Damon Kitchen, with Constangy, Brooks, Smith & Prophete in Jacksonville.

For more than a generation, employees under the age of 40 at most U.S. businesses, nonprofits and government organizations have been protected by the Age Discrimination in Employment Act of 1967 (ADEA). The law prohibits discrimination on the basis of age in hiring, promotion, discharge, compensation, or terms, conditions or privileges of employment. For nearly 50 years, courts throughout the nation had interpreted the ADEA's 20 employee coverage threshold as applying to state and local government entities, including municipalities, counties and school boards. But as of late 2018, this is no longer the case.

In November, the U.S. Supreme Court handed down its opinion in Mount Lemmon Fire District v. Guido, holding 8-0 that the ADEA applies to all state and local governmental employers, regardless of the number of employees.

The case involved two of the oldest employees of a municipal fire district in Arizona who claimed age discrimination after the department laid off several employees due to unanticipated budget shortfalls. The Equal Employment Opportunity Commission (EEOC) determined that the two employees were victims of age-based discrimination. However, a federal district court determined that the fire district was not subject to the ADEA because it employed fewer than 20 individuals. Accordingly, the district court granted the fire district's motion for summary judgment. The employees then appealed the district court's ruling to the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit reversed the district court's ruling and held that the ADEA's 20-employee coverage threshold did not apply to public entities like the fire district, and that such public entities were employers for purposes of the ADEA regardless of the number of employees. Unhappy with that ruling, the fire district petitioned the U.S. Supreme Court to review the Ninth Circuit's decision. Although the Supreme Court granted the fire district's petition, it agreed with the Ninth Circuit and upheld its decision. Justice Ruth Bader Ginsburg wrote the opinion. Justice Brett Kavanaugh took no part in the consideration or decision of the case.

According to the court, Section 630(b) of the ADEA has two separate categories of “employer.” Employer is defined as “a person engaged in an industry affecting commerce who has 20 or more employees,” and “also means … a state or political subdivision of a state.” The court noted that the language “also means” should be read as connoting “in addition to.” Accordingly, the court ruled that the 20-employee minimum applicable to private sector employers did not apply to state or local governmental employers.

The fire district unsuccessfully argued that the ADEA should be interpreted in accordance with Title VII of the Civil Rights Act of 1964, which applies to states and political subdivisions with 15 or more employees. In rejecting the employer's argument, the court noted that, when enacted, neither Title VII nor the ADEA applied to state or local governments at all. Congress amended Title VII in 1972 and the ADEA in 1974 to apply to state and local governments, but in doing used different language.

Notably, the 1972 amendments to Title VII did not change the definition of the term “employer” from meaning “a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.” Though the new language in the amendments changed the definitions of “person” and “industry affecting commerce.” Specifically, Congress changed the Title VII definition of “person” to include “governments, governmental agencies, and political subdivisions,” and the definition of “industry affecting commerce” to include “any governmental industry, business, or activity.” As a result of these two definitional changes, all governmental entities are Title VII “employers” if they have 15 or more employees.

By contrast, the 1974 amendments to the ADEA did not alter the existing definitions of “person” or “industry affecting commerce” as set forth in that statute. Instead, Congress changed the ADEA definition of “employer” as described above. Thus, the Supreme Court found that the amendments to Title VII and the ADEA were significantly different, and that the ADEA—unlike Title VII—has no minimum-employee threshold if the employer is a state or local governmental entity.

So, what does this mean for small government entities?

The impact of the court's decision in Mount Lemmon is expected to be considerable, as state and local governmental employers with fewer than 20 employees are now subject to suit under the ADEA. Although the Eleventh Amendment to the U.S. Constitution will shield state employers of all sizes from private ADEA actions, state employers with fewer than 20 employees will be subject to age discrimination lawsuits filed by governmental entities such as the Equal Employment Opportunity Commission.

Moreover, because Eleventh Amendment immunity does not apply to local governmental entities such as municipalities, counties and school boards, the Mount Lemmon decision exposes those local governmental employers with fewer than 20 employees to suit under the ADEA from private and governmental plaintiffs alike.

Smaller municipal and county government agencies should carefully review and revise their anti-discrimination policies, severance and settlement policies, and management training procedures to make sure they are minimizing the risk of a costly and time-consuming age discrimination lawsuit.

Damon Kitchen is a partner with Constangy, Brooks, Smith & Prophete in the firm's Jacksonville, Florida office. His practice focuses on labor and employment litigation and defense, and he can be reached at [email protected].