Policy Statement: Specific Exemptions from coverage pursuant to sec. 9 of the Age Discrimination in Employment Act

(c)       Purpose of § 9 - Section 9, in pertinent part, reflects a congressional intent to allow for discretionary action by the Commission in establishing reasonable exemptions from the provisions of the Act where it has been clearly shown that such exemptions are in fact necessary and proper in the public interest.  This section makes it possible, when necessary, for the Commission to strike a balance between the rights of individuals age 40 and over to be free from arbitrary employment discrimination and other kinds of policies, programs, or activities designed and implemented in the public interest.

(d)       Commission Regulations - The regulation found at 29 C.F.R. § 1627.15 sets forth the procedures that must be followed by the Commission when using its exemption authority under § 9 of the ADEA.  Section 1627.16 is representative of one such use of the exemption authority where it has been decided that it is necessary and proper in the public interest to exclude specified employment practices of certain employers from coverage under the Act.

(1)       Section 1627.15 Administrative exemptions; procedures - This section of the regulations provides that the Commission will exercise with caution its authority under § 9 of the Act to establish reasonable exemptions.  Furthermore, the Commission in deciding whether to grant an exemption shall always consider the remedial purpose of the statute to promote employment of older persons based on their ability rather than age and to prohibit arbitrary employment discrimination based on age.  A decision by the Commission to grant an exemption under § 1627.15 may be unilateral or pursuant to a request, when it is determined that such action is necessary and proper in the public interest.  The section does not establish any formal procedures for requesting such action.  However, it is made clear that an exemption will only be granted subsequent to adequate public notice in the Federal Register and analysis of the comments received.  If a request for an exemption is made under § 1627.15, it must be submitted in writing to the Commission.

(2)       Section 1627.16 Specific exemptions - This section of the regulations provides that, pursuant to § 9 of the ADEA and the necessary procedures set forth in § 1627.15 (See 6(d) (1) above), it has been found to be in the public interest to exempt from all prohibitions of the Act all activities and programs under Federal contracts or grants, or carried out by the public employment services of the several States, that are designed exclusively to provide employment for, or to encourage the employment of, individuals with special employment problems.  Included in the types of programs and activities exempted are those under the Manpower Development and Training Act of 1962, as amended, and the Economic Opportunity Act of 1964, as amended (programs listed as examples, not limitations).  The exemption further defines persons with special employment problems as those individuals who are among the long- term unemployed, handicapped, members of minority groups, older workers, or youth.  The exemption mandates that all questions concerning the application of the exemption are to be referred to the Commission for decision.

If a covered employer is utilizing a program or activity that is exempt under this section from the provisions of the ADEA, such employer nevertheless is required to maintain and preserve records containing the same information and data required of other covered employers under the Act.

(e)       Case Resolution - The most important question to be addressed in every case under the ADEA involving a claim by an employer or other covered entity that it is entitled to one of the specific exemptions set forth in § 1627.16 is whether such employer or entity is currently participating in an activity or program under a federal contract or grant, or carried out by the public employment services of the several States, designed exclusively to provide employment for, or to encourage the employment of, individuals with special employment problems.  The Commission takes the position that the burden of producing evidence sufficient to establish the exemption, like any other affirmative defense, is on the employer or other covered entity seeking to invoke it.  Field office staff consultation is imperative in those situations where the respondent has not supplied sufficient evidence to clearly establish that it was participating in a program or activity similar or the same in all aspects as the programs or activities described in § 1625.16 and this Policy Statement.

Each request for a determination on the applicability of the § 1627.16 exemption must be processed on its own peculiar facts.  The processing of charges/complaints involving § 1627.16 should proceed as follows:

(1)       The employer seeking to invoke an exemption under § 1627.16 of the regulations has the burden of showing that it comes within the exception and is thus exempt from all prohibitions of the Act; and

(2)       Such employer may make this showing by producing evidence of the following:

               (i)     A federal contract,

              (ii)     A federal grant, or

             (iii)     Activities or programs carried out or sponsored by the public employment services of the several states, any one or a combination of which must be designed exclusively to provide employment for, or to encourage the employment of, persons with special employment problems;

(3)       An employer or covered entity alleging involvement in activities or programs that qualify for the exemption should be requested to produce a certification or contract document from the Federal or State agency that administers the contracts or grants; such agencies or employment services may include, but are not limited to, the following:

               (i)     Employment and Training Administration (ETA), United States Department of Labor;

              (ii)     Office of Job Training Programs, United States Department of Labor;

             (iii)     Office of Vocational and Adult Education, United States Department of Education;

             (iv)     United States Employment Services (USES), United States Department of Labor;

              (v)     United States Department of Health and Human Services;

             (vi)     Veterans' Employment and Training Service (VETS), United States Department of Labor; or

            (vii)     The Department of Employment Services for a particular state;

(4)       Specific information on the activity or program in which the employer or covered entity is involved is necessary to a determination of whether said employer or covered entity is exempt under the ADEA; for example, is the activity or program identical or similar to those under the Manpower Development and Training Act of 1962, as amended, or the Economic Opportunity Act of 1964, as amended.

NOTE:  Although specifically mentioned in § 1627.16 of the interpretative regulations, the Manpower Development and Training Act of 1962 and the Economic Opportunity Act of 1964, as amended, have expired and have been replaced by the Job Training Partnership Act (JTPA) of 1982.  The essential objectives of the JTPA are to train or retrain and find employment for the persons who qualify under that Act.  Qualified individuals are those persons defined as economically disadvantaged, particularly disadvantaged youth, who are traditionally among the unemployed.

Under the JTPA, the Secretary of Labor awards block grants to the several states and the District of Columbia as well as certain United States possessions.  The Department of Labor has promulgated implementing regulations for the JTPA which can be found in 20 C.F.R. Parts 626-638 and 675-684.

The following types of programs or activities, although some are now non-functional, are representative of those intended to be exempt from coverage under § 1627.16:

               (i)     Neighborhood Youth Corps;

              (ii)     Work Incentive (WIN) Program;

             (iii)     Job Corps;

             (iv)     Public Service Careers;

              (v)     Operation Mainstream; and

             (vi)     CETA.

Employees in these types of programs have traditionally received basic education courses; work experience; counseling; testing; on-the-job and skills training; vocational rehabilitation; medical, dental and eye care; transportation; use of day care centers; and a variety of other supportive services which are designed to enhance their employability.  The referenced criteria set out in this paragraph are for illustrative purposes only and are intended to provide examples of the types and purposes of programs which are made exempt by § 1627.16.

This information may be useful when confronted with a program or activity operated by a respondent that receives funds directly from a federal agency, grant, or state employment service and at the same time is responsible for the direct hiring of individuals with special employment problems.  This is in contrast to those programs or activities where the state agencies provide the names of individuals to the contractor or employer and that contractor or employer must hire only from that pool of individuals.

(5)       Even though an employer or other covered entity is granted an exemption under § 1627.16, the employer or entity should be maintaining records containing the same information and data that is required of employers and other covered entities that are not exempt from the prohibitions of the Act.  See, §§ 1627.3, 1627.4, and 1627.5 of the interpretative regulations.

(6)       The exemption is only available with regard to the specific activity or program aiding employees who have been certified as individuals with special employment problems.

Example - Charging Party alleges that she was discriminatorily denied employment because of her age (65) by Respondent Employer.  Specifically, CP applied for one of 10 positions that R had identified as being reserved for youth with special employment problems.  R maintains that the 10 positions were only to be filled with individuals referred to it by the State Office of Employment Services.  R further contends that it has a contract which establishes its relationship with the State Employment Office and as such it is also exempt from coverage under the ADEA regarding the 10 designated positions.  The Commission would probably conclude that R is entitled to the specific exemption that is set forth at § 1627.16, 29 C.F.R. Part 1627 regarding the 10 positions in question.

Note:  The result would be different if CP had applied for a job that was not included in the 10 designated positions under the contract with the State Employment Office.  In that case, the prohibitions of the ADEA would apply.  On the other hand, if R had been participating in a program or activity in which it received funding directly from a federal or state agency and such program or activity's sole or exclusive purpose was to employ individuals with special employment problems in every available position, its actions may be exempt under § 1627.16.

DATED: January 20, 1988                 APPROVED:______________________

Clarence Thomas

Chairman

                                                                                                                            July 3, 1989

1.         SUBJECT:  Policy Statement:  Specific exemptions from coverage pursuant to § 9 of the Age Discrimination in Employment Act (ADEA) of 1967 as amended.  Activities and programs under federal contracts or grants, as carried out by the several States, designed exclusively for individuals with special employment problems as set forth in § 1627.16 of the Commission's Regulations.

2.         PURPOSE:  This Notice continues in effect Notice N-915, dated January 20, 1988, until rescinded or superseded.  This Statement provides information on the nature and scope of the specific exemptions from ADEA coverage provided for certain activities and programs designed to provide or encourage the employment of persons with special employment problems pursuant to § 9 of the ADEA and as delineated in § 1627.16, 29 C.F.R. Part 1627 of the Commission's Interpretive Regulations.  This Statement is also intended to provide information on the evaluation and processing of cases under the ADEA where the respondent alleges that it is entitled to a specific exemption.

3.         ORIGINATOR:  ADEA Division, Office of Legal Counsel.

4.         EFFECTIVE DATE:  Upon receipt; as an exception to EEOC Order 205.001, Appendix B, Attachment 4, § a(5), this Notice will remain in effect until rescinded or superseded.

Approved: ____/s/_________________

Clarence Thomas

Chairman