Friday, January 06, 2012

Unpaid employer's retirement contributions for its employees plus accrued interest must be paid to the NYS Employees’ Retirement System

Unpaid employer's retirement contributions for its employees plus accrued interest must be paid to the NYS Employees’ Retirement System
DiNapoli v Town of New Scotland, 2011 NY Slip Op 09247, Appellate Division, Third Department

When Walter Myers, then an employee of the Town of New Scotland, applied for service retirement benefits from the Retirement System [ERS], ERS discovered that New Scotland had not paid certain employer contributions due the System on behalf of Myers for the period September 1, 1972 through March 31, 1973.*

ERS sent the Town its annual invoice determination for employer contributions in which included a charge in the amount of $10,310 for "prior years adjustment," reflecting the cost of Myers' service credit for the disputed period, plus interest. New Scotland declined to pay the “prior years adjustment” and ultimately ERS sued the Town to recover the amount it alleged it was due pursuant to Retirement and Social Security Law §17(e).

Supreme Court ruled that ERS’ claim was subject to the six-year Statute of Limitations set out in CPLR §213. It then granted ERS’ motion for summary judgment finding that its petition demanding the “prior years adjustment” was timely filed. The Appellate Division agreed with Supreme Court that the six-year Statute of Limitations controlled and that whether ERS’ action was timely “turns on when the cause of action against [the Town] accrued.”

Noting that RSSL §17 requires ERS to annually "determine the amount which each participating employer is required to pay to the [R]etirement [S]ystem to discharge its obligations" for the fiscal year, which amount shall include "any additional obligation, plus interest on such amount, for fiscal years preceding the current fiscal year," the Appellate Division explained that as there is “no limit is placed on how far back in time [ERS] may bill for such obligation.”

As ERS sent the Town its annual invoice in November 2007, in which it included the “prior year's adjustment” at issue, ERS’ cause of action accrued on or about February 1, 2008 when the Town failed to make the payment reflecting the cost of Myers' service credit as required by law.

Accordingly, said the Appellate Division, ERS’ action was timely and while payment of ERS’ assessment has “potentially significant fiscal effects” on the Town due to the unanticipated obligation to pay interest computed over such a lengthy period of time, the Retirement and Social Security Law clearly “requires that such interest be assessed.”

Finding that ERS established a prima facie entitlement to judgment as a matter of law and that the Town failed to raise any questions of fact, the Appellate Division held that Supreme Court properly granted summary judgment to ERS.

Myers had been initially employed by the Town on September 1, 1972. He then applied for membership in ERS on March 31, 1973.

The decision is posted on the Internet at:

Handbooks focusing on State and Municipal Public Personnel Law continue to be available for purchase via the links provided below:

The Discipline Book at http://thedisciplinebook.blogspot.com/

Challenging Adverse Personnel Decisions at http://nypplarchives.blogspot.com

The Disability Benefits E-book: at http://section207.blogspot.com/

Layoff, Preferred Lists at http://nylayoff.blogspot.com/

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