In a rare victory for employers and older employees, the United States Supreme Court recently concluded that the Age Discrimination in Employment Act (ADEA) does not permit employees who are over 40 to sue their employers for offering more favorable benefits to older co-workers. In General Dynamics Land Systems, Inc. v. Cline, the Court held that although the ADEA protects older employees against preferential treatment to younger employees, it does not apply in reverse.

The case arose over a benefits change that benefited older employees at a subsidiary of General Dynamics Corp. Until 1997, a collective bargaining agreement between the employer and its union provided full health benefits to all employees who retired with 30 years of seniority. The employer and union then negotiated a new agreement which offered retiree health benefits only to those at least age 50 on July 1, 1997. About 200 present or former employees in Ohio and Pennsylvania, over the age of 40 but under the age of 50, sued, claiming that they were discriminated against because they were too young to get benefits being offered to older coworkers.

The U.S. District Court for the Northern District of Ohio dismissed the action, concluding that the purpose of the ADEA was to protect older employees from discrimination and not to prevent them from receiving more favorable treatment than other employees covered by the law. However, the Court of Appeals for the Sixth Circuit reversed, concluding that the statute’s prohibition was so clear on its face that if Congress had meant to limit its coverage to protect only the older worker against the younger, it would have said so. On appeal, the Supreme Court reversed and dismissed the action, concluding that the ADEA does not permit employees over the age of 40 to file claims under it as a result of more favorable treatment to older employees.

Interestingly, both the AARP and the AFL-CIO argued in favor of the employer’s position, while the Justice Department and the EEOC opposed the employer. The EEOC previously had a well-established interpretation that the ADEA applied to claims of reverse age discrimination by those over 40.

The case was particularly significant because an opposite result would have resulted in thousands of lawsuits by “younger” employees over the age of 40 as a result of buy-outs or other retirement incentives offered to “older” employees over the age of 40. The case was also significant, in that it signaled a willingness by the Supreme Court to override interpretations of federal employment laws by the EEOC which do not comport with the clear directive of the statute.

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Robert J. Tribeck is Administrative Chair of Rhoads & Sinon’s Business Litigation Group and a member of the Firm’s Employment and Labor Law Group. For more information about this litigation, Attorney Tribeck can be reached at (717) 237-6701 or rtribeck@rhoads-sinon.com.