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Also, §22 of the New York State's General Construction Law, in pertinent part, provides that “Whenever words of the masculine or feminine gender appear in any law, rule or regulation, unless the sense of the sentence indicates otherwise, they shall be deemed to refer to both male or female persons.” NYPPL typically follows this protocol.

July 22, 1999

Contracting out work to a private company alleged to constitute a violations of §209-a.1 of the Taylor Law


Contracting out work to a private company alleged to constitute a violations of §209-a.1 of the Taylor Law
Local 1342 and Niagara Frontier Transit Metro, 30 PERB 3068

Amalgamated Transit Union Local 1342 filed charges against the Niagara Frontier Transit Metro System challenging the Metro's decision to contract out for the installation of an electronic burner control with a private company. The union argued that this action violated §209-a.1 of the Civil Service Law.

A PERB administrative law judge [ALJ] dismissed the charge filed by the Local on the grounds that Metro did not have "the schematic drawing necessary to the correct installation of the control device." PERB sustained the ALJ's conclusion but rejected the reasoning underlying it.

Implying that the lack of drawings was irrelevant, PERB said that the charge had to be dismissed because "the unit employees have never installed a device of this type."

Citing its ruling in the Niagara Frontier Transportation Authority proceeding [18 PERB 3083], PERB said that "an employer need not negotiate a decision to subcontract unit work if the work which is contracted is substantially different from the work previously performed by unit employees" [emphasis supplied]. PERB said that the record supported its finding that the Local's unit employees had not done such work previously.

However, PERB cautioned that its ruling was limited to the facts of this particular case. It took pains to point out that it was not holding or suggesting that "by this decision that a simple difference in equipment design or technology would be itself effect a loss of exclusivity or establish a dissimilarity in tasks or qualifications sufficient to permit an employer to subcontract or otherwise transfer unit work."

In another unit work case, CSEA and the Town of Southampton, 30 PERB 3069, PERB decided that Southampton's unilateral decision to  transfer work being performed by unit employees to nonunit part-time employees did not violate the Taylor Law. PERB said that for some time the tasks claimed as exclusive unit work by CSEA had been performed by non-unit employees, by private contractors and by community service workers at various town locations.

July 19, 1999

Joining a retirement system

Joining a retirement system
Plasberg v State of New York, 245 A.D.2d 681

§803 of the Retirement and Social Security Law authorizes retroactive membership in a public retirement system if, when initially employed, the individual's membership in the system was optional and the employer failed to advise the worker of his or her eligibility to join a retirement system.

Is evidence that the individual was orally advised of such eligibility sufficient to defeat his or her claim for such retroactive membership?

This is an important issue as retroactive membership in a retirement system would usually result in an improved retirement benefit and could even result in the member's her moving to a different "Tier." As to the impact on the employer, approval of retroactive membership would usually require the employer to make a potentially significant employer contribution for such retroactive member service credit to the retirement system involved.

Edward E. Plasberg applied for retroactive membership in the New York State Employees' Retirement System [ERS] based on his service as a seasonal laborer with the Town of Niskayuna in 1968. He alleged that Niskayuna did not tell him he was eligible to join ERS in 1968.

The Appellate Division said that Plasberg's representation that he was not told of his eligibility for membership was sufficient to state a prima facie case of eligibility for retroactive membership. In rebuttal, however, Niskayuna contended that it had orally advised Plasberg that he could join ERS at the time. Was this sufficient to defeat Plasberg's retroactive membership claims?

It was, ruled the Appellate Division, since "testimony at a hearing revealed that other employees hired at approximately the same time as [Plasberg] and worked in similar positions were informed of their option to join the Retirement System."

The lesson here is that a public employer who is able to demonstrate to the satisfaction of the courts that it orally advised employees of their eligibility to join ERS will be considered to have a rational basis for rejecting an  individual's application for retroactive membership in a public retirement system under §803.

Determining seniority for tenure purposes in the event of a layoff

Determining seniority for tenure purposes in the event of a layoff
Kaufman v Fallsburg CSD, 91 N.Y.2d 57

Seniority is probably the most critical factor in determining who may be lawfully retained an a layoff situation. In the Kaufman case the New York Court of Appeals addressed the competing seniority claims of two  elementary grade teachers seeking to avoid being excessed by the Fallsburg Central School District.

Two teachers, Forman and Kaufman, were both  appointed to the elementary tenure area on September 1, 1992. Forman had been given a probationary appointment in the special education tenure area in November 1990 but in the 1991-92 academic year she was assigned to teach sixth grade subjects to mixed classes consisting of regular education students and six learning-disabled special needs students. On September 1, 1992, the District additionally appointed Foreman to the elementary tenure area, and assigned her to teach fourth grade.

Kaufman, who had prior service in the District as a substitute teacher, also received a probationary appointment in the elementary tenure area on September 1, 1992. Kaufman then took over the instruction of Foreman's sixth grade class.

Effective June 30, 1994, the District abolished four elementary education positions. Kaufman was excessed when the District determined that she had the least seniority in the elementary tenure area. Kaufman sued, contending that she was entitled to additional credit in the elementary tenure area for the two months she taught as a regular substitute elementary teacher during the 1991-1992 school year and thus had greater seniority in the elementary tenure area than did Foreman.

While the District conceded that Kaufman was entitled to the two months of additional credit as she claimed, it said it had also recalculated Foreman's seniority and concluded that she was entitled to additional credit in the elementary tenure area for the entire 1991-1992 school year during which she taught the mixed sixth grade class of regular education and special needs students. This, the District argued, meant that Foreman still remained senior to Kaufman in the elementary tenure area.

Kaufman challenged this, contending that: (1) The facts in the record did not establish that Foreman served in the elementary tenure area during the 1991-1992 school year; and (2) the District did not have any authority to grant Foreman seniority credit in the elementary tenure area as of September 1991 because the District (a) failed to expressly notify Foreman that her assignment for the 1991-1992 school year was outside her initial special education appointment, and (b) it had not obtained Foreman's prior written consent to that out-of-tenure area assignment.

These omissions, Kaufman contended, barred the District from retroactively crediting Foreman with elementary tenure area seniority for her service during the 1991-1992 school year. A  New York State Supreme Court justice disagreed,  reasoning that accepting Kaufman's theory would penalize teachers for school district mistakes by depriving them of credit to which they would have been entitled but for the school district's error. The Appellate Division concurred with the Supreme Court's analysis and affirmed the lower court's ruling (234 AD2d 698).

The Court of Appeals agreed, dismissing Kaufman's appeal. It said that the lower courts "correctly concluded that there was a sound factual basis for the District's determination that Foreman devoted a substantial portion of her time* during the 1991-1992 school year to teaching in the elementary tenure area." The Court said that the record contains "ample evidence to support the District's finding that Foreman devoted over 40% of her time to teaching the "common branch subjects" of reading, science, arithmetic and language arts to her sixth grade students."

The Court also held that the fact that some of her sixth-graders were learning-disabled special needs students "does not, under these circumstances, compel a different conclusion and thus Foreman was entitled to seniority credit in the elementary tenure area for her service during the 1991-1992 school year."

What about the District's failure to comply with the notice provisions set out in 8 NYCRR 30.9(b)? Shouldn't this prevent the District from giving Foreman retroactive elementary area seniority credit for the 1991-1992 sixth-grade assignment? The Court of Appeals said that "concededly, Foreman was not formally notified that her assignment to teach sixth grade in 1991-1992 was out of her original tenure area, and her consent was not obtained." More important, said the Court, 8 NYCRR 30.9(b) was promulgated pursuant to a legislative tenure scheme designed "to protect competent teachers from the abuses they might be subjected to if they could be dismissed at the whim of their supervisors," citing Ricca v Board of Education., 47 NY2d 385, 391.

Finding that  the underlying purpose of 8 NYCRR 30.9(b) is not fulfilled by applying that provision to block a teacher from receiving seniority credit which, absent school district error, would have been received by reason of actual service in an out-of-tenure area, the Court said that the regulation has a two-fold protective purpose: (1) it protects teachers from being required to accept assignments outside of their designated tenure areas involuntarily; and (2) it protects teachers from being deprived of credit in a previously appointed tenure area if they unwittingly accept, and serve in, out-of-area assignments.

The Court of Appeals concluded that 8 NYCRR 30.9(b) was intended, and has been consistently construed administratively, as a safeguard for teachers who are assigned (either involuntarily or without their knowledge) outside of their designated tenure areas. Accordingly, the provision  should not be interpreted to prevent a teacher from knowingly and voluntarily waiving that section's consent requirement when strict application of the regulation would itself impose adverse consequences upon the teacher.

* 8 NYCRR 30.1[g] provides that a "substantial portion" of the teacher's time "means 40 percent or more of the total time spent by a professional educator in the performance of his [or her] duties, exclusive of time spent in preparation, monitoring or in co-curricular activities."

Negotiating religious daysoff


Negotiating religious daysoff
Binghamton CSD v Binghamton T.A., NYS Supreme Court [Not selected for publication in the Official Reports]

The collective bargaining agreement between the Binghamton Central School District and the Binghamton Teachers Association provided for paid leave for "days for religious observance in accordance with a list agreed to by the parties." The list the parties later agreed upon set out "approved leave days" for observing a number of Christian, Jewish and Eastern Orthodox religious holidays.

When the district denied a teacher's request for paid leave to observe Ash Wednesday, a day of religious observation included on "the list," the teachers association filed a contract grievance. The grievance could not be resolved by the parties and the teachers demanded that the grievance go to binding arbitration.

The district objected  and sought a court order staying the arbitration. The district justified its position on the grounds that time off for a religious observance was unconstitutional because it violated the "Establishment Clause." It argued that any arbitration award in favor of the teachers association would violate law and public policy and thus be unenforceable.

To support its position, the district cited a PERB ruling [CSEA and Eastchester UFSD, 29 PERB 3041]. In the Eastchester case, PERB concluded that negotiating days off for religious observances was not a mandatory subject of collective bargaining.

The Court decided that in this instance the scope of the agreement to arbitrate was not the issue. Rather, the question to be resolved was whether or not "the particular subject matter of the grievance is an authorized subject of negotiation."

Noting that PERB had not ruled that the subject of the dispute -- paid leave for absences for a religious observance -- was a "prohibited subject of negotiations," the Court concluded that "once both sides do bargain and agree on a permissive subject [of negotiations], their accord is as binding and enforceable as if the subject had been one of required negotiations."

The bottom line: the court declined to grant the district's motion to stay the arbitration. Why? Because, the court explained, the district and the association were free to negotiate and ultimately contract, to submit the subject dispute to arbitration.

What about the constitutional issue raised by the district? The court decided that negotiating paid absence to observe religious holidays did not offend the Establishment Clause because "the leave provision negotiated neither forces nor prohibits religious participation, nor does it favor one particular religion over another...."

July 15, 1999

Rejecting representation by an employee organization

Rejecting representation by an employee organization
CSEA and Town of Cicero, 30 PERB 3066

There are still some public employees who are eligible for representation for the purposes of the Taylor Law but remain unrepresented.

In the Town of Cicero, for example, collective bargaining units for Highway Department and Police Department had been established and the eligible employees of those agencies are represented for the purposes of collective bargaining. But other Town employees were not even in a collective bargaining unit, much less represented.

CSEA decided it would like to be the collective bargaining agent for those workers. The first step was to determining who would be in the proposed bargaining unit. CSEA and the Town of Cicero stipulated (agreed) that specified clerical and other Town personnel would be included in a single negotiating unit.

Among the titles included in the negotiating unit: Clerk to the Town Justice; Deputy Receiver of Taxes; Typist I; Park Maintenance Crew Leader; Dog Control Officer; and Recreation Attendant. Once the unit was defined, CSEA sought to represent the unit as its agent. Apparently Cicero declined to "recognize" CSEA as the collective bargaining agent for the unit. CSEA filed a petition with PERB seeking to represent this unit.

N.B. Employee organizations are either "certified" by PERB or a public employer may "recognize" an employee organization for the purpose of collective bargaining [Civil Service Law §204.1].

PERB scheduled a secret ballot representation election in which the individuals in the stipulated negotiating unit could vote. Because "... a majority of the eligible voters in the unit who cast ballots do not desire to be represented for the purposes of collective bargaining..." PERB dismissed CSEA's petition.

July 14, 1999

Taxing payments for disability

Taxing payments for disability
A NYPER Analysis

Personnel officers may be aware of Revenue Ruling 72-45, in which the Internal Revenue Service [IRS] concluded that service-related disability retirement benefits paid to New York City police officers and firefighters may be excluded from gross income because such payments were in lieu of workers' compensation, and workers' compensations payments are not taxable. 

This has prompted a number of public employers and union officials to ask if withholdings  for income tax should be deducted from payments made to individuals pursuant to §207-a or §207-c of the General Municipal Law. Unfortunately, there does not appear to be any authoritative decision concerning the matter. However, there is a private letter ruling [Index Number 0104.02-00, dated April 1979] that the IRS sent to an individual indicating that: (1) §207-a and §207-c payments "are made under a statute in the nature of a workmen's compensation act providing compensation to employees for personal injuries or sickness incurred in the course of employment;" (2) §207-a and §207-c payments "are excludable from ... gross income under §104(a)(a) of the [Internal Revenue] Code;" and (3) "Such payments are not subject to withholding of income tax at source on wages, nor are they subject to employment taxes imposed under the Federal Insurance Contributions Act or the Federal Unemployment Tax Act."

Although this letter might seem of some help in resolving whether or not tax deductions should be taken from §207-a or §207-c payments, caution is recommended here. Unlike an IRS Revenue Ruling, an IRS private letter may not be used or cited as precedent in other cases involving the same issue or question.

N.B. NYPER is not aware of any formal Revenue Ruling specifically addressing the issue of withholding income taxes from §207-a or §207-c payments "at the source of wages."

The key difference between the subject of the IRS ruling -- service-related disability retirement benefits -- and GML 207 payments is that §207-a/c payments are made by the employer rather than a retirement system. Does this constitute a significant difference for tax purposes? Clearly if such payments are withheld "at the source" by the employer, the individual may apply for a tax refund, claiming that §207-a and §207-c payments are in the nature of a workers' compensation benefit. However, the letter opinion cannot be cited as authority in the event the IRS questions:

1.The employer's decision not to withhold income tax deductions for §207-a or 207-c payments or,

2.The employee's failure to file an estimated income tax return or to pay "estimated income taxes" on §207-a or §207-c income, if income tax deductions are not made by the employer,.

What about deducting income taxes on payments made to an individual who is performing light duty while receiving §207-a or §207-c benefits? Letter opinion 0104.02-00 specifically states that it "applies only to the full disability payments received on or after July 30, 1976, and not to any payments for light duty."

Making a reviewable record of a hearing, whether formal or informal, is always a good practice


Making a reviewable record of a hearing, whether formal or informal, is always a good practice
Lenard v Syosset CSD, NYS Supreme Court [Not selected for inclusion in the Official Reports. Text of decision set out below.]

The Lenard case focuses on an issue that sometimes surfaces when processing "§803 applications" for retroactive membership in a retirement system: the sufficiency of the review or hearing procedure provided by the employer in the course of its considering an individual's application for such membership.

The Lenard decision demonstrates the importance of having a record  made in such proceedings. In addition, it points out that making a reviewable record of a hearing, whether formal or informal, is always a good practice regardless of the subject under consideration.

A number of teachers employed by the Syosset Central School District filed for retroactive membership in the New York State Teachers' Retirement System [TRS] pursuant to §803 of the Retirement and Social Security Law. The Board, however, declined to complete the necessary affidavit that would allow TRS to process these applications and  the teachers requested a hearing.

The District provided "informal hearings" to consider the teachers' claims. However, no record of the proceedings was made, an omission that was to prove critical in resolving the appeal that followed.

In each case the hearing officer concluded that the teacher failed to meet her burden of proof because there was no "documentation" to support her claim. Accordingly, he decided, the Board was not required to complete the affidavit for the teacher. The Board approved and adopted the hearing officer's decisions, writing each teacher that her "request for retroactive membership in TRS has been denied in accordance with the attached Hearing Officer's decision...."

New York State Supreme Court Justice Winick observed that the Court of Appeals  had earlier ruled on the issue of whether statements or oral testimony by an employee claiming eligibility for retroactive retirement membership satisfied §803's evidence requirements. The holding was that such statements, without more, can constitute substantial evidence sufficient to "satisfy the statutory burden" [Scanlon v Buffalo Public School System, 90 NY2d 662].

N.B. Providing oral evidence does not automatically satisfy the "substantial evidence" requirement set out in §803. In Tompkins v Ossining UFSD, 666 NYS2d 37, the Appellate Division sustained a school district's rejection of a teacher's claim for retroactive retirement membership pursuant to §803, finding that the teacher's allegations concerning her eligibility were "vague, incomplete and inconsistent."

Justice Winick commented that §803 requires only a "review process" and not a hearing and that the nature of the review process is left to the discretion of the school district. Here, however, the Court determined that there was a problem with the "informal hearing" procedure the District provided to the teachers.

An informal hearing without requiring any testimony to be sworn may be proper even if the testimony is not recorded. But, Justice Winick said, here there was no record made of the proceedings that could be examined by a court to resolve disputes as to whether certain oral evidence was submitted or to determine whether the burden of proof has been met."

Further, the hearing officer did not set out the nature of the oral evidence given by the teachers in his decision. This proved to be a significant omission because "the Court [was] unable to determine whether such evidence otherwise satisfied the burden of proof." Further, said the Court, although affidavits were submitted by the parties concerning the evidence submitted [in the course of the litigation], such affidavits do not allow a court "to now make findings regarding the oral evidence submitted."

Why couldn't the District correct this problem by submitting an affidavit setting out the hearing officer's reasons for rejecting the applications filed by its teachers? As Justice Winick noted, this would be inappropriate under the circumstances.

In Van Antwerp v Liverpool Central School District, decided February 5, 1998, the Appellate Division considered a Supreme Court justice's reliance on an affidavit "produced for the first time" in connection with the Article 78 proceeding [Article 78, Civil Practice Law and Rules] involving a §803 claim before him. The Appellate Division ruled such a post-hearing document  "... set forth facts that were not before [the District] and therefore could not have provided a basis for its determination."

The controlling principle, according to Justice Winick, is that a "judicial review of an administrative determination is limited to the record before the agency, and proof outside the administrative record should not be considered."  Accordingly, Justice Winick annulled the Board's decision and directed it to complete the affidavits so that the teachers' applications for retroactive membership could be considered by TRS.

The lesson here is that when a hearing is provided, formal or otherwise, which may be subject to appeal, a transcript, or a least a record, of the proceedings should be made and the hearing officer should make reference to the record, the testimony and proof offered by the parties and his or her analysis of such evidence in his or her determination.

Further, the deciding authority should have the hearing officer's findings and recommendations available to it at the time it makes its decision.

N.B. The Court said that (1) there was no issue concerning the teachers' continuous employment by the District or (2) whether Syosset was the responsible school district. Why? Because the hearing officer ruled in favor of teachers on these issues and that the Board had adopted those findings.

The full opinion follows:

Lenard v Syosset Central School District

In this proceeding pursuant to CPLR Article 78, petitioners seek review of a determination of respondent Board of Education of Syosset Central School District, dated January 23, 1995, which, after a hearing, denied their request for retroactive membership pursuant to §803 of the Retirement and Social Security Law.

§803(b)(3) of the Retirement and Social Security Law, in relevant part, provides:

b. Retroactive membership shall be granted to a member of a public retirement system prior to the date on which the member actually joined such system provided that:

(3) the employer who employed such member at the time he or she was first eligible to join a public retirement system files with the retirement system an affidavit stating that the relief sought is appropriate because the member did not (i) expressly decline membership in a form filed with the employer; (ii) participate in a procedure explaining the option to join the system in which a form, booklet or other written material is read from, explained or distributed, such form, booklet or written material can be produced and documentation or notation to the effect that he or she so participated exists; or (iii) participate in a procedure that a reasonable person would recognize as an explanation or request requiring a formal decision by him or her to join a public retirement system.

Petitioners, teachers in the Syosset Central School District, applied pursuant to §803 of the Retirement and Social Security Law for retroactive membership. In each case, respondent Board of Education did not complete the required affidavit, stating, in correspondence to the New York State Teachers' Retirement System, that "... a review of the district's files has not uncovered any information permitting to [sic] an affirmative response to any of ... [the] statements" in the employee affidavit form. Under the circumstances, the New York State Teachers' Retirement System advised petitioners that it was unable to process their requests. Petitioners then requested a hearing pursuant to Retirement  and Social Security Law, '803(b)(3), to examine and review the evidence to be presented that they were never advised of their right to join the retirement system. Pursuant to this request, a hearing was held before the Director of Pupil Personnel Services of the Syosset Central School District. The hearing was conducted informally, and no recording of the testimony, either stenographic or other, was made.

Following the hearing, the Director of Pupil Personnel Services issued written findings of fact and decision. With respect to each petitioner he found that:

no evidence was submitted nor was there evidence existing in district files declining membership, participation in a procedure of explanation of option to join TRS, nor having followed any procedure that a reasonable person might recognize an option to join TRS.

He concluded that each petitioner did not meet her burden of proof by submitting "clear documentation," "any documentation," or "any substantial documentation" in support of the claim and that, therefore, respondent Board of Education was not required to complete the requested affidavit. By resolution dated January 23, 1995, respondent Board of Education approved and adopted the decision of the Director of Pupil Personnel Services.

In accordance with its determination, respondent Board of Education completed an affidavit, pursuant to Retirement and Social Security law, '803, with respect to each petitioner, stating: "The request for retroactive membership has been denied in accordance with the attached Hearing Officer's decision, which was adopted by the Board of Education on January 23, 1995."

§803(b) of the Retirement and Social Security Law imposes upon the employee, here, petitioners, the burden of proving by substantial evidence that she did not participate in a procedure described in clause (ii) or (iii) of this subsection. The Court of Appeals in its recent decision in Matter of Scanlon v. Buffalo Public School System, 90 NY2d 662, has settled the issue whether statements or oral testimony by an employee, without more, can constitute substantial evidence, concluding that such evidence can satisfy the statutory burden.

§803 of the Retirement and Social Security Law requires only a "review process." It does not require a hearing, and the nature of the review process is left to the discretion of the school district (see, Matter of Scanlon v. Buffalo Public School System, supra). Accordingly, an informal hearing without requiring any testimony to be sworn or recorded may be proper. Where, as here, however, testimony is not recorded, the Court is unable to examine a record to resolve disputes whether certain oral evidence was submitted and, therefore, to determine whether the burden of proof has been met.

In his findings and decision, the Hearing Officer concluded that petitioners had not met their burden of proof because no documentary evidence had been submitted in support of their claims. In light of Matter of Scanlon, although documentary evidence may be considered, it is not the only evidence that may satisfy the burden of proof. The decision of the Hearing Officer in predicating his finding that petitioners failed to meet their burden of proof because of the absence of documentary evidence, therefore, was arbitrary and capricious.

Since the Hearing Officer did not address in his findings of fact and decision the nature of the oral evidence given by petitioners, the Court is unable to determine whether such evidence otherwise satisfied the burden of proof. The affidavits submitted by the parties regarding the evidence submitted, moreover, do not permit the Court itself to now make findings regarding the oral evidence submitted. Not only are the affidavits conflicting, but also the affidavits may contain matter which is de hors the record and which may not be considered (see, Matter of Aguayo v. New York State Division of Housing and Community Renewal, 150 AD2d 565). However, judicial review of an administrative determination is limited to the grounds presented by the agency at the time of its decision. (Matter of Scanlan v. Buffalo Public School System, supra at 678). Thus, in evaluating the rationality of respondent's determination, we may only consider those grounds set forth in the Hearing Officer's findings and decision which were adopted by the Board of Education. (See Matter of Sadoff v. Ithaca City School District, _ AD2d _ 1998, Third Department, decided January 22, 1998).

Each petitioner submitted a form entitled "CLAIM PURSUANT TO §803 OF THE RETIREMENT AND SOCIAL SECURITY LAW." Each petitioner answered in the affirmative the question: "Did your first public employer fail to advise you of your right to join a public retirement system?" While this evidence is generally supportive of petitioners' claims, it does not reflect the specificity required by clauses (ii) and (iii) of §803(b)(3) of the Retirement and Social Security Law. Without more, therefore, this form alone may not satisfy petitioners' burden of proof.

With respect to petitioner Dinehart, respondent Board of Education, relying on Matter of Lovett v. Manhasset Public Schools, (_ AD2d _, 2d Dept, Dec. 15, 1997), contends that since she had previously been a member of the New York State Teacher's Retirement System she participated in a procedure that a reasonable person would recognize as an explanation or request requiring a formal decision to join a retirement system. Such reliance is misplaced.

In Matter of Lovett, there was something more than solely previous membership. The Court also considered the petitioner's response on her employment application that she was no longer a member of the system. Similarly, in Matter of Clark v. Board of Education for Kingston City School District, 90 NY2d 662, a companion case decided together with Matter of Scanlon, the Court of Appeals found that past tenure as a full time teacher and member of the New York State Teachers' Retirement System and asking whether that teacher was currently a member of the system qualified as a procedure that a reasonable person would view as a request to join the system. Unlike Matter of Lovett and Matter of Clark, there is no evidence in addition to petitioner Dinehart's non-membership.

There is no issue regarding whether petitioners' employment service was continuous and whether respondent Board of Education is the proper school district to which the claims for retroactive membership should be directed. The Hearing Officer found in favor of petitioners on these issues, and respondent Board of Education adopted said decision. Therefore, respondent Board of Education may not now challenge such decision.

Accordingly, petitioners are entitled to judgment granting the petition, annulling the determination of respondent Board of Education, and directing the respondents to complete the affidavit so that the petitioners be granted retroactive membership in the retirement system in accordance with their prayer for relief in the amended petition.

Settle judgment.

Misconduct off-duty and FOIL


Misconduct off-duty and FOIL
Daily Gazette v City of Schenectady, [The Appellate Division's Opinion is appended to this summary]

Guests at a bachelor party rented a bus and toured nightspots in Schenectady. Among them were a number of off-duty City of Schenectady police officers. Some of the passengers on the bus, including some of the police officers, threw eggs at the occupants of an automobile.

Although a complaint was filed, the complainants wished to remain anonymous. Ultimately they declined to press charges, apparently satisfied with the police officers' payment of the costs associated with the damages arising out of the incident and the police chief's assurance of departmental discipline.

The chief then promised not to reveal the names of any police officers who admitted their involvement in the incident, who agreed to make restitution and who agreed to accept internal  discipline.

Eighteen police officers came forward and were punished, without objection, according to the degree of their involvement. According to the opinion, the punishments imposed ranged from written reprimands to lost vacation days, lost overtime pay, fines and "technical suspensions."

Local newspapers, Schenectady's Daily Gazette and Albany's Times Union, printed articles reporting the incident. The papers also filed a Freedom of Information Law [FOIL] with the chief seeking the identities of the police officers involved and their respective punishments.

The City Records Officer denied the request, citing "the possible breach of confidentiality which may attach to the personnel records of police officers" under Civil Rights Law §50-a,  which protects the personnel records of police officers, firefighters and correction officers from public view if those records are used to evaluate performance. The newspapers appealed but a Supreme Court justice denied the appeal.

In a 3-2 ruling, the Appellate Division panel reversed, directing that the names of the police officers involved and the respective discipline imposed on each be given to the two newspapers.

The Appellate Division decided that the significant issue was whether or not Schenectady satisfied its burden of proving that the requested information was exempt from FOIL disclosure.

According to the decision, all government records are presumptively subject to disclosure unless specifically exempt by statute.

Although Schenectady relied on the Civil Rights Law §50-a exemption, the majority of the appellate panel said  the Court of Appeals limited  this exclusion to FOIL requests made in a context related to litigation [Prisoners' Legal Services of New York v New York State Department of Correctional Services, 73 NY2d 26].

The majority said FOIL requests need not be honored if the court deems it likely that the person requesting the information intends to use it to sue either the employer or the employee for damages. Clearly, the newspapers did not seek to do this; they merely wanted to print the information.

Two of the five judges dissented. They said that "[i]n light of the policy enunciated by the Legislature in enacting this statute, coupled with the Court of Appeals' interpretation thereof, we are constrained to conclude that disclosure is prohibited." Accordingly, they said that they would "affirm the judgment of Supreme Court which denied disclosure of the requested materials under FOIL pursuant to Civil Rights Law §50-a...."

N.B.  In two other cases the Appellate Division, Third Department, found "an obvious litigation purpose for the information being sought under FOIL." See Ruberti, Girvin & Ferlazzo v New York State Division of State Police (218 AD2d 494) and Ferrara v Superintendent, New York State Division of State Police, (235 AD2d 874). One case involved alleged gender-based discrimination and the other involved alleged police misconduct in making an arrest.

The full opinion follows:

Daily Gazette v. City of Schenectady

 SPAIN, J. -- In the early morning hours of May 11, 1997, 18 off-duty police officers employed by respondent City of Schenectady in Schenectady County were among the passengers on a bus chartered for a police officer's bachelor party. During their tour of local night spots a number of passengers on the bus, including some of the Schenectady policemen, got into a fracas with the occupants of an automobile during which eggs were thrown from the bus at the automobile and at one of the occupants of the automobile. Subsequently, the persons in the automobile complained to the Schenectady Police Department; however, requesting that their identities remain anonymous, they indicated that they did not want to press formal charges. Apparently they were satisfied with the police officers' payment of the costs associated with the damages arising out of the incident and the Police Chief's assurance of departmental discipline. Thereafter, the Police Chief promised not to reveal the names of any police officers who admitted their involvement in the incident, agreed to make restitution and accept departmental discipline. Eventually, all 18 police officers came forward and were punished, without objection, according to the degree of their involvement; the punishments reportedly range from written reprimands to lost vacation days, lost overtime pay, fines and technical suspensions. Petitioners, Daily Gazette Company (hereinafter The Gazette) and Capital Newspapers Division of the Hearst Corporation (hereinafter The Times Union), published newspaper articles reporting the incident. In addition, they each filed a Freedom of Information Law (Public Officers Law art 6) (hereinafter FOIL) request with the Police Chief ultimately seeking only the identities of the police officers involved and their respective punishments.

 On May 28, 1997, respondent Mayor of Schenectady issued a press release regarding the FOIL requests. The release stated that although the Mayor's personal inclination was to disclose the police officers' names, he chose not to do so at such time due to the confidentiality claim being raised by the Schenectady Police Benevolent Association (hereinafter PBA), the police officers' union. The next day, deeming the FOIL requests to have been formally filed, respondent City Records Officer denied them citing, inter alia, "the possible breach of confidentiality which may attach to the personnel records of police officers under [Civil Rights Law §50-a]". Petitioners each appealed this decision to the Mayor (see, Public Officers Law §89 [4] [a]), who denied the appeals on the basis of, inter alia, Civil Rights Law §50-a.

 Petitioners then commenced the instant CPLR article 78 proceeding seeking a writ of prohibition and mandamus vacating and prohibiting enforcement of the decisions by the City Records Officer and the Mayor (see, Public Officers Law §89 [4] [b]), as well as seeking counsel fees and costs (see, Public Officers Law §89 [4] [c]). In part, petitioners relied on an advisory opinion they each requested from the State Committee on Open Government (hereinafter the Committee) (see, Public Officers Law §89 [1] [a], [b] [ii]), which recommended FOIL disclosure of the police officers' identities and the penalties imposed. Supreme Court granted petitioners' motion to consolidate and join the proceedings and determined, inter alia, that the requested information was afforded specific protection from disclosure under FOIL by Civil Rights Law §50-a (see, Public Officers Law §87 [2] [a]). In denying the petitions, Supreme Court cited the Court of Appeals' decision in Matter of Prisoners' Legal Servs. of N.Y. v. New York State Dept. of Correctional Servs. (73 NY2d 26) as its basis for holding that courts were "powerless" to change the "almost impenetrable cloak of secrecy" afforded police officers by Civil Rights Law §50-a. Petitioners appeal.1

 The question on review distills to whether Supreme Court appropriately found respondents to have satisfied their burden of proving that the requested information was exempt from FOIL disclosure (see, Matter of M. Farbman & Sons v. New York City Health & Hosps. Corp., 62 NY2d 75, 82; Matter of Capital Newspapers Div. of Hearst Corp. v. Burns, 109 AD2d 92, 93, affd 67 NY2d 562; see also, Public Officers Law §89 [4] [b]). In our view, Supreme Court erred in misconstruing the holding in Prisoners' Legal Servs. and, therefore, we reverse. Government records are presumptively subject to disclosure unless, inter alia, specifically exempt by statute (Public Officers Law §87 [2] [a]; see, Matter of Hanig v. State of New York Dept. of Motor Vehicles, 79 NY2d 106, 109; Matter of Scott, Sardano & Pomeranz v. Records Access Officer of City of Syracuse, 65 NY2d 294, 296-297) and exemptions under FOIL "are to be narrowly construed" (Capital Newspapers Div. of Hearst Corp. v. Burns, 67 NY2d 562, 566; see, Matter of Fink v. Lefkowitz, 47 NY2d 567, 571). The agency denying access must demonstrate "that the requested material falls squarely within a FOIL exemption by articulating a particularized and specific justification" (Capital Newspapers Div. of Hearst Corp. v. Burns, supra, at 566; see, Public Officers Law §89 [4] [b]; Matter of Russo v. Nassau County Community Coll., 81 NY2d 690, 700; Matter of Fink v. Lefkowitz, supra, at 571). The statutory exemption under FOIL which respondents relied upon provides, in pertinent part, that personnel records of police officers, correction officers and firefighters "used to evaluate performance toward continued employment or promotion shall be considered confidential and not subject to inspection or review" (Civil Rights Law §50-a [1]).

 In the instant case, Supreme Court cites the Court of Appeals' ruling in Prisoners' Legal Servs. and concludes as follows:

 While it appears to this Court that police officers, firefighters and correction officers, unlike other public employees, are afforded an almost impenetrable cloak of secrecy by §50-a, if the information related to on or off the job misconduct is placed in their personnel records, the Courts are powerless to change it. If change is appropriate, it is the exclusive province of the State Legislature.

 At the time of its decision in Prisoners' Legal Servs., the Court of Appeals had previously explored the legislative history behind Civil Rights Law §50-a and held that the statute does not create a blanket exemption from FOIL disclosure to police personnel records; rather, the court found that it was enacted to prevent "vexatious" use of the contents of such records in the context of civil or criminal litigation (Matter of Capital Newspapers Div. of Hearst Corp. v. Burns, supra, at 569).

 Here, petitioners do not appear to seriously challenge the fact that the information sought is contained in the police officers' personnel records (see, Civil Rights Law §50-a [1]);2 nor do they challenge the fact that the information they seek could be used to evaluate the performance of the police officers for employment and promotion purposes (see, Civil Rights Law §50-a [1]). They argue, however, that as long as their FOIL requests have not been made in the context of litigation or potential litigation the requested information is not exempt from disclosure under Civil Rights Law §50-a. This litigation/nonlitigation distinction was recognized and indeed endorsed in Prisoners' Legal Servs. where, although Civil Rights Law §50-a was invoked to support the denial of disclosure, the grievance records at issue were being sought by a prisoners' advocacy organization whose role was to investigate and likely pursue legal proceedings against errant correction officers.

 Clearly, the purpose of the information request in Prisoners' Legal Servs. was potentially adversarial or litigious in nature. However, the Court of Appeals was careful to contrast that scenario with one where, as here and in Matter of Capital Newspapers Div. of Hearst Corp. v. Burns (supra), the media is merely seeking the information to report as news and not with even a remote view toward any litigation. In making a key distinction between the request in Capital Newspapers and the FOIL request before it in Prisoners' Legal Services, the Court of Appeals, referring to its holding in Capital Newspapers, states:

 we by no means suggested that the application of [§ 50-a] was limited to an ongoing litigation. Rather, we simply recognized that the legislative intent in enacting the [correction officer] amendment to §50-a was to prevent release of sensitive personnel records that could be used in litigation for the purpose of harassing or embarrassing correction officers records having remote or no such potential use, like those sought in Capital Newspapers, fall outside the scope of the statute (Matter of Prisoners' Legal Servs. of N.Y. v. New York State Dept. of Correctional Servs., supra, at 33 [citation omitted]).

 The use or potential use in litigation remains a critical factor in assessing Civil Rights Law §50-a protection as evidenced in other cases ordering disclosure. For example, in a pre-Prisoners' Legal Servs. decision, this court permitted access to a disciplinary determination action against a police investigator, citing Capital Newspapers and stating that the protection afforded under Civil Rights Law §50-a "is only intended to prevent access to police personnel records for purposes of harassment of the police on cross-examination or otherwise in the context of a civil or criminal action" (Matter of Scaccia v. New York State Div. of State Police, 138 AD2d 50, 54). Similarly, a post-Prisoners' Legal Servs. decision in Supreme Court, Oneida County, ordered disclosure of the final determination of a firefighter's suspension hearing to a local newspaper, citing Capital Newspapers and specifically rejecting the notion that Civil Rights Law §50-a (1) prohibited its release, concluding:

 the court finds that in this non-litigation context, [petitioner newspaper] is entitled to disclosure of the final determination in this fireman's suspension hearing, without disclosing all the supporting allegations, complaints or witness names (Matter of Rome Sentinel Co. v. City of Rome, 145 Misc 2d 183, 186).

 (See, Powhida v. City of Albany, 147 AD2d 236, 238-239.)

 Notably, the litigation/nonlitigation distinction is no less prominent in the two recent decisions of this court which Supreme Court, in the instant case, also relied upon in support of its denial of access. In each of those cases, there was an obvious litigation purpose for the information being sought under FOIL. In Matter of Ruberti, Girvin & Ferlazzo v. New York State Div. of State Police (218 AD2d 494), a law firm representing female members of the State Police sought materials related to police promotional processes with an eye toward pursuing gender-based discrimination lawsuits on behalf of its clients. Acknowledging that FOIL requests for records having remote or no such potential use will fall outside the scope of Civil Rights Law §50-a, we observed that the law firm's FOIL request justified the invocation of §50-a "[a]s the information sought plainly relates to the claims of gender discrimination made by petitioner's clients, it cannot be said that the requested documents would have little or no potential use in any lawsuit commenced against respondent or any of its members on that ground" (Matter of Ruberti, Girvin & Ferlazzo v. New York State Div. of State Police, 218 AD2d 494, 498). Similarly, the obvious prospect of litigation or adversarial use of FOIL information was a key factor in upholding the denial of access under Civil Rights Law §50-a where an inmate at a correctional facility sought information under FOIL for records concerning "an internal investigation conducted by the State Police into alleged police misconduct related to petitioner's arrest" (Matter of Ferrara v. Superintendent, New York State Police, 235 AD2d 874, 875, lv denied 90 NY2d 829).

 In our view, Prisoners's Legal Servs. did not broaden the scope of the Civil Rights Law § 50-a exemption to include FOIL requests made in a context unrelated to litigation. Accordingly, respondents have failed to demonstrate that the information requested by petitioners comes squarely within the Civil Rights Law § 50-a FOIL exemption because they have not established, in any convincing way, that the information sought would be used in existing or potential litigation. The names of the police officers involved and the respective discipline imposed must be released to petitioners.

 As to the issue of counsel fees and other litigation costs reasonably incurred, this matter should be remitted to Supreme Court for further proceedings pursuant to Public Officers Law §89 (4) (c) (see, Powhida v. City of Albany, 147 AD2d 236, 238-239, supra).

 In light of our foregoing decision, we need not address petitioners' remaining contentions.

 Mercure, J.P., and White, J., concur.

 PETERS, J. (dissenting) -- Since the majority's authorization for disclosure appears solely premised on the "context" in which the request is made and whether, emanating from that context, there is a threat of litigation or potential litigation, we believe that it has misconstrued Matter of Prisoners' Legal Servs. of N.Y. v. New York State Dept. of Correctional Servs. (73 NY2d 26) and incorrectly ordered disclosure.

 Throughout the Court of Appeals decision in Prisoners' Legal Services, it is emphasized that "[d]ocuments pertaining to misconduct or rules violations are the very sort of record which, the legislative history reveals, was intended to be kept confidential" (id., at 31). In discussing the underpinnings of this legislation, the court noted the litigation/nonlitigation distinction and explained that "records may be protected from disclosure under [Civil Rights Law] § 50-a, even though not sought for actual litigation" (id., at 32). If pending litigation were necessary before receiving statutory protection, the court countered that "the statute could be circumvented by the simple expedient of making FOIL requests for the records first and bringing the lawsuit later. The Legislature could not have intended to enact a statute that could so easily be rendered ineffectual" (id., at 33).

 Finding later interpretation of its decision in Matter of Capital Newspapers Div. of Hearst Corp. v. Burns (67 NY2d 562) misguided, the Court of Appeals clarified that the request made therein by a newspaper for FOIL access to attendance and sick leave records of correction officers was permitted because those materials "did not constitute the kind of personnel records protected under § 50-a" (Matter of Prisoners' Legal Servs. of N.Y. v. New York State Dept. of Correctional Servs., supra, at 33), not because statutory protection was limited to pending litigation. It was because these records had no remote or even potential use in litigation for the purposes of harassment or embarrassment of the correction officers at issue (see, Matter of Capital Newspapers Div. of Hearst Corp. v. Burns, supra, at 568-569) that disclosure was permitted.

 For these reasons, we disagree with the majority's construction of Prisoners' Legal Servs. We find that the Court of Appeals, in construing Civil Rights Law §50-a (1), held that the statute included, within its scope, all sensitive personnel documents that could have potential use in litigation for the purpose of harassment or embarrassment, regardless of the context in which the request was made. To conclude that the documents sought here fall outside of that scope based solely upon the litigation/nonlitigation context in which the request was made lifts the cloak of secrecy afforded by statute and usurps legislative function.

 In light of the policy enunciated by the Legislature in enacting this statute, coupled with the Court of Appeals' interpretation thereof, we are constrained to conclude that disclosure is prohibited. Accordingly, we would affirm the judgment of Supreme Court which denied disclosure of the requested materials under FOIL pursuant to Civil Rights Law §50-a (see, Public Officers Law §87 [2] [a]).

 Carpinello, J., concurs.

 ORDERED that the judgment is modified, on the law, with one bill of costs to petitioners, by partially granting the petition and directing respondents to release to petitioners the names of the police officers involved in the incident of May 11, 1997 and the respective discipline imposed; matter remitted to the Supreme Court for further proceedings not inconsistent with this court's decision; and, as so modified, affirmed.

 ----------------------

 Notes

 (1) The PBA was granted permission by this court to file and has filed an amicus curiae brief on behalf of the 18 police officers.

 (2) According to Prisoners' Legal Servs., the kind of information sought herein comes under the broad definition of "personnel records." Notably, the central issue in Prisoners' Legal Servs. was whether inmate grievances against correction officers and the administrative decisions relating thereto are considered personnel records within the meaning of Civil Rights Law §50-a (1), even when such documents may not have been stored within a correction officer's personnel file folder. The court held that whether a document qualifies as a personnel record "depends upon its nature and its use in evaluating an officer's performance -- not its physical location (Matter of Prisoners' Legal Servs. of N.Y. v. New York State Dept. of Correctional Servs., supra, at 32).

Domestic partners

Domestic partners
Forey v Bell Atlantic Corp., 56 F. Supp. 2d 327

If your organization provides dependent health insurance coverage and other benefits traditionally available to the spouse of an employee to an employee's same-sex domestic partners, you probably should plan to follow the progress of the Forey case.

Paul Forey is suing Bell Atlantic in a New York federal district court contending that the company violated Title VII and the Equal Pay Act when it refused to enroll his female domestic partner as a dependent in its group health insurance plan although it allows its employees to enroll their same-sex domestic partner for dependent health insurance coverage and dental and vision care benefits.

In addition, Forey complains that Bell Atlantic treats an employee's same-sex domestic partner the same as the spouse of an employee for the purposes of life insurance, leaves of absence, "beneficiary designation," and other fringe benefits while denying such status to the employee's domestic partner in a heterosexual relationship.

According to Forey, "all things being equal, if [I] were female [I] would be entitled to claim [my] domestic partner as an eligible dependent under the benefits plan." Accordingly, Forey charges Bell Atlantic with making its decision solely on his gender, which he contends is prohibited by Title VII and other federal and state laws.

Age limitations for appointment as a police officer


Age limitations for appointment as a police officer
Peterson v City of NY, 1998 U.S. Dist. Lexis 7082

Chapter 37 of the Laws of 1994 deleted the maximum age requirement for initial appointment as a police officer by political subdivisions of the State other than the City of New York. However, New York City's Administrative Code §14-109, disqualified anyone over age 35 for initial appointment as a police officer.

Eugene Peterson, Jr. sued the city after his name was removed from the eligible list for appointment for police officer. Peterson was 38 years old when he took the police officer examination. He sued, contending that this action constituted a denial of equal protection within the meaning of the Fourteenth Amendment.

Federal district court Judge Lawrence M. McKenna rejected Peterson's petition, holding that New York City's Code provision disqualifying applicants age 35 and over for appointment as a police officer is constitutional because it is rationally related to a legitimate state purpose -- ensuring a capable police force. Judge McKenna commented that in Doyle v Suffolk County, 786 F2d 523, the Second Circuit U.S. Court of Appeals upheld New York State's former prohibition against initially appointing persons who were age 29 or over as police officers. In Doyle, the Circuit Court said that "it is not irrational for the New York legislature to believe that physical abilities to perform the duties of police officer decline beyond age 29."

However, five police officer candidates over age 35 were appointed to police officer positions as a result of the reduction of their chronological age in recognition of their military service. This also passed court muster. Judge McKenna held that "age adjustments" pursuant to §243 of the Military Law, which allows individuals to reduce their chronological age by up to six years for military service, was constitutional.

Overtime payment for K-9 handler and other Fair Labor Standards Act decisions


Overtime payment for K-9 handler and other Fair Labor Standards Act decisions

Should police dog handlers be paid overtime for the hours they spend caring for the animals while off-duty? The answer lies in a highly technical controversy involving Congress' ability to regulate behavior of localities and states and "States' Rights."

 The federal law that guarantees overtime for workers is the Fair Labor Standards Act [FLSA]. Although states and localities have traditionally adhered to FLSA provisions, questions have been raised about whether or not states and localities are bound by the law.

The Seventh Circuit U.S. Court of Appeals in Chicago has ruled that FLSA does not appear enforceable by the federal judiciary because federal courts lack jurisdiction to consider such matters [Mueller v Thompson, CA7, 94-3262]. However, the Seventh Circuit said it is possible for a state to be subject to FLSA requirements if it "knowingly" adopts the FLSA as state law.

Furthermore, past practice may make an employer subject to the FLSA. Such a rationale appears to underlie the ruling in the Holzapfel case by the Second Circuit Court of Appeals in New York.

The case arose when Joseph Holzapfel, a former Town of Newburgh K-9 police officer, sued the Town seeking payment for the "44-45 off-duty hours" he spent each week caring for his animal from 1991 until he left the force in 1995. [Holzapfel v Town of Newburgh, CA2, 97-7114]

According to the ruling, the Newburgh had a policy of paying its K-9 officers two hours of overtime each week. While Holzapfel was told that he would be paid only for two hours of overtime, the Court found that he was never told to limit his off-duty work with his and other K-9 animals.

Commenting that the Town's Chief of Police had "actual as well as constructive knowledge that [Holzapfel] worked more than two overtime hours each week," the Second Circuit ruled that a jury that had ruled against Holzapfel should have been instructed as to this element of the case.

Presumably the court deemed the town to have waived its 11th Amendment immunity for the purposes of bringing a FLSA claim in federal court by adopting a "standard policy" of paying two hours of overtime to K-9 officers, thereby becoming subject to all of the provisions of the FLSA.

The unanimous opinion, authored by Circuit Judge Richard J. Cardamone, suggested that the question of compensation for off-duty work caring for K-9 animals should be negotiated to set the parameters of their off-duty responsibilities caring for the animals.

Other FLSA cases

Another case brought under FLSA, Spadaro v Town of Guilderland, was settled out-of-court when the Town agreed to pay police officer Dean Spadaro $34,000 for the time he spent caring for a police dog off-duty.

EDITOR'S NOTE:  The Internal Revenue Service has indicated that police officers assigned to handle K-9 animals do not have to  include any reimbursements for the cost of feeding the animals received from their employer in preparing their personnel income tax return. Such reimbursement are considered a "working condition fringe benefit" by IRS since feeding the animals is a "business necessity." As the officers would be entitled to deduct the cost of the food fed to the animals as a business expense if the employer did not reimburse them for such expenses, they can exclude any such reimbursements from "income" for the purposes of determining their personal income tax liability.

Another case decided by the Second Circuit, Rogers v City of Troy, considered a different FLSA issue: changing the payroll procedure to institute a "lag payroll."

City of Troy police officers and former police officers sued, claiming that the City  violated FLSA's minimum wage provisions when it gradually changed the pay schedule of its police officers in order to implement a "lagged biweekly payroll" in place its "traditional weekly payroll" procedure.

The city said that the change was needed "to increase the efficiency of its payroll operation." At the time Troy had two payroll modes in effect. The payroll for "forty hour" civilian employees had been changed to a lag payroll procedure but no similar change for police officers was made when the civilian employees' payroll mode was changed.

The federal district court ruled that an employer may switch to a lag payroll without violating the FLSA. The Circuit Court agreed, but said that such a change had to be made in good faith. As a result it vacated the lower court's ruling and remanded the matter to allow the district court to consider the issue of "good faith."

What test is to be applied in determining "good faith?" According to the Circuit Court, it must be shown that the employer made the change for:

(a) a valid business purpose;
(b) there is no unreasonable delay in the payment of wages;
(c) the change is to be permanent; and
(d) the change does not result in the violation of any substantive wage and hour requirements of the FLSA.

However there was another aspect of the case to consider. Troy's attempt to change to a lag payroll was also the subject of a grievance filed by the Troy PBA.

The arbitrator ruled that implementation of the lagged biweekly pay schedule had violated the Taylor Law agreement then in place and directed the City to reimburse the officers for one week's lagged wages and to return to the prior weekly unlagged pay schedule.

Although Troy challenged the arbitrator's ruling, it was upheld by state courts [In re the Arbitration Between Troy Police Benevolent & Protective Association, Inc., 223 AD2 995]

These rulings teach us that:

1.An employer may change its payroll procedure without offending the Fair Labor Standards Act provided the change is permanent and made in good faith for a legitimate business purpose and that the resulting "lag" is not unreasonably long; and

2.An employer should make certain that the proposed change neither violates the provisions of the controlling Taylor Law agreement nor constitutes a violation of a "past practice" or  a unilateral change of a mandatory subject of negotiations.

The full text of the decision follows:

Rogers v City of Troy

The plaintiffs appeal from a judgment of the United States District Court for the Northern District of New York (Thomas J. McAvoy, Chief Judge) dismissing their complaint for failure to state a claim under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §201, et seq. The issue on this appeal is whether an employer can, without violating the FLSA, pay its employees later than the contractually agreed upon payday, if that late payment is due to the employer's good faith effort to make a permanent change in its pay schedule. We hold that an employer can make such a change without violating the FLSA, but that the plaintiffs' claim should not have been dismissed on the pleadings. Accordingly, we vacate and remand.

   I. Background

The plaintiffs are police officers and former police officers employed by the City of Troy. They started this action in December 1994, alleging that the City violated the minimum wage provisions of the FLSA when, during the months of October, November, and December 1994, it gradually changed the pay schedule of its employees and implemented a lagged biweekly payroll in place of the weekly one previously used. The City stated that it altered the pay schedule in order to increase the efficiency of its payroll operation.

Under the old pay system, the City's employees had been paid every Friday, but in accordance with two disparate systems of payroll accounting. The pay schedule for "forty hour" civilian employees had been lagged -- i.e., on any given Friday, they were paid for work performed in the week prior to the one that was just ending. The pay schedule for police officers (and certain other employees, such as fire fighters) instead was not significantly lagged -- i.e., on any given Friday, the officers were paid for the work they had performed in the week that was nearing completion.

The City decided that having two separate pay systems was inefficient. In addition, the City felt that the payroll staff, which had to prepare the paychecks for non-lagged workers well before the relevant pay period was over, spent too much time estimating the number of hours that non-lagged employees would work in the relevant week, and then spent yet more time -- during the following week -- adjusting the paychecks to reflect the hours that had actually been worked in the earlier week. Finally, the City determined that it would save money by computing and issuing paychecks once every two weeks, rather than once every week. As a result of these administrative concerns, the City claims, it decided to put all employees on a biweekly, lagged payroll.

To implement the lag, the plaintiffs' pay was delayed by one day each week for five weeks. Once the week-long lag had been phased in, the switch to the biweekly pay system was made. The plaintiffs claim that they are entitled to a week's worth of pay in liquidated damages for each of the five weeks in which they were paid one additional day late while the new pay schedule was being phased in.

At approximately the same time that the officers filed this federal lawsuit, their union, the Troy Police Benevolent and Protective Association, filed for arbitration pursuant to the contract between the union and the City. In that proceeding, the union argued that, under their contract, the officers were entitled to be paid certain wages for the period between January 1, 1994, and December 31, 1994, and that, as a result of the new pay schedule, the officers were not paid on time for one week of work performed in 1994. In other words, they alleged that by December 31, 1994, they had actually received only 51/52 of the annual salary provided for in their contract. This, they contended, violated that agreement. The union also asserted that the City had a contractual obligation to pay the officers on a weekly, unlagged schedule. The union acknowledged that the contract was silent both as to the length of the pay period and as to the frequency of paychecks. But it contended that the City's longstanding weekly payment of unlagged paychecks -- every Friday over an eighteen year period -- constituted a past practice that was strong enough to rise to the status of a contractual right.

The arbitrator accepted the union's arguments and concluded that the implementation of the lagged biweekly pay schedule had violated the labor contract. The arbitrator therefore ordered the City to reimburse the officers for one week's lagged wages and to return to the prior weekly unlagged pay schedule. The arbitrator's order was subsequently affirmed by the state courts. See In re Arbitration Between Troy Police Benevolent & Protective Ass'n, Inc., 223 A.D.2d 995, 996, 636 N.Y.S.2d 499, 501 (App. Div. 1996).

In December 1996, the district court, pursuant to Federal Rule of Civil Procedure 12(b)(6), dismissed the plaintiffs' FLSA complaint for failure to state a claim. See Rogers v. City of Troy, 949 F. Supp. 118, 126 (N.D.N.Y. 1996). The court held that the employer's failure to pay its employees promptly on their regular payday did not in this case violate the FLSA since the late payment occurred as a result of the employer's change of the regular payday, which was intended to be permanent and was not designed to evade the substantive wage and hour requirements of the Act. The officers appealed.

   II. Discussion

The FLSA provides that "[e]very employer shall pay to each of his employees . . . who in any workweek is engaged in commerce or in the production of goods for commerce . . . not less than the minimum wage." 29 U.S.C. §206(b). The Act does not specify when this wage must be paid. The officers contend that it must be paid on the contractual pay date. The City, while acknowledging that wages must be paid in a timely fashion, argues that the FLSA is not violated when the pay date is permanently changed for legitimate business reasons.

We agree with the district court, and hold that, although the FLSA does include a prompt payment requirement, that requirement is not violated when an employer changes its pay schedule so long as this change: (a) is made for a legitimate business purpose; (b) does not result in an unreasonably long delay in payment; (c) is intended to be permanent; and (d) does not result in violation of the substantive minimum wage or overtime provisions of the FLSA. But since the plaintiffs' complaint alleges facts that, if proven true, would show that the City of Troy's actions did not satisfy this test, we hold that the complaint should not have been dismissed pursuant to Rule 12(b)(6).

A. Prior Cases

Although the FLSA does not explicitly require that wages be paid on time, the courts have long interpreted the statute to include a prompt payment requirement. See, e.g., United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 491 (2d Cir. 1960) ("While the FLSA does not expressly set forth a requirement of prompt payment, such a requirement is clearly established by the authorities . . . ."). More than fifty years ago, the Supreme Court explained that the Act's liquidated damages provision:

constitutes a Congressional recognition that failure to pay the statutory minimum on time may be so detrimental to maintenance of the minimum standard of living 'necessary for health, efficiency and general well-being of workers' and to the free flow of commerce, that double payment must be made in the event of delay in order to insure restoration of the worker to that minimum standard of well-being.

[Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 707 (1945) (footnote omitted).(2)

Brooklyn Savings Bank concerned a night watchman, Mr. O'Neil, who was employed by Brooklyn Savings Bank from November 1938 until August 1940. During that time, O'Neil frequently worked overtime, but was never paid an overtime wage as required by the FLSA. In November 1942 -- more than two years after O'Neil had left the Bank's service -- the Bank computed the overtime wage that he was due and offered him a check for that amount in exchange for his signing a release of his rights under the FLSA. See id. at 700. Under the Act, he would have been entitled to liquidated damages in addition to the overdue wages.(3) O'Neil accepted the check and signed the waiver; later, however, he sued and the Bank raised the waiver as a defense. See id.

The Court held that the waiver was invalid, concluding that "the same policy considerations which forbid waiver of basic minimum and overtime wages under the Act also prohibit waiver of the employee's right to liquidated damages." Id. at 707. Accordingly, the Court held that O'Neil was entitled to statutory damages despite the fact that he had been paid his full wages prior to instituting his lawsuit.

Subsequent courts have interpreted Brooklyn Savings Bank to mean that "the FLSA requires the employer to pay on time." Calderon v. Witvoet, 999 F.2d 1101, 1107 (7th Cir. 1993). In Calderon, the defendants operated a farm and employed seasonal farmhands. These farmhands received less than the minimum wage in each pay check. Those who stayed until the end of the season were paid a "bonus" to bring their total wages up to the minimum hourly rate specified by the FLSA. The plaintiffs in Calderon alleged that workers who left before the season was over did not receive their full wages. See id. The employer contended that the employees had agreed to this scheme, and that the withholding was actually of service to them because it acted as a savings account. The court held that this practice violated the Act, stating that "[i]f the FLSA requires timely payment in cash or a cash equivalent such as a check, and this requirement may not be varied by agreement, it follows that even the workers' enthusiastic assent to deferred payment -- a form of employer-held savings account -- is ineffectual." Id.

Similarly, in Klinghoffer Brothers Realty, the Second Circuit held that the FLSA was violated in a case in which an employer required four employees to perform overtime work. The employees were only to be paid for this extra work when the company emerged from bankruptcy proceedings. See Klinghoffer Bros. Realty Corp., 285 F.2d at 489-90. We noted that the employees had nothing more than "a vague understanding that at some indefinite future date . . . they would be taken care of" and that "[a]t the time the present prosecution was commenced they had been unpaid for approximately a year." Id. at 491. We concluded that "[s]uch delayed payment does not meet the requirements" of the FLSA. Id.

While these cases are instructive, they arose in fundamentally different circumstances from those in the instant case. The earlier cases all involved substantial delays in payment, and -- more important -- the practices disapproved of resulted in evasions of the minimum wage and overtime provisions of the FLSA.(4) None of them addressed a situation in which an employer has made a permanent change in its payroll schedule for a valid business purpose, which -- both during the transition to the change and after it was in place -- still yielded wages that conformed with the minimum wage and overtime provisions of the Act.

Two governing principles of law that are relevant to the case before us do, however, emerge from these earlier cases. First, it is clear that the FLSA requires wages to be paid in a timely fashion. Second, the cases demonstrate that what constitutes timely payment must be determined by objective standards -- and not solely by reference to the parties' contractual arrangements. Indeed, to link the statutory obligations under the FLSA to the parties' collective bargaining agreement would be contrary to the whole thrust of the statute, which "was not designed to codify or perpetuate [industry] customs and contracts" but "to achieve a uniform national policy" in terms of wages and hours. Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 741 (1981) (internal quotation marks and citation omitted). The FLSA sets a national "floor" in terms of working conditions, in order to protect workers from the substandard wages and excessive hours that might otherwise result from the free market. Parties may, of course, contract for additional rights above those guaranteed by the statute. But the existence of the FLSA does not convert every suit involving the breach of an employment contract into a federal case. Accordingly, while waiver or agreement does not insulate a practice from being held to be a violation of the FLSA, neither does a violation occur simply because a practice breaches a worker's collective bargaining agreement.(5)

B. Agency Interpretation

Because the statute does not explicitly address the prompt payment requirement, let alone the particular twist on it that is before us, we hold that the statute is ambiguous. It is, therefore, appropriate to consider the views of the administrative agency charged with the law's enforcement. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-45 (1984). Two pronouncements from the Department of Labor support our reading of the FLSA.

First, during the course of this litigation, the district director of the Department of Labor's Wage and Hour Division issued an informal opinion letter regarding "the City's conversion from a weekly payroll, paid on Friday of the same week, to a biweekly payroll with a one-week lag." This letter stated that there was "no conflict between the FLSA and [the City's] biweekly payroll plan." While this letter does not have the same force as an agency regulation, or even of a formal opinion letter from the Wage and Hour Administrator, it is nonetheless instructive.

Second, regulations governing the calculation of the "work period" for overtime purposes provide that an employer may change the beginning and ending of the "work period" so long as "the change is intended to be permanent and is not designed to evade the overtime compensation requirements of the Act." 29 C.F.R. §553.224; see also id. §778.105 (same). Admittedly, these regulations refer only to overtime pay, and speak to changes in the "work period." They thus do not directly govern changes in the pay date like those before us. Nevertheless, we believe that, by analogy, they are relevant in determining the proper construction of the statute as it applies to this case.

The regulations recognize that an employer (in the context of overtime) may, for a legitimate business purpose, wish to change its accounting system. They conclude that when such a change is permanent and is not designed to evade the minimum wage, overtime, or prompt payment requirements of the FLSA, the values that the Act is designed to protect -- guaranteeing workers a minimum wage and reasonable hours -- are not offended.(6) They do so in the particular setting of overtime wages. But their underlying reasoning applies just as well to payments of ordinary wages.

C. Application of the Test

To summarize: Whether the prompt payment requirement of the FLSA has been violated must be determined by reference to objective standards. In general, the prompt payment requirement is not violated when an employer changes the pay schedule, provided that the change: (a) is made for a legitimate business reason; (b) does not result in an unreasonable delay in payment; (c) is intended to be permanent; and (d) does not have the effect of evading the FLSA's substantive minimum wage or overtime requirements.

This case comes before us on appeal from the district court's sua sponte dismissal of the plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, which we review de novo. See, e.g., Sykes v. James, 13 F.3d 515, 518-19 (2d Cir. 1993). Like the district court, we are required to accept the material allegations in the complaint as true. Dismissal is not appropriate "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-56 (1957).

In the case before us, it is clear that, even if the facts are as the plaintiffs allege, the change did not have the effect of evading the substantive minimum wage or overtime provisions of the FLSA. But the plaintiffs also assert (1) that the change was not intended to be permanent; (2) that it resulted in an unreasonable delay in payment; and (3) that it was motivated by something other than a legitimate business purpose, namely by the desire to transfer money from the officers' pockets to the city's coffers and to retaliate against the police union for its refusal to make certain concessions in contract negotiations. If the plaintiffs were able to prove these allegations, the city's actions would not satisfy the test outlined above. Accordingly, the case should not have been resolved on a motion to dismiss.

1. Minimum Wage & Overtime Provisions

To understand fully why the substantive wage and hour provisions of the FLSA were not directly violated by the change, it is helpful to examine exactly how the new pay schedule was implemented. The plaintiffs' pay was delayed by one day each week for five weeks. Once the week-long lag had been phased in, the switch to the biweekly pay system was made. In other words, the plaintiffs were paid: On Friday, October 7, for the week ending Saturday, October 8; On Monday, October 17, for the week ending Saturday, October 15; On Tuesday, October 25, for the week ending Saturday, October 22; On Wednesday, November 2, for the week ending Saturday, October 29; On Thursday, November 10, for the week ending Saturday, November 5; On Friday, November 18, for the week ending Saturday, November 12; On Friday, December 2, for the two weeks ending Saturday, November 26; On Friday, December 16, for the two weeks ending Saturday, December 10; On Friday, December 30, for the two weeks ending Saturday, December 24; and so forth on a biweekly basis.

The plaintiffs' claim is that they are entitled to a week's worth of pay in liquidated damages for each of the five weeks during which they were paid one additional day late while the new pay schedule was being phased in. They also seem to allege that, as a result of the change, they were denied a week's pay. Indeed, they contend that "the entire design of the defendants' delayed payment scheme was to evade the obligation to pay plaintiffs for a week's work." The plaintiffs do not, however, claim in this lawsuit that they are entitled to reimbursement and liquidated damages for the week's worth of "lost wages."

This omission seems odd at first, until one realizes that, as the plaintiffs' are surely aware, it is simply not correct to say that a week's wages were skipped. Under their contract, the police officers were entitled to be paid a certain amount for the period between January 1, 1994, and December 31, 1994. Thus, junior officers had the right to receive $25,262.00 during this one-year period. As a result of the lag, the officers received only 51/52 of the figures listed in their contract for 1994 by December 31, 1994. Thus, junior officers would have received only $24,776 each by December 31, 1994, and would not receive the remaining $486 until January 13, 1995. As the arbitrator held, therefore, the officers were denied timely payment of a week's wages that were due to them under their contract.

But there has been no serious suggestion -- let alone any proof -- that a week's payment was permanently skipped. It was only delayed. If, for example, an officer quit work on December 31, 1994, she would be paid for the work done between the end of the last pay period (December 24) and the date of departure (December 31). She would, of course, receive the check up to two weeks later than she would have under the prior schedule (on January 13 rather than on December 30). But she would get her money. Moreover, since the plaintiffs' wages for every work week were greater than the statutory minimum even when the wages were discounted for the delay in payment, each employee would be paid at least the minimum wage for every hour he or she worked. It follows that the new pay schedule did not result in an evasion of the substantive minimum wage or overtime requirements of the FLSA.(7)

2. Other Factors

A pay scheme that does not result in the direct evasion of the substantive minimum wage and overtime provisions of the FLSA may nevertheless violate the statute's implicit prompt payment requirement. The plaintiffs have alleged facts that, if proven true, would establish such a violation in the case before us. The plaintiffs contend that the administrative reasons proffered by the defendants to explain the change were pretextual, and that the real reasons for the change were to collect a week's worth of interest on the withheld wages and to retaliate against the officer's union for refusing to make certain concessions in contract negotiations. In addition, the plaintiffs contend that the change was not intended to be permanent, and that the delay in payment was unreasonably long.(8) On a motion to dismiss pursuant to Rule 12(b)(6), we must accept as true the plaintiffs' allegations. Since it would not be impossible for the plaintiffs to prove these allegations, and if they were proven true, the defendant's actions would violate the FLSA, the complaint should not have been dismissed.

We hold that the FLSA does not prohibit an employer from changing the payday of its employees for a valid business purpose, provided that: (a) the change is made for a legitimate business purpose; (b) there is no unreasonable delay in the payment of wages; (c) the change is intended to be permanent; and (d) the change does not result in the violation of the substantive wage and hour requirements of the Act. In the case before us, the undisputed evidence shows that the change in the City of Troy's pay schedule satisfied part (d) of this test. The plaintiffs have alleged, however, that the remaining factors of the test are not satisfied. While it may be that the plaintiffs can produce no evidence in support of their allegations, we must accept them as true at the 12(b)(6) stage. Accordingly, we reverse the judgment of the district court dismissing the plaintiffs' complaint for failure to state a claim and remand the case for further proceedings consistent with this opinion.

RELEVANT FOOTNOTES:

2. The Court further noted that "[t]he necessity of prompt payment to workers of wages has long been recognized by Congress as well as by state legislatures." Brooklyn Sav. Bank, 324 U.S. at 707 n.20 (citing state and federal statutes other than the FLSA, such as the federal longshoremen's workers' compensation statute, that required payments to be made within a certain time period).

3. At that time, liquidated damages were compulsory under the FLSA. Since 1947, there has been a good faith exception under which employers who reasonably did not believe that their actions violated the FLSA may escape double damages. See 29 U.S.C. §260. That exception has been construed narrowly, however. See, e.g., Reich v. Southern New England Telecomms. Corp., 121 F.3d 58, 71 (2d Cir. 1997).

4. The only case that arguably does not fall within this paradigm is the Ninth Circuit's decision in Biggs v. Wilson, 1 F.3d 1537 (9th Cir. 1993). In Biggs, the court held that the FLSA's prompt payment requirement was violated when the State of California paid its employees two weeks late because of a budgetary impasse in the state legislature. See id. at 1538. Admittedly, the employer in Biggs did not seek to evade the minimum wage and overtime provisions of the FLSA. At the same time, however, the late payment in that case was not part of a permanent change in the pay schedule. Moreover, the change in the pay schedule was not made for a good faith business purpose. Thus, Biggs in no way contradicts the result we reach today. To the extent, however, that there are inconsistencies between our reasoning and the reasoning of the Ninth Circuit in Biggs, we respectfully decline to follow that Circuit's opinion.

5. This  does not mean that the contractual pay date will never be relevant. When an employer breaches its contract by paying its employees late, and such late payment is not due to a permanent change in the pay schedule that satisfies the three-part test outlined in this opinion, the lateness of the payment may obviously be measured not only in relation to how much time had elapsed between when the wages were earned and when they were paid out, but also in relation to the date on which the workers had a contractual right to receive their wages.

6. The requirement that a change be permanent prevents employers from "changing" their pay schedules to delay the payment of wages whenever they are so inclined.

7. Similarly, the plaintiffs only claim damages for the first five weeks during which the new schedule was implemented. They do not claim that they are entitled to liquidated damages for every week that they were paid under the new pay schedule -- every week from December 1994 until the arbitrator ordered the city to switch back to the old pay schedule in June 1995. But during these six months, the plaintiffs were not paid, on time, the wages that were contractually due to them. Were we to accept the plaintiffs' interpretation of the FLSA, it would seem that they would be entitled to liquidated damages for each of these weeks. This is so because in the plaintiffs' view, the FLSA is violated whenever wages are not paid on the contractual pay date. And the right to liquidated damages cannot be waived by the employee. See Brooklyn Sav. Bank, 324 U.S. at 707. Once again, the plaintiffs' own failure to argue that they are entitled to double wages for the whole six month period during which they were paid their full wages one week or two weeks late, suggests that they themselves are not convinced by the logic of the position they maintain. In fact, to grant double payments for that whole time would be absurd.

8. We note that a week's delay in the circumstances of this case would, as a matter of law, not be unreasonably long, at least in the absence of evidence either that the change was not designed to be permanent or that it was made for improper motives.

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