October 22, 2012 (PLANSPONSOR.com) – A federal judge found the Baltimore County Employee Retirement System (ERS) violates the Age Discrimination in Employment Act (ADEA).
The U.S. District Court for the District of Maryland found the plan to be “facially discriminatory” because the plan explains the different contribution rates required by different employees by age rather than pension status. The court concluded there are no non-age-related financial considerations that justify the disparity in contribution rates between older and younger workers.
Originally filed by the Equal Employment Opportunity Commission (EEOC) in 2007, the lawsuit claimed the pension plan discriminated against older participants by requiring them to pay more toward their retirement savings than younger workers. Prior to the lawsuit, employees' pension contributions were calculated based on how long they would work for the county before they turn 60. Younger county employees were required to contribute about 4% to their pension systems and older employees 6% or more.
The district court previously concluded that Baltimore County was motivated by a permissible principle—the time value of money—rather than the age of new hires (see “Court Upholds Higher Pension Contribution Requirement for Older Workers”). The 4th U.S. Circuit Court of Appeals vacated that decision when the EEOC appealed.
The next phase of the litigation will determine damages. The EEOC has asked that the affected participants be reimbursed for amounts wrongfully withheld from their paychecks. The county has since changed its pension system so all employees pay a flat contribution rate.
The district court's opinion is here.