Wednesday, November 05, 2014

If a settlement or award includes a payment only the part constituting reimbursement for lost wages is included in determining the employee’s retirement allowance


If a settlement or award includes a payment only the part constituting reimbursement for lost wages is included in determining the employee’s retirement allowance
2014 NY Slip Op 07412, Appellate Division, Third Department

In 2006 a grievance brought by the union on behalf of a teacher [Teacher] who was not selected for a coaching position was settled with the school district. The settlement included a payment in the amount of $9,500 for “lost wages” as the result of Teacher not being given a coaching position.

This 2006 settlement award was included in the calculation of Teacher's final average salary for retirement purposes by the New York State Teachers' Retirement System [TRS].

Teacher was not appointed to a coaching position for either of the next two school years.  The union again filed a grievance on behalf of Teacher and again the matter was settled. A 2011 settlement “memorandum of understanding [MOU]” provided for an awarded of $11,220.* This amount constituted the stipends that Teacher would have been paid had he been appointed to a coaching position for both school years.

Teacher then asked TRS to recalculate his three-year final average salary to include the 2011 settlement payment provided by the MOU and to adjust his retirement allowance accordingly. TRS determined that because the payment provided pursuant to the 2011 MOU was not part of Teacher‘s regular compensation it could not be included in the final computation of his retirement benefit.

Teacher sued TRS seeking a court order annulling its decision, arguing that TRS’s decision was arbitrary and capricious in light of its previous inclusion of the 2006 settlement payment in its computation of his final average salary.

Supreme Court dismissed Teacher’s petition and he appealed that ruling to the Appellate Division.

The Appellate Division noted that a TRS member's final average salary is based on his or her highest average annual regular salary that was earned over any three consecutive years of service prior to retirement but shall exclude, among other things, "payments which are not part of the salary base."

TRS had explained that it had included the payment made to Teacher pursuant to the 2006 stipulation as the MOU reflected an acknowledgment by the school district that it had violated an existing collective bargaining agreement when it denied Teacher's coaching application on the ground that he was unqualified and gave the positions to teachers with less seniority. In addition, the 2006 settlement confirm that Teacher was indeed eligible to assume the coaching positions.

However, TRS pointed out that the 2011 MOU settling Teacher's subsequent grievances “did not concede, in any manner, that the denial of Teacher ‘s coaching applications for the 2005-2006 and 2006-2007 school years had resulted in any contractual violations….” In fact, said TRS, the 2011 MOU reiterated the school district's assertion that Teacher "was unqualified for the coaching position at issue."

The Appellate Division said that the fact that the school district opted to pay Teacher in exchange for a complete settlement of his claims against it does not create a basis to find that Teacher was eligible for the coaching appointments. Accordingly, the court found that the MOU settlement payment did not constituted compensation that Teacher would have earned and thus TRS was correct in excluding the 2011 settlement payment in its calculation of Teacher’s final average salary.

Finding that TRS’s determination, which was rendered without a hearing, was rational and not arbitrary and capricious, the Appellate Division declined to disturbed it.

* The Appellate Division observed that “Although the MOU states that the $11,220 settlement amount constitutes the stipends of $5,605 that Teacher would have been paid if appointed to a coaching position during each of the two school years for which he applied, the annual stipend amounts actually total $11,210.”

The decision is posted on the Internet at:
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Handbooks focusing on State and Municipal Public Personnel Law continue to be available for purchase via the links provided below:

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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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