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COMPANIES WITH FEWER THAN 15 EMPLOYEES CAN BE SUBJECT TO FEDERAL ADA CLAIMS


Employers with fewer than 15 employees generally are not covered by Title VII of the Civil Rights Act of 1964 or the Americans With Disabilities Act ("ADA"). In Buchanan v. Watkins & Latofsky, LLP, __ F. 3d __ (9th Cir. Feb. 14, 2022), the Ninth Circuit Court of Appeals held that because Title VII and the ADA include the same 15-employee threshold and statutory enforcement scheme, the "integrated enterprise doctrine" applicable in Title VII cases applies equally under the ADA. Under this doctrine, a plaintiff can bring a claim if she can establish that the defendant is so interconnected with another employer that the two form an integrated enterprise, and the integrated enterprise collectively has at least 15 employees.

1. Background

Two attorneys, who are licensed to practice in Nevada and California, owned and were the only partners of W & L Nevada. Likewise, they owned and were the only partners of Watkins and Letofsky, a California limited liability partnership. Considering factors of interrelation of operations, common management, centralized control of labor relations, and common ownership or financial control, the Ninth Circuit concluded that the plaintiff in the ADA case, Buchanan, established a genuine issue of material fact whether the two offices were an integrated enterprise.

2. Integrated Enterprise Test Under The ADA

The ADA applies to employers with 15 or more employees. In interpreting the analogous 15-employee requirement in Title VII, the Ninth Circuit has held that even when a defendant has fewer than 15 employees, a plaintiff can bring a statutory claim if she can establish that (1) defendant is “so interconnected with another employer that the two form an integrated enterprise” and (2) the integrated enterprise collectively has at least 15 employees. In the Title VII context, courts consider the following four factors to determine whether two entities are an integrated enterprise: (1) interrelation of operations; (2) common management; (3) centralized control of labor relations; and (4) common ownership or financial control.

The court recognized that the statutory scheme and language of the ADA and Title VII are identical in many respects. Because both statutes include the same 15-employee threshold and statutory enforcement scheme, the court held that the integrated enterprise doctrine applied under Title VII applies equally under the ADA.

Based on the facts in the case before it, the Ninth Circuit determined that a jury could reasonably find that all four factors suggest an integrated enterprise. Accordingly, it reversed the district court’s grant of summary judgment for the employer on the plaintiff’s ADA claims.

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About The Author

Richard J. Simmons is a Partner in the law firm of Sheppard, Mullin, Richter & Hampton LLP in Los Angeles. He represents employers in various employment law matters involving litigation throughout the country and general advice regarding state and federal wage and hour laws, employment discrimination, wrongful discharge, employee discipline and termination, employee benefits, affirmative action, union representation proceedings, and arbitrations. Mr. Simmons received his B.A., summa cum laude, from the University of Massachusetts, where he was a Commonwealth Scholar and graduated in the Phi Kappa Phi Honor Society. He received his J.D. from Berkeley Law at the University of California at Berkeley where he was the Editor-in-Chief of the Industrial Relations Law Journal, now the Berkeley Journal of Employment and Labor Law.

Mr. Simmons argued the only case before the California Supreme Court that produced a victory for employers and business in 2018. He was recently recognized as the Labor and Employment Attorney of the Year by the Los Angeles Business Journal and was inducted into the Employment Lawyers Hall of Fame. He has lectured nationally on wage and hour, employment discrimination, wrongful termination, and other employment and labor relations matters. He is a member of the National Advisory Board to the Berkeley Journal of Employment and Labor Law, published by Berkeley Law at the University of California at Berkeley. He was also appointed by the California Industrial Welfare Commission as a member of three Minimum Wage Boards for the State of California.