The United States District Court for the District of Maryland ruled last week that Baltimore County, Maryland violated the Age Discrimination in Employment Act ("ADEA") by requiring public employees age 40 and older to contribute a higher percentage
of their salaries to the county's defined benefit pension plan than younger
employees contributed, even if the older and younger workers had the same years
to go for retirement eligibility. See EEOC v. Baltimore County, No. 07-2500, (D.Md. Oct. 17, 2012). The EEOC had sued under the ADEA on behalf of older Baltimore County employees hired prior to July 1, 2007. In 2009, the Court granted summary judgment to the county, reasoning that the employer had shown that it was motivated by the permissible financial consideration of the “time value of money,” rather than the ages of new hires. On appeal by EEOC, however, the U.S. Court of Appeals for the Fourth Circuit vacated the district court's ruling and remanded for further consideration of whether the varying contribution rates for employees actually were justified by the alleged financial considerations.
Ruling on competing summary judgment motions, the district court determined that, because the early retirement option was strictly based on years of service, Baltimore County could not justify an age-based disparity in employee contribution rates. In granting partial summary judgment to the Equal Employment
Opportunity Commission EEOC the court held that Baltimore County violated the ADEA
because it had not shown any non-age-related financial considerations that justified
the disparity in contribution rates between older and younger workers. The Court noted that, athough the County had been presented with the opportunity to depose representatives of Buck
Consultants, the actuarial firm responsible for the county's Employee Retirement
System since its inception in 1945, "the
county has come forward with no evidence demonstrating why two workers with the
same number of years until retirement eligibility should be required to
contribute to the ERS at different rates.” The Court noted that, although linking an employee's contribution rate to his or her age
made financial sense when the retirement system provided for retirement at age 65, the
county's 1973 decision to add an early retirement option based on years of
service, irrespective of age, detached an employee's pension eligibility from
age. The Court found that the EEOC had proved that the county's pension contribution system, which charged
older employees a higher percentage of their salaries until the county adopted a
flat-fee system effective July 1, 2007, facially discriminated based on age and
could not be be justified by nondiscriminatory financial considerations.
