Arizona Governing Committee for Tax Deferred Annuity & Deferred Compensation Plans v. Norris

Background

The State of Arizona ran a deferred compensation plan that let employees pick annuities from insurance companies the State selected. All participating companies used sex-based mortality tables, so a woman who deferred the same amount received lower monthly annuity payments than a man. A female employee sued on behalf of all current and future female enrollees, the District Court ruled for the class, and the Ninth Circuit mostly affirmed before the case reached this Court.

Reasoning

The central question was whether Title VII bars an employer from offering retirement options that result in women getting smaller monthly checks than men who made the same contributions. The Court held that practice is sex discrimination under Title VII because the annuity option is a privilege tied to employment and the State chose the insurers and contract terms. The Court said future retirement benefits based on contributions made after this decision must be calculated without regard to sex, while benefits based on contributions made before the decision can be calculated under the plan’s existing terms.

Real world impact

State employees, other employers, and insurers must reassess annuity offerings. Employers who sponsor similar plans will need to stop using sex-based tables for future contributions or change how they offer annuities. The case was sent back for further proceedings to apply the ruling to individual situations and calculate appropriate relief.

Dissents or concurrances

Some Justices (O’Connor, Powell, the Chief Justice, Blackmun, Rehnquist) agreed the plan violated Title VII but argued the Court should limit relief prospectively because retroactive equalization could harm pension funds and disrupt the insurance market. Justice Marshall (joined by Brennan, White, Stevens) provided the main opinion parts finding discrimination and explaining retroactivity issues.