Compliance January 29, 2015

EEOC Says Workers Fired for Turning Age 62

The EEOC has filed a lawsuit against Stack Bros. Mechanical Contractors for alleging firing older workers because of their age.
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Stack Bros. Mechanical Contractors, a heating and plumbing contractor in northern Wisconsin and northern Minnesota, is charged in a lawsuit with violating federal law by firing two employees when they reached age 62 and by retaliating against one of those employees for resisting the company’s plan to discriminate against her.

The lawsuit has been filed by the U.S. Equal Employment Opportunity Commission (EEOC). The agency’s investigation revealed Randy Virta and Karen Kolodzeske repeatedly warned the company’s owner that his plan to fire them when they turned 62 was illegal. However, the owner followed through with his plans, firing both employees and retaliating against Kolodzeske for her complaints, first by denying her a raise and then by demoting her and cutting her hours and pay.

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The lawsuit accuses Stack Bros. of violating the Age Discrimination in Employment Act (ADEA), which prohibits employers from taking adverse actions against employees and job applicants on the basis of age. The agency is seeking back pay, reinstatement, front pay, and liquidated damages for both Virta and Kolodzeske, an order barring future discrimination and retaliation, and other relief. Virta and Kolodzeske had worked for Stack Bros. for 16 and 25 years, respectively.

“The conduct in this case was utterly unacceptable,” says Julianne Bowman, acting director of the EEOC’s Chicago District. “The experience, expertise and wisdom of older workers are essential to our nation’s ability to compete in the global economy and the ability of those workers to continue to be employed without discrimination is critical to their economic well-being and quality of life. When age discrimination invades the workplace, everybody loses. “

The suit, EEOC v. Stack Bros. Mechanical Contractors, Inc., was filed in U.S. District court for the Western District of Wisconsin. 

Compliance January 29, 2015

Charter Schools to Be Included in Governmental Plan Regs

In response to comments about its intention to issue governmental plan regulations, the IRS says charter schools may participate in governmental plans.
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The Internal Revenue Service (IRS) has announced that guidance under consideration about governmental retirement plans would provide that employees of a public charter school may participate in a State or local retirement system if certain conditions are satisfied.

In Notice 2015-07, the agency said it anticipates issuing proposed regulations under Section 414(d) of the Internal Revenue Code (Code) to define the term “governmental plan.” The notice describes specific rules that the IRS and Treasury Department are considering proposing that relate to whether a State or local retirement system that covers employees of a charter school is a governmental plan within the meaning of Section 414(d).

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On November 8, 2011, the IRS and Treasury Department published an Advance Notice of Proposed Rulemaking (ANPRM) relating to the definition of a governmental plan. Members of the public charter school community submitted more than 2,000 comments expressing concern that if the guidance described in the ANPRM were published in its current form as a final regulation, it would deter State or local retirement systems from permitting charter school employee participation in their retirement systems in order to retain their governmental plan status. Commenters indicated that this, in turn, would jeopardize the retirement security of charter school employees and adversely affect charter schools’ ability to attract and retain teachers.

The IRS says it is considering proposing regulations specifying that a State or local retirement system that covers employees of a public charter school will not fail to be a governmental plan if the following conditions are satisfied:

  • The entity is a nonsectarian independent public school that serves a governmental purpose by providing tuition-free elementary or secondary education, or both;
  • The entity is established and operated in accordance with a specific State statute authorizing the granting of charters to create independent public schools or authorizing the establishment of independent public schools;
  • Participation in the State or local retirement system by the entity’s employees is expressly required or permitted under applicable law;
  • The charter school satisfies either of these requirements:
    • (1) The entity’s governing board or body is controlled by a State, political subdivision of a State, or agency or instrumentality of a State or of a political subdivision of a State; or
    • (2) The primary source of the entity’s funding is from a State, political subdivision of a State, or agency or instrumentality of a State or political subdivision of a State; the rights of the entity’s employees to their accrued benefits under the State or local retirement system are not dependent on whether the entity continues to participate in the system and, in the event the entity ceases participation, a governmental entity has responsibility for the accrued benefits of the entity’s employees, including the continued funding of the accrued benefits; and the entity is part of a local educational agency subject to the significant regulatory control and oversight by a State, political subdivision of a State, or agency or instrumentality of a State or political subdivision of a State;
     
  • All financial interests of ownership in the entity are held by a State, political subdivision of a State, or agency or instrumentality of a State or of a political subdivision of a State.

The notice also discusses the potential for broader transition relief for governmental plans once final regulations are issued.

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