The US 6 th Circuit Court of Appeals, in relying on its 1995 ruling in a similar dispute involving an Ohio public employee retirement plan, declared that the three retirement plans making up the Kentucky Retirement System did not violate the Age Discrimination in Employment Act (ADEA). The appellate judges said this was true despite the fact that a worker’s age is a significant factor governing how the Kentucky system calculates a worker’s retirement benefits.
The latest ruling upholds a lower court decision by US District Judge Jennifer Coffman of the US Dis trict Court for the Western District of Kentucky – also relying on the 1995 case – that upheld the disputed benefits determination formula used by the Kentucky Retirement System.
On the losing end in both the lower court and before the appellate panel was the US Equal Employment Opportunity Commission, which challenged the Kentucky system’s use of a multiplier to calculate disability retirement benefits paid when a worker retires due to disability before he or she otherwise would be eligible for retirement.
According to court background, the three affected systems are: the County Employees’ Retirement System, the Kentucky Employees Retirement System, and the State Police Retirement System. Each classifies employees as holding “hazardous” or “nonhazardous” jobs and provides normal retirement benefits at age 55 or after 20 years of service to those holding a hazardous job and normal retirement at age 65 to those holding a nonhazardous job.
In addition employees who become disabled are eligible for retirement benefits under the systems. Employees who become disabled when they already are eligible for normal retirement receive only normal retirement benefits generally calculated as 2.5% of final compensation multiplied by years of service. Workers who become disabled before they are eligible for normal retirement, however, get additional years – up to the number of years remaining until the employer would have reached retirement age or 20 years of service, but no more than the number of years already worked.
The purpose of the addition apparently is to give disabled workers the benefits they would have earned had they worked until normal retirement. Nevertheless, the end result often is greater benefits to employees who retire disabled before reaching eligibility for normal retirement than for employees who retire disabled after already reaching such eligibility, even if they have the same years of service.
In the 1995 precedent, Lyon v. Ohio Educ. Ass’n and Prof’l Staff Union, an early retirement plan which similarly attributed unworked years to younger employees when calculating their retirement benefits was upheld.
“Under both plans, certain younger employees (those below the standard retirement age) are eligible to receive credit for additional years of service that they did not in fact work, with the result that a younger employee receives greater retirement benefits than an older employee with the identical final or average salary and years of actual service,” wrote Circuit Judge John Rogers. “Although this case involves disability retirement benefits and Lyon involved early retirement benefits, that difference is not material. Under Lyon, therefore, the EEOC has failed to demonstrate discriminatory intent.”
The latest case grew out of an EEOC charge filed by Charles Lickteig, a former deputy sheriff for Jefferson County, Kentucky. At age 61 with 17 years of service, Lickteig applied for but was denied disability retirement benefits under the County Employees’ Retirement System. When conciliation efforts failed, EEOC sued the Kentucky Retirement System, the Jefferson County Sheriff’s Office, and the commonwealth of Kentucky. The lower court ruled for the retirement systems, saying that the EEOC did not prove that the defendants deliberately discriminated against certain workers.
The opinion is EEOC v. Jefferson County Sheriff’s Dep’t, 6th Cir., No. 03-6437, 9/19/05, is here .
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