MINNESOTA DOC’S “AGE 55 CLIFF” VIOLATES THE ADEA

by Art Gutman Ph.D., Professor, Florida Institute of Technology

On June 4, 2010, Minnesota District Court Judge Paul A. Magnuson ordered the Minnesota DOC to pay $724,000 to 35 retirees, as well as insurance premiums for dental and medical coverage until the retirees reach age 65. The DOC had previously negotiated collective bargaining agreements (CBAs) with its unions in the 1980s that included a so-called “age 55 cliff.” Under the agreement, employees who retired within the pay period in which they turned 55 received continued state contributions to their medical and dental insurance policies, where as those retiring afterwards would not. The DOC argued that the CBAs were legal in light of the Supreme Court’s ruling in Kentucky Retirement System v. EEOC (2008) [128 S. Ct. 2361].

The Kentucky case featured a pension disability plan in which “hazardous position” workers (e.g., policemen) were eligible for normal retirement benefits after 20 years service or after working 5 years upon reaching age 55. However, years were added for disabled workers to total 20, or number of years needed to reach age 55. The plaintiff in this case (Charles Lickteig) was disabled at age 61, and therefore, no years were added to his pension. The Supreme Court ruling was controversial, as five justices supported the plan because years of service is merely “correlated with age”, whereas four justices dissented on grounds that the plan was facially discriminatory. Judge Magnuson ruled that the Minnesota DOC “age 55 cliff” was facially discriminatory, and therefore, illegal under the ADEA.

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