Certain employees of Minnesota state agencies used to find themselves in a difficult position as their fifty-fifth birthday approached. If they agreed to retire before they turned 55, the state would continue to pay the employer’s portion of the employees insurance premiums, ranging from 85 to 100 percent, until the employee reached the age of 65. But, if the employee continued to work past the age of 55, the state would not pay any of their premiums once they retired. So while an employee that retired at 54 would have their retirement insurance premiums paid by the state, an employee retiring just a year later would be responsible for the full price of the retiree insurance premiums.
In response to this situation that was known as the ‘Age 55 cliff,’ the U.S. Equal Employment Opportunity Commission (EEOC) filed an age discrimination lawsuit against these agencies. The federal courts agreed that this practice constituted unlawful age discrimination. Now a court has approved a consent decree that requires the agency to pay restitution to the employees.
This consent decree applies to the Minnesota Board of Public Defense (BOPD) and concludes the last of the lawsuits that were originally filed against six different state agencies. A federal district court had initially determined that this practice was age discrimination and that decision was upheld by the Eighth Circuit Court of Appeals.
A spokesperson for the EEOC said that “as the courts recognized, it is arbitrary and unlawful for employers to maintain incentive plans that explicitly reduce benefits as people grow older.” No worker should be treated unfairly simply as a function of their age.
Source: Jobmouse, “Minnesota to Pay Damages, Insurance Coverage to Resolve EEOC Age Discrimination Lawsuit,” May 3, 2012.