Charles Lickteig, a 61-year-old man employed by the Jefferson County Sheriff’s Department (“Sheriff’s Department”), filed an age discrimination charge with the Equal Employment Opportunity Commission (“EEOC”) after the Kentucky Retirement Systems (“KRS”) denied his request for disability retirement benefits because Mr. Lickteig was already of retirement age.  The EEOC subsequently brought charges against KRS, the Commonwealth of Kentucky and the Sheriff’s Department, alleging that the state disability retirement system violates the ADEA by denying or paying lower benefits to disabled employees old enough to retire. 

Under the state’s disability retirement plan, state and county employees who work in hazardous jobs and become disabled are only entitled to normal retirement benefits—or 2.5 percent of their final salary multiplied by the number of years of service—after: (a) reaching 55, with at least five years of service; or (b) at least 20 years of service.  The state plan, on the other hand, credits younger workers with the number of years of service required for the worker to reach 55 years of age or twenty years of service, up to the number of years the employee actually worked. 

Thus, in Mr. Lickteig’s case, his retirement benefits—based on 18 years of service—would be less than the retirement benefits of an employee under age 55 with 18 years of service.  As the EEOC explained in its brief to the Supreme Court, “If a 54-year-old employee with ten years of service becomes disabled, KRS will impute one additional year and will calculate the worker’s disability retirement benefits as though he had served for 11 years.  A 45-year-old disabled worker with ten years of service, by contrast, would be credited with ten imputed years, and his benefits would be calculated on the basis of 20 years of service.”

The district court granted summary judgment in favor of defendants and a panel of the Sixth Circuit Court of Appeals affirmed the decision.  However, the full Sixth Circuit reversed, finding in favor of the EEOC.  It ruled that the state’s disability retirement plan is “facially discriminatory” on the basis of age because: (1) it denies employees over age 55 disability benefits which are available to similarly situated younger employees; and (2) “employees who become disabled when they are still ‘young enough’ to be eligible for disability-retirement benefits receive reduced benefits compared to otherwise-similar but even younger disabled employees for no reason other than their age.”  Thus, the EEOC need not demonstrate discriminatory intent in order to establish a prima facie case of disparate treatment age discrimination in violation of the ADEA, the court ruled. 

Holding that the disparity in pension eligibility and benefits inherent in Kentucky’s retirement system is not “actually motivated” by age, the Supreme Court reversed.  While pension benefits and age often go “hand in hand,” the high court explained, an employer could “easily ‘take account of one while ignoring the other.’” 

Writing for the majority, Justice Breyer articulated the proper test as follows: “Where an employer adopts a pension plan that includes age as a factor, and that employer then treats employees differently based on pension status, a plaintiff, to state a disparate treatment claim under the ADEA, must adduce sufficient evidence to show that the differential treatment was ‘actually motivated’ by age, not pension status.”  According to a slim majority of the Court, the EEOC did not meet this test.

The Court pointed to the following six factors which guided its determination that Kentucky did not use pension benefits impermissibly as a proxy for age:

1. Age and pension status are “‘analytically distinct’ concepts”;
2. The benefits are offered to all employees in similar positions on the same terms, and Congress has approved systems, such as Social Security Disability Insurance, which, like Kentucky’s plan, calculate permanent disability benefits with a formula that takes age into account;
3. There is a non-discriminatory reason for the discrepancy: “[T]he whole purpose of the disability rules is… to treat a disabled worker as though he had become disabled after, rather than before, he had become eligible for normal retirement benefits.  Age factors into the disability calculation only because the normal retirement rules themselves permissibly include age as a consideration”;
4. In some cases, an older worker could have more additional years of service imputed than a younger worker; 
5. Kentucky’s system does not rest on improper stereotypes which the ADEA was designed to stop; and 
6. Practical issues would make it difficult for the state to correct the plan short of cutting the benefits available to disabled workers who are not pension-eligible. 

The Court made clear that its holding did not displace the legal principle that a facially discriminatory statute or policy suffices to show disparate treatment without any proof of discriminatory intent.  

Justice Kennedy dissented, along with Justices Scalia, Ginsburg and Alito, arguing that the majority’s decision puts the “[ADEA] and its enforcement on a wrong course.”  According to the dissent, “When it treats these employees differently on the basis of pension eligibility, Kentucky facially discriminates on the basis of age.”