A school district would have had to lay off school teachers to comply with U.S. Equal Employment Opportunity Commission demands in an age discrimination charge filed against it because of its early retirement incentive plan, says the district's attorney.

The EEOC announced Wednesday that it had charged Murphy School District No. 21 in Phoenix with violating the Age Discrimination in Employment Act for unlawfully using an early retirement incentive plan that provides greater economic benefits to younger retirees based on their age.

School district attorney Bradley Gardner, a partner with law firm Udall Shumway P.L.C. in Mesa, Ariz., would not reveal how much money was involved but said complying with the agency's demands would have meant laying off teachers at the district, which includes four schools, and increasing class size.

“We've been trying to work out a settlement with the EEOC” but have been unsuccessful, said Mr. Gardner, who added no complaints had been filed with the EEOC in connection with the early retirement incentive plan, which has been in place since the 1980s.

“They decided on their own initiative it was a violation of the law,” he said.

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He said the school district has now dropped the policy.

The lawsuit filed on Wednesday seeks monetary relief for all retirees who retired between 2008 and the present and were age 62, 63, 65 or older when they retired. This includes the amount of money a retiree would have received except for the discrimination, plus prejudgment interest and liquidated damages.

Mr. Gardner said the EEOC “has been fairly hard and fast in terms of the money they want.”

The EEOC is treating the school district like “this is a huge school district with a lot of disposable cash, and that just isn't the case. In fact, they operate on a very thin budget,” Mr. Gardner said.

An EEOC spokeswoman had no further comment. Earlier in the week, EEOC regional attorney Mary Jo O'Neill said in a statement, “early retirement incentive plans like this which are facially age discriminatory need to be changed. People in their 60s should not be penalized merely because they want to continue working.”