## Facts

- The Des Moines Independent Community School District offered employees an early retirement incentive plan (ERIP) that, before May 15, 2001, included payment of health insurance premiums until age 65 and a one-time cash payment of about 30% of annual salary.
- Effective May 15, 2001, the District amended the ERIP so eligible teachers would receive a lump-sum benefit generally calculated as a $200 credit for each unused sick leave day.
- The amended ERIP included age-related eligibility and timing features affecting who could participate and the benefit consequences of retiring at particular ages.
- Current or former District employees (primarily teachers) who retired or considered retiring under the amended ERIP sued, alleging the amended plan violated the Age Discrimination in Employment Act (ADEA) and Iowa wage law.
- The district court granted summary judgment to the employees on the ADEA claim, holding the amended ERIP violated the ADEA and did not qualify for the ADEA safe harbor for voluntary early retirement incentive plans.
- The District appealed.

## Issues

1. Whether the District’s amended ERIP discriminated “because of age” in the provision of retirement-related benefits in violation of the ADEA.
2. Whether the amended ERIP qualified for the ADEA safe harbor for voluntary early retirement incentive plans under 29 U.S.C. § 623(f)(2)(B)(ii).

## Decision

- The Eighth Circuit affirmed summary judgment for the employees.
- The court held the amended ERIP violated the ADEA as a matter of law because its structure resulted in differential treatment based on age in retirement benefits.
- The court held the District failed to prove the affirmative defense that the amended ERIP fell within the § 623(f)(2)(B)(ii) safe harbor.
- The court concluded that, even if employees were not forced to retire, the plan was not “consistent with the relevant purposes” of the ADEA.

## Legal Principles

- The ADEA prohibits employers from discriminating against an individual with respect to compensation, terms, conditions, or privileges of employment because of age, and that prohibition extends to employee benefit plans.
- An early retirement incentive plan is not exempt from ADEA scrutiny merely because it is described as “voluntary.”
- The § 623(f)(2)(B)(ii) safe harbor is an affirmative defense; the employer bears the burden to show the plan is (1) voluntary and (2) consistent with the ADEA’s purposes.
- A plan that conditions, reduces, or differentially structures benefits based on age, or that effectively penalizes continued employment at older ages, is not consistent with the ADEA’s anti-discrimination purposes and is not protected by the safe harbor.
- Statutory exceptions to ADEA liability are construed narrowly.

## Conclusion

The Eighth Circuit held that the District’s amended ERIP unlawfully discriminated based on age in retirement benefits and that the District did not establish the statutory safe harbor for voluntary early retirement incentive plans because the plan’s age-based features conflicted with the ADEA’s purposes.


Jankovitz v. Des Moines Indep. Cmty. Sch. Dist., 421 F.3d 649 (8th Cir. 2005)