A group of employees of the City and County of San Francisco (the City) filed a class action alleging that the City’s disability retirement system benefits formula discriminated against older workers in violation of California’s Fair Employment and Housing Act (FEHA).
The employees challenged the San Francisco Employee’s Retirement System (SFERS) which calculated disability retirement benefits using two formulas and paid retirees the higher amount of either: Formula 1 (Regular Formula): based primarily on years of service and salary; or Formula 2 (Backup Formula): based on estimate of what the employee might have earned if they had continued working until age 60, subject to limitations.
The employees argued that Formula 2 disproportionately benefited younger workers and could result in lower disability retirement benefits for employees hired at age 40 or older. They claimed this was unlawful age discrimination. After a bench trial, the court ruled in part that pension status motivated the City’s disability retirement system and that age was not a substantial motivating factor. The employees appealed.
The California Court of Appeal ruled in favor of the City, holding that the disability retirement system formulas did not violate FEHA. The Court found no evidence that the City designed the system to target or disadvantage older workers because the formulas are based on years of service and earnings, not age. The employees failed to prove any discriminatory intent or to state a disparate impact on older workers.
Carroll v. City & County of San Francisco, 115 Cal. App. 5th 1192 (2025).