KENNEDY, J., DISSENTING
KENTUCKY RETIREMENT SYSTEMS V. EEOC
554 U. S. ____ (2008)
SUPREME COURT OF THE UNITED STATES
NO. 06-1037
KENTUCKY RETIREMENT SYSTEMS, et al.,
PETITIONERS
v. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
on writ of certiorari to the united states court of
appeals for the sixth circuit
[June 19, 2008]
Justice Kennedy, with whom
Justice Scalia, Justice Ginsburg, and Justice Alito join,
dissenting.
The Court today ignores
established rules for interpreting and enforcing one of the most
important statutes Congress has enacted to protect the Nation’s
work force from age discrimination, the Age Discrimination in
Employment Act of 1967 (ADEA or Act), 81 Stat. 602, as amended, 29
U. S. C. §621
et seq. That Act prohibits employment
actions that “discriminate against any individual with respect to
his compensation, terms, conditions, or privileges of employment,
because of such individual’s age.” §623(a)(1). In recent years
employers and employees alike have been advised by this Court, by
most Courts of Appeals, and by the agency charged with enforcing
the Act, the Equal Employment Opportunity Commission (EEOC), that
the most straightforward reading of the statute is the correct one:
When an employer makes age a factor in an employee benefit plan in
a formal, facial, deliberate, and explicit manner, to the detriment
of older employees, this is a violation of the Act. Disparate
treatment on the basis of age is prohibited unless some exemption
or defense provided in the Act applies.
The Court today undercuts this basic
framework. In doing so it puts the Act and its enforcement on a
wrong course. The decision of the en banc panel of the Court of
Appeals for the Sixth Circuit, which the Court reverses, brought
that Circuit’s case law into line with that of its sister Circuits.
See
EEOC v.
Jefferson Cty. Sheriff’s Dept., 467
F. 3d 571, 573 (2006) (overturning
Lyon v.
Ohio
Ed. Assn. and Professional Staff Union, 53 F. 3d 135
(1995)); see also,
e.g.,
Jankovitz v.
Des
Moines Independent Community School Dist., 421 F. 3d 649,
653–655 (CA8 2005);
Abrahamson v.
Board of Ed. of
Wappingers Falls Century School Dist., 374 F. 3d 66,
72–73 (CA2 2004);
Arnett v.
California Public
Employees Retirement System, 179 F. 3d 690, 695–697 (CA9
1999);
Auerbach v.
Board of Ed. of Harborfields
Central School Dist.
of Greenlawn, 136 F. 3d
104, 109–114 (CA2 1998);
Huff v.
UARCO, Inc., 122
F. 3d 374, 387–388 (CA7 1997). By embracing the approach
rejected by the en banc panel and all other Courts of Appeals that
have addressed this issue, this Court creates unevenness in
administration, unpredictability in litigation, and uncertainty as
to employee rights once thought well settled. These consequences,
and the Court’s errors in interpreting the statute and our cases,
require this respectful dissent.
Even were the Court correct that Kentucky’s
facially discriminatory disability benefits plan can be justified
by a proper motive, the employer’s own submission to us reveals
that the plan’s discriminatory classification rests upon a
stereotypical assumption that itself violates the Act and the
Court’s own analytical framework.
As a threshold matter, all should concede that
the paradigm offered to justify the statute is a powerful one: The
young police officer or firefighter with a family is disabled in
the heroic performance of his or her duty. Disability payments are
increased to account for unworked years of service. What the Court
overlooks, however, is that a 61-year-old officer or firefighter
who is disabled in the same heroic action receives, in many
instances, a lower payment and for one reason alone: By explicit
command of Kentucky’s disability plan age is an express
disadvantage in calculating the disability payment.
This is a straightforward act of
discrimination on the basis of age. Though the Commonwealth is
entitled by the law, in some instances, to defend an age-based
differential as cost justified, 29 U. S. C. §623(f)(2)(B)(ii),
that has yet to be established here. What an employer cannot do,
and what the Court ought not to do, is to pretend that this
explicit discrimination based on age is somehow consistent with the
broad statutory and regulatory prohibition against disparate
treatment based on age.
I
The following appears to be
common ground for both sides of the dispute: Kentucky operates dual
retirement systems for employees in hazardous occupations. An
employee is eligible for normal retirement if he or she has
accumulated 20 years of service with the Commonwealth, or is over
age 55 and has accumulated at least 5 years of service. If the
employee can no longer work as a result of a disability, however,
he or she is entitled to receive disability retirement. Employees
who are eligible for normal retirement benefits are ineligible for
disability retirement. See Ky. Rev. Stat. Ann. §§16.576, 16.577(2)
(Lexis 2003), 61.592(4) (Lexis Cum. Supp. 2003).
The distinction between normal
and disability retirement is not just a difference of nomenclature.
Under the normal retirement system benefits are calculated by
multiplying a percentage of the employee’s pay at retirement by
years of service. See §16.576(3) (Lexis 2003). Under the disability
system the years-of-service multiplier includes not only the
employee’s actual years of service but also the number of years it
would have taken the employee to become eligible for normal
retirement (subject to a cap equal to the number of actual years
served). See §16.582(5)(a). In other words employees in the normal
retirement system are compensated based solely on their actual
years of service; but employees in the disability retirement system
get a bonus, which accounts for the number of years the employee
would have worked had he or she remained healthy until becoming
eligible to receive normal retirement benefits.
Whether intended or not, the result of these
divergent benefits formulae is a system that, in some cases,
compensates otherwise similarly situated individuals differently on
the basis of age. Consider two covered workers, one 45 and one 55,
both with five years of service with the Commonwealth and an annual
salary of $60,000. If we assume both become disabled in the same
accident, the 45-year-old will be entitled to receive $1,250 in
monthly benefits; the 55-year-old will receive $625, just half as
much. The benefit disparity results from the Commonwealth’s
decision, under the disability retirement formula, to credit the
45-year-old with 5 years of unworked service (thereby increasing
the appliable years-service-multipler to 10 years), while the
55-year-old’s benefits are based only on actual years of service (5
years). In that instance age is the only factor that accounts for
the disparate treatment.
True, age is not a factor that reduces
benefits in every case. If a worker has accumulated 20 years of
service with the Commonwealth before he or she becomes disabled,
age plays no role in the benefits calculation. But there is no
question that, in many cases, a disabled worker over the age of 55
who has accumulated fewer than 20 years of service receives a lower
monthly stipend than otherwise similarly situated workers who are
under 55. The Court concludes this result is something other than
discrimination on the basis of age only by ignoring the statute and
our past opinions.
II
It is difficult to find a clear
rule of law in the list of policy arguments the Court makes to
justify its holding. The difficulty is compounded by the Court’s
own analysis. The Court concedes that, in this case, Kentucky’s
plan “placed an older worker at a disadvantage,”
ante, at
9; yet it proceeds to hold that the Commonwealth’s disparate
treatment of its workers was not “ ‘actually motivated’ by
age, ”
ante, at 10. The Court’s apparent rationale is
that, even when it is evident that a benefits plan discriminates on
its face on the basis of age, an ADEA plaintiff still must provide
additional evidence that the employer acted with an “underlying
motive,”
ante, at 9, to treat older workers less favorably
than younger workers.
The Court finds no support in the
text of the statute. In the wake of
Public Employees Retirement
System of Ohio v.
Betts,
492 U. S. 158 (1989),
where the Court held that bona fide employee benefit plans were
exempt from the coverage of the ADEA, Congress amended the Act to
provide that an employee benefit plan that discriminates on the
basis of age is unlawful, except when the employer establishes
entitlement to one of the affirmative defenses Congress has
provided. See Older Workers Benefit Protection Act (OWBPA), 104
Stat. 978, codified at 29 U. S. C. §623(f). As a result of the
OWBPA, an employer cannot operate an employee benefit plan in a
manner that “discriminate[s] against any individual … because of
such individual’s age,” §623(a), except when the plan is a
“voluntary early retirement incentive plan” or when “the actual
amount of payment made or cost incurred on behalf of an older
worker is no less than that made or incurred on behalf of a younger
worker,” §§623(f)(2)(B)(i)–(ii); see generally B. Lindemann &
D. Kadue, Age Discrimination in Employment Law 175 (2003). Under
any common understanding of the statute’s terms a disability plan
that pays older workers less than younger workers on the basis of
age “discriminate[s] … because of … age.” That is how the agency
that administers the statute, the EEOC, understands it. See 2 EEOC
Compliance Manual §3, p. 627:0004 (2001) (“[B]enefits will not
be equal where a plan reduces or eliminates benefits based on a
criterion that is explicitly defined (in whole or in part) by
age”). And the employer here has not shown that any of the
affirmative defenses or exemptions to the Act applies. That should
be the end of the matter; the employer is liable unless it can make
such a showing.
The Court’s holding stems, it asserts, from a
statement in
Hazen Paper Co. v.
Biggins,
507 U. S. 604 (1993),
that an employment practice discriminates only if it is
“ ‘actually motivated’ ” by the protected trait.
Ante, at 4 (quoting
Hazen Paper, 507 U. S., at
610; emphasis deleted). If this phrase had been used without
qualification, the Court’s interpretation of it might have been
justified. If one reads the relevant passage in full (with
particular emphasis on the second sentence), however,
Hazen
Paper makes quite clear that no additional proof of motive is
required in an ADEA case once the employment policy at issue is
deemed discriminatory on its face. The Court said this:
“In a disparate treatment case, liability depends
on whether the protected trait (under the ADEA, age) actually
motivated the employer’s decision.
See,
e.g.,
United States Postal Service Bd. of Governors v.
Aikens,
460
U. S. 711 (1983);
Texas Dept. of Community Affairs v.
Burdine, 450 U. S. 248, 252–256 (1981);
Furnco Constr.
Corp. v.
Waters,
438 U. S. 567, 576–578
(1978). The employer may have relied upon a formal, facially
discriminatory policy requiring adverse treatment of employees with
that trait.
See,
e.g., [
Trans World Airlines,
Inc. v.]
Thurston, [
469 U. S. 111 (1985)];
Los Angeles
Dept. of Water and Power v.
Manhart,
435 U. S. 702, 704–718 (1978). Or the
employer may have been motivated by the protected trait on an ad
hoc, informal basis.
See,
e.g.,
Anderson
v.
Bessemer City,
470 U. S. 564 (1985);
Teamsters [v.
United States,
431 U. S. 324, 334–343
(1977)]. Whatever the employer’s decisionmaking process, a
disparate treatment claim cannot succeed unless the employee’s
protected trait actually played a role in that process and had a
determinative influence on the outcome.”
Ibid.
In context the paragraph identifies a decision made
in reliance on a “facially discriminatory policy requiring adverse
treatment of employees with [a protected] trait” as a type of
employment action that is “actually motivated” by that trait. By
interpreting
Hazen Paper to say that a formal, facial,
explicit, mandated, age-based differential does not suffice to
establish a disparate-treatment violation (subject to statutory
defenses and exemptions), it misconstrues the precedent upon which
its entire theory of this case is built. The Court was right in
Hazen Paper and is wrong here.
At a minimum the Court should not cite
Hazen Paper to support what it now holds. Its conclusion
that no disparate-treatment violation has been established here
conflicts with the longstanding rule in ADEA cases. The
rule—confirmed by the quoted text in
Hazen Paper—is that
once the plaintiff establishes that a policy discriminates on its
face, no additional proof of a less-than-benign motive for the
challenged employment action is required. For if the plan
discriminates on its face, it is obvious that decisions made
pursuant to the plan are “actually motivated” by age. The EEOC (or
the employee) must prevail unless the employer can justify its
action under one of the enumerated statutory defenses or
exemptions.
Two cases cited in
Hazen Paper as
examples of “formal, facially discriminatory polic[ies],” stand for
this proposition. See
Trans World Airlines, Inc. v.
Thurston,
469 U. S. 111 (1985);
Los Angeles
Dept. of Water and Power v.
Manhart,
435 U. S. 702 (1978).
In
Thurston, the Court considered
whether Trans World Airlines’ transfer policy for older pilots
violated the ADEA. The policy allowed pilots to continue working
for the airline past the mandatory retirement age of 60 if they
transferred to the position of flight engineer. 469 U. S., at
115–116. But the 60-year-old pilot had to bid for the position.
Under the bid procedures a pilot who became ineligible to remain at
the controls on account of a disability (or even outright
incompetence) had priority over a pilot forced out due to age.
Id., at 116–117. The Court held the burden-shifting
framework of
McDonnell Douglas Corp. v.
Green,
411 U. S. 792
(1973), which is used to determine whether there was a
discriminatory motive at play, had no application because the
policy was “discriminatory on its face.” 469 U. S., at 121.
Manhart, a Title VII case, involved a
municipal employees’ retirement plan that forced female employees
to make larger contributions than their male counterparts. The
Court noted that even if there were no evidence that the policy had
a discriminatory “effect,” “that evidence does not defeat the claim
that the practice, on its face, discriminated against every
individual woman employed by the Department.” 435 U. S., at
716.
Just as the majority misunderstands
Hazen
Paper’s reference to employment practices that are “actually
motivated” by age, so too does it overstate what the
Hazen
Paper Court meant when it observed that pension status and age
are “analytically distinct.” 507 U. S.em>., at 611. The Court
now reads this language as creating a virtual safe harbor for
policies that discriminate on the basis of pension status, even
when pension status is tied directly to age and then linked to
another type of benefit program. The
Hazen Paper Court did
not allow, or support, this result. In
Hazen Paper pension
status and age were “analytically distinct” because the employee’s
eligibility to receive a pension formally had nothing to do with
age; pension status was tied solely to years of service. The Court
recognized that age and pension status were correlated (because
older workers were more likely to be pension eligible); but the
Court found the plan to be facially neutral with regard to age
precisely because age and pension status were not expressly linked
under the terms of the plan. See
id., at 613 (noting that
“we do not consider the special case where an employee is about to
vest in pension benefits as a result of his
age, rather
than years of service”). In order to prove disparate-treatment
liability the
Hazen Paper Court held that the plaintiff
needed to provide additional evidence that his termination in fact
was motivated by age.
Id., at 613–614.
The saving feature that was controlling in
Hazen Paper is absent here. This case is the opposite of
Hazen Paper. Here the age distinction is active and
present, not superseded and absent. Age is a determining factor of
pension eligibility for all workers over the age of 55 who have
over 5 (but less than 20) years of service; and pension status, in
turn, is used to determine eligibility for disability benefits. For
these employees, pension status and age are not “analytically
distinct” in any meaningful sense; they merge into one category.
When it treats these employees differently on the basis of pension
eligibility, Kentucky facially discriminates on the basis of age.
Were this not the case, there would be no facial age discrimination
if an employer divided his employees into two teams based upon
age—putting all workers over the age of 65 on “Team A” and all
other workers on “Team B”—and then paid Team B members twice the
salary of their Team A counterparts, not on the basis of age (the
employer would declare) but of team designation. Neither
Hazen
Paper nor the plain text of the ADEA can be read to permit
this result.
The closest the Court comes to reconciling its
holding with the actual text of the statute is its citation to the
Act’s exemption allowing employers to condition pension eligibility
on age.
Ante, at 7. Of course, the fact that it invokes an
exemption is a concession by the Court that the Act otherwise would
condemn the age-based classification Kentucky’s disability plan
makes. But the exemption provides no support for the Court’s
holding in any event. Its coverage is limited to “employee pension
benefit plan[s] [that] provid[e] for the attainment of a minimum
age as a condition of eligibility for normal or early retirement
benefits.” See 29 U. S. C. A. §623(
l)(1)(A)(i)
(Supp. 2007). There is no farther reaching exemption for subsequent
employment decisions based upon pension eligibility. And to the
extent the Court finds such a loophole to be implicit in the text
of the statute, a disability benefits program of the sort at issue
here is not the only type of employment policy that fits through
it. If the ADEA allows an employer to tie disability benefits to an
age-based pension status designation, that same designation can be
used to determine wages, hours, heath care benefits,
reimbursements, job assignments, promotions, office space,
transportation vouchers, parking privileges, and any other
conceivable benefit or condition of employment.
III
The Court recognizes some of the
difficulties with its position and seeks to limit its holding, yet
it does so in ways not permitted by statute or our previous
employment discrimination cases.
The Court notes that age is not
the sole determining factor of pension eligibility but is instead
just one factor embedded in a set of “complex system-wide rules.”
Ante, at 7. There is no suggestion in our prior ADEA
cases, however, and certainly none in our related Title VII
jurisprudence, that discrimination based on a protected trait is
permissible if the protected trait is one among many variables.
This is quite evident when the protected trait
is necessarily a controlling, outcome-determinative factor in
calculating employee benefits. In
Manhart, for instance,
sex was not the only factor determining how much an employee was
required to contribute to the pension plan on a monthly basis; the
employee’s salary, age, and length of service were also variables
in the equation. 435 U. S., at 705; Brief for Petitioners in
Los Angeles Dept. of Water and Power v.
Manhart,
O. T. 1977, No. 76–1810, p. 23. And even though the
employer’s decision to require higher contributions from female
employees was based upon an actuarially sound premise—that women
have longer life expectancies than men—the Court held that the plan
discriminated on its face. 435 U. S., at 711.
Similarly, we have said that the ADEA’s
substantive prohibitions, which were “derived
in haec
verba from Title VII,”
Lorillard v.
Pons,
434 U. S. 575,
584 (1978), require the employer “to ignore an employee’s age
(absent a statutory exemption or defense),”
Hazen Paper,
507 U. S., at 612. This statement perhaps has been qualified by the
Court’s subsequent holding in
General Dynamics Land Systems,
Inc. v.
Cline,
540 U. S. 581 (2004),
that the ADEA does not forbid employers from discriminating in
favor of older workers to the detriment of younger workers.
Reasonable minds may have disagreed about the merits of
Cline’s holding. See
id., at 601 (Scalia, J.,
dissenting); see also
id., at 602 (Thomas, J.,
dissenting). But
Cline does not dictate the path the Court
chooses here. For it is one thing to interpret a statute designed
to combat age discrimination in a way that benefits older workers
to the detriment of younger workers; it is quite another to do what
the Court does in this case, which is to interpret the ADEA to
allow a discriminatory employment practice that disfavors older
workers while favoring younger ones. The Court, moreover, achieved
the result in
Cline by reading the word “age” to mean “old
age”—
i.e., by reading “discriminat[ion] … because of [an]
individual’s age,” 29 U. S. C. §623(a), to mean discrimination
because of an individual’s advanced age. See
Cline,
supra, at 596. Here the Court seems to adopt a new
definition of the term “discriminate” by holding that there is no
discrimination on the basis of a protected trait if the trait is
one among several factors that bear upon how an employee is
treated. There is no principled way to draw this distinction, and
the Court does not attempt to do so. Cf.
Manhart,
supra, at 710 (“[T]here is no reason to believe that
Congress intended a special definition of discrimination in the
context of employee group insurance coverage”).
The Court recites what it sees as “several
background circumstances [that] eliminate the possibility that
pension status, though analytically distinct from age, nonetheless
serves as a ‘proxy for age’ in Kentucky’s Plan.”
Ante, at
7. Among these is a “clear non-age-related rationale,”
ibid., “to treat a disabled worker as though he had become
disabled after, rather than before, he had become eligible for
normal retirement benefits,”
ante, at 8. There is a
difference, however, between a laudable purpose and a rule of
law.
An otherwise discriminatory employment action
cannot be rendered lawful because the employer’s motives were
benign. In
Automobile Workers v.
Johnson Controls,
Inc.,
499 U. S.
187 (1991), the employer had a policy barring all female
employees, except those who were infertile, from performing jobs
that exposed them to lead. The employer said its policy was
designed not to reinforce negative gender stereotypes but to
protect female employees’ unborn children against the risk of birth
defects.
Id., at 191. The argument did not prevail. The
plan discriminated on its face on the basis of sex, and the
employer did not establish a bona fide occupational qualification
defense. As a result, the Court held that the restriction violated
Title VII. “[T]he absence of a malevolent motive [did] not convert
a facially discriminatory plan into a neutral policy with a
discriminatory effect.”
Id., at 199.
Still, even if our cases allowed the motive
qualification the Court puts forth to justify a facial and
operative distinction based upon age, the plan at issue here does
not survive the Court’s own test. We need look no further than the
Commonwealth’s own brief for evidence that its motives are contrary
to the ADEA. In its brief the Commonwealth refers to the
61-year-old complainant in this case, Charles Lickteig, as
follows:
“An employee in Mr. Lickteig’s position has had an
extra 21 years to devote to making money, providing for himself and
his family, saving funds for retirement, and accruing years that
will increase his retirement benefits. Thus, the 40-year-old
employee is likely to need more of a boost.” Brief for Petitioners
23.
The hypothetical younger worker seems entitled to a
boost only if one accepts that the younger worker had more
productive years of work left in him at the time of his injury than
Lickteig did. As an actuarial matter, this assumption may be sound.
It is an impermissible basis for differential treatment under the
ADEA, however. As we said in
Hazen Paper, the idea that
“productivity and competence decline with old age” is the “very
essence of age discrimination.” 507 U. S., at 610. By forbidding
age discrimination against any “individual,” 29 U. S. C.
§623(a), the ADEA forbids employers from using the blunt tool of
age to assess an employee’s future productivity. Cf.
Western
Air Lines, Inc. v.
Criswell,
472 U. S. 400, 409
(1985) (noting the Labor Department’s findings that “the process of
psychological and physiological degeneration caused by aging varies
with each individual”). Whether this is good public policy in all
instances might be debatable. Until Congress sees fit to change the
language of the statute, however, there is no principled basis for
upholding Kentucky’s disability benefits formula.
* * *
As explained in this dissent,
Kentucky’s disability retirement plan violates the ADEA, an Act
intended to promote the interests of older Americans. Yet it is no
small irony that it does so, at least in part, because the
Commonwealth’s normal retirement plan treats older workers in a
particularly generous fashion. Kentucky allows its employees to
retire at the age of 55 if they have accumulated only five years of
service. But for this provision, which links age and years of
service in a way that benefits older workers, pension eligibility
would be a function solely of tenure, not age. Accordingly, this
case would be more like
Hazen Paper, and the EEOC’s case
would be much weaker. Similarly, as the Court notes,
ante,
at 10, Kentucky could avoid any problems by not imputing unworked
years of service to any disabled workers, old and young alike.
Neither change to the plan would result in more generous treatment
for older workers. The only difference would be that, under the
first example, older workers would lose the option of early
retirement, and, under the second, younger workers would see their
benefits cut. These are not the only possible remedies—the
Commonwealth could impute unworked years of service to all
employees forced into retirement on account of a disability
regardless of age.
The Court’s desire to avoid
construing the ADEA in a way that encourages the Commonwealth to
eliminate its early retirement program or to reduce benefits to the
policemen and firefighters who are covered under the disability
plan is understandable. But, under our precedents, “ ‘[a]
benefit that is part and parcel of the employment relationship may
not be doled out in a discriminatory fashion, even if the employer
would be free … not to provide the benefit at all.’ ”
Thurston, 469 U. S., at 121 (quoting
Hishon v.
King & Spalding,
467 U. S. 69, 75 (1984)).
If Kentucky’s facially discriminatory plan is good public policy,
the answer is not for this Court to ignore its precedents and the
plain text of the statute.
For these reasons, in my view, the judgment of
the Court of Appeals should be affirmed and the case remanded for a
determination whether the State can assert a cost-justification
defense.
Comments
Be the first to comment
Leave a Comment