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Cypen & Cypen
JUNE 19, 2008

Stephen H. Cypen, Esq., Editor


Kentucky permits “hazardous position” workers (for example, police officers and firefighters) to receive normal retirement benefits after working either 20 years or 5 years and attaining age 55, and pays “disability retirement” benefits to workers meeting specified requirements. Kentucky’s “plan” calculates normal retirement benefits based on actual years of service. The plan calculates disability benefits by adding to an employee’s actual years of service the number of years that the employee would have had to continue working in order to become eligible for normal retirement benefits, adding no more than the number of years the employee had previously worked. A member, who continued working after becoming eligible for retirement at age 55, became disabled and retired at age 61. He filed an age discrimination complaint with Equal Employment Opportunity Commission after the plan based his pension on his actual years of service without imputing any additional years. EEOC filed suit against Kentucky, arguing that the plan failed to impute years solely because the member became disabled after age 55. The district court granted Kentucky summary judgment, holding that EEOC could not establish age discrimination. However, the Sixth U.S. Circuit Court of Appeals, in an en banc decision, reversed on the ground that the plan violated the Age Discrimination in Employment Act of 1967. Now, the United States Supreme Court has reversed, holding that Kentucky’s system does not discriminate against workers who become disabled after becoming eligible for retirement. The Court’s opinion in no way unsettles the rule that a statute or policy that facially discriminates based on age suffices to show disparate treatment under ADEA. The Court is dealing with the quite special case of differential treatment based on pension status, where pension status -- with the explicit blessing of ADEA -- itself turns, in part, on age. Further, the rule for dealing with this sort of case is clear: where an employer adopts a pension plan that includes age as a factor, and that employer then treats employees differently based on pension status, a plaintiff, to state a claim under ADEA, must adduce sufficient evidence to show that the differential treatment was “actually motivated” by age, not pension status. The decision was 5-4, with an unusual combination of the Chief Justice, and Justices Breyer, Stevens, Souter and Thomas making up the majority. Kentucky Retirement Systems v. Equal Employment Opportunity Commission, Case No. 06-1037 (U.S., June 19, 2008).


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