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EEOC Revokes Policy Requiring Same Benefits for Retirees.

By unanimous vote, the U.S. Employment Opportunity Commission (EEOC) reversed its policy of enforcing the Age Discrimination in Employment Act (ADEA) against employers who provide lesser health care benefits to Medicare-eligible retirees than to its younger retirees. After holding a series of meetings concerning the application of the ADEA to employer-sponsored retiree health benefit plans, the EEOC concluded that the policy, which found retiree health plans that are reduced or eliminated on the basis of age or Medicare-eligibility violate the ADEA, must be revised.

The issue stems from a ruling a year ago by the 3rd U.S. Circuit Court of Appeals that held that the ADEA apply to retirees and their health insurance. The case, Erie County retirees Assn. et al vs. County of Erie, PA, et al, involved retired employees of Erie County, Pa., who sued the county over a health plan that offered different benefits to retirees eligible for Medicare than for younger retirees not eligible for Medicare. The 3rd Circuit found that the ADEA permitted lawsuits against employers who offered different retiree health care plans based on age. The ruling stunned many because it was generally understood that ADEA applied only when comparing benefits offered to younger and older employees, not to retiree health care plans.

On August 1, Tom Grundhoefer, general counsel at the League of Minnesota Cities and the League of Minnesota Cities Insurance Trust (LMC), traveled to Washington to attend the last series of EEOC meetings regarding the application of the ADEA to employment retiree benefits. Also present at the meeting were Laura Kushner and Kirk Withinsin from the Minnesota League (via telephone) and representatives from the Wisconsin Association of School Boards. Throughout the meeting, Grundhoefer raised the concern that the crux of the issue centered around the "lack of safe harbor" afforded to retirees once the cost issues of the retiree plans are addressed. Specifically, there was no consensus that Medicare could be accepted as a sufficient `safe harbor' for municipalities offering early retiree packages.

Explaining the decision to rescind and review the policy, the EEOC's new chair, Cari M. Dominguez, said that after hearing from "a wide range of stakeholders ... the commission shares these concerns, and our review will focus on the development of a new policy, consistent with the ADEA, that does not discourage employers from providing this valuable benefit."

The EEOC meeting did, however, bring out clarity on three issues. First, municipalities and over 700 school districts charged with an Erie breach should have received a letter informing them that EEOC would not pursue any suits against them. Second, any municipality or school district that has or is offering cash-only retirement options are in "violation of settled law." Finally, the only municipalities potentially subject to litigation are those who employ mandatory retirement policies or offer cash incentives that are tied to age.

Details: The full text of the rescission is available on the agency's web site at
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Title Annotation:Employment Opportunity Commission
Author:Pluviose-Fenton, Veronique
Publication:Nation's Cities Weekly
Article Type:Brief Article
Geographic Code:1USA
Date:Sep 3, 2001
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