NYC not required to make “increased-take-home-pay" retirement contributions for police officers and firefighters appointed after June 30, 2009

NYC not required to make “increased-take-home-pay" retirement contributions for police officers and firefighters appointed after June 30, 2009

Lynch v City of New York, 2014 NY Slip Op 04873, Court of Appeals

The bottom line of a very comprehensive opinion in which the Court of Appeals addressed whether Retirement and Social Security Law §480 (b) requires the City of New York (the City) to make "Increased-Take-Home-Pay" (ITHP) pension contributions on behalf of New York City police officers and firefighters appointed on or after July 1, 2009 -- the City is not required to make such contributions.

The Court of Appeals ruled that “For the reasons that follow, we conclude that section 480 (b) only encompasses temporary programs in place as of 1974 for tier 1 and 2 members of a public employee retirement system. Stated another way, section 480 (b) does not obligate a public employer to pay any portion of a tier 3 public employee's statutorily required pension contribution. Accordingly, the City has properly deducted 3% from the gross annual wages of its tier 3 police officers and firefighters as mandatory employee pension contributions.”

The text of the decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2014/2014_04873.htm

2014 End-of-Session Legislative Review.

2014 End-of-Session Legislative Review.  

NYMUNIBLOG has posted an article by Jillian D. Kasow, Esq. – 2014 End-of-Session Legislative Review.  

Ms. Kasow notes that on June 20th, the New York State Legislature concluded the second year of its 2013-14 legislative session and lists some key legislation passed during the Session.

You may view the latest post at
http://nymuniblog.com/2014-end-of-session-legislative-review/

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Internal Revenue Service severance pay advisory update

Internal Revenue Service severance pay advisory update

Source: Office of Federal, State and Local Governments

In its July 2013 newsletter,*the Internal Revenue Service’s Office of Federal, State and Local Governments [FSLG] addressed the tax treatment of severance payments made by government entities to terminated employees by the Internal Revenue Service [IRS]. The article, Severance pay and FICA, noted that under Internal Revenue Code §61 severance pay is included [1] in the gross income of the recipient and normal income tax withholding rules apply and [2] severance pay is generally wages for purposes of FICA taxes.

In its decision in United States v. Quality Stores, 134 S.Ct. 1395 [2014], the United States Supreme Court held that severance payments made to involuntarily terminated employees were wages subject to Social Security and Medicare (FICA) taxes. Accordingly, IRS advises it will disallow all claims for refunds of FICA taxes on severance pay.

However, IRS Revenue Ruling 90-72 provides a limited administrative exception for certain payments that supplement state unemployment compensation, sometimes referred to as “SUB-pay.” The Ruling provides for an exception for a stream of payments coordinated with the receipt of unemployment compensation and specifically points out that a lump-sum payment would not qualify for the exception. IRS said that as the Supreme Court decision did not address the provisions of Revenue Ruling 90-72, payments that meeting Ruling 90-72 requirements stated in that ruling continue to be excluded from wages for FICA purposes.

Questions about severance pay should be directed to one of the following Federal, State and Local Government [FSLG] Specialists for New York State: Dave Coulon [(315) 233-7305]; Jean Redman [(607-378-0069] or Granville Shannon [(212) 436 -1492].

* The July 2013 is posted on the Internet at: http://www.irs.gov/pub/irs-tege/p4090_0713.pdf. The FSLG Newsletter is asemiannual newsletter published by the Internal Revenue Service’s office of Federal, State and Local Governments (FSLG) to assist in FSLG’s mission to ensure compliance by Federal, state, and local governmental entities with Federal employment and other tax laws through educational and compliance review activities.

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Suspension without pay

Suspension without pay
2014 NY Slip Op 04860, Appellate Division, First Department

The employee [Plaintiff] was suspended without pay indefinitely pursuant to Article III(9) of the collective bargaining agreement (CBA) based on his failure to provide a proper accounting of funds allocated to him in connection with his employment. He remained suspended without pay until he retired on November 30, 2004. 

The disciplinary arbitration panel found that Plaintiff had been improperly suspended without pay for more than 30 days, in violation of the CBA, and awarded him wages and benefit contributions for the period from 30 days after his suspension through the date of the first arbitration hearing, which was held September 29, 2005. The employer filed a CPLR Article 75 petition challenging the arbitration award.

Noting that Civil Service Law §75(3) was incorporated into the CBA under Article XVII(4)(B), the Appellate Division agreed with the employer that since the CBA and Civil Service Law §75(3) both permit back-pay awards only for periods of improper suspension, even if the grievant was suspended improperly and held that the arbitrators exceeded their power by awarding Plaintiff back pay for a period of time following his voluntary retirement.

Accordingly, the Appellate Division unanimously modified the arbitration award, on the law, to define the period for the purposes of awarding Plaintiff back pay and benefits ran from 30 days after Plaintiff’s suspension without pay through the date of the Plaintiff's retirement rather than for period running from 30 days after his suspension without pay through the date of the first arbitration hearing,

In effect the court ruled that an individual improperly suspended without pay was entitled to back pay for any suspension without pay in excess of the 30-day period authorized by §75(3) only through the effective date of his or her separation from service such as the result of his or her retirement, resignation or death. Presumably the same limitation would apply in situations where the individual services would otherwise terminate by operation of law, rule or regulation while he or she was improperly suspended without pay.

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Attaining tenure by estoppel or acquisition

Attaining tenure by estoppel or acquisition

Files v Department of Educ. of the City of New York, 2014 NY Slip Op 04713, Appellate Division, First Department

Typically a probationary teacher or administrator will attain tenure by estoppel or acquisition when a school board accepts the continued services of the teacher or administrator, but fails to take the action required by law to either grant or deny tenure prior to the expiration of the teacher’s or administrator’s probationary term.

The Appellate Division sustained a State Supreme Court decision rejecting a probationary teacher’s [Teacher] petition by which she sought a court order annulling her employer’s decision to deny her tenure and to terminate her employment, contending that she had attained tenure by estoppel.

As to Teacher’s claim that she had attained tenure by estoppel, the Appellate Division said the she had failed to demonstrate that she acquired tenure by estoppel or acquisition as the record demonstrated that she did not perform the duties of a teacher beyond her probationary term. The decision notes that Teacher’s employer made it clear to her that she would not be given tenure and, at most, would be offered an extension of her probationary period. Teacher, however, declined the offer to extend her probationary period.

Significantly Teacher was not placed in a classroom nor did she perform any traditional teaching functions immediately prior to the expiration of her probationary period. Rather, said the Appellate Division, the record demonstrates that she performed administrative tasks instead of traditional teaching duties.

The Appellate Division also rejected Teacher’s allegation that her employer had “engaged in bad faith when it terminated her employment” as the record indicated that Teacher had received “two letters of misconduct and an unsatisfactory performance rating.”

One exception to the general rule: In Mendez v Valenti, 101 AD2d 612 the Appellate Division held that as long as the termination of a probationer appointed to a position in the classified service is effected within a reasonable time after the end of his or her maximum period of probation, such as set to coincide with the end of the next payroll period, he or she does not attain tenure by estoppel or acquisition notwithstanding his or her continuation on the payroll. 

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