Courts continue to give companies confusing signals on how to correlate special early retirement plans with the demands of the law against age discrimination. In the most recent ruling, the employer -- National Geographic Society -- won. But the opinion from the U.S. Court of Appeals in Chicago still opens the way to a lot of litigation.
Certainly the May 29 ruling in Henn v. National Geographic gives personnel managers a lot more freedom than they got from the U.S. Court of Appeals in New York in an opinion issued in March. That decision held that every one-time-only early retirement plan that hinged on the age of the worker was a prima facie violation of the Age Discrimination in Employment Act.
That doesn't mean an employer cannot make such offers to reduce a work force. But it does mean that any disgruntled worker covered by such an option can get a trial on a complaint that the plan is unlawfully discriminatory, and that the company can win only by showing there is a solid business justification for the program and that the worker's decision to retire is truly voluntary.
The ADEA guarantees older workers will not be discriminated against, Judge Frank H. Easterbrook explained. And as he and his colleagues see it, offering a worker the boon of early retirement is hardly discriminating against him or her.
The National Georgraphic plan was only for members of the advertising sales force over age 55. Four of the 12 who took the society's offer complained that they were pressured into saying "yes" because they were warned that if they did not retire, their sales results had to be a lot better. Such a warning was justified by their mediocre individual ad totals, Easterbrook wrote. With records that could justify a firing, a company has the right to lean on an employe to take early retirement instead, the judges agreed.
But the Chicago opinion hardly means businesses in Indiana, Illinois and Wisconsin -- the states where federal litigation is controlled by that appellate court -- are home free in designing early retirement options.The judges said that such a plan can become unlawfully discriminatory if those it covers do not get enough time to weigh it carefully and work out the alternatives with a financial adviser.
And the decision upholding the National Geographic plan suggests that had there been different plaintiffs, the outcome might have been different. Had similar workers who were just short of their 55th birthday complained that in not getting an early retirement offer they were being discriminated against because of their age, the judges would have found that a much stronger case.
Meanwhile, judges in the 10 other federal judicial circuits now have two conflicting opinions to look at; so business has little clue about which model they will follow.
In other cases, courts ruled that:
Companies get bigger tax deductions for pension liability than the Internal Revenue Service thought. The tax collectors argued that when a company switches to a new retirement plan, it should get a deduction only for the unfunded part of the obligation it picks up for the past service of those then on the payroll. But the IRS held that view of the law unreasonable, and said the deduction should be only for the unfunded part of the liability. For one firm that fought the Service, it meant the difference between $15.6 million in deductions and $3.3 million. The U.S. Court of Appeals in Philadelphia sided with the taxpayers, reasoning that if Congress meant the deduction to be only for unfunded liability, the lawmakers would have said so. AMP v. U.S., June 4 The government has to enforce safety rules at its own facilities. Despite objections from Washington, the U.S. District Court in Trenton, N.J., gave the go-ahead to a suit against the Army by a civilian construction worker injured at a military post. It is up to the government whether to have a safety program, the judge explained, and its decision on that question may not be attacked in a lawsuit. But once safety provisions are written into a contract, the government has a duty to enforce them, and must pay damages if officials' being sloppy about that duty cause someone to be hurt.
Pelham v. U.S., June 4 Insurers must pay for the loss of the company of an unborn child killed in an accident. The insurance company insisted the word "person" in a liability policy applies only to those already born. But the Iowa Supreme Court said that is so only for certain kinds of claims. Actual death damages may not be collected by family members of an unborn, they agreed. But the parents of a fetus close enough to term to have been viable can recover for the degree to which their own life is made less rich because of the death of the child.
Craig v. IMT Insurance, June 17 A motorist accused of drunken driving has the right to a jury trial. The Supreme Court in 1970 said a defendant facing a possible jail term of six months or more has a right to a jury trial. But the U.S. Court of Appeals in New Orleans has ruled that even with shorter jail terms, the total punishment for a criminal conviction may be so serious that the Constitution demands the defendant get a jury trial if he or she wants one. Landry v. Hoepfner, June 3Moskowitz covers legal affairs for McGraw-Hill World News.