Two high court rulings concerned age bias. One important ruling for employers was that in Meacham v. Knolls Atomic Power Laboratory, No. 06-1505. The case turned on a reduction in force in which 31 employees were laid off--all but one of them over age 40. They sued under the Age Discrimination in Employment Act (ADEA), charging that the employer's methods for determining which workers to lay off had a 'disparate impact' on older workers. A jury gave the plaintiffs damages of more than $6 million, but several courts wrangled over the case.

The law clearly allows employers to make decisions based on either a 'bona fide occupational qualification' or a 'reasonable factor other than age,' even if those decisions hit older workers harder than younger ones--and Knolls argued that it had considered reasonable factors other than age in the layoffs. But who must prove how reasonable those factors were? In other civil rights cases, the burden has been on the plaintiffs. But in their second look at this case, justices ruled that the employer must give the proof.

The other age case, Kentucky Retirement Systems, et al. v. Equal Employment Opportunity Commission,No. 06-1037, involved a disability retirement plan that plaintiffs and EEOC felt treated older workers unfairly. Disabled state employees who are old enough to retire receive only their regular retirement benefits, while younger disabled workers may get more generous disability benefits, because the state credits them with missing years of service up to 20. Justices said that age was not the only factor governing the state's practices; pension benefit determinations are also involved, so the plan is not discriminatory.

Other decisions involved unions. Unions in California pushed through a law in 2000 called a union-neutrality statute and barring any employer that gets state funds or grants of at least $10,000 from using that money to "assist, promote, or deter union organizing." The state Chamber of Commerce and other employer organizations quickly objected, charging that the law was preempted by the National Labor Relations Act (NLRA). A federal district court agreed, and so did the 9th Circuit in its first two looks, but it then reversed in 2006. In a 7-2 decision, the high court rejected the California law because it "imposes a targeted negative restriction on employer speech about unionization" (Chamber of Commerce v. Brown, No. 06-939).

And, a June 27 ruling by the NLRB (in Northeastern Land Services) barred employer policies that restrict employees' discussions of wages or working conditions. The plaintiff in the case had complained to co-workers about delays in getting paid and was fired for it. Employees must be allowed to discuss wages with their union representatives.

How Will the Rulings Affect You?

• Carefully consider your criteria for identifying employees to be laid off, with an eye to the high court's ruling in Meacham. The burden will be on you to prove that your decisions were based on 'reasonable factors other than age.' Employment law experts told the justices that this ruling will make it more difficult for courts to cull out meritless cases--and that it will discourage employers from the "thoughtful analytical process" that most use in reaching such decisions.
• If your layoff decisions will be based on managers' evaluations of employees, as Knolls's were, make your assessment criteria as objective as possible. Knolls managers were told to rate employees on "performance, flexibility, and criticality of ? skills." Plaintiffs later charged that the 'flexibility' criterion especially led to subjective decisions by managers, with the 'criticality of skills' measure also not sufficiently objective. Strive for criteria that can be measured with existing organizational tools.
• On the other side of the coin, there's good news for employers in the Kentucky Retirementruling: Justices acknowledged that age and pension benefit determinations tend to go hand in hand, but that pension determinations are a valid, nondiscriminatory reason for plan decisions that may appear to benefit younger employees. The same sort of rationale has recently supported court rulings that cash-balance pension plans are not biased against older workers.
• The Chamber of Commerce ruling against California's union-neutrality law threatens the validity of similar laws in at least a dozen other states. Justices found that in spite of unions' success in pushing such laws through, employers--and employees--have the right to oppose unionization. That's a free-speech right. Congress, the high court said, favored "uninhibited, robust, and wide-open debate." Both employers and employees need to remember that such speech must not be coercive--no threats allowed.