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EEOC v. WESTINGHOUSE ELEC. CORP.

March 26, 1986

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,
v.
WESTINGHOUSE ELECTRIC CORPORATION



The opinion of the court was delivered by: KATZ

KATZ, J.

 MEMORANDUM

 In the trial of this case, I saw the human wreckage of older Westinghouse employees, let go after years of service to the Company. Because these employees were eligible for their retirement benefits, they were denied the severance pay to which younger workers were entitled. Those persons eligible for early retirement were also denied severance pay, and had to draw down their reduced pension benefits to survive.

 This heartless corporate policy was justified by a variety of litigation ploys. These ranged from a belatedly invented corporate "policy" of providing a single income stream to laid off employees, to a claim that the EEOC provided insufficient conciliation efforts, to a farfetched estoppel defense that Westinghouse had relied on the flawed arguments of government lawyers in earlier litigation of this issue which it lost.

 I find that Westinghouse's practice of denying severance pay to its older employees eligible for pensions is blatant, willful age discrimination. *fn1" I therefore enjoin the practice and award double damages to the injured employees.

 I also reject the EEOC's shotgun approach of attacking a variety of other Westinghouse employment practices which are protected by law as bona fide pension and seniority arrangements. Therefore, I uphold the Westinghouse practices, other than denial of severance pay, at issue in this case.

 This case began on November 10, 1982, with an administrative charge filed with the EEOC by Charles Slackway. See Plaintiff's Exhibit 1A. Processing of Slackway's charge culminated on June 7, 1983, with a letter of violation addressed to Westinghouse. See Plaintiff's Exhibit 4B. The EEOC tried to conciliate the matter. These efforts proved fruitless, and a complaint was filed in this court in November, 1983. The complaint alleged: "since before June 1, 1980, and continuously up until the present time, Defendant has willfully engaged in unlawful employment practices at its Lester, Pennsylvania facility. . . ." The complaint targeted defendant's "failure to provide Layoff and Income Benefits" to thirty-five named individuals and "all other terminated or laid-off employees aged 60 and older who were eligible for early retirement benefits and/or received early retirement benefits."

 Continued investigation of Slackway's case led to further charges against Westinghouse. Once again, conciliation was unsuccessfully attempted. In August, 1984, the Commission filed an amended complaint that expanded the case by including defendant's Concordville, Pennsylvania facility and increasing the number of plaintiffs to 117. It named the following ADEA violations:

 
1) denying layoff income benefits (LIB) to employees laid off prior to July, 1982, who were eligible for any type of retirement;
 
2) after July, 1982, giving laid off employees the option of selecting either LIB or retirement, but not both;
 
3) forcing laid off employees to retire prior to age 70 because LIB was not available;
 
4) denying early retirement to laid off employees who chose LIB;
 
5) denying recall to work to employees who were laid off and forced to retire; and
 
6) giving lower retirement benefits to laid off employees who were not eligible for retirement because of age at the time of their layoff, but who later became qualified for retirement benefits.

 Plaintiffs subsequently filed a second amended complaint in October, 1984. This complaint expanded the scope of the case to a nationwide complaint embracing all of defendant's employees aged 40 or older, at all of its facilities. *fn2"

 The EEOC's charges implicate eight of defendant's employment plans and practices. The eight challenged practices are: (1) pre-July, 1982, arrangements for pensions and layoff income benefits, (2) post-July, 1982, arrangements for pensions and layoff income benefits, (3) arrangements for management employees, (4) Advanced Retirement Plan I, (5) Advanced Retirement Plan II, (6) an "impact number" process of awarding special benefits to certain employees laid off as a result of location shutdowns, product line relocations, or job movements, (7) limitation of retirement benefits to those actually eligible at time of layoff, and (8) limitation of death prior to retirement benefits to spouses of employees actually eligible for the benefits at the time of death. Before I examine the issues surrounding these plans and practices, it is necessary to set forth their pertinent terms.

 The Pre-July, 1982, Arrangements For Pensions and Layoff Income Benefits

 Prior to July, 1982, Westinghouse employees were covered by a 1979 pension plan for represented employees, and a 1979 pension plan for non-represented employees. The pertinent characteristics of the plans were identical.

 1. The plans encompassed four retirement categories. Thus, employees could take a "normal," "deferred," "early," or "selected" retirement. See Joint Ex. 2 at 7, 47-50.

 2. Employees were eligible for normal retirement at age 65. Normal retirees were entitled to a nonforfeitable pension if they were employed by Westinghouse on the day before their 65th birthdays and had begun this employment at some time preceding the first day of the month following their 60th birthdays. See Joint Ex. 2 at 47.

 3. Employees could defer retirement. Retirements could not be deferred beyond the first day of the month following attainment of age 70. See Joint Ex. 2 at 47.

 4. There were four early retirement possibilities. These were:

 
a. If an employee was age 60 or older and had 10 or more years of service, then he or she could take an early retirement. See Joint Ex. 2 at 47.
 
c. If an employee was laid off before age 60, due to a location closedown, and was either age 55 with 10 or more years service, or age 50 with 25 or more years of service, then he or she could take an early retirement. The employee was not eligible for early retirement benefits if he or she received LIB. Employees with contractual rights at another Westinghouse location, and employees offered employment at another Westinghouse location, were not eligible for early retirement. See Joint Ex. 2 at 48.
 
d. If an employee between ages 50 and 60 with 25 or more years of service was laid off due to a job movement or product line relocation, then the employee could apply for early retirement. The employee was not eligible for early retirement if he or she received LIB. See Joint Ex. 2 at 48-49.

 5. Selected retirement occurred in one of two situations. These were:

 
a. If an employee had 30 or more years of service then he or she could choose to retire after his or her 58th birthday. See Joint Ex. 2 at 49.
 
b. If an employee between ages 50 and 60 with 30 or more years of service was laid off due to a location closedown or a product line relocation, then he or she could take a selected retirement. The employee was not eligible for selected retirement if he or she received LIB. See Joint Ex. 2 at 49-50.

 6. Layoff Income and Benefits ("LIB"), was provided to employees with at least two years of service who were laid off through no fault of their own. At minimum, these employees received LIB in an amount equal to four weeks' pay. Employees' Total Maximum Sums of LIB were equivalent to one week's pay for each full year of service. See Joint Ex. 13 at 2-3.

 7. LIB was provided in several different forms.

 
a. When layoffs were projected to continue for more than six months, employees could elect to receive the total amount due in one lump sum. This election terminated the employee's relationship with the Company. Thus, the employee lost all recall rights and credits for years of service, other than any rights existing under the pension plan. See Joint Ex. 13 at 3.
 
b. If an employee wished to retain recall rights and service credits, he or she could elect LIB in the form of weekly payments. Under this arrangement, Westinghouse supplemented weekly federal and state unemployment benefits so that the combined benefits equalled 60% of the employee's weekly pay. Receipt of the weekly company contributions was contingent upon receipt of each week's federal and state unemployment benefits. See id. at 4. When federal and state benefits expired, weekly company benefits equal to 60% of the employee's weekly pay continued either until the total maximum sum had been paid out, or until twelve months had passed since the date of layoff. See id. at 4.

 If an employee was 59 years old and had ten years of service at the time of layoff, then LIB payments ceased when the employee turned sixty and became eligible for early retirement. See id. at 4.

 If an employee was laid off for a year and had not been offered reemployment with Westinghouse, then weekly payments ceased and the employee received the balance of the total maximum sum in a lump sum. If, however, the employee was laid off within one year of eligibility for early retirement, then the employee received his or her early retirement pension at age 60. Id. at 4.

 The Post-July, 1982, Arrangements For Pensions And Layoff Income Benefits

 In July, 1982, Westinghouse implemented certain changes in its pension benefits and LIB programs. The resulting plans apply to all employees.

 9. Eligibility for normal retirement continues to accrue at age 65. As before, the retiring employee is entitled to a nonforfeitable pension if he or she was employed by Westinghouse on the day before his or her 65th birthday and had begun such employment before age 60. See Joint Ex. 3 at 36.

 10. Employees can defer retirement. Retirements may not be deferred beyond the first day of the month following attainment of age 70. Id.

 11. There are four possibilities for early retirement.

 
a. If an employee has ten or more years of service, then he or she can take early retirement after turning 60. If the employee is laid off and elects to receive LIB benefits, then he or she is only entitled to vested pension benefits rather than full early retirement benefits. See id. at 36-37.
 
b. If an employee is laid off after turning 59 but before age 60 and has between ten and thirty years of service, then he or she can retire after turning 60. The employee cannot take early retirement if he or she has returned to employment with Westinghouse before turning 60. If the employee elects to receive LIB, then the employee is not eligible for full early retirement benefits. See id. at 37.
 
c. If an employee is laid off before age 60, due to a location shutdown, then the employee can take an early retirement if he or she meets one of the following age and years of service requirements:
 
1. Age 55 with 10 or more years of service.
 
2. Age 54 with 13 or more years of service.
 
3. Age 53 with 16 or more years or service.
 
4. Age 52 with 19 or more years of service.
 
5. Age 51 with 22 or more years of service.
 
6. Age 50 with 25 or more years of service.

 Employees with contractual employment rights at another Company location, and employees offered employment at another Westinghouse Location, are not eligible for early retirement. If an employee elects to receive LIB, then the employee is not eligible for early retirement. Id. at 37-38.

 
d. If an employee between ages 50 and 60, with 25 or more years of service, is laid off due to job movement or product line relocation, then the employee can apply for early retirement. If the employee elects to receive LIB, then he or she cannot receive early retirement benefits. Id. at 38.

 12. Selected retirement can occur in two situations.

 
a. If an employee has 30 or more years of service, then he or she can retire between ages 58 and 65. If an employee is laid off and elects to receive LIB, then the employee is not eligible for selected retirement benefits. Id. at 38-39.
 
b. If an employee between ages 50 and 60, with 30 or more years of service, is laid off due to location closedown, job movement, or product line relocation, then he or she can apply for selected retirement. Employees with contractual employment rights at another company location, and employees offered employment at another Westinghouse location, are not eligible for early retirement. If the employee elects to receive LIB, then the employee is not eligible for selected retirement benefits. Id. at 39.

 14. If an employee is laid off after turning 59 and has 10 years of service, then he or she can elect to retire at age 60. If the employee makes this election, then he or she receives LIB until turning 60 or until the total maximum sum is paid, whichever is first. Id. at 7.

 Westinghouse's Arrangements For Management Personnel

 15. There are three components to Westinghouse's arrangements for its managerial employees. These are: a management separation allowance program ("MSA"), see Joint Ex. 20, a pre-retirement income plan ("PRIP"), see id., and an executive pension plan, see Joint Ex. 4.

 16. MSA benefits are similar to LIB benefits. MSA provides a total dollar sum in an amount related to years of service and level of salary at the time of separation. This sum is payable on a monthly or lump sum basis. See Joint Ex. 20.

 17. If an employee desires MSA in a lump sum, then he or she must specifically request that form of payment. If the employee makes this election, then he or she forfeits life insurance benefits. Id. at 9-10. Under the monthly payment scheme, life insurance benefits, hospital expense and surgical operation insurance, maternity benefits, and major medical protection benefits continue with MSA payments or for 12 months, ...


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