Early Retirement Incentive Plan Violated Age Discrimination Law, Judge Finds
MINNEAPOLIS – A federal judge in Minneapolis has ruled that the Minnesota Department of Corrections (DOC) violated federal age discrimination law by maintaining an early retirement incentive plan (ERIP) that reduced benefits for persons over age 55, the U.S. Equal Employment Opportunity Commission (EEOC) announced today.
Under the ERIP, an employee who retired at age 55 would get employer contributions for health and dental insurance until age 65, but an employee who retired after age 55 would get no such employer contributions towards health and dental coverage.
In its age discrimination lawsuit against DOC, the EEOC contended that the incentive plans contained in collective bargaining agreements for DOC employees violate the ADEA because they facially discriminate based upon age. (EEOC v. Minnesota Department of Corrections et al., Civ. 08-05252 PAM/FLN in U.S. District Court for the District of Minnesota). The EEOC asserted that these agreements constituted arbitrary age discrimination, and the agency sought judgment against the DOC, including unions as nominal parties, so that the collective bargaining agreements could be revised to remove the provisions.
In an order issued on April 8, 2010, U.S. District Court Judge Paul A. Magnuson held that the early retirement incentives are “facially discriminatory, and, as such, violate the ADEA.” He noted that the “law on intent is clear: when a plan is discriminatory on its face, ‘intent to discriminate can be presumed.’” The court affirmed that an early retirement incentive plan cannot condition its benefits solely based on age, and rejected the argument of the Department of Corrections that the 2008 decision of the U.S. Supreme Court in Kentucky Retirement Systems v. EEOC barred the EEOC’s suit. The Department of Corrections had argued that the Kentucky Retirement case changed the law with respect to retirement plans which discriminate based solely on the age of the participant.
The court ordered the parties to complete discovery on the damage issues, and following submission of damage claims, stated that it will enter judgment for the EEOC.
“This is a significant victory for the employees of the DOC,” said John C. Hendrickson, regional attorney for the EEOC’s Chicago District, which has jurisdiction over cases in Minnesota. “There are innumerable ways to have lawful early retirement programs, but there is one way that it indisputably unlawful, and that is to exclude persons solely because they are over a specified age.”
EEOC Senior Trial Attorney Laurie A. Vasichek, who leads the Commission’s litigation team, said, “The EEOC has battled discriminatory early retirement programs for years. We hope this opinion will send a wake-up call to employers who continue to maintain these discriminatory policies: you cannot punish someone because he wants to keep working past a certain age.”
The EEOC’s trial team also included Associate Regional Attorney Jean Kamp and Nicholas Pladson and Jessica Palmer-Denig, trial attorneys in the EEOC’s Minneapolis office.
The EEOC enforces federal laws prohibiting employment discrimination. The EEOC’s Chicago District Office is responsible for processing charges of discrimination, administrative enforcement, and the conduct of agency litigation in Illinois, Wisconsin, Minnesota, Iowa and North and South Dakota, with Area Offices in Milwaukee and Minneapolis. Further information about the EEOC is available on its web site at www.eeoc.gov.