Skip to main content

District’s 6% Limitation in CBA Found to Constitute Age Discrimination

In 2018, the EEOC filed an age discrimination suit on behalf of employees of Urbana School District No. 116 alleging that employees’ pay increases were restricted on the basis of age. Specifically, the EEOC pointed to language in the school district’s collective bargaining agreement (“CBA”) with its teaching staff that provided as follows:

“Notwithstanding any of the other provisions of this agreement, no teacher who is less than ten (10) years from retirement eligibility may receive an overall increase in total reportable creditable earnings  in  excess  of  six  percent  (6%)  of  the  previous   year’s   total   reportable   creditable   earnings,   unless   the   payment   causing   the   teacher  to  exceed  the  six  percent  (6%)  salary  threshold  is  specifically  exempt  by  statute  or  regulation  from  the  payment  of  any  penalty  of  other  monies  constituting  a  surcharge  to  the  Teachers’ Retirement System. Should the Illinois General  Assembly  or  the  Teachers’  Retirement  System  impose  a  salary  threshold  greater  or  lesser than the six percent (6%) threshold thereby causing  the  payment  of  any  penalty  or  other  monies constituting a surcharge to TRS, then this agreement  shall  automatically  incorporate  this  new threshold upon its effective date.”

In ruling for the EEOC, the court found that teachers within 10 years of retirement who should have been entitled to salary increases greater than 6% based on taking lane and step movement on the salary schedule were nonetheless limited to 6% salary increases as a result of the CBA language. Likewise, the court found that teachers within 10 years of retirement were prevented from earning additional pay through extra-curricular work. The court determined that the CBA language and resulting salary limitations only affected those employees who were 45 years of age or older. On the EEOC’s motion for summary judgment, the court ruled in the EEOC’s favor and found that restricting employees’ pay increases based on this CBA language constituted unlawful age discrimination.

In its defense, the District argued that limiting pay increases for those within 10 years of retirement was not unlawful because it was motivated by a desire to avoid TRS penalties for exceeding 6% salary thresholds, not age.  This “RFOA” (“reasonable factor other than age”) defense, however, was rejected by the court. The court ultimately order the school district to pay more than $51,000 in damages.

This case is important because many school districts have similar language in their collective bargaining agreements restricting salary increases for employees nearing retirement in an effort to avoid TRS penalties.

Please contact Barb Erickson or any attorney in our Labor/Personnel Practice Group with questions about employee retirement incentives in collective bargaining agreements.

Source:  EEOC v. Urbana School District No. 116, No. 18-cv-2212, 2023 WL 7354553 (C.D. Ill. November 7, 2023)