Pension Case Worth Watching
In August of 2018, EEOC filed a lawsuit against Urbana School District charging age discrimination due to a provision in its collective bargaining agreement which allegedly limits increases in salary during the last ten years preceding an employee's retirement. The purpose of such limitation, of course, is to prevent retirement system penalty to the school district, but EEOC charges that such a provision, which means a late career employee is entitled to a smaller increase in salary than an early career teacher, is illicit age discrimination.
The apparently relevant provision of the collective bargaining agreement reads:
Notwithstanding any of the other provisions of this agreement, no teacher who is less than ten (10) years from retirement eligibility may receive an overall increase in total reportable creditable earnings in excess of six percent (6%) of the previous year's total reportable creditable earnings, unless the payment causing the teacher to exceed the six percent (6%) salary threshold is specifically exempt by statute or regulation from the payment of any penalty or other monies constituting a surcharge to the Teachers' Retirement System.
While the case does not directly ask the question whether a teacher retirement salary enhancement incentive is violative of the law, it is conceivable that the outcome of the case may have broader impact beyond the narrow language of the contract above. Particularly as districts grapple with the now lower "3%" threshold imposed by Public Act 100-587, it is important for school districts to consider the effect of a salary threshold limitation which may have an impact on late-career teacher earnings.