Minn. to Pay for Biased Early Retirement Incentives

May 3, 2012 (PLANSPONSOR.com) - A federal judge has ordered the Minnesota Board of Public Defense (BOPD) to make restitution to settle a U.S. Equal Employment Opportunity Commission (EEOC) age discrimination lawsuit.

The BOPD must pay $53,000 to four former employees who were denied employer contributions for retiree health and dental insurance because they were older than age 55 at the time they retired. The BOPD must also offer to pay future premium costs for one of the employees who would still be entitled to receive them but for the unlawful early retirement provision.  

The action resolves the last in a series of cases the EEOC brought against Minnesota state agencies regarding early retirement incentive plans contained in collective bargaining agreements for certain employees. The incentive plans required that the employee retire by age 55 to obtain the incentive, and would lose it if he worked longer.  

For an employee who retired by age 55, the employer continued to pay the employer’s share of the insurance premiums which generally ranged from 85% to 100% of the total amount of the premium—and continued to do so until the retiree reached age 65. The employer paid nothing for an employee who retired after age 55, and the cost of retiree insurance fell entirely on the retiree.

Thus, explained EEOC Senior Trial Attorney Laurie Vasichek, who led the litigation team on the cases, “Not retiring by age 55 was like stepping off a cliff as far retiree medical insurance was concerned, and the parties to the collective bargaining agreements referred to this provision as the ‘Age 55 Cliff.’” The 8th U.S. Circuit Court of Appeals affirmed a lower court ruling in the case which held that the early retirement incentives were arbitrary age discrimination.