By Marshall H. Tanick
BridgeTower Media Newswires
Baby boomers were dealt a stunning setback a few weeks ago in protecting themselves from discrimination in the workplace due to their age.
The devastating defeat was handed down in mid-December by the 8th U.S. Circuit Court of Appeals, which upheld dismissal of a lawsuit brought by an aged attorney challenging termination from his position as a partner in a mega-law firm under its mandatory age 70 retirement policy.
The 72-year-old lawyer, who had been with his St. Louis-based law firm for 45 years, was unsuccessful in challenging the policy under the federal Age Discrimination in Employment Act, 29 U. S. C. § 621.
Pursuing age-discrimination claims has traditionally been one of the hardest types of workplace bias cases for claimants to win. The U.S. Supreme Court, composed of jurists averaging in their late 60s, has not been kind to claimants in their age categories, resulting in the law not working well for aging employees.
The ruling of a three-judge panel of the 8th Circuit just made it harder by ruling that the ADEA does not apply to equity partners in law firms in Von Kaenel v. Armstrong Teasdale, 943 F.3d 1139 (8th Cir. 2019). The tribunal held that the septuagenarian attorney was not covered by the 1967 measure prohibiting age-based discrimination in employment because he was not deemed an "employee" under the statute. It reasoned that he did not come within that category by applying a multi-factor analysis that turned on his participation in management decisions and annual payment of a share or percentage of the firm's profits under the firm's "complicated" compensation formula.
It did so by using the "fact-intensive" standard established by the Supreme Court in Clackemas Gastroenterology Associates v. Wells, 538 U.S. 440 (2003), which consists of multiple considerations derived from common law and principles of agency. Although "no one factor [is] decisive" under Clackemas, the quality and quantity "of control" exercised by the claimant over the business is central to the determination.
Give guidance
The ruling received some modest reporting in law and business publications. Despite its insular context, the case deserves even more attention because of its far-reaching implications beyond the boundaries of the 8th Circuit, the particularities of law firms, and the circumstances of ageism alone.
The court described its ruling as one "of first impression," meaning the issue had not been adjudicated previously. Although it arose in St. Louis, where the 260-member law firm is headquartered, it constitutes a binding precedent for employers and those who work for them throughout the seven-state area within the circuit. As the first of its kind, the decision could give guidance to courts in other parts of the nation to reach similar outcomes as comparable cases occur in major law firms in different parts of the country.
The potential effects of the case are enormous. The reasoning of the ruling is not restricted to big law firms or to compulsory retirement programs. The decision barring age-discrimination claims could be applied to partners or principals of a myriad of businesses providing professional services, such as medical clinics, accounting firms, architecture and land planning companies, financial services institutions, as well as small and midsize businesses, often composed of family members and other kin, among others. By not treating partners as "employees" covered by the act, the ruling would permit other forms of disparate treatment against older employees, above the 40-year threshold in the ADEA. That could extend to refusals to promote members to partnership status due to their age, compensation differentials, or other disparate age-related treatment, even discharge.
Indeed, based upon the premise that partners are not protected by the ADEA, law firms need not even mask their decision-making discharge under the veil of a mandatory retirement program. Setting aside the niceties, they could simply tell aging partners: "We're firing you because you're too old" or, as a corollary, refuse to elevate attorneys to partnership status because of their age or, for that matter, other illegitimate and biased bases.
Immense impact
But beware, baby boomers, there are even more ominous signs ahead.
The outcome of the case could be imposed on other federal anti-discrimination laws, which are linked to an employer-employee relationship, including laws barring differential treatment based on gender, religion, race, disability, and additional otherwise-protected categories.
The impact stemming from the ruling could be immense. It may affect a large number of current baby boomers, those born between 1946 and 1964. Although demographically declining in overall relationship to other age groups as some die, the boomers still constitute a large group. Boomers consist of about 75 million Americans, more than 20% of the overall population, although the 8th Circuit court ruling also would impact those approaching their senior years and even the next crop reaching that plateau in the future.
Because the federal age statute is inapplicable, there's not much those aging attorneys can do about it.
Or can they?
Assorted alternatives
Boomers could invoke an assortment of alternatives to combat this case and its ominous implications.
As a threshold matter, a request could be made for reconsideration to the panel or for an en banc hearing by the full circuit tribunal.
Depending upon that outcome, an appeal by certiorari could be taken to the U.S. Supreme Court seeking to overturn the Von Kaenel ruling. But the high court generally eschews reviewing intermediate appellate rulings until there have been conflicting rulings, which may be in the works as other law firm lawsuits percolate in the lower courts.
Even if the jurists in the nation's capital take the case, there is no assurance they would overturn it and, in fact, a baby boomer appeal could boomerang. That tribunal has been notoriously hostile to ADEA claims in recent years, rejecting a number of challenges seeking to broaden its scope and an appeal could yield an affirmance that would make the decision binding throughout the country in virtual perpetuity. E.g. General Dynamics Land Systems, Inc. v. Cline, 540 U. S. 581 (2004) (ADEA does not extend to workers below age 40). The EEOC, somewhat hesitatingly, weighed in three years later with the issuance of its own guidelines, derived from the General Dynamics case, eschewing enforcement of "reverse discrimination" cases for pre-40 year old workers.
Another alternative is to seek to change the law by passage of legislation in Congress and approved by President Trump.
Good luck on that one!
A measure of that type may have political appeal benefiting older Americans, a large and high voter-turnout group. But even if approved by the more worker-friendly Democratic-controlled House of Representatives, it is highly unlikely that legislation of that type could break through the D.C. deadlock or make it past Senate Majority Leader Mitch McConnell and his business-friendly Republican colleagues or be approved by President Trump, whose administration has been adverse to employee rights in historically epic proportions.
Age aggrieved
For those aggrieved by age discrimination, the ruling is not necessarily cataclysmic. It only applies to partners or principals of enterprises, not to rank-and-file wage earning so-called W-2 employees who are not involved in major management decisions or participating in sharing of business profits beyond their ordinary salaries and modest bonuses.
But those impacted by the case could seek refuge under the state Human Rights Act, which contains parallel anti-age-discrimination protection unless for an unspecified bona fide qualification as well as proscribing actions by employers that interfere with pension rights and remedies. Aggrieved attorneys or others could also make claims under local anti-discrimination laws.
Those concerned about age discrimination in business operations also could try to incorporate anti-discrimination provisions in organic documents like by-law or other contractual arrangements although management decision-makers may be disinclined to hem in their authority.
So, as the baby boomers reach and exceed retirement age, individuals in the workforce need to be wary of further infringements.
They hope that the recent Von Kaenel age discrimination case is not a harbinger for more restrictions on their rights, while law firms and those who manage them and owners of other professional services businesses may find it an encouragement to affording greater flexibility in their decision-making, until they are on the wrong side of those determinations.
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Marshall H. Tanick is an attorney with the Twin Cities law firm of Meyer Njus Tanick.
