The Gallery: U.S. Supreme Court Strikes Another Chink in the Governmental Immunity Armor

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This month, the United States Supreme Court made a ruling that is sending shock waves through the state and local government sector. On November 6, in the case Mount Lemmon Fire District v. Guido Et Al. the Court ruled the Age Discrimination in Employment Act (ADEA) applies to small state offices with fewer than 20 employees.

This hotly contested case arose when the Mount Lemmon Fire District terminated the employment of two firefighters who were over the age of 40. Claiming age discrimination, the two officers fought all the way to the United States Supreme Court and won.

Similarly entrenched in its belief, the fire district argued it was exempt from the requirements of the ADEA. As an employer of fewer than 20 employees, it believed it should be exempt from the ADEA in the same way private sector employers are exempt if they have fewer than 20 employees. The ADEA provides:

“The term ‘employer’ means 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 . . . .” 29 U. S. C. §630(b). Initially, both Title VII of the Civil Rights Act of 1964 and the ADEA applied solely to private sector employers. In 1974, Congress amended the ADEA to cover state and local governments.”

At issue in this case was whether the amendment by Congress to extend the ADEA to state and local governments only applied to governmental bodies that also met the threshold of 20 employees as is the case in the private sector. Seemingly having no mercy for the fire district, the U.S. Supreme Court answered with a resounding yes. The ADEA applies to all forms of state and local government regardless of size.

If you work in state or local government, this decision may shock you. First, because you had no idea the ADEA applies to you. Second, because the Court clearly decided in favor of a protected class rather than the governmental body traditionally cloaked in governmental immunity.

This suggests governmental bodies are more vulnerable than ever before. In order to protect yourself, you must accelerate your commitment to compliance with consumer laws or risk costly, protracted litigation fought at the expense of your constituents and without an expectation of prevailing.

Examples of laws which do not specifically exempt state and local governmental bodies from compliance, and therefore create risk, include:

  • Telephone Consumer Protection Act – Federal statute limiting the use of automatic telephone dialing systems, prerecorded messages, text messaging and artificial voice to communicate with a consumer by way of their mobile phone without the express consent of the consumer. Enforced by way of private right of action.
  • Fair Credit Reporting Act – Federal statute controlling how and what consumer data may be reported to a consumer reporting agency, detailing the conditions that must be satisfied before a consumer credit report may be pulled and describing the responsibilities of a credit consumer reporting agency. Enforced by way of private right of action.
  • Health Insurance Portability and Accountability Act – Federal statute which does the following: Provides the ability to transfer and continue health insurance coverage for millions of American workers and their families when they change or lose their jobs; reduces health care fraud and abuse; mandates industry-wide standards for health care information on electronic billing and other processes; and requires the protection and confidential handling of protected health information. Enforced by regulatory bodies. No private right of action.
  • Unfair, Deceptive or Abusive Acts and Practices Act section of the Consumer Credit Act – Section of the Dodd Frank Consumer Credit Act that prohibits parties from engaging in acts or omissions which result in harm to consumers because they are unfair or abusive. Enforced by regulatory bodies. No private right of action.
  • Electronic Funds Transfer Act – Federal law that protects consumers engaged in the transfer of funds through electronic methods. Includes the use of debit cards, automated teller machines and automatic withdrawals from a bank account.

Although Mount Lemmon Fire district v. Guido et. al. did not turn specifically on the narrow question of governmental immunity, the decision should be a call to action for state and local governments. The Supreme Court is the highest court in the land and this week it clearly exhibited a willingness, if not an outright appetite, to interpret a Federal statute against the interest of the governmental body in favor of the consumer.  Compliance clearly matters.

Rozanne Andersen, Cheif Compliance Officer, Ontario Systems

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