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November 15, 2010
Retirement benefits based on only an employee’s regular salary and termination pay or other compensation paid in anticipation of retirement excluded
Davies v NYS LPFRS, 259 AD2d 912, motion for leave to appeal denied, 93 NY2d 810
A Taylor Law contract negotiated by the City of Corning and its police officers allowed unit members to elect to participate in a “senior officer” program. This program permitted police officers electing to participate to give up 20 percent of their accumulated sick leave credits in exchange for a salary increase equal to 30 percent of the value of his or her remaining sick leave accruals. This increased hourly rate applied to a participant’s base salaries, overtime credits and holiday pay.
The Local Police and Fireman Retirement System [LPFRS] subsequently advised retired participants of the “senior officer” program that the increase in their base salaries resulting from their participation in the program should not have been included in determining their “final average salary” for purposes of calculating their retirement allowance.
As a result, the retirement allowances of such retired officers were recalculated and reduced. LPFRS than made arrangements to recoup the overpayments that it had made to such retirees. Terrance Davies appealed this ruling by LPFRS to the Comptroller seeking reinstatement of their initial retirement benefit.
The Comptroller denied their appeal, concluding that Corning’s senior officer program “was nothing more than an attempt to circumvent the prohibition contained in Retirement and Social Security Law Section 431.” Section 431, said the Comptroller, prohibits the Retirement System from using accumulated sick leave credits in calculating an applicant’s final average salary.
Unhappy with this ruling, Davies, together with other retirees affected by the Comptroller’s decision filed an Article 78 [Article 78, Civil Practice Law and Rules] seeking reversal of the Comptroller’s determination and an order reinstating their former level of retirement benefits.
The Appellate Division commenced its analysis of Davies’ appeal by commenting that “it is well settled that the Comptroller is vested with exclusive authority to determine applications for retirement benefits and such determination, if supported by substantial evidence, must be upheld. Based upon its review of the record as a whole, the panel said that “we cannot say that such determination is not supported by substantial evidence.”
The decision noted that in Tooley v McCall, 676 NY2d 259 the Appellate Division ruled that, “retirement benefits are to be computed on the basis of an employee’s regular salary and not on any kind of termination pay or other form of additional compensation paid in anticipation of retirement.”
The court rejected Davies’ argument that the “senior officer” program did not violate Section 431 because the participants had not received a lump-sum payment of accumulated sick leave credits.
The Appellate Division said that such an argument “misses the mark.” In determining what constitutes termination pay or compensation paid in anticipation of retirement, the panel said that it “must look to the substance of the transaction and not to what the parties may label it.” Concluding, as did the Comptroller, that the senior officer program was designed to circumvent the provisions of Retirement and Social Security Law Section 431, the Appellate Division dismissed the appeal.
The clear lesson here is that courts will not allow parties to obtain a benefit otherwise prohibited by law by including the benefit in a collective bargaining agreement negotiated pursuant to the Taylor Law.
One issued not addressed in the opinion was whether the election to participate in the “senior officer” program had an adverse impact on the benefits otherwise available to participants as a result of the Comptroller’s determination and, if so, what remedy, if any, the retired police officers had available to them.
Public Personnel Law E-books
The Discipline Book - A concise guide to disciplinary actions involving public employees in New York State set out in a 700 page e-book. For more information click on http://booklocker.com/books/5215.html
A Reasonable Disciplinary Penalty Under the Circumstances - A 442-page e-book focusing on determining an appropriate disciplinary penalty to be imposed on an employee in the public service in instances where the employee has been found guilty of misconduct or incompetence. Now available in two formats - as a large, paperback print edition and as an e-book. For more information click on
The Layoff, Preferred List and Reinstatement Manual - A 645 page e-book reviewing the relevant laws, rules and regulations, and selected court and administrative decisions. For more information click on http://booklocker.com/books/5216.html
General Municipal Law §§207-a and 207-c - Disability Leave for fire, police and other public sector personnel - A 1098 page e-book focusing on administering General Municipal Law Sections 207-a/207-c and providing benefits thereunder. For more information click on
SELECTED REFERENCES and BLOGS
- A Handbook addressing disciplining public employees
- A Handbook focusing on imposing reasonable disciplinary penalties
- A Handbook focusing on layoff and reinstatement
- A Handbook on Disability Benefits for public employees
- A sample personnel handbook
- Blogging Civil Rights Law
- Blogging Constitutional Law
- Blogging Disability Law
- Blogging Education Law
- Blogging Human Rights Law
- Blogging Legal Information
- Blogging Military Law
- Blogging public libraries
- Challenging Adverse Personnel Decisions
- COVID-19 - New York State maps and data
- Delaware Employment Law Blog
- Gotham schools newsroom - A NYC school news blog
- New York City ERS blog - by John Murphy
- NY Municipalities - NYMUNIBLOG
- St. Lawrence County Civil Service Web Site
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