Unemployment Benefits – Collective Bargaining Agreement

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7^th Circuit Court of Appeals

Case Name: Timothy O’Brien, et al. v. Catepillar Inc.,

Case No.: 17-2956

Officials: EASTERBROOK, KANNE, and SYKES, Circuit Judges.

Focus: Unemployment Benefits – Collective Bargaining Agreement

For more than half a century, Caterpillar Inc. paid unemployment benefits to laid-off employees at its manufacturing plant in Joliet, Illinois. This arrangement lasted until Caterpillar and the local union agreed to end the program in their 2012 collective-bargaining agreement. In exchange for the elimination of the benefits, Caterpillar distributed $7.8 million to certain employees who had participated in the plan. Retirement-eligible employees received a pro rata share if they agreed to retire. Those who were ineligible to retire received the same pro rata share of the fund but with no strings attached.

Timothy O’Brien and 47 other retirement-eligible employees who refused to retire brought this lawsuit, alleging that the liquidation plan violates the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. §§ 621 et seq. The district judge entered summary judgment for Caterpillar, and we affirm. Though the liquidation plan has a disparate impact on older workers, it was justified by several “reasonable factors other than age.” Id. § 623(f)(1). The plan achieved one of Caterpillar’s long-standing financial objectives—namely, the elimination of costly unemployment benefits. It also saved money by incentivizing early retirement and reducing administrative expenses, and contributed to labor peace between Caterpillar and the union.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.