CHICAGO — Caterpillar Inc. has won a lawsuit after it was accused of negatively impacting its elderly employees based on Judge Sharon Johnson Coleman’s decision for the U.S. District Court for the Northern District of Illinois Eastern Division.  

An unemployment benefit package for Caterpillar Inc., which is headquartered in Peoria and has locations throughout Illinois, was at the center of the legal battle. The plaintiffs, which consisted of 48 employees or estates of deceased workers, requested summary judgment against the company, claiming that its supplemental unemployment benefit (SUB) plan liquidation program had a “disparate impact” on its older employees.

Caterpillar also requested summary judgement under the notion that the employees do not have the capacity to decide what is considered a “disparate impact” on workers. Caterpillar added that other factors, not age, led to the terms of the SUB.

The SUB assisted eligible employees in the Joliet location who were laid off. It was a part of the company’s pension plan until 2012. In March of that year, Caterpillar and International Association of Machinists and Aerospace Workers, a trade union, were in talks of negotiating the collective bargaining agreement (CBA). The talks included getting rid of the Joliet SUB plan.

Caterpillar wanted to axe the SUB plan for various reasons, including what it alleged was an outdated administration system (that would cost money to update) and the idea that SUB money could be used in other ways throughout the company, such as utilizing the SUB funds to encourage retirement for eligible employees “so their positions could be filled by newly hired employees who would be subject to the lower ‘new hire’ compensation package.”

The “new hire competitive base rate schedule” was a part of the 2005 CBA. It was for those hired after May 2, 2005 and offered a “compensation package significantly lower” than the one for employees hired before that date. The company went back and forth with the union on various proposals and the Union repeatedly refused to remove the SUB and subsequently went on strike.

The two parties came to an agreement that said the company would provide SUB funds in equal shares to those who participated in SUB and were eligible for retirement “under the pension plan” and those who “voluntarily retired” between October 1, 2012 and January 1, 2013. The firstgroup received their funds directly and the second group received its funds via their 401(k) accounts.

The plaintiffs consist of 48 employees who did not want to retire and therefore didn’t receive any of the SUB funds. They hired an expert, Whitman Soule, who after multiple analyses, determined, “there is a very strong relationship between age and retirement eligibility.”

Caterpillar then hired their own expert, Jon Guryan, who stated Soule’s findings were irrelevant and in some cases invalid.

Considering this, Coleman ruled in favor of Caterpillar.

She first pointed out that the Age Discrimination in Employment Act (ADEA) makes it illegal for someone to be fired because of their age.

“It is not enough to simply allege that there is a disparate impact on workers, or point to a generalized policy that leads to such an impact," Coleman said in the decision. "Rather, the employee is ‘responsible for isolating and identifying the specific employment practices that are allegedly responsible for any observed statistical disparities.'”

Coleman said the plaintiffs failed to point to a policy or act that proved age discrimination.

She also pointed out that the indicator for those who received the incentive was not based on their age, but their eligibility to retire. She added that this is a “reasonable factor other than age for the disbursement of the SUB plan fund.”

Coleman, therefore, sided with Caterpillar and denied summary judgement for the plaintiffs.

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Organizations in this Story

Benassi & Benassi, P.C.
300 NE Perry Ave
Peoria, IL - 61603-3628

Caterpillar Inc.
501 Southwest Jefferson Avenue
Peoria, IL - 61605

Miner, Barnhill & Galland, P.C.
1426 E. Hunter Place Ste A
Chicago, IL - 60610-3811

U.S. District Court for the Northern District of Illinois
219 S Dearborn St
Chicago, IL - 60604

Winston and Strawn LLP
35 W Upper Wacker Dr
Chicago, IL - 60601

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