Too Little Too Late If You Work for The State? The Applicability of Employee Thresholds to Age Discrimination Claims from State Workers

The Issue

Americans born in 1978 will be turning 40 this year. In addition to the wisdom that comes with age, these citizens will also be gaining the possibility of protection from age discrimination under the Age Discrimination and Employment Act (ADEA). This act prohibits employers from discriminating “against persons 40 years of age or older.29 U.S.C. §§ 621–34. According to 29 U.S.C. § 630(b), the term “employer” is defined as:

[…] a person engaged in an industry affecting commerce who has twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year․ The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State and any agency or instrumentality of a State or a political subdivision of a State, and any interstate agency, but such term does not include the United States, or a corporation wholly owned by the Government of the United States. (Emphasis Added)

If the “twenty or more employees” threshold is not met, workers over 40 are ineligible for ADEA protection. The circuit courts are split on whether the 20-employee threshold only applies to persons, or whether agents of persons, and state entities are included.

The Split

The Seventh Circuit

In Kelly v. Wauconda Park Dist. (7th Cir. 1986), the Seventh Circuit ruled that government entities were encompassed by the 20-employee threshold in 29 U.S.C. § 630(b). The court utilized a two-step process in determining whether government entities had to meet the 20-employee threshold. First, the court looked at whether 29 U.S.C. § 630(b) is ambiguous. If the statute was determined to be ambiguous, then the court would analyze legislative history to guide its decision.

In the first step of the analysis, both parties made arguments about the ambiguity of the statute. Kelly made an argument that the statute excluded government entities, and Wauconda argued that government entities were included by the statute. The court concluded that the statute was ambiguous because it had two reasonable but differing interpretations.

The court then analyzed the legislative history. The lower court ruled “that ‘[t]he legislative history of the 1974 amendment, the similarities between it and a parallel amendment of Title VII, and common sense’ all favor [Wauconda’s] reading of section 630(b).” The Seventh Circuit believed that the analysis of the 1974 ADEA amendment’s history was a valid point, and that Title VII had a large number of parallels to the ADEA. Ultimately, the Seventh Circuit held that the legislative history weighed in favor of the ADEA’s 20-employee threshold applying to government entities.

Therefore, Wauconda Park District, a local government entity, was not an “employer” for ADEA purposes because it did not have the required number of employees as specified in 29 U.S.C. § 630(b).

The Sixth, Eighth, and Tenth Circuits

In EEOC v. Monclova Township (6th Cir. 1990), Palmer v. Arkansas Council On Economic Education (8th Cir. 1998), and Cink v. Grant County (10th Cir. 2015), the Sixth Circuit, Eighth Circuit, and Tenth Circuit, respectively, came to the same conclusion as the Seventh Circuit in Kelly.  Each circuit held that the 20-employee threshold applied to state entities.

The Ninth Circuit

In Guido v. Mount Lemmon Fire Dist. (9th Cir. 2017), the court held that the ADEA definition of “employer” “is deconstructed as follows: The term “employer” means [A—person] and also means (1) [B—agent of person] and (2) [C—State-affiliated entities].” Due to the division of these three categories, the “person” category is the only category of the three that is modified by the “who has twenty or more employees” clause. If this is the case, then “agents of the person” or “state-affiliated entities” would have to comply with the ADEA regardless of meeting the 20-employee threshold.

The court supports their position by claiming that the “person” category is further defined by 29 U.S.C. § 630(a) (The term “person” means one or more individuals, partnerships, associations, labor organizations, corporations, business trusts, legal representatives, or any organized groups of persons), and is narrowed by the “engaged in an industry affecting commerce who has twenty or more employees for each working day” clause. The court also claims that the “state-affiliated entities” category is further defined by “the various types of State-affiliated entities covered, such as a ‘political subdivision of a State’.”

The Equal Employment Opportunity Commission (EEOC) supports the Ninth Circuit’s holding. The EEOC states that when Title VII was amended, Congress was able “to apply clarifying language across multiple definitions of a term.” The clarifying language in question applied to “States and State-related entities, including political subdivisions of a State.” 42 U.S.C. § 2000e. The EEOC believed that Congress could have applied similar language to 29 U.S.C. § 630(b) if it had wanted to, but that Congress chose not to.

The ninth circuit ultimately held that “a political subdivision of a State need not have twenty or more employees in order to qualify as an employer subject to the requirements of the ADEA.”

Looking Forward

Based on the holdings from the various circuits, a state entity may or may not be considered an “employer” under the ADEA’s 20-employee threshold. On February 26, 2018, the Supreme Court granted certiorari to hear the case of Guido v. Mount Lemmon Fire Dist. Thus, the issue may be resolved soon.

For further reading, see what Squire Patton Boggs has to say on the topic.