School District Settles Retirement Plan Age Bias Suit

In EEOC v. Murphy School District No. 21 (CV 14-00721-PHX-SRB), filed in the U.S. District Court for the District of Arizona, the EEOC alleged that since at least 2008, the school district has engaged in unlawful employment practices by utilizing a policy titled “Retirement of Professional Staff Members.” The EEOC said the early retirement incentive plan discriminated based on age by providing for older employees to be compensated at lower rates than are paid to younger employees.

For example, for employees retiring with five through nine years of service at age 64, benefits were calculated based on salary plus 3%; at age 63, salary plus 6%; at age 62, salary plus 9%; at age 61, salary plus 12%; at age 60, salary plus 15%; and at age 60 or younger, salary plus 15%. Incentives were cut off at age 65 for employees with five through nine years of service, age 63 for employees with 10 to 24 years of service, and age 61 for employees with 25 or more years of service.

In a statement announcing the settlement, the EEOC said the school district established its plan in the 1980s. The Older Workers Benefit Protection Act, which became effective in 1992, amended the Age Discrimination in Employment Act (ADEA) to outlaw early retirement incentive plans which discriminated on the basis of age. The school district’s early retirement incentive plan then became facially discriminatory.

The settlement will substantially compensate more than two dozen retired employees. It also requires the school district to change its policies about age discrimination and provide training about the ADEA to its employees and administrators.

“People in their 60s should not be penalized merely because they want to continue working,” says EEOC Regional Attorney Mary Jo O’Neill.