Targeted Advertising and Age Discrimination: An Explainer
In the age of social media, traditional help-wanted ads have become obsolete. Employers can reach more applicants by advertising for open positions on sites like Facebook than they ever could through newspapers, or even their digital equivalents (such as Craigslist). However, the massive numbers of social media users—approximately two billion on Facebook alone—also pose a unique challenge for employers. Facebook’s pricing structure gives advertisers two basic options: they can opt to pay a fee each time a user clicks on an ad or pay a fee based on the number of “impressions” (i.e., the number of times an ad appears on users’ screens). Either way, from an employer’s perspective, an advertisement that reaches an unqualified or uninterested user is wasted money. This creates a financial incentive for employers to narrow the reach of their advertisements to users whom they believe will be the best fit for a position. Employers achieve this through the process of “microtargeting.” Facebook’s Ads Manager allows employers to select which users will be exposed to ads based on factors such as demographics, online interests, and browsing data. For example, a law firm might decide to limit an ad campaign for an associate position to current or former law students who are interested in finance and live in New York City. By tailoring the ads’ exposure to users who fall within these parameters, the firm can maximize the value of each ad purchased.
Proponents of microtargeting claim it’s necessary to make online advertising efficient, but the practice has been criticized as discriminatory. Facebook recently reached a settlement in a group of lawsuits alleging that its advertising policies allowed employers to discriminate on the basis of age, gender, and zip code (a proxy for race). As part of the settlement, Facebook will no longer allow targeting based on these and other characteristics that may relate to protected classes. Facebook is social media’s frontrunner and therefore has the greatest resources and incentive to defend its current practices from legal challenges. Now that Facebook has conceded, it’s easy to foresee other platforms following its lead. But this leaves unresolved the doctrinal question of whether these lawsuits would have prevailed on their merits. Specifically, does targeted advertising on the basis of age amount to illegal discrimination?
Three years after the passage of Title VII, Congress extended employment protections to older workers. The Age Discrimination in Employment Act of 1967 (“ADEA”) aims to “promote employment of older persons based on their ability rather than age.” To achieve this goal, the Act forbids arbitrary age discrimination against people who are 40 or older. The cornerstone of this prohibition is found in two provisions of ADEA § 4. Section 4(a)(1) makes it unlawful for an employer to “refuse to hire . . . or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of such individual’s age.” Section 4(a)(2) makes it unlawful to “limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities . . . because of such individual’s age.”
In Smith v. City of Jackson, a Supreme Court plurality emphasized “key textual differences” between §§ 4(a)(1) and 4(a)(2) to support the conclusion that each section prohibits a different form of employer conduct, and therefore implicates different forms of liability under the Act. Section (4)(a)(1) focuses on an employer’s actions with respect to a targeted individual, so this section encompasses disparate treatment liability. In contrast, § 4(a)(2) focuses on an employer’s actions with respect to employees generally, so this section encompasses disparate impact liability. The Court suggested that these categories are mutually exclusive. As Justice Scalia noted in his Smith concurrence, “The only provision of the ADEA that could conceivably be interpreted to effect [a disparate impact prohibition] is § 4(a)(2).” Thus, a plaintiff’s ultimate success under the ADEA depends on his ability to allege the right cause of action under the right section of the statute.
To bring a disparate treatment claim under § 4(a)(1), the plaintiff must establish that the employer has taken an adverse action against him “because of” his age. Employers argue that tailoring employment ads by audience isn’t an adverse action within the meaning of the statute. They concede that they’re forbidden from making hiring decisions on the basis of age, as well as explicitly identifying preferred ages for job candidates. But they maintain that excluding potential applicants from an ad campaign is distinct from excluding actual applicants from consideration. If anyone can apply for a position and the employer’s ultimate hiring decision is not based on age, the ADEA has not been violated. Critics respond that exclusion from an ad campaign is functionally equivalent to exclusion from consideration. After all, applying for a position necessarily requires knowledge that the position exists. Resolution of this dispute will turn on how expansively courts read § 4(a)(1). Under a narrow reading, courts could conclude that employers cannot “refuse to hire” a worker who hasn’t applied for a position. Under a broad reading, courts could conclude that § 4(a)(1)’s purpose is to prevent discrimination based on age, so employers shouldn’t be permitted to circumvent the Act by shifting the discriminatory decision from the consideration phase to the advertising phase.
To bring a disparate impact claim under § 4(a)(2), a plaintiff must show that an employer’s facially neutral policies have a discriminatory effect on older workers and cannot be justified by business necessity. However, even assuming that a recruiting strategy which includes age-targeted ads is facially neutral, challenging such a strategy under a disparate impact standard may not be possible. Two circuits have held that § 4(a)(2) doesn’t provide legal protections to job applicants. Unlike the disparate impact language of Title VII—which was amended in 1972 to prohibit employers from limiting, segregating, or classifying both employees and applicants for employment—ADEA § 4(a)(2) only prohibits such conduct with respect to employees. If a court applies this logic to claims arising from targeted ads, plaintiffs will be limited to alleging disparate treatment under § 4(a)(1).
Because Facebook settled the cases against it, the underlying issue of the ADEA’s application to targeted ads remains unresolved. The stakes in future cases will be high. A decision for employers threatens to undermine the ability of older workers to compete for employment opportunities. A decision for employees would force companies to change central aspects of their recruiting practices. Regardless of how a court might decide, it’s unlikely that targeted online advertisements will find a comfortable home in a judicial interpretation of a law first passed in 1967 and last amended in 1991. Therefore, the legislature should amend the ADEA to keep pace with technological changes to the employment marketplace. At the very least, such an amendment should explicitly confer § 4(a)(2)’s disparate impact protections to job applicants—as Title VII’s equivalent provision already does. However, a more comprehensive amendment should elaborate upon § 4(a)(1) to provide employers and courts with guidance for determining which specific advertising strategies are permissible and which rise to the level of illegal age discrimination.