Can Employers Reject Older Job Seekers to Protect an Image? A Federal Court May Decide
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Can Employers Reject Older Job Seekers to Protect an Image? A Federal Court May Decide

Federal officials claim that steakhouse chain Texas Roadhouse has a history of age discrimination

February 2, 2017

Nationwide steakhouse chain Texas Roadhouse is in hot water with the government over claims of age discrimination in its employment practices.

"Old 'N Chubby"

Federal officials claim that the chain has a history of labeling workers over the age of 40 as "Old 'N Chubby," among other names, and rejecting them for jobs in which they would be seen by customers.

The lawsuit has wide-ranging implications even beyond the claim that the company has been engaging in a "pattern and practice" of discriminating against older job applicants since 2007.

The case's scope and origins are unusual for the U.S. Equal Employment Opportunity Commission (EEOC). The Commission enforces job discrimination laws.

The suit, which covers thousands of workers at nearly 500 locations, is the biggest age discrimination case brought to trial by the EEOC in more than 30 years. In bringing the case, the Commission has resurrected a legal tool for fighting systemic bias that it has rarely used for years: carrying out its own investigations and filing a lawsuit instead of waiting for individual consumers to submit complaints and then giving them permission to sue, for the most part, on their own.

The chain's defense is making two arguments: that the discrimination charges are wrong, and that the EEOC does not have any authority under the law to bring systemic suits. In addition, the case is reaching a climax just as the EEOC is facing a new, aggressively pro-business and anti-regulatory presidential administration that might not endorse strategies like these.

The details of the suit show several of the complications of fighting age bias, which, according to scholars and activists, is still both widespread and accepted decades after the Age Discrimination in Employment Act (ADEA) was passed. This bias is dangerous for millions of people who are not well prepared economically for their later years.

"Research studies indicate that age discrimination remains a serious problem a half-century after Congress acted to eliminate it," said Alicia H. Munnell, economist at Boston College and head of the school's Center for Retirement Research. "Many older job seekers face a substantial hurdle in large parts of the American economy."

Although the U.S. has made measurable progress against race, gender, and several other types of discrimination, it is less clear how much ground has been gained against age bias. One reason is that cases that seem to pit older workers' interests against younger workers' interest have been notoriously unpopular with juries and public alike.

"Of course we did it"

The EEOC first filed the case in 2011, reportedly after one of its officials ate dinner at a Texas Roadhouse and asked about its hiring policies.

The agency has presented several pieces of evidence, including job applications from 38 restaurants across 20 states on which company officials posted yellow stickers including comments. In addition to "Old 'N Chubby," the comments included "OLD," "little older lady," and "middle age…Doesn't really fit our image." Also included among the evidence are statistics indicating that, out of the nearly 200,000 people hired by Texas Roadhouse over the years to fill so-called front-of-the-house jobs, fewer than 3,000 were over age 40. This disparity was so large that the government's expert witness estimated that the chances of it happening without discrimination are one in 781 billion.

When Dee Shaughnessy, then-human resources director at Texas Roadhouse, was asked whether or not the company discriminated based on age, she allegedly responded: "Did we do it? Of course we did it. All you have to do is walk in the front door of our restaurants and see what people look like."

Company executives have strenuously denied the allegations in their own filings and testimony. Its expert testified that the government's figures are wrong.

The EEOC's legal tactic, which is known as a "directed investigation" targeting an employment practice widely used throughout a company or industry instead of an individual complaint, has been attacked by politicians in addition to the restaurant chain. Senator Rand Paul criticized the EEOC during a Senate hearing in 2014. He called the tactic "snooping" and "entrapment" designed to "persecute American business."

In an apparent reference to the Texas Roadhouse case, Paul said, "I imagine you going into a business where there's been no complaint … and you keep asking another question, another question, another question, and you finally get to a question where the guy says 'Oh yeah, I'm tired of old people coming in here.' And then all of a sudden … 'Oh my goodness, now we can do something!'"

He told P. David Lopez, who until recently was the agency's general counsel, that businesses would be damaged unfairly by such "unlimited" investigations.

"How can you show up to work with a straight face?" Paul demanded. "I don't understand why you wouldn't resign immediately and say, 'This is abhorrent! This is so against everything America stands for!'"

In subsequent hearings, Senators Lamar Alexander and Tim Scott directly questioned the EEOC's decision to pursue the case.

A New President's View

Though the new administration has been otherwise occupied during its first days in office, it may take a similarly unfavorable view of the agency's action, especially because the labor secretary nominee, Andrew Puzder, is CEO of a restaurant chain who deeply dislikes what in his view is government meddling in the relationship between employees and employers.

If his nomination is confirmed, Puzder would control one of the EEOC's sister agencies in charge of enforces discrimination laws among federal contractors and would also have a great deal of influence over workplace regulations necessary to its work.

The authority of the EEOC for investigating bias comes largely from 1964's Civil Rights Act, in cases of race, gender, and many other forms of discrimination, and 1967's ADEA. The latter, in its own words, is meant "to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; to help employers and workers find ways of meeting problems arising from the impact of age on employment." Congress later gave the agency the power to file suits under both laws, even when no individual complaints have been filed, as a way to fight systemic discrimination.

In 2006, President George W. Bush named appointees to establish a task force. This task force found that, though the EEOC had once had specialized staffs at the regional level to pursue directed investigations, these staffs had been greatly disbanded during the 1970s and 1980s and the probes reduced by the late 1990s. It recommended building the staffs up again and boosting investigations.

"Congress empowered the EEOC to eradicate discrimination, and didn't limit their ability to do so simply to where there's an individual complaint," said lawyer Michael C. Subit. "It's like the police; no one would say the police can't take action against something suspicious or dangerous until somebody's complained about it."

Too Downhome to Discriminate?

During the Texas Roadhouse trial, which is currently in its fourth week, the company's lawyers have made the argument that the agency has wrongly transformed some negative comments written on yellow stickers, stray comments made by managers, and hiring imbalances at a few of the restaurants into a broad claim of bias. Their defense has combined homespun with high law, seeking to characterize Texas Roadhouse and its CEO-founder, W. Kent Taylor, as so folksy and plain-spoken that it would be difficulty to image either of them committing systemic discrimination.

The agency's lawyers have seemed stiff and their questions strained against this backdrop, a contrast that Taylor tried to emphasize in his testimony. He told the attorneys, who were all in business dress, that he had not worn the suit he was wearing for his appearance in court in ten years. When he was requested to explain a discrepancy between his testimony and a previous deposition, he responded that he had been fed "a lot of lawyer sandwiches," a comment that made a juror laugh quietly.

Alongside this too-downhome-to-discriminate defense, the company lawyers have introduced numerous corporate documents, training manuals, and employee newsletter including explicit prohibitions against age discrimination as well as other types.

The EEOC's lawyers have responded that this anti-discrimination language distributed by the company to its employees was undermined by photos that it used to illustrate the people who fit its "image" and "legendary service" ideal. According to the agency, nearly all the photos were of young people.

"The recipe for 'legendary service' is this: Hire young," said EECO lawyer Sara E. Smolik. She said that the hiring statistics indicate that "it isn't a fluke. It isn't an accident. It happened for a reason."

Texas Roadhouse and the EEOC have battled over those statistics. The company's expert told the jury that the agency's expert hid individual restaurants that did not have hiring imbalances by presenting figures for the company as a whole.

While Texas Roadhouse has argued that each restaurant makes independent hiring decisions, EECO lawyers contend that company's corporate headquarters is firmly in charge, noting that Taylor is so deeply involved in the details of the business that at times he climbs onto his restaurants' roofs to inspect their exhaust fans.

Rights and the Law

The most important battle between the parties, however, might not be any of the arguments they've made before the jury, but rather the one that they have had several times before presiding judge Denis J. Casper.

The company's lawyers have strenuously contended that the EEOC cannot charge it as it has because it does not have the right under the age bias law to bring any kind of systemic discrimination suits. The judge has rejected this argument twice, but the company has continued to repeat it in motions that it has filed as recently as January 30.

This persistence is the result of a 25-year-long re-reading of the ADEA that has moved age discrimination from being basically identical to race, gender, and other forms of employment bias to a lesser concept requiring more legal proof before it can be accepted as having taken place.

The change has happened in stages. One step took place in the early 1990s when Congress amended the civil rights law so that it would be easier to prove discrimination but did not change the age law in the same ways. Defendants in age bias suits started to claim that this fact indicated that Congress meant for the two laws, which until that time had operated in tandem, to be treated differently.

A second, and critical, step was the 2009 Supreme Court decision Gross v. FBL Financial Services Inc. The Court ruled that employees who believe that have experienced age discrimination at their employers' hands have to show that they would not have experienced it "but for" their age. This ruling was widely interpreted to mean that future plaintiffs would have to prove that age was the only factor that caused the problem, a very different standard than that for race or gender discrimination and a legal bar that is so high it is nearly impossible to clear.

In subsequent years, lower courts and several lawyers, including those representing Texas Roadhouse, have tried to use the ruling to place a strict limit on how far the age limit can reach.

"Because the ADEA does not authorize suits like the one EEOC is pursuing here," the company's lawyers said in citing the decision, "it cannot prove liability regardless of the evidence it presented at trial."

The case's closing arguments concluded on January 30. When the jury reaches a verdict, it could also bring either new grounds for age discrimination claims or new barriers.