Increased Liability for Small Public Employers Under the ADEA: Mount Lemmon Fire District v. Guido

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Small public employers will want to take note of the recent Supreme Court ruling in Mount Lemmon Fire District v. Guido. The Age Discrimination in Employment Act of 1967 (ADEA) prohibits employers from discriminating against employees and job applicants on the basis of age if they are 40 years of age or older. In October 2018, the Supreme Court unanimously ruled that the ADEA prohibits age discrimination by all state and local government employers, regardless of their size.

Mount Lemmon Fire District, a political subdivision in Arizona, laid off two of its oldest full-time firefighters, John Guido (46 years old) and Dennis Rankin (54 years old). Guido and Rankin claimed that the Fire District discriminated against them on the basis of their age in violation of the ADEA. The Fire District argued that it did not have enough employees to be considered an “employer,” and thus subject to liability under the ADEA. Following disagreement among the Equal Employment Opportunity Commission (EEOC) and the lower courts regarding application of the ADEA to the Fire District, the Supreme Court agreed to hear the case.

The ADEA defines the term “employer” to include “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).

The question faced by the Supreme Court was whether the ADEA’s numerosity specification (20 or more employees) also applies to state entities, including political subdivisions.

The Court held that the numerosity requirement does not apply, and all state entities and political subdivisions must comply with the ADEA, regardless of how many people the entity employs. The Court held that the statue establishes two separate categories of employers who may be liable under the ADEA: (1) persons engaged in an industry affecting commerce with 20 or more employees (including their “agents”), and (2) States or political subdivisions with no attendant numerosity limitation.

Mount Lemmon Fire District v. Guido Clarifies the ADEA’s Definition of “Employer”

Justice Ginsburg’s opinion in Mount Lemmon Fire District v. Guido considered Congress’s intent in drafting many of the statutes which protect employees from discriminatory or unfair employment practices, such as the ADEA, Title VII of the Civil Rights Act of 1964 (Title VII), and the Fair Labor Standards Act (FLSA).

The Court found the FLSA to be the best comparator for the ADEA. Many aspects of the ADEA are based on the FLSA and both statutes were amended in 1974 to add liability for state and local governments. The FLSA already categorizes state and political subdivisions as “employers” regardless of the number of employees they have, and the Court reasoned that the ADEA’s kinship to the FLSA makes it appropriate to apply the same interpretation.

Justice Ginsburg’s opinion also considered the policy implications of applying the ADEA to small public entities and ultimately rejected the Fire District’s argument that such an application would put at risk vital public services such as fire protection. “Experience suggests otherwise,” writes Justice Ginsburg, noting that the EEOC and a majority of states have been applying the ADEA to all small public entities for 30 years and no service shrinkages have been documented.

Implications for Small Public Employers

To avoid liability, small public employers should evaluate and update current anti-discrimination policies and procedures to ensure compliance with the ADEA. Additionally, such employers should be aware of additional requirements for settlement and severance agreements: the ADEA requires employers to provide employees over the age of 40 with 21 days to review any settlement or severance agreement, and 7 days to revoke acceptance.

While the Court did not speak directly about agent liability, employers should also be aware that attempts at imposing liability on individuals as agents may begin to arise in the lower courts. The Court left this possibility open by noting that “the second sentence of the ADEAS’s definitional provision, §630(b), pairs States and their political subdivisions with agents, a discrete category that carriesno numerical limitation.” Additionally, the Court expressly pointed to the FLSA—under which individuals can be held liable—as the best comparator statute for the ADEA.

Following Mount Lemmon Fire District, compliance with the ADEA is crucial for all public employers and their agents. If you are concerned about your rights or obligations under the ADEA—whether an employee or an employer—contact us today.