Employees who were older at the time of hire receive smaller pensions than those hired at younger ages: Age discrimination: Settlement

Law Reporter, May 2003

Arnett v. California Pub. Employee Ret. Sys., U.S. Dist. Ct., N.D. Cal., No. 95-03022 CRB, Jan. 29, 2003.

Arnett was a police officer in California who was hired at age 43. He suffered permanently disabling injuries after five years on the force. He retired and claimed his pension.

Under California's pension system, it was assumed that an officer would retire at age 55. An officer hired at age 30 received 50 percent of the officer's annual salary as a pension. For officers hired after age 30, the system provided that the pension amount would be reduced by 2 percent of salary for each year of age over 30 at time of hire. Using this calculation, Arnett's pension amount was 32 percent of his annual salary.

Arnett and six other officers sued the retirement system. The U.S. Equal Employment Opportunity Commission intervened in the suit. Suit alleged age discrimination in violation of the Age Discrimination in Employment Act of 1967, 29 U.S.C. [sec][sec] 621 et seq.

The parties reached a settlement. Under its terms, defendant will eliminate the age-related disparity in pension payments for future payments, which are estimated at a present value of $200 million. Additionally, defendant will provide $50 million in retroactive benefits for officers whose payments were lower under the system.

Plaintiffs' Counsel

Ellen Lake, Oakland, Cal.

Edward L. Faunce, Seal Beach, Cal.

*Steven R. Pingel, Seal Beach, Cal.

* Thomas E. Frankovich,

*William R. Tamayo,

David F. Offen-Brown, and

Raymond T. Cheung, all of San Francisco, Cal.

Laurie A. McCann, Washington, D.C.

Jennifer S. Goldstein, Washington, D.C.