Disability Benefits Based On ‘Pension Status,’ Not Age

Kentucky’s public safety retirement system allows police officers, firefighters, and other “hazardous position” employees to retire and receive “normal retirement” benefits after either (1) 20 years of service, or (2) five years of service and attaining the age of 55. The retirement system also allows those that become seriously disabled but have not otherwise become eligible for retirement to retire immediately and receive “disability retirement benefits.”

However, if an employee continues working after the “normal retirement” age and later becomes disabled, the employee is not eligible for disability retirement benefits.

Charles Lickteig, a deputy sheriff with the Jefferson County, Kentucky Sheriff’s Department, became eligible for retirement at age 55. Lickteig continued to work until age 61, when he became disabled and retired. When the State granted him a service-based retirement benefit rather than a disability benefit, Lickteig filed a complaint with the Equal Employment Opportunity Commission, contending he was the victim of age discrimination.

In a 5-4 decision, the United States Supreme Court rejected the EEOC’s argument. The Court found that “as a matter of pure logic, age and pension status remain analytically distinct concepts. That is to say, one can easily conceive of decisions that are actually made because of pension status and not age, even where pension status is itself based on age.

“Congress had otherwise approved of programs that calculate permanent disability benefits using a formula that expressly takes account of age. For example, the Social Security Administration now uses such a formula in calculating Social Security Disability Insurance benefits. There is a clear non-age-related rationale for the disparity at issue here. The manner in which Kentucky calculates disability retirement benefits is in every important respect but one identical to the manner in which Kentucky calculates normal retirement benefits. The one significant difference consists of the fact that the plan imputes additional years of service to disabled individuals. But the plan imputes only those years needed to bring the disabled worker’s years of service to 20 with the number of years that the individual would have worked had he worked to age 55. It is obvious, then, that the whole purpose of the disability rules is to treat a disabled worker as though he had become disabled after, rather than before he had become eligible for normal retirement benefits. Age factors into the disability calculation only because the normal retirement rules themselves permissibly include age as a consideration.”

Four dissenting judges argued that the Court’s opinion gutted some of the important provisions of the Age Discrimination in Employment Act, and that the decision “ignores established rules for interpreting and enforcing one of the most important statutes Congress has enacted to protect the Nation’s workforce from age discrimination.”

Kentucky Retirement Systems v. Equal Employment Opportunity Commission, 128 S.Ct. 2361(2008).

NOTE: The Court’s decision is quite unusual in that the majority opinion included two justices, Justices Stevens and Souter, who tend to cast their votes in favor of employees in labor disputes, where the dissenting opinion (arguing that age discrimination existed) included three justices, Justices Kennedy, Scalia, and Alito, who routinely vote for employers in labor disputes.

This article appears in the August 2008 issue