The Equal Employment Opportunity Commission has issued a notice of proposed rulemaking to address the meaning of the “reasonable factors other than age” test under the Age Discrimination in Employment Act.

The proposed rulemaking is in response to a U.S. Supreme Court decision in Smith v. City of Jackson (2005), which held that the ADEA authorizes recovery for disparate impact claims of discrimination and that the “reasonable factors other than age” test, rather than the “business-necessity test,” is the appropriate standard for determining the lawfulness of a practice that disproportionately affects older individuals.

The EEOC proposes to clarify the scope of the RFOA defense, and explains that whether a particular employment practice is based on reasonable factors other than age turns on the facts and circumstances of each particular situation and whether the employer acted prudently in light of those facts. EEOC notes that this standard is lower than Title VII’s “business-necessity test” but higher than the Equal Pay Act’s “any other factor” test. EEOC says it represents a “balanced approach that preserves an employer’s right to make reasonable business decisions while protecting older workers from facially neutral employment criteria that arbitrarily limit their employment opportunities.”