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1999
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Dozens of middle-aged Duke Power workers, angered by changes in their pension plan, will likely file age discrimination complaints against the company.

The employees are members of the baby boom generation who claim they have suffered in Duke’s 1997 conversion to a "cash balance" pension plan. Some experts view the nationwide trend toward such conversions as a skirmish in an intergenerational war between baby boomers and their children.

Close to 300 Duke workers, most in their 40s and early 50s met Wednesday with officials of the Equal Employment Opportunity Commission, who encouraged them to file complaints, said a Duke employee who attended.

Originally scheduled to occur at the EEOC offices, the meeting was moved to the Charlotte City Council chambers to accommodate the large crowd.

"For the EEOC people, the whole point of the meeting was to encourage people to get claims in the pipeline so they can start determining whether they are valid," said the employee, aged 40-plus with about two decades at Duke.

Duke spokesperson Guynn Savage said Duke switched plans "to meet what we see as the needs of an ever-changing, highly competitive business environment."

Savage said the 1997 changes in Duke's benefits plan also increased incentive opportunities and improved the 401(k) plan. She said a recent Money Magazine article ranked Duke benefits 10th among 40 Fortune 500 companies that were surveyed.

Duke's benefits plan is continuously reviewed, she added, because "we wish to retain talented and skilled employees and to do what is best for our business to remain competitive."

At the EEOC, cash-balance plan conversions have recently become a high priority, said spokesman Michael Widovsky in Washington.

"We’re trying to find out if these programs are discriminatory or not and what kind of role the EEOC should play in this," Widovsky said. He said about 100 complaints have been filed nationally.

Like Duke, hundreds of large and medium-size companies have made the switch to cash-balance pension plans. They generally allow benefits to accrue evenly over an employee's career, and-like 401(k) plans - they allow employees to take their accounts with them when they change jobs.

While old-style plans generally base retirement pay on the peak earnings of an employee's later years, cash-benefit plans provide significant pension accumulation early in a worker’s career.

"For older employees, a traditional plan is a really good deal," said Richard Rogers, a benefits attorney in the Raleigh office of Kilpatrick Stockton. "You earn most of your benefits in the last few years before you retire, based on the average compensation.

"But a lot of younger employees are looking for more tangible benefits earned earlier because they don't expect to work with one employer for their entire careers," he said, noting that companies often convert so they can attract younger workers.

Generally in a transition from traditional to cash-benefit plans, accrued benefits catch up to their pre-transition level at age 65. But many baby boomers worry that employers will find ways to force them out before they reach 65.

That's one reason some Duke employees in their 40s and 50s would like to be grandfathered into the old plan, as some employees in their 50s were in 1997. "It's the transition that's the issue," said the Duke employee, who saw the cash balance of his pension fall by tens of thousands of dollars. "If they had grandfathered everyone, it would have been OK."

IBM's conversion to a cash-balance plan is early May spawned an Internet message board where hundreds of workers complained. At the Minnesota State Fair, some employees flew a banner reading: "IBM's pension theft could happen to you." In September, IBM announced it would change eligibility rules to double the number of workers - to 65,000 - who could be grandfathered.

Congress is also looking at the pension conversion issue. Bipartisan legislation being pushed by the Clinton administration would force most companies to give easily understood explanations of changes 45 days before they take place and oblige them to answer requests for individual benefits statements 90 days after the changes are made.

Duke Power is a subsidiary of Charlotte-based Duke Energy.

Age Discrimination Charge is # 1 Priority

At the EEOC meeting on 11/17/99, it was also discovered that the cash balance plan age discrimination charge is the number one priority of the U. S. Equal Employment Opportunity Commission Charlotte District. What better news could we ask for? An appeal was previously made to the EEOC chairwoman that Duke Energy employees be exempted from the 180 day filing statute of limitations.

We discovered that not only had the filing time limit been waved, but also the age limit for filing! Normally a person must be 40 years old to file an age discrimination charge. Evidently someone in the EEOC knows that cash balance conversions have the potential to discriminate against employees of any age. No guarantees have ever been made and this is all new legal ground. A vigorous investigation is all we can ask for.

Duke used the murkiness of the law to implement the cash balance retirement plan. We can use the same murkiness of the law to challenge Duke's cash balance plan. The courts have the power to interpret the law as it applies to today's situation. The courts could find that Duke has violated laws in ways that no one had ever considered before.

To the question: can all employees be covered under someone else's charge?, the answer was "Yes and no." If your circumstances are very similar to the charging party's, you could be covered. But there are several limitations to this approach, and no guarantee that you would be covered. If the charging party drops the charge, the employees that have not filed a charge will have no recourse. If the charging party settles out of court for a trifling sum, you will be bound to accept that amount. So, it seems that to ensure the full benefits of EEOC involvement, all employees so inclined would be well served to file an individual charge.

Companies are prohibited by law from taking retaliatory action against employees for exercising their right to file a charge. If it is found that Duke-Energy violated age bias laws in implementing the cash balance retirement plan, the Equal Employment Opportunity Commission may give the company a chance to mend its ways. If the company agrees to "make the employees whole" who were discriminated against, the employees will be compensated and the matter closed.

Compensation could come in various forms. The pension plan could be reverted to its former configuration. All employees could be given a choice of plans. The compensation could be monetary. The EEOC Charlotte District Office covers North and South Carolina. The EEOC will be looking strictly at age discrimination in their cash balance retirement plan investigation. There may be violations of law in other areas such as ERISA (this is where Wallace and Graham come in).

Duke-Energy has 60 days to respond to the charge. If they stonewall (would Duke do that?), the subpoena process will begin. If the EEOC finds Duke Energy in violation of the law, but Duke refuses to make restitution, then the EEOC may prosecute them. In some cases the Equal Employment Opportunity Commission may find the company in violation of the law, but elect not to prosecute them. In such cases, only the employees who filed charges would have the right to prosecute through a private attorney.

During the question and answer period of the meeting, someone asked if stealing was against the law, to the delight of the crowd. The question was asked: what if someone retires and takes the cash balance retirement plan, can they still sue the company? The answer was "generally you can still sue." Someone asked how long the process would take. The answer was probably months and maybe years. If the case comes to court, the matter will then be on public record. The case could be settled out of court. In this case the company would probably not release the details to the public. But the employees would be free to broadcast the news!

EEOC Meeting Well Attended

The EEOC meeting in Charlotte on 11/17/99 was very well attended. Many employees were disappointed that few concrete answers could be given to personal circumstances. These cases are new and no precedent has been set. This alone tells us one thing; contrary to what Rick Priory would have you believe, no cash balance pension plan perpetrator is out of the woods yet!

Correctly interpreted, almost everything said was GOOD news for employees. We could have been told that we had no case and to forget about it. We could have been told that 180 days had elapsed and we could no longer file a charge. We could have been told that people under age 40 could not file. The fact that the charges have not been tested in court could work in OUR FAVOR just as well as it could for Duke-Energy. The fact that the EEOC does not know the answers means that the courts need to determine them. Again, in uncharted territory, we stand as good of a chance of winning as anyone else. There is no fee to file a charge. As an American citizen, you are entitled to have the EEOC investigate the cash balance pension plan, and determine if your rights have been violated. Where can you find a better deal than that?

Wallace and Graham Investigating Lawsuit

The law firm of Wallace and Graham is definitely investigating the possibility of an ERISA law suit. We were going to make absolutely sure that this was the case before anything was announced. We asked Ms. Mona Lisa Wallace "Are you pursuing an ERISA law suit." Her answer, "Yes."

The firm is hiring top ERISA attorneys to study the matter. They will be hired from out of state. Wallace and Graham is a name that strikes fear deep within the hearts of Duke Energy's senior management. GO WALLACE AND GRAHAM!

Keep in mind that this is just a future possibility. The EEOC age discrimination charge is still the only avenue of possible justice available to employees now. If you delay filing an age discrimination charge, waiting for something else to develop, you may miss your only opportunity for justice! You may request to be put on the Cash Balance Plan mailing list or ask questions by contacting:

Wallace and Graham, P.A.
525 North Main Street
Salisbury, NC 28144

(800) 849-5291

The EEOC reached a 7.1 million dollars settlement in this class action age discrimination lawsuit. The EEOC sued Thomson Consumer Electronics, Inc. and the IBEW.

"EEOC Chairwoman Ida L. Castro said, 'This settlement will have national implications, making it clear that individuals cannot be disadvantaged by employers simply because they happen to be older than their fellow workers or job seekers. It also shows that the Commission's joint investigative-legal approach to enforcing our civil rights laws works.' Ms. Castro applauded Thomson's 'willingness to settle this matter without resort to lengthy and costly litigation.'

"EEOC General Counsel Designate C. Gregory Stewart said at the press conference: 'This case is the direct result of the EEOC's commitment to the development of more impact litigation and larger class actions; the agency will continue to focus on these kinds of cases.' He added that age bias issues, particularly those involving severance benefits, 'have been identified by the agency as a strategic litigation priority.'"

The aging of the baby boomers-a group of 76 million people-has precipitated a dramatic rise in the cost of age discrimination litigation. In each of the past four fiscal years, age discrimination comprised about 20 percent of all discrimination charges filed with the Equal Employment Opportunity Commission (EEOC), following only race, sex and, more recently, disability.

On average, however, age discrimination settlements and jury awards are substantially higher than those awarded for race discrimination, sex discrimination or disability cases.

In fact, between 1988 and 1995-the most recent period for which figures are available-people claiming age discrimination were awarded an average of $219,000, compared to $147,799 for race discrimination, $106,728 for sex discrimination and $100,345 for disability cases, according to Jury Verdict Research, a Horsham, Pa.-based consulting company.