A Political Entity Can Be Liable, No Matter How Small: Supreme Court Holds ADEA Still Applies to Small County EmployerCan small municipalities make decisions based on age? Not according to the United States Supreme Court, which recently resolved a circuit split on the question of whether the Age Discrimination in Employment Act (ADEA) applied to state and federal political entities with fewer than 20 employees. In Mount Lemmon Fire District v. Guido, a unanimous court found that the ADEA applies to all federal and state entities, regardless of the size of those entities’ workforce.

Mount Lemmon Facts and the Supreme Court’s Rationale

To resolve a budget shortfall, Mount Lemmon terminated its two oldest firefighters, both of whom were over age 40. Those firefighters filed suit in federal court, alleging their termination violated the ADEA. Mount Lemmon moved to dismiss the lawsuit, arguing the ADEA did not apply to it because it had fewer than 20 employees. The district court agreed. The Ninth Circuit Court of Appeals reversed the district court, finding that the ADEA applied. Because the Sixth, Seventh, Eighth, and Tenth Circuits previously found otherwise, the Supreme Court granted review of the case, siding with the Ninth Circuit’s interpretation of the ADEA.

By way of background, the ADEA initially applied to private sector employers with 20 or more employees. In 1974, Congress amended the ADEA to cover state and local governments. The amended ADEA defined a covered “employer” as:

[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.

Prior to the Mount Lemmon ruling, smaller political entities were able to argue that the numerical threshold of 20 employees for ADEA claim exposure applied to them as it did private employers. The Supreme Court rejected that argument, finding that the ADEA’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 State or political subdivisions with no attendant numerosity limitation.”

The Supreme Court also found that the ADEA’s 20-employee threshold did not apply to federal employers either. Therefore, all political entities, regardless of size, are subject to potential ADEA claims.

Seven justices joined the opinion, which was authored by Justice Ruth Bader Ginsburg, with Justice Brett Kavanaugh not participating.

Takeaways

Although this case applies to small political subdivisions, it is a good reminder for everyone to be careful about potential age or other discrimination claims related to reductions in force. We don’t have any information on what criteria Mount Lemmon used to pick these two firefighters to lay off, but it probably was not their age. The fact that the terminated employees were the oldest in the department was likely a coincidence. So, when looking to save some money and balance the budget, employers need to keep an eye on whether the decisions look like discrimination (age or otherwise) and be sure they can defend the decisions. Your employment counsel can help.