November 16, 2015

Employees of Suffolk County Community College held ineligible to participate in the County’s Deferred Compensation Plan


Employees of Suffolk County Community College held ineligible to participate in the County’s Deferred Compensation Plan
Suffolk County Assn. of Mun. Empls., Inc. v Levy, 2015 NY Slip Op 08180, Appellate Division, Second Department
Suffolk County Assn. of Mun. Empls., Inc. v Levy, 2015 NY Slip Op 08181, Appellate Division, Second Department

A number of individuals employed by the Suffolk Community College represented by Suffolk County Association of Municipal Employees [SCAME], an employee organization representing employees of Suffolk County including those at the College, had been permitted to participate in the Suffolk County Public Employees Deferred Compensation Plan [County Plan].

The County Planis administered by the Suffolk County Deferred Compensation Board [County Board] and in 2009 the County and the College entered into a Sponsor Service Agreement and a Memorandum of Understanding of Procedures that provided that the College and the County are independent entities and that neither entity's employees are to be deemed employees of the other entity.

The County Board then asked New York State Deferred Compensation Board [State Board] if the College's employees were eligible to continue to participate in the County Plan in view of the terms of the 2009 Memorandum of Understanding deeming them to be employed by an entity other than the County. The State Board determined, primarily based upon the terms of the New Operating Agreement, that the County and the College were separate and distinct employers and, therefore, the College's employees could no longer participate in the County Plan.*

The County Board adopted the State Board's determination and, in a letter dated March 29, 2010, informed the College's employees that they could no longer participate in the County Plan.

SCAMEchallenged the County Board's determination that the County and the College were separate employers and, thus, the College's employees could no longer participate in the County Plan. Supreme Court dismissed SCAME's CPLR Article 78 petition and the employee organization appealed.

The Appellate Division sustained the Supreme Court’s ruling. The Appellate Division explained that “contrary to [SCAME’s] contentions, the challenged determination that the County and the College are separate employers and, therefore, the College's employees could no longer participate in the County Plan, had a rational basis and was not arbitrary and capricious or an abuse of discretion. Accordingly, said the court, the Supreme Court properly denied the petition and dismissed the proceeding.

* The State Board cited §457 of the Internal Revenue Code as the authority for establishing the Suffolk County Public Employees Deferred Compensation Plan. It should be noted, however, that Article 8-C of the Education Law [§§398-399-A], SPECIAL ANNUITY, also referred to as a “tax-deferred annuity plan,” permits an individual employed by “the state university, the board of higher education of the city of New York, or a community college established and operated under article one hundred twenty-six of this chapter to participate in a tax-deferred annuity plan as permitted under §403(b) of the United States Internal Revenue Code” should such an entity “elect to establish by resolution special annuity and custodial account programs which shall provide for the purchase of contracts or establishment of custodial accounts providing retirement and death benefits for or on behalf of employees electing to enter into an agreement with such employer providing for a reduction of annual salary for the purpose of purchasing such contracts or for making contributions to such custodial accounts.”

The decision is posted on the Internet at: