If you’re found liable for age discrimination, it’s going to cost you

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By: Jonathan R. Mook and Colete Fontenot
DiMuroGinsberg, PC

The Equal Employment Opportunity Commission (EEOC) recently scored a win for older workers when the U.S. Supreme Court declined to review the U.S. 4th Circuit Court of Appeals’ decision in EEOC v. Baltimore County. As a result, employers can look forward to paying back wages without exception as a remedy for age discrimination.

Origins of the case
The EEOC’s case began when two older Baltimore County employees filed an age discrimination charge in which they claimed they were paying a higher percentage of their salary to the county’s retirement plan than their younger coworkers paid. The plan was structured so that the amount contributed by employees rose with their age. Thus, employees who enrolled when they were 20 paid 4.42 percent of their wages, those who joined at 40 paid 5.57 percent, and those who enrolled at 50 paid 7.23 percent.

After an investigation, the EEOC determined the county’s retirement contribution structure violated the federal Age Discrimination in Employment Act (ADEA) because employees’ age was the “but-for” cause of differential treatment in their contribution amounts. The county disputed that determination, however, so the EEOC filed suit.

County found liable for discrimination
The Maryland federal district court sided with the EEOC and concluded that the county’s contribution formula discriminated against employees on the basis of their age. Unhappy with that result, the county appealed to the 4th Circuit, which is based in Richmond, Virginia, and whose decisions apply to employers in Maryland, North and South Carolina, Virginia, and West Virginia.

The 4th Circuit upheld the lower court’s finding that the county’s retirement contribution structure violated the ADEA. The court of appeals then sent the case back to the district court to calculate damages. In the renewed district court proceedings, the EEOC sought retroactive back pay based on the older employees’ higher contributions to the retirement plan.

What does this decision mean for you?
Mandatory back pay as a remedy for age discrimination can be quite substantial, which is a compelling reason to make sure all your managers are clearly aware of the liability that age discrimination presents. Here are a few steps you can take to avoid a large back-pay award being rendered against your organization:

  • Encourage employees to report anything they consider to be age discrimination at the time it happens, and move quickly to resolve any complaints that have merit.
  • Review your personnel policies to ensure there’s no “systemic” age discrimination written into your guidelines, benefits, or compensation.
  • Finally, be sure to talk with your older employees and let them know they are valued members of your organization and should tell you if they feel they aren’t being treated fairly.

The best way to avoid age discrimination claims or any other type of workplace discrimination is to work with your employees to resolve any problems they identify. That way, there’s no need for anyone to file an EEOC charge or pursue a discrimination claim against you in court.

Is back pay mandatory?
The district court refused to award back pay to the county employees. Because the language of the ADEA itself doesn’t require an award of back pay, the district court believed it had the discretion to determine whether to grant such an award, and it exercised its discretion to deny the request for back pay. The EEOC appealed the denial of back pay to the 4th Circuit, and this time, the court of appeals reversed the district court.

The appeals court reasoned that even though the ADEA doesn’t require back pay, it still had to be awarded because the Act’s remedies incorporate the terms of the Fair Labor Standards Act (FLSA). The FLSA provides that employers “shall be liable” for the payment of lost wages. Accordingly, the 4th Circuit said that upon a finding of age
discrimination, lost wages in the form of back pay are mandatory remedies under the ADEA. Because the U.S. Supreme Court declined to review the 4th Circuit’s decision, back-pay awards for violations of the ADEA are now mandatory, at least for employers within the 4th Circuit.