2002-06-26 CC Packet - Laserfiche WebLink

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Jun,14. 2002 10:32AM BARNA,GUZY&STEFFAN , No,9990 P 3/4, ~ r Mr. James D. Hoeft June 4, 2002 Page 2 Decembllr 29, 1994 (No authority to provide car allowance subsidizing personal use). In particular. the authority of local units of government to make employer contributions to deferred compensation plans is di1:ectly limited by statute. See, Minn. Stat ~ 356.24 (2000) Op. Atty. Gen. 59a-41, Februaty 22, 1984. Fourth, cities also have specific statutory authority to direct a portion of an employee's salary, through payroll allocation, to certain specified deferred compensation prograro.s. See, e.g., Minn. Stat 99471.615,352.96 (2000). This authority, however, is limited to situations in which the public employer, acting at the request of an individual employee, directs a portion of the money that would', otherwise be payable di=t1y to the employee, to the purchase of certain deferred compensation investments identified by the statut/OS. [d. lOp. Atty. Gen. 59a-41, February 22, 1984. Fifth, under the facts you describe, the money directed to the deferred compensation does not appear to be money belonging to the employee which would be payable to him or her absent a request to direct it to the plan. :Rather it appears to be, in effect, an employer-paid benefit that the employee might choose to receive in lieu of employer-paid insurance. Sixth, this analysis is consistent with that of the court in Stang v. Minnesota Teachers Retiremem Ass'n.. 566 N.W.2d 345 (Minn. Ct. App. 1997). In that case, the COlll.t addre&'led the question of inclusion of certain payments in an employee's "salary" for retirement purposes. The school district employer had offered a :Ilexible benefit progJ.'am which allowed employees to allocate all or part of a stated amouot of money among inSutllIlce and various other available benefits. Any portion of the allowance not otherwise allocated was paid to the employee directly. The court dctennined that the money should not be excluded from "salary" as employer payments in lieu of insurance.l A key to the cow'(s analysis was the fact that the money in question belonged to the employees, who could decide whether to receive it outright or direct all or part to pay for insurance or other available benefits, The opposite is true here. The money in question is not available to the employees to spend in any way they choose. Rather, it is a specific employe.I"paid benefit that may be chosen by the employees in lieu of all or part of their insurance coverage. , 1 Payments "in lieu of insurance" are generally excluded from the definition of employee salal')' for purposes of public employee retirement funcla. See, e.g.. Minn. Stat. H 352.01, subd. 13, 353,01, subd. 10 (b) (2), 354.05, subd. 35 (b) (3) (2000).