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Baltimore County must reimburse workers who overpaid into pension fund, appeals court rules

Baltimore County in Maryland must pay back employees who had to contribute to the county's $3.1 billion pension fund at a higher rate than their younger co-workers, a federal court ruled Wednesday.

When the Baltimore County Employees' Retirement System, Towson, Md., was created in 1945, the county's actuarial firm at the time based its calculations for employee contribution rates on the number of years that an employee would contribute to the plan before being eligible to retire at age 65. The firm ultimately concluded that older employees who enrolled in the plan should contribute a higher percentage of their salaries, because their contributions would earn interest for fewer years than the younger employees' contributions, according to court documents.

Between 1945 and 2007, the employee contribution rates were amended only once — in 1977 —but the fact that rates were based on an employee's age at the time of plan enrollment and were higher for older employees did not change. "For example, after 1977, employees who enrolled in the plan at age 20 contributed 4.42% of their annual salaries, while employees who enrolled in the plan at age 40 and 50 contributed 5.57% and 7.23% of their annual salaries, respectively," court documents from 2014 said.

A three-judge panel for the 4th U.S. Circuit Court of Appeals in Richmond, Va., said Wednesday that under the Age Discrimination in Employment Act, the county workers deserved to be paid back.

In 2007, the U.S. Equal Employment Opportunity Commission filed a lawsuit against the county on behalf of two correctional officers. Since then, decisions have been made and appealed, including a 2016 ruling that said the county was not required to pay back the workers. The EEOC appealed and the 2016 ruling was reversed Wednesday.

The 4th Circuit remanded the case to a lower court to determine the amount of back pay to which the affected county employees are entitled.

“The county executive has asked the county attorney to review the court’s decision," a county spokeswoman said. "Once that review is complete, the county will decide what to do next.”