Age Discrimination and the Law
(4/17/12)- The New York law firm Kelley Drye & Warren LLP has agreed to pay a partner nearly $600,000 in back pay to settle allegations that the firm engaged in age discrimination when it stripped him of his financial stake in the firm.
The settlement was reached between the U.S. Equal Employment Opportunity Commission (EEOC) and the firm on behalf of Eugene D'Ablemont, and filed in the federal court in Manhattan.
The EEOC sued Kelley Drye on Mr. D'Ablemont's behalf in 2010, alleging the firm's policy of "de-equalizing" partners at age 70 violated the federal Age Discrimination in Employment Act. The lawl firm has subsequently abandoned the policy.
Mr. D'Ablemont will also receive 12% of the annual fees collected for certain client matters.
(4/15/10)- Last year, nearly 25,000 workers filed age discrimination complaints, a 29% jump over 1997, according to the Equal Employment Opportunity Commission.
Is it age-discrimination when a company freezes an employees traditional pension plan and converts it into a "cash-balance" pension plan? We discussed this issue in some of the items in our article "Corporate Healthcare and Pension Plans-Part I" dated 2/29/08; 1/26/07; 9/10/06 and 8/16/06. Those articles highlighted the legal issues mainly behind the IBM conversion, but this matter is coming to the forefront in a $2.3 billion in damages lawsuit against AT&T being brought in the federal court in Newark, N.J.
The suit alleges a 1998 pension change effectively froze the pensions of 40,000 older management employees at AT&T, but not those of younger employees. Under a cash balance conversion a company freezes the pension value to a cash-out amount, and this value would grow at a flat rate. Under traditional pension plan computations, a benefit is determined by multiplying years of service and salary, which produces rapid pension growth in an employee's later years.
The suit was filed in 1998 and involves 24,000 employees of the company.
One of the plaintiffs in the case is Gerald Smit, who was 47 years of age in 1997 when his pension was valued at $1,985. When he retired from the company 8 years later his pension was still worth only $1,985.
Normally, a judge without a jury hears age-discrimination trials, but if the judge finds that there was a willful violation of the law, he can send it on to a jury. The jury in turn could award punitive damages also, so that the total amount in the case could come to $4.6 billion.
The company does not face a cash loss, since their pension fund is well funded, and that is where the damages would be incurred.
The enactment of the Pension Protection Act in 2006 states that companies that convert to "cash balance" plans after June 30, 2005 cannot be held liable for age discrimination as long as they pass certain basic tests.
(10/12/09)- Who has the burden of proof in age discrimination cases brought under the federal Age Discrimination in Employment Act of 1967? Last June, the Supreme Court in a 5-to-4 ruling shifted the burden back to the plaintiff in such cases.
The court's decision in Gross vx. F.B.L Financial Services was applauded by the business community, while being derided by the labor community. Three Democratic Congressional committee chairmen said that they would introduce legislation to overturn the decision.
Senator Tom Harkin (Dem.-Io), chairman of the Senate Health, Education, Labor and Pensions Committee; Senator Patrick J. Leahy, (Dem-VT) chairman of the Senate Judiciary Committee; and Representative George Miller (Dem-CA), chairman of the House Education and Labor Committee were the three Congressmen who hope to have new legislation passed next year that would reverse the ruling of the Court.
As a result of the Gross decision, the employee has the burden of proof in showing that age, rather than other reasons was the cause for the discrimination.
The ruling's defenders who backed the majority opinion, that was written by Justice Clarence Thomas, said that the Court was only following the intent of Congress, which had amended the main employment discrimination act to make the burden of proof easier for plaintiffs, but had not done so with the federal ADEA law.
The proposed new law is called the Protecting Older Workers Against Discrimination Act.
(4/23/09)-The U.S. Supreme Court, in overturning a decision of the Second U.S. Circuit of Appeals in New York, ruled that labor unions can surrender their members' right to sue over employment discrimination under the Age Discrimination in Employment Act.
This case involved three watchmen who brought a case in federal court in New York even though the union contract said such claims should go to arbitration. The New York Appeals court ruled that the union could not bargain away the power of an individual member to sue over the statutory rights granted under the ADEA.
Writing for the majority in overruling the lower court decision, Justice Clarence Thomas rejected "misconceptions" of arbitration as an inferior form of justice.(14 Penn Plaza LLC v Pyett).
(2/14/09)- President Barack Obama signed into law the Lilly Ledbetter Fair Play Act, named for the woman whose attempt to sue Goodyear Tire & Rubber Co. for pay discrimination was blocked by the Supreme Court as discussed in our item dated 3/10/08. The president thus fulfilled one of his earliest campaign promises when he signed the legislation.
Under the bill, employees can file discrimination claims within 180 days of their most recent paycheck from the employer, even if the initial discrimination happened much earlier. The bill would give employees the chance to recover back pay for up to two years prior to their unfair pay claim.
(7/8/08)- The U.S. Supreme Court, in a 7-1 decision, overturned the ruling of the U.S. Court of Appeals for the 2nd Circuit of Manhattan for the defendant in the case of Meacham V. Knolls Atomic Power Laboratory, No. 06-150 that we discuss in our item dated 5/3/08 below. Thus, it is the employer who has the burden of proof to show that its action in dismissing employees did not have a "disparate impact" under the Age Discrimination in Employment Act (ADEA) of 1967 on the older workers.
The employer must show that the dismissals were based not on age, but on some other "reasonable factors". The age discrimination law provides that an employment action that would be "otherwise prohibited" is lawful if the "differentiation is based on reasonable factors other than age."
In his majority opinion overturning the appeals court's decision, Justice David H. Souter said the structure of the statute made it clear that the defense was "entirely the responsibility of the party raising it." Justice Antonin Scalia wrote a concurring opinion to say that the court was properly adopting the position of the Equal Opportunity Commission.
The only dissenter was Justice Clarence Thomas, who once headed the commission. Justice Stephen G. Breyer recused himself from the case since he owns stock in State Street Bank, which owns 18% of the Lockheed Martin Corporation, a government contractor that administers the laboratory for the Department of Energy.
(6/14/08)- The Age Discrimination in Employment Act (ADEA) of 1967 applies in the private sector, but there is no such explicit protection in the portion of the law that applies to federal workers. In the case of Gomez-Perez v. Potter, No. 06-1321 the federal appeals court in Boston dismissed a suit on the ground that age-discrimination that applies to federal workers does not cover retaliation claims.
In an opinion from the U.S. Supreme Court that overturned the appeals court and reinstated the lawsuit, Justice Alito said that understood in the context of its enactment, the provision did cover retaliation. He noted that while the basic age-discrimination law was passed in 1967, it was not extended to federal workers until 1974. Retaliation complaints filed annually with the Equal Employment Opportunity Commission has doubled in the last 15 years to 22,000 from 15,000.
In the federal age-discrimination case opinion Justice Alito said that the provision in question, broadly prohibits, "discrimination based on age," and was "not materially different" from the anti-discrimination language the court had interpreted both in the Title IX case, and in an earlier decision from 1969, interpreting a Reconstruction-era statute that bars racial discrimination in property ownership.
(5/3/08)- Who has the burden of proof under the Age Discrimination in Employment Act (ADEA) of 1967? That is the key question involved in the appeal now pending before the Supreme Court of the U.S. in the case of Meacham V. Knolls Atomic Power Laboratory, No. 06-150.
The case was brought by two dozen workers at a federal research lab in New York state. The employer, Knolls Atomic Power Laboratory, which is owned by Lockheed Martin Corporation, terminated 31 employees after using a set of guidelines to evaluate workers' skills and amenability to retraining. All but one of the dismissed workers was over the age of 40, which is the age of coverage under the act.
Most of the affected employees joined in a lawsuit, arguing that there was no justification for using an evaluation system that had a "disparate impact" on older workers. The plaintiffs won in the jury trial, but the U.S. Court of Appeals for the 2nd Circuit of Manhattan overturned the judgment. That court ruled that the plaintiffs had the burden of proving that the policy they were challenging was unreasonable.
The Bush administration, through the solicitor general, has added its support in the matter before the Supreme Court in favor of the plaintiffs.
(3/31/08)- The U.S. Supreme Court upheld the ability of employers to reduce health benefits to retirees when they become eligible for Medicare. This decision marks the end of an 8-year case that began when the 3rd U.S. Circuit Court of Appeals ruled that the Age Discrimination in Employment Act (ADEA) applied to retiree health care plans. The ruling involved plans provided by Erie County, PA. AARP had appealed the case to the Supreme Court.
In October 2000 the Equal Employment Opportunity Commission adopted a ruling in connection with the fact that health care plans for those over 65 were covered by the ADEA in its compliance manual.
A federal district court ruled in April 2001 that the Erie County health care plans violated the ADEA because Medicare-eligible retirees receive "lesser" benefits than younger retirees.
In July of 2001 the EEOC suspended enforcement of the Erie County ruling and said it would review the earlier policy. In August of that year the EEOC formally withdrew enforcement of the ruling and pledged to create rules that do not discourage employers from offering retiree health plans.
In April 2002, Erie County settled the litigation by paying $305,000 to retirees and their lawyers. Before the settlement was approved, the county cut younger retirees' health benefits. In April 2004 the EEOC proposed final rules to exempt retiree health plans from ADEA.
In February 2005, AARP filed a suit to block publication of the final EEOC rule. Judge Anita B. Brody of the U.S. District Court in Philadelphia barred the EEOC from publishing the rule for 60 days and agreed to hear arguments on her ruling.
In April 2005 Judge Brody permanently blocked the EEOC from enforcing its exemption rule. In September however Judge Brody reversed her earlier ruling, saying that the EEOC has the right to issue its retiree health care ADEA exemption.
In June 2007 the 3rd Circuit affirmed the EEOC's right to issue the ADEA exemption stating that the exemption was reasonable and in the public interest.
For additional details on this matter please see our items dated: 1/1/08,10/12/05 and 4/7/05.
The Court ruling means that employers can spend more on providing health benefits to employees under the age of 65 than those over 65 without concern of being sued on the matters.
As corporate America seeks to reduce its health care costs, more employees over the age of 65 will be shifted over to Medicare coverage instead of being covered by the corporate health care plan. This in turn will result in more people being covered by Medicare, which of course will mean higher costs for the Medicare fund.
(3/10/08)- As opposed to its decision in the Ledbetter case, the Supreme Court of the United States used a more liberal interpretation of the Age Discrimination in Employment (ADEA) of 1967 by upholding the appellate court's reversal of the decision of the lower court in the Federal Express Corp. v. Holowecki, No. 06-1322 case. For additional information on this case please see our item dated 11/15/07 below. The court decided that the failure to file the proper form to complain about job-related age discrimination does not deprive employees of the right to bring a legal action for the discrimination.
The 7-2 decision in this case saw several of the justices change their stance from their 5-4 vote in the Ledbetter v. Goodyear Tire and Rubber Company decision. In the Ledbetter case the employees forfeited their right to sue by not filing a formal complaint with the Equal Employment Opportunity Commission (EEOC) within 180 days of a manager's discriminatory pay decision.
Under the age discrimination law, employees must first file a discrimination charge with the EEOC, and then wait 60 days before filing a lawsuit, in order to give the commission time to resolve the matter with the employee.
In FedEx case, one of the 14 complaining employees filed the wrong document with the commission, an "intake questionnaire" rather than a formal "charge" form. The questionnaire was accompanied with an affidavit that described the problem and asked the commission to end FedEx's "age discrimination plan".
The alleged age discrimination involved the company's change in performance benchmarks that would make it extremely difficult for couriers over 40 to meet. They alleged that the new policies "were veiled attempts to force older workers out of the company before they would be entitled to receive retirement benefits".
Justice Anthony Kennedy wrote the majority opinion. The dissenters were Justices Clarence Thomas-a former chairman of the EEOC- and Antonin Scalia. Three of the seven members voting in the majority had voted with the majority in the Ledbetter case. They were Chief Justice John G. Roberts, and Justices Samuel A. Alito Jr. and Anthony Kennedy.
After the employees had filed their suit in the Federal District Court in Manhattan, that court found the document filed by the complainants was insufficient, and granted FedEx's request to dismiss the lawsuit. The United States Court of Appeals for the Second Circuit reinstated the lawsuit, which decision was therefore upheld by the Supreme Court.
The EEOC, which backed the employees in this case said that it had changed its procedures so that this type of situation could not arise again. Under the federal law, employees must file a charge with the EEOC at least 60 days before they can file a lawsuit. The ADEA covers workers over 40 years of age, but it does not define what exactly constitutes a "charge".
The commission's Tampa office handled the "intake questionnaire", along with the employee's affidavit laying out the allegation, but it neither opened an investigation into the matter, not did it notify FedEx of the complaint. FedEx argued that the couriers had no right to file a lawsuit, since the company had been denied its right to resolve the complaint through the EEOC.
(1/1/08)- The Equal Employment Opportunity Commission issued a new regulation that would allow employers to provide retiree health benefits " only to those retirees who are not yet eligible for Medicare." In other words, employers will be allowed to discriminate against retirees who are eligible for Medicare by not having to continue to cover them under the company's retirement plans.
The new regulation went on to say that retiree health benefits can be "altered, reduced or eliminated" when a retiree becomes eligible for Medicare. Christopher G. Mackaronis, a lawyer for AARP which had sued to block issuance of the final regulation asserted that this exemption is "in direct conflict" with the Age Discrimination in Employment Act of 1967.
The commission said that under that law, it could establish "such reasonable exemptions" as it might find "necessary and proper in the public interest." The U.S. Court of Appeals for the Third Circuit in Philadelphia upheld this claim in June, in the case filed by AARP, which has asked the Supreme Court to review this decision.
In its ruling, the appeals court said: "We recognize with some dismay that the proposed exemption may allow employers to reduce health benefits to retirees over the age of 65 while maintaining greater benefits for younger retirees, but it went on to say that the commission had shown that the exemption was " a reasonable, necessary and proper exercise" of its authority.
The new regulation would enable employers to reduce or eliminate health benefits provided to the spouse or dependents of a retired worker 65 or over, regardless of whether benefits for the retiree are changed.
A study of the General Accountability Office in 2001 estimated that one-third of large employers and less than one-tenth of small employers offered health benefits to retirees.
David Certner, AARP's legislative director, said the group has challenged the EEOC's authority to issue the regulation and is petitioning the Supreme Court to rule on the matter. He went on to say, "It is a wrong-headed move to legalize discrimination, allowing employers to back off their health care commitments based on nothing more than age."
(11/15/07)- In the latest age-discrimination case to reach the Supreme Court in the matter of Federal Express Corporation vs. Holowecki, No.06-1322, the court will be dealing with the issue of form over substance. Unlike the Ledbetter case, the government will be arguing with the Equal Employment Opportunity Commission in this one.
Last May, the Supreme Court ruled against the Equal Employment Opportunity Commission's viewpoint, so that a tight time frame was established for filing of pay discrimination cases. The EEOC had argued that such lawsuits are timely as long as a current paycheck can reflect a prior discrimination.
In the present case before the court, the EEOC used a liberal interpretation of the type of document an employee must file to initiate a charge of job-related age discrimination. The commission argued that even though the formal requirement of filing a "Form 5" is required for a formal "charge of discrimination", a written complaint (Form 283) reflects the applicants intention to initiate the complaint.
The Federal District Court in New York had dismissed the suit in April 2002, on the grounds that the 14 plaintiffs had failed to file the required initial charge, or Form 5 with the commission before going to court. The U.S. Court of Appeals for the Second Circuit in New York upheld the commission's position, reinstating the case.
Form 283, which had been filed with the commission, describes the accusations of discrimination and enables the commission officials to advise an employee whether the accusations should move on to the formal charge stage.
Under the commission rules, a formal charge is followed promptly by notice to the employer. The Second Circuit Court agreed with the commission, saying that the Form 283 could be used because it had enough information and showed the intent to make a formal charge.
Federal Express argued that this laxity and inconsistency in the procedures deprives employers of what various federal anti-discrimination laws meant to provide them with. This interpretation in turn deprived the employer of the chance to resolve the issue without having to go to court.
(6/21/07)- The 3rd U.S. Circuit Court of Appeals in Philadelphia, Pa., affirmed the Equal Employment Opportunity Commission's right to issue the Age Discrimination Employment Act ruling which granted an exemption to the act, stating that it was "reasonable and in the public interest". This in effect means that employers can reduce health benefits to retirees when they become Medicare-eligible.
(8/15/06)- A three-judge panel has ruled that IBM did not discriminate against its older employees when it switched their pension plan to a cash-balance from their defined-benefits plan.
"All terms of IBM's plan are age-neutral," Judge Frank H. Easterbrook of the U.S. Court of Appeals for the Seventh Circuit in Chicago wrote in his decision, which reversed the 2003 lower federal court ruling of the Southern District of Illinois.
The plaintiffs, who are current or former IBM employees, intend to ask the full appeal court to reconsider the ruling. There are at least 1,500 pension plans similar to IBM's in place in this country covering over seven million workers and retirees.
When older workers are shifted from a traditional pension plan to a cash-balance plan, they lose the steep buildup of pension benefits in their latter years of employment, and can end up with pensions that are much lower.
Judge Easterbrook noted that since all workers of all ages in the plan received an annual 5% pay credit, the plan could not be considered discriminatory. Just because younger workers had more years to earn credits could not be considered discriminatory.
He went on to note that, "removing a feature that gave extra benefits to the old differs from discriminating against them,".
IBM and the plaintiffs had previously agreed to cap the amount of the remedy to the plaintiffs at $1.4 billion in 2004 to the 140,000 current and former workers if it lost is appeal on the age-discrimination claim.
The decision has no effect on a $320 million settlement that IBM reached with the plaintiffs on the five other claims in the original lawsuit that was filed in 1999 once all legal proceedings have terminated.
(7/3/06)- Title VII of the 1964 Civil Rights Act prohibits employment discrimination on grounds of race, color, religion, sex or national origin-and retaliation against people who file complaints about such discrimination. A unanimous U.S. Supreme Court ruled that the conduct of the employers towards employees who file discrimination suits will be carefully examined in regards to any retaliation that is taken against the complaining employee.
Even though the case before the court involved a complaint of sexual harassment, the decision certainly will apply to age discrimination cases as well, even though age is not specifically mentioned in this particular section of the act.
The facts of the case that was decided by the Supreme Court involved the conduct and retaliation by the employer, the Burlington Northern Santa Fe Corp., against its employee, Sheila White, a forklift operator in its rail-yard in Memphis, Tenn. Ms. White complained to the company about harassment from her male co-workers. The company disciplined her manager, but Ms. White was reassigned to less-desirable work, and later suspended for 37 days without pay for insubordination.
Ms. White then brought suit against the company for retaliation even though Burlington paid her for the 37 days she did not work. A jury awarded her $43,500 in compensatory damages. The court's ruling upheld that judgment, noting "suspension without pay would well act as a deterrent, even if the suspended employee eventually received backpay." The case will now be returned to the lower court for an assessment of compensatory damages.
The Equal Employment Opportunity Commission stood behind the employee in this case, saying that there should be "exceptionally broad protection" for those who protest employment discrimination.
Justice Stephen Breyer wrote the opinion for the majority in the case. He went on to say in his opinion that the conduct of the employer can be illegal if it would dissuade a "reasonable employee from filing a discrimination claim."
(10/12/05)- U.S. District Judge Anita B. Brody reversed her earlier decision as we discussed in our item of 4/7/05, and thus ruled that companies may offer better health care benefits to younger retirees than they give to older retirees who qualify for Medicare. As a basis for her reversal the judge cited a recent U.S. Supreme Court decision in an unrelated case that required her to reverse her earlier ruling.
The case centers on a rule change issued in April 2004 by the Equal Employment Opportunity Commission that would have created an explicit exemption to the Age Discrimination in Employment Act of 1967. The rule change would allow employers to reduce health benefits for retirees when they became eligible for Medicare.
A lawyer for AARP said it would appeal the reversal by the judge. Judge Brody cited the comments by Supreme Court Justice Clarence Thomas, in an Internet-access case in June that judges should defer to the expertise of federal agencies. Therefore the judge concluded that she must uphold the EEOC's request to depart form the "equal value" or "equal benefits" standard of the Age Discrimination in Employment Act of 1967.
(9/9/05)- Two employees of the Southern California Gas Company have sued the utility, alleging that the company in changing from a defined-benefits pension plan to a cash-balance pension plan had violated federal and state laws against age discrimination, as well as a federal provision that requires companies to notify workers in advance of changes that reduce benefit accruals.
The lawsuit further alleges that the violations to the plan, which was changed to the cash-balance plan in 1998, did not become apparent until 2003. The suit was filed in Federal District Court in Los Angeles.
In 2003, a federal judge ruled that IBM illegally discriminated on the basis of age against its workers when it converted its pension plans from defined-benefits to cash balance type plans. The company has appealed that decision to the Supreme Court, which has not ruled on the matter yet. Rep. John A. Boehner (Rep.-Ohio) has introduced legislation in Congress on this matter, but the bill would apply only to future conversions, not ones that have been converted already.
The issue in the Southern Cal. Gas case involves an issue that was not addressed in the IBM case. This issue is called the "wearaway issue". Wearaway occurs when employees are switched from defined-benefits to cash-balance plans.
In defined-benefit plans the benefits are calculated according to a formula that typically multiples each worker's pay and years of service by some factor. The more years worked the greater the benefit, with the greatest accumulation occurring in the final years of employment. The problem with the conversion has arisen because the older worker does not see his pension grow as it did before under the older method.
In a cash-balance plan the balance for each worker grows every year according to a predetermined interest rate figure. Every year the worker can see what his balance in the plan is, and this amount will move with the worker even if he changes to another job in the industry.
There may be a period of several years when the workers in the 40's and 50's see no growth in their pensions since it may take a while for that amount to get to the expected defined-benefit level under the slower growing cash-balance method of computation. An employer may have several years of no growth at all in the converted plan.
Officials at Southern Cal tried to soften this conversion problem in 1997 by delaying the wearaway period for 5 years. Workers who wished to retire between 1998 and 2003 could receive the traditional pension benefit, as if the conversion had never taken place. That option was removed in 2003, the year the wearaway provision began to become effective.
One of the two plaintiffs in this case, Susanna H. Selesky who began working for the company in 1977 had accumulated a monthly pension of $2,549.86, but would earn only a pension of $2,447.26 under the cash-balance plan. Because her actual earned benefit was larger under the old plan, the company froze it while the smaller, hypothetical amount earned enough interest to catch up to it. According to the online pension calculator that the company had on its site, her pension would have remained frozen until at least 2009, even though her younger colleagues would continue to build up their benefits during that time.
The other plaintiff, David Hurlic, had an even longer wearaway period since the calculator showed that he could not expect to resume benefit accruals until 2015.
4/7/05)-A federal judge struck down a rule passed in April 2004 by the Equal Employment Opportunity Commission that would have created an explicit exemption to the Age Discrimination in Employment Act of 1967 that would have allowed employers to reduce health benefits for retirees when they became eligible for Medicare.
Ten million retirees could have had benefits cut under the rule. The judge, Anita B. Brody of the Federal District Court in Philadelphia struck down the rule and issued a permanent injunction that prohibits federal officials from enforcing it. Under the EEOC rule, Judge Brody said, employers could have given older retirees "health benefits that are inferior" to those given to retirees younger than 65. AARP was the main plaintiff in the case. Chairwoman Cari M. Dominguez of the EEOC said that the agency would appeal the decision
According to a study done by Hewitt Associates and the Kaiser Family Foundation the proportion of companies with more than 1,000 workers offering health coverage to retirees dropped from 80% in 1991 to 57% in 2003. The appeals court ruled on the exact same legal issue five years ago, in a case involving retirees who had worked for Erie County, Pa. According to the written decision from Judge Brody. In that case, the appeals court found that Congress had intended the age discrimination law to apply "when an employer reduces health benefits based on Medicare eligibility."
There is no law that requires employers to provide health benefits to workers or retirees. Employers can legally provide benefits to active employees and not to retirees. Under Judge Brody's ruling if an employer provides benefits to retirees, it cannot discriminate among them on the basis of age. Thus retirees who are younger than 65 cannot be favored over those who are over 65.
(4/6/05)- By a 5-3 vote, the U.S. Supreme Court ruled that plaintiffs should be allowed to show that age discrimination by an employer had a disparate impact on those employees over the age of 40 under the 1967 Age Discrimination in Employment Act. In 1971, the Supreme Court recognized the disparate impact theory for race and sex under the Title VII of the Civil Rights Act of 1964, but it had never ruled on the issue of age in this matter. Justice John Paul Stevens, with former Chief Justice William Rehnquist not participating in the case, wrote the majority opinion.
In the case before the court, the employer prevailed since the court also stated that the employer could show that "reasonable factors other than age" were involved in making the employers decision. The case involved a group of older police officers in Jackson, Miss., who challenged the city's decision to give proportionately more generous raises to officers with less than five years on the force, most of whom were younger.
The appeal by the officers in Jackson reached the Supreme Court after the two lower courts ruled that the law required them to prove intentional discrimination, and that claims of disparate impact were categorically unavailable. The city argued it needed to boost pay at the low end to be competitive with neighboring communities that were attracting new officers with higher pay offers. The Supreme Court found that the city's line of reasoning was "unquestionably reasonable." The official title of the case is Smith v. City of Jackson, No. 03-1160.
According to official estimates, over half of the working population will be over 40 within 5 years, the age at which the 1967 Age Discrimination in Employment Act will apply. A major question that arises is, can cost factor alone be considered a "reasonable justification" for wage differentials among employees?
(11/5//04)- The Equal Employment Opportunity Commission (EEOC) has filed a lawsuit in the Federal District Court in St. Louis in which the agency accuses Allstate of age discrimination. Allstate which is the 2nd largest insurer of cars and homes in this country, is already being sued by several of its former employees who were among a group of 6,000 agents who were dismissed in 2000.
The EEOC's lawsuit focuses on the refusal of Allstate to consider any of the dismissed agents for other jobs with the company for at least 1 year. Ninety-four percent of the dismissed agents were 40 years or older. C. Felix Miller, the attorney for the agency in charge of the case, said the company also erred in making an exception to the one-year ban when it rehired an agent who was younger than 40. Mr. Miller said that the lawsuit is " a completely different issue and completely different facts" from the earlier suit between the parties in this matter.
A spokesman for the agency said that it received more than 80,000 complaints of age discrimination in 2003, but only 350 to 400 of them resulted in lawsuits. This dispute grew out of a plan by Allstate in the fall of 1999, in which the company said it was eliminating its employee-agent jobs. Allstate also did say however that the agents could become independent contractors, without any benefits.
About 4,000 of the agents became independent contractors and received a $5,000 bonus. The other 2,000, who left the company, received payments on average of $100,000 in severance pay and were permitted to sell their agencies and keep the proceeds. To receive the bonuses, severance pay and sell their agencies, the agents were required to sign a release promising that they would not sue Allstate for age discrimination under the federal employment laws.
The EEOC later determined that the requirement to give up the right to sue violated several laws that prohibit employers from discrimination because of race, religion, color, age or other factors. The dismissed agents initiated their own suit against the company in 2001 because of age discrimination law violations. The EEOC filed its own lawsuit against Allstate on behalf of the agents in late 2001.
Eventually the lawsuits were combined in the Federal court in Philadelphia that is being heard by Judge John P. Fullam. Judge Fullam has ruled that the case may proceed because Alllstate may have also violated the Older Workers' Benefit Protection Law.
The Supreme Court of the U.S. has agreed to take on a case where the plaintiffs allege age discrimination even though there is absence of proof that the employer deliberately singled out older workers for unfavorable treatment. The issue in the case is one that will be followed closely by many individuals who are 40 years or older. That is the age at which coverage under the Age Discrimination in Employment (ADEA) of 1967 begins.
In this particular case the older police officers in Jackson, Miss. allege that they were discriminated against when the city increased the pay for the newly hired officers. The city increased the pay of the new officers to be more competitive with the pay of newly hired police officers in other communities in the area. This increase had the effect of giving proportionately smaller increases to the more senior officers. The 30 plaintiffs who brought the suit all were 40 years or older.
Both the Federal District Court in Jackson and the U.S. Circuit Court of Appeals for the Fifth Circuit, in New Orleans, ruled for the city on the ground that the law requires proof of "disparate treatment", meaning intentional discrimination. In a 2-1 ruling the U.S. Circuit Court said that the law does not cover neutral policies that have a differential impact on different age groups. Other federal appellate courts have reached a different conclusion. The Supreme Court in a case brought before it by workers for the Florida Power Corporation dismissed the case without a decision because questions were raised about whether the company actually had the policies claimed by the plaintiffs.
The Supreme Court in interpreting Title VII of the Civil Rights Act of 1964, which bars employment discrimination on the basis of race and sex has ruled that suits can be brought under the "disparate impact" theory without proof of discriminatory intent. Congress ratified that understanding when it amended Title VII in 1981. Congress used Title VII when it passed the ADEA in i967.
U.S. District Judge John P.Fullam in Philadelphia, has ruled that Allstate Insurance Co. had not discriminated on the basis of age when the company required its agents to sign a release giving up their right to sue the company in exchange for staying on as independent contractors or leaving and receiving severance pay and other benefits.
The Supreme Court has ruled in the case of General Dynamics Land Systems, Inc. v. Cline, No. 02-1080, that the Age Discrimination in Employment Act of 1967 (ADEA) can't be used by younger workers to claim "reverse discrimination" in favoring older workers. In its 6-3 ruling the high court affirmed the legality of the company's right to stop providing health-care coverage to future retirees, except those current employees who were at least 50 years of age.
The employees of General Dynamics, who were between the ages of 40 and 50, alleged "reverse discrimination" in age. The case involves interpreting ADEA, regarding the rights of younger people being protected from being discriminated against. The law's protection specifically begins at the age of 40 and has no upper limit.
The case, General Dynamics Land Systems, Inc. v. Cline, No. 02-1080 grew out of a new collective bargaining agreement between General Dynamics and the United Auto Workers Union. The agreement terminated health benefits for new workers, except for those who were at least 50 years of age on July 1, 1997. Thus in effect older retirees were treated more favorably than younger retirees. Some 200 workers between the ages of 40 and 50 filed suit on the ground that the new plan, which they were too young to benefit from, discriminated against them because of age.
The protection of the Act begins at the age of 40. The federal district court in Cleveland dismissed the suit on the ground that the law did not prohibit favoritism toward older workers. The United States Court of Appeals for the Sixth Circuit, in Cincinnati, reinstated the suit. The union and several other unions and the U.S. Chamber of Commerce have supported the position of management while the federal government has supported the position of the younger workers in the matter.
Writing for the court's majority, Justice David Souter said that the Congress never contemplated the notion of younger workers covered by the act bringing discrimination lawsuits. "We see the text, structure, purpose and history of ADEA . as showing that the statute does not mean to stoop an employer from favoring an older employee over a younger one."
One of the bargaining chips that helped gain AARP's approval
for the new Medicare and prescription drug bill law was the
Republican leadership agreeing to drop a Senate provision
designed to protect employers who provide health coverage for
early retirees. AARP opposed this provision as being
discriminatory against those 65 and older. The "Erie"
provision involves a 2002 federal court decision that cited the
Age Discrimination in Employment Act of 1967 (ADEA) in
prohibiting employers from reducing the health benefits of
retirees who turn 65 and become eligible for Medicare. A Senate
amendment sought to overturn that prohibition, which sponsors
said could lead employers to drop coverage altogether rather than
The Supreme Court has recently ruled in two key decisions what seemingly are conflicting decisions in the area of age discrimination. In one of the cases, Swierkiewicz vs. Sorema N.S., the court overruled the ruling of the U.S. Court of Appeals for the Second Circuit. The Supreme Court thus allowed a bare-bones statement of the case to stand in the face of a motion to dismiss the action because of lack of specific facts. In the second case, Adams vs. Florida Power Corp., the Supreme Court dismissed a case it heard argued last month on the type of evidence necessary to prove a violation of Title VII of the Age Discrimination in Employment Act of 1967.
In the Swierkiewicz case, the appeals court had upheld the motion to dismiss the case brought by Akos Swierkiewicz who was 52 years of age and the chief underwriter for Sorema N.A., a New York insurance company owned by a French corporation. Title VII of the Age Discrimination in Employment Act of 1967 was modeled on the Civil Rights Law of 1964 that prohibited discrimination on the basis of race, sex, religion or national origin. Justice Clarence Thomas wrote the Supreme Court's decision.
Justice Thomas' opinion stated that the Appeals Court had confused the rules for litigating a Title VII case with the much more lenient rules set in 1938 by the Federal Rules of Civil Procedure, for filing the initial complaint. The decision means in effect that a plaintiff can proceed with the discovery stage of an age discrimination lawsuit and acquire the information like personnel records that would be necessary to help prove his/her case.
Plaintiffs are unable to marshal specific facts of discrimination based on age unless he/she can proceed with the discovery stage of the proceeding. The court ruled that Mr. Swierkiewicz's complaint both alleged age discrimination and provided details of the events and individuals involved in his termination. Thus the Supreme Court rejected the Appeals Court theory of "heightened pleading" standard for cases brought under the Civil Rights Act of 1964. The decision written by Justice Thomas concluded that the concept of "notice pleading", under which the complaint has to do no more than provide a simple and clear statement of the claim was applicable in this matter.
In the Adams case the "disparate impact" theory was utilized in an attempt to extend its usage to age discrimination cases, whereas it heretofore had been used to aid plaintiffs who lack direct evidence of discrimination in race or sex lawsuits. In cases of "disparate impact" the plaintiff shows that a seemingly neutral policy does in fact fall much more harshly on one group than it does on another without there being a valid business reason for the disparity.
The Adams case was brought by 117 employees of Florida Power Corp. who lost their jobs at the company through a series of reorganizations and reductions in the work force in the mid- 1990s. All of the 117 were over the age of 40, the age at which the Age Discrimination in Employment Act of 1967 forbids employers to discriminate against workers "because of " age. More than 70 % of the Florida Power workers who were let go were over 40.
The Florida District Court in Tampa ruled that there could not be a class-action suit in this case because the age discrimination act required proof of intentional discrimination against each plaintiff. It was not sufficient to show that the reorganizations had a "disparate impact", and the U.S. Court of Appeals for the 11th Circuit, in Atlanta agreed.
Under the rules that apply for race and sex discrimination suits, evidence of a "disparate impact", which is often based on statistics shifts the burden of proof to the employer to justify the disparity. The age discrimination law provides that actions that would otherwise be prohibited can be justified if "the differentiation is based on reasonable factors other than age."
The Age Discrimination in Employment Act tracks exactly the wording for the core definitions in the Title VII Civil Rights Act of 1964 that dealt with discrimination based on sex or race. In 1971, the Supreme Court ruled that a Title VII violation could be proven through "disparate impact", a decision that Congress ratified when it amended the Civil Rights Act in 1991. In the oral argument held for the case Justice Ruth Bader Ginsburg asked the defendant's attorney if in fact it was "unseemly to take identical words" from one act and interpret them differently in this case.
Since the Supreme Court decision, without explanation, dismissed the Adams case we can not ascertain their exact reasoning in this matter. Thus the area of age discrimination lawsuits still has many ambiguities in it that still have to be resolved.
For a related article on this topic please see our article Job Layoffs and the Older Worker
FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL
SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing
By Allan Rubin
updated April 17, 2012
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