A class-action lawsuit claiming that accounting giant PwC's "aggressive" recruitment of college students and recent graduates—to the exclusion of older job seekers—is testing whether campus recruiting could make employers liable in age discrimination claims.
The lead plaintiff in the case is a certified public accountant over the age of 40 who claims that he was turned down for an entry-level associate position at the firm because "PwC maintains hiring policies and practices for giving preference to younger employees that result in the disproportionate employment of younger applicants."
The federal Age Discrimination in Employment Act (ADEA) prohibits employers from discriminating against workers and job applicants who are 40 and older.
The lawsuit claims that PwC's unlawful bias against older workers manifests itself in several ways:
- A near-exclusive reliance on campus recruiting for entry-level accounting positions.
- A focus on attracting and retaining Millennials.
- A mandatory early retirement policy that requires partners to retire by age 60.
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The complainants argue that PwC generally does not post job openings for entry-level positions on its careers site, as it does for more-experienced roles, and that the only way to apply to these positions is through the firm's campus recruitment program.
The suit also points to the firm's recruitment brochures filled with images of younger people and its own internal figures from 2016 that 80 percent of its employees are between the ages of 21 and 36.
Emily Nicklin, a partner in the Chicago office of Kirkland & Ellis, representing PwC, said the claims are false. "PwC devotes enormous resources to recruiting a diverse workforce. That includes hiring individuals at all experience levels and of all ages. Like hundreds of other employers, PwC recruits at colleges and universities and does so in accordance with the law."
"In short, it is not on-campus recruiting itself that is discriminatory—rather the excessive reliance on that approach that excludes older workers," said Daniel B. Kohrman, an attorney for AARP Foundation Litigation based in Washington, D.C., and an attorney for the plaintiffs in the PwC case. "An exclusive or near-exclusive focus on recent graduates is clearly discriminatory."
For example, "if the only way an older job seeker can get an entry-level job with PwC is to be at a college recruitment center, and they don't allow him to apply there, that's obviously age discrimination," agreed Patricia Barnes, an attorney and expert on employment discrimination based in Tucson, Ariz. "On the other hand, if the employer does all kinds of recruiting, including focusing on all age demographics, then arguably college recruiting efforts would be OK."
Gerald L. Maatman Jr., a senior partner at Seyfarth Shaw and chair of the firm's class-action defense practice, said that, in theory, a claim against a college recruiting program "could probably be crafted under the right circumstances," but it would be "going too far to say that all recruiting on campus would be illegal or a form of age discrimination."
Maatman added that there are many obvious business-necessity arguments for recruiting recent college graduates that would serve as viable defenses against disparate impact age discrimination claims, including employers needing to create a pipeline of talent for their organizations and needing to develop young people to be future leaders in the company.
"The common sense implications of applying a disparate impact theory to recruiting college grads stands the ADEA on its head," Maatman said. "How in the world would a company run a recruiting program if every time [it] made an employment decision, it had to run an adverse impact analysis? Congress never intended the ADEA to prohibit employers from recruiting on college campuses."
Are Job Seekers Protected Against Disparate Impact?
The first issue that parties in the PwC case must get through is whether job applicants even have standing under disparate impact theory.
Disparate impact claims allege unintended bias from policies or practices that are not explicitly discriminatory. Courts have upheld disparate impact discrimination claims in lawsuits alleging gender and race bias in hiring practices, but those categories are covered by a different civil rights statute—Title VII of the Civil Rights Act.
In October 2016, the U.S. Court of Appeals for the 11th Circuit decided that job applicants cannot claim disparate impact age discrimination under the ADEA in a similar case brought against R.J. Reynolds Tobacco Co. The appellate court ruled that only workers who already have been hired may bring disparate impact claims and that job applicants may only sue for intentional age discrimination.
But in February, the U.S. District Court for the Northern District of California said PwC failed to prove that job applicants don't have the right to sue for disparate impact bias and that such claims may only be brought by employees. Now there is a split among federal courts as to who may bring disparate impact discrimination claims under the ADEA.
"PwC fully respects all anti-discrimination laws, but respectfully disagrees with the court's interpretation here," the company said in a statement. "The firm continues to believe that this provision of the ADEA does not apply to job applicants."
PwC attorney Joshua Z. Rabinovitz, a partner in the Chicago office of Kirkland & Ellis, argued that the language of the ADEA was not amended when Title VII of the Civil Rights Act was amended in 1972 to permit disparate impact lawsuits by job applicants. Therefore, he said, the ADEA does not allow disparate impact lawsuits by job applicants.
Jahan Sagafi, a partner in the San Francisco office of Outten & Golden and an attorney for the plaintiffs in the PwC case, said the district court's recognition that the ADEA allows applicants to assert disparate impact claims is faithful to Congress' desire to combat bias against older workers, "especially given the problem of long-term unemployment for older workers seeking work. This ruling is consistent with core American values of freedom of opportunity and meritocracy, so companies get the benefit of the most qualified workers, without artificial restrictions based on age, race, gender, religion or other factors."
"The 11th Circuit is parsing the language of the ADEA in a tortuous way to reach their conclusion that job applicants are not protected from disparate impact discrimination," Barnes said. "It's clear that the ADEA was intended to cover job applicants. The EEOC [Equal Employment Opportunity Commission] has interpreted it that way for decades, and the law's preamble shows Congress was concerned with barriers to older workers finding employment."
The ADEA clearly prohibits intentional discrimination against older applicants, Kohrman said. The underlying issue in the PwC and Reynolds cases is whether the ADEA also prohibits hiring based on factors other than age that lead to a significant disproportionate adverse impact on older applicants.
"Omitting [disparate impact] coverage … would be nonsensical, inconsistent with the text of the ADEA, contrary to Congress' intent in enacting the ADEA and clashing with nearly 50 years of federal agency interpretation," he said. "It … would severely detract from the ADEA's power to deter an older workers' ability to challenge age-related hiring discrimination, as the best evidence of intentional age bias is rare."
The U.S. Supreme Court may soon provide much-needed clarity on the issue, as it is considering whether to take up an appeal on the Reynolds case. "We'll probably know about Reynolds within the next three to nine months," Maatman said. The high court may wait until the issue plays out further in lower courts and more opinions are delivered, he added.
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