Court Says Farmers Group Discriminated in Denying Payments to Older Workers

Clearing a path for thousands of older workers to seek retirement benefits denied by their employers, a federal judge in Los Angeles has ruled that the Farmers Group insurance companies engaged in age discrimination by limiting payments to employees working beyond age 65.

The ruling by U.S. District Judge Terry J. Hatter Jr. could result in payments totaling $5 million to the 84 Farmers employees who participated in a class-action lawsuit, according to the American Assn. of Retired Persons, which represented many of the workers.

Though an attorney for the Los Angeles-based firm said Wednesday that Farmers would appeal the decision, the older workers who learned of Hatter’s Sept. 22 ruling are celebrating the news.

“It isn’t the money, because I don’t need the money,” said Margaret Jashni, 68, a computer program auditor who has worked for Farmers for 48 years. “It’s the principal of the thing.

“It’s so unfair, such a stereotypical attitude, that after 65 you’re old and decrepit,” she said. “Actually, I’m smarter than I was when I was 65. I’m not ready to retire. I love my work.”

Standards Changed

It was Farmers’ policy when workers turned 65 to “freeze” their retirement benefits. Older workers did not receive profit-sharing payments, losing an annual bonus that typically amounted to 15% of their salary. Nor did they get credit under Farmers’ pension plan for years worked beyond their 65th birthday, in some cases cutting their pensions nearly in half.

As of Jan. 1, an amendment to the federal Age Discrimination in Employment Act has barred employers from limiting older workers’ pensions.

Up until then, however, it was unclear if such practices were legal. Farmers, for instance, has argued that its policies fit within an exemption under the age discrimination law.

In any event, similar practices were widespread. Almost half of all employers, in fact, froze retirement benefits at age 65, according to a 1985 study by Mercer-Meidinger, a benefits consulting firm. The study, commissioned by AARP, estimated that 213,000 older workers were losing $450 million yearly due to the corporate policies.

Several thousand workers who retired before Jan. 1 had filed federal discrimination complaints charging that their benefits had been reduced by such policies. They now will be able to cite the Farmers decision as a precedent in their favor, said Christopher G. Mackaronis, an AARP attorney in Washington.

“The decision breathes life into those claims,” Mackaronis said Wednesday.

Workers who lost benefits but have not filed complaints with the federal Equal Employment Opportunity Commission would face difficult legal obstacles to pursuing a claim, though, Mackaronis said.

Under the age discrimination law, such complaints would have to be filed within three years of the date they began to be penalized by a benefits-freeze policy, he explained.

Donald J. Hoffman, an attorney for Farmers in Los Angeles, said it was unlikely the case would result in a wave of claims against employers. “These matters are decided pretty much on a case-by-case basis,” he said. “Each case would still have to be individually brought or decided.”

Hatter ruled that Farmers had willfully violated the age discrimination law, thereby doubling the damages to be collected by the affected workers. He still must conduct a jury trial to determine the amounts they will be awarded.

Mackaronis estimated that some of the workers will collect more than $100,000 in profit-sharing payments, while others will have their monthly pensions doubled by the decision.

In all, he said, the payments will total about $5 million. Hoffman said Farmers had not yet made an estimate of the damages.

The Equal Employment Opportunity Commission joined in the suit on behalf of 53 workers who claimed only to have lost earnings from Farmers’ profit-sharing plan. AARP represented another 31 workers who claimed they were denied payments from both the profit-sharing and pension plans.

As many as 50 other Farmers workers may have lost benefits, according to Carla Barboza, a senior trial attorney for the commission in Los Angeles, but they chose not to participate in the lawsuit.

“You’ve got people who’ve been working there 20, 30 or 40 years, and they’re so loyal to their employer,” Barboza said. Letters the workers received from Farmers concerning the suit may have persuaded them not to participate, she added.