New Jersey Supreme Court: Refusal To Renew Contract Of Employee Over The Age Of 70 On The Basis Of Age Is Discriminatory

Monday, July 5, 2010 - 00:00

On June 1, 2010, the New Jersey Supreme Court held that the over-70 exception in the New Jersey Law Against Discrimination (the "LAD"), which allows employers to refuse to accept for employment employees over the age of seventy, does not permit employers to refuse to renew employment contracts based on age.

In Nini v. Mercer County Community College, A-13/14, the Court ruled that refusing to renew the contract of a worker over the age of 70 is equivalent to terminating that employee or forcing him or her into retirement, and is prohibited by the LAD. The Court found that this interpretation is consistent with the broad legislative intent of the LAD to protect all individuals from discrimination in employment, and particularly, to protect older workers from being forced out of the workforce based solely on age.

The Facts

Mercer County Community College (the "College") employed Rose Nini for 26 years, most recently as a Dean. In June 2004, when Nini was over 70 years of age, the president of the College informed Nini that he was not recommending her for reappointment when her contract expired the following year. Nini alleged that at a meeting with the president, he made it clear that he thought she had no right to be working at her age and that she should consider taking early retirement. He also purportedly told her that people who had been working for twenty-five years "lose their effectiveness." Nini further claimed that (i) others at the College referred to older workers as "dead wood" and joked about getting rid of the oldest workers and (ii) she had heard from another employee that the College's Human Relations Director had said that the College had to "get rid of old timers and bring in new blood."

In September 2004, Nini requested in writing that the Board of Trustees review the events surrounding the nonrenewal of her contract. In that letter, Nini stated her belief that age was the reason for the nonrenewal.

In October 2004, Nini sent another letter, this one alleging that the College President retaliated against her because of the first letter. In March 2005, Nini received a letter confirming that her contract would not be renewed.

Trial Court

Nini filed a complaint against the College alleging age discrimination and retaliation. The College moved for summary judgment, arguing that Nini did not have a claim under the LAD because an employer could decline to renew a 70-year-old employee's contract based on the over-70 exception. In granting the College's motion, the trial court reasoned that Nini was not terminated but rather, was not rehired and therefore, was not protected by the LAD.

Appellate Division

The Appellate Division reversed, finding that contract nonrenewals should not be equated with new hires when interpreting the over-70 exception. Instead, the Appellate Division held that a contract nonrenewal for a worker over 70 was similar to a termination, which did not fall within the statutory exception.

The Supreme Court

The New Jersey Supreme Court granted certification to determine whether the over-70 exception applies to the nonrenewal of an existing employee's contract. Like the lower appellate court, the Supreme Court concluded that the refusal to renew the contract of an employee over 70 years of age on the basis of age is prohibited by the LAD.

The Court began its analysis by reaffirming that the LAD was enacted to prohibit discrimination in all aspects of the employment relationship. Notwithstanding that broad mandate, the Court also noted that the LAD contained a series of explicit exceptions, one of which provided that the LAD should not be construed to bar employers from refusing to accept for employment or to promote any person over the age of seventy. These exceptions, the Court noted, apparently reflected a legislative recognition of the managerial interests of employers who should not have to experience the financial obligations and organization upheavals of hiring (and in the case of age) promoting workers who could not satisfy a bona fide occupational qualification of the job or, for one reason or another, were unlikely to be long-term prospects.

The College and Nini agreed that hiring and promotion were covered by the exception but that termination was not. The parties, however, disagreed over the meaning of a contract renewal, which was not specifically addressed in the statutory language or the legislative history of the LAD. The College argued that when Nini's contract expired, she became an applicant whom it legally refused to hire. Nini countered by claiming that the nonrenewal of her contract was effectively a termination and therefore, outside the exception.

Ultimately, the Court sided with Nini. In reaching this decision, the Court noted that the LAD was remedial legislation that should have expansive coverage and that exceptions should be narrowly construed. It found that to allow contract nonrenewal because of age would undermine the purpose of the LAD. The Court rejected the College's contention that permitting nonrenewal would advance managerial interests, finding that those interests were not implicated where the employee was already working, required no training, and was performing satisfactorily, the organizational scheme was not impacted, and the issue was one of contract renewal. To adopt the College's interpretation, the Court remarked, would create a loophole which would permit employers to place older employees under contract to prevent them from having valid age discrimination claims. In the absence of a clear indication to the contrary, the Court ruled that it could see no reason why the Legislature would want to characterize workers like Nini as new hires, thus allowing discrimination against a class of workers with a pre-existing relationship to the employer, while protecting other similarly situated employees.

Critical to the Court's decision was the fact that the LAD prohibits both terminations and forced retirements based on age. To the Court, this signified a specific intention to protect those employees over 70 who, like Nini, have a pre-existing relationship with the employer from being pushed out of the workforce based on age.

Although acknowledging that the over-70 exception was susceptible of more than one interpretation regarding contract renewals, the Court adopted the interpretation that did "the least violence to the overall antidiscrimination goals of the LAD." It thus held that refusing to renew the contracts of employees over the age of 70 based on age is violative of the LAD.

Conclusion

The Supreme Court's holding in Nini v. Mercer County Community College makes clear that the LAD permits claims of age discrimination by employees over the age of 70 when their contracts are not renewed based on age. Under these circumstances, employers cannot seek protection from liability based on the over-70 exception embodied in N.J.S.A. 10:5-12(a).

Employers must be careful to base employment decisions on legitimate, nondiscriminatory reasons. In New Jersey, age is not a valid reason for nonrenewal of employment contracts under the LAD, even when an employee is over the age of 70.

David Garlandis Chair of the Employment & Labor Practice Group at Sills Cummis & Gross P.C. in the Newark office.

Please email the author at dgarland@sillscummis.comwith questions about this article.