WEAC Issues Statement Regarding Federal Action on Early Retirement Incentive Plans
September 28, 2000
WEAC's Office of General Council has received many calls
regarding the recent news about the United States Equal Employment Opportunity
Commission's (EEOC) actions concerning retirement programs.
About two years ago the Seventh Circuit Court of Appeals
decided in Solon vs. Gary Community School Corp. that early retirement
incentive plans (ERIPs) tied directly to age could be illegal. The law
previously seemed to say that age-based incentive systems were legal as
long as they were truly voluntary, and federal courts outside of the 7th
Circuit still allow voluntary age-based ERIPs.
After the Solon decision, the Milwaukee EEOC office
reevaluated its position on ERIPs and challenged hundreds of Minnesota
plans. Most employers there agreed to the EEOC changes, although some
have filed suit challenging them.
Now the EEOC has turned its attention to Wisconsin.
The EEOC contacted many Wisconsin school districts this summer asking
questions about the early-retirement language in their collective bargaining
agreements and side letters.
Since then the EEOC has issued complaints against some
districts and asked them to enter into settlement agreements.
No unions have been contacted or charged as of this
date.
WEAC's attorneys believe the Solon decision will be
overruled by the U.S. Supreme Court or modified by the 7th Circuit. But
for now it is the law and it must be respected.
WEAC has been and is continuing to advise school districts
to remove direct or indirect reference to age in their retirement programs,
but understands the difficulty of doing this under the limitations the
state government has placed on local school budgets and collective bargaining.
WEAC's Center for Collective Bargaining and Office of
General Counsel are working closely with UniServ directors to ensure that
the rights of members and locals are preserved. We are forming a work
team that will develop interim bargaining "solutions" for as long as Solon
is in effect, and we are analyzing potential legislative solutions to
resolve the issue on a national level.
WEAC has been following this issue closely for the past
year and is well versed in this area of the law. We do not believe that
an employer can reduce a vested benefit for any retired employee, and
have reason to believe that the EEOC's position may ultimately help locals
bargain better retirement packages.
We will keep you updated.
Posted September 28, 2000