Labor & Employment Law Daily ADEA’s 20-employee minimum does not apply to state entities or political subdivisions
Tuesday, November 6, 2018

ADEA’s 20-employee minimum does not apply to state entities or political subdivisions

By Kathleen Kapusta, J.D.

Siding with the Ninth Circuit on an issue over which the federal appeals courts have divided, Justice Ginsburg, writing for a unanimous Supreme Court, held that “the text of the ADEA’s definitional provision, also its kinship to the FLSA and differences from Title VII, leave scant room for doubt that state and local governments are ‘employer[s]’ covered by the ADEA regardless of their size” (Mount Lemmon Fire District v. Guido, November 6, 2018, Ginsburg R.).

The ADEA’s numerosity specification (20 or more employees), which is applicable to a “person engaged in an industry affecting commerce” does not apply to state entities (including state political subdivisions), wrote Ginsburg, explaining that ADEA Section 630(b)’s two-sentence delineation, and the expression “also means” at the start of the second sentence, combine to establish separate categories: persons engaged in an industry affecting commerce with 20 or more employees and states or political subdivisions with no attendant numerosity limitation. “[T]wenty or more employees” is confining language, the Court explained, observing that “the confinement is tied to §630(b)’s first sentence, and does not limit the ADEA’s governance of the employment practices of States and political subdivisions thereof.”

Justice Kavanaugh took no part in the consideration or decision of the case.

Lower court proceedings. When Mount Lemmon Fire District, a political subdivision in Arizona, laid off its two oldest full-time firefighters at the ages of 46 and 54, they sued alleging their terminations violated the ADEA. Granting summary judgment in favor of the Fire District, the district court held that the ADEA’s 20-employee minimum applies to political subdivisions and the Fire District was too small to qualify as an employer under the Act. Reversing, the Ninth Circuit, disagreeing with four of its sister circuits which found the statutory provision at issue ambiguous, held that a political subdivision of a state need not have 20 or more employees in order to qualify as an employer under the ADEA.

Title VII and the ADEA. Agreeing, the Supreme Court first observed that the ADEA, like Title VII, initially applied solely to private-sector employers and both statutes defined employers to include “a person engaged in an industry affecting commerce” whose employees met a numerical threshold. A 1972 amendment to Title VII, however, extended the statute’s coverage to state and local government entities by defining them as “persons.” And as persons, the Court pointed out, they meet Title VII’s definition of “employer” and are subject to liability only if they have at least 15 employees.

While the ADEA was amended two years later to cover state and local governments, rather than adding these entities to the Act’s definition of “person,” Congress added them directly to the definition of “employer.” Thus, observed the Court, since 1974, the ADEA’s key definitional provision, Section 630(b), has read: “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 . . . .” In the same 1974 enactment, the Court pointed out, Congress amended the FLSA, on which parts of the ADEA had been modeled, to reach all government employers regardless of their size.

“Also means.” At issue here was the proper reading of the ADEA following the 1974 amendment and the question, observed the Court, was whether the words “also means” in the provision at issue add new categories to the definition of “employer” or merely clarify that states and their political subdivisions are a type of “person” included in Section 630(b)’s first sentence. Pointing out that the ordinary meaning of “also means” is additive—it means “in addition,” “besides,” “likewise,” and “too”—the Court concluded that the words add new categories of employers to the ADEA’s reach.

Moreover, not only did Congress not repeat the “twenty or more employees” qualifier when referencing state and local government entities, the text of Section 630(b) pairs states and their political subdivisions with agents, a discrete category that, “beyond doubt, carries no numerical limitation,” said the Court. “The Fire District does not gainsay that the 20-employee restriction applies to §630(b)’s first sentence. Its construction, however, would lift that restriction for the agent portion of the second sentence, and then reimpose it for the portion of that sentence addressing States and their political subdivisions. We resist a reading so strange.”

FLSA is better comparator. Also rejected was the Fire District’s contention that the ADEA should be interpreted in line with Title VII, which applies to state and local governments if they meet a numerosity specification. The better comparator, reasoned the Court, is the FLSA, on which many aspects of the ADEA are based and which, like the ADEA, ranks states and political subdivisions as “employer[s]” regardless of the number of employees they have. And while the Fire District warned that applying the ADEA to small public entities risks curtailment of vital public services such as fire protection, the Court pointed out that “a majority of States forbid age discrimination by political subdivisions of any size; some 15 of these States subject private sector employers to age discrimination proscriptions only if they employ at least a threshold number of workers. No untoward service shrinkages have been documented.”

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