September 29, 2025
Employer Liability for 3rd Party Rules & Restrictions
The EEOC announced in its press release, “Employers are ultimately responsible for their own hiring, firing, and conditions of employment. They cannot escape liability for evident age-based employment decisions just because another private party, such as an insurance company, imposes an age-based restriction.”
Here’s the scoop. The employer’s new liability insurance policy did not cover drivers aged 65 or older with a few exceptions. As a result, the employer allegedly fired a 69-year old employee who had worked for them for four years, and refused to hire a class of older drivers and applicants for driver positions because of their age.
Some key issues cited in the claim include:
- the company President had actual knowledge that the policy excluded individuals age 65 and above, thus the company had knowledge;
- the employer did not seek an exception to the age-based exclusion of coverage;
- the employer maintained a practice of refusing to employ any driver who was age 65 or older; and
- although the employer did obtain new insurance that did cover individuals age 65 or above, it was conditioned upon the individuals providing a “valid Long Form Physical to the insurance carrier for review and possible acceptance. Carrier will not consider physicals with less than 1 year of validity.”
Wait, there’s more. Remember to retain your employment records, including applications for at least one year from the date of creation or last action, whichever is later. The EEOC also claimed this employer violated the ADEA by maintaining “a practice of destroying applications submitted by job applicants who are not hired 30 days after the date of their applications.”
Lesson learned? Employers can be liable for rules and restrictions set or imposed by a third party when they adversely impact employees or applicants based on a legally protected status, including age, race, sex, etc. If you use a vendor that imposes a rule that is tied to protected status, reconsider it. Talk to the vendor to understand why they have the rule. Is it based on a federal or state rule or regulation? Talk to your company’s legal counsel to understand the legal risk and if it’s something you want to take on.
