What's an RFOA? If an employer makes a decision or series of decisions that have a disparate impact on its older workers, it must show that it acted on the basis of one or more "reasonable factors other than age." If it can't do so, disgruntled employees can sue for violation of the Age Discrimination in Employment Act (ADEA). Proving such reasonable factors may be tougher with EEOC's new rule.

How did we get here? The origins of this recent EEOC initiative go back to U.S. Supreme Court rulings in 2005 and 2008. In the first case, Smith v. City of Jackson, a group of older police officers sued, alleging that the city violated ADEA when it adopted a pay plan that gave them less generous pay raises than those for younger officers. The city argued that it needed to bring younger officers' salaries up to compete with those in surrounding communities. Justices accepted that rationale as a reasonable factor other than age, although they noted that there might have been other ways to achieve the objective.

Three years later, the court ruled, in Meacham v. Knolls Atomic Power Lab, that requiring employers to show a "business necessity" for a decision disparately impacting older workers was too strict a standard, but that the burden is on employers both to produce a neutral factor and to persuade the court that it is reasonable. By November 2011, EEOC had drafted a final regulation to define what the high court requires of employers, and it is likely to be final within a few months.

What does the rule say? The proposal will be hard for employers to follow, and harder for them to argue in court. EEOC is offering a nonexhaustive (allowing for other possibilities) list of factors that may be found reasonable. Sample questions to ask about the practice an employer follows are these:

1. Is the practice and its implementation a common one?
   
2. To what extent is the practice related to the employer's stated business goal?
   
3. What steps did the employer take to assess the adverse impact of the practice on older workers?
   
4. Were alternative options available?

Other considerations involve how much unchecked discretion the employer gave to supervisors to assess employees subjectively and how much guidance supervisors were given on how to apply reasonable factors to avoid discrimination. Critics of the rule say it will be too easy for older workers to show, at least initially, that an allegedly neutral policy affected them negatively—and nearly impossible for an employer to obtain summary judgment on such a claim. That means time and expense for employers to battle every suit in court.

What should you do? First, firm up the criteria you use for making decisions about hiring, employee assessments, and promotions. Throw out vague criteria, which can easily be interpreted subjectively. Next, train your managers and supervisors in your criteria. Remember that seeking "flexibility" in employees is often code for youthfulness, so avoid such terms.

Avoid costly labor lawsuits. Train your supervisors and employees with BLR's employee training center.