The Americans with Disability Act (ADA) prohibits discrimination against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training, and other terms, conditions, and privileges of employment. Many businesses can be unsure whether the ADA applies to them, as such, this article details which employers are covered by the ADA. 

In the simplest terms, covered entities under the ADA include private employers, state and local governments, employment agencies, and labor organizations.

Private Employers: A private employer is covered under the ADA if it has fifteen (15) or more employees. Both part-time and full-time employees are counted for ADA coverage purposes. Also, to be covered under the ADA, an employer must also be engaged in an industry affecting commerce; however, this requirement is rarely looked at. It can be assumed that if an employer has the requisite number of employees for the relevant time frame it will also meet the industry affecting commerce requirement.

Integrated Enterprises: Under the ADA, if there are several worksites that are all owned, operated, and managed by the same business, then all employees at those sites must be counted. However, if there are different sites that are not owned, operated, or managed by the same business, then all employees are only counted if the business is an integrated enterprise.

According to the ADA, an integrated enterprise is one in which the operations of two (2) or more employers are considered so intertwined that they are considered a single employer. The separate operations that create the integrated enterprise are treated as a single employer for purposes of both coverage and liability.

Factors that are considered in determining whether employers are an integrated enterprise are: the degree of interrelation between the operations; the degree to which the entities share common management; centralized control of labor relations; and, the degree of common ownership or financial control over the entities. Out of all these factors the primary focus is on the centralized control of labor relations.

Joint Employers: A joint employer is covered by the ADA. A joint employer is two (2) or more employers that are unrelated or that are not sufficiently related to be an integrated employer; however, each employer exercises sufficient control of an individual to qualify as the individual’s employer. This issue frequently arises in cases involving temporary staffing agencies. In order to determine ADA coverage, count the number of individuals employed by the business alone and the employees jointly employed by the business and other entities. If an individual is jointly employed by two or more employers, then that person is counted for coverage purposes for each employer with which that person has an employment relationship.

For example, if XYZ Corp has thirteen (13) regular employees and five (5) employees assigned to it by a temporary agency, who are jointly employed by both XYZ and the temporary agency. Then XYZ is covered under the ADA as it has eighteen (18) employees.

Labor Organizations: Labor organizations are typically covered by the ADA. To determine if labor organization is covered it must meet one of the following tests: (1) it has fifteen (15) or more members or maintains a hiring hall, which procures employees for at least one covered employer; or, (2) it represents the employees of an employer and it engages in an industry affecting commerce.

Employment Agencies: An employment agency is covered under the ADA if it regularly procures employees for at least one covered employer. It does not matter whether or not the employment agency receives compensation for the services. If an employment agency regularly procures employees for at least one covered employer, it is covered with respect to all of its employee procurement and referral activities, including any referrals to non-covered employers.

Limited exemptions to ADA coverage: There are limited exceptions to ADA coverage. The first exemption from the ADA is American Indian Tribes, as they are excluded from the definition of employer; however, the ADA may apply to tribally-owned businesses. The factors looked at when determining whether a tribally-owned business is exempt from the ADA are (1) whether it performs essentially governmental functions on the tribe’s behalf and (2) whether it is integrated with and controlled by the tribe.

The ADA also does not apply to bona fide private membership clubs (other than a labor organization), which is exempt from taxation under 501(c) of the IRS Code. In order to fall under this exemption an organization must show that it is tax-exempt and that it is a bona fide membership club.

If your business has questions regarding ADA coverage or any other ADA issue, do not hesitate to contact our office and speak with a member of our experienced team of professionals.