Supreme Court Expands ADEA’s Application

Allen Smith, J.D. By Allen Smith, J.D. November 6, 2018
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​The U.S. Supreme Court has extended the reach of the Age Discrimination in Employment Act (ADEA) to all states and localities, regardless of their size, in a unanimous decision that will make it harder for towns to lay off older workers. 

The ruling also may result in individual liability under the ADEA for company employees.

A majority of appeals courts had ruled that small public employers weren't covered by the law, but the high court decided that the ADEA applies, like the Fair Labor Standards Act, to all government employers, regardless of size.

The most common ADEA claim is discriminatory discharge—10,091 such charges were filed in the last fiscal year. Age-discrimination claims currently constitute 22 percent of all Equal Employment Opportunity Commission (EEOC) claims, and it's expected that such litigation will increase as the workforce ages, noted Ryan Bates, an attorney with Hunton Andrews Kurth in Washington, D.C.

The ADEA prohibits employment discrimination against workers who are 40 or older. In just three years, the oldest of the Millennials (those born roughly between 1981 and 1996) will be covered by the law, and Baby Boomers (those born roughly between 1946 and 1964), who are already covered, are often choosing to work past the normal retirement age of 67.

Discriminatory Layoff Was Alleged

In Mount Lemmon Fire District v. Guido, U.S., No. 17-587, two laid-off firefighters brought an ADEA claim against the Mount Lemmon, Ariz., Fire District, which had 11 full-time employees before it fired the two oldest, who were ages 46 and 54. The employer argued that the ADEA didn't apply because it was too small to qualify as an employer under the law.

The ADEA defines "employer" as meaning "a person engaged in an industry affecting commerce who has 20 or more employees. … The term also means (1) any agent of such a person and (2) a state or political subdivision of a state."

Writing for the Supreme Court, Justice Ruth Bader Ginsburg noted that the question of coverage boiled down to whether "also means" added new categories to the definition of employer such that small employers were covered, or if it merely clarified that states and localities are a type of "person" included in the first sentence of the definition. The court concluded that it meant the former, even though the 7th, 8th and 10th circuits had reached the opposite conclusion. 

But the 9th Circuit had ruled that the ADEA covered state and local governments regardless of size, which was consistent with 30 years of EEOC interpretation, and the Supreme Court affirmed that ruling.

The high court's decision means the ADEA will have a broader reach than Title VII of the Civil Rights Act of 1964, which applies only to employers—private ones as well as state and local governments—that have 15 or more employees.

Mount Lemmon had cautioned that application of the ADEA to small public entities meant vital public services such as fire protection could be compromised. But the court said there was no evidence this would be the case.

OWBPA Will Apply to Small Localities

The Supreme Court's decision means that the technical requirements of the Older Workers Benefits Protection Act (OWBPA), which amended the ADEA in 1990, will apply to all state and local governments, noted Tibor Nagy Jr., an attorney with Ogletree Deakins in Phoenix and Tucson, Ariz. This will make layoffs more cumbersome.

If releases from age-discrimination claims are used in exchange for severance pay, employers must comply with the OWBPA to waive ADEA claims. As noted by the EEOC in guidance on understanding waivers of discrimination claims in severance agreements, a waiver must:

  • Be written in a manner that can be clearly understood.
  • Specifically refer to rights arising under the ADEA.
  • Advise the employee in writing to consult an attorney before accepting the agreement.
  • Provide the employee with at least 21 days to consider the offer.
  • Give an employee seven days to revoke his or her signature.
  • Not include rights and claims that may arise after the date on which the waiver is executed.

[SHRM members-only toolkit: How to Conduct a Layoff or Reduction in Force]

During workforce reductions or voluntary exit incentive programs, two more requirements must be met for releases to be valid: 1) The employer must publicly identify the exiting employees, and 2) the employees who are leaving must be informed in writing of the job titles and ages of all those singled out for leaving, along with employees in the same job classification or unit who were not selected for departure.

"That sort of detail may not be commonly known by local governments or local government attorneys who are stretched thin and have to handle thousands of different issues that arise," said David Klass, an attorney with Fisher Phillips in Charlotte, N.C.

Individual Liability?

Klass added that the ruling also may make it easier for plaintiffs to bring claims against individuals for direct liability under the ADEA. The court's interpretation of the phrase "also means" indicates that courts may say individual supervisors are agents of an employer and covered by the act. 

Justice Brett Kavanaugh did not participate in the Nov. 6 ruling, which was decided 8-0.

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