Kentucky Retirement Systems v. EEOC

PETITIONER: Kentucky Retirement Systems et al.
RESPONDENT: Equal Employment Opportunity Commission
LOCATION: Earthquake Park

DOCKET NO.: 06-1037
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 554 US 135 (2008)
GRANTED: Sep 25, 2007
ARGUED: Jan 09, 2008
DECIDED: Jun 19, 2008

ADVOCATES:
Malcolm L. Stewart - on behalf of the Respondent
Robert D. Klausner - on behalf of the Petitioners

Facts of the case

Charles Lickteig is a deputy sheriff in Kentucky. Because he is a hazardous duty worker, he is eligible to retire at age 55. Kentucky Retirement Systems offers a two-tier calculation of so-called "disability retirement benefits." If hazardous duty workers like Lickteig opt to keep working and then become disabled, they receive only their scheduled retirement benefits. In contrast, workers who become disabled before reaching age 55 receive payments that reflect not only their actual years of service but the number of years remaining until they would have reached 55. In effect, if two workers were otherwise identical, the one who retired on disability before 55 would always get benefits equal to or greater than those of the post-55 retiree.

Lickteig decided against retirement at 55. Six years later, he became disabled because of "a deteriorating vertebra, arthritis, nerve damage, and Parkinson's disease," and stopped working. When he applied for disability retirement benefits, he received word that he was eligible only for standard retirement.

The Equal Employment Opportunity Commission argued unsuccessfully in federal district court that the two-tier system violated the Age Discrimination in Employment Act (ADEA). The U.S. Court of Appeals for the Sixth Circuit affirmed. The appellate court reheard the case en banc and reversed, holding that the simple act of treating younger disabled retirees better than older ones was sufficient to make out a prima facie ADEA violation.

Question

Is the use of age as a factor in a retirement plan "arbitrary" rendering the plan discriminatory on its face in violation of the Age Discrimination in Employment Act?

Media for Kentucky Retirement Systems v. EEOC

Audio Transcription for Oral Argument - January 09, 2008 in Kentucky Retirement Systems v. EEOC

Audio Transcription for Opinion Announcement - June 19, 2008 in Kentucky Retirement Systems v. EEOC

Stephen G. Breyer:

Well now, the second one, Kentucky Retirement Systems v. EEOC is more complicated.

It involves a very complicated retirement pension system that Kentucky has so I'll simplify it for discussion and if you want the whole complication, you have to read the opinion.

The system permits, but it doesn't require, certain workers like policemen to retire at age 55 and get a pension.

Now, for a worker who becomes seriously disabled before he be 60 – before he becomes 55, he gets a pension too because Kentucky does that by pretending that the worker had worked till the age of 55.

So he gives the -- they give the worker credit for years of work that he didn't actually work and I call those phantom years.

And if you're disabled before you're 55, you get these phantom years to bring you up to the age 55 and then they figure out what the pension would have been if he'd really done it.

Well in this case, a worker became seriously disabled after he was 55 and eligible for a pension.

And he complains that Kentucky system amounts to age discrimination.

He points out that Kentucky would give 55 -- give phantom years to a worker who became disabled before he reach 55, "but what about me?"

He says, "I – I reached 55 and then I became disabled so I don't get any phantom years.

That's seems like age discrimination just based on the fact that whether you are older or younger than 55."

Now, the Court of Appeals agreed with that, but we don't agree with that, we reverse.

“We agree that Kentucky treated the two workers differently, but we don't think that difference amounts to discrimination because of age."

Those are the words of the ADEA, that's what the ADEA forbids, discrimination because of age.

"Rather, we think what's going on is that Kentucky is simply trying to give a pension to workers who became disabled before they reached retirement age."

Kentucky gives the phantom years to those workers because otherwise they couldn't qualify for a pension.

Kentucky doesn't give phantom years to workers who became disabled after they reach say 55 because those workers already have qualified for a pension.

They don't need any phantom years to become qualified.

So, age is certainly a factor that ordinarily qualifies workers for a pension, but it is pension status, "Are you, Mister Disabled Worker, already qualified for a pension or not already qualified for a pension?"

That's what matters for purposes of determining whether phantom years are added.

That is what explains the difference in treatment.

So, age is in a sense an artifact of the pension eligibility rules.

It is not the reason or even a reason for the discrimination.

So, we conclude Kentucky systems does not embody the sort of discrimination that Congress sought to eliminate in the ADEA, and so it doesn't fall within the statute's prohibition.

Now, we have been pretty careful to limit our holding to this quite special case of differential treatment based on pension status, and pension status is a circumstance that the ADEA and the Social Security law too both treat as special, specifically authorizing age-related rules that in other areas they might bar.

Now, we also list in a number of other features, quite a few features of this case that make it special for age discrimination purposes.

The upshot is that where an employer treats employees differently based on their pension status and even if the pension status does depend on age, the plaintiff still has to show that that age made a difference rather than just a pension status, that it was actually motivated this discrimination or there's a reason for it that was based upon age and not pension status.

Now, we explain this -- it's more complex even than I've suggested and we explained it all in our decision.

Justice Kennedy has filed a dissenting opinion with which Justices Scalia, Ginsburg, and Alito have joined.