[Senate Report 107-142]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 345
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-142

======================================================================



 
             OLDER WORKERS' RIGHTS RESTORATION ACT OF 2001

                                _______
                                

                 April 15, 2002.--Ordered to be printed

                                _______
                                

   Mr. Kennedy, from the Committee on Health, Education, Labor, and 
                   Pensions, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 928]

    The Committee on Health, Education, Labor, and Pensions, to 
which was referred the bill (S. 928) to amend the Age 
Discrimination in Employment Act of 1967 to require, as a 
condition of receipt or use of Federal financial assistance, 
that States waive immunity to suit for certain violations of 
that Act, and to affirm the availability of certain suits for 
injunctive relief to ensure compliance with that Act, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and summary..............................................2
 II. Background and history of the legislation........................3
III. Section-by-section analysis......................................3
 IV. Explanation of the bill and committee views......................6
  V. Cost estimate...................................................10
 VI. Regulatory impact statement.....................................11
VII. Application of law to the legislative branch....................11
VIII.Minority views..................................................12

 IX. Changes in existing law.........................................16

                         I. Purpose and Summary

    Age discrimination is a serious and persistent problem 
nationally, including among State agencies. The Federal 
prohibition against age discrimination in employment by the 
States was established by the 1974 amendments to the Age 
Discrimination in Employment Act of 1967 (ADEA), and has been 
upheld by the Supreme Court.
    In Kimel v. Florida Board of Regents, the Supreme Court 
held that Congress lacked the power to subject States to suit 
under the ADEA. As a result of this decision, state employees 
who are victimized by age discrimination cannot sue to 
vindicate their Federal rights. States are immune from suit 
under the ADEA unless they have explicitly consented to be sued 
or unless the Equal Employment Opportunity Commission brings 
suit on behalf of the victim.
    Kimel created a serious loophole in existing civil rights 
protections. Unlike similar victims of age discrimination 
employed by the private sector and local and Federal Government 
agencies, State employees after Kimel lack a right of private 
action under Federal law to redress age discrimination against 
them. While most States do have State laws prohibiting age 
discrimination, these laws do not replace the consistency of 
the protections, rights and remedies afforded by Federal law. 
For example, the substance of some State laws is less 
protective than the ADEA; some States provide less generous 
remedies.
    S. 928, the Older Workers' Right Restoration Act of 2001, 
is designed to address this loophole. The bill provides that 
State programs and activities that accept Federal funds will 
thereby waive their immunity to Federal suit by employees of 
those programs who claim that they have been the victims of age 
discrimination. The Act also confirms that actions for 
equitable relief against State officials in their official 
capacity remain available for all State employees under the 
ADEA.
    S. 928 does not create new duties for States. States are 
now--and have been for more than 25 years--prohibited from 
discriminating against their employees on the basis of age. S. 
928 simply restores the remedies that State employees were 
afforded before the Kimel decision and that all other employees 
protected by the ADEA enjoy. S. 928 was modeled on numerous 
other civil rights statutes, including Title VI of the Civil 
Rights Act of 1964 and the Rehabilitation Act of 1973, that use 
similar approaches to guarantee that Federal funds will not be 
used to subsidize discrimination.
    S. 928 is intended to ensure that State workers--like all 
other workers covered under the Age Discrimination in 
Employment Act--have adequate remedies when they are the 
victims of unlawful conduct. The committees believes that no 
one should be subjected to discriminatory hiring, firing or 
other job action based on age or any other characteristic that 
is unrelated to job performance. Age discrimination wastes 
valuable talent and hurts morale. S. 928 will afford to State 
employees the full range of remedies and procedures available 
to redress such discrimination when it occurs.

             II. Background and History of the Legislation

    In 1967, Congress outlawed age discrimination in employment 
in the private sector by passing the Age Discrimination in 
Employment Act. In 1974, recognizing that employees of State 
government agencies were also often subject to pervasive and 
arbitrary age discrimination, Congress extended the Act to 
cover State governments. For more than 25 years, State 
employees were protected from age discrimination, and had the 
same remedies as all other employees covered by the law.
    But in Kimel v. Florida Board of Regents, decided last 
year, the Supreme Court held, 5-4, that Congress lacked the 
constitutional authority to subject States to suits by 
individuals claiming violations of their rights under the ADEA. 
This decision reversed the long-standing interpretation of the 
law--including by 6 of the 8 Federal circuit courts to have 
considered the question--that State employees were entitled to 
the remedies and procedures provided to all other employees 
protected under the ADEA.
    The constitutional underpinnings--as well as the impact--of 
the Kimel decision were addressed in detail at a hearing held 
by this committee on April 4, 2001. At that hearing, entitled 
``States' Rights and Federal Remedies: When Are Employment Laws 
Constitutional?,'' committee members heard from Dr. J. Daniel 
Kimel, a professor at Florida State University and the 
plaintiff in the Kimel case; Michael H. Gottesman, Professor of 
Law at Georgetown University Law Center; Marci A. Hamilton, 
Visiting Professor of Law at New York University School of Law; 
and David Strauss, Harry N. Wyatt Professor of Law at the 
University of Chicago Law School. Each of the witnesses 
confirmed that the approach taken by S. 928 is constitutional.
    S. 928 was introduced on May 22, 2001 and is virtually 
identical to S. 3008, the version of the bill introduced by 
Senators Jeffords, Kennedy and Feingold in the 106th Congress. 
On September 13, 2001, the Senate Committee on Health, 
Education, Labor, and Pension, acting in Executive Session, 
ordered S. 928 reported by a vote of 12 to 9.

                    III. Section-by-Section Analysis


Section 1. Short title

    Section 1 provides that the Act may be cited as the ``Older 
Workers' Rights Restoration Act of 2001.''

Section 2. Findings

    Section 2 sets forth Congressional findings.
    Section 2(1) states that the Age Discrimination in 
Employment Act has prohibited States from discriminating on the 
basis of age since 1974, more than 25 years ago. The Supreme 
Court has upheld Congress' constitutional authority to apply 
these prohibitions to the States.
    Section 2(2) states that age discrimination in employment 
remains a serious problem both nationally and among State 
agencies. The section further addresses the invidious effects 
that such discrimination has on its victims, including 
increasing the risk of unemployment, preventing the best use of 
available labor resources, adversely affecting morale and 
productivity, and perpetuating unwarranted stereotypes about 
the abilities of older workers.
    Section 2(3) states that private civil suits by victims of 
employment discrimination have been a crucial tool for 
enforcement of the Age Discrimination in Employment Act, and 
further states that the Supreme Court's Kimel decision cut back 
on the availability of those suits against State employers. 
Section 2(3) also sets forth the Federal Government's interest 
in ensuring that Federal financial assistance is not used to 
subsidize or facilitate violations of the Age Discrimination in 
Employment Act.
    Section 2(4) examines the effects of the Kimel decision, 
and finds that, although age-based discrimination by State 
employers remains unlawful, State employees lack important 
remedies for discrimination that are available to all other 
employees covered under the Age Discrimination in Employment 
Act. The section states that State employees will have no 
adequate Federal remedies for violations of that Act unless a 
State chooses to waive sovereign immunity or the Equal 
Employment Opportunity Commission brings a suit on their 
behalf. Without the deterrent effect of such suits, the 
committee finds that there is a greater likelihood that Federal 
funds will be used to subsidize or facilitate violations of the 
Act.
    Section 2(5) finds that Federal law has long treated 
nondiscrimination obligations as a core component of programs 
or activities that, in whole or in part, receive Federal 
financial assistance and that that assistance should not be 
used in any way to subsidize invidious discrimination. The 
committee finds that assuring nondiscrimination in employment 
is a crucial aspect of assuring nondiscrimination in federally 
supported programs and activities.
    Section 2(6) describes the Age Discrimination Act of 1975, 
which does not apply to employment discrimination. The section 
states that that limitation was originally intended only to 
avoid duplication with the Age Discrimination in Employment 
Act, but has, in the wake of Kimel, become a serious loophole 
in Federal age discrimination law.
    Section 2(7) finds that the Supreme Court has upheld 
Congress' authority to condition receipt of Federal financial 
assistance on acceptance by the recipients of conditions on the 
use of that assistance, including a requirement that States 
waive their sovereign immunity to suits for a violation of 
Federal law. The section states that it is necessary to require 
such a waiver in this case in order to assure compliance with, 
and to provide effective remedies for violations of, the Age 
Discrimination in Employment Act.
    Section 2(8) states that a State's receipt or use of 
Federal financial assistance in any program or activity of the 
State will constitute a limited waiver of sovereign immunity 
under the Age Discrimination in Employment Act, to suits 
brought by employees within that program or activity. The 
waiver will not eliminate a State's immunity with respect to 
programs or activities that do not receive or use Federal 
financial assistance. Where a program or activity is covered by 
the waiver, State employees will be accorded only the same 
remedies that are available to other employees under the Age 
Discrimination in Employment Act.
    Section 2(9) makes clear that State sovereign immunity does 
not bar suits for prospective injunctive relief brought against 
State officials. It is the committee's intent to clarify that 
the Age Discrimination in Employment Act authorizes such suits, 
for the same injunctive relief that was available to State 
employees before the Kimel decision and that is available to 
other employees under the Act.

Section 3. Purposes

    Section 3 sets forth the purposes of S. 928: to provide to 
State employees in programs or activities that receive or use 
Federal financial assistance the same rights and remedies that 
are available to other employees under the Age Discrimination 
in Employment Act; to provide that the receipt or use of 
Federal financial assistance for a program or activity 
constitutes a State waiver of sovereign immunity from suits 
under the Act by employees of that program or activity; and to 
affirm that suits for injunctive relief under the Act are 
available against State officials in their official capacities.

Section 4. Remedies for State employees

    Section 4 amends Section 7 of the Age Discrimination in 
Employment Act (29 U.S.C. 626) by adding sections (g)(1)(A), 
(g)(1)(B) and (g)(2).
    Section (g)(1)(A) states that a State's receipt or use of 
Federal financial assistance for any program or activity of the 
State will constitute a waiver of sovereign immunity to suit by 
an employee of that program or activity under the Age 
Discrimination in Employment Act, for relief as authorized in 
that Act.
    Section (g)(1)(B) makes clear that the term ``program or 
activity'' has the meaning given the term in Section 309 of the 
Age Discrimination Act of 1975.
    Section (g)(2) confirms that a State official may be sued 
in his/her official capacity, for violations of the Age 
Discrimination in Employment Act, by any employee who has 
complied with the requisite procedures of that Act and who 
seeks injunctive relief authorized in the Act. This section 
authorizes a court to award costs to the prevailing party, as 
authorized by section 722 of the Revised Statutes.

Section 5. Severability

    Section 5 states that if any provision, amendment made by, 
or the application of any provision, of S. 928 is held to be 
invalid, it will not affect the remaining provisions of the 
bill, the amendments made by the bill, or the application of 
those provisions or amendments.

Section 6. Effective date

    Section 6(a) provides that, as to each program or activity, 
the provisions of this bill will apply to conduct occurring on 
or after the day, after the date of enactment of the bill, on 
which a State first receives or uses Federal financial 
assistance for that program or activity.
    Section 6(b) states that section 7(g)(2) of the Age 
Discrimination in Employment Act, as added by S. 928, applies 
to any suit pending on or after the date of enactment of S. 
928.

            IV. Explanation of the Bill and Committee Views

    The committee seeks to respond to the Supreme Court's 
decision in Kimel v. Florida Board of Regents, and to restore 
to employees of State government agencies the rights and 
remedies that they enjoyed prior to the Kimel decision and that 
are accorded to all other workers protected under the Age 
Discrimination in Employment Act. These rights and remedies are 
necessary to ensure that State employees will be effectively 
protected against employment discrimination on the basis of 
age. S. 928 will also ensure that State employees will be 
treated in the same way, and be entitled to the same recourse, 
as workers in other sectors of the economy who are victimized 
by age discrimination. The committee believes that S. 928 
achieves these goals in a reasonable, moderate, and lawful way.

Section 2. Findings

    Section 2 sets forth the committee's findings with regard 
to the background of, the need for, and the lawfulness of, S. 
928. These include the following:
    The committee believes that age discrimination remains a 
serious problem for State employees. For example, the committee 
heard testimony from J. Daniel Kimel, a professor of physics at 
Florida State University, who has no recourse for the age-based 
salary discrimination to which he believes he has been 
subjected.
    The committee is also aware of the numerous cases in which 
courts were forced to reverse judgments against State 
employers, who were found to have discriminated on the basis of 
age, in the wake of the Kimel decision. See, e.g., McGinty v. 
State of New York, 193 F.3d 64 (2d Cir. 1999), dismissed on 
remand in light of Kimel, 184 F. Supp. 2d 314, 2000 WL 132720 
(N.D.N.Y. Jan. 19, 2000) (death benefits reduced on the basis 
of age; court found willful violation of ADEA); Wichmann v. 
Board of Trustees, 180 F.3d 791 (7th Cir. 1999), vacated and 
remanded in light of Kimel, 120 S.Ct. 929 (Jan. 18, 2000) (48 
year old employee terminated because his employer wanted ``to 
cut down the old, big trees so the little trees underneath can 
grow''); Arnett v. California Public Employees Retirement 
System, 179 F.3d 690 (9th Cir. 1999), vacated and remanded in 
light of Kimel, 120 S.Ct. 930 (Jan. 18, 2000) (younger 
employees received greater disability retirement benefits than 
older workers with same length of service); Mete v. New York 
State Office of Mental Retardation and Developmental 
Disabilities, 984 F. Supp. 125 (N.D.N.Y. 1997), aff'd, 162 F.3d 
770 (2d Cir. 1998), vacated and remanded in light of Kimel, 120 
S.Ct. 928 (Jan. 18, 2000). Because there are more than 5 
million State employees across the country and based on the 
committee's careful examination of this issue and the testimony 
received, the committee does not believe that these are 
isolated problems; a significant component of the Nation's 
workforce is at risk.
    Absent this bill, State workers affected by this type of 
discrimination will lack important Federal procedures and 
remedies to redress it. These procedures and remedies, which 
are available to all other employees covered under the Age 
Discrimination in Employment Act--including in the private 
sector and in the Federal and Local Governments--serve 
important deterrent purposes, as well as providing compensation 
and make-whole relief to the victims of unlawful conduct. 
Without such remedies, it is more likely that State programs 
and activities that receive Federal financial assistance will 
use that assistance to violate the law.
    Congress has long endorsed the core principle that Federal 
monies should not be used to subsidize or facilitate invidious 
discrimination. This principle is reflected in some of the 
Nation's most important civil rights laws, including Title VI 
of the Civil Rights Act of 1964 (prohibiting race and national 
origin discrimination in programs and activities receiving 
Federal financial assistance); the Rehabilitation Act of 1973 
(comparable provisions prohibiting discrimination based on 
disability); and Title IX of the Education Amendments of 1972 
(prohibiting sex discrimination in education programs that 
receive Federal funds). It is reflected in the Age 
Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), which 
prohibits age discrimination in federally subsidized programs. 
Because Congress believed that the Age Discrimination in 
Employment Act of 1967 adequately prohibited age discrimination 
in employment, it decided, in 1975, not to include employment 
in the universe of activities covered by the Age Discrimination 
Act of 1975. In the wake of the Kimel decision, and its 
devastating impact on remedies for age discrimination in 
employment, that choice has created a serious loophole in the 
constellation of Federal protections. It is the purpose of S. 
928 to close that loophole.
    The committee believes that a crucial aspect of ensuring 
nondiscrimination in federally assisted programs and activities 
is to ensure that there is no discrimination against those who 
carry out those programs and activities. Because it affects the 
people who carry out a program or activity's mission, 
employment is inextricably linked to the implementation of 
federally assisted programs and activities, whether those 
programs and activities concern transportation, education or 
the environment. Where a federally assisted program 
discriminates against its workers on a prohibited basis, that 
program has violated not only fundamental notions of fairness 
but also the commitment that Congress has made to ensure the 
nondiscriminatory expenditure of Federal funds.
    The Supreme Court has consistently upheld Congress' 
authority to condition receipt of Federal financial assistance 
on acceptance by recipients of conditions related to the use of 
that assistance. See, e.g., South Dakota v. Dole, 483 U.S. 203 
(1987). Furthermore, even while invalidating certain 
Congressional efforts to abrogate States' sovereign immunity, 
the Court has noted that Congress retains the power, within 
limits set forth in Dole, to convince States to voluntarily 
waive their sovereign immunity as a condition attached to 
acceptance of specified Federal funds. College Savings Bank v. 
Florida Prepaid Postsecondary Education Expense Board, 527 U.S. 
666, 686-87 (1999); Alden v. Maine, 527 U.S. 706, 755 (1999).
    S. 928 satisfies the criteria stated in Dole for 
determining the validity of conditioning Federal grants to 
States. In Dole, the Court upheld the conditioning of certain 
highway funds upon a State's prohibition of the purchase or 
public possession of alcoholic beverages by persons under 
twenty-one years of age. 483 U.S. at 205-06. The Dole Court 
recognized five limits on such an exercise of Congress' 
Spending Power. Id. at 207-11. First, the Spending Power must 
be utilized in pursuit of the general welfare. Id. at 207. 
Second, the condition attached to the funds must be expressed 
clearly and unambiguously. Ibid. Third, the condition must be 
germane to the Federal interest in a particular program. Id. at 
207-08. Fourth, the power may not be used to induce the States 
to engage in activity that would be itself unconstitutional. 
Id. at 208-11. Fifth, the financial inducement offered by 
Congress may not be ``so coercive as to pass the point at which 
pressure turns into compulsion.'' Id. at 211 (internal 
quotation marks omitted).
    These conditions are amply met. First, the funds in 
question are intended to serve valid public purposes. Second, 
the conditions attached to the funds are expressed 
unambiguously. Third, the condition is germane to the Federal 
interest in each program affected by the condition. The 
condition simply furthers Congress' interest in ensuring that 
all intended beneficiaries of the program funded by Congress 
are in fact able to participate in that program, and that they 
may do so on fair and equal terms. The connection between the 
Federal assistance and the condition imposed on that assistance 
by S. 928--ensuring that the intended beneficiaries actually 
benefit--is even tighter than the connection upheld in Dole. In 
Dole, the Court upheld a connection that required States, in 
order to receive certain Federal funds, to take action that was 
entirely separate from the operations of any Federally funded 
program. The spending condition of S. 928, by contrast, applies 
only on a program-by-program basis--requiring a waiver of 
immunity only as to the particular programs or activities that 
actually receive Federal funds--and does not require the State 
to take any external action. Fourth, S. 928 does not induce 
States to engage in any unconstitutional activity. Fifth, the 
financial inducement cannot be described as coercive. The 
inducement--the promise of Federal funds for a State program--
is no more coercive than similar program-wide inducements 
offered by Congress in a variety of civil rights statutes that 
condition Federal funds upon a State's agreement to refrain 
from discriminating on various grounds: the Age Discrimination 
Act of 1975, Title VI of the Civil Rights Act of 1964, Title IX 
of the Education Amendments of 1972, and the Rehabilitation Act 
of 1973. No court has ever found such an inducement to be 
unconstitutionally coercive. The additional condition that a 
State must waive its sovereign immunity from suits brought by 
an employee of a program or activity receiving Federal funds 
does not affect the coercion analysis, which, as was made clear 
in Dole, 483 U.S. at 211, inquires only whether the benefit 
threatened to be withheld is so substantial as to constitute 
coercion. Furthermore, S. 928 merely follows the approach taken 
by Section 1003 of the Rehabilitation Act Amendments of 1986 
(42 U.S.C. 2000d-7), which provided that a State shall not be 
immune from suit for violations of any Federal statute 
prohibiting discrimination by recipients of Federal funds. 
Section 1003 therefore adds an additional condition--waiver of 
sovereign immunity--to the non-discrimination condition imposed 
by the four civil rights statutes cited above. These dual 
conditions, which are the same as the conditions imposed by S. 
928, have been upheld repeatedly by courts of appeals. See 
Douglas v. California Department of Youth Authority, 271 F.3d 
812, 819-21 (9th Cir. 2001); Nihiser v. Ohio Environmental 
Protection Agency, 269 F.3d 626, 628 (6th Cir. 2001); Jim C. v. 
Arkansas Department of Education, 235 F.3d 1079, 1080-82 (8th 
Cir. 2000) (en banc); Pederson v. Louisiana State University, 
213 F.3d 858, 875-76 (5th Cir. 2000); Stanley v. Litscher, 213 
F.3d 340, 344 (7th Cir. 2000); Sandoval v. Hagan, 197 F.3d 484, 
493-94 (11th Cir. 1999), rev'd on other grounds sub nom. 
Alexander v. Sandoval, 532 U.S. 275 (2001); Litman v. George 
Mason University, 186 F.3d 544, 551-57 (4th Cir. 1999).\1\
---------------------------------------------------------------------------
    \1\ Although the Second Circuit has reached a different conclusion 
with respect to the Rehabilitation Act, its decision rests on grounds 
not applicable here. In dismissing a suit against the State University 
of New York under the Rehabilitation Act, the Second Circuit held that 
New York had not waived its sovereign immunity from such suits, despite 
the fact that the State university had received Federal funds, because 
at the time of the actions that gave rise to the suit, Title II of the 
Americans with Disabilities Act of 1990--whose proscriptions are 
virtually identical to the Rehabilitation Act--was reasonably 
understood to abrogate New York's sovereign immunity under Congress' 
Commerce Clause authority. Therefore, ``a state accepting conditional 
federal funds could not have understood that in doing so it was 
actually abandoning its sovereign immunity from private damages suits, 
since by all reasonable appearances state sovereign immunity had 
already been lost.'' Garcia v. S.U.N.Y. Health Sciences Center of 
Brooklyn, 280 F.3d 98 (2d Cir. 2001) (citation omitted).
    The Second Circuit's reasoning in Garcia is not applicable to S. 
928. In the wake of Kimel, it is clear that States do possess sovereign 
immunity from private damages suits brought under the Age 
Discrimination in Employment Act of 1967. Therefore, a State that 
chooses to accept conditioned Federal funds will unquestionably 
``underst[an]d that in doing so it [is] actually abandoning its 
sovereign immunity from private damages suits.''
---------------------------------------------------------------------------
    For the foregoing reasons, S. 928 is a constitutional, 
narrowly tailored exercise of Congress' spending power that 
allows States to decide, on a program-by-program basis, whether 
they are willing to accept the Federal conditions in return for 
Federal money. Each of the witnesses at the committee's hearing 
on this issue on April 4, 2001 endorsed the constitutionality 
of this approach.

Section 4. Remedies for State employees

    Section 4 contains the core operative language of the bill. 
It provides that a State's receipt or use of Federal financial 
assistance for any program or activity of that State will 
constitute a waiver of sovereign immunity to suits under the 
Age Discrimination in Employment Act brought to employees of 
that program or activity.
    This language fully meets constitutional standards. A 
State's waiver of immunity is limited to those programs and 
activities that receive or use Federal funds; those programs 
and activities that do not receive or use such funds will be 
unaffected by this bill. Any waiver of immunity extends only to 
suits brought under the Age Discrimination in Employment Act by 
employees of that program or activity.
    The bill also does not impose new substantive obligations 
on the States. For more than 25 years, States have been 
prohibited from discriminating in employment on the basis of 
age. S. 928 thus does not require any change in State actions. 
Where States abide by their longstanding anti-discrimination 
obligations, there will be no reason for suits to be brought 
against them.
    This bill is necessary because State employees currently 
have no Federal remedy where States violate the anti-
discrimination requirements of Federal law. Although most 
States have laws that prohibit age discrimination in 
employment, those laws do not provide the consistency necessary 
to ensure that all State workers will be adequately protected. 
For example, the law in one State does not cover public sector 
employees. Nine States do not allow State employees to bring 
private lawsuits. Five States do not permit jury trials. Eight 
States cut off protection for employees at age 70. And 30 
States do not require that prevailing parties be reimbursed for 
their attorney fees. The committee believes that the protection 
of Federal rights should not be left to this patchwork of State 
law.
    The committee intends the term ``program or activity'' to 
have the same meaning given the term in Section 309 of the Age 
Discrimination Act of 1975 (42 U.S.C. 6107). This will make S. 
928 consistent with the other civil rights in which this term 
is used, including not only the Age Discrimination Act, but 
Title VI of the Civil Rights Act of 1964, Title IX of the 
Education Amendments of 1972, and the Rehabilitation Act of 
1973, as well.

                            V. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 27, 2001.
Hon. Edward M. Kennedy,
Chairman, Committee on Health, Education, Labor, and Pensions, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 928, the Older 
Workers' Rights Restoration Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Lanette J. 
Walker (for federal costs), and Leo Lex (for the state and 
local government impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

S. 928--Older Workers' Rights Restoration Act of 2001

    S. 928 would deem the receipt of federal funds for any 
program or activity as a waiver of state sovereign immunity 
with regard to legal liability under the Age Discrimination in 
Employment Act when a suit is brought by an employee of that 
program or activity. Because federal funds provide a 
significant portion of revenues for state governments (roughly 
one-quarter), CBO expects that generally states would continue 
to accept those funds even with the requirement that they waive 
their sovereign immunity. Therefore, CBO estimates that 
implementing S. 928 would have no significant impact on the 
federal budget.
    The bill could affect direct spending; therefore, pay-as-
you-go procedures would apply. CBO expects that any change in 
direct spending would be insignificant, however, because it is 
unlikely that states would choose to not receive federal funds 
that they collect under current law.
    Because the waiver of sovereign immunity under this bill 
would be a condition for the receipt of federal funds, it would 
not be an intergovernmental mandate as defined in the Unfunded 
Mandates Reform Act (UMRA). States that continue to accept 
federal assistance may face significant additional costs due to 
lawsuits brought under the Age Discrimination in Employment 
Act. CBO has no basis for estimating either the likelihood, 
number, or outcome of such lawsuits. S. 928 contains no 
private-sector mandates as defined in UMRA.
    The staff contacts for this estimate are Lanette J. Walker 
(for federal costs), and Leo Lex (for the state and local 
government impact). The estimate was approved by Peter H. 
Fontaine, Deputy Assistant Director for Budget Analysis.

                    VI. Regulatory Impact Statement

    The committee believes that it is impractical to prepare a 
regulatory impact statement at this time because the number of 
States affected will depend on which States accept the 
conditions of aid imposed by this bill.

           VII. Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act, requires a description of the application 
of the bill to the legislative branch. S. 928 applies to State 
programs and activities that accept Federal financial 
assistance. It does not apply to the legislative branch.

                          VIII. MINORITY VIEWS

    The relationship between the Federal and State Governments 
has changed in recent decades, and the undersigned members 
believe that Federal legislation and federal lawsuits are not 
necessarily the only answer to the concern shared by all 
members of the committee that workers are protected from age 
discrimination.
    The impetus for the proposed legislation is the Supreme 
Court decision in Kimel v. Florida Board of Regents (2000). 
That case was the most recent in a series defining what is 
being called the ``New Federalism,'' in which the Court 
recognizes that the Eleventh Amendment restricts the power of 
Congress to impose Federal workplace laws on the States as 
employers. Specifically in the Kimel case, the Court ruled that 
State employees do not have a private right of action under the 
Age Discrimination in Employment Act because the States did not 
waive their sovereign immunity. S. 928 is designed to overturn 
the outcome of the Kimel decision and grant most State 
employees a private right of action in Federal court to sue 
their employers.

                               background

    The rulings of the Supreme Court in this and other recent 
cases clarify the scope of Congressional authority. A general 
understanding of the parameters is useful in considering the 
legislative options raised by S. 928.
    To varying degrees, Congress can regulate non-federal 
workplaces through three separate sets of powers. The Commerce 
Clause is used very broadly to control behavior in the private 
sector and at the local government level.
    Congress' power over the States is restricted by the 
Eleventh Amendment; in most cases a State's sovereign immunity 
cannot be abrogated by Congress and States in most instances 
cannot be sued in Federal court by individuals. The exception 
is found in the Enforcement Clause (Section 5) of the 
Fourteenth Amendment, which allows suits against the States in 
Federal courts for constitutional violations of the Equal 
Protection clause. The post-Civil War amendment to the 
Constitution was designed to remedy state-sanctioned 
discrimination and to ensure fair trials in Federal courts in a 
region of the country where State courts had a history of 
denying the civil rights and protections to blacks and other 
minorities.
    In the Kimel decision, the Supreme Court ruled that age is 
not automatically a suspect class and Congress did not make the 
case that age discrimination by State governments was so 
pervasive and irrational as to rise to the level of a 
constitutional violation. As a result, Congress improperly 
relied on the Enforcement Clause of the Fourteenth Amendment to 
justify suits by State employees against the State in Federal 
court.
    This leaves Congress' Spending Clause powers as the last 
avenue for creating a Federal cause of action against the 
States. The Supreme Court has held that Congress has wide 
latitude in fixing the conditions for the voluntary receipt of 
Federal money.
    S. 928 utilizes the Spending Clause power and requires that 
``receipt or use of Federal financial assistance for a program 
or activity constitutes a State waiver of sovereign immunity 
from suits by employees within that program or activity for 
violations of the Age Discrimination in Employment Act of 
1967.''
    The operative language of the legislation defining 
``program or activity'' utilizes the definition and scope of 
spending power exercised in the provision of the Age 
Discrimination Act of 1975 (42 U.S.C. Sec. 6107) which extends 
the right to sue to beneficiaries of federally assisted 
programs run by the States. This language was added to that law 
in the Civil Rights Restoration Act of 1987 (29 U.S.C. Sec. 
794). Commonly known at the time as the Grove City bill, the 
legislation also added the ``program or activity'' language to 
the Title IX of the Educational Amendments Act of 1972, to the 
Rehabilitation Act, and to Title VI of the Civil Rights Act of 
1964.

                        ARGUMENTS IN OPPOSITION

    The Supreme Court has ruled that age discrimination is 
beyond the scope of Congressional authority when it comes to 
regulating the affairs of the States. Deference to federalism 
principles and to States' rights argue in favor of leaving this 
issue to the States themselves to resolve. Deference to a 
state's sovereign immunity is not a partisan issue. In the 
recent case, Laro v. State of New Hampshire (1st Cir., August, 
6, 2001), the Democrat Governor and Attorney General staunchly 
and successfully defended the State's sovereign immunity under 
the Family & Medical Leave Act.
    It is equally important that 48 States already have age 
discrimination laws on their books and have procedures for 
their enforcement. This point was stressed by Justice O'Connor 
in her majority decision in Kimel. The officials of each those 
States, who are elected directly by the people affected by the 
laws, have chosen to tailor their laws and procedures to the 
needs and cultures of the states. S. 928 ignores the good faith 
efforts of the officials of those States and imposes a 
different set of rules. No evidence has been presented to the 
committee that State causes of action are inadequate, or that 
the rights of State employees are regularly being denied. 
Except for a statistical comparison of State laws, the majority 
report makes no effort to prove such a case. The pending 
legislation improperly relies on the blanket and unfounded 
assumption that the right to sue in Federal court under Federal 
law is always preferred. We reject this assumption.
    The Kimel majority ruled that age discrimination is not the 
same thing as race discrimination and does not require the same 
level of Federal enforcement. That was also the view of 
Congress when it passed the Age Discrimination Act of 1975, the 
law on which S. 928 relies to exercise Congress' Spending 
Clause authority. The Senate committee report accompanying that 
bill stressed the difference: ``Distinguishing among 
individuals on the basis of race * * * is per se unfair 
treatment and violative of the Constitution * * *. But age may 
often be a reasonable distinction for these purposes * * *.'' 
It follows that States should be allowed to make the 
determination of whether policies are reasonable and to enforce 
those policies.
    It can also be said that S. 928 creates yet another 
opportunity for trial lawyers to shop for the friendliest forum 
to bring suit and recover large monetary judgments. While 
subjecting businesses to crippling lawsuits should always be of 
concern, even greater care should be given to legislation that 
opens up a public treasury to individual gain.
    For all of the foregoing reasons, the undersigned dissent 
to the majority report accompanying S. 928.

                    STATE RESPONSIBILITY ALTERNATIVE

    At the markup on S. 928 conducted on September 14, 2001, 
Senator Gregg was prepared to offer an alternative that would 
not have imposed a one-size-fits-all approach to State employee 
coverage under the ADEA. The Gregg amendment would have 
provided a middle ground position that ensures a remedy for 
State employees while preserving the sovereign immunity of the 
States. Senator Gregg's ``State Responsibility'' amendment 
would have limited the application of S. 928 only to those 
States that have no age discrimination law with remedies and 
enforcement procedures in State court equal to those provided 
in the Age Discrimination in Employment Act.
    This approach is similar to the enforcement scheme under 
the Occupational Safety and Health Act. The OSH Act provides 
for State control and enforcement of safety and health issues 
where the State standards ``are or will be at least as 
effective in providing safe and healthful employment as the 
standards promulgated'' by OSHA. State plans must also have a 
safety and health program that is ``applicable to all employees 
of public agencies of the State and its political 
subdivisions'' and that applies standards that are ``as 
effective as the standards contained in the approved [State] 
plan.'' (29 U.S.C. Sec. 667(c)). Like the OSH Act, a State 
Responsibility provision would adopt the modern appreciation of 
the competence of the States in dealing with the workplace 
needs of their citizens.
    Also, it is more than likely that a state law applies to 
more employees than S. 928 which relies on Congressional 
Spending Clause powers. The proposed definition of ``program or 
activity'' found in S. 928 is limited to ``the entity of such 
State and local government that distributes such assistance and 
each such department or agency * * * to which the assistance is 
extended.'' This means that for ``State and local governments, 
only the department or agency which receives the aid is covered 
* * *,'' according to the Senate Labor and Human Resources 
committee report accompanying the Civil Rights Restoration Act 
of 1987. As acknowledged in the majority report, gaps in 
federal coverage under S. 928 will no doubt exist. For example, 
Federal money for a ``program or activity'' does not typically 
reach the legislature or judiciary of a State, and employees of 
those branches of State government would not be covered under 
S. 928. State age discrimination laws are free to apply more 
broadly and cover workers missed by the ADEA as amended by S. 
928. A State responsibility approach would give States the 
incentive to expand coverage of their age discrimination laws, 
thus better serving the State employees than the approach taken 
in S. 928.

                               CONCLUSION

    The undersigned members of the committee are committed to 
purposes of the Age Discrimination in Employment Act and share 
the concern of the majority for the protection of State 
employees. We dissent from S. 928 for the reasons that the bill 
is unnecessarily proscriptive of States' rights and fails to 
consider less disruptive alternatives. For these reasons we 
respectfully dissent.

                                   Judd Gregg.
                                   Michael B. Enzi.
                                   John Warner.
                                   Jeff Sessions.
                                   Mike DeWine.
                                   Bill Frist.
                                   Tim Hutchinson.
                                   Kit Bond.
                                   Pat Roberts.

                      IX. Changes in Existing Law

    In compliance with rule XXVI, paragraph 12, of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (existing law proposed to be omitted is enclosed in 
black brackets, new matter is printed in italic, existing law 
in which no change is proposed is shown in roman):

             AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967

           *       *       *       *       *       *       *


             RECORDKEEPING, INVESTIGATION, AND ENFORCEMENT

    Sec. 7. (a) * * *

           *       *       *       *       *       *       *

    (g)(1)(A) A State's receipt or use of Federal financial 
assistance for any program or activity of a State shall 
constitute a waiver of sovereign immunity, under the 11th 
amendment to the Constitution or otherwise, to a suit brought 
by an employee of that program or activity under this Act for 
equitable, legal, or other relief authorized under this Act.
    (B) In this paragraph, the term ``program or activity'' has 
the meaning given the term in section 309 of the Age 
Discrimination Act of 1975 (42 U.S.C. 6107).
    (2) An official of a State may be sued in the official 
capacity of the official by any employee who has complied with 
the procedures of subsections (d) and (e), for injunctive 
relief that is authorized under this Act. In such a suit the 
court may award to the prevailing party those costs authorized 
by section 722 of the Revised Statutes (42 U.S.C. 1988).

                                  
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