether 29 U.S.C. § 633a(a) of the Age Discrimination in Employment Act of 1967 imposes liability only when age is a “but-for cause” of the personnel action at issue. Babb v. Wilkie, 106 L. Ed. 2d 432, 438 (2020). 29 U.S.C. § 633a(a), in essence, provides that individuals aged 40 and older “shall not be subjected to personnel actions based on age discrimination,” with a few exceptions. In Babb, the plaintiff, who was born in 1960, is a clinical pharmacist at the U.S. Department of Veterans Affairs Medical Center in Bay Pines, Florida. Id. at 439. The plaintiff brought a suit in 2014 against the Secretary of Veterans Affairs (“VA”), alleging she had been subjected to age discrimination. Id. There were three personnel actions made by the VA that the plaintiff centers around her claim. The VA took away her “advanced scope” designation, which had made her eligible for promotion, was denied training opportunities and passed over for positions in the hospital’s anticoagulation clinic, and lastly, was placed in a new position but her holiday pay was decreased. Id. The plaintiff alleged that throughout this time period supervisors made several “age-related comments” to her as well. Id.

The Supreme Court granted certiorari in this case due to the Circuit split over the interpretation of § 633a(a). The Court’s analysis starts off with looking at the plain meaning of the provision, which leads to the conclusion that “age need not be a but-for cause of an employment decision in order for there to be a violation.” Id. at 440. To support the Court’s conclusion, the language of “free from” found within the provision is examined closely, and the Court concludes that the language coupled with “any” means there cannot be any discrimination whatsoever based on age. Id. at 440-441. Reading the rest of the provision together, the Court determines that “age must be a but-for cause of discrimination, but it does not necessarily have to be a but-for cause of a personnel action itself.” Id. at 441. As a result, the Court concludes that the statute “does not require proof that an employment decision would have turned out differently if age had not been taken into account.” Id.

The Government attempts to make an argument that compares the text of 29 U.S.C. § 633a(a) with other statutes interpreted in prior cases, one of which is the private-sector provision of the ADEA. 29 U.S.C. § 623(a)(1). This provision makes “it unlawful for an employer . . . to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.” Id. The Court discusses the critical difference between § 623(a)(1) and § 633a(a), which is § 633a(a) “prohibits any age discrimination in the ‘making’ of a personnel decision, not just with the respect to end results.” Babb at 444. After noting this difference between the two provisions, the Court recognizes that federal employers are held to a stricter standard. However, the Court then addresses how Congress could have added the federal government to the definition of “employer” in the ADEA’s private sector provision but chose not to. Id. at 445.

The Indiana Supreme Court recently provided important guidance for employers looking to hold employees accountable for breaching non-solicitation clauses in employment agreements by providing for liquidated damages. In its December 18, 2019, majority opinion in American Consulting, Inc. d/b/a American Structurepoint, Inc. v. Hannum Wagle & Cline Engineering, Inc. d/b/a HWC Engineering, Inc. et al. (“ASI”),[1] the Court found that the liquidated damages provisions in employees’ employment agreements were facially unreasonable and unenforceable and were not correlated to the employer’s actual loss.[2]

In ASI, the relevant contract provisions for one former employee provided as follows:

• For two years after employment, the employee will not sell, provide, try to sell or provide or assist any person or entity in the sale or provision of any competing products or services to the employer’s customers with whom the employee had any business contact on behalf of the employer during the two years prior to his separation from employment. A breach of this provision that results in the termination, withdrawal or reduction of a client’s business with the employer will result in liquidated damages equal to 45% of all fees and other amounts that the employer billed to the customer during the 12 months prior to the breach.

Employers often express concern about obese employees in physically demanding jobs or jobs that involve driving a motor vehicle. Obesity causes increased risk of numerous conditions that can cause sudden incapacitation, such as heart attack or stroke.[1]  It is also linked with sleep apnea, which can cause exhaustion.[2]  As a result, employers often fear that an employee’s obesity creates a safety risk for the employee, fellow employees, and, in some cases, the public. However, employers are skittish about benching these employees for fear of potential liability under the Americans with Disabilities Act (“ADA”).

Employers in Indiana can take some comfort in that the Seventh Circuit Court of Appeals issued several opinions in 2019 that have narrowed the scope of employees who are protected under the Americans with Disabilities Act (“ADA”) due to obesity. While this is encouraging for employers, the current state of the law challenges common sense and makes an employer’s evaluation more—not less—complex.

First, the Seventh Circuit held that obesity alone is not a physical impairment under the ADA unless there is evidence that obesity is caused by an underlying physiological disorder or condition.[3]  While Richardson is positive for employers because it forecloses carte blanch ADA protection for every obese person, it adds complexity for employers who must now consider whether an employee’s obesity is caused by an underlying physiological disorder or condition before making employment decisions. Furthermore, what specific policy goal does the Richardson rule promote? If obesity is not an “impairment” that qualifies under the ADA, why should obesity be protected when it is the manifestation of an underlying physiological disorder? Surely the employer is not making its decision to remove an obese employee from a safety sensitive job on the basis of the employee’s thyroid disorder that caused or contributed to the obesity. Unfortunately, that policy question is one for congress—not the Seventh Circuit—and congress isn’t solving many problems these days.