CalPERS, EEOC Reach Record Age Discrimination Accord

January 30, 2003 ( - The California Public Employees' Retirement System (CalPERS) and California state and local government employers have agreed to a record out-of-court settlement of an age discrimination case for $250 million.

The US Equal Employment Opportunity Commission (EEOC) said the settlement, the largest in the agency’s history, affects 1,700 police, firefighters and other public safety workers.

Under the agrement approved by US District Court Judge Charles Breyer, the class of former employees will receive benefits estimated at $250 million, most of which will be paid in increments over the lifetimes of the individual recipients.

The lawsuit, filed under the Age Discrimination In Employment Act of 1967 (ADEA), alleged that the officers suffered discrimination because their industrial disability retirement (IDR) benefits were reduced in proportion to their age when hired. In 1995, former Fremont police officer Ron Arnett and six other disabled retirees challenged CalPERS’ enforcement of the California Government Code Section 21417, by filing the lawsuit resolved by the settlement.

CalPERS said that the industrial disability cap retirement law was enacted by the Legislature in the 1980s in response to criticism of the growing costs of disability benefits for public employees, and was intended to preclude a public servant from receiving more in a disability retirement than they would have otherwise gotten after working a full career and retiring for service.

In a statement, CalPERS said the CalPERS Board of Administration was concerned about the perceived inequities in the law and attempted to get it repealed, but was unsuccessful.

Benefit Cut for Each Over-30 Year When Hired

For each year over age 30 that a public safety officer was hired, Section 21417 reduced the amount of industrial disability pensions below the 50% of compensation standard – in essence, the more years over age 30 at hire, the less one was entitled to receive if seriously injured on the job. So, Arnett, who joined the police at age 43, was given 32% instead of 50% of his salary for his IDR benefit when he suffered permanently disabling injuries after five years of service.

By contrast, if Arnett had simply been 30 at his time of hire – 14 years younger but with the same work record, the same contributions to CalPERS over the same period of time, and the same injuries – he would have been entitled to half his pay.

The settlement of the case provides approximately $50 million to the state and local public safety officers for reduced IDR benefits in the past. In addition, CalPERS will adjust future payments to eliminate the age-related disparity, calculated at approximately $200 million (present value) to be paid out over the remainder of the officers’ lifetimes, the EEOC said.

Members who may be part of the class affected can find information regarding the settlement on the CalPERS web site at .

The settled case isArnett and EEOC v. California Public Employee Retirement System,Northern District of California, Civil No. 95-03022 CRB.