City of San Diego employees contribute a percentage of their salary to fund survivor benefits and their pensions. The retirement system allows a retiring employee to choose among several options for allocating the employee's pension benefit and the survivor benefit. If a City employee is married (or has a registered domestic partner) at the time of retirement and chooses the surviving spouse benefit, the employee will receive her full monthly pension benefit until her death. At that time, if the employee's spouse or registered domestic partner survives her, the spouse or partner will receive a monthly allowance equal to half of the employee's monthly pension benefit. If a City employee is single at the time of retirement and has chosen the surviving spouse benefit, the City either refunds the employee her contributions to the survivor benefit (plus interest) as a lump sum, or treats the employee's survivor contributions as voluntary additional contributions made to provide a larger monthly pension benefit.
Janet Wood was single when she retired and had chosen the surviving spouse benefit. She elected to have her survivor contributions treated as additional voluntary contributions, adding to her monthly benefit.
Wood filed a class action lawsuit against the City alleging that the surviving spouse benefit violates Title VII and the Fair Employment and Housing Act. Wood's theory was that the City pays a larger amount of money to the married retirees who select the surviving spouse benefits than it does to single retirees who do the same, and because male retirees are more likely to be married, the surviving spouse benefit is lower for female retirees. It was undisputed that, in the aggregate, it costs more to fund surviving spouse benefits for married retirees than it does to refund the survivor contributions made by single retirees. The district court dismissed Wood's case. The Ninth Circuit Court of Appeals affirmed.
Disparate treatment occurs where an employer has treated a particular person less favorably than others because of a protected trait. In order to successfully challenge a facially neutral policy on a disparate treatment theory, the plaintiff must prove that the employer had a discriminatory intent. The Court found that Wood could not allege that the City had any discriminatory animus.
In addition, the U.S. Supreme Court previously held that a facially neutral pension plan will inevitably have a disparate impact on some protected groups. These claims are not actionable under Title VII because the difference in benefits is based on the potential life spans of men and women and is not based upon their sex. Consequently, here, the Court upheld the dismissal without leave to amend.
The U.S. Equal Pay Act, upon which the disparate impact part of this case relies, authorizes pay differentials based on any factor other than sex. The fact that pension benefits are based on the different life spans of men and women was the "factor other than sex" in this case.
Wood v. City of San Diego (9th Cir. 2012) 678 F.3d 1075.