Plain-English guide to the Age Discrimination in Employment Act for employers: who is covered, slides, the age 40 and 20-employee tests, deadlines and remedies.
Last reviewed October 29, 2026 · General information, not legal advice
General information only, not legal advice. CPA Tax Payroll and Accounting Corp is a CPA firm, not a law firm. Laws change: confirm with the official source or a licensed attorney before you act. Read the full notice.
The Age Discrimination in Employment Act of 1967 (ADEA) is a federal law that protects job applicants and employees age 40 and older from discrimination because of age. The Equal Employment Opportunity Commission (EEOC) enforces it. This page is for owners, managers and nonprofit leaders deciding whether the ADEA applies to them and what it covers. Page 3 offers a short routine we call the Forty-Candle Fairness Check.
Slide show: The ADEA in seven slides
What the law does
The ADEA (1967) protects applicants and employees age 40 and older from age discrimination.
Who it covers
Employers with 20 or more employees, a higher bar than the 15 used by Title VII. The EEOC enforces it.
The core rule
No age-based hiring, firing, pay, layoffs or benefits. No ads that signal an age preference. No retaliation.
A number to know
A severance waiver needs 21 days to consider (45 for group programs) and 7 days to revoke.
The deadline
File with the EEOC within 180 days, or 300 in Illinois. A suit may follow 60 days after filing and within 90 days of the EEOC's closing notice.
The penalty
Back pay, plus an equal amount for willful violations. No pain-and-suffering or punitive damages.
Tip
Write down the non-age reason for every hiring and layoff decision, and have severance releases reviewed by counsel.
Who is covered
Item
Rule
Employer
20 or more employees on each working day in each of 20 or more calendar weeks, this year or last. Agents and state and local governments count. Employment agencies and some labor unions are also covered, under their own tests.
Protected people
Applicants and employees age 40 or older. The statute sets no upper age limit.
Under 40
Not protected by the ADEA, though some state laws protect younger workers. Favoring an older worker over a younger one is not illegal under the ADEA, even if both are 40 or older.
Executive exception
Compulsory retirement at 65 or older is allowed for a bona fide executive or high policymaking employee who held that job for the prior 2 years and is entitled to an immediate, nonforfeitable retirement benefit of at least $44,000 a year.
Employers under 20
No ADEA coverage, but state age laws may apply. See our Illinois page.
How it touches your taxes and payroll
Back pay under the ADEA generally counts as wages for social security and Medicare and goes on Form W-2 in the year it is paid (IRS Publication 957). See our guide to W-2 and W-3 filing. EEOC rules under the ADEA also call for payroll records that include each employee's date of birth, kept for 3 years, so payroll and HR files should match. Our payroll tax basics explain the wider payroll picture.
