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More on Last Week’s Grant in No. 06-1037, Kentucky Retirement Systems v. EEOC

The following summary was written by Eric Dreiband, a partner in the labor and employment section at the Akin Gump office in Washington, D.C.

In Kentucky Retirement Systems v. EEOC, the Supreme Court will review a Sixth Circuit ruling that the EEOC showed a prima facie case of age discrimination in violation of the Age Discrimination in Employment Act (ADEA). The Court will decide whether a benefit plan providing lower disability benefits, or denying disability benefits, to workers who are old enough to qualify for ordinary retirement benefits violates the ADEA as amended by the Older Workers Benefit Protection Act (OWBPA).

Charles Lickteig, a Deputy Sheriff for Jefferson County, was denied disability benefits because he was old enough to qualify for normal retirement benefits. Lickteig filed a charge of discrimination with the EEOC, which subsequently filed charges alleging the Kentucky Retirement Systems (KRS) plan denied or paid fewer disability retirement benefits to older individuals because of age in violation of the ADEA.

The plan at issue offers disability retirement benefits only to employees not eligible for normal retirement benefits. For example, employees in hazardous positions who have worked at least 20 years or have reached age 55 and become disabled in the line of duty may only receive the normal retirement benefits they would otherwise be entitled to. The disability benefits plan guarantees monthly payments of at least 25% of monthly final rate of pay and provides additional benefits for dependent children. These benefits are not available to an employee who becomes disabled after reaching normal retirement age. The disability plan also attributes additional years of service to younger workers when calculating benefit levels such that younger workers get credit for the years of service they would have worked prior to normal retirement if they had not become disabled. The result, according to the Sixth Circuit, is that “[i]n every case, a worker younger than normal retirement age (55/65) who retires on disability will receive more benefits each year than an older employee who retires from the same job, with the same disabling condition, length of service, and final compensation, who becomes disabled after reaching [retirement age] and must take normal retirement.”

Kentucky Retirement Systems (KRS), the state of Kentucky, and the Jefferson County Sheriff’s Department asked the Court to review the Sixth Circuit’s holding that the EEOC established a prima facie violation of the ADEA because the plan was “facially discriminatory.” The petition noted that using age and years of service as factors in determining benefits is not necessarily discriminatory and argued that a benefits plan only violates the ADEA if distinctions based on age are “arbitrary.” The petition asserted that the KRS disability retirement benefits are intended to provide disabled employees with a replacement for the normal retirement benefits that he or she can no longer earn, and that therefore denying those benefits to workers who are already old enough to qualify for normal retirement benefits does not constitute “arbitrary” age discrimination based on ageist stereotyping in violation of the ADEA.

The EEOC’s opposition brief disputed the petition’s interpretation of the ADEA and noted that the Second, Seventh, Eighth, and Ninth Circuits have recognized a prima facie ADEA violation when ruling on analogous benefits plans. The brief asserted that the KRS plan is facially discriminatory and that no improper stereotyping or discriminatory motive is needed for a prima facie ADEA violation. The brief also emphasized the OWBPA, which was a Congressional response to a Supreme Court case analyzing a similar benefit plan structure. (Public Employees Retirement System of Ohio v. Betts (1989)). The OWBPA clarified that the ADEA prohibited age discrimination in employee benefit plans even without evidence of discriminatory intent.

The petitioner’s and respondent’s briefs due Nov. 5 and Dec. 3, respectively.