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Equity Law Partner Not Entitled to ADEA Protection

Armstrong Teasdale LLP required all the firms’ partners to sign a partnership agreement that included a mandatory retirement provision. Equity partners were required to retire at 70 years of age but they were entitled to severance benefits for the two years following that retirement so long as they did not engage in the practice of law. When Joseph von Kaenel retired at 70 as required, he continued to practice law. Thus, he did not receive his severance payments. Kaenel filed suit, alleging that his forced retirement violated the Age Discrimination in Employment Act (ADEA).
The Eighth Circuit Court of Appeals considered Kaenel’s employment at the firm. To be protected by the ADEA, Kaenel had to be an employee. For guidance, the appellate court relied on a Supreme Court decision addressing whether shareholder-director physicians were employees within the meaning of the Americans with Disabilities Act. The criteria set forth by the Supreme Court required consideration of various factors, including whether the organization may hire and hire the individual, the extent the organization supervised the individual’s work, whether the person reported to someone higher in the organization, whether the parties intended for the person to be an employee, and whether the person shared in the profits, losses and liabilities of the company.
Under Kaenel’s circumstances, he was not an employee. Among the factors considered by the court: he had to make a capital contribution and sign a partnership agreement, he was able to vote on changes to the agreement (including the mandatory retirement provision), he shared in the firm’s profits and losses, his health insurance and 401K contributions were deducted from partner distributions, his practice group leader did not review his work, and he could only be expelled from the firm by a vote of the partners or the mandatory retirement provision. With these facts, the circuit court concluded that Kaenel was not an employee and thus not entitled to bring a claim under the ADEA.