The Age Discrimination in Employment Act: a quick guide for small employers
A short cheat sheet on the federal age bias law, with the 20-employee test, the age 40 rule, the clocks in force in October 2026 and the release rules that matter at layoff time.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 29, 2026.
The Age Discrimination in Employment Act (ADEA) protects job applicants and employees age 40 or older from age bias. The U.S. Equal Employment Opportunity Commission (EEOC) enforces it against employers with 20 or more employees. Our Mile-Forty Fair-Choice Trail makes it a routine. The official text starts at 29 U.S.C. 621.
- It protects applicants and employees 40 or older, with no upper age limit.
- It covers employers with 20 or more employees for 20 or more weeks.
- Charges go to the EEOC within 180 days, or 300 in Illinois.
- Money: back pay, plus an equal amount if willful; no pain-and-suffering damages.
Who it covers
| Group | Covered? | Note |
|---|---|---|
| Applicants and employees 40 or older | Yes | No upper age limit |
| Workers under 40 | Not by the ADEA | Some other states may protect them |
| Employer, 20 or more employees | Yes | For 20 or more weeks; includes state and local governments |
| Employer, fewer than 20 | Not by the ADEA | State age laws may apply |
The numbers
| Item | Amount or period | Year or status |
|---|---|---|
| Charge deadline | 180 days; 300 in Illinois | October 2026; EEOC quorum restored October 27, 2025 |
| Before suing | Wait 60 days after the charge; sue within 90 days of the closing notice | Statute |
Source: 29 U.S.C. 626
Our checklist
The Mile-Forty Fair-Choice Trail follows a worker's path from job ad to exit.
- Ad: no age-coded words such as "recent graduate" or "young".
- Hiring: the same standards at every age; write down the non-age reason.
- Day to day: act quickly on age remarks from supervisors or customers.
- Layoffs: test whether a selection rule falls harder on workers 40 and older.
- Exit and files: attorney review of releases; EEOC rules: payroll with birth dates 3 years, hiring and discharge files 1 year.
Mistakes people make
- Age-coded job ads or interview comments.
- Layoff rules that hit workers 40 and older without a non-age reason.
- Releases with short review periods or a waiver of future claims.
Talk to an attorney before a layoff, buyout or severance release, and on an EEOC charge.
Common questions
Are workers under 40 protected?
Not by the ADEA. Some states protect younger workers, but Illinois's age rule also starts at 40 (training programs excepted); see the [Illinois Human Rights Act](/small-business-laws/illinois/human-rights-act/).
Can applicants challenge neutral rules that screen out older people?
For neutral rules that hurt older candidates, the Seventh Circuit (which covers Illinois) held in Kleber v. CareFusion (2019) that outside applicants cannot bring that claim, and the Eleventh Circuit agreed in Villarreal (2016). EEOC guidance names applicants too, so ask an attorney.
How is back pay from an age claim taxed?
Back pay generally counts as wages for Social Security and Medicare, on Form W-2 for the year paid. Interest, penalties and legal fees in an award are not wages. See [small business compliance](/small-business-compliance/).
Official sources
- U.S. Equal Employment Opportunity Commission: Age discrimination
- U.S. EEOC: Age Discrimination in Employment Act of 1967
- U.S. EEOC: Time limits for filing a charge
- U.S. EEOC Chicago District: Timeliness
- IRS: Publication 957, back pay under court orders and agreements
Keep reading
Let's talk about your taxes, your business, your plans.
Tell us what you need and we will get back to you quickly. There is no pressure: just a friendly conversation and a clear next step.
4260 Westbrook Dr, Suite 107
Aurora, IL 60504
Monday to Friday, 9:00 am to 5:00 pm, by appointment. Saturday and Sunday by appointment when needed.