Court Opinion

ID: 9670790
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:26:18.66461+00
Date Added: 2024-06-11T18:16:06.540165
License: Public Domain

PETERSON, Judge
(dissenting).
I respectfully dissent.
The Human Rights Act prohibits age discrimination with respect to employee compensation:
[I]t is an unfair employment practice:
‡ ⅜ ⅜: ⅝ ⅜ ⅜
(2) For an employer, because of * * * age,
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(c) to discriminate against a person with respect to hiring, tenure, compensation, terms, upgrading, conditions, facilities, or privileges of employment.
Minn.Stat. § 363.03, subd. 1 (1986).
The severance pay provision in Leemoris contract states:
Administrators who have completed at least ten (10) years of continuous service with the School District and who are at least forty-five (45) years of age shall be eligible for severance pay, pursuant to the provisions of this Article, upon submission of a written resignation accepted by the School Board by April 1st.
(Emphasis added.)
This contract provision restricts eligibility for severance pay on the basis of age. It could not do so more clearly. Only employees who are at least forty-five years old may receive severance pay.
Leemon was denied severance pay because she was not yet 45 years old. Her age was the sole basis for the district’s refusal to pay her severance pay. There could be no other basis because Leemon met the other requirements for receiving severance pay. Leemon was a victim of age discrimination with respect to compensation.
The majority correctly states that the Human Rights Act does not prohibit all acts of *577age discrimination. Minn.Stat. § 363.02, subd. 6 (1986) provides in part:
Nothing in this chapter shall be construed to prohibit the establishment of differential privileges, benefits, services, or facilities for persons of designated ages if (a) such differential treatment is provided pursuant to statute, or (b) the designated age is greater than 59 years or less than 21 years.
The majority concludes that the age discrimination Leemon suffered is permitted under clause (a) because the differential treatment in Leemon’s contract is provided pursuant to Minn.Stat. § 465.72, subd. 1 (1986). Specifically, the majority concludes that the authority to adopt rules for the payment of severance pay granted to the school district by section 465.72 includes authority to adopt rules that discriminate against employees on the basis of age when the rules serve a legitimate early retirement incentive purpose. I see no basis for this conclusion.
Minn.Stat. § 465.72, subd. 1 provides: Except as may otherwise be provided in Laws 1959, chapter 690, as amended, any county, city, township, school district or other governmental subdivision may pay severance pay to its employees and promulgate rules for the payment of severance pay to an employee who leaves employment on or before or subsequent to the normal retirement date. Severance pay shall also include the payment of accumulated vacation leave, accumulated sick leave, or a combination thereof. The severance pay shall be excluded from retirement deductions and from any calculations in retirement benefits. It shall be paid in a manner mutually agreeable to the employee and employer and, except as provided in subdivision 2, over a period not to exceed five years from retirement or termination of employment. If a retired or terminated employee dies before all or a portion of the severance pay has been disbursed, that balance due shall be paid to a named beneficiary or, lacking some, to the deceased’s estate. Except as provided in subdivision 2, in no event shall severance pay provided for an employee leaving employment exceed an amount equivalent to one year of pay.
(Emphasis added.)
Minn.Stat. § 465.72, subd. 1 authorizes political subdivisions to pay severance pay to employees who terminate their employment. It does not limit this authority to employees who terminate their employment by retiring and it does not distinguish between employees who terminate their employment to retire and those who terminate their employment for some other reason. See id.
Minn.Stat. § 465.72, subd. 1 refers specifically to “retirement or termination of employment” and to “retired or terminated” employees. This demonstrates that the legislature considered severance pay to be compensation paid to an employee who leaves employment to retire, or for some other reason.
Although the statute expressly authorizes adoption of “rules for the payment of severance pay to an employee who leaves employment ”, nothing in the statute suggests that the rules may discriminate against employees on the basis of age. Id. (emphasis added). The language of the statute does not support a construction that the legislature intended to permit differential treatment among employees when severance pay is paid as an “early retirement incentive.”
The majority cites Patterson v. Independent Sch. Dist. No. 709, 742 F.2d 465 (8th Cir.1984) as support for its conclusion that a voluntary early retirement program is within the discretion given the school district by Minn.Stat. § 465.72, subd. 1. This reliance is misplaced. Patterson involved interpretation of 29 U.S.C. § 623(f)(2) (Supp. II 1978), a provision in the Federal Age Discrimination in Employment Act. 742 F.2d at 466. The court in Patterson specifically declined to decide whether the challenged early retirement program was permitted by Minn.Stat. § 465.72. Id. at 468. The court stated:
Presumably it falls within the statutory discretion vested by § 465.72 as well as the requirements of § 125.611. [In any event *578that is a matter of State law. Our problem is whether it satisfies 29 U.S.C. 623(f)(2) ].

Id.

Furthermore, the issue in Patterson was whether the plaintiffs retirement benefits were calculated pursuant to a bona fide employee benefit plan. Id. at 466. 29 U.S.C. § 623(f)(2) creates an exception from the federal prohibition against age discrimination in employment for
a bona fide seniority system or any bona fide employee benefit plan such as a retirement, pension, or insurance plan, which is not a subterfuge to evade the purposes of this chapter.
Unlike the federal act, however, the Minnesota Human Rights Act does not contain an exception from its prohibition against age discrimination in employment for any bona fide employee benefit plan. See Minn. Stat. §§ 363.01-.14 (1986). The fact that a severance pay program is provided for a legitimate purpose and is a bona fide benefit plan that satisfies 29 U.S.C. § 623(f)(2) does not mean the program complies with the Minnesota Human Rights Act. ■
Even if the majority is correct that the Human Rights Act permits age discrimination when the discrimination is for a legitimate early retirement incentive purpose, the majority has not identified any legitimate early retirement incentive purpose served by the requirement in Leemon’s contract that an administrator be at least forty-five years old to receive severance pay. The majority has simply concluded that the severance pay provision in Leemon’s contract “is clearly designed to serve a legitimate early retirement incentive purpose as exemplified by the declining benefits formula.”
It is true that, under the severance pay provision, the amount of severance pay an employee may receive is reduced after the employee reaches age 61. I agree with the majority that reducing severance pay for employees who are near the normal retirement age serves an early retirement incentive purpose. This differential treatment also is permitted under Minn.Stat. § 363.02, subd. 6 because the designated age is greater than 59 years. Leemon, however, is not challenging this element of the severance pay provision, she is challenging the element that limits severance pay to employees over age 45. Under the majority’s own reasoning, there must be a legitimate early retirement incentive purpose for this specific restriction.
The majority has offered no explanation of how the declining benefits formula demonstrates a legitimate basis for limiting severance pay to employees over age 45. Neither have respondents offered an explanation of what legitimate early retirement incentive purpose is served by treating a thirty-six year old administrator who terminates employment differently than a forty-five year old administrator who terminates employment.
I must emphasize that Leemon’s contract does not limit severance pay to employees who retire; it only requires that an employee (1) complete ten years of continuous service with the district, (2) be at least forty-five years old, and (3) submit a written resignation. The reason for the resignation is irrelevant. A forty-five year old employee is not required to demonstrate that retirement is the reason for resigning. Under the express terms of the contract, severance pay is not just a benefit for retiring employees.
The only reason why the severance pay provision in Leemon’s contract is being treated as an early retirement incentive is that the severance pay provision is included in an article of the contract titled “EARLY RETIREMENT.” The district and its bargaining units should not be permitted to transform the authority to pay severance pay into the authority to pay severance pay in a discriminatory manner by simply including the severance pay provision in an article that describes early retirement benefits. The district should at least be required to identify the early retirement incentive purpose served by the age restriction for severance pay. It has not been required to do so.
The differential treatment in the severance pay provision of Leemon’s contract is not provided pursuant to Minn.Stat. § 465.72, subd. 1. The age discrimination Leemon suffered does not fall within the exception created by Minn.Stat. § 363.02, subd. 6 and *579is, therefore, prohibited by Minn.Stat. § 363.-03, subd. l(2)(c). I would affirm.