State by Beaulieu v. Independent School Dist. No. 624

• Decision Date: 16 June 1995
• Docket Number: No. C1-93-1190,C1-93-1190
• Citation: 533 N.W.2d 393
• Parties: 68 Fair Empl.Prac.Cas. (BNA) 257, 101 Ed. Law Rep. 425 STATE of Minnesota, by David BEAULIEU, Commissioner, Department of Human Rights, petitioner, Appellant, v. INDEPENDENT SCHOOL DISTRICT NO. 624, and White Bear Lake Teachers' Association (MEA), intervenor, Respondents.
• Court: Minnesota Supreme Court

Page 393

533 N.W.2d 393

68 Fair Empl.Prac.Cas. (BNA) 257, 101 Ed. Law

Rep. 425

STATE of Minnesota, by David BEAULIEU, Commissioner Department of Human Rights, petitioner, Appellant, v. INDEPENDENT SCHOOL DISTRICT NO. 624, and White Bear Lake Teachers' Association (MEA), intervenor, Respondents.

No. C1-93-1190.

Supreme Court of Minnesota.

June 16, 1995.

Syllabus by the Court

An early retirement program implemented pursuant to the provisions of Minn.Stat. section 465.72 is not in violation of the age discrimination provisions of the Minnesota Human Rights Act.

Hubert H. Humphrey, III, Atty. Gen., Erica Jacobson, Asst. Atty. Gen., St. Paul, for appellant.

Joseph E. Flynn, Knutson, Flynn, Hetland, Deans & Olsen, St. Paul, for I.S.D. #624.

Rebecca H. Hamblin, Harley M. Ogata, MN Educ. Ass'n., St. Paul, for White Bear Lake Teachers' Ass'n.

Heard, considered and decided by the court en banc.

OPINION

GARDEBRING, Justice.

This case involves the interpretation of the age discrimination provisions of the Minnesota Human Rights Act (MHRA) and the extent to which those provisions are modified by certain statutory exceptions. The Administrative Law Judge (ALJ) concluded that the contract between respondent Independent School District # 624 (ISD) and the White Bear Lake Principals' Association violated the MHRA because it unlawfully discriminated against employees based on age. The court of appeals reversed the ALJ, holding that the contested provisions of respondent's employment contract were within a statutory exemption to the MHRA, and therefore the discrimination was not unlawful. We affirm, finding sufficient statutory authority to exempt this early retirement program from the age discrimination provisions of the MHRA.

The material facts are undisputed. Colleen Leemon was employed in various positions by ISD from 1976 until 1987. The contract between ISD and the White Bear Lake Principals' Association, which governed her employment, provided in part:

EARLY RETIREMENT

Section 1. 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.

* * * * * *

Section 3. Administrators, upon early retirement, shall receive as severance pay an amount representing present contract salary. * * *

Section 4. An administrator who retires after June 30, 1985 shall be eligible for severance pay as defined and limited in Sections 3 and 4 according to the following schedule relating to the employee's age at the end of the school year in which early retirement occurs:

                                 Age 45 to 60  100%
                                           61  75%
                                           62  50%
                                     63 to 70  0%
                

* * * * * *

Section 8. An administrator who retires early pursuant to this Article shall be eligible to continue participation in the District group medical-hospitalization, dental and group life insurance plans or individual plans selected by the retiring administrator and shall receive the same School District contributions as provided for other administrators. The amount of life insurance shall be $150,000. The administrator's right to participation and contribution in such group insurance will be for a period of ten (10) years or age 70, whichever comes first. The benefits contained in this Section may be fully or partially delayed from the date of retirement to age 60 at the discretion of the administrator.

Subd. 1. The administrator, upon the completion of the ten (10) year time limit or prior to age 71, may elect to enroll in all or part of the insurance programs at the administrator's expense, contingent upon insurance company approval.

In essence, the contract provides an early retirement option for administrators who have worked for ISD for at least 10 years and are 45 years of age. The program authorizes severance pay on a scale based on years of service and continued ISD contributions toward group insurance premiums. Leemon met the service requirements of the program, but was not eligible due to her age.

In 1987, at the age of 36, Leemon voluntarily terminated her employment. She subsequently attempted to collect severance pay and insurance premium reimbursement under the terms of the "Early Retirement" provisions of her employment contract. ISD denied her request. In June of 1987, after ISD had denied her request, Leemon filed a charge of discrimination against ISD with the Minnesota Department of Human Rights (Department), alleging that ISD had discriminated against her on the basis of age. The Department found probable cause that ISD had engaged in age discrimination. As a result, the Department filed a claim on behalf of Leemon against ISD alleging that certain provisions of the contract discriminated against Leemon, based solely on age, in violation of § 363.03, subd. 1(2) (1986) of the MHRA. The ALJ granted summary judgment for Leemon, concluding that ISD had unlawfully discriminated against her on the basis of age. In a second order, the ALJ directed ISD to pay Leemon in excess of one hundred thousand dollars for severance pay and insurance premiums.

In a split decision by the court of appeals, 509 N.W.2d 572, the majority reversed the ALJ, holding that ISD's voluntary "early retirement incentive" provisions, which distinguished between former employees based on age, was authorized by Minn.Stat. § 465.72 (1986). As a result, the court concluded that the scheme spelled out by the contract, though discriminatory on the basis of age, was not unlawful.

This appeal requires us to examine the relationship of several sections of Minnesota Statutes. We begin with the Minnesota Human Rights Act, which clearly prohibits age discrimination with respect to employee compensation. The MHRA states:

[I]t is an unfair employment practice:

* * * * * *

(2) For an employer, because of * * * age,

* * * * * *

(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). However, there are several exceptions to the MHRA's general prohibition to age discrimination in employment. ¹ The only relevant exception in the present case states:

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 * * *.

Minn.Stat. § 363.02, subd. 6 (1986) (emphasis added). The applicability of this MHRA exception turns on whether a separate statute authorizes differential treatment of employees based on age.

ISD argues that the age differentiation within the early retirement scheme is permitted under the MHRA exception because it is authorized by Minn.Stat. § 465.72, subd. 1. ² The relevant portion of Minn.Stat. § 465.72 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...