Small companies will be significantly affected by the latest Supreme Court ruling expanding job protection to older workers.

The Court ruled that federal law allows people 40 and over to file age bias claims over salary and hiring even if employers never intended any harm. Many smaller companies have higher than usual older workers with varying salary levels. The ruling says that even if the consequences were unintended, companies are liable.

The decision eases the legal threshold for about 75 million middle-aged and older people to contend in court that a policy has a disproportionately hurtful effect on them.

Some Loopholes

The court did say however, employers still will prevail if they can cite a reasonable explanation for their policies, such as cost-cutting. The key, experts believe, will be demonstrating the reasons for salary disparities.

While the decision was applauded by advocates for older workers, business and municipal groups expressed disappointment, saying it could create costly additional litigation.

The case was brought by older police officers in Jackson, MS, who contended a city policy favored younger colleagues. The court unanimously rejected their appeal but in a 5-3 vote ruled they were entitled to pursue the lawsuit.

Justice John Paul Stevens, writing for the majority, cited the 1967 Age Discrimination in Employment Act. He said it was meant to allow the same type of legal challenges for older workers that minorities and women can make under the 1964 Civil Rights Act. But he also said the same law stipulates employers are within their rights to sometimes treat older workers differently.

Older Workers Can Be Treated Differently

"Age ... not uncommonly has relevance to an individual's capacity to engage in certain types of employment," wrote Stevens, who at 84 is the court's oldest member.

Justice Sandra Day O'Connor and two others disagreed, saying the age discrimination act bars the impact claims. She said Congress never intended such lawsuits because employers should have flexibility to make business decisions that might unintentionally harm older workers.

Physical Limitations Recognized

"There often is a correlation between an individual's age and her ability to perform her job," O'Connor wrote. "That is to be expected, for physical ability generally declines with age, and in some cases, so does mental capacity."

"This is a major boost for the fight to eliminate age discrimination in the workplace. Evidence that an employer is intentionally out to get older workers is very hard to come by," said Laurie McCann, senior attorney for AARP, the advocacy group for people 50 and over.

"It is a significant win for older workers who lack smoking gun evidence of age discrimination," said Thomas Goldstein, a Washington lawyer who represented the police officers. "It also reminds employers to be conscious of the effects of their policies."