747 F.3d 267
4th Cir.2014Background
- Baltimore County maintained a mandatory employee retirement plan with employee contribution rates set by age at enrollment, calculated by actuarial firm Buck to fund ~50% of pension benefits.
- At plan inception retirement was age-based, but the County later added service-based retirement options (e.g., 20–30 years of service permitted retirement irrespective of age) and early retirement provisions; contribution rates were not adjusted to reflect these changes.
- Older employees who enrolled later paid higher percentages of salary (e.g., post-1977: age 20 = 4.42%, age 40 = 5.57%, age 50 = 7.23%), even when employees with different ages at enrollment could receive identical benefits by retiring after the same years of service.
- Two correctional officers filed EEOC charges; the EEOC sued on behalf of a class of employees age 40+ at enrollment, alleging ADEA disparate treatment because contribution rates increased with age.
- The district court initially granted summary judgment to the County; the Fourth Circuit vacated and remanded for failure to account for service-based retirement eligibility. On remand the district court granted partial summary judgment for the EEOC on liability; the Fourth Circuit affirmed that ruling and remanded for damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether age-based contribution rates violate the ADEA | EEOC: Rates discriminate "because of" age; older enrollees pay more even when receiving same benefits after equal service | County: Rates reflect permissible financial objective — the time value of money; older hires have fewer years to accrue interest | Held: Violation — rates are based on age at enrollment and not justified by permissible factors; age was the but-for cause |
| Whether Kentucky Retirement factors control analysis | EEOC: Not applicable; plan discriminates explicitly by age at enrollment | County: District court should apply Kentucky Retirement factors to justify rates as non-age-motivated | Held: Kentucky factors not controlling here because this plan facially discriminates by age at enrollment rather than using pension status as a proxy for age |
| Whether service-based benefits funded by County justify age-based employee rates | EEOC: County subsidy of service-based retirement does not justify higher employee rates for older enrollees who receive same benefits | County: Service-based benefits are employer-funded; employee rates can still reflect time-value funding for age-based benefits | Held: Rejected — disparate rates unjustified where employees could receive identical service-based benefits despite different ages at enrollment |
| Whether ADEA "safe harbor" for subsidized early retirement shields County | EEOC: Safe harbor does not address employee contribution rates and thus does not permit age-based higher contributions | County: 29 U.S.C. § 623(l)(1)(A)(ii)(I) permits subsidizing service-based/early retirement, shielding plan | Held: Safe harbor inapplicable — it authorizes employer subsidies but does not permit age-tiered employee contribution rates |
Key Cases Cited
- Kentucky Ret. Sys. v. EEOC, 554 U.S. 135 (2008) (analyzing when pension-status distinctions serve as proxies for age)
- Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993) (distinguishing disparate treatment based on age from treatment based on other employment-status factors)
- Int'l Union v. Johnson Controls, Inc., 499 U.S. 187 (1991) (facial discrimination focuses on the explicit terms of a policy, not employer intent)
- Gross v. FBL Fin. Servs., 557 U.S. 167 (2009) (ADEA plaintiff must prove age was the but-for cause of adverse action)