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)