The Public Employees Retirement System of Ohio (PERS),
established by statute in 1933, provides retirement benefits for
state and local government employees. Benefits are payable based on
age and service or, for persons under the age of 60 at retirement,
on disability. The disability retirees age requirement has remained
unchanged since 1959. However, in 1976, PERS was amended to provide
that disability payments could not constitute less than 30% of the
retiree's final average salary. No corresponding floor applies to
age-and-service payments. Individuals continue to receive the type
of benefit they retired on throughout retirement, regardless of
age. In 1985, appellee, who had been employed by a county agency
since 1978, retired at age 61 because of her health. Despite her
medical condition, she was ineligible for disability retirement
benefits because of her age. Her monthly age-and-service benefits
amount to approximately one-half of the amount she would have
received on disability retirement. She filed a charge against PERS
with the Equal Employment Opportunity Commission (EEOC), and then
filed suit in the District Court, claiming that PERS' refusal to
grant her disability benefits application violated the Age
Discrimination in Employment Act of 1967 (ADEA). The court granted
summary judgment in her favor, finding that PERS' retirement scheme
was discriminatory on its face, in that it denied benefits to
certain employees on account of age. It rejected PERS' reliance on
§ 4(f)(2) of the ADEA, which exempts from the Act's prohibitions
certain actions taken in observance of
"the terms of . . . any bona fide employee benefit plan such as
a retirement, pension, or insurance plan, which is not a subterfuge
to evade the purposes of [the Act]."
Rather, the court, relying on the EEOC's interpretive
regulations, held that plans qualify for the § 4(f)(2) exemption
only if age-related reductions in benefits are justified by the
increased cost of providing those benefits to older employees,
which was not the case here. The Court of Appeals affirmed,
agreeing that the exemption is available only to plans that can
provide such cost justifications or establish a substantial
business purpose. The court rejected PERS' reliance on
United
Air Lines, Inc. v. McMann, 434 U. S. 192,
which, in upholding an age-based mandatory retirement plan, ruled
that plans
Page 492 U. S. 159
adopted prior to the ADEA's enactment need not be justified by
any business purpose, and defined "subterfuge" to mean "a scheme,
plan, strategem, or artifice of evasion." Instead, the court
concluded that Congress had expressly repudiated
McMann
when it amended the ADEA in 1978 by adding a clause forbidding
age-based mandatory retirement to the end of § 4(f)(2).
Held: Section 4(f)(2) exempts all provisions of bona
fide employee benefit plans from the purview of the ADEA, unless
the plan is a subterfuge for discrimination in the
non-fringe-benefit aspects of the employment relationship, and
summary judgment for appellee was therefore inappropriate. Pp.
492 U. S.
165-182.
(a) An employee benefit plan adopted prior to the ADEA's
enactment cannot be a subterfuge. While the 1978 amendment to the
ADEA changed the specific result in
McMann, it did not
change the controlling, general language of the statute. Since
Congress did not add a definition of "subterfuge" or modify §
4(f)(2)'s language in any way other than by adding the new last
phrase, there is no reason to depart from
McMann's holding
that "subterfuge" should be given its ordinary meaning. However,
this reaffirmation of
McMann does not insulate the
specific plan provision being attacked -- the 30% floor -- from
challenge, since it was not added to the plan until 1976, after the
ADEA became applicable to PERS. Pp.
492 U. S.
165-169.
(b) Section 4(f)(2) does not protect age-based distinctions in
employee benefit plans only when justified by the increased costs
of benefits for older workers. Thus, 29 CFR §1625.10, which recites
such a definition, is invalid. No such requirement can be found in
the statute itself. Moreover, §1625.10's definition is not entitled
to deference, since the term "subterfuge," as interpreted in
McMann, includes a subjective intent element which
§1625.10's objective requirement fails to acknowledge; since the
regulation, contrary to the EEOC's suggestion, was not adopted
contemporaneously with the ADEA's enactment, and since appellee's
reliance on the ADEA's legislative history and the 1978 amendment
is misplaced. The cost-justification rule also is not supported by
the argument that the statutory phrase that "any bona fide employee
benefit plan such as a retirement, pension, or insurance plan" is
intended to limit § 4(f)(2)'s protection to those plans which have
a cost justification for all age-based differentials in benefits.
The statutory language, on its face, appears to be nothing more
than a listing of the general types of plans that fall within the
"employee benefit plan" category, rather than an exclusive listing.
Nor is it apparent that the specified plans were intentionally
selected because the costs to employers of the benefits provided by
these plans tend to increase with age. In addition, the
regulatory
Page 492 U. S. 160
definition of an employee benefit plan does not support the
proffered interpretation. Pp.
492 U. S.
169-175.
(c) Both the statute and the legislative history support a
construction of § 4(f)(2) that exempts the provisions of a bona
fide benefit plan from the purview of the ADEA so long as the plan
is not a method of discriminating in other, non-fringe-benefit
aspects of the employment relationship. Thus, a post-Act plan
cannot be a subterfuge to evade the ADEA's purpose of banning
arbitrary age discrimination unless it discriminates in a manner
forbidden by the Act's substantive provisions. If the ADEA's
substantive prohibitions were read to encompass employee benefit
plans, any employee benefit plan that, by its terms, mandated the
discrimination allowed under § 4(f)(2) would be facially
irreconcilable with the purposes of the Act, a result Congress
could not have intended. Pp.
492 U. S.
175-180.
(d) An employee seeking to challenge an employee benefit plan
provision as a subterfuge bears the burden of proving that the
discriminatory plan provision actually was intended to serve the
purpose of discriminating in some non-fringe-benefit aspect of the
employment relationship. Section 4(f)(2) redefines the elements of
the plaintiff's
prima facie case, since it is not so much
a defense to an age discrimination charge as it is a description of
the type of employer conduct that is prohibited in the employee
benefit plan context. This interpretation is consistent with this
Court's longstanding interpretation of the analogous provision of
Title VII of the Civil Rights Act of 1964. Summary judgment for
appellee was inappropriate, because she failed to meet her burden
of proof on this issue. On remand, the District Court should give
appellee an opportunity to demonstrate the existence of a genuine
issue of material fact. Pp.
492 U. S.
181-182.
848 F.2d 692, reversed and remanded.
KENNEDY, J., delivered the opinion of the Court, in which
REHNQUIST, C.J., and WHITE, BLACKMUN, STEVENS, O'CONNOR, and
SCALIA, JJ, joined. MARSHALL, J., filed a dissenting opinion, in
which BRENNAN, J., joined,
post, p.
492 U.S. 182.
Page 492 U. S. 161
JUSTICE KENNEDY delivered the opinion of the Court.
The Age Discrimination in Employment Act of 1967 (ADEA), 81
Stat. 602,
as amended, 29 U.S.C. § 621
et seq.
(1982 ed. and Supp. V), forbids arbitrary discrimination by public
and private employers against employees on account of age. Under §
4(f)(2) of the Act, 29 U.S.C. § 623(f)(2), however, age-based
employment decisions taken pursuant to the terms of "any bona fide
employee benefit plan such as a retirement, pension, or insurance
plan, which is not a subterfuge to evade the purposes of" the Act,
are exempt from the prohibitions of the ADEA. In the case before
us, we must consider the meaning and scope of the § 4(f)(2)
exemption.
Page 492 U. S. 162
I
A
In 1933, the State of Ohio established the Public Employees
Retirement System of Ohio (PERS) to provide retirement benefits for
state and local government employees. Public employers and
employees covered by PERS make contributions to a fund maintained
by PERS to pay benefits to covered employees. Under the PERS
statutory scheme, two forms of monthly retirement benefits are
available to public employees upon termination of their public
employment. Age-and-service retirement benefits are paid to those
employees who, at the time of their retirement, (1) have at least 5
years of service credit and are at least 60 years of age; (2) have
30 years of service credit; or (3) have 25 years of service credit
and are at least 55 years of age. Ohio Rev.Code Ann. §§ 145.33,
145.34 (1984 and Supp. 1988). Disability retirement benefits are
available to employees who suffer a permanent disability, have at
least five years of total service credit, and are under the age of
60 at retirement. § 145.35. The requirement that disability
retirees be under age 60 at the time of their retirement was
included in the original PERS statute, and has remained unchanged
since 1959.
Employees who take disability retirement are treated as if they
are on leave of absence for the first five years of their
retirement. Should their medical conditions improve during that
time, they are entitled to be rehired. § 145.39. Employees
receiving age-and-service retirement, on the other hand, are not
placed on leave of absence, but they are permitted to apply for
full-time employment with any public employer covered by PERS after
18 months of retirement. Ohio Rev.Code Ann. § 145.381(C) (1984).
Once an individual retires on either age-and-service or disability
retirement benefits, he or she continues to receive that type of
benefit throughout retirement, regardless of age.
Page 492 U. S. 163
Appellee June M. Betts was hired by the Hamilton County Board of
Mental Retardation and Developmental Disabilities as a speech
pathologist in 1978. The board is a public agency, and its
employees are covered by PERS. In 1984, because of medical
problems, appellee became unable to perform her job adequately, and
was reassigned to a less demanding position. Appellee's medical
condition continued to deteriorate, however, and by May 1985, when
appellee was 61 years of age, her employer concluded that she was
no longer able to perform adequately in any employment capacity.
Appellee was given the choice of retiring or undergoing medical
testing to determine whether she should be placed on unpaid medical
leave. She chose to retire, an option which gave her eligibility
for age-and-service retirement benefits from PERS. Because she was
over 60 at the time of retirement, however, appellee was denied
disability retirement benefits, despite her medical condition.
Before 1976, the fact that appellee's age disqualified her for
disability benefits would have had little practical significance,
because the formula for calculating disability benefits was almost
the same as the formula used to determine age-and-service benefits.
In 1976, however, the PERS statutory scheme was amended to provide
that disability retirement payments would in no event constitute
less than 30 percent of the disability retiree's final average
salary. Ohio Rev.Code Ann. §145.36 (1984). No such floor applies in
the case of employees receiving age-and-service retirement
payments. The difference was of much significance in appellee's
case: her age-and-service retirement benefits amount to $158.50 per
month, but she would have received nearly twice that, some $355 per
month, had she been permitted to take disability retirement
instead.
Appellee filed an age discrimination charge against PERS with
the Equal Employment Opportunity Commission
Page 492 U. S. 164
(EEOC), and filed suit in the United States District Court for
the Southern District of Ohio, claiming that PERS' refusal to grant
her application for disability retirement benefits violated the
ADEA. The District Court found that PERS' retirement scheme was
discriminatory on its face, in that it denied disability retirement
benefits to certain employees on account of their age.
Betts v.
Hamilton County Bd. of Mental Retardation, 631 F.
Supp. 1198, 1202-1203 (1986). The court rejected PERS' reliance
on § 4(f)(2) of the ADEA, which exempts from the Act's prohibitions
certain actions taken in observance of
"the terms of . . . any bona fide employee benefit plan such as
a retirement, pension, or insurance plan, which is not a subterfuge
to evade the purposes of [the Act] . . . ."
29 U.S.C. § 623(f)(2). Relying on interpretive regulations
promulgated by the EEOC, the District Court held that employee
benefit plans qualify for the § 4(f)(2) exemption only if any
age-related reductions in employee benefits are justified by the
increased cost of providing those benefits to older employees.
Because the PERS plan provided for a reduction in available
benefits at age 60, a reduction not shown to be justified by
considerations of increased cost, the court concluded that PERS'
plan was not entitled to claim the protection of the § 4(f)(2)
exemption. 631 F. Supp. at 1203-1204. [
Footnote 1]
A divided panel of the Court of Appeals affirmed.
Betts v.
Hamilton County Bd. of Mental Retardation and Developmental
Disabilities, 848 F.2d 692 (CA6 1988). The majority agreed
with the District Court that the § 4(f)(2) exemption is available
only to those retirement plans that can provide age-related cost
justifications or "a substantial business purpose" for any
age-based reduction in benefits.
Id. at 694. The
Page 492 U. S. 165
majority rejected PERS' reliance on
United Air Lines, Inc.
v. McMann, 434 U. S. 192
(1977), which held that retirement plans adopted prior to the
enactment of the ADEA need not be justified by any business
purpose, concluding that Congress had "expressly repudiated" this
decision when it amended the ADEA in 1978. 848 F.2d at 694. Because
PERS had failed to provide any evidence that its discrimination
against older workers was justified by age-related cost
considerations, the majority concluded that summary judgment was
appropriate.
Judge Wellford dissented. Noting that PERS' plan was adopted
long before enactment of the ADEA, he argued that under
United
Air Lines, Inc. v. McMann, supra, it could not be a
"subterfuge to evade the purposes" of the Act. Judge Wellford
rejected the EEOC's regulations requiring cost justifications for
all age-based reductions in benefits, finding that nothing in the
statute's language imposed such a requirement. We noted probable
jurisdiction, 488 U.S. 907 (1988), and now reverse.
II
Under § 4(a)(1) of the ADEA, it is unlawful for an employer
"to fail or refuse to hire or discharge any individual or
otherwise discriminate against any individual with respect to his
compensation, terms, conditions, or privileges of employment,
because of such individual's age."
29 U.S.C. § 623(a)(1). Notwithstanding this general prohibition,
however, § 4(f)(2) of the ADEA provides that it is
not
unlawful for an employer
"to observe the terms of . . . any bona fide employee benefit
plan such as a retirement, pension, or insurance plan, which is not
a subterfuge to evade the purposes of this chapter, except that no
such employee benefit plan shall excuse the failure to hire any
individual, and no such . . . employee benefit plan shall require
or permit
Page 492 U. S. 166
the involuntary retirement of any individual . . . because of
the age of such individual."
29 U.S.C. § 623(f)(2).
On its face, the PERS statutory scheme renders covered employees
ineligible for disability retirement once they have attained age
60. Ohio Rev.Code Ann. § 145.35 (1984). PERS' refusal to grant
appellee's application for disability benefits therefore qualifies
as an action "to observe the terms of " the plan. All parties
apparently concede, moreover, that PERS' plan is "bona fide," in
that it "
exists and pays benefits.'" McMann, 434 U.S.
at 434 U. S. 194;
see id. at 434 U. S.
206-207 (WHITE, J., concurring in judgment). Finally,
whatever the precise meaning of the phrase "any . . . employee
benefit plan such as a retirement, pension, or insurance plan,"
see infra, at 492 U. S.
173-175, it is apparent that a disability retirement
plan falls squarely within that category. Cf. 29 CFR §
1625.10(f)(1)(ii) (1988). Accordingly, PERS is entitled to the
protection of the § 4(f)(2) exemption unless its plan is "a
subterfuge to evade the purposes of" the Act. [Footnote 2]
We first construed the meaning of "subterfuge" under § 4(f)(2)
in
United Air Lines, Inc. v. McMann, supra. In
McMann, the employer's retirement plan required employees
to retire at the age of 60. After being forced to retire by the
terms of the plan, McMann sued under the ADEA, claiming that the
forced retirement was a violation of the Act, and that the
mandatory retirement provision was not protected by the § 4(f)(2)
exemption because it was a subterfuge to evade the purposes of the
Act. [
Footnote 3] We rejected
both positions.
Page 492 U. S. 167
With respect to mandatory retirement, we found that the
statutory language and legislative history provided no support for
the proposition that Congress intended to forbid age-based
mandatory retirement.
Turning to the claim that the mandatory retirement provision was
a "subterfuge to evade the purposes of" the Act, we rejected the
conclusion of the court below that forced retirement on the basis
of age must be deemed a subterfuge absent some business or economic
purpose for the age-based distinction. Instead, we held that the
term "subterfuge" must be given its ordinary meaning as "a scheme,
plan, stratagem, or artifice of evasion."
Id. at
434 U. S. 203.
Viewed in this light, the retirement plan at issue could not
possibly be characterized as a subterfuge to evade the purposes of
the Act, since it had been established in 1941, long before the Act
was enacted. As we observed,
"[t]o spell out an intent in 1941 to evade a statutory
requirement not enacted until 1967 attributes, at the very least, a
remarkable prescience to the employer. We reject any such
per
se rule requiring an employer to show an economic or business
purpose in order to satisfy the subterfuge language of the
Act."
Ibid.
As an initial matter, appellee asserts that
McMann is
no longer good law. She points out that, in 1978, less than a year
after
McMann was decided, Congress amended § 4(f)(2) to
overrule
McMann's validation of mandatory retirement based
on age.
See Pub. L. 95-256, § 2(a), 92 Stat. 189. The
result of that amendment was the addition of what now is the final
clause of § 4(f)(2).
The legislative history of the 1978 amendment contains various
references to the definition of subterfuge, and, according to
appellee, these reveal clear congressional intent to disapprove the
reasoning of
McMann. The Conference Committee Report on
the 1978 amendment, for example, expressly discusses and rejects
McMann, stating that
"[p]lan provisions in effect prior to the date of enactment are
not exempt under section 4(f)(2) by virtue of the fact that
they
Page 492 U. S. 168
antedate the act or these amendments."
H.R.Conf.Rep. No. 95-950, p. 8 (1978).
See also 124
Cong.Rec. 7881 (1978) (remarks of Rep. Hawkins) ("The conferees
specifically disagree with the Supreme Court's holding and
reasoning in [
McMann], particularly its conclusion that an
employee benefit plan which discriminates on the basis of age is
protected by section 4(f)(2) because it predates the enactment of
the ADEA"); 124 Cong.Rec. 8219 (1978) (remarks of Sen. Javits);
id. at 7888 (remarks of Rep. Waxman).
PERS disputes appellee's interpretation of this legislative
history, asserting that it refers only to benefit plans that permit
involuntary retirement, and not to the more general issue of
whether a pre-Act plan can be a subterfuge in other circumstances.
We need not resolve this dispute, however. The 1978 amendment to
the ADEA did not add a definition of the term "subterfuge" or
modify the language of § 4(f)(2) in any way, other than by
inserting the final clause forbidding mandatory retirement based on
age. We have observed on more than one occasion that the
interpretation given by one Congress (or a committee or Member
thereof) to an earlier statute is of little assistance in
discerning the meaning of that statute.
See Weinberger v.
Rossi, 456 U. S. 25,
456 U. S. 35
(1982);
Consumer Product Safety Comm'n v. GTE Sylvania,
Inc., 447 U. S. 102,
447 U. S. 118,
and n. 13 (1980);
United States v. Southwestern Cable Co.,
392 U. S. 157,
392 U. S. 170
(1968);
Rainwater v. United States, 356 U.
S. 590,
356 U. S. 593
(1958);
see also McMann, 434 U.S. at
434 U. S. 200,
n. 7. Congress changed the specific result of
McMann by
adding a final clause to § 4(f)(2), but it did not change the
controlling, general language of the statute. As Congress did not
amend the relevant statutory language, we see no reason to depart
from our holding in
McMann that the term "subterfuge" is
to be given its ordinary meaning, and that, as a result, an
employee benefit plan adopted prior to enactment of the ADEA cannot
be a subterfuge.
See EEOC v. Cargill, Inc., 855 F.2d 682,
686 (CA10 1988);
EEOC v. County of Orange, 837 F.2d 420,
422 (CA9 1988).
Page 492 U. S. 169
According to PERS, our reaffirmation of
McMann should
resolve this case. The PERS system was established by statute in
1933, and the rule that employees over age 60 may not qualify for
disability retirement benefits has remained unchanged since 1959.
The ADEA was not made applicable to the States until 1974.
See Pub.L. 93-259, § 28(a)(2), 88 Stat. 74, codified at 29
U.S.C. § 630(b)(2). Since the age-60 requirement predates
application of the ADEA to PERS, PERS argues that, under
McMann, its plan cannot be a subterfuge to evade the
purposes of the ADEA.
While
McMann remains of considerable relevance to our
decision here, we reject the argument that it is dispositive. It is
true that the age-60 rule was adopted before 1974, and is thus
insulated under
McMann from challenge as a subterfuge. The
plan provision attacked by appellee, however, is the rule that
disability retirees automatically receive a minimum of 30 percent
of their final average salary upon retirement, while disabled
employees who retire after age 60 do not. The 30 percent floor was
not added to the plan until 1976, and to the extent this new rule
increased the age-based disparity caused by the pre-Act age
limitation,
McMann does not insulate it from challenge.
See EEOC v. Cargill, supra, at 686, n. 4;
EEOC v.
County of Orange, supra, at 423;
EEOC v. Home Ins.
Co., 672 F.2d 252, 259, and n. 9 (CA2 1982). No "remarkable
prescience" would have been required of PERS in 1976 for it to
formulate the necessary intent to evade the ADEA, and thus the
automatic rule of
McMann is inapplicable.
See 434
U.S. at
434 U. S. 203.
Accordingly, we must turn to an inquiry into the precise meaning of
the § 4(f)(2) exemption in the context of post-Act plans.
III
Appellee and her
amici say that § 4(f)(2) protects
age-based distinctions in employee benefit plans only when
justified by the increased cost of benefits for older workers. They
cite an interpretive regulation promulgated by the Department
Page 492 U. S. 170
of Labor, the agency initially charged with enforcing the Act,
in 1979. 44 Fed.Reg. 30658-30662 (1979), codified at 29 CFR §
860.120 (1980), redesignated 29 CFR § 1625.10 (1988). The
regulation recites that the purpose of the exemption "is to permit
age-based reductions in employee benefit plans where such
reductions are justified by significant cost considerations," and
that "benefit levels for older workers may be reduced to the extent
necessary to achieve approximate equivalency in cost for older and
younger workers." § 1625.10(a)(1). With respect to disability
benefits in particular, the regulation provides that
"[r]eductions on the basis of age in the level or duration of
benefits available for disability are justifiable only on the basis
of age-related cost considerations . . . ."
§ 1625.10(f)(1)(ii). Under these provisions, employers may
reduce the value of the benefits provided to older workers as
necessary to equalize costs for workers of all ages, but they
cannot exclude older workers from the coverage of their benefit
plans altogether.
The requirement that employers show a cost-based justification
for age-related reductions in benefits appears nowhere in the
statute itself. The EEOC, as
amicus, contends that this
rule can be drawn either from the statutory requirement that
age-based distinctions in benefit plans not be a subterfuge to
evade the purposes of the Act or from the portion of § 4(f)(2)
limiting its scope to actions taken pursuant to "any bona fide
employee benefit plan such as a retirement, pension, or insurance
plan." Brief for EEOC as
Amicus Curiae 9-14. We consider
these alternatives in turn.
A
The regulations define "subterfuge" as follows:
"In general, a plan or plan provision which prescribes lower
benefits for older employees on account of age is not a
'subterfuge' within the meaning of section 4(f)(2), provided that
the lower level of benefits is justified by age-related cost
considerations."
29 CFR §1625.10(d) (1988). Various lower courts
Page 492 U. S. 171
have accepted this definition.
E.g., EEOC v. Mt.
Lebanon, 842 F.2d 1480, 1489 (CA3 1988);
see also Cipriano
v. Board of Education of North Tonawanda School Dist., 785
F.2d 51, 57-58 (CA2 1986). As the analysis in
McMann makes
apparent, however, this approach to the definition of subterfuge
cannot be squared with the plain language of the statute. Although
McMann's holding, that pre-Act plans can never be a
subterfuge, is not dispositive here, its reasoning is nonetheless
controlling, for we stated in that case that "subterfuge" means "a
scheme, plan, stratagem, or artifice of evasion," which, in the
context of § 4(f)(2), connotes a specific "intent . . . to evade a
statutory requirement." 434 U.S. at
434 U. S. 203.
The term thus includes a subjective element that the regulation's
objective cost-justification requirement fails to acknowledge.
Ignoring this inconsistency with the plain language of the
statute, appellee and the EEOC suggest that the regulation
represents a contemporaneous and consistent interpretation of the
ADEA by the agencies responsible for the Act's enforcement, and is
therefore entitled to special deference.
See EEOC v. Associated
Dry Goods Corp., 449 U. S. 590,
449 U. S. 600,
n. 17 (1981);
See also Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc.,
467 U. S. 837
(1984). But of course, no deference is due to agency
interpretations at odds with the plain language of the statute
itself. Even contemporaneous and longstanding agency
interpretations must fall to the extent they conflict with
statutory language.
Contrary to the suggestion of the EEOC and appellee, moreover,
the cost-justification requirement was not adopted
contemporaneously with enactment of the ADEA. The
cost-justification rule had its genesis in an interpretive bulletin
issued by the Department of Labor in January, 1969. 34 Fed.Reg.
322, 323, codified at 29 CFR § 860.120(a) (1970). To be sure, that
regulation provided that plans which reduced benefits on the basis
of age would "be considered in compliance with the statute" if the
benefit reductions were justified
Page 492 U. S. 172
by age-related cost considerations, but it did not purport to
exclude from the § 4(f)(2) exemption all plans that could not meet
a cost-justification requirement. [
Footnote 4] Rather, this original version of the
cost-justification rule was nothing more than a safe harbor, a
nonexclusive objective test for employers to use in determining
whether they could be certain of qualifying for the § 4(f)(2)
exemption. It was not until 1979 that this regulatory safe harbor
was transformed into the exclusive means of escaping classification
as a subterfuge.
Appellee and her
amici rely in large part on the
legislative history of the ADEA and the 1978 amendments. In view of
our interpretation of the plain statutory language of the
subterfuge requirement, however, this reliance on legislative
history is misplaced.
See Davis v. Michigan Dept. of
Treasury, 489 U. S. 803,
489 U. S. 808,
n. 3 (1989);
McMann, 434 U.S. at
434 U. S. 199.
The "subterfuge" exception to the § 4(f)(2) exemption cannot be
limited in the manner suggested by the regulation.
Page 492 U. S. 173
B
The second possible source of authority for the
cost-justification rule is the statute's requirement that the §
4(f)(2) exemption be available only in the case of "any bona fide
employee benefit plan such as a retirement, pension, or insurance
plan." The EEOC argues, and some courts have held, that the phrase
"such as a retirement, pension, or insurance plan" is intended to
limit the protection of § 4(f)(2) to those plans which have a cost
justification for all age-based differentials in benefits.
See
EEOC v. Westinghouse Electric Corp., 725 F.2d 211, 224 (CA3
1983),
cert. denied, 469 U.S. 820 (1984);
EEOC v.
Borden's, Inc., 724 F.2d 1390, 1396 (CA9 1984). The argument
is as follows: the types of plans listed in the statute share the
common characteristic that the cost of the benefits they provide
generally rises with the age of their beneficiaries. This common
characteristic suggests that Congress intended the § 4(f)(2)
exemption to cover only those plans in which costs rise with age.
The obvious explanation for the limitation on the scope of §
4(f)(2), the argument continues, is that the purpose of the
exemption is to permit employers to reduce overall benefits paid to
older workers only to the extent necessary to equalize costs for
older and younger workers.
There are a number of difficulties with this explanation for the
cost-justification requirement. Perhaps most obvious, it requires
us to read a great deal into the language of this clause of §
4(f)(2), language that appears on its face to be nothing more than
a listing of the general types of plans that fall within the
category of "employee benefit plan." The statute's use of the
phrase "
any employee benefit plan" seems to imply a broad
scope for the statutory exemption, and the "such as" clause
suggests enumeration by way of example, not an exclusive listing.
Nor is it by any means apparent
Page 492 U. S. 174
that the types of plans mentioned were intentionally selected
because the cost to the employer of the benefits provided by these
plans tends to increase with age. Indeed, many plans that fall
within these categories do not share that particular attribute at
all, defined-contribution pension plans perhaps being the most
obvious example. [
Footnote 5]
We find it quite difficult to believe that Congress would have
chosen such a circuitous route to the result urged by respondent
and the EEOC.
The interpretation is weakened further by the fact that the
regulation itself does not support it. According to 29 CFR §
1625.10(b) (1988),
"[a]n 'employee benefit plan' is a plan, such as a retirement,
pension, or insurance plan, which provides employees with what are
frequently referred to as 'fringe benefits.'"
This definition makes no mention of the limitation urged by the
EEOC, and indeed seems sufficiently broad to encompass a wide
variety of plans providing fringe benefits to employees, regardless
of whether the cost of those benefits increases with age. The
regulation's discussion of the cost-justification requirement is
reserved for the subsection defining "subterfuge." § 1625.10(d).
[
Footnote 6] Under these
Page 492 U. S. 175
circumstances, this aspect of the EEOC's argument is entitled to
little, if any, deference.
Cf. Bowen v. Georgetown University
Hospital, 488 U. S. 204,
488 U. S.
212-213 (1988).
For these reasons, we conclude that the phrase "any bona fide
employee benefit plan such as a retirement, pension, or insurance
plan" cannot reasonably be limited to benefit plans in which all
age-based reductions in benefits are justified by age-related cost
considerations. Accordingly, the interpretive regulation construing
§ 4(f)(2) to include a cost-justification requirement is contrary
to the plain language of the statute, and is invalid.
IV
Having established that the EEOC's definition of subterfuge is
invalid, we turn to the somewhat more difficult task of determining
the precise meaning of the term as applied to post-Act plans. We
begin, as always, with the language of the statute itself.
The protection of § 4(f)(2) is unavailable to any employee
benefit plan "which is a subterfuge to evade the purposes of" the
Act. As set forth in § 2(b) of the ADEA, the purposes of
Page 492 U. S. 176
the Act are
"to promote employment of older persons based on their ability
rather than age; to prohibit arbitrary age discrimination in
employment; to help employers and workers find ways of meeting
problems arising from the impact of age on employment."
29 U.S.C. § 621(b). On the facts of this case, the only purpose
that the PERS plan could be a "subterfuge to evade" is the goal of
eliminating "arbitrary age discrimination in employment."
As the presence of the various exemptions and affirmative
defenses contained in § 4(f) illustrates, Congress recognized that
not all age discrimination in employment is "arbitrary." In order
to determine the type of age discrimination that Congress sought to
eliminate as arbitrary, we must look for guidance to the
substantive prohibitions of the Act itself, for these provide the
best evidence of the nature of the evils Congress sought to
eradicate. Indeed, our decision in
McMann compels this
approach, for it rejected the contention that the purposes of the
Act can be distinguished from the Act itself:
"The distinction relied on is untenable, because the Act is the
vehicle by which its purposes are expressed and carried out; it is
difficult to conceive of a subterfuge to evade the one which does
not also evade the other."
434 U.S. at
434 U. S. 198.
Accordingly, a post-Act plan cannot be a subterfuge to evade the
ADEA's purpose of banning arbitrary age discrimination unless it
discriminates in a manner forbidden by the substantive provisions
of the Act.
Section 4(a), the ADEA's primary enforcement mechanism against
age discrimination by employers, forbids employers
"(1) to fail or refuse to hire or to discharge any individual or
otherwise discriminate against any individual with respect to his
compensation, terms, conditions, or privileges of employment,
because of such individual's age;"
"(2) to limit, segregate, or classify his employees in any way
which would deprive or tend to deprive any individual of employment
opportunities or otherwise adversely
Page 492 U. S. 177
affect his status as an employee, because of such individual's
age; or"
"(3) to reduce the wage rate of any employee in order to comply
with this chapter."
29 U.S.C. § 623(a).
The phrase "compensation, terms, conditions, or privileges of
employment" in § 4(a)(1) can be read to encompass employee benefit
plans of the type covered by § 4(f)(2). Such an interpretation,
however, would, in effect, render the § 4(f) (2) exemption nugatory
with respect to post-Act plans. Any benefit plan that, by its
terms, mandated discrimination against older workers would also be
facially irreconcilable with the prohibitions in § 4(a)(1) and,
therefore, with the purposes of the Act itself. It is difficult to
see how a plan provision that expressly mandates disparate
treatment of older workers in a manner inconsistent with the
purposes of the Act could be said not to be a subterfuge to evade
those purposes, at least where the plan provision was adopted after
enactment of the ADEA.
On the other hand, if § 4(f)(2) is viewed as exempting the
provisions of a bona fide benefit plan from the purview of the ADEA
so long as the plan is not a method of discriminating in other,
non-fringe-benefit aspects of the employment relationship, both
statutory provisions can be given effect. This interpretation of
the ADEA would reflect a congressional judgment that age-based
restrictions in the employee benefit plans covered by § 4(f)(2) do
not constitute the "arbitrary age discrimination in employment"
that Congress sought to prohibit in enacting the ADEA. Instead,
under this construction of the statute, Congress left the employee
benefit battle for another day, and legislated only as to hiring
and firing, wages and salaries, and other non-fringe-benefit terms
and conditions of employment.
To be sure, this construction of the words of the statute is not
the only plausible one. But the alternative interpretation would
eviscerate § 4(f)(2). As JUSTICE WHITE wrote in his separate
concurrence in
McMann,
"[b]ecause all retirement
Page 492 U. S. 178
plans necessarily make distinctions based on age, I fail to see
how the subterfuge language, which was included in the original
version of the bill and was carried all the way through, could have
been intended to impose a requirement which almost no retirement
plan could meet."
434 U.S. at
434 U. S.
207.
Not surprisingly, the legislative history does not support such
a self-defeating interpretation, but, to the contrary, shows that
Congress envisioned a far broader role for the § 4(f)(2) exemption.
When S. 830, the bill that was to become the ADEA, was originally
proposed by the administration in January, 1967, it contained no
general exemption for benefit plans that differentiated in benefits
based on age. [
Footnote 7]
Senator Javits, one of the principal moving forces behind enactment
of age discrimination legislation, generally favored the
administration's bill, but believed that a broader exemption for
employee benefit plans was needed. Accordingly, he proposed an
amendment substantially along the lines of present-day § 4(f)(2).
113 Cong.Rec. 7077 (1967).
One factor motivating Senator Javits' amendment was the concern
that, absent some exemption for benefit plans, the Act might
"actually encourage employers, faced with the necessity of
paying greatly increased premiums, to look for excuses not to hire
older workers when they might have done so under a law granting
them a degree of flexibility with respect to such matters."
Id. at 7076. [
Footnote
8] Reducing the cost of
Page 492 U. S. 179
hiring older workers was not the only purpose of the proposed
amendment, however. Its goals were far more comprehensive. As
Senator Javits put it, "the age discrimination law is not the
proper place to fight" the battle of ensuring "adequate pension
benefits for older workers," and § 4(f)(2) was therefore intended
to be "a fairly broad exemption . . . for bona fide retirement and
seniority systems."
Ibid. Later, referring to the effect
of his proposed amendment on the provisions of employee benefit
plans, Senator Javits stated that, "[i]f the older worker chooses
to waive all of those provisions, then the older worker can obtain
the benefits of this act. . . ."
Id. at 31255. And
finally, in his individual views accompanying the Senate Report on
S. 830, Senator Javits observed:
"I believe the bill has also been improved by the adoption of
language, based on an amendment which I had offered,
exempting
the observance of bona fide seniority systems and retirement,
pension, or other employment benefit plans from its
prohibitions."
S.Rep. No. 723, 90th Cong., 1st Sess., 14 (1967) (emphasis
added).
Other Members of Congress expressed similar views. Senator
Yarborough, the principal sponsor and floor manager of the
administration bill, observed that § 4(f)(2),
"when it refers to retirement, pension, or insurance plan, . . .
means that a man who would not have been employed except for this
law does not have to receive the benefits of the plan."
113 Cong.Rec. 31255 (1967). Indeed, at least one Congressman
opposed the ADEA precisely because it permitted employers to
exclude older employees from participation in benefit plans
altogether when the terms of the plans mandated that result. 113
Cong.Rec. 34745 (1967) (remarks of Rep. Smith).
While the Committee Reports on the ADEA do not address the
matter in any detail, they do state that § 4(f)(2)
"serves to emphasize the primary purpose of the bill -- hiring
of older workers -- by permitting employment without necessarily
including such workers in employee benefit plans."
S.Rep. No. 723,
supra, at 4; H.R.Rep. No. 805, 90th
Page 492 U. S. 180
Cong., 1st Sess., 4 (1967). That explanation does not support a
narrow reading of the § 4(f)(2) exemption. The Committee Reports,
moreover, refute a reading of § 4(f)(2) that would limit its
protection to pre-Act plans, for they make it clear that the
exemption "applies to new and existing employee benefit plans, and
to both the establishment and maintenance of such plans." S.Rep.
No. 723,
supra, at 4; H.R.Rep. No. 805,
supra, at
4. In short, the legislative history confirms that the broader
reading of § 4(f)(2) is the correct one, and that Congress intended
to exempt employee benefit plans from the coverage of the Act
except to the extent plans were used as a subterfuge for age
discrimination in other aspects of the employment relation.
While this result permits employers wide latitude in structuring
employee benefit plans, it does not render the "not a subterfuge"
proviso a dead letter. Any attempt to avoid the prohibitions of the
Act by cloaking forbidden discrimination in the guise of age-based
differentials in benefits will fall outside the § 4(f)(2)
exemption. Examples of possible violations of this kind can be
given. Under § 4(d) of the ADEA, for example, it is unlawful for an
employer to discriminate against an employee who has "opposed any
action made unlawful by" the Act or has participated in the filing
of any age discrimination complaints or litigation. Nothing in §
4(f)(2) would insulate from liability an employer who adopted a
plan provision formulated to retaliate against such an employee.
See 29 CFR § 1625.10(d)(5) (1988). Similarly, while §
4(f)(2) generally protects age-based reductions in fringe benefits,
an employer's decision to reduce salaries for all employees while
substantially increasing benefits for younger workers might give
rise to an inference that the employer was, in fact, utilizing its
benefits plan as a subterfuge for age-based discrimination in
wages, an activity forbidden by § 4(a)(1). These examples are not
exhaustive, but suffice to illustrate the not-insignificant
protections provided to older employees by the subterfuge proviso
in the § 4(f)(2) exemption.
Page 492 U. S. 181
V
As construed above, § 4(f)(2) is not so much a defense to a
charge of age discrimination as it is a description of the type of
employer conduct that is prohibited in the employee benefit plan
context. By requiring a showing of actual intent to discriminate in
those aspects of the employment relationship protected by the
provisions of the ADEA, § 4(f)(2) redefines the elements of a
plaintiff's
prima facie case, instead of establishing a
defense to what otherwise would be a violation of the Act. Thus,
when an employee seeks to challenge a benefit plan provision as a
subterfuge to evade the purposes of the Act, the employee bears the
burden of proving that the discriminatory plan provision actually
was intended to serve the purpose of discriminating in some
non-fringe-benefit aspect of the employment relation.
This result is supported by our longstanding interpretation of
the analogous provision of Title VII, the statute from which "the
prohibitions of the ADEA were derived in
haec verba."
Lorillard v. Pons, 434 U. S. 575,
434 U. S. 584
(1978). Section 703(h) of Title VII states that
"[n]otwithstanding any other provision of this subchapter, it
shall not be an unlawful employment practice for an employer to
apply different standards of compensation, or different terms,
conditions, or privileges of employment pursuant to a bona fide
seniority . . . system, . . . provided that such differences are
not the result of an intention to discriminate because of race,
color, religion, sex, or national origin. . . ."
42 U.S.C. § 2000e-2(h).
Despite the fact that § 703(h), like § 4(f)(2), appears on first
reading to describe an affirmative defense, we have
"regarded [§ 703(h)] not as a defense . . . but as a provision
that itself 'delineates which employment practices are illegal, and
thereby prohibited and which are not.'"
Lorance v. AT&T Technologies, Inc., 490 U.
S. 900,
490 U. S. 908
(1989) (quoting
Franks
Page 492 U. S. 182
v. Bowman Transportation Co., 424 U.
S. 747,
424 U. S. 758
(1976)). Although the use of the phrase "subterfuge to evade the
purposes of [the Act]" in § 4(f)(2) renders the scope of its
protection for employee benefit plans broader than the scope of the
protection for seniority systems provided by § 703(h), the similar
structure and purpose of the two provisions supports the conclusion
that ADEA plaintiffs must bear the burden of showing
subterfuge.
Applying this structure to the facts here, it follows that PERS'
disability retirement plan is the type of plan subject to the §
4(f)(2) exemption, and PERS' refusal to grant appellee's request
for disability benefits was required by the terms of the plan.
Because appellee has failed to meet her burden of proving that the
reduction in benefits at age 60 was the result of an intent to
discriminate in some non-fringe-benefit aspect of the employment
relation, summary judgment for appellee was inappropriate. On
remand, the District Court should give appellee an opportunity to
demonstrate the existence of a genuine issue of material fact on
this issue.
See Celotex Corp. v. Catrett, 477 U.
S. 317 (1986). The judgment of the Court of Appeals is
reversed, and the case is remanded for further proceedings
consistent with this opinion.
It is so ordered.
[
Footnote 1]
The District Court also found that PERS' disability retirement
plan was not covered by § 4(f)(2) because PERS' actions were not
taken pursuant to the terms of the plan, and because the plan
impermissibly permits or requires involuntary retirement on the
basis of age. 631 F. Supp. at 1204-1205.
[
Footnote 2]
As a result of the 1978 amendments, § 4(f)(2) cannot be used to
justify forced retirement on account of age. Appellee contends, and
the District Court found, that appellee was forced to retire under
the terms of PERS' plan, and that, as a result, § 4(f)(2) is
unavailable to PERS. The Court of Appeals did not address this
question, and we express no opinion on it, leaving its resolution
to that court on remand. .
[
Footnote 3]
When
McMann was decided, § 4(f)(2) did not contain the
final clause excluding from its protection benefit plans that
"require or permit the involuntary retirement of any individual . .
. because of the age of such individual."
[
Footnote 4]
As originally promulgated in January 1969, the regulation
provided:
"Section 4(f)(2) of the Act provides that it is not unlawful for
an employer, employment agency, or labor organization"
"to observe the terms of . . . any bona fide employee benefit
plan such as a retirement, pension, or insurance plan, which is not
a subterfuge to evade the purposes of this Act, except that no such
employee benefit plan shall excuse the failure to hire any
individual. . . ."
"Thus, an employer is not required to provide older workers who
are otherwise protected by the law with the same pension,
retirement or insurance benefits as he provides to younger workers,
so long as any differential between them is in accordance with the
terms of a bona fide benefit plan. For example, an employer may
provide lesser amounts of insurance coverage under a group
insurance plan to older workers than he does to younger workers,
where the plan is not a subterfuge to evade the purposes of the
Act. A retirement, pension or insurance plan will be considered in
compliance with the statute where the actual amount of payment
made, or cost incurred, in behalf of an older worker is equal to
that made or incurred in behalf of a younger worker, even though
the older worker may thereby receive a lesser amount of pension or
retirement benefits, or insurance coverage."
29 CFR § 860.120(a) (1970).
[
Footnote 5]
A defined contribution plan is one in which
"the employer's contribution is fixed and the employee receives
whatever level of benefits the amount contributed on his behalf
will provide."
Alabama Power Co. v. Davis, 431 U.
S. 581,
431 U. S. 593,
n. 18 (1977);
see 29 U.S.C. § 1002(34). Under this type of
plan, the cost of making contributions for any given employee is
completely unrelated to that employee's age. The dissent therefore
is quite wrong to suggest that these plans "commonly -- indeed,
almost invariably -- entail costs that rise with the age of the
beneficiary. . . ."
Post at
492 U. S.
187.
[
Footnote 6]
Regulations issued by the Department of Labor in 1969 did
provide that "[n]ot all employee benefit plans, but only those
similar to the kind enumerated in section 4(f)(2) of the Act, come
within this provision." 34 Fed.Reg. 9708, 9709 (1969), codified at
29 CFR § 860.120(b) (1970). Accordingly, the regulations suggested
that "a profit-sharing plan as such would not appear to be within
[the] terms" of § 4(f)(2).
Ibid. According to the EEOC,
this provision reflects the Department's conclusion that §
4(f)(2)
"would not shield discrimination against older employees in the
provision of profit-sharing benefits because the cost of providing
those benefits does not increase as employees age."
Brief for EEOC as
Amicus Curiae 10-11 n. 4. Nothing in
the regulation suggested, however, that the reason for the
exclusion of profit-sharing plans was that such plans were not
characterized by increasing costs with age. To the contrary, it
seems clear that the Department of Labor viewed the § 4(f)(2)
exemption as applicable to plans that served the purpose of
retirement, pension, or insurance plans, regardless of whether the
cost of the benefits provided by such plans rose with the age of
their beneficiaries:
"However, where it is the essential purpose of a plan financed
from profits to provide retirement benefits for employees, the
exception may apply. The 'bona fides' of such plans will be
considered on the basis of all the particular facts and
circumstances."
29 CFR § 860.120(b) (1970). We express no opinion, of course, on
the precise meaning of the phrase "any bona fide employee benefit
plan such as a retirement, pension, or insurance plan." We hold
only that it does not support the cost-justification requirement
urged by appellee and the EEOC.
[
Footnote 7]
The administration bill's version of § 4(f)(2) provided that
"[i]t shall not be unlawful for an employer, employment agency,
or labor organization . . . to separate involuntarily an employee
under a retirement policy or system where such policy or system is
not merely a subterfuge to evade the purposes of this Act."
113 Cong.Rec. 2794 (1967).
[
Footnote 8]
Elsewhere, Senator Javits explained that, under his version of §
4(f)(2),
"an employer will not be compelled to afford older workers
exactly the same pension, retirement, or insurance benefits as
younger workers, and thus employers will not, because of the often
extremely high cost of providing certain types of benefits to older
workers, actually be discouraged from hiring older workers."
113 Cong.Rec. 31254-31255 (1967).
JUSTICE MARSHALL, with whom JUSTICE BRENNAN joins,
dissenting.
The majority today immunizes virtually all employee benefit
programs from liability under the Age Discrimination in Employment
Act of 1967 (ADEA or Act), 29 U.S.C. § 621
et seq. (1982
ed. and Supp. V). Henceforth, liability will not attach under the
ADEA even if an employer is unable to put forth any justification
for denying older workers the benefits younger ones receive, and
indeed, even if his only reason for discriminating against older
workers in benefits is his abject hostility to, or his unfounded
stereotypes, of them. In reaching this surprising result, the
majority casts aside the estimable
Page 492 U. S. 183
wisdom of all five Courts of Appeals to consider the ADEA's
applicability to benefit programs, of the two federal agencies
which have administered the Act, and of the Acting Solicitor
General on behalf of the Equal Employment Opportunity Commission
(EEOC) as
amicus curiae, all of whom have concluded that
it contravenes the text and history of the Act to immunize
discrimination against older workers in benefit plans which is not
justified by any business purpose. Agreeing with these authorities,
and finding the majority's "plain language" interpretation
impossibly tortured and antithetical to the ADEA's goal of
eradicating baseless discrimination against older workers, I
dissent.
It is common ground that appellant Public Employees Retirement
System of Ohio (PERS) discriminated against appellee June Betts on
account of her age.
Ante at
492 U. S.
163-165. Had Betts become disabled before, rather than
after, turning 60, PERS would be paying her $355.02 a month in
disability benefits for the rest of her life, more than double the
$158.50 a month she is now entitled to collect. It is also common
ground that PERS' facially discriminatory provision was enacted
after the ADEA's passage in 1967, and therefore is subject to the
Act's broad antidiscrimination command, § 4(a)(1), 29 U.S.C. §
623(a)(1),
ante, at
492 U. S. 169,
[
Footnote 2/1] and that PERS is
liable to Betts for the difference between the monthly sums noted
above unless PERS' benefit plan falls within the § 4(f)(2)
exemption, 29 U.S.C. § 623(f)(2).
Ante at
492 U. S.
165-166. Finally, it is common ground that, based on
PERS' refusal to offer any explanation for the age-specific
benefits it provides, its disparate treatment of older employees
lacked any business justification whatsoever; indeed, the cost to
PERS of its disability plan varied not at all with an employee's
age.
Ante
Page 492 U. S. 184
at
492 U. S.
164-165. [
Footnote 2/2]
For want of a better explanation, one is left to conclude that PERS
denied benefits to those employees who became disabled after
turning 60 solely because it wished to cut its overall disability
outlays -- and that PERS viewed older workers as a convenient
target for its budgetary belt tightening.
This case thus presents the issue whether a benefit plan which
arbitrarily imposes disparate burdens on older workers can claim
succor under § 4(f)(2) from age discrimination liability. The
majority arrives at the novel conclusion that the ADEA exempts from
liability all discriminatory benefit programs, regardless of their
justification, unless the discrimination implicates aspects of the
employment relationship unrelated to the provision of benefits, and
then only if the discrimination violates "the substantive
provisions of the Act."
Ante at
492 U. S. 176.
The majority acknowledges that this reading shelters from the
ADEA's purview all but a few hypothetical types of benefit plan age
discrimination, [
Footnote 2/3]
leaving older workers unprotected from baseless discrimination
insofar as it affects the often considerable portion of overall
compensation comprised by employee benefits.
Ante at
492 U. S. 177,
492 U. S. 181.
The majority thus scuttles the heretofore consensus, and in my view
correct, interpretation that the § 4(f)(2) exemption
Page 492 U. S. 185
is limited to those programs whose disparate treatment is
justified by a plausible business purpose.
To reach the result it does, the majority uses an interpretive
methodology, purportedly one parsing § 4(f)(2)'s "plain language,"
which is so manipulative as virtually to invite the charge of
result-orientation. Ordinarily, we ascertain the meaning of a
statutory provision by looking to its text, and, if the statutory
language is unclear, to its legislative history.
Blum v.
Stenson, 465 U. S. 886,
465 U. S. 896
(1984). Where these barometers offer ambiguous guidance as to
Congress' intent, we defer to the interpretations of the provision
articulated by the agencies responsible for its enforcement, so
long as these agency interpretations are "based on a permissible
construction of the statute."
Chevron U.S.A. Inc. v.
Natural Resources Defense Council, Inc.,
467 U. S. 837,
467 U. S. 843
(1984);
see also Bethesda Hospital Assn. v. Bowen,
485 U. S. 399,
485 U. S. 403
(1988);
K mart Corp. v. Cartier, Inc., 486 U.
S. 281,
486 U. S. 291
(1988).
Eschewing this approach, the majority begins its analysis not by
seeking to glean meaning from the statute, but by launching a
no-holds-barred attack on the business purpose reading of §
4(f)(2).
Ante at
492 U. S.
169-170. Disaggregating the sentence that is § 4(f)(2)
[
Footnote 2/4] into two portions,
the majority concludes that the business purpose test is
irreconcilable with the "plain language" of the "subterfuge"
portion,
ante at
492 U. S.
170-172, and also cannot be inferred from the text of
the portion enumerating types of employee benefit plans,
ante at
492 U. S.
173-175. En route to interring the consensus
interpretation of § 4(f)(2), the majority pauses not a moment on
the provision's
Page 492 U. S. 186
purposes or legislative history. Only after burial, and almost
by afterthought, does the majority attempt to come up with its own
interpretation of the exemption, hastily proceeding to divine the
capacious alternative reading outlined earlier.
There are deep problems with the majority's interpretive
methodology, chief among them its unwillingness to apply the same
unforgiving textual analysis to its reading of the § 4(f)(2)
exemption as it does to the consensus reading, and its selective
use of legislative history to suggest that Congress contemplated
the draconian interpretation of § 4(f)(2) the majority divines. A
conventional analysis of § 4(f)(2) illuminates these methodological
lapses, and yields a very different result.
Beginning with the text, the only thing plain about § 4(f)(2)'s
spare language is that it offers no explicit command as to what
heuristic test those applying it should use. In dispatching the
consensus reading, the majority makes much of the fact that
"[t]he requirement that employers show a cost-based
justification for age-related reductions in benefits appears
nowhere in the statute itself."
Ante at
492 U. S. 170.
This truism, is, however, equally applicable to the complex
construction the majority adopts, under which all but certain
limited species of benefit plan discrimination are exempted from
the ADEA, and under which the burden of proving nonexemption is
shouldered by the ADEA plaintiff. [
Footnote 2/5] Indeed,
Page 492 U. S. 187
the fact that § 4(f)(2) enumerates various types of benefit
programs eligible for exemption from the ADEA's nondiscrimination
command, but makes no mention of disability programs, strongly
undercuts the majority's assertion that the text compels exemption
here. This is a case in which only so much blood can be squeezed
from the textual stone, and in which one therefore must turn to
other sources of statutory meaning.
The structure of § 4(f)(2), on the other hand, provides
considerable support for the business purpose interpretation. The
majority views § 4(f)(2) as involving two separate clauses, with
the first enumerating, for no apparent reason, three types of
benefit plans, and the second, the "subterfuge" clause, making §
4(f)(2)'s exemption applicable except where a benefit plan is
created with a "specific
intent . . . to evade'" the ADEA.
Ante at 492 U. S. 171
(citation omitted). This reading has the perverse consequence of
denying the § 4(f)(2) exemption only to subtle acts of
discrimination effected through a stratagem or other artifice of
discrimination, while leaving it intact for those age-based
distinctions like PERS which, though arbitrary, are so
brazenly discriminatory in disentitling older workers to benefits
that they cannot possibly warrant the "subterfuge"
characterization. It is difficult to believe that Congress, in
passing the ADEA, intended to immunize acts of unabashed
discrimination against older workers.
A far more sensible structural interpretation regards the §
4(f)(2) sentence as a synthetic whole. Under this reading, the
initial enumeration of "a retirement, pension, or insurance plan"
serves a concrete purpose: it gives content to the ensuing word
"subterfuge." All the enumerated benefit plans commonly -- indeed,
almost invariably -- entail costs that rise with the age of the
beneficiary; thus, an employer whose benefit plan treats older
workers less favorably than
Page 492 U. S. 188
younger ones though spending the same amount on each employee,
typically has a cost-based reason for doing so. By this reading, an
employer with an economic justification cannot properly be viewed
as having resorted to subterfuge to evade the ADEA's command
against irrelevant age distinctions. Unlike the majority's
artificial bifurcation of § 4(f)(2), this holistic interpretation
does not excuse express acts of unjustified age discrimination like
PERS', while punishing only evasive or subtle discrimination.
Significantly, all the Courts of Appeals to consider § 4(f)(2) have
concluded that the enumeration of benefit plans where age and cost
generally correlate sheds considerable light on the scope of the
exemption. [
Footnote 2/6] And once
the possibility of this interpretation is admitted, the majority's
sole ground for rejecting the business purpose interpretation --
that it clashes with the "plain language of the statute,"
ante at
492 U. S. 171
-- necessarily falls away.
The majority's reliance on the text of the statute as a basis
for rejecting the business purpose test is, finally, made puzzling
in light of its concession that its "construction of the words of
the statute is not the only plausible one."
Ante at
492 U. S. 177.
It is difficult to avoid the conclusion that the majority is using
two different standards of textual analysis: the business purpose
interpretation fails because the plain language
Page 492 U. S. 189
of the statute does not command it, but the majority's
interpretation succeeds because the plain language of the statute
does not preclude it.
Given, then, that some ambiguity remains under any fair reading
of § 4(f)(2)'s text and structure, it therefore is appropriate to
consult its legislative history. This history convincingly supports
the holistic reading and the business purpose interpretation
derived therefrom. As initially introduced by Senator Ralph
Yarborough in 1967, § 4(f)(2) did not recognize any circumstances
that might authorize age discrimination in the provision of fringe
benefits. Instead, it sheltered only the employer who
"separate[s] involuntarily an employee under a retirement policy
or system where such policy or system is not merely a subterfuge to
evade the purposes of this Act."
S. 830, 90th Cong., 1st Sess. (1967). [
Footnote 2/7]
Several Senators, however, led by Senator Jacob Javits, urged
that employers, in fashioning benefit programs, be allowed to
consider cost differentials between benefits provided to older
employees and those provided to younger ones. During Senate
hearings on the bill which became the ADEA, Senator Javits
criticized the initial version of § 4(f)(2), stating that that
version did "not provide any flexibility in the amount of pension
benefits payable to older workers depending on their age when
hired." Age Discrimination in Employment: Hearings on S. 830 and S.
788 before the Subcommittee on Labor of the Senate Committee on
Labor and Public Welfare, 90th Cong., 1st Sess., 27 (1967).
Employers "faced with the necessity of paying greatly increased
premiums," Senator Javits feared, might "look for excuses not
Page 492 U. S. 190
to hire older workers."
Ibid. Senator George Smathers,
a cosponsor of the initial bill, acknowledged in response that the
bill would not permit employers to vary benefit levels to take into
account the greater expense of providing some fringe benefits to
older workers.
Id. at 29-30. He proposed amending it to
permit such variations. The following day, Senator Javits proposed,
as a means of incorporating his and Senator Smathers' concerns, an
amendment which incorporated essentially the present language
enumerating specific types of benefit plans. 113 Cong.Rec. 7077
(1967). The Javits proposal, which was ultimately adopted and which
underwent only peripheral changes before the Act's enactment, was
designed to ensure, in its sponsor's words, that
"an employer will not be compelled to afford older workers
exactly the same pension, retirement, or insurance benefits as
younger workers, and thus employers will not,
because of the
often extremely high cost of providing certain types of benefits to
older workers, actually be discouraged from hiring older
workers."
113 Cong.Rec. 31254-31255 (1967) (emphasis added).
The history of § 4(f)(2) militates in favor of the business
purpose interpretation in several respects. First, it demonstrates
that the sponsors of the exemption intended to protect benefit
plans with economic justifications for treating older workers
disparately, and did not intend categorically to immunize benefit
plans from liability for unjustified discrimination.
See FEA v.
Algonquin SNG, Inc., 426 U. S. 548,
426 U. S. 564
(1976) (statements of sponsors "deserv[e] to be accorded
substantial weight in interpreting the statute"). [
Footnote 2/8]
Page 492 U. S. 191
Second, this history undercuts the majority's contention that
the § 4(f)(2) term "subterfuge to evade the purposes of the Act"
supports the broad exemption of benefit plans from coverage. That
phrase
predated the Javits amendment, and was part of the
bill when it did not authorize any age-based discrimination in the
provision of benefits. The language broadening the exemption must
come instead from the enumeration language added at Senator Javits'
behest, language most properly read to import only the business
purpose test. Third, at no point during the debate on § 4(f)(2) did
any legislator come even remotely close to endorsing the
construction of § 4(f)(2) chosen by the majority. This silence is
hardly surprising, given that an unqualified exemption contravenes
Congress' overarching goal in passing the ADEA of protecting older
workers against arbitrary discrimination. The business purpose
test, on the other hand, advances this goal, playing the hardly
radical role of ensuring that, where no justification exists for
disparate age-based treatment, older workers are not saddled with
burdens that should be shared by all workers or by their employer.
[
Footnote 2/9]
Page 492 U. S. 192
Even if I did not strongly believe that the text and structure
of the § 4(f)(2) exemption, as informed by its legislative history,
limit the exemption to benefit plans whose discrimination against
older workers rests on some business justification, I would still
conclude that adoption of the business purpose test is mandated
under
Chevron's admonishment to defer to enforcement
agencies' reasonable interpretations of ambiguous statutory
provisions.
See Western Air Lines, Inc. v. Criswell,
472 U. S. 400,
472 U. S. 412
(1985) (deferring to Department of Labor and EEOC on interpretation
of ADEA). Shortly after the ADEA's passage, the Department of
Labor, which originally administered the Act, interpreted § 4(f)(2)
to allow employers to discriminate on the basis of age in the
provision of employee benefits, but only where providing such
benefits was more expensive for older workers.
See 29 CFR
§ 860.120(a) (1970). Where cost did not vary with age, the
Department of Labor concluded, § 4(f)(2) did not exempt from ADEA
scrutiny discriminatory benefit programs.
See § 860.120(b)
("Not all employee benefit plans, but only those similar to the
kind enumerated in section 4(f)(2) of the Act, come within this
provision," and thus profit-sharing and other plans lacking an
economic basis for discriminating against older workers were not
exempted by § 4(f)(2)); 34 Fed.Reg.
Page 492 U. S. 193
9709 (1969) (same). [
Footnote
2/10] The EEOC, to which responsibility for enforcing the ADEA
was transferred in 1979, adopted
in toto Labor's business
purpose interpretation of § 4(f)(2). The EEOC's regulations state
that § 4(f)(2)'s purpose "is to permit age-based reductions in
employee benefit plans
where such reductions are justified by
significant cost considerations." 29 CFR § 1625.10(a)(1)
(1988) (emphasis added). [
Footnote
2/11] The majority's derogation of this dual agency
interpretation leaves one to wonder why, when important civil
rights laws are at issue, the Court fails to adhere with
consistency to its so often espoused policy of deferring to expert
agency judgment on ambiguous statutory questions.
See, e.g.,
429 U. S. S.
194� Co. v. Gilbert,@
429 U. S. 125,
429 U. S.
155-156 (1976) (BRENNAN, J., dissenting).
The majority today puts aside conventional tools of statutory
construction and, relying instead on artifice and invention,
arrives at a draconian interpretation of the ADEA which Congress
most assuredly did not contemplate, let alone share, in 1967, in
1978, or now. Because I cannot accept that it is the ADEA's command
to give employers a free hand to fashion discriminatory benefit
programs, I dissent.
[
Footnote 2/1]
I agree with the majority that neither our decision in
United Air Lines, Inc. v. McMann, 434 U.
S. 192 (1977), involving a plan with a mandatory
retirement provision adopted prior to the passage of the ADEA, nor
Congress' 1978 amendment of § 4(f)(2) in response to
McMann, controls this case.
Ante at
492 U. S.
167-169.
[
Footnote 2/2]
It is no answer to surmise that providing disability benefits to
an older worker costs more than providing equivalent benefits to a
younger worker, as is typically the case with life insurance
benefits. PERS, after all, provided full monthly benefits to
employees over 60, so long as they had become disabled prior to
attaining that age. The sole distinction PERS drew was based on an
employee's age at disability, a factor that does not correlate with
the cost to an employer of providing benefits. Indeed, insofar as
an employer is concerned about the cumulative cost of providing
benefits during the remaining life of a disabled employee, this
concern militates
in favor of older workers, whose
predicted lifespans are shorter than those of younger workers.
[
Footnote 2/3]
For example, if an employer refuses to provide benefits to an
older worker in retaliation for filing a claim under the ADEA, a
claim challenging that refusal would be cognizable.
Ante
at
492 U. S.
180.
[
Footnote 2/4]
Section 4(f)(2) provides that it is not unlawful for an
employer
"to observe the terms of . . . any bona fide employee benefit
plan such as a retirement, pension, or insurance plan, which is not
a subterfuge to evade the purposes of this chapter, except that no
such employee benefit plan shall excuse the failure to hire any
individual, and no such . . . employee benefit plan shall require
or permit the involuntary retirement of any individual . . .
because of the age of such individual."
29 U.S.C. § 623(f)(2).
[
Footnote 2/5]
The majority's holding that the employee bears the heavy burden
of proving not only that a discriminatory benefit plan implicates
nonbenefit aspects of employment, but also that it was intended to
discriminate, strikes a further blow against the statutory rights
of older workers.
Ante at
492 U.S. 182. It is one thing for an
employee to prove discrimination against older workers. It is
considerably more difficult to prove that an employer undertook
such discrimination with unlawful motives. In light of the severe
evidentiary and practical obstacles, where discrimination in
non-fringe-benefit aspects of the employment relationship has been
proved, a more appropriate approach would place the burden on the
employer to show that the discrimination was not born of improper
intent.
See Wards Cove Packing Co. v. Antonio,
490 U. S. 642,
490 U. S. 668
(1989) (STEVENS, J., dissenting) .
[
Footnote 2/6]
See Betts v. Hamilton County Bd. of Mental Retardation and
Developmental Disabilities, 848 F.2d 692 (CA6 1988) (case
below);
EEOC v. Mt. Lebanon, 842 F.2d 1480 (CA3 1988);
Karlen v. City Colleges of Chicago, 837 F.2d 314 (CA7
1988);
Cipriano v. Board of Ed. of North Tonawanda School
Dist., 785 F.2d 51 (CA2 1986);
EEOC v. Westinghouse Elec.
Corp., 725 F.2d 211 (CA3 1983),
cert. denied, 469
U.S. 820 (1984);
EEOC v. Borden's, Inc., 724 F.2d 1390
(CA9 1984). It is true that these courts took slightly divergent
analytic paths to this common result: some have interpreted §
4(f)(2)
ab initio, and others have deferred to the EEOC's
statutory reading to this effect; some have imputed the business
purpose requirement to the term "subterfuge," and others have
instead attributed it to § 4(f)(2) more generally. This divergence,
however, in no way vitiates the significance of the Courts of
Appeals' unanimity that the statute supports the business purpose
requirement.
[
Footnote 2/7]
The narrow scope of this initial exemption may have reflected
the fact that Congress was aware that employers at that time did
not regard as a major concern the benefit program costs associated
with older workers.
See, e.g., Report of the Secretary of
Labor to the Congress Under Section 715 of the Civil Rights Act of
1964, The Older American Worker: Age Discrimination in Employment
16 (1965) ("Relatively few employers . . . cited the costs of
providing pension and insurance benefits as significant barriers to
employment of older persons").
[
Footnote 2/8]
The majority attempts to appropriate Senator Javits by stringing
together fragments of his comments on the Senate floor. The
majority cites his statement that "
the age discrimination law
is not the proper place to fight' the battle of ensuring `adequate
pension benefits for older workers.'" Ante at 492 U. S. 179,
quoting 113 Cong.Rec. 7076 (1967). But as the Solicitor General
notes, this remark, read in proper context, "does not suggest that
any type of discrimination in the provision of employee
benefits should be permissible under the ADEA," but makes the more
limited point that certain existing pension plans with lengthy
vesting periods "should be changed by comprehensive pension
legislation, rather than by an age discrimination statute." Brief
for EEOC as Amicus Curiae 17, n. 9 (emphasis added).
Senator Javits eventually proposed, and won the enactment of, such
legislation. See 29 U.S.C. §1053 (1982 ed. and Supp. V).
Similarly, Senator Javits' statement that amended § 4(f)(2)
provides "`a fairly broad exemption . . . for bona fide retirement
and seniority systems,'" ante at 492 U. S. 179,
quoting 113 Cong.Rec. 7076 (1967), fully accords with the business
purpose test. That test exempts from § 4(f)(2)'s coverage any act
of age discrimination with some legitimate business basis --
leaving unprotected only the presumably narrow band of benefit
programs, like PERS, which practice unjustified age
discrimination.
[
Footnote 2/9]
That Congress viewed the § 4(f)(2) exemption as bounded by a
business purpose requirement was, if anything, confirmed in 1978,
when Congress added a clause in response to
United Air Lines,
Inc. v. McMann, 434 U. S. 192
(1977). In rejecting a claim that a plan adopted before the ADEA's
enactment could be a subterfuge,
McMann declined to hold
that a "
per se rule requir[ed] an employer to show an
economic or business purpose in order to satisfy the subterfuge
language of the Act." 434 U.S. at
434 U. S. 203.
This statement, referring only to pre-ADEA plans, left open the
issue of a
per se business purpose rule for discriminatory
plan provisions adopted after the Act's passage. Reiterating the
need for an economic justification for discrimination, Senator
Javits stated during the 1978 debate:
"The meaning of the exception, as I stated in [the 1967]
colloquy with Senator Yarborough on the Senate floor, was that an
'employer will not be compelled under this section to afford to
older workers exactly the same pension, retirement, or insurance
benefits as he affords to younger workers.'"
124 Cong.Rec. 8218 (1978). The Senator explained that
"[w]elfare benefit levels for older workers may be reduced only
to the extent necessary to achieve approximate equivalency in
contributions for older and younger workers."
Ibid.
[
Footnote 2/10]
The majority's dismissal of this administrative interpretation
of § 4(f)(2) on the ground that it was not contemporaneously issued
is disingenuous. In the majority's view, the Department of Labor
initially articulated a broad "safe harbor" exemption for benefit
programs, and only in 1979 revised its interpretation to adopt the
business purpose test.
Ante at
492 U. S.
171-172. The sole support the majority adduces for this
proposition is the Department of Labor's 1969 regulation providing
that age-related benefit reductions would be "
considered in
compliance with the statute'" if cost-justified. Ante at
492 U. S. 171,
quoting 29 CFR § 860.120(a) (1970). This regulation does not
demonstrate that Labor was applying a business purpose test, the
majority suggests, apparently because the regulation failed
explicitly to state the corollary proposition that
non-cost-justified plans fall outside the statutory exemption. This
tenuous reading fails to explain (1) why Labor saw a need to
include the cost-justification qualification in its reading of the
exemption; (2) why Labor stated that profit-sharing plans, lacking
an economic basis for age discriminating, fall outside the
exemption; and (3) why Labor, in its 1979 pronouncement, in no way
suggested it was changing its construction of § 4(f)(2).
[
Footnote 2/11]
See also 29 CFR §1625. 10(a)(1) (1988) ("A benefit plan
will be considered in compliance with the statute where the actual
amount of payment made, or cost incurred, in behalf of an older
worker is equal to that made or incurred in behalf of a younger
worker, even though the older worker may thereby receive a lesser
amount of benefits or insurance coverage"); § 1625.10(d) ("[A] plan
or plan provision which prescribes lower benefits for older
employees on account of age is not a
subterfuge' within the
meaning of section 4(f)(2), provided that the lower level of
benefits is justified by age-related cost
considerations").