PHILADELPHIA—The U.S. Equal Employment Opportunity Commission cannot publish and put into effect a proposed rule that would exempt retiree health care plans from the Age Discrimination in Employment Act, a federal judge ruled Wednesday.
EEOC's proposed regulation "is contrary to law and violates the clear intent of Congress in passing and amending the ADEA," ruled Judge Anita Brody of the U.S. District Court for the Eastern District of Pennsylvania.
Under Judge Brody's ruling, which the EEOC plans to appeal, the agency is permanently barred from publishing its rule, which effectively would have allowed employers, as many now do, to provide smaller health care benefits to Medicare-eligible retirees than they offer to younger retirees.
Judge Brody's decision—sought by the AARP, which challenged the EEOC rule—continues the uncertainty for employers as to whether long-accepted retiree health care plan design violates the ADEA.
That uncertainty began in August 2000, when the 3rd U.S. Circuit Court of Appeals, in the so-called Erie County case, ruled that retiree health care plans are subject to ADEA. To prevent a charge of age discrimination under standard ADEA rules, employers either would have to spend the same amount of money for health care benefits or provide the same level of benefits for older and younger retirees.
The EEOC initially enforced the Erie County ruling but later stopped enforcement after business and labor groups warned that employers would drop coverage for both groups of retirees rather than upgrade benefits for Medicare-eligible retirees.
Judge Brody, though, said she was "controlled by Congress' intent, as expressed in the plain language of ADEA and as interpreted by the Third Circuit," and thus the proposed exemption is invalid.
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