By Alina Buccella
On March 31, 2014, the Fourth Circuit issued an opinion in the case Equal Employment Opportunity Commission v. Baltimore County. Here, a mandatory retirement benefit plan administered by the State of Maryland that required older employees to pay a greater percentage of their salaries towards the plan based on their age at the start of their enrollment was challenged by the Equal Employment Opportunity Commission (EEOC) as violating the Age Discrimination in Employment Act (ADEA). This case had already visited the Fourth Circuit, which at that time remanded for further determination of the issues, and on remand, the district court granted partial summary judgment in favor of the plaintiff. The district court found that the retirement plan violated ADEA, and the Fourth Circuit affirmed, and also concluded that ADEA’s safe harbor provision did not apply.
The EEOC filed suit on behalf of a class of members of the plan who claimed age discrimination. The County’s main argument was that the higher contribution for older employees was not motivated by age alone, but by the amount of time until the employee could retire. This determination, the County argued, was based on the time-value of money, as necessary to ensure that employee contributions would eventually comprise half of the retirement plan benefits. However, this amount of time varied depending on the type work the employee did, while the age/rate schedule for contribution levels did not. Under ADEA it is generally unlawful to treat employees in a protected age group differently than other employees when administering a retirement benefits plan, unless the different treatment “is based on reasonable factors other than age.”
Because of the system established by the County, the EEOC argued that the retirement benefit plan facially violated ADEA, which did not require a showing of intent. However, the EEOC had to show that the County “engaged in disparate treatment ‘because of’ the employee’s age.” Because the County did not allow for different contribution rates depending on whether an employee chose to retire after a certain number of years of service as opposed to a minimum age requirement, employees entering the system at an older age would have to contribute more money based on their age alone, without regard to the time-value of money. The Fourth Circuit found that there was no reasonable factor other than age relied upon by the County, and determined that the retirement benefit plan facially violated ADEA.