Seventh Circuit Court of Appeals Finds that Oakton Community College’s Decision to Discontinue Employment of SURS Annuitants Was Not Age Discriminatory

Oct 25, 2018

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On October 11, 2018, a three-judge panel on the Seventh Circuit Court of Appeals issued a decision affirming the award of summary judgment to Oakton Community College (“Oakton”) by the District Court and dismissing the appeal filed on behalf of a class of non-reemployed State Universities Retirement System (“SURS”) annuitants. The Seventh Circuit (which covers Illinois, Indiana and Wisconsin) ruled that Oakton’s decision to no longer employ SURS annuitants was not age discriminatory in violation of the Age Discrimination in Employment Act (“ADEA”). 

Relevant Facts

As an Illinois public community college, Oakton participates in the State Universities Retirement System (“SURS”), which provides retirement benefits to eligible employees of state universities and public community colleges. SURS participants collecting SURS annuities who return to work for a covered university or community college after retirement (“SURS annuitants”) are subject to earnings limitations. In 2012, the Illinois legislature amended the SURS “Return-to-Work” law and imposed additional reporting requirements and potential fines on colleges and universities related to the employment and compensation of SURS annuitants.

Specifically, covered institutions that employ SURS annuitants are now required to determine whether these annuitants are “affected” under the statute. An annuitant becomes “affected” when s/he exceeds his or her earnings limitation. If any employed SURS annuitant exceeds his or her earnings limitation, the amended “Return-to-Work” law requires the college to pay a “contribution” (i.e. penalty) to the System equal to 12 times the amount of the gross monthly retirement annuity payable to a particular annuitant. 

In November 2014, Oakton announced that it would discontinue the employment of all SURS annuitants effective July 1, 2015 because of the significant challenges in maintaining a system to monitor annuitants’ earnings, concerns about SURS’ administration and enforcement of the Return-to-Work law, and the risk of penalties which Oakton had already incurred after inadvertently employing several affected annuitants in Fall 2014. Ultimately, over 80 SURS annuitants, aged 55 or older, lost their jobs as a result of Oakton’s decision. A class of non-reemployed SURS annuitant adjunct faculty members filed suit claiming that Oakton’s decision not to employ SURS annuitants violated the ADEA and the Illinois Human Rights Act (“IHRA”).

Additionally, the Plaintiff class brought claims under both the U.S. and Illinois constitutions and state tort law. The District Court granted summary judgment in favor of Oakton, finding that Oakton’s decision to no longer employ SURS annuitants was not age discrimination because it was based on “reasonable factors other than age.” The SURS annuitants then appealed to the Seventh Circuit.

Seventh Circuit’s Ruling 

The Seventh Circuit held that the lower court correctly awarded summary judgment to Oakton because while Oakton’s decision adversely impacted older workers, its decision was based upon reasonable factors other than age. The Court further stated that the reasonable factor other than age defense set forth in the ADEA only requires Oakton to prove that its decision not to employ SURS annuitants was “reasonable” under the facts and circumstances. Additionally, the Seventh Circuit rejected Appellant’s reliance on EEOC regulations which set forth various considerations to be examined when applying this reasonable factor other than age defense.

The District Court was not required to examine all of the articulated EEOC considerations to find that Oakton demonstrated that its decision to no longer employ SURS annuitants was based on a reasonable factor other than age. This decision is important not only for Oakton Community College but for all colleges and universities that choose to no longer employ SURS annuitants given the significant hurdles and potential costs imposed by the Return-to-Work law changes. Robbins Schwartz is proud to have achieved this victory for Oakton.

Feel free to contact your Robbins Schwartz attorney with any questions regarding the decision.