HR Management & Compliance

U.S. Supreme Court Issues 3 New Decisions

The first case, Meacham v. Knolls Atomic Power Laboratory, involved an employer’s decision to lay off 31 employees, 30 of whom were age 40 or older. The workers sued, claiming the layoffs had a disparate impact on older workers in violation of the Age Discrimination in Employment Act (ADEA).

The employer claimed it based its layoff decision on reasonable factors other than age, which is an affirmative defense under the ADEA. It also stated that the employees had earlier lost their case because they couldn’t show the factors were unreasonable. By a 7-1 vote, the justices said the employer — not the employees — had to prove that the non-age factors used in its decision were reasonable.

In a widely watched benefits case, Metropolitan Life v. Glenn, a majority of the justices ruled that a conflict of interest exists when the administrator of an Employee Retirement Income Security Act (ERISA) benefits plan evaluates the validity of benefits claims and also pays for them.

The case involved an employee who initially received disability benefits but later was denied. The plan administrator, MetLife, also was the insurer that paid valid claims. The employee contested the denial in court under ERISA, saying MetLife had a conflict of interest that the court should consider as part of its review. The Supreme Court majority agreed, saying that the significance placed on the conflict in a review depends on the circumstances of the case.

Finally, in Kentucky Retirement Systems v. EEOC, a 5-4 majority found no age discrimination in a retirement plan that credited additional years of service to employees who became disabled before they became eligible to retire but not to employees who became disabled after they became eligible to retire. A decision based on retirement eligibility isn’t equivalent to one based on age, the majority said.

We will provide more detailed information on these rulings in the next issue of your Employment Law Letter.