EEOC was awarded summary judgment by a federal court in Maryland last week. The court found that Baltimore County's pension plan violates the ADEA in EEOC v. Baltimore County, Civil No. L-07-2500-BEL (D. Md. Oct. 17, 2012).
All full-time employees under age 59 were required to participate in the Plan. Employees were required to contribute to the Plan at different rates based on the age at which they joined, so that the contribution would be sufficient to fund approximately one-half of his or her final retirement benefit, with the other half to be funded by the County. Older workers were required to contribute a higher percentage of their salary than younger workers because their contributions would have less time before retirement to accrue earnings. For example, a laborer who became a member of the Plan at age 25 was required to contribute 2.75%, whereas a laborer who joined at age 45 was required to contribute 4%. The Plan was changed in 2007 so that new employees were required to contribute at a flat rate, regardless of their age at the time they were hired.
In 2007, the EEOC filed suit on behalf of older County employees who had been hired under the original terms of the Plan. The District Court granted summary judgment to the County in 2008, finding that the Plan did not violate the ADEA because the disparate contribution rates were justified by a permissible financial consideration--the time value of money. The Court reasoned that the system was not based on age but on the number of years an employee had until reaching retirement age. The EEOC appealed and the Fourth Circuit vacated the judgment and remanded the case.
On remand, the District Court determined that there are no non-age-related financial considerations that justify the disparity in contribution rates. In other words, the Court concluded that the County charged different contribution rates to different employees based on age and, therefore, age is the "but-for" cause of the disparate treatment in violation of the ADEA.
See also, EEOC press release.