July 20, 1981
Subject:
State Departments, Institutions and Agencies; Retirement; Mandatory Retirement for Persons under Age 70.
Requested By:
Richard H. Robinson, Jr. Assistant to the President University of North Carolina
Question:
Does state law permit the University of North Carolina to require certain employees to retire before they reach age 70 when an exception to the Age Discrimination in Employment Act would permit the mandatory retirement under federal law?
Conclusion:
No.
The Age Discrimination in Employment Act Amendments of 1978 increased the protections of that act to cover groups of employees who had previously been excluded and to include employees between the ages of 65 and 70. The Act includes a number of exceptions to the prohibition against compulsory retirement before age 70. One of those exceptions would allow compulsory retirement of an employee between the ages of 65 and 70 who, for the two-year period immediately before retirement, has been in a bona fide executive or high policy-making position and provided that certain nonforfeitable annual retirement benefits would equal at least $27,000. Where the requirements of this exception are met, the University of North Carolina could require such an employee to retire before age 70 without violating federal law. However, current provisions of state law would not permit the University to require such an employee to retire before age 70.
The Age Discrimination in Employment Act, as amended, generally forbids discrimination against employees between the ages of 40 and 70. It explicitly prohibits compulsory retirement of employees between the ages of 40 and 70, with certain exceptions as mentioned above. However, that Act in no way prohibits state legislation or employer policies which do not conflict with its provisions. Nothing in the Age Discrimination in Employment Act, as amended, prevents the State of North Carolina, either as an employer or as a state from enacting laws for its citizens from forbidding compulsory retirement in situations in which the federal law would permit compulsory retirement.
Chapter 135 of the General Statutes establishes the Teachers’ and State Employees’ Retirement System of North Carolina. Its members include all full-time employees, agents or officers of the State or any of its departments, bureaus and institutions other than educational, whether elected, appointed or employed. G.S. § 135-1(10). "Employer" for purposes of the Retirement System includes the Board of Trustees of the University of North Carolina. G.S. § 135-1(11). Thus, University of North Carolina employees are subject to the provisions of Chapter 135, Article 1 of the General Statutes, the retirement provisions for teachers and state employees.
G.S. § 135-5(a)(2) reads as follows:
"A member in service who attains age 70 shall make timely application for retirement in accordance with (1) above, to be effective no later than the first of July coincident with or next following his seventieth birthday: Provided that, upon the approval of his employer, any member may be continued in service on a year-to-year basis."
The forerunner of this provision was enacted long before the federal Age Discrimination in Employment Act. Originally, the age specified for retirement was 65. The provision was amended to change the age from 65 to 70 in 1979 in order to conform with the changes of the Age Discrimination in Employment Act.
Under G.S. § 135-5(a)(2), an employer or Retirement System member must retire after completion of the fiscal year in which he turns age 70. However, he may continue in service with the approval of his employer on a year-to-year basis. No particular determination or mechanism is required for the employer to allow the member to continue in service passed the year in which he turns 70. Nor has the Board of Trustees of the Retirement System imposed any particular procedure for an employer to signal or exercise its desire to continue an employee after the year in which he turns age 70. The employer then may simply allow the employee to keep on working without meeting any specific requirements for allowing him to continue past age 70. Thus, after the employee completes the year in which he turns age 70, the employer is free to choose whether or not the employee shall continue working if the employee wishes to work. The only situation in which this provision comes into play is when the employee would like to continue working and the employer does not wish the employee to continue working. Then the employee must retire. By implication, then, the employee cannot be required to retire before age 70 for any reason based on age. The employee can always choose not to continue working whether he has reached age 70 or not. Since we have seen that the provision for retirement at age 70 gives the employer the choice of allowing the employee to continue working or not, but does not give the employee that choice, then the only possible difference is that the employer cannot force the employee to retire before age 70. The fact that this provision was amended in light of the 1978 Age Discrimination in Employment Act Amendments does not change this result. It merely indicates the desire of the General Assembly to change the provision so that it would not be in violation of the amended Age Discrimination in Employment Act.
For yet another reason, the University of North Carolina, along with other state agencies, is forbidden to require the retirement because of age of an employee under age 70. G.S. § 126-16, which is part of the State Personnel Act, specifies that all state departments and agencies and local political subdivisions must give equal opportunity for employment with regard to, among other things, to all persons otherwise qualified except in the event of bona fide occupational qualifications. The age discrimination provision is limited to individuals at least 40 years of age but less than 70 years of age. There are certain exemptions to the State Personnel Act embodied in G.S. § 126-5. However, most of these exemptions do not exempt employees from the entire Chapter, but include them under the coverage of Articles 6 and 7. Article 6 includes G.S. § 12616, the provision forbidding discrimination of various kinds including discrimination on the basis of age. Specifically, G.S. § 126-5(c) excludes from Chapter 126 instructional and research staff, physicians and dentists of the University of North Carolina and employees whose salaries are fixed under the authority vested in the Board of Governors of the Unviersity of North Carolina by the provisions of G.S. § 116-11(4), 116-11(5), and 116-14 except as to Articles 6 and 7.
To require someone to retire solely because he has reached a specific age is the very essence of discrimination because of age. Of course, nothing in Chapter 126, Chapter 135, or the Age Discrimination in Employment Act forbids the termination of somebody who is between the ages of 40 and 70, or even someone who is between the ages of 65 and 70, or even someone who is between the ages of 65 and 70, for reasons that could equally be applied to an employee of a different age. However, the provisions of G.S. 136-5(a)(2) and the provisions of G.S. § 126-16 prohibit the University of North Carolina from requiring an employee who is between the ages of 65 and 70 to retire for reasons based on his age even though the compulsory retirement would be under circumstances fitting within an exception to the Age Discrimination in Employment Act as amended in 1978.
Rufus L. Edmisten Attorney General
Norma S. Harrell Assistant Attorney General