This week Lincoln County Administrator Carrie Kipfer informed County Commissioners of a change to the rules for the Maine Public Employee Retirement System (PERS) that would require it to treat retirees that it employed differently than non-retirees. Ms. Kipfer expressed concern that this rule change could result in age discrimination. Under this PERS rule (Ch. 803 sec. 14), a retiree who is receiving PERS benefits that returns to work for an employer that participates in PERS must either stop receiving benefits or incur a greater PERS deduction from her pay than non-retirees who work for the employer.
“There are great benefits to hiring people who have experience,” said Ms. Kipfer. “This is unfair to them, because they’ve already paid their dues and won’t be getting anything else from the system.” To illustrate her point, Ms. Kipfer cited the example of a retired deputy sheriff that the county had rehired a few years ago. This deputy sheriff no longer works for the county but if he did, this new rule would discourage him from working.
This new PERS rule follows a contentious debate in the legislature earlier this year when lawmakers debated whether to prohibit retirees from collecting pension benefits if they returned to work for an employer in PERS. Under existing law, there are already limitations on retirees’ ability to return to work. Retirees can only return to work for a limited number of years and there are limitations on how much they can be paid. The proposed legislation to prohibit retirees from returning to work was not passed during the last legislative session.
Whether this constitutes age discrimination is an interesting question. These laws seem to treat retirees worse than workers who have not retired; and retirees are typically older than non-retirees. It does not appear that the laws are intended to harm workers because of their ages, but the laws have that effect. When employment practices harm certain protected groups of workers, such as older workers, the affected workers can sometimes prevail on a “disparate impact” claim. Disparate impact laws allow workers to attack employment practices that have a discriminatory effect on protected groups regardless of whether the employer had a discriminatory motive when it adopted the practice. There are a number of defenses that the state could deploy in response to such a claim but it might be worthwhile for the retirees, if they have not already done so, to explore the option of litigation.