In Kentucky Retirement Systems v. EEOC, the Supreme Court held that Kentucky’s pension and disability system did not discriminate against older workers in violation of the Age Discrimination in Employment Act (ADEA). Under Kentucky’s system, pension benefits are calculated based upon years of service. Employees are eligible for normal retirement benefits after 20 years of service or after the employee works 5 years and has reached the age of 55. The system also provides benefits to employees who become disabled before becoming eligible for normal retirement benefits. A disabled employee is treated as if he or she had 20 years of service or 5 years of service, if the employee is already 55 years old. The purpose of this rule is to treat disabled workers as if they are retirement eligible upon becoming disabled.
Charles Lickteig, a participant in the pension system, continued working after he became retirement eligible at age 55. He later became disabled. Because Lickteig became disabled after the normal retirement age of 55, he was not entitled to any “extra” years of service. The Equal Employment Opportunity Commission brought suit against the retirement system, alleging that the rules for disabled workers discriminated against those who were over the age of 55.
The Supreme Court found that the system did not violate the ADEA. Relying on its prior decision in Hazen Paper Co. v. Biggins, the Court explained that an employee claiming age discrimination must prove that age “actually motivated” the employer’s decision. Further, the Court noted that pension status is not necessarily a proxy for age. Here, the system’s rules applied equally to all workers, and the Court found that the disability rules were focused on an employee’s pension status. In this respect, Lickteig was already eligible for normal retirement benefits. Although that status may have been based on his age, the Court rejected the notion that the employer’s decision was “because of age,” noting that many pension plans use age and years of service to determine eligibility for benefits. In fact, while the disability rules placed Lickteig at a disadvantage, the Court explained that in some circumstances the rules could advantage older workers. Finally, the Court found that the Kentucky system did not reflect any prohibited stereotypes or generalizations about older workers.
Kentucky Retirement Systems reflects the common-sense notion that age is often used as a benchmark to determine pension eligibility. If the plan’s rules are focused on an employee’s pension status, they generally will not constitute age discrimination under the ADEA, even though eligibility may be based in part upon age.
This bulletin was prepared by Law Clerk Kim Sullivan.