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Arizona Governing Committee v. Norris

Significance



The decision effectively prevented employers from offering annuity plans that offer men and women unequal benefits.

With the erosion of traditional pensions, employers throughout the country began offering their employees the opportunity to enroll in deferred compensation plans. Employees who enrolled in these plans saved a portion of their earnings in tax-deferred accounts, which allowed them to postpone paying federal income tax on these dollars until they retired.



The state of Arizona worked with several investment companies to offer this benefit to its employees. The companies generally offered three different types of payment options upon retirement: a single lump-sum amount on retirement, payments of a certain amount over a certain period of time, or monthly payments of an agreed amount through the end of the person's life known as annuity payments.

Natalie Norris worked as a supervisor in the Arizona Department of Economic Security. In 1975, she began contributing to a deferred compensation plan offered by the state, choosing the annuity or monthly payment option. After contributing for a period of time, she learned that at retirement, she would receive $34 a month less than male state employees who deferred the same amount of compensation and would retire at the same time. All of the companies offering annuity plans to state of Arizona employees used mortality tables which calculated monthly retirement benefits. These tables incorporated the fact that women live longer than men, and would therefore receive less money per month. Norris attempted to address this issue to the state and the retirement companies but was unable to resolve the situation. She then filed a class-action suit in the U.S. District Court for the District of Arizona, alleging that the plan violated Title VII of the Civil Rights Act of 1964 by discriminating on the basis of gender.

The district court agreed that the plan violated Title VII and ordered the state to stop using the gender-based mortality tables and to pay those female employees, who had already retired, benefits equal to those paid to men. The state appealed to the U.S. Court of Appeals for the Ninth District and lost. The state then asked the Supreme Court to review the case, on certiorari. In a 5-4 decision, the Court agreed that the plan violated Title VII.

The opinions themselves were split amongst the justices, but in essence, the Court found that under Title VII, gender could not be properly used to predict longevity. In addition, Title VII required employers to treat employees as individuals, not as members of a class such as gender, race, or religion. Although the retirement plan companies had developed the discriminatory mortality tables, the state was legally responsible since it had entered into a contract with the companies on behalf of the employees. While some of the justices felt that previous Court decisions on related issues gave the state and benefit companies fair warning to change their policies, thereby making them liable to pay "back benefits" to already-retired employees, they were in the minority. The Court majority found that, due to the extraordinary financial burden that would be placed on the companies in order to provide these "back-benefits," a revised plan removing the gender discrimination would not be retroactive.

While the Court's ruling effectively prevented employers from offering unequal retirement benefits to men and women, its initial impact would be on men. In an interview with Time, Michael Stuntz of the American Council on Life Insurance said, "It looks as if proportionately more men would have their pensions reduced while more women would have their pensions increased."

Additional topics

Law Library - American Law and Legal InformationNotable Trials and Court Cases - 1981 to 1988Arizona Governing Committee v. Norris - Significance