Continuation of the county pension scheme for disabled retirees

Carry: The department’s ability to demonstrate that the pension plan had a rational connection to a legitimate government purpose was key to its success on appeal. Government employers should ensure that they can do the same when implementing a policy that could be considered to discriminate against people with disabilities.

Indiana County pension plan that provides cost-of-living increases for able-bodied retirees, but not disabled retirees, does not constitute unlawful discrimination, says U.S. 7th Circuit Court of Appeals .

The plaintiff in this case was a former police officer with the Lake County Sheriff’s Department in Indiana, who suffered an injury on the job that left him with a permanent disability. The plaintiff retired and started to receive a monthly disability pension.

The department pays monthly retirement benefits to retirees and those taking early retirement due to disability. For non-disabled retirees, the ministry calculates benefits based on the number of years the retiree has worked. Once a retiree reaches age 55, they become eligible for annual increases based on the cost of living. For employees who take early retirement due to disability, the department calculates benefits as if that person had been employed for 32 years, but is not eligible for cost of living increases. The plaintiff sued Lake County, arguing that this policy violated the Equal Protection Clause of the Fourteenth Amendment and other laws that protect workers with disabilities.

The lower court did not rule on the merits of the plaintiff’s case, but rather ruled that his claims were barred by a prior settlement agreement. On appeal, the 7th Circuit reversed and found that the earlier agreement did not preclude Plaintiff’s claims because it expressly stated that it would not affect Plaintiff’s pension and other retirement benefits. In addition, the settlement agreement did not cover claims that arose after the effective date of the agreement.

Regarding the merits of plaintiff’s claim, the 7th Circuit ruled that the county pension plan did not violate the Equal Protection Clause. The appeals court noted that the county had a legitimate interest in providing pension plans that meet the different needs of distinct groups. The cost of living adjustment is just one of the many differences between the plans.

Non-disabled retirees, for example, are required to contribute a portion of their salary to the scheme each year until they become eligible for retirement, and they only become eligible after 20 years of employment. On the other hand, employees who retire due to disability receive benefits upon retirement, regardless of the length of their employment with the department. The applicant had worked for the department for only eight years before beginning to receive disability pension benefits. The appeals court noted that disabled pensioners also receive a lump sum of all contributions they had previously made to the plan with interest, unlike non-disabled pensioners.

Considering the different plans as a whole, the appeals court found that the differences between the plans were rationally related to the county’s legitimate interest in providing benefits that met the needs of all employees, past and present. The appeals court determined that Lake County could have reasonably believed that former employees with disabilities would benefit more from an initial lump sum than from a cost-of-living adjustment provided in future years. In addition, the court had a legitimate interest in promoting long-term careers in the department and providing more generous benefits to employees who have worked there the longest.

Based on the above, the appeals court held that the county’s policy did not violate the Equal Protection Clause, noting that local government decisions may survive review under the Equal Protection Clause. equality of protection even if they only partially achieve the legitimate interest of the government which they aim to promote.

Ostrowski v. Lake Cty.7th Cir., No. 21-1674/21-2580, 2022 WL 1486054 (May 11, 2022).

Rebekah Ray is an associate at Marr Jones & Wang LLP, the Worklaw® Network member firm in Honolulu.

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