The U.S. Equal Employment Opportunity Commission

EEOC Office of Legal Counsel staff members wrote the following informal discussion letter in response to an inquiry from a member of the public. This letter is intended to provide an informal discussion of the noted issue and does not constitute an official opinion of the Commission.


ADEA: Employee Ranking

April 25, 2003

Dear:

This is in response to your April 8, 2003 letter to the Chair of the U.S. Equal Employment Opportunity Commission (EEOC or Commission), Cari M. Dominguez, asking whether EEOC views "employee ranking" by employers to be discriminatory. Chair Dominguez asked this office to respond directly to you.

As you may know, the EEOC enforces Title VII of the Civil Rights Act of 1964 (Title VII), prohibiting discrimination on the basis of national origin, race, color, religion, and sex; the Age Discrimination in Employment Act of 1967 (ADEA), prohibiting discrimination against employees 40 years of age or older; the Americans with Disabilities Act of 1990 (ADA), prohibiting discrimination against qualified individuals with disabilities; and the Equal Pay Act of 1963 (EPA), which prohibits pay discrimination between men and women who perform substantially equal work in the same establishment.

As we understand it, under an "employee ranking" system, a company evaluates employees against one another, according to performance and competency criteria, and then ranks them. An employee's rank may affect his or her compensation, discipline, or whether the employee is disciplined, or even terminated.

A forced ranking system is not inherently discriminatory. Such a system implicates EEO law only if a company purposely uses the system to discriminate on a prohibited basis, or if one or more of the company's ranking criteria have a significant disparate impact on a prohibited basis and the criteria cannot be justified by job-relatedness and business necessity. Over the years, EEOC has challenged performance evaluations, layoffs, and other employment practices when there was reason to believe that they were used to discriminate. However, because the Commission's resources are limited, we are unable to litigate every case.

We hope this information is helpful to you. Please keep in mind that this is informal guidance and not a formal opinion of the EEOC.

Sincerely,

Dianna Johnston
Assistant Legal Counsel


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