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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v. BALTIMORE COUNTY, et al. Defendants. * * * * * * * * * * ************** MEMORANDUM In this action brought under the Age Discrimination in Employment Act (the "ADEA"), the U.S. Equal Employment Opportunity Commission (the "EEOC") challenges an aspect of the Baltimore County pension system that governs employees hired prior to July 1, 2007. Under that system, the percentage of salary that new-hires pay into Baltimore County's pension plan varies depending on the number of years to retirement eligibility. For example, a thirty-year-old newhire contributes more than a twenty-year-old new-hire. In its suit, the EEOC contends that this provision discriminates against older workers. Following discovery, the parties filed cross-motions for summary judgment. The Court heard oral argument on December 16, 2008. The Court concludes that the former Baltimore County plan does not violate the ADEA because (i) Baltimore County was motivated by a permissible principle, the time value of money, rather than the age of new-hires, and (ii) retirement benefits of older new-hires accrue faster than do the benefits of younger new-hires. Thus, the Court will, by separate order: (1) deny the EEOC's motion, (2) grant Baltimore County's motion, and (3) close the case.

Civil No. L-07-2500

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I.

FACTUAL BACKGROUND Pursuant to Article 5 of the Baltimore County Code, Baltimore County maintains a

defined benefit pension plan known as the Employee Retirement System (the "ERS"). Participation in the ERS is mandatory for full-time employees younger than fifty-nine years old. The ERS requires employees to contribute a percentage of their salaries to the pension plan, which is also funded by employer contributions. For individuals hired prior to July 1, 2007, the percentage employees are required to contribute varies from employee to employee, and is determined by a worker's age at the time of enrollment. For example, an employee who enrolls in the ERS at age twenty is required to contribute 4.42% of his salary, whereas an employee who enrolls at age fifty-eight must contribute 7.65% of his salary. In other words, the older an employee is when he enrolls in the ERS, the greater the amount deducted from his paycheck as a contribution to the fund. Similarly, Baltimore County contributes more towards the relative cost of funding retirement benefits for older new-hires. Thus, while older new-hires contribute more towards their retirement benefits, they bear progressively less of the relative cost of those benefits. On June 6, 2007, Baltimore County changed its pension system. Under the new system, employees hired after July 1, 2007 contribute to the ERS at a flat rate, regardless of their age at the time of hiring. As noted above, individuals hired before that date make contributions at rates determined by their age at the time of enrollment. The EEOC brings this action on behalf of older Baltimore County workers hired prior to July 1, 2007.1

It should be noted that the ADEA only protects workers aged forty and above. As a result, had the EEOC prevailed, determining the relief to be awarded would not have been straightforward. For example, a thirty year old new-hire would not receive ADEA protection for ten years. 2

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In April 1999 and January 2000, the EEOC issued Notices of Charge of Discrimination to Baltimore County on behalf of Richard Bosse and Wayne Lee, correctional officers with the Baltimore County Bureau of Corrections. Both Bosse and Lee claimed that requiring older newhires to contribute more than younger new-hires discriminates against employees on the basis of age. While Baltimore County denies that its former pension system was discriminatory, it nonetheless cooperated in the EEOC's investigation and provided details about the ERS. On August 24, 2000, in response to a request for additional information, Baltimore County provided the EEOC with financial data concerning the relationship between an ERS participant's age and his retirement costs. The EEOC did not respond, and no further actions were taken for over five years. On March 6, 2006, the EEOC notified Baltimore County that it had determined that the ERS violated the ADEA. After the parties' settlement efforts failed, the EEOC filed suit on September 18, 2007, alleging that Baltimore County's practice of requiring older workers to contribute more to the mandatory pension plan violates Section 4(a)(1) of the ADEA. 2 29 U.S.C.

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