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Recent ruling on workplace age bias could have an enormous impact

The decision involved people who are partners or principals. But the reasoning of the ruling is not restricted to big law firms or to compulsory retirement programs at them or other enterprises.

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Photo by Bill Oxford on Unsplash

One of the myriad ways that President Donald Trump is changing America is his appointments to the federal judiciary. As of year’s end, he had nominated and the Republican-controlled Senate had confirmed 187 federal judges.

The two that attracted the most attention, naturally, were the pair placed on the U.S. Supreme Court, Neil Gorsuch and Brett Kavanaugh, who are turning the tribunal in an even more conservative direction than it has been veering in recent years.

While they make up 22% of the Supreme Court’s nine members, it’s at the lower levels of the federal judicial system that the president and his Senate allies are having their most sizable impact. The Supreme Court only decides about 70 cases a year, although many of them are quite important, along with the decisions it makes declining to review lower court decisions and leaving them in place.

Trump has named 133 judges to the federal trial courts, including two here in Minnesota, two others to specialty tribunals and an enormous 50 to the federal Circuit Courts of Appeal, 25% of their total composition, including one on the Eighth Circuit, which oversees federal litigation in Minnesota and six other states west of the Mississippi River in the middle of the country.

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The Trump appointee to that 11-member contingent, by the way, is a Minnesotan, David Stras, elevated two years ago this month from the Minnesota Supreme Court and a frequently mentioned candidate for a future spot on the Supreme Court.

These jurists on the lower federal tribunals, particularly the appellate ones, issue more rulings affecting more people, businesses, and other organizations than the Supreme Court, where the glare is greatest.

They are doing so with a decidedly conservative bent that closely emulates the views of the president and his administration and, because of their lifetime appointments, these jurists mostly a relatively young lot, will do so for many years ahead.

The unmistakable significance of those appellate tribunals was reflected in a ruling of the Eighth Circuit in mid-December. Although not decided by any Trump appointees, it has the flavor of an anti-employee outlook that characterized the way that tribunal has drifted from its halcyon days of being regarded as one of the most employee-hospitable ones in the country to one of the least favorable. It also portends how that tribunal, and others around the nation, are likely to lean the long after the president and his administration are gone.

A stunning blow

The case, von Kaelen v Armstrong Teasdale, dealt a stunning pre-holiday blow to baby boomers in Minnesota and some neighboring states in protecting themselves from age discrimination in the workplace. The decision threw out a lawsuit brought by an attorney challenging termination from his position as a partner in a mega-law firm under its mandatory 70-year-old retirement policy.

Pursuing age discrimination claims has traditionally been one of the hardest types of workplace bias cases for claimants to succeed. The U.S. Supreme Court, composed of jurists averaging in the late 60s, has not been kind to claimants in their age categories.

The Eight Circuit appellate, headquartered in St. Louis with occasional forays into the Twin Cities, just made it harder by ruling that the Federal Age Discrimination In Employment Act (ADEA) does not apply to partners in law firms. It held that the septuagenarian attorney, who had been with the long-established firm for 42 years, was not covered by the measure prohibiting age-based discrimination in employment because he was not deemed an “employee” protected under the measure. It reasoned that he did not come within that category because of a multifactor 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.

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Effects could be enormous

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 centered, because the tribunal spans a seven-state area in the center of the country, it constitutes a binding precedent for employers and those who work for them throughout the seven-state area, including Minnesota. As a unique ruling, it could give guidance to courts in other parts of the nation to reach similar outcomes if comparable cases occur elsewhere.

Marshall H. Tanick
Marshall H. Tanick
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 at them or other enterprises. 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 mid-sized 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 because of their age, compensation differentials, or other disparate age-related treatment, even discharge.

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 here in Minnesota and elsewhere. It may affect a large number of current baby boomers, those born between 1946-1964. Although demographically declining in overall relationship to other age groups as some die, the Boomers still comprise a large group. It consists of about 75 millions Americans, more than 20% of the overall population, and some 30% of the workforce in Minnesota, although The Eighth Circuit court ruling also would impact those reaching their senior years in the future.

Alternatives could be accessed

Boomers can access a number of alternatives to combat this case and its ominous implications.

An appeal could be taken to the U. S. Supreme Court seeking to overturn the von Kaenel ruling. But the Supreme Court generally eschews reviewing intermediate appellate rulings until there have been conflicting rulings, which may take years to develop. Even if it takes the case, there is no assurance the justices 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.

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Another alternative is to seek to change the law by passage of legislation. Good luck on that effort!

A law of that type may have political appeal benefiting older Americans, a large and high-voting-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 make it past Senate Majority Leader Mitch McConnell and his business-friendly Republican colleagues or be signed by Trump, whose administration has been averse to employee rights in epic proportions.

Not necessarily cataclysmic

For Minnesotans — and others — 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-discrimination provisions or for those working in Minneapolis, the city’s civil rights ordinance. However, the courts in this state generally follow the reasoning of federal discrimination cases in interpreting the Minnesota measure.

But that tendency is not universal, especially in age bias litigation. For example, the courts here have construed the state age law to extend to individuals of any age, even those younger than the 40-year federal limit. Moreover, Minnesota is one of a handful of states that allow so-called reverse discrimination claims for youthful employees asserting improper treatment because of their age, which is not covered by the federal law.

So, as the baby boomers reach and exceed retirement age, individuals in the workforce in Minnesota need to be wary of further infringements. They hope that the recent von Kaenel  case is not a harbinger for more restrictions on their rights.

Marshall H. Tanick is a Twin Cities constitutional and employment law attorney and historian.

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