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Federal court orders Baltimore County to pay back workers who overpaid for pensions

A federal appeals court ruled Wednesday that Baltimore County must pay back employees who were forced to overpay into the county’s pension system for years.

A lower court will determine how much the county would have to reimburse older workers who, until 2007, were charged more for pension contributions than younger workers. The county has previously estimated it could be on the hook for up to $19 million.

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County officials haven’t decided whether they’ll appeal this latest ruling in a long-running lawsuit over the pension system. It’s unclear how long it would take for the U.S. District Court to figure out payments to an undetermined number of current and former county workers.

“The county executive has asked the county attorney to review the court’s decision,” Ellen Kobler, a spokeswoman for County Executive Don Mohler, said in a statement. “Once that review is complete, the county will decide what to do next.”

Mohler was appointed to the county’s top job in May following the death of County Executive Kevin Kamenetz, who had vigorously defended the county against the lawsuit. Baltimore County attorneys argued through multiple appeals that the county hadn’t violated discrimination laws.

The county could petition for a re-hearing in the federal appeals court or request a hearing before the U.S. Supreme Court.

Baltimore County could owe more than $19 million in payments to thousands of retirees and employees who contributed to a pension system the federal government says discriminated against beneficiaries on the basis of age.

The case affects county employees who were hired before 2007, when Baltimore County ended its decades-long practice of setting pension contribution rates for new hires based on an employee’s age. Workers who were hired at an older age were required to pay more into the pension plan than newly hired workers who were younger.

The pension system includes all county workers except Board of Education employees, who participate in a different system. There are about 9,500 active employees and 6,000 retirees in the county system.

County officials have said it would take years to sort through records to determine how many workers and retirees might be due payments.

The lawsuit, brought by the U.S. Equal Employment Opportunity Commission on behalf of two correctional officers, has bounced around the federal court system since 2007. The county attempted to appeal to the U.S. Supreme Court in 2014, but the high court declined to hear the case.

How much does it cost to appeal a case to the U.S. Supreme Court? For the Baltimore County government, the tab was $42,000 for a Florida-based law firm to write an appeal that was rejected by the country's highest court.

A U.S. District Court judge ruled in 2012 that the county was improperly charging older workers more for their pension contributions. Another federal judge, however, ruled in 2016 that the county was not required to pay back the workers. The EEOC appealed that ruling, and both sides made oral arguments before the Fourth Circuit U.S. Court of Appeals last October.

A three-judge panel in the Fourth Circuit wrote Wednesday that the workers must be paid back under one of the federal laws central to the case, the Age Discrimination in Employment Act.

The EEOC declined to comment on the ruling Wednesday.

As a result of the litigation, the county revamped its pension contributions system, eliminating the age-based contribution rates, and fired and sued its longtime pension advisory company, Buck Consultants. That lawsuit was dismissed.

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