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This report includes a summary of key changes, including the salary level test and salary basis test.

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August 22, 2001
EEOC Rescinds Medicare Rule
The
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U.S. Equal Employment Opportunity Commission announced this week that it has effectively rescinded a new policy that could have had a dramatic impact on employers who provide benefits that supplement Medicare.

The policy had been meant to reflect a 2000 federal appeals court ruling involving the Age Discrimination in Employment Act. The court found that it is discriminatory under the ADEA to provide one set of benefits to Medicare-eligible retirees and another set to younger retirees.

Under the ruling, employers had to provide either equal benefits to all retirees or spend the same amount of money on them.

But the EEOC issued a statement saying it has "begun a review" of the new policy.

The announcement came in the form of an official rescission of portions of the Commission's Compliance Manual Chapter on "Employee Benefits" that discuss the application of the ADEA to retiree health plans. The rescission was approved on August 17 by a unanimous vote of the Commission.

Explaining the decision to rescind and review the policy, the Commission's new chairwoman, Cari M. Dominguez, said: "The commission has heard from a wide range of stakeholders including employer, employee, and labor groups expressing concerns about the impact of the now rescinded policy on the future of employer-sponsored retiree health benefits.

"The Commission shares these concerns, and our review will focus on the development of a new policy, consistent with the ADEA, that does not discourage employers from providing this valuable benefit."

Commission Vice Chairman Paul M. Igasaki observed that the agency "must carefully craft a policy which protects the rights of older retirees but does not deter employers from providing health benefits to retirees in general."

The commission will continue to vigorously pursue other types of age discrimination claims involving retirees, such as cash-based early retirement incentives that are reduced or eliminated with advancing age.

The full text of the rescission, as well as other information about the EEOC, is available on the agency's web site at www.eeoc.gov.

In addition to the ADEA, which prohibits discrimination against workers age 40 and older, the EEOC enforces Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, sex, religion, color, or national origin; the Equal Pay Act of 1963; Title I of the Americans with Disabilities Act of 1990, which prohibits employment discrimination against individuals with disabilities; and portions of the Rehabilitation Act of 1973 that prohibit disability discrimination in federal employment.

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