SLF LABOR AND EMPLOYMENT ALERT January 2008

COORDINATION OF RETIREE HEALTH BENEFITS WITH MEDICARE

On December 26, 2007, the Equal Employment Opportunity Commission (“EEOC”) implemented new regulations that allow employers to coordinate retiree health benefits with Medicare. The final regulations are published in 29 CFR Part 1625 and 1627 and in volume 72, pages 72938-72945, of the Federal Register. Alternatively, the information is freely available on the EEOC’s website at http://edocket.access.gpo.gov/2007/E7-24867.htm.

The impact of these new regulations should be considered by all employers. Prior to the approval of the new regulations, it was a violation of the Age Discrimination in Employment Act (“ADEA”) for employers to coordinate the health benefits they offered to retirees participating in Medicare. Moreover, in addition to prohibiting employers from coordinating with Medicare, the ADEA prohibited employers from coordinating with other comparable state health benefits.

The new regulations permit employers providing and coordinating health benefits with Medicare the ability to do so without confirming that Medicare eligible and non-Medicare eligible retirees are receiving the same benefits. Employers are also authorized to negotiate with unions for health benefits that coordinate with Medicare. Nonetheless, employers must be aware that the new regulations only affect the ADEA and do not change and/or alter any existing laws pertaining to employers who provide health care benefits. As the new regulations indicate: “[t]he exemption only applies to the practice of coordinating employer-sponsored retiree health benefits with eligibility for Medicare or a comparable State health benefit program. No other aspects of ADEA coverage or employment benefits other than retiree health benefits are affected by the exemption.” Source: http://edocket.access.gpo.gov/2007/E7-24867.htm.

The promulgation of these new regulations does not create a new mandate requiring employers to provide health care coverage. As the EEOC has previously stated, employers are not required to provide these benefits. However, if an employer does offer health care benefits, it must be cognizant of the different rules and regulations that apply – including the ADEA and its prohibition of age discrimination.

CASE LAW UPDATE: INTERNAL INVESTIGATIONS/PROTECTED ACTIVITY (Title VII Retaliation)

The United States Supreme Court recently granted certiorari in Crawford v. Metropolitan Government of Nashville, Case No. 06-1595, a case that originated in the Sixth Circuit Court of Appeals. Petitioner, an employee of Defendant, appealed to the Sixth Circuit the district court’s decision to grant summary judgment in favor of the employer on the employee’s Title VII retaliation claims. The Sixth Circuit affirmed the district court’s decision. As the Sixth Circuit stated, “[u]pon appeal, Crawford claims that her actions during the internal investigation constitute both opposition to a practice made unlawful by Title VII and participation in an investigation under Title VII, and that she therefore engaged in activity that Title VII protects. As did the district court, we hold that precedent compels a contrary conclusion.” The question presented to the Supreme Court by Appellant is “[d]oes the anti-retaliation provision of section 704(a) of Title VII of the 1964 Civil Rights Act protect a worker from being dismissed because she cooperated with her employer’s internal investigation of sexual harassment?”

The SLF Labor and Employment Alert will provide an update on Crawford as soon as the United States Supreme Court renders a decision.

CASE LAW UPDATE: REASONABLE FACTORS OTHER THAN AGE DEFENSE (ADEA Disparate Impact)

The United States Supreme Court recently granted certiorari to determine whether “an employee alleging disparate impact under the ADEA bears the burden of persuasion on the ‘reasonable factors other than age’ defense, as held by the Second Circuit in this case in conflict with the decisions of other circuits and a regulation of the Equal Employment Opportunity Commission.” The question was posed by Petitioners after the Second Circuit denied them relief in Meacham v. Knolls Atomic Power Laboratory, Case No. 06-1505. In Meacham, the Second Circuit held, “[w]e conclude that plaintiffs have failed to carry their burden of demonstrating that the challenged employment practice was unreasonable, and therefore vacate the judgment of the district court and remand with instructions to enter judgment as a matter of law...” In its opinion, the Second Circuit also stated that “[i]t is therefore hard to see how an ADEA plaintiff can expect to prevail on a showing of disparate impact based on a factor that correlates with age without also demonstrating that the factor is unreasonable.”

The SLF Labor and Employment Alert will provide an update on Meacham as soon as the United States Supreme Court renders a decision.

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