The U.S. Equal Employment Opportunity Commission (EEOC) recently announced that a pharmaceutical company in Indianapolis, Indiana, will pay $2.4 million in a nationwide age discrimination lawsuit. According to the EEOC’s charges, the company failed to hire older individuals (over 40 years of age) for pharmaceutical sales representative roles. Last month, the EEOC reached a settlement in a separate age discrimination case that involved an artificial intelligence (AI) algorithm that the employer trained to reject female applicants aged 55 or older and male applicants aged 60 or older. The agency announced that that company would pay $365,000 to settle its AI discriminatory hiring lawsuit.

Background of the Age Discrimination Case

According to the lawsuit, between 2017 and 2021, the company instituted an “Early Career” hiring initiative. This hiring initiative included goals designed to redirect hiring preferences toward adding more millennials to the company’s workforce. However, the initiative had the adverse effect of denying qualified applicants positions within the company. These included sales representative applicants who were over the age of 40.

Age Discrimination Under the ADEA

The Age Discrimination in Employment Act (ADEA) makes age a protected class. Specifically, the ADEA prohibits discrimination against people who are age 40 or older. Meanwhile, some state laws protect against the discrimination of younger individuals. Age discrimination involves treating an individual unfavorably because of their age. Harassment as a part of age discrimination can include offensive or derogatory remarks about someone’s age. Furthermore, an employment policy or practice that applies to all should not negatively impact those over the age of 40. The exception to this is if the policy relies on a reasonable factor other than age (RFOA). An employment practice is considered to be based on an RFOA if it was reasonably designed and administered to achieve a legitimate business purpose. Specifically, the factor may be reasonable based on:

  • the extent that it relates to the employer’s stated business purpose;
  • how accurately the employer defined and how fairly they applied the factor;
  • whether the employer limited supervisors’ subjective discretion when assessing employees;
  • in what way the employer assessed the adverse impact of the employment practice on older workers; and
  • the degree of harm to individuals within the protected class.

Penalties in the Case

The EEOC filed suit in the U.S. District Court for the Southern District of Indiana, Indianapolis Division (the Court). In EEOC v. Lilly USA, LLC, et al., Case No. 1:22-1882-TWP-MKK, the Court ordered the company to pay $2.4 million to affected applicants and provide other equitable relief. In its consent decree, the Court also requires the company to provide equal employment opportunity (EEO) training to managers and human resources personnel. Additionally, the company must survey job applicants as to whether they experienced discrimination. Finally, the company must specifically state in contracts with third-party recruiters that It will not discriminate against candidates based on age. The consent decree also sets up a claim process to identify and compensate affected individuals age 40 or older who were denied positions at the company.