Municipal and school district audits released during the week ending January 9, 2021

New York State Comptroller Thomas P. DiNapoli announced that the following local government and school district audits were issued during the week ending January 9, 2021.

Click on the text highlighted in color to access the complete audit report

Local Government Audits

Citizens Hose Company – Board Oversight of Financial Operations (Ontario County) Auditors determined Citizens Hose Company did not have adequate controls in place to ensure that company funds were safeguarded. The company’s bylaws were insufficient because they did not provide detailed guidance for the treasurer or audit committee when collecting and depositing funds, recording cash receipts and disbursements and paying company bills. In addition, the treasurer misappropriated more than $20,000 of company funds. The company secretary also inappropriately used a company credit card for personal purchases of at least $1,100 without detection by officials. As a result of the audit, the former Citizens Hose Fire Company treasurer, pleaded guilty to felony grand larceny and was ordered to repay restitution.

City of Gloversville – City Clerk (Fulton County)Auditors found the former clerk did not properly account for fees. The former clerk waived fees for 249 certified copies of birth certificates totaling $2,490 without a valid reason. The former clerk also did not deposit all fees intact and substituted checks and money orders for cash collections. Auditors did determine that the current clerk was acting properly and accounting for fees as of Oct.1, 2017.

Ethics Oversight (Statewide Unit) This multi-unit audit included 20 individual audits including: 8 Counties: Albany, Chautauqua, Chemung, Genesee, St. Lawrence, Steuben, Suffolk and Tompkins; 8 Towns: Clay, Colonie, Greece, Oyster Bay, Ramapo, Southampton, Tonawanda and Union; and 4 Cities: New Rochelle, Rochester, Troy and Utica. Local governments must comply with New York State General Municipal Law (GML) and should do more to ensure proper ethics oversight.

Oneida-Herkimer-Madison Board of Cooperative Services (Oneida County, Herkimer County and Madison County) Oneida-Herkimer-Madison Board of Cooperative Educational Services (BOCES) officials did not regularly provide formalized information technology (IT) security awareness training. BOCES officials also did not assess computer usage to confirm IT assets were used for appropriate purposes or establish adequate controls to safeguard information contained in the network and financial system. Personal internet use was found on computers. In addition, network and application user accounts were not properly managed. Auditors also determined no disaster recovery plan was developed. Sensitive IT control weaknesses were communicated confidentially to BOCES officials.

Village of Monticello – Financial Condition (Sullivan County) The board did not adequately manage the village’s financial condition. As a result, the village is fiscally stressed. Auditors determined the village’s total fund balance will likely be fully depleted at the end of the 2019-20 fiscal year. The village also has exhausted nearly 100 percent of its constitutional tax limit. In addition, the village has significant infrastructure needs that it lacks the funds to address.

Village of Monticello – Records and Reports (Sullivan County) Auditors determined the treasurer did not maintain accurate, complete and timely accounting records or properly reconcile bank accounts in a timely manner. About $5 million of real property tax revenue was not posted to the accounting records. Bank reconciliations were generally performed two to three months after the statement date. In addition, periodic financial reports were not prepared for the board of trustees or department heads. Annual Update Documents, which are required annual financial reports, constitutional tax limit forms and adopted budgets were not filed in a timely manner, with some filed typically over 200 days late.

School DistrictAudits

Alexandria Central School District – Financial Condition Management (Jefferson County and St. Lawrence County) The district’s budgeted appropriations from 2016-17 through 2018-19 exceeded actual expenditures by $844,261, or 6.4 percent and the district did not need to use most of the appropriated fund balance for operations. The surplus fund balance in the general fund exceeded the 4 percent statutory limit for the past three fiscal years. As of June 30, 2019, surplus fund balance was $1.75 million, or 12.8 percent of the next year’s budget. In addition, district officials have not developed a long-term financial plan or a comprehensive reserve fund policy. Officials also did not implement the recommendations in a prior audit released in March 2016. This audit contains similar findings and recommendations.

Prattsburgh Central School District – Financial Management (Steuben County and Yates County) The board and district officials’ actions to manage financial condition were not transparent and more taxes were levied than necessary to fund operations. The board also appropriated fund balance totaling $1.13 million for fiscal years 2016-17 through 2018-19 but none of the money was used or needed to fund operations. For the last three fiscal years, the district reported that it exceeded the 4 percent statutory surplus fund balance limit, however when unused appropriated fund balance is added back, surplus fund balance exceeded the limit between 11 and 15 percentage points. In addition, the board did not develop written multiyear financial and capital plans.

###

When the statutory language is clear and unambiguous, it should be construed so as to give effect to the plain meaning of the words used

This CPLR Article 78 was filed by an individual [Plaintiff] who was initially employed by New York City Health and Hospitals Corporation and subsequently was appointed as a correction officer by the New York City Department of Correction [DOC].

At the time of his appointment by DOC Plaintiff was a "Tier 4 member" of  the New York City Employees' Retirement System [NYCERS]and DOC requested that the NYCERS to place the Plaintiff in the City's CF-20 plan in Tier 3. DOC's request was approved,

Subsequently Plaintiff asked NYCERS about his member status in the System. NYCERS advised him that it had conducted a review of his membership status and had determined that his current retirement plan, CF-20, was incorrect. NYCERS told Plaintiff that it was mandated by law to place him in the Uniformed Correction Force 22 year plan [CF-22]. 

Contending that NYCERS's determination changing Plaintiff's pension benefit plan from CF-20 to CF-22 was arbitrary and capricious, Plaintiff asked Supreme Court to compel NYCERS to reinstate him as a CF-20 Plan member. Supreme Court denied Plaintiff's petition and he appealed the court's ruling.

The Appellate Division sustained Supreme Court's decision, explaining:

1. "NYCERS is the public employee retirement system responsible for administering the retirement programs for employees of the City [of New York] and various [New York] City-related participating employers."

2. Before the effective date of the 2012 amendment to the Retirement and Social Security Law [RSSL], any person who became employed as a uniformed correction officer was eligible to join the CF-20 plan in Tier 3 pursuant to RSSL §504-d as then in effect.

3. In March 2012, the Legislature amended certain provisions of the RSSL, the result of which Plaintiff would be ineligible for CF-20 benefits.

It is undisputed that, when the Plaintiff joined NYCERS in 2004, he joined as a Tier 4 member and was subject to RSSL Article 15 rather than the provisions of RSSL Article 14 until he was appointed as a correction officer.

Although the Appellate Division conceded the Plaintiff was correct that certain portions of the legislative history of the amendment indicate that the 2012 amendment would impact members who first become members of NYCERS on or after April 1, 2012, NYCERS successfully argued that the legislative history of the amendment stated that the relevant amendments would apply to new New York City uniformed correction members.

Citing People v Brown, 115 AD3d 155, affirmed 25 NY3d 247, the Appellate Division opined that the plain language of the RSSL §501(25) is clear and unambiguous. The court then indicated that "when the statutory language is clear and unambiguous, it should be construed so as to give effect to the plain meaning of the words used." 

Thus, the court concluded that Plaintiff did not become subject to Article 14 of the RSSL until after April 1, 2012, and NYCERS properly reclassified his retirement system member status from CF-20 to CF-22.

The court rejected Plaintiff's arguments that [1] Article V, §7 of the New York Constitution* and [2] the doctrine of equitable estoppel** barred NYCERS from changing his retirement system member status as NYCERS, itself, initially placed him in the CF-20 plan.

In the words of the Appellate Division, "[i]n securing a public employee's retirement rights, '[t]he Constitution does not, in terms or otherwise, preserve naked pension rights quarights but, rather, the benefits of the contractual relationship ... Thus, we must look to the contract for both the source and the definition of the plaintiff's benefits'".

Noting that Plaintiff became a member of NYCERS as a Tier 4 member subject to RSSL Article 15, the court concluded that "the 2012 amendments at issue in no way diminished or impaired [Plaintiff's]  pension benefits," and agreed with NYCERS that the 2012 amendments, as applied to Plaintiff, did not violate his rights under the Constitution's pension impairment clause.

* Article V, §7 of the New York Constitution, which states that "Membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired". 

** See, however, https://publicpersonnellaw.blogspot.com/2020/12/a-governmental-entity-may-be-subject-to.html, a decision by the Appellate Division that addressed an exception to this general rule.

Click here to access the text of the decision.

Click here to access another Appellate Division ruling involving similar issues as presented in this action handed down on the same day. 

 

 

Evaluating an individual's application for accidental disability retirement where a statutory presumption of causation is a factor

A New York City police officer [Plaintiff] filed an application for accidental disability retirement [ADR] benefits based on a heart condition. The Medical Board [Board] concluded that Plaintiff was disabled as a result of various heart ailments but recommended ordinary disability retirement [ODR]* because there was no evidence that Plaintiff had hypertension or any other stress-related heart problems. The Retirement System adopted the Board's recommendation.

Plaintiff filed a petition pursuant to CPLR Article 78 seeking a court order [1] vacating the Retirement System's determination denying Plaintiff 's application for ADR and [2] directing that he be granted retirement with accidental disability benefits. Supreme Court granted Plaintiff's petition and the Retirement System appealed.

The Appellate Division affirmed the Supreme Court's ruling, explaining that the lower court had properly granted the petition based on the presumption of causation set out in General Municipal Law §207-k.**

Conceding that there was some evidence that Plaintiff was diagnosed with "essential hypertension" prior to his retirement, the Appellate Division noted that most of the evidence related to hypertension post-dated his retirement.

Further, said the court, the Board did not express an opinion as to whether Plaintiff's other heart ailments, including his need for a dual chamber pacemaker were causally related to stress or other occupational factors and failed "to address Plaintiff's numerous heart problems and focused only on the absence of hypertension."

The Appellate Division then opined that the Retirement System "cannot deny ADR benefits in a case governed by General Municipal Law §207-k by relying solely on the absence of evidence tying the disability to work-related stress," citing Bitchatchi v Board of Trustees of N.Y. City Police Dept. Pension Fund, Art. II, 20 NY3d 268.

* Ordinary Disability Retirement benefits are typically less generous than Accidental Disability Retirement benefits.

** General Municipal Law §207-k sets out a rebuttable presumption that a  disability resulting from any condition of impairment of health caused by diseases of the heart suffered by an applicant for accidental disability retirement benefits was incurred in the performance and discharge of official duty unless the contrary is proven by competent evidence.

Click here to access the text of the decision.

 

Court vacates agency's grievance decision after finding it arbitrary and capricious and not rational under the circumstances presented

The Acting Director of Labor Relations [Director] of the New York State Unified Court System [UCS] denied a grievance filed by certain individuals [Plaintiffs] challenging the placement of the names of certain candidates on the promotion examination No. 55-787 eligible list for appointment to the title of Senior Court Reporter with UCS.

Plaintiffs filed a petition pursuant to CPLR Article 78 appealing the Director's decision and seeking a court order directing UCS:

[1] To remove from the eligible list for promotional examination No. 55-787 the names of candidates who were not employed in the Court Reporter title by the date of the examination; and

[2] To remove any candidate from the position of Senior Court Reporter appointed  from the promotional examination eligible list who did not meet the minimum qualifications to compete in the promotion examination.

Citing 22 NYCRR 25.13[k], Supreme Court "determined that the complained-of conduct by the UCS violated its own rules and eligibility requirements." Holding that such action "was arbitrary and capricious," the court granted Plaintiffs' petition. UCS appealed the Supreme Court's ruling.

The Appellate Division's decision notes that UCS had simultaneously administered an open-competitive examination and a promotional examination for the title of Senior Court Reporter, which examinations were substantively identical. Further, both examination announcements stated that the promotion list "will be used to make appointments before appointments are made from the list established from the open-competitive examination."

Separate eligible lists for each examination were established. However the names of 22 individuals who had taken the open-competitive examination appeared on both the competitive list and the promotion list, although none of these 22 individuals met the minimum qualifications to take the promotional examination and none had actually taken the promotional examination.

Also noted in the Appellate Division's decision was the fact that these 22 individuals "had been appointed as entry level Court Reporters after the examination but before the eligibility lists were established," and that a number of these 22 candidates "had scored higher than those who had taken the promotional examination."

Agreeing with the Supreme Court's determination that the UCS's placement of open-competitive candidates for the Senior Court Reporter position on the promotion list was arbitrary and capricious and not rational under the circumstances presented herein, the Appellate Division explained Article V, §6 of the New York State Constitution provides that "[a]ppointments and promotions in the civil service of the state and all of the civil divisions thereof, including cities and villages, shall be made according to merit and fitness to be ascertained, as far as practicable, by examination which, as far as practicable, shall be competitive."

Conceding that a civil service commission exercises wide discretion in determining the fitness of candidates, the Appellate Division observed that the exercise of such discretion is to be sustained unless it has clearly been abused  and a court, in determining a CPLR Article 78 petition, ''may not substitute its judgment for that of the agency responsible for making the determination and, as long as the administrative determination is not irrational or arbitrary and capricious, [the court] may not annul it."

Here, however, the Appellate Division agreed with the Supreme Court's finding that UCS's placement of the names of open-competitive candidates for the Senior Court Reporter position on the promotion list for that title was arbitrary and capricious and not rational under the circumstances presente and opined that UCS's conduct, among other things, "violated its own rules and eligibility requirements set forth in the exam announcements." It then sustained the Supreme Court's decision granting Plaintiffs' petition, with costs.

Click here to access the decision.

 

Employee served with disciplinary charges alleging the use of aggressive language and expletives and creating a disturbance at the workplace

An employee [Defendant] of a New York City agency was alleged to have had a physical encounter with a co-worker involving the use of "aggressive language and expletives" and creating a disturbance that required the New York City Police Department [NYPD] having to be called to the work site.

Responding to the call, NYPD personnel determined that the matter "should be handled in-house," resulting the appointing authority subsequently serving administrative disciplinary charges against the Defendant.

After the required disciplinary hearing, New York City Office of Administrative Trials and Hearings [OATH] Administrative Law Judge Ingrid M. Addison determined that the Defendant was guilty of having created a disturbance in the workplace resulting in wasting City resources in violation of the agency’s Code of Conduct.

The ALJ, finding that there was no mitigating circumstances with respect to the Defendant's misconduct, recommended that the appointing authority suspend the Defendant without pay for thirty days.

Click here to access Judge Addison's decision.

_______________

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 found guilty of misconduct or incompetence. 

For more information click here: http://booklocker.com/books/7401.html

_____________________

 

 

 

Plaintiff's annual performance rating appeal rejected due to the lack of evidence of the raters acting in bad faith or with animus

The New York City Department of Education of the City of New York [DOE] denied the educator's [Plaintiff] administrative appeal of a rating of ineffective on his Annual Professional Performance Review. Plaintiff filed a CPLR Article 78 petition appealing DOE's decision. Supreme Court dismissed the proceeding and Plaintiff appealed the Supreme Court's decision.

The Appellate Division unanimously affirmed the Supreme Court's dismissal of Plaintiff's petition, explaining:

1. DOE's overall rating of Plaintiff as ineffective had a rational basis in the record; and

2. Plaintiff failed to demonstrate that DOE's determination was made in bad faith or in violation of a lawful procedure or a substantial right,

The records indicated DOE observed Plaintiff's performance on three separate occasions, which, opined the court, "provided a rational basis for its rating of [Plaintiff] on the Measures of Teacher Practice portion of her overall rating." 

Further, the Appellate Division noted that Plaintiff "did not demonstrate through competent proof that the "ineffective performance" rating resulted from "bad faith or animus" on the part of the raters, and that DOE's rating of Plaintiff had been based on an assessment of her students' growth compared to other similarly situated students according to criteria used by the school.

Click here to access the Appellate Division's decision

Paid Family Leave Webinars for Employers and HR Professionals

The New York State Workers’ Compensation Board kicks off 2021 with a Paid Family Leave webinar series starting January 5, 2021, for employers and human resources professionals.

 

As of January 1, 2021, Paid Family Leave is now in the final year of a four-year phased in approach. Over the last four years, benefits have been significantly enhanced to further improve the lives of working New Yorkers and their families, including more time off, more uses for Paid Family Leave, and more financial security.

 

Each one-hour session will provide an overview of New York State's landmark Paid Family Leave benefit, including important information regarding COVID-19, updates for 2021, and resources to help you share information with your employees.

 

Paid Family Leave is employee-paid insurance that provides employees with job-protected, paid time off from work to bond with a new child, care for a family member with a serious health condition, or assist when a spouse, domestic partner, child or parent is deployed abroad on active military service.  As of March 2020, Paid Family Leave may also be available in the event an employee, or their minor dependent child, is subject to a mandatory or precautionary order of quarantine or isolation due to COVID-19.

 

---

REGISTRATION IS REQUIRED

 

Sign up to participate in a session on one of the following dates. Each session is free and there will be time at the end for questions. 

Tuesday, January 5, 2021: 12:00 p.m. - 1:00 p.m.

Wednesday, January 20, 2021: 12:00 p.m. - 1:00 p.m.

Tuesday, February 9, 2021: 12:00 p.m. - 1:00 p.m.

Click here to access Registration

 

Appeal to the Commissioner of Education alleges defects in conducting an election of candidates to the school board

In this appeal to the Commissioner of Education* the Petitioner, a disappointed candidate for election to the school board, submitted an appeal to the Commissioner alleging a number of procedural defects in school board's conducting the election including [a] allegations of "improper electioneering;" [b] including the name of a candidate the ballot "ineligible to serve as trustee;" and [c] failing to properly announce or certify the election results."

After initially addressing a procedural issue concerning the nature of a reply to the school district's answer to Plaintiff's petition and explaining "A reply is not meant to buttress allegations in the petition or to belatedly add assertions that should have been in the petition," the Commissioner turned to the merits of the appeal submitted by the Petitioner with respect to issues involving:

1. The Governor's suspension of Education Law §§2002 and 2022 under color of the ongoing state of emergency caused by the novel coronavirus pandemic;

2. §§2018 and 2608 of the Education Law to the extent necessary “to eliminate any minimum threshold of signatures required” for the nominating petition of a candidate seeking election to a board of education;"

3. Voting using absentee ballots and the procedures to be followed related to  declaring a ballot invalid and other any irregularities actually affecting "the outcome of the election or were so pervasive that they vitiated the electoral process;"

4. Recounting ballots in school district elections; and

5. Attacks on the integrity of the tallies and the returns of the inspectors of election, such as a showing of fraud or improper conduct.**

Observing that "It is well settled that mere speculation as to the possible existence of irregularities provides an insufficient basis on which to annul election results," and citing various earlier Decisions of the Commissioner of Education addressing this point, the Commissioner found that Petitioner "failed to carry her burden of proof to annul the election results or compel a recount" and, after explaining the reasons in support of such findings, the Commissioner dismissed the Petitioner's appeal.

In the words of the Commissioner, "Petitioner has failed to meet her burden of proof to establish that any irregularities affected the outcome of the election.  Therefore, there is no basis upon which to order a recount or invalidate the results of the election" and dismissed Petitioner's appeal.

*Decisions of the Commissioner of Education, Decision No. 17,947.

** To the extent the Commissioner did not specifically address an issue raised by Petitioner in her appeal, the Commissioner said that she found such issue "to be without merit."

 Click here to access the text of the Commissioner's decision

 

The doctrine of res judicata bars considering claims that could have been advanced in an earlier administrative disciplinary hearing in the course of subsequent litigation

Although the Appellate Division held that the Plaintiff's breach of contract claims against the New York City Department of Education [DOE] was properly dismissed for failure to serve a notice of claim within three months of claim accrual, citing Fifty CPW Tenants Corp. v Epstein, 16 AD3d 292, the court further observed that these breach of contract claims against DOE were all related to Plaintiff's termination. As Plaintiff's breach of contract claims  "... were litigated, or could have been litigated in his Education Law §3020-a hearing or his proceeding to vacate the arbitration award," the Appellate Division ruled that the claims were barred by the doctrine of res judicata."

Addressing Plaintiff's complaint that his collective bargaining representative, the United Federation of Teachers [UFT], failed to properly represent him during his Education Law §3020-a disciplinary proceedings, the Appellate Division noted that UFT's alleged failure "to properly represent" Plaintiff occurred almost a year before he had commenced the instant litigation. The court explained that the applicable statute of limitations was "four months from the date the [Plaintiff] knew or should have known that such breach occurred," and thus it was untimely. 

Further, opined the Appellate Division, "[c]haracterizing a claim for breach of the duty of fair representation as one for breach of contract is unavailing to avoid the four-month limitations period," citing Roman v City Empls. Union Local 237, 300 AD2d 142, lv denied 100 NY2d 501.

In addition, the Appellate Division noted that Plaintiff's claim was based on an alleged breach of contract based on Plaintiff's representation that UFT failed to offer him opportunities to "participation in certain remediation programs during the 2008-09, 2009-10, and 2010-11 school years." As this issue related to Plaintiff's §3020-a disciplinary hearings, the court said the claim was subject to a six-year statute of limitations and thus it would run, at the latest, only until 2017.

The Appellate Division unanimously affirmed Supreme Court's ruling granting DOE's and UFT's motions to dismiss Plaintiff's complaint.

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_07516.htm

 

Emergency Medical Technician found guilty of disciplinary charges alleging that he addressed vulgar language to a triage nurse is suspended without pay

The New York City Fire Department [Department] served disciplinary charges on an Emergency Medical Technician [EMT] alleging that the EMT used vulgar language in the course of his responding to a work-related question posed by a hospital triage nurse in violation of Department rules. This, the Department contended, "created a hostile work environment."

At the disciplinary hearing that followed, the Department presented documentary evidence and testimony given by the EMT's coworker and a nurse who had overheard the EMT's response to the triage nurse. The EMT testified that he did not recall the incident but did not challenge the charge in the light of the testimony of the Department's witnesses.

OATH Administrative Law Judge Ingrid M. Addison found the EMT guilty of violating five of the six rules he was alleged to have violated and recommended that the EMT be suspended from his employment without pay for 45 day.

Then Judge Addison, noting that EMT's misconduct was based on a single incident, opined that imposing "a single penalty" was appropriate under the circumstances and so recommended to the Department.

The decision is posted on the Internet at http://archive.citylaw.org/wp-content/uploads/sites/17/oath/20_cases/20-1798.pdf

 _______________

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 http://booklocker.com/books/7401.html

 

 

Prosecuting a claim of "employer retaliation" allegedly based on an employee's having exercised his federal Family Medical Leave Act rights

The federal Family Medical Leave Act, 29 U.S.C. §2612(a)(1)(C), [FMLA] entitles eligible employees to twelve workweeks of unpaid leave per year “to care for [a] spouse, or a son, daughter, or parent . . . , if such spouse, son, daughter, or parent has a serious health condition.”

The FMLA prohibits an employer from interfering with an employee’s exercise of this entitlement or retaliating against an employee for exercising this entitlement.* 

In this action the U.S. Circuit Court of Appeals, Second Circuit, distinguished between prosecuting claims of “interference” and claims of “retaliation” under the FMLA as follows:

a. An employee typically brings an “interference” claim when the employer allegedly has prevented or otherwise impeded the employee’s ability to exercise rights under the FMLA, characterized as ex ante FMLA protection; and

b. “Retaliation” claims, in contrast, typically involve an employee, having actually exercised his FMLA rights or opposed perceived unlawful conduct within the meaning of the FMLA, subsequently alleges that he was subjected to some adverse employment action by the employer. This is characterized as ex post FMLA protection.

To establish a prima facie case of interference with FMLA rights, a plaintiff must demonstrate that:

(1) Plaintiff is an eligible employee for FMLA leave within the meaning of the FMLA;

(2) The defendant is an employer as defined by the FMLA;

(3) Plaintiff was entitled to take leave under the FMLA

(4) Plaintiff gave notice to the defendant of her intention to take leave; and

(5) Plaintiff was denied benefits to which she was entitled under the FMLA.

In contrast, to establish a prima faciecase of retaliation within the meaning of the FMLA, the plaintiff must demonstrate that:

(1) Plaintiff “exercised rights protected under the FMLA”; 

(2) Plaintiff“was qualified for [the] position”; 

(3) Plaintiff “suffered an adverse employment action”; and 

(4) “the adverse employment action occurred under circumstances giving rise to an inference of retaliatory intent.”

Courts test FMLA retaliation claims under the burden-shifting framework set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, whereby upon the plaintiff's making a prima facie case of retaliation the burden shifts to the employer to demonstrate action was not in the nature of retaliation but made for legitimate business reasons. 

Then, as the court held in Weinstock v. Columbia Univ., 224 F.3d 33, if the employer demonstrates that the action taken was for "a legitimate business reason," the burden of going forward then shifts back to the plaintiff, who "must then show that [the employer's] proffered explanation is pretextual.” A plaintiff may satisfy this burden “by demonstrating weaknesses, implausibilities, inconsistencies, or contradictions in the employer’s proffered” reason, or by providing evidence such that "a reasonable fact finder could conclude that the prohibited reason was a motivating factor in the adverse employment action."

* See Woods v. START Treatment & Recovery Ctrs., Inc., 864 F.3d 158

Click here to access the text of the Circuit Court's decision.

 

A governmental entity may be subject to the doctrine of estoppel where the injured party has suffered manifest injustice as the result of bureaucratic confusion and deficiencies

Shortly after commencing their employment with the City of New York, the New York City Employees' Retirement System [NYCERS] placed the petitioners [Members] in this CPLR Article 78 action in the Basic Tier 4, 62/5 Retirement Plan [the 62/5 plan] which provided for retirement with full benefits at age 62 after at least 5 years of credited member service.

It was undisputed that the Members' enrollment in the 62/5 plan was in error and that the NYCERS was required by statute to enroll the Members in the Tier 4 57/5 Retirement Plan [the 57/5 plan] which Plan allows for retirement with full benefits at age 57 after at least 5 years of credited member service. The 57/5 Plan also requires greater employee contributions to the NYCERS.* The Members were in the 62/5 plan for more than 20 years, receiving annual statements from NYCERS confirming their membership in that plan.

However, in 2016 NYCERS advised the Members, then respectively 63 and 62 years of age, that their retirement plans were being changed to the 57/5 plan and that they owed additional member contributions because of their belated placement in that plan. The amount respectively due, said NYCERS was $20,198.41 and $24,346.69. This increased employee pension contributions was attributed to required contributions to the 57/5 plan that should have been deducted from their compensation since the time the Members joined NYCERS.

NYCERS also advised the Members that they could pay off their respective deficits "either in a lump sum or through periodic payroll deductions and that any unpaid balance remaining at the time of their retirement would permanently reduce their pension benefits."

The Members commenced this CPLR Article 78 proceeding seeking a court order directing NYCERS to reinstate them in their former 62/5 plan and to reimburse them for any additional pension contributions resulting from their involuntary switch into the 57/5 plan.

Supreme Court found that switching the Members from the 62/5 plan to the 57/5 plan violated Article V, §7 of the New York State Constitution. Further Supreme Court ruled that NYCERS long delay in discovering its error deprived the Members of "any opportunity to retire with full benefits before the age of 62," and it would be "an injustice to require them to make ...  payments when this benefit has been lost," notwithstanding their newly acquired 57/5 members status. NYCERS appealed the Supreme Court's decision.

The Appellate Division, agreeing with NYCERS that the Supreme Court erred in finding that switching the Members from the 62/5 plan to the 57/5 plan violated Article V, §7 of the New York State Constitution, modified the judgment of Supreme Court with respect to the Members' placement in the 57/5 plan in accordance with the applicable statute. The Appellate Division, however, sustained Supreme Court's applying the doctrine of estoppel thus requiring NYCERS to reimburse the Members for any funds collected pursuant to their placement in the 57/5 plan and barring its further collection of any such funds.

Citing Civil Serv. Empls. Assn., Local 1000, AFSCME, AFL-CIO v Regan, 71 NY2d 653 and other decisions, the Appellate Division observed that Article V, §7 "provides in pertinent part that 'membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired.'" The Appellate Division then observed that "under the New York State Constitution, '[t]he rights of public employees are . . . fixed as of the time the employee becomes a member of the system,' not at the time of retirement."

Further, opined the Appellate Division:

1. NYCERS is obligated to correct its errors and was required by statute to place the Members in the 57/5 plan;

2. The Members were never were eligible for membership in the 62/5 plan and thus were not entitled to receive benefits hereunder; and

3. The Members were required by law to be placed in the 57/5 plan from the outset of their employment and thus do not possess a constitutionally protected contractual right to be returned to the 62/5 plan.

However, the Appellate Division, noting "the extraordinary circumstances of this case," concluded that the Members had successfully established that NYCERS should be estopped from collecting additional funds resulting from their being placed in the 57/5 plan.

Although the Appellate Division conceded that "[a]s a general rule, estoppel may not be invoked against a governmental body to prevent it from performing its statutory duty or from rectifying an administrative error ... [t]his Court has invoked the doctrine of estoppel against governmental entities where ... 'misleading nonfeasance would otherwise result in a manifest injustice,' such as where the plaintiff has been the victim of bureaucratic confusion and deficiencies."

Pointing out that NYCERS' failure to discover its pension enrollment error for more than 20 years had effectively deprived the Members of any opportunity to avail themselves of the key benefit of early retirement, since they were both older than 62 when they were first advised of the NYCERS' error." The Appellate Division concluded that "[u]nder these circumstances, it would be manifestly unjust to permit NYCERS to collect additional employee contributions from the [Members] after its negligence rendered it impossible for them to obtain the primary benefit of the 57/5 plan."

The decision states that "Simply put, [NYCERS] may not negligently deny the [Members] the benefit of the 57/5 plan while simultaneously demanding from them the additional contributions associated therewith."

Sustaining that part of Supreme Court's determination stopping NYCERS from collecting such additional contributions and directing it to reimburse the Members for any such amounts it has already collected, the Appellate Division said it agreed with the Supreme Court's dismissal of NYCERS' cross motion to dismiss the Members' petition as amended.

* See Retirement and Social Security Law §604-d.

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_07583.htm