Employee Pension Plans Under Scrutiny by EEOC
- Article Information
- Published on Friday, 26 October 2012 02:22
A U.S. District Court Judge ruled on October 22, 2012 that a Baltimore County Pension plan which contained rules which required different contribution rates from employees based on age, violated the Age Discrimination in Employment Act (ADEA) of 1967. The lawsuit was filed in 2007, by the Equal Employment Opportunity Commission (EEOC), on behalf of two county Department of Corrections employees, and a class of similarly situated employees who were at least 40 years of age, and who were required to pay higher pension contributions than those paid by younger employees.
The District Court rejected Baltimore County's argument that the Supreme Court's decision in Kentucky Retirement v. EEOC, 554 U.S. 135 (2008) permitted the pension practice. U.S District Court Judge Benson Everett Legg emphasized in his decision that the pension plan could result in "Two employees with the same number of years until retirement eligibility—that is, the same pension status—do not necessarily contribute at the same rate. Pension status, therefore, cannot be the driving factor behind the disparate treatment, which is directly linked to an employee’s age. As such, because age is the 'but-for' cause of the disparate treatment, the ERS violates the [Age Discrimination in Employment Act](ADEA)." The court also noted that Baltimore County, although provided amble opportunity, failed to bring forward evidence that non-age related financial considerations justified the disparity in contribution rates between older and younger workers. The next phase of the litigation will determine damages.
"It is pretty rare that any plaintiff can win any claim against a pension plan," said EEOC General Counsel David Lopez. "While some may have thought the Kentucky Retirement decision spelled the death knell for this case and others like it, our perseverance paid off in limiting the impact of that decision. The EEOC is prepared to vigorously litigate these cases, where necessary, to ensure compliance with the law."
This resolution is the latest in a series of systemic suits the EEOC has brought against public employers alleging age discrimination in the provision of retirement benefits. Although these cases have been filed against public employers, private employers are likely to be the next focus for the EEOC. Thus, all employers need to scrutinize their pension/retirement plans to make sure they are complaint with the ADEA. Read More.
EEOC Files Lawsuit Against a Bank for Alleged Age and Disability Discrimination
- Article Information
- Published on Monday, 08 October 2012 06:09
Denial of a reasonable accommodation to a disabled individual violates Title I of the Americans with Disabilities Act (ADA) of 1990, and discriminating on the basis of age violates the Age Discrimination in Employment Act (ADEA) of 1967. The Equal Employment Opportunity Commission (EEOC) has filed a lawsuit against Regions Financial Corporation, doing business as Regions Bank, for allegedly violating federal law by terminating a 61-year-old manager because of her age and refusing to provide her with a reasonable accommodation for her disability. According to the EEOC's suit, Regions Bank fired the manager of a Memphis branch after she requested a reasonable accommodation for her disability, hyperthyroidism, which caused her debilitating fatigue and heightened anxiety. The EEOC alleged that the branch manager had worked for Regions Bank's predecessor for more than 30 years and had worked for Regions Bank since 2005. The EEOC further alleges that Regions refused her request for reasonable accommodation and failed to engage in the interactive process to accommodate the manager which is required under federal law. Further, the EEOC alleged that Regions treated younger managers more favorably than the branch manager. Read More.
EEOC Issues FAQs on Age Discrimination Final Regulation
- Article Information
- Published on Friday, 30 March 2012 16:08
As noted in in the Employment Law Weekly article, "EEOC Issues Final Rule on Age Discrimination" posted on March 30, 2012, the EEOC has issued the final regulation on “Disparate Impact and Reasonable Factors Other than Age” (RFOA) pursuant to the Age Discrimination in Employment Act of 1967 (ADEA). The EEOC has also issued FAQs to further explain the final regulation, which include:
1. What is the purpose of the rule?
The rule responds to two Supreme Court decision in which the Court criticized one part of the Commission’s existing ADEA regulations. The Court upheld EEOC’s longstanding position that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, even if the harm was not intentional. However, it disagreed with the part of the regulations which said that, if an employee proved in court that an employment practice disproportionately harmed older workers, the employer had to justify it as a “business necessity.” The Court said that, in an ADEA disparate impact case, the employer did not have to prove business necessity; it need only prove that the practice was based on an RFOA. The Court also said that the RFOA defense is easier to prove than the business necessity defense but did not otherwise explain RFOA.
The rule does two things:
It makes the existing regulation consistent with the Supreme Court’s holding that the defense to an ADEA disparate impact claim is RFOA, and not business necessity; and it explains the meaning of the RFOA defense to employees, employers, and those who enforce and implement the ADEA.
2. Who is required to follow the rule?
The rule applies to all private employers with 20 or more employees, state and local government employers, employment agencies, and labor organizations. Although the ADEA applies to the federal government as an employer, the rule does not apply to federal employers by virtue of section 633a(f) of the ADEA.
3. Does the rule apply to all employment practices?
No. The rule applies to only a few kinds of employment practices. Specifically, it applies only to practices that are neutral on their face, that might harm older workers more than younger workers, and that apply to groups of people. For instance, it applies to tests used to screen employees or to some procedures used to identify persons to be laid off in a broad reduction-in-force (“RIF”).
4. What determines whether an employment practice is based on Reasonable Factors Other than Age?
An employment practice is based on an RFOA when it was reasonably designed and administered to achieve a legitimate business purpose in light of the circumstances, including its potential harm to older workers.
The rule emphasizes the need for an individualized consideration of the facts and circumstances surrounding the particular situation. It includes the following list of considerations relevant to assessing reasonableness:
- The extent to which the factor is related to the employer’s stated business purpose;
- The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination;The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to
negative age-based stereotypes;
- The extent to which the employer assessed the adverse impact of its employment practice on older workers; and,
- The degree of the harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.
5. Must employers show that they used each of the considerations listed in the EEOC’s regulation to establish the defense?
No. The considerations merely describe the most common characteristics of reasonable practices. The rule makes clear that the defense could be established absent one or more of the considerations, and that there could even be a situation in which the defense is met absent any of the considerations. Similarly, the
defense is not automatically established merely because one or more of the considerations are present. Read More.
An Inference of Age Discrimination May Exist if Others Not In Protected Class Are Treated More Favorably
- Article Information
- Published on Monday, 24 September 2012 17:49
The Age Discrimination in Employment Act (ADEA) prohibits an employer from terminating an employee who is over forty years of age because of the employee’s age. Under a “disparate treatment” theory of discrimination, a plaintiff in an ADEA case can establish age discrimination based on: (1) “circumstantial evidence” of age discrimination; or (2) “direct evidence” of age discrimination. To establish a prima facie case of discrimination, the employee must allege that he or she was: (1) at least forty years old; (2) performing his or her job satisfactorily; (3) discharged; and (4) either replaced by a substantially younger employee with equal or inferior qualifications or discharged under circumstances otherwise giving rise to an inference of age discrimination. An inference of discrimination can be established by showing the employer had a continuing need for the employee’s skills and services in that their various duties were still being performed . . . or by showing that others not in their protected class were treated more favorably.
In a recent case, Sheppard v. David Evans and Assoc., Kathryn Sheppard, who worked for David Evans and Assoc., alleged that that she was wrongfully terminated due to her age (over forty). She also alleged that even though her performance was satisfactory or better and she received consistently good performance reviews, she was terminated and five of younger coworkers kept their jobs. Although the lower court held that Sheppard had not pled sufficient facts to constitute a cause of action, on appeal to the 9th Circuit, the court disagreed holding that Sheppard’s allegation that “her five younger comparators kept their jobs gives rise to an ‘inference of age discrimination’ because it plausibly suggests that Evans ‘had a continuing need for [Sheppard’s] skills and services [because her] various duties were still being performed.’ It also plausibly suggests that employees outside her protected class ‘were treated more favorably’ than Sheppard.”
This case highlights the fact that employers must be careful about termination of employees who are age 40 or older to ensure that it does not constitute a violation of the ADEA. An inference of age discrimination may exist in situations where a group of employees is performing the same job but only the employee over age 40 is terminated, even though the employee did not have performance issues. Similarly, an inference of age discrimination may exist in situations where an employee is over the age of 40, has no performance issues, is terminated, and subsequently replaced by a younger employee. In cases where performance problems do exist with a worker protected by the ADEA, it is essential that such problems be properly documented in advance of any termination. Read More.
EEOC Issues Final Rule on Age Discrimination
- Article Information
- Published on Friday, 30 March 2012 15:30
The U.S. Equal Employment Opportunity Commission (EEOC) has issued the “Final Regulation on Disparate Impact and Reasonable Factors Other than Age” (RFOA) pursuant to the Age Discrimination in Employment Act of 1967 (ADEA). The ADEA prohibits employment discrimination against employees who are 40 years of age or older. The final rule was coordinated with other federal agencies and reviewed by the Office of Management and Budget (OMB). The rule was posted for public inspection today and will be published in the Federal Register on Friday, March 30.The EEOC’s final rule clarifies that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, unless the employer can show that the policy or practice is based on a reasonable factor other than age. The rule explains the meaning of the RFOA defense to employees, employers, and courts, and makes EEOC’s regulations consistent with Supreme Court case law. The rule applies to private employers with 20 or more employees, state and local government employers, employment agencies, and labor organizations. Read More.