On June 19, 2017, the Ninth Circuit Court of Appeals held in John Guido; Dennis Rankin v. Mount Lemmon Fire District, 859 F.3d 1168 (9th Cir. 2017), that political subdivisions of a State do not need to meet the twenty-employee minimum in order to fall under the Age Discrimination in Employment Act’s ("ADEA") scope. The Ninth Circuit decision is particularly significant because it contradicts four other circuit courts that declared that political subdivisions must have at least twenty employees to qualify as an "employer" under the ADEA.

Case Background

John Guido and Dennis Rankin served as full-time firefighter Captains for the Mount Lemmon Fire District ("Fire District"), a political subdivision of the State of Arizona. After they were terminated, Mr. Guido and Mr. Rankin ("Plaintiffs") brought suit against the Fire District, alleging age discrimination under the ADEA.

The Fire District moved for summary judgment on the ground that it was not an "employer" within the meaning of the ADEA because it did not meet the twenty-employee minimum requirement contained in the definition of "employer" in section 630(b). The district court granted the Fire District’s motion for summary judgment.

On appeal, the Plaintiffs argued that the ADEA’s twenty-employee minimum requirement did not apply to a political subdivision of a State. They asserted that because of its status as a political subdivision, the Fire District was an "employer" as defined by the ADEA .

The Court of Appeals’ Analysis

The Ninth Circuit Court of Appeals ruled in the Plaintiffs’ favor by relying on a plain interpretation of the statute’s language. The Ninth Circuit explained that the definition of "employer" in the ADEA unambiguously created three distinct categories of employers. Section 630(b) reads:

"The term ‘employer’ means 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 . . . ."

The Ninth Circuit reasoned that the word "also," adds "another definition to a previous definition of a term—it does not clarify the previous definition." Therefore, the Ninth Circuit concluded that the twenty-employee requirement is limited to the first definition of employer and does not apply to a political subdivision. In addition, the court stated: "If Congress had wanted to include the second sentence definitions of employer in the first sentence, it could have used the word ‘include’ … The word ‘also’ is not used in common speech to mean ‘includes.’"

The Ninth Circuit further explained that even if the statute were ambiguous, the best reading of the statute would be that the twenty-employee minimum does not apply to a political subdivision. In support, the Ninth Circuit cited the language used by Congress in the 1972 amendment to Title VII of the Civil Rights Act of 1964. In the 1972 amendment, Congress extended Title VII protections to States and State-related entities, and made clear that the twenty-employee minimum applied to political subdivisions:

(a) The term "person" includes one or more individuals, governments, governmental agencies, political subdivisions, labor unions, partnerships, associations, corporations, legal representatives, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees in cases under Title 11, or receivers.

(b) The term "employer" means a person engaged in an industry affecting commerce who has fifteen or more employees …

The Ninth Circuit reasoned that Congress used different language in the 1972 amendment to Title VII than it used in the 1974 ADEA amendment to extend coverage to political subdivisions, thereby changing the ADEA’s meaning relative to Title VII, and "such Congressional choice must be respected." In other words, by using different language in the ADEA Amendment, Congress was signaling a desire to do something different than it had done with the 1972 amendment.

The court also rejected the argument that the statute’s legislative history supported the imposition of the twenty-employee minimum to a political subdivision. In Kelly v. Wauconda Park District, 801 F.2d 269 (7th Cir. 1986), the Seventh Circuit Court of Appeals reasoned that section 630(b) was ambiguous because it was subject to multiple "fair and reasonable" interpretations. The Kelly court relied on legislative history to support its conclusion that the ADEA should be similarly extended to include the twenty-employee minimum because "it is difficult to see why one set of rules should apply to private industry and varying standards to government."

The Ninth Circuit disagreed. It reiterated that the statute was unambiguous and noted that the portion of the legislative history relied upon by the Kelly court "never states that the twenty-employee minimum should apply to political subdivisions." Therefore, the legislative history did not support the Kelly court’s conclusion.

In short, the Ninth Circuit held that the twenty-employee minimum does not apply to political subdivisions. Therefore, it determined that the Fire District, a political subdivision, was an "employer" subject to the ADEA.

Significance of Guido Decision to Employers

In the Ninth Circuit, public employers of any size are subject to the ADEA. The U.S. Supreme Court may take up this issue in the future in order to address the split between the circuits. For now, public employers should review severance agreements to ensure a provision is included that releases the employer from potential ADEA claims.