United Air Lines, Inc. v. McMann

1977-12-12

Headline: Court allows employers to enforce mandatory retirements in bona fide pension plans adopted before 1967, making it lawful to retire workers before age 65 when the plan predates the Age Discrimination in Employment Act.

Holding: The Court held that enforcing a mandatory retirement at age 60 under a bona fide retirement plan adopted before the Age Discrimination in Employment Act does not violate the Act and is not automatically a subterfuge.

Real World Impact:

Permits employers to enforce mandatory pre-65 retirements under bona fide plans adopted before 1967.
Makes it harder for employees to challenge pre-Act mandatory retirements under the Age Discrimination Act.
Leaves open challenges to plans adopted or maintained after the Act's effective date.

Topics: age discrimination, mandatory retirement, pension plans, employee benefits

Summary

Background

A long-time United Air Lines employee joined the company in 1944 and voluntarily entered United’s retirement plan in 1964. That plan, created in 1941, set a “normal retirement” date as the first day after a participant’s 60th birthday. The employee was retired over his objection on February 1, 1973, and sued under the Age Discrimination in Employment Act seeking reinstatement, back pay, and an injunction. Lower courts were split: the Fourth Circuit treated a pre-65 retirement as a possible “subterfuge” unless the employer showed a business purpose, while other circuits had reached different conclusions.

Reasoning

The Supreme Court examined §4(f)(2) of the Act, which says employers may observe the terms of a bona fide retirement plan so long as it is not a subterfuge to evade the Act. The Court accepted the stipulated facts that United’s plan was bona fide and operated to require retirement at age 60. It held that a bona fide plan adopted long before the Act could not reasonably be treated as a subterfuge to evade legislation enacted decades later, and rejected a per se rule forcing employers to prove an economic purpose for pre-Act plans. The Court therefore reversed the Fourth Circuit’s ruling.

Real world impact

The ruling means employers can enforce mandatory retirements tied to bona fide retirement plans that were established before the 1967 Act without automatically violating that law. The Court remanded the case for further proceedings consistent with its opinion. The Department of Labor’s interpretations and later positions were noted but not dispositive once the plan was found mandatory.

Dissents or concurrances

Justices Stewart and White joined the judgment; Stewart emphasized the plan’s pre-Act origin, while White said continued maintenance after the Act may warrant separate scrutiny. Justice Marshall (joined by Justice Brennan) dissented, arguing the Act should bar involuntary pre-65 retirements and the legislative history supports that view.