SECTION 335:15-11-8. Involuntary retirement exemption from non- discrimination requirements

  It is not a discriminatory practice for an employer to require the compulsory retirement of any person who has attained the age of sixty-five (65) and who, for the two-year period immediately before retirement, is employed in a bona fide executive or high policymaking position, if such person is entitled to an immediate nonforfeitable annual retirement benefit from a pension, profit-sharing, savings or deferred compensation plan, or any combination of such plans, of the employer, which equals, in the aggregate, at least Forty-four Thousand Dollars ($44,000.00). [25 O.S. Section 1309(3)].

(1)   Burden of proof. Since this provision is an exemption from the non-discrimination requirements of the Act, the burden is on the one seeking to invoke the exemption to show that every element has been clearly and unmistakably met. Moreover, as with other exemptions from the Act, this exemption must be narrowly construed.

(2)   Forced retirement and change in position or status. An employee within the exemption can lawfully be forced to retire on account of age at 65 or above. In addition, the employer is free to retain such employees, either in the same position or status or in a different position or status. For example, an employee who falls within the exemption may be offered a position of lesser status or a part-time position. An employee who accepts such a new status or position, however, may not be treated any less favorably, on account of age, than any similarly situated younger employee.

(3)   Qualification as "bona fide executive".

(A)   In order for an employee to qualify as a "bona fide executive," the employer must initially show that the employee satisfies the definition of a bona fide executive set forth in Title 29, Code of Federal Regulations (C.F.R.), section 541.1. Each of the requirements in paragraphs (a) through (e) of §541.1 must be satisfied, regardless of the level of the employee's salary or compensation.

(B)   Even if an employee qualifies as an executive under the definition in §541.1 of the C.F.R., the exemption for Title 25 of the Oklahoma Statutes may not be claimed unless the employee also meets the further criteria specified in the Conference Committee Report in the form of examples (see H.R. Rept. No. 95-950, p. 9). The examples are intended to make clear that the exemption does not apply to middle-management employees, no matter how great their retirement income, but only to a very few top level employees who exercise substantial executive authority over a significant number of employees and a large volume of business. As stated in the Conference Report:

(i)   Typically the head of a significant and substantial local or regional operation of a corporation (or other business organizations), such as a major production facility or retail establishment, but not the head of a minor branch, warehouse or retail store, would be covered by the terms "bona fide executive". Individuals at higher levels in the corporate organizational structure who possess comparable or greater levels of responsibility and authority as measured by established and recognized criteria would also be covered.

(ii)   The heads of major departments or divisions of corporations (or other business organizations) are usually located at corporate or regional headquarters. With respect to employees whose duties are associated with corporate headquarters operations, such as finance, marketing, legal, production and manufacturing (or in a corporation organized on a project line basis, the management of product lines), the definition would cover employees who head those divisions.

(iii)   In a large organization, the immediate subordinates of the heads of these divisions sometimes also exercise executive authority, within the meaning of this exemption. The conferees intend the definition to cover such employees if they possess responsibility which is comparable to or greater than that possessed by the head of a significant and substantial local operation who meets the definition. [H.R. 95-90, p.10].

(4)   Qualification as "high policymaking position". The phrase "high policymaking position" is limited to certain top level employees who are not bona fide executives. Specifically, these are … individuals who have little or no line authority but whose position and responsibility are such that they play a significant role in the development of corporate policy and effectively recommend the implementation thereof.

(A)   For example, the Chief economist or the chief research scientist of a corporation typically has little line authority. His duties would be primarily intellectual as opposed to executive or managerial. His responsibility would be to evaluate significant economic or scientific trends and issues, to develop and recommend policy direction to the top executive officers of the corporation, and he would have a significant impact on the ultimate decision on such policies by virtue of his expertise and direct access to the decision makers. Such an employee would meet the definition of a "high policymaking" employee.

(B)   On the other hand, as this description makes clear, the support personnel of a "high policymaking" employee would not be subject to the exemption even if they supervise the development, and draft the recommendation, of various policies submitted by their supervisors. [H.R. 95-90, p.10].

(5)   Application of involuntary retirement exemption to a particular employee. In order for the exemption to apply to a particular employee, the employee must have been employed in a "bona fide executive or a high policymaking position," as those terms are defined in ((3) and (4) of this subsection), for at least two years immediately before retirement. [H.R. 95-90, p. 10].

(6)   Annual retirement benefit.

(A)   The "annual retirement benefit," to which covered employees must be entitled, is the sum of amounts payable during each one-year period from the date on which such benefits first become receivable by the retiree. Once established, the annual period upon which calculations are based may not be changed from year to year.

(B)   The annual retirement benefit must be immediately available to the employee to be retired pursuant to the exemption. For purposes of determining compliance, "immediate" means that the payment of plan benefits (in a lump sum or the first of a series of periodic payments) must occur not later than 60 days after the effective date of the retirement in question. The fact that an employee will receive benefits only after expiration of the 60-day period will not preclude his retirement pursuant to the exemption, if the employee could have elected to receive benefits within that period.

(C)   The annual retirement benefit must equal, in the aggregate, at least $44,000.00. The manner of determining whether this requirement has been satisfied is set forth in Title 29, CFR, §1627.17.

(D)   The annual retirement benefit must be "nonforfeitable". Accordingly, the exemption may not be applied to any employee subject to plan provisions which could cause the cessation of payment to a retiree or result in the reduction of benefits to less than $44,000.00 in any one year. For example, where a plan contains a provision under which benefits would be suspended if a retiree engages litigation against the former employer, or obtains employment with a competitor of the former employer, the retirement benefit will be deemed to be forfeitable. However, retirement benefits will not be deemed forfeitable solely because the benefits are discontinued or suspended for reasons permitted under section 411 (a) (3) of the Internal Revenue Code.

(E)   An annual retirement benefit will not be deemed forfeitable merely because the minimum statutory benefit level is not guaranteed against the possibility of plan bankruptcy or is subject to benefit restrictions in the event of early termination of the plan in accordance with Treasury Regulation 1.301-4(c). However, as of the effective date of the retirement in question, there must be at least a reasonable expectation that the plan will meet its obligation.