School District Sued Over Early Retirement Incentives

The U.S. Equal Employment Opportunity Commission (EEOC) says a Phoenix, Arizona, school district unlawfully used an early retirement incentive plan.

A lawsuit filed by the EEOC in the U.S. District Court for the District of Arizona, EEOC v. Murphy School District No. 21 (CV 14-00721-PHX-SRB) alleges 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 says the early retirement incentive plan discriminates 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 are 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 are 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.

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

Under the Age Discrimination in Employment Act (ADEA), early retirement incentive plans which discriminate on the basis of age violate the law. The ADEA prohibits employers, including state and local governments, from discriminating against individuals age 40 and older in all aspects of employment, including pension benefit plans, because of their age.

The EEOC filed its suit after exhausting conciliation efforts to reach a voluntary pre-litigation settlement. The agency is seeking monetary relief, including the amount of money a retiree should have received but for the discrimination, with pre-judgment interest, and liquidated damages.

The EEOC is also seeking an injunction from the court that would prohibit future discrimination and other curative relief to prevent Murphy School District No. 21 from engaging in any further discriminatory practices.

The EEOC’s complaint is here.