An employer cannot rely on a contract to discriminate

Earlier this month, an employer learned the hard way that it could not rely on a contract provision to greenlight discrimination.

For several years, a school district limited the annual earnings increases of teachers over age 45 to avoid a pension-contribution surcharge.

Why?

Because its collective bargaining agreement with the teachers union allowed it to do so. And this seemingly caught the attention of the U.S. Equal Employment Opportunity Commission, which filed a lawsuit to challenge the CBA provision limiting the salary increases of teachers within ten years of retirement eligibility (age 55) to no more than 6% above their previous year’s salary.

The Age Discrimination in Employment Act makes it “unlawful for an employer . . . to discriminate against any individual” age 40 or older “with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.” To prevail, a plaintiff doesn’t need to prove that the defendant acted with an illicit motive. But, the plaintiff does need to demonstrate that the adverse action would not have occurred but of the plaintiff’s age.

Here, the parties agreed that the CBA contained a provision mandating a six-percent earnings-increase cap on all teachers “less than ten (10) years from retirement eligibility.” The parties also agreed that this provision would only apply to teachers older than 45.

“As a result,” noted the court, “a 46-year-old teacher and a 44-year-old teacher with identical credentials and experience were not entitled to identical annual increases in pay. The 44-year-old would have received a full salary increase; the 46-year-old would not. The only differences between the two teachers were their ages.”

That’s age discrimination.

How did the school district attempt to defend its action, you ask?

The defendant argued that it “may affirmatively defend [itself] by showing that the identified practice or policy is based on a reasonable factor other than age,” often called an “RFOA.” However, RFOAs are unavailable in cases where the plaintiff alleges disparate treatment.

Also, the defendant argued that it considered years of service rather than age when applying the provision of the CBA. But the “undisputed record” showed that the defendant took “explicit, and ultimately determinative, account of age.” Among other things, it maintained a spreadsheet limited to tracking teachers over the age of 45.

If employers account for years of service and ignore age, they can avoid ADEA discrimination claims. But that’s not what happened here. As the EEOC noted in its press release announcing the win in this lawsuit, “Determining compensation based on age violates the ADEA.”

As we head into the Thanksgiving holiday, I’ve got one more blog post in me: the annual Thanksgiving food ranking poll. I’ll see you tomorrow for that.