December 15, 2000
Re:
Personnel Matters
You have asked several questions about employee benefits concerning a part-time
employee who is 77 years old and who has been with the city for 23 years. My responses to your
questions are based on general principles of law. If The City has created any property interest
for this employee either through a policy or through an individual contract, then these answers
may not apply.
1. You asked whether or not the city must continue providing this part-time employee
with health insurance coverage. The answer is no, with some cautionary remarks.
You should review the health insurance plan the city is currently using to see if it states
any conditions for eligibility for coverage. The plan could limit coverage for employees who are
eligible for Medicare. You also need to review your records to determine how this employee
became eligible for health insurance in the first place, because she may have a reliance interest.
Was there an ordinance enacted that gave part-time employees health insurance coverage?
Generally, unless it is a specifically granted benefit, part-time employees are not eligible for
health insurance. [NOTE: Your Code has a provision that says the City Manager is to develop
rules and regulations for personnel matters (see Section 4-105). Our version of your Code does
not have those regulations in it. Your questions are addressed subject to my review of those
regulations. I will be happy to review them if you want to send me a copy.]
In fact, there is no statutory requirement, either state or federal to provide what are called
welfare benefits, which includes health insurance, for employees; if the city wished to change
benefit programs, it can modify or terminate the benefits at any time. State ex. rel. Thompson v.
City of Memphis, 251 S.W. 46 (1923). If the employer, in this case the city, has entered into a
contractual agreement to provide benefits, then they must be provided. You have indicated,
however, that the city has made no such obligation. Is there any Employee Handbook, which
might set out certain benefits for part-time workers? Was there an employment contract with this
particular worker that requires the city to provide health insurance? If the answer to both
questions is no, and the city has not adopted any rules and regulations that would give rise to
any expectancy interest on the employee’s part, then I see no obligation to continue providing
the employee’s health insurance. Because the city has been providing her with the insurance
for an extended time, the employee may be relying on its continuation, so the city should provide
her with notice under COBRA of a date after which her insurance will be terminated. She needs
to be given the option to pick up payment of the premiums herself. If she is on Medicare, she
would only need a supplemental policy which would be less expensive than full coverage. At her
age, however, even that could be prohibitively expensive.
2. You next ask if you can make the woman retire? The answer is no, because I see no
evidence that she qualifies for any benefit under TCRS. You can, however, terminate her
employment because she is an employee at will.
Unless the city has given up its right in this regard through a written policy, rules and
regulations or by contract, employees in Tennessee are employees “at will” which basically
means they can be fired for any reason. In your letter, you indicated you have considered cutting
the employee’s hours to zero. Since she is part-time, there is probably nothing wrong with doing
that. But you shouldn’t call it “making her retire” because I don’t think she has any right to
participate in TCRS. Under § 8-35-201, Tennessee Code Annotated “the chief legislative body
of any political subdivision of the state” may authorize its employees to become eligible for
participation in TCRS under certain conditions. Has The City authorized this employee’s
participation in TCRS? Has The City been making retirement contributions on her behalf? If
not, then she would have trouble establishing eligibility for any retirement benefits. [Her part-time
status does not totally foreclose the possibility of a pro-rated retirement benefit, provided all back
contributions have been made. See § 8-34-621, Tennessee Code Annotated.] I doubt that The
City has either authorized her participation or made the requisite contributions, so she is
probably not entitled to any benefits from TCRS.
3. You also ask if the city can stop paying premiums for her life insurance. The answer is
yes, because the city is not obligated to provide benefits such as life insurance.
With the same reservations as have been expressed in earlier paragraphs, I ask, how
did she acquire life insurance benefits to begin with? Was there a resolution passed? Does she
have a contractual entitlement to life insurance? If not, I see no obligation to continue paying her
premiums. Please see the discussion in Section 1 above about there being no duty for the
employer to provide welfare benefits. As a courtesy you might want to give her the option of
paying the premiums herself on a continuation policy. The fact that your existing insurer will not
cover her any longer should be sufficient grounds for discontinuing her coverage.
4. You did not ask, but I assume you must be concerned with the employee claiming age
discrimination if you take away her hours or any of her benefits. So long as your
termination of her job is based on “bona fide occupational qualification,” she would not
have a cause of action against the city under the Age Discrimination in Employment Act.
Generally it is unlawful for an employer to discharge an employee based solely on age.
There is an exception in the federal Age Discrimination Act which allows an employer to take
action which is “not unlawful” if the action is based on a “bona fide occupational qualification”
reasonably necessary to the normal operation of the particular business. 29 U.S.C. § 623 (f)(1).
For example, I would think that being able to mop and wax floors would be an integral part of
being a custodial worker. You might check the job descriptions in The City for what duties are
required for a custodial worker. If there is no such policy, then I would recommend that you write
some to avoid future problems like this. Age cannot be the job qualification in and of itself, but
factors such as strength and agility might be appropriate. Many job descriptions include a
minimum weight that can be lifted, for example. I’m enclosing a couple of sample job
descriptions for your review.
I hope this helps with your problem. Since the woman has been with the city for so long,
a face-to-face conversation with her would be appropriate. Treating her with respect and dignity
as this point might also prevent future problems. This is not legal advice, but I have found that
good honest communication can prevent lawsuits from ever occurring. You might also consult
the Senior Citizens’ center for help in finding some other useful activity for this woman to take
the place of her job. Please let me know if you need additional information or authorities.
Sincerely,
Donna M. Leydorf
Legal Consultant