United States: Supreme Court: Small Public Employers Now Subject To ADEA

Is This A Prelude To Individual Liability?

In a unanimous 8-0 decision, the United States Supreme Court issued its first ruling of the new term today and delivered a blow to small public-sector employers fending off age discrimination lawsuits. The Court ruled that the Age Discrimination in Employment Act (ADEA) applies to all states and political subdivisions regardless of the number of people the public entity employs. Today's ruling in Mount Lemmon Fire District v. Guido has implications for small public employers—who must now comply with the ADEA—but also raises the serious specter for individual liability under the ADEA for all employers.

Lower Courts Disagree On Statutory Text

The ADEA provides that "employers" may not discriminate against persons on the basis of age. The ADEA originally applied only to private employers, but in 1974, Congress amended the definition of "employer" to read as follows:

The term 'employer' means a person engaged in an industry affecting commerce who has twenty or more employees. . . . The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State. . . .

29 U.S.C. §630(b) (emphasis added).

For decades after the ADEA was amended, courts interpreted this definition to find that states and political subdivisions with fewer than 20 employees were not subject to the ADEA. This was well-settled law in the 6th, 7th, 8th, and 10th Circuit Courts of Appeal.

But this all changed, starting with a budget shortfall at the Mount Lemmon Fire District, a political subdivision of Arizona. The Fire District laid of John Guido and Dennis Rankin, the two oldest fulltime firefighters, due to the shortfall. Guido and Rankin claimed that the Fire District discriminated against them on the basis of their age in violation of the ADEA, and the Equal Employment Opportunity Commission (EEOC) agreed. When Guido and Rankin sued in federal district court, however, the district court held that the Fire District was not subject to the ADEA because it employed fewer than 20 individuals.

In a June 2017 opinion, the 9th Circuit Court of Appeals reversed. In its holding, the appeals court held that the language of the ADEA unambiguously stated that the statute applied to all state and political subdivisions without regard to the number of employees. A circuit conflict was created, and the Supreme Court granted review of the case to resolve the conflict.

Unanimous Ruling From SCOTUS Creates New Liability

The fundamental issue in Mount Lemmon Fire District v. Guido was whether the phrase "also means" in the definition clause added new categories of employers or merely clarified the employers identified in the first sentence of the clause. Guido and Rankin argued that this language added new categories of employers to the ADEA's reach under the plain meaning of the statute, while the Fire District argued that the language merely clarified that states and their political subdivisions are a type of "person" discussed in the first sentence of the definition.

The Fire District supported its conclusion in multiple ways, but three are particularly important. First, the Fire District argued that the Court should interpret the ADEA similarly to Title VII of the Civil Rights Act of 1964, which prohibits discrimination based upon race, sex, and other protected categories. Notably, Title VII applies only to employers with 15 or more employees, regardless of whether the employer is private or public. Second, the Fire District argued that individuals would be exposed to direct liability as agents of employers if the Court held that "also means" was additive. Third, the Fire District argued that requiring small government agencies to comply with the ADEA would lead to service disruptions due to the cost of compliance and risk of litigation.

The Court, in a unanimous opinion by Justice Ginsberg (Justice Kavanaugh took no part in the decision as he did not take part of the oral arguments in the case), agreed with the individuals and the 9th Circuit and found that the plain, ordinary meaning of the words "also means" were additive in character. This interpretation made the portion of the definition related to state and political subdivisions an additional category of employers subject to the ADEA that was separate from the 20-employee minimum requirement. Additionally, the Court noted that the wording of the statute grouped public employers with agents, which also does not have a numerical limitation.

The Court shot down the Fire District's argument that the ADEA should be interpreted similarly to Title VII. The Court determined that while the ADEA and Title VII are often interpreted similarly, Congress intentionally chose to word the amendments of the two statutes differently. The better comparator, according to the Court, was the Fair Labor Standards Act (FLSA), which, like the ADEA, was amended in 1974 and also applies to all state and political subdivisions regardless of the number of employees they have. In reaching this conclusion, the Court noted that many aspects of the ADEA are based upon the FLSA. Importantly, the FLSA imposes direct liability on individuals for violations of the act.

The Supreme Court also sidestepped whether its holding had implications for imposing individual liability under the agent clause of the statute. In a footnote, the Court stated simply: "We need not linger over possible applications of the agent clause, for no question of agent liability is before us in this case."

Finally, the Court rejected the Fire District's argument of potential service disruption as a potential result of such as ruling. The Court noted that the EEOC had applied the ADEA consistent with the Court's holding for 30 years and that a majority of states have state laws that prohibit age discrimination by public entities regardless of size, and no reports of service deficiencies as a result of prohibiting age discrimination had been documented.

Impact On Public Sector Employers

First and foremost, this holding affects local governments and special districts created by those governments or the states. In particular, special districts provide many critical services to local communities. The employer in this case, for example, is a fire protection district, which provides fire protection, EMS, rescue, and public assistance to a 12.5 square mile area of the Santa Catalina Mountains the Coronado National Forest in Arizona. Without this special district, that remote area would be without such services. There are tens of thousands of these special districts and similar governmental units around the country providing much needed services to the public.

Just like small private-sector employers, special districts often have few employees with limited budgets and, as a result, are ill-equipped to handle costly age discrimination litigation. These unexpected lawsuits can destroy a special district's operating budget and result in limiting the crucial public services they provide or even require layoffs.

Moreover, small government agencies should also consider the holding's effect on their settlement and severance agreements. As many employers know, the ADEA provides for additional restrictions on waiving claims under the statute in settlement agreements, including providing the employee 21 days to review any agreement and seven days to revoke it after acceptance. Now that they are potentially liable under the ADEA, smaller public entities should have their severance and settlement agreements reviewed by counsel for necessary revisions.

A Prelude To Individual Liability?

Aside from the direct and obvious impact on small public employers, the Court's decision may open a path for courts to impose liability on individuals even though the Court expressly declined to rule on the issue. Specifically, because the Court held that "also means" adds to the first sentence of the definition of "employer" and does not simply clarify it, not only would a "State or political subdivision of a State" be in another type of employer under the ADEA, but so would "any agent of such a person."

An employee, of course, is normally understood to be an agent of the employer. Further, the Court noted that an apt comparison to the ADEA was not Title VII but the FLSA—and under the FLSA, individuals can be held liable.

More employee-friendly courts, like the 4th Circuit and the 9th Circuit, and many other district courts, may use Mount Lemmon as a launching pad to hold individuals directly liable under the ADEA. If the issue were to reach the Supreme Court in the future, there is a plausible majority in favor of agreeing with such a decision: the four liberal justices plus Chief Justice Roberts, who, during oral argument in Mount Lemmon, commented that he was not "sure what's so bad about direct agent liability."

Conclusion

In light of Mount Lemmon, small public employers should reassess their antidiscrimination policies and procedures—as well as their severance and settlement agreements—to ensure compliance with the ADEA. All employers should stay tuned for further case developments regarding whether individuals may become directly liable under the ADEA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions