Court of Appeal holds imputed service years in disability pension calculation does not constitute FEHA age discrimination: Carroll v. City and County of San Francisco

In Carroll v. City and County of San Francisco (2025) 115 Cal.App.5th 1192, the Court of Appeal (First Appellate District, Division Four) held that a public pension plan’s method of calculating disability retirement benefits using imputed service years was motivated by pension status rather than age, and thus did not constitute age discrimination under FEHA.

Plaintiffs, members of the San Francisco Employees’ Retirement System (SFERS), filed a putative class action alleging that Defendant’s calculation of disability retirement benefits (specifically the provision of imputed service years) discriminated against employees based on their age of entry. After the trial court sustained Defendant’s demurrer, the Court of Appeal reversed. The parties agreed to a stipulated class certification order then filed cross-motions for summary judgment. Following a bench trial, the trial court ruled against Plaintiffs for all claims. It found that they failed to establish that the award of retirement benefits qualifies as an adverse employment action and failed to provide sufficient evidence of discriminatory animus or disparate impact. Plaintiffs appealed.

The Court of Appeal affirmed the judgment. Relying heavily on Kentucky Retirement Systems v. EEOC (2008) 554 U.S. 135, the court held that retirement plan terms offering imputed service years to disabled employees younger than 55 were motivated by pension status, not age, and were therefore nondiscriminatory. The court rejected Plaintiffs’ attempts to distinguish Kentucky, holding that the differing standards for assessing employer motive under the ADEA and FEHA were immaterial to this analysis. Regarding the disparate impact claim, the court noted scenarios where older disabled employees could receive higher benefits than younger ones (such as when an older employee had a break in service). Because Plaintiffs failed to “point to data showing how retirement benefits for the class or any comparative group were actually calculated,” the court held they failed to demonstrate that the plan “in fact” had a disparate impact on the protected class.

Full opinion

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