On the Supreme Court Docket — Guido v. Mt. Lemmon School District: Numerosity Requirements in the ADEA and Other Employment Discrimination Statutes (Part II)

by Bernard Bell — Tuesday, May 15, 2018

This is the second of two posts regarding Guido v. Mt. Lemmon School District,  Dkt. No. 17-587, currently on the Supreme Court docket for the October 2018 Term.  The case involves the applicability of Age Discrimination in Employment Act of 1967’s (ADEA) numerosity requirement, 29 U.S.C.A. § 630(b), to public employers.

In my prior post I laid out the interpretive problem.  Section 630’s text strongly suggests that the numerosity requirement does not apply to public employers, yet that interpretation creates anomalies.  It not only distinguishes between public and private employers for no apparent reason, but also gives the ADEA broader coverage than Title VII.  I discussed a federalism clear statement rule that could lead to rejection of the most natural reading of the statutory text in the interest of safeguarding state and local sovereignty.  This post considers the issue in presented by Guido from more of a policy perspective — should the numerosity requirement apply to public employers on the same basis as it applies to private ones?  Granted, the Supreme Court is unlikely to engage in explicit consideration of such a substantive question, particularly if the parties do not frame any such arguments in terms of drawing inferences regarding congressional intent.

Should the Numerosity Requirement Apply to Public Employers?

Professor Richard Carlson has described the history of numerosity requirements and the justifications offered for including such a requirement in Title VII during the lengthy congressional debate over the Civil Rights Act of 1964.  Richard Carlson, The Small Firm Exemption and the Single Employer Doctrine in Employment Discrimination Law, 80 St. John’s L. Rev. 1197 (2006).  I will enumerate the rationales he unearthed and discuss whether they apply with equal force to public employers.

Prof. Carlson dates the emergence of numerosity requirements to late Nineteenth and early Twentieth Century occupational safety and workers compensation laws.  Id. at 1197-98.  Numerosity requirements continue to be a feature of many, but by no means all. employment laws.  See, Texas Workforce Commission, Thresholds for Coverage Under Employment-Related Laws, accessible athttp://www.twc.state.tx.us/news/efte/thresholds_for_coverage.html ; HR.BLR.com, HR 101: Which Laws Apply to My Company?, accessible at,  https://hr.blr.com/state-comparison-charts/HR-101-Which-Laws-Apply-to-My-Company.

Prof. Carlson identifies four justifications for exempting small employers from Title VII:

“(1) to relieve small firms of the otherwise disproportionate costs they might bear under the new law;

(2) to preserve a right of ‘personal’ relationships beyond government intervention;

(3) to permit racial or ethnic self-help by small firms and family-owned businesses; [and]

(4) to avoid over-extension of the Equal Employment Opportunity Commission’s (“EEOC”) limited resources;”

Carlson, supra, at 1205.  I will discuss each in turn.  Before doing so, I note a fifth justification Prof. Carlson identified, namely that the numerosity requirement would “defuse at least some business opposition to Title VII and preserve enough support for its enactment.” Id. Of course, Guido involves amendments to a different statute, the ADEA, amendments adopted ten years after the debate accompanying Title VII’s passage.  Nonetheless, the presence of this fifth justification does highlight a point that textualists often make, namely that legislation is routinely, perhaps always, incoherent – the only legislative “intent” is the intent to enact the text that the legislative body ultimately adopts, nothing more, nothing less.  See, Bernard W. Bell, Legislative History Without Legislative Intent: The Public Justification Approach to Statutory Interpretation, 60 Ohio St. L. J. 1, 38-39 (1999)(discussing arguments that group choice often cannot embody any coherent underlying purposes).

Relief from Disproportionate Costs. The first justification for a numerosity requirement was relieving small companies, i.e., mom-and-pop enterprises, of compliance burdens and potential litigation.  Carlson notes that “[e]xempt firms . . . tend to be the sort that provide self-employment as much as profits for their owners.”  Id. at 1198-99.  Such small private entities might bear extraordinary costs in seeking to comply with employment laws or address the threat of litigation by disappointed job applicants or discharged employees.  See, Papa v. Katy Indus., 166 F.3d 937, 940 (7th Cir. 1999)(Posner, J.).

But small government entities are not necessarily in the same position as “mom-and-pop” enterprises.  Small government entities are generally creatures of much larger governmental entities, often state governments.  Indeed, municipalities themselves are generally created and have the scope of their authority defined by state legislatures.  See 2 John Martinez, Local Government Law §§13.1-13.3(2008). I have examined the nine federal court cases regarding application of the ADEA’s numerosity requirement to public employers that cite the leading case, Kelly v. Wauconda Park District, 801 F.2d 269 (7th Cir. 1986), including Kelly itself.  Of those cases, three involved an entity related to a municipal government, two involved a relationship to a county government, and three involved a relationship to the state government (or a department of a state government).  One involved the question of whether a township’s workforce should include it zoning board, zoning appeals board, and volunteer firefighters.  The cases reflect the varied and sometimes complex interrelationships between governmental entities on the state and local levels.

These larger governmental entities may exert some control over employment-related decision-making.  State civil service rules may apply to state instrumentalities and even to small municipal governments or larger governments who choose not to create their own civil service rules.  Martinez, supra, at §10.15 at 10-120 (“The jurisdiction of a given civil service commission may be municipal or statewide, depending on the particularities of state law, and its establishment may be mandated or a matter of local option”).  In any event, larger governmental entities certainly have the capacity to advise political subdivisions and instrumentalities.  E.g., New York State Division of Local Government Services, Local Government Handbook 118-19 (6th ed. 2009), accessible at https://www.dos.ny.gov/lg/publications/Local_Government_Handbook.pdf (discussing state agencies that provide “technical assistance to local governments assisting with setting up and operating local personnel programs” and related matters); Hawaii Rev. Stat. § 28-4 (State Attorney General’s duty to advise all public officials free of charge).  These larger entities may perhaps even litigate on behalf of smaller entities, particularly if those smaller entities are state instrumentalities.  See, e.g., Hawaii Rev. Stat. § 28-8.3; Ore. Rev. Stat. § 180.220; Governor James J. Florio, Executive Order #6, accessible at, http://nj.gov/infobank/circular/eof6.htm .

Similar considerations arise when corporations employing fewer that twenty people are affiliated with a family of corporations.  See Papa v. Katy Indus., 166 F.3d at 939-40.  The courts have employed a four-factor test to determine whether an entity satisfies the numerosity requirement by virtue of the aggregate number of people employed by it and related companies.  In particular, courts consider the “interrelation of operations, common management, common ownership, and centralized control of labor relations and personnel” between the smaller entity that would otherwise not satisfy the numerosity requirement and related entities. Id.; Carlson, supra, at 1205-09, 1271-73.  Such a case-by-case approach may not make sense with respect to public entities related to state, county, or municipal governments. That approach will lead to added litigation expense for both the small government entity and its employee — as it will require the parties to litigate the relationship between the employing entity and other governmental entities.  It will also introduce an element of uncertainty which may deprive smaller entities of much of the benefit the numerosity rule seeks to provide; the cautious small government agency will have to comply with the ADEA, given the risk that it might well apply.

In any event, the compliance costs of small government entities is probably less than those of the paradigmatic “mom-and-pop” operation.  And small government entities may have the financial backing of the municipal or state government in ways that make lawsuits less devastating or the need to secure insurance for potential liability much less imperative. Indeed, with respect to the ADEA in particular, small state instrumentalities enjoy state sovereign immunity from damages actions. Kimel v. Forida Board of Regents, 528 U.S. 62 (2000).

Preserving “personal” relationships.  Anti-discrimination laws often seek to avoid infringing on an area of personal choice, such as the choice of whom to invite into one’s home.  Thus the inclusion of “Mrs. Murphy’s Exemption” in the Fair Housing Act (FHA).  The exemption makes the FHA inapplicable to residential housing with four or fewer rental units if the owner resides one of the units. Pub. L. 90–284, Title VIII, 82 Stat. 81, §803(b)(2) (codified at 42 U.S.C. § 3603(b)(2)).  Proponents of Title VII’s numerosity requirement viewed establishing a small businesses as an area of personal choice, at least with respect to employment practices.  For example, some proponents argued that [w]ithin a small firm . . . relations between owners, managers and their employees were like partnerships or other personal associations.” Carlson, supra, at 1261-62.

But this freedom of close association argument is inapplicable to government entities, which are not associations between private individuals.  No individual has the right to treat government as a form of personal association, equivalent to a private social group or private business enterprise.  (Indeed, such private associations have been characterized as “critical buffers between the individual and the power of the state.”  Roberts v. U.S. Jaycees, 468 U.S. 609, 619 (1984).)

It may well be that interpersonal relationships assume importance even in small government agencies.  Nevertheless the current holders of such public positions should not be entitled to hire and fire based on personal predilections that run counter to the government’s commitment to equal treatment of all its citizens.  Indeed, Congress has provided for EEOC review of Title VII claims made by members of a state or local elected official’s personnel staff, 42 U.S.C.A. § 2000e-16c(a)(1)).  Government officials are representatives of “the public,” not of themselves.

Permitting racial or ethnic self-help by small firms and family-owned businesses.  Prof. Carlson notes that Senator Norris Cotton, one prominent proponent of the numerosity requirement, argued that race-based employment decisions by small proprietors could provide a means of self-help for disadvantaged minorities.  Carlson, supra, at 1265-67.  Carlson, while questioning the sincerity of the argument, notes that “the experience of some immigrant communities, where small businesses have created employment opportunities and provided a community-wide economic lift” supports this thesis. Id. at 1266.

This community self-help benefit of the numerosity requirement is also inapplicable to government entities.  In part, the rationale reflects the view that small businesses are an extension of their owner’s personality.  And, the effectiveness of such self-help approaches presumes community cohesion and/or a web of business relationship rooted in a common ethnicity.  But such self-help is fundamentally foreign to the role of government entities.  Government entities may create smaller offices to address problems in particular communities which may be united by ethnicity.  Nevertheless, it seems a stretch to suggest that government offices should be permitted to take into account prohibited factors, such as age, in a way that makes them completely immune from the operation of employment discrimination laws.  Employment discrimination laws probably contain sufficient flexibility to permit government entities to consider unique abilities to relate to a particular target group a specialized office seeks to serve.  A complete exemption from the anti-discrimination laws would probably serve little purpose while creating the possibility for arbitrary official discrimination at odds with society’s basic commitments.

Over-Extension of the EEOC.  In the context of Title VII, Senators wrestled with matching the size and resources that Congress would need to committed to the EEOC and the scope of the new agency’s responsibilities.  Carlson, supra, at 1267-68.  Prof. Carlson notes that Senators who took different positions on where the numerical trigger should be set for the numerosity provision factored their position on that question into their estimates of the necessary extent of enforcement resources that would need to be committed to the agency.  Id.  Of course, most agencies use enforcement guidelines to marshal their resources rather than having such decisions be made by somewhat arbitrary statutory withdrawals of jurisdiction.  See, id. at 1268.  In any event, small public employers may present less of an enforcement challenge for the EEOC’s than small private employers, because their employment decisions are likely to be more formalized.  The procedural requirements with regard to dismissal of public employees, whether federal constitutional “procedural due process” requirements or state or local civil service protections, see See 2 Martinez, supra, at §§10:14, 10:56, 10:57, Osborne M. Reynolds, Jr., Local Government Law §§ 87, 88, 91 (3d ed. 2009), may well ease the EEOC’s enforcement burden.

In short, there is a strong basis for arguing that the numerosity provisions of the ADEA, and probably other employment-discrimination statutes, should not apply to private employers.

Note.  The nine federal court cases regarding application of the ADEA’s numerosity requirement to public employers that cite the leading case, Kelly v. Wauconda Park District, 801 F.2d 269 (7th Cir. 1986) are: (1) Guido v. Mount Lemmon Fire District, 859 F.3d 1168 (9th Cir 2017)(state instrumentality); (2) Cink v. Grant County, 635 Fed. Appx. 470 (10th Cir. 2015)(county sheriff’s office); (3) Palmer v. Arkansas Council on Economic Education, 154 F.3d 892 (8th Cir.1998)(entity related to state department of education and funded by the state); (4) EEOC v. Montclover Township, 920 F.2d 360 (6th Cir. 1990)(township, court refused to count members of zoning board, zoning board of appeals, and volunteer firefighters as town employees); (5) Kelly v. Wauconda Park District, 801 F.2d 269 (7th Cir. 1986)(park district related to municipal government); (6) Holloway v. Water Works and Sewer Bd. of Town of Vernon, 24 F.Supp.3d 1112 (N.D. Ala. 2014)(instrumentality of municipal government); (7) Parker v. Macon County Soil and Water Conservation District, 2010 WL 105721 (C.D. Ill. 2010)(entity associated with Illinois Department of Agriculture, which provided financial support and had some input regarding employees’ salaries); (8) Riley v. County of Pike, 761 F. Supp. 74 (C.D. Ill. 1991)(county state attorney’s office considered distinct from the county, even though county had some budget-related authority and paid some of the state attorney’s office staff); (9) Smith v. Wyatt County Regional Library Bd., 657 F. Supp. 1216 (W.D. Va. 1987)(library board affiliated with a county).

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