Employment Law Daily Retroactive back pay EEOC sought was mandatory legal remedy under ADEA
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Friday, September 21, 2018

Retroactive back pay EEOC sought was mandatory legal remedy under ADEA

By Joy P. Waltemath, J.D.

Vacating and remanding a district court’s denial of retroactive back pay to the EEOC under the ADEA, the Fourth Circuit found that Congress consciously chose to incorporate the powers, remedies, and procedures of the FLSA into the ADEA. Here, in a case in which the contribution rates for a county’s age-based employee retirement benefit plan were determined to be unlawfully based on age, the appeals court held that back pay awards under the ADEA are mandatory legal remedies, and the retroactive monetary award, such as the back pay sought here, was a mandatory legal remedy under the ADEA upon a finding of liability. The fact that the EEOC acknowledged that its own unreasonable delay in investigating resulted in the county incurring substantial additional back pay liability did not change the statutory analysis where the EEOC said it would not seek monetary relief for the excessive deductions that the county made before the commission issued its letter of determination (EEOC v. Baltimore County, September 19, 2018, per curiam).

Contributions rates to employee retirement benefit plan. The case, before the Fourth Circuit for a third time, originally involved whether the contribution rates of the county’s age-based employee retirement benefit plan were permissible based on financial considerations or whether they violated the ADEA. The district court eventually found the county had violated the ADEA by imposing disparate plan contribution rates based on age and awarded partial summary judgment on liability in favor of the EEOC. The Fourth Circuit affirmed summary judgment to the EEOC and remanded for consideration of damages. The parties later agreed to a strategy to gradually equalize contribution rates under the plan and entered into an approved joint consent order, which did not resolve claims for monetary relief, expressly indicating the court would address that relief later.

Retroactive back pay. And it did, ultimately denying the EEOC’s motion for retroactive monetary relief in the form of back pay, closing the case, and concluding that it had the discretion under the enforcement provision of the ADEA, 29 U.S.C. § 626(b), to wholly deny back pay. And, even if back pay were a mandatory remedy, the court said it would deny the relief according to its equitable powers because of the EEOC’s years-long delay in bringing the action. The EEOC appealed, arguing that the court lacked the discretion to decline to award back pay, but the county stressed the ADEA grants courts broad authority “to grant such legal or equitable relief as may be appropriate,” including denying back pay, under its enforcement provision. But, said the EEOC, the ADEA incorporated certain FLSA provisions that mandate violators “shall be liable” for back pay. Because back pay is a mandatory, legal remedy under the FLSA, the Fourth Circuit agreed with the EEOC and concluded that a retroactive monetary award of back pay under the ADEA is mandatory upon a finding of liability.

Statutory interpretation. This was an issue of statutory interpretation for the court, which stressed the ADEA is a remedial statute enacted “to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment.” Because Congress adopted the enforcement procedures and remedies of the FLSA into the ADEA, the appeals court construed the ADEA consistent with the cited statutory language in and judicial interpretations of the FLSA. “Back pay is, and was at the time Congress passed the ADEA, a mandatory legal remedy under the FLSA,” continued the Fourth Circuit, and “in enacting the ADEA, Congress would have been aware that retroactive monetary damages, such as back pay, were mandatory remedies under the FLSA, and intended to incorporate such mandatory remedies into the ADEA.”

Judicial precedent. Then the appeals court considered the Supreme Court’s approach in interpreting a different portion of the ADEA—whether ADEA plaintiffs were entitled to a jury trial—in Lorillard v. Pons. The Court looked to the procedural provisions of the statute and noted that Congress directed “that the ADEA be enforced in accordance with the ‘powers, remedies, and procedures’ of the FLSA.” So, it reasoned, when the ADEA adopted an FLSA provision, that ADEA provision should be interpreted the same way its FLSA counterpart traditionally had been interpreted.

Legislative history. The legislative history of the ADEA also indicated that Congress acted with particular precision in crafting the statute, reasoned the appeals court, describing that history and concluding it also suggested that Congress consciously chose to incorporate the powers, remedies, and procedures of the FLSA into the ADEA.

Title VII doesn’t govern here. Although the county cited three Title VII pension decisions issued by the Supreme Court that all held retroactive monetary awards are discretionary under Title VII based on the unique burdens that retroactive awards place on employee pension plans, the Fourth Circuit still sided with the EEOC. A back pay award under Title VII is a discretionary equitable remedy that a court may select in awarding relief to a plaintiff, but back pay awards under the ADEA are mandatory legal remedies, the amount of which is to be determined by a factfinder. Accordingly, the Fourth Circuit held that retroactive monetary awards, such as the back pay sought here, are mandatory legal remedies under the ADEA upon a finding of liability.

Unreasonable delay. That the EEOC unreasonably delayed in the investigation, which the agency conceded and which caused the county to incur substantial additional back pay liability, did not change the appeals court’s approach as to the law. It did note that “exercising its prosecutorial discretion,” the EEOC had represented to the court that it would not seek monetary relief for the excessive deductions that the county made before the commission issued its letter of determination. The EEOC further represented that it had secured reasonable back pay awards from public pension plans in over 30 ADEA lawsuits and that “it will do the same here.” The court vacated and remanded to the district court for a determination of the amount of back pay owed.

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