Determining an individual’s “final average salary” for retirement allowance purposes

Determining an individual’s “final average salary” for retirement allowance purposes

Weingarten v NYC Teachers' Retirement System, Ct. of Appeals, 98 N.Y.2d 575

Rhonda Weingarten was employed in the New York City school system. In addition to receiving her base annual salary, she also received hourly compensation -- referred to as "per session" compensation -- for the additional service she provided to the school district. The issue to be resolved in Weingarten’s lawsuit: may these additional earnings be added to the teachers' pensionable salary base for the purpose of determining their final averages salary for retirement purposes or are they barred by the provisions of Section 431 of the Retirement and Social Security Law?

The collective bargaining agreement between the teachers and the New York City Board of Education defines "per session work" as including such assignments as teaching summer school, teaching evening or adult education classes, or working with various athletic and non-athletic extracurricular programs.

Teachers apply these positions and may participate in only one such activity at a time. The teachers are required to submit separate time sheets for their "per session work" and receive payment for their per session work via checks issued in addition to their regular payroll checks.

In the early 1990s, teachers demanded that their "per session" compensation be included in determining their final average salary. The New York City Teachers' Retirement System [NYCTRS] refused consider per session earnings as pensionable compensation.

Weingarten sued NYCTRS, seeking a court decision holding that the System's exclusion of this income from a teacher's base salary calculation for retirement purposes was contrary to Section 13-554 of the Administrative Code and Sections 443(a), 504 and 604 of the Retirement and Social Security Law.

As the Court of Appeals noted, a critical element in determining a retiree's retirement allowance is the computation of the individual's "final average salary" for the purposes of retirement.

Both a State Supreme Court judge and the Appellate Division agreed with Weingarten, ruling that the teachers were entitled to receive credit all per session compensation earned while NYCTRS members in determining their final average salary for retirement purposes since the inception of this 1998 law suit.

Rejecting NYCTRS's argument that its views were entitled to "great weight," the Court of Appeals said that it was simply being asked to resolve a question "of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent." Accordingly, it said it would consider the matter de novo.

The critical arguments presented by the parties respectively were as follows:

1. NYCTRS contended that per session compensation has been outside the scope of the definition of "annual salary" since the inception of teachers' retirement plans and that subsequent legislative modifications to the retirement system -- which have not specifically addressed per session compensation -- did not adjust benefits to include this type of income.

2. Weingarten argued that per session compensation is a form of regular compensation and therefore should be considered in determining a member’s retirement allowance, primarily because per session income is not covered by the exclusions from "annual salary" set forth in the applicable statutes.

The Court of Appeals said that for the purpose of evaluating whether per session compensation is pensionable, it was "guided by several considerations, including the use of the term ‘salary’ in the progression of NYCTRS statutes and regulations, the legislative intent evidenced in the modifications to the programs and the public policy that precludes artificial inflation of income before retirement."

Observing that the term "annual salary" predated the establishment of the NYCTRS as it was used in a predecessor statute that established the New York City Public School Teachers' Retirement Fund in 1917, the court commented that the 1917 Fund and the NYCTRS were designed to provide an income related to actual earnings during employment, "indicating that pensionable income was intended to include more than just anticipated base salary."

The Court of Appeals pointed out that in response to the former practice of including certain one-time or lump sum items of compensation, such as sick leave payments, over-time payments, termination pay and payments for unused vacation credit to enhance a member's final salary prior to his or her retirement, in 1971 the Legislature enacted Section 431 of the Retirement and Social Security Law [Chapter 503, Laws of 1971].

Section 431 explicitly barred a public retirement system of this State from considering the following in determining a member's final average salary:

1. Lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked;

2. Any form of termination pay;

3. Any additional compensation paid in anticipation of retirement; and

4. That portion of compensation earned during any twelve months included in such salary base period that exceeded the total compensation paid to the individual during the preceding twelve months by more than twenty per cent.

Although per session compensation was different from the exclusions listed in the first three categories barred by Section 431, the court said that "[c]ategory four would, however, limit pensionable compensation to the extent that the addition of per session income exceeds the statutory cap" and it was therefore necessary for it to consider this type of exclusion in a manner that "accord[s] respect to the[ir] interlocking and interrelated features."

The court's decision: Since the Legislature's exclusion of particular forms of compensation or payments from the calculation of the individual's final average salary "implicates a long-settled principle of statutory construction" -- where the Legislature lists exceptions in a statute, items not specifically referenced are deemed to have been intentionally excluded. Applying this canon of construction in these circumstances, the court said that by failing to exclude per session compensation when it enacted Section 431, "the Legislature evidenced an intent to allow per session compensation to be includable for pension purposes."

Pointing out that this view is consistent with the treatment of "per session" type payments by the New York State Teachers' Retirement System [TRS], which covers teachers in public schools outside of the City of New York, the decision notes that TRS "treats per session compensation as pensionable." The court said that there was "no reasonable basis justifying the disparate treatment of per session compensation by the NYCTRS and ... TRS."

The Court of Appeals also observed that "the highly regulated nature of per session activities prevents artificial manipulation of total compensation in the pre-retirement period" thereby avoiding the type of abuse that Section 431 seeks to bar.

Dismissing a probationary employee

Dismissing a probationary employee

Weintraub v NYC Board of Education, App. Div., 298 A.D.2d 595, Lv. to appeal denied, 99 N.Y.2d 507

The Weintraub case succinctly sets out what could be characterized as "black letter law" concerning the dismissal of a probationary employee.

The New York City Board of Education dismissed probationary teacher David H. Weintraub. Weintraub sued, only to have his petition summarily dismissed by a State Supreme Court judge.

The Appellate Division affirmed the lower court's ruling, indicating that:

As a probationary employee, [Weintraub] could be terminated without a hearing provided that the termination was not in bad faith, a consequence of constitutionally impermissible reasons, or prohibited by statute or case law.

The probationary employee bears the burden of establishing such bad faith or unlawful reason for his or her termination. However conclusory allegations of bad faith are insufficient to meet this burden and apparently all that Weintraub presented was what the court characterized as "conclusory allegations of bad faith."

In addition to confirming the lower court's dismissal of Weintraub's petition without a hearing, the Appellate Division commented that "[t]he termination of the petitioner's employment was not in bad faith or illegal."

The court's reference to the bar of termination prohibited by statute or case law includes the prohibition against terminating a probationary employee during his or her minimum period of probation without notice and hearing.

Where a probationary period has been set in terms of a minimum and a maximum period of probation, case law holds that if the appointing authority elected to terminate a probationary  employee during his or her minimum period of probation, such an individual is entitled to a notice and hearing in the same manner as a tenured individual.

In contrast, a probationer terminated after completing his or her minimum period of probation may be terminated without notice and hearing prior to the completion of his or her maximum period of probation.

Changing vacation scheduling not a mandatory subject of collective bargaining

Changing vacation scheduling not a mandatory subject of collective bargaining
Mtr. of NYS Correctional Officers and Police Benevolent Asso. and Elmira Correctional Facility, PERB Case U-23550

The Board reversed the Decision of the ALJ and dismissed NYSCOPBA's improper practice charge that alleged that the State had violated §209-a.1 (d) of the Act by unilaterally changing the manner in which unit employees working vacation relief are scheduled at the Elmira Correctional Facility.

The Board balanced the interests of unit employees in making plans and scheduling events against the State's need to provide corrections service by filling the vacant job openings through vacation leave and any other vacancies and found that the State's interests predominated.

Because the determination as to whether a particular work rule constitutes a mandatory or nonmandatory subject of bargaining involves identifying the subject matter and then balancing the competing interests of the employer and the employees, the Board concluded that the charge dealt with a nonmandatory subject of negotiations

Disqualification for unemployment insurance benefits

Disqualification for unemployment insurance benefits

Rivera v Commissioner of Labor, 298 A.D.2d 673

As a general rule, termination for misconduct will disqualify an applicant for unemployment insurance benefits. In the Rivera case, the New York City Department of Citywide Administrative Services controverted the claim for unemployment insurance filed by one of its former employees, Emerita Rivera, on the grounds that she had been terminated for misconduct.

The Unemployment Insurance Appeal Board agreed, and ruled that Rivera was disqualified from receiving unemployment insurance benefits because she had been terminated due to her own misconduct. The Appellate Division sustained the Board's determination.

The court pointed out that substantial evidence in the record supported the Board's decision. The Appellate Division noted that the record established that, prior to her termination, Rivera:

1. Refused to perform field-monitoring duties associated with her position as a Contract Specialist II despite being warned that she could be discharged for insubordination is she refused to perform her field duties.

2. That although Rivera had been granted a medical leave of absence, she failed to submit any medical documentation substantiating her request to be placed in a "restricted duties" status.

3. When Rivera was examined by the employer's physicians, the physicians concluded that she was medically and psychologically able to perform the duties of her position.

Under these circumstances, said the court, "we find no reason to disturb the Board's decision" and dismissed Rivera's appeal.

Ordering a hiring freeze

Ordering a hiring freeze
Caputo v Halpin, 160 A.D.2d 938; Motion for leave to appeal dismissed, 76 N.Y.2d 773

From time to time a jurisdiction’s chief executive officer places a “hiring freeze” on appointments to vacant positions in departments and agencies in the jurisdiction. Does he or she need an expressed power to do so?

The Caputo decision involved this question: the truncating of the power of an appointing officer to fill vacant positions in his or her department after the Suffolk County Executive issued an order freezing the filling of vacant county positions in order to avoid an expected budget deficit.

The Appellate Division ruled that:

Within this context, it was well within the power of the Soffolk County Executive to delay the approval of the appointments to the vacancies in the anticipation that there will be a budget deficit and that not filling these vacancies for which funds had been appropriated would be a convenient source to realize savings. The statutory provisions dealing with the avoidance of a deficit make the County Executive, as chief budget officer, the overseer of expenditure of budgeted funds.

In affirming the Appellate Division's ruling, the Court of Appeals referred to its decision in Slominski v Rutkowski, 62 NY^2d 781, a case involving a similar challenge to the Erie County Executive ordering a hiring freeze.

The Court said that despite the lack of an express provision granting the Suffolk County Executive authority to order temporary hiring freezes, a statutory power, by contrast, enjoyed by the Erie County chief executive officer, the rationale in Slominski was applicable in the Suffolk County situation. The Court of Appeals held that "the very broad powers granted the Suffolk County Executive are sufficiently similar to those granted the Erie County Executive [considered] in Slominski to render that case essentially indistinguishable."

Other problems are certain to arise in the context of such an anticipated budget deficit. Among them are the following:

1. Compensation: In Abberbock v Nassau County, a State Supreme Court judge decided that the freeze imposed on expected salary increases, as well as the reduction of salaries, of employees designated managerial or confidential [M/C] in the context of a fiscal crisis "cannot be said ... represents an unreasonable course of conduct or that it is unrelated to an active and manifest evil" insofar as employees designated managerial or confidential were concerned. The Appellate Division agreed.

2. Eligible lists: When deciding Lopez v Barrios-Paoli, the Supreme Court, New York County, considered a number of issues that frequently result when there is a hiring freeze, including the "backing up" of eligible lists. Here the court decided that New York City’s personnel director's extension of earlier lists after a subsequent list had been established, thereby requiring the earlier lists to be certified first for appointment to vacancies, was a discretionary act pursuant to Section 56.1 of the Civil Service Law. Section 56.1 permits the extension of any eligible list in the event of a restriction against the filling of vacancies.

3. Leave from a "hold" position: The status of an individual's leave from his or her "hold item" may lead to difficulties, as the decision by the Appellate Divisions in Dworkin v Dept of Environmental Conservation demonstrates. Such employees may erroneously believe that they are protected in the event of termination because a budget problem because they think that they have a "hold item." As the Dworkin decision demonstrates, sometimes such a belief that they are protected by having a "hold position" is illusory!

In addition, the termination of temporary and provisional employees could result in litigation while the layoff of persons holding a permanent appointment pursuant to Section 80 or 80-a of the Civil Service Law creates significant technical difficulties as well as personal problems for the individuals affected. Also, in some instances provisions in collective bargaining agreements may set out procedural elements that must be honored before a layoff may be instituted by the appointing authority.