Employee contributions required of individuals participating in the State University of New York's Optional Retirement Program

In Coller v State Univ. of NY., 80 A.D.2d 166, the Appellate Division considered a claim that certain participants in the State University of New York's Optional Retirement Program* [ORP] were exempt from the provisions of Chapter 890 of the Laws of 1976, which Chapter, in pertinent part, created "a new retirement program for public employees hired on or after July 1, 1976."

The new law made the retirement systems, including optional retirement programs, contributory with respect to employees appointed after July 1, 1976.

Certain State University of New York ORP participants appointed prior to July 1, 1976, [Plaintiffs] had employee contributions for their respective ORP deducted from their compensation effective January 1, 1977. 

Plaintiffs then initiated a CPLR Article 78 action demanding that State be ordered to resume making contributions to their ORP on their behalf as it had done prior to January 1, 1977. Supreme Court rejected Plaintiffs' petition, which decision was affirmed by the Appellate Division. 

In particular, the Appellate Division noted that Petitioners, at the time of their election to participate in a then noncontributory optional retirement plan, consented in writing to their payment of appropriate employee contributions to their ORP provided by the Teachers Insurance and Annuity Association and, or, the College Retirement Equity Fund [TIAA; CREF], if required to do so.**

The text of the Appellate Division's decision is set out below:

Petitioners are employees of the State University of New York (SUNY) and are employed at various colleges which are constituent parts of SUNY. Pursuant to section 393 of the Education Law, eligible employees of SUNY are permitted to elect participation in an optional pension plan selected by SUNY in lieu of the New York State Teachers' Retirement System or the New York State Employees' Retirement System. Here, the optional pension plan selected by SUNY and elected by petitioners was the Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF). At the time of its selection by SUNY, membership in TIAA-CREF for electing SUNY employees was noncontributory, with the State underwriting the total cost of membership (Education Law, § 392, subds 1, 2). Article 14 effective January 1, 1977 and article 14-A effective July 1, 1977, specifically sections 500 and 517, were added to the Retirement and Social Security Law (L 1976, ch 890, § 1), thereby creating "a new retirement program for public employees hired on or after July 1, 1976" (Governor's Memorandum, NY Legis Ann, 1976, p 412). The new law made the retirement system, including the optional retirement programs such as TIAA-CREF, contributory with respect to employees appointed after July 1, 1976.

Petitioners, members of TIAA-CREF, by a CPLR article 78 proceeding, demanded (1) that respondents be ordered to resume making contributions to the TIAA-CREF fund as they had done prior to January 1, 1977, (2) that respondents reimburse petitioners for all moneys deducted from their salaries since January 1, 1977, and (3) that petitioners be permitted to proceed with the litigation as a class action. Special Term denied the request for class action relief and dismissed the petition. This appeal ensued.

Turning first to the request by petitioners to proceed with this matter as a class action (CPLR 901), we note that when governmental operations are involved, and when subsequent petitioners will be adequately protected under the principles of stare decisis, class actions are inappropriate (Matter of Jones v Berman, 37 N.Y.2d 42). This is especially true in CPLR article 78 proceedings (Matter of Leone v Blum, 73 A.D.2d 252, 274, mot for lv to app granted 50 N.Y.2d 1042). Accordingly, we affirm that part of the judgment which denied petitioners' motion to prosecute this matter as a class action.

The initial argument advanced by petitioners in opposition to respondents' application of sections 500 and 517 of the Retirement and Social Security Law to themselves and others similarly situated so as to change a noncontributory system to a contributory one, is that such application violates section 7 of article V of the New York State Constitution, which states that membership in a State retirement system is a contractual relationship, "the benefits of which shall not be diminished or impaired." This contention must be rejected. There is nothing in the law or in its application requiring members to make contributions to TIAA-CREF that affects benefits to members in any manner. Next, the contractual relationship which petitioners enjoyed with the State by which the latter paid their contributions to TIAA-CREF was conditioned upon the New York State Teachers' Retirement System continuing its noncontributory status. Subdivision 2 of section 392 of the Education Law reserved to the State the right to end payments made by the State in lieu of employee contributions to the elected optional retirement plan. Therefore, enactment of sections 500 and 517 of the Retirement and Social Security Law triggered that condition and represented an overt act by the State to exercise a reserved power by making the Teachers' Retirement System contributory, thereby terminating the contractual relationship obligating the State to underwrite teacher membership in any optional retirement plan.

Similarly, since any property interest petitioners had in their optional system prior to January 1, 1977 was conditional, such interest was irretrievably lost by the enactment of sections 500 and 517 of the Retirement and Social Security Law in 1976. Furthermore, petitioners, at the time of their election to participate in a noncontributory optional retirement plan, consented in writing to appropriate employee contributions to the TIAA-CREF fund if required to do so.^**

Finally, petitioners' remaining contentions, including the point addressed to the constitutionality of sections 500 and 517 of the Retirement and Social Security Law with respect to their effective date causing unequal protection of teachers who joined TIAA-CREF before or after July 1, 1976, are untenable and are rejected. Petitioners have not met their "burden of establishing unconstitutionality beyond a reasonable doubt" (O'Conner v Levitt, 51 A.D.2d 1090).

The judgment should be affirmed, with costs.

Judgment affirmed, with costs.

* §396 of the Education Law, however provided that the "Employer not liable for payment of benefits. Neither the state, nor state university, nor any electing employer or its local sponsor shall be a party to any contract purchased in whole or in part with contributions made under the optional retirement program established and administered pursuant to this article. No retirement, death, or other benefits shall be payable by the state, or by state university, or by any electing employer or its local sponsor under such optional retirement program. Such benefits shall be paid to electing employees or their beneficiaries by the designated insurer or insurers in accordance with the terms of their contracts." [See, also, Royv Teachers Ins. & Annuity Assn., 878 F.2d 47 [2d Cir 1989] and Matter of Bindler v Goldin. 52 N.Y.2d 1.]

** The form signed by Petitioners stated: "To the Comptroller of the State of New York: You are hereby informed that I have elected the Optional Retirement Program [TIAA-CREF] * * * I do consent and agree to appropriate deductions, when required * * * and payment of salary or compensation less such deductions [which] * * * shall be a full and complete discharge and acquiesce of all my claims * * * for * * * services rendered".

Manager who referred to mask as "KKK hood" lawfully terminated for "cause"

On November 16, 2021, Employment Law News from WK WorkDay posted the following item by Ronald Miller, J.D.

A manager for an automobile repair business, who referred to respiratory masks as a “KKK hood,” and asked a Black employee if he were offended by the name and whether he wanted to try it on, was lawfully terminated under the terms of an employment agreement, a Florida District Court of Appeal ruled. In so ruling, the appeals court reversed a trial court’s award of damages to the employee for improper termination. Contrary to the trial court, the appeals court determined that the employee’s intent was irrelevant since he was also discharged for his conduct. Accordingly, the employer properly exercised its right to terminate the employee under its harassment policy (Master Collision Repair, Inc. dba Gerber Collision v. Waller, November 3, 2021, Roberts, C.).

“KKK hood” reference. The employer is in the automotive collision repair business. It hired the employee as a market manager responsible for the management of several locations. On March 7, 2018, he was in one of the employer’s stores to conduct fit testing for respiratory masks certain employees had to wear when performing tasks like sanding and painting. While there, the employee repeatedly referred to the respiratory mask as a “KKK hood.” He then asked a Black employee, who worked in the front office and was not part of the fit test group, if he would be offended if the mask was referred to as a “KKK hood” and if he wanted to try it on.

Senior management and human resources were made aware of complaints about the employee’s behavior. HR immediately began an investigation and the store’s general manager confirmed that the employee had asked other employees to put on the “KKK hood.” The employee himself admitted referring to the mask as a “KKK hood” and admitted that he asked the Black employee to try it on, but claimed he was joking. A few days later, the Black employee tendered a resignation letter detailing the employee’s conduct and the distress it had caused him.

After determining that the complaints against the employee were substantiated, the employer notified him that he was terminated for cause under his employment agreement.

Breach of contract claim. The employee sued the employer for breach of contract, arguing he was improperly terminated because he had not received written notice and a 30-day cure period under the terms of the employment agreement. Following a bench trial, the trial court entered judgment in favor of the employee and awarded him severance pay and health benefits for a six-month period. This appeal followed.

The appeals court concluded that the trial court erred in finding the employer improperly terminated the employee without first providing him notice and an opportunity to cure. The employment agreement plainly defined “cause” to mean willful failure and/or gross negligence in the performance of duties or the material breach of the terms and conditions of the agreement. Clearly, the employment agreement provided two separate avenues for the employer to terminate an employee for “cause” based upon a violation of the terms and conditions of the employment agreement. The second provision gave the employer leeway to terminate the employee immediately with written notice of the violation of the terms and conditions of the employment agreement without providing an opportunity to cure.

Under the agreement, the employee was responsible for performing his duties in accordance with employer policies, including the harassment policy contained in the employee handbook. Thus, the trial court erred in concluding that the employer failed to properly terminate the employee.

Employee intent. Similarly, the appeals court concluded that the trial court erred in finding that the employer did not conduct a good faith investigation or assess the ability to cure before terminating the employee. The trial court found the employer failed to investigate the employee’s intent, and without intent, his use of the term “KKK hood” might not be racial harassment. This was error. Rather, the record was clear that the employee was not terminated for words alone, but also for his conduct—he invited a Black employee to try on the “KKK” hood. At any rate, the employee’s intent was irrelevant to the employer’s determination that his conduct constituted harassment as defined under the employer’s harassment policy.

Accordingly, the judgment of the trial court was reversed.

Woman arrested for allegedly stealing and cashing her deceased sister's NYS Employees' Retirement System retirement benefit checks

On November 16, 2021, New York State Comptroller Thomas P. DiNapoli and Brooklyn District Attorney Eric Gonzalez announced the arrest of Latrenda Dixon for the alleged theft*of some $8,000 in retirement benefits sent to her deceased sister by the New York State Employees' Retirement System. 

Dixon, 52, of the Bronx is charged with illegally cashing 20 checks in Brooklyn for nearly $8,000 issued by the New York State and Local Retirement System to her deceased sister, Linda Dixon. She cashed the checks using her sister’s state employee ID at a check cashing location.

“Ms. Dixon attempted to scam the pension system by allegedly pretending to be her deceased sister,” DiNapoli said. “My thanks to District Attorney Gonzalez for his continued partnership in safeguarding the New York State and Local Retirement System.”

“Stealing from the state pension system is not a victimless crime; law abiding taxpayers end up paying the price,” said Brooklyn District Attorney Gonzalez. “I would like to thank State Comptroller DiNapoli for all of the work his agency did to bring this defendant to justice. We will now seek to hold her accountable for her alleged actions.”

Dixon was charged with grand larceny in the third and fourth degree; scheme to defraud in the first and second degree; identity theft in the first and second degree; 20 counts of criminal possession of a forged instrument in the first degree; 20 counts of criminal possession of a forged instrument in the second degree, and criminal possession of stolen property in the third and fourth degree.

She was arraigned in Kings County court and released without bail on her own recognizance. Dixon is due back in court Nov. 30, 2021.

This case was investigated by the Office of the State Comptroller’s Division of Investigations in partnership with the Brooklyn District Attorney’s Office.

The case is being prosecuted on behalf of the Brooklyn D.A.’s Office by Senior Assistant District Attorney Nicole Manini, of the District Attorney’s Green Zone Trial Bureau, under the Supervision of Assistant District Attorney Glenn Singer, Assistant District Attorney Sara Kurtzberg, and Assistant District Attorney Sasha Pemberton, Green Zone Deputy Bureau Chiefs. 

* N.B. These charges are accusations and the individual is presumed innocent unless and until proven guilty.