Taxing Fringe Benefits

Taxing Fringe Benefits

Source: FSLG Newsletter

What: Free Webinar – Taxability of Fringe Benefits Part Three: Other Compensation and Payments to Employees 

When: July 9, 2015; 2 p.m. (Eastern)

How: Register for this event. You will use the same link to attend the event.

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Backup Withholding and Form 1099 Miscellaneous

• June 25, 2015; 2 p.m. (Eastern)
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Taxability of Fringe Benefits Part Two: Commonly Provided Fringe Benefits

• June 11, 2015; 2 p.m. (Eastern)
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Filing a notice of claim required by Education Law §3813(1) not a condition precedent to an action seeking to vindicate a “public interest” in contrast to advancing a private right

Filing a notice of claim required by Education Law §3813(1) not a condition precedent to an action seeking to vindicate a “public interest” in contrast to advancing a private right
2015 NY Slip Op 04675, Court of Appeals

A teacher serving a three-year probationary period [Probationer] was terminated before the end of the probationary period. Probationer brought a CPLR Article 78 proceeding seeking a court order [1] annulling the School District's determination, [2] reinstatement with tenure and [3] back pay.

The School District asked Supreme Court to dismiss Probationer’s petition contending that Probationer had not served a timely notice of claim as required by Education Law §3813(1).

Probationer’s sole argument in opposition to the District’s "affirmative defense" was that such a "[n]otice of [c]laim is not a condition precedent to a special proceeding properly brought pursuant to CPLR [a]rticle 78 seeking judicial enforcement of a legal right derived through enactment of positive law."

Supreme Court agreed with Probationer and directed that the District reinstate Probationer to her position with back pay “pending a hearing to determine whether Probationer was denied tenure and terminated from her probationary employment in bad faith.”

The School District appealed and the Appellate Division reversed the lower court’s determination.

The Appellate Division ruled that the “positive-law exemption” on which Probationer relied “was not relevant to the situation of a probationary teacher seeking to compel a school district to grant tenure.”*

The Appellate Division also commented that in its view Education Law §3813(1) does not apply when a litigant seeks only equitable relief, but observed that Probationer asked for damages in the form of back pay in addition to an equitable remedy and brought the lawsuit “to advance a private right rather than vindicate a public interest.”

The Court of Appeals, after granting Probationer leave to appeal, affirmed the Appellate Division’s ruling, explaining that on appeal to the court Probationer advanced two arguments:

1. The monetary damages that Probationer demands “are merely incidental” to Probationer’s primary claim for equitable relief; and, or,

2. That Probationer seeks to enforce her claim to tenure by estoppel rights.

However, said the Court of Appeals, “Even if the Appellate Division may have considered one or both of these arguments,” Probationer “did not raise them at Supreme Court; therefore, they are unpreserved for our review.”  

* In Sephton v Board of Education of the City of New York, 99 AD2d 509 [appeal denied 62 NY2d 605], the Appellate Division noted that "the 'tenure rights' of teachers are ... considered a matter in the public interest and therefore §3813 is not applicable to cases seeking to enforce such rights,” [citations omitted]. However, said the Sephton court, the Sephton plaintiffs “are seeking to recover back pay due to the allegedly improper restructuring of their salaries. Such a claim seeks vindication of private rights and duties. Thus a [timely §3813(1)] notice of claim was a condition precedent to the maintenance of the action (citations omitted).”

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2015/2015_04675.htm

New York Governor Andrew M. Cuomo announces thirteen new appointments to his administration

New York Governor Andrew M. Cuomo announces thirteen new appointments to his administration

Jen McCormick has been appointed First Deputy Commissioner of the Department of Agriculture and Markets. Ms. McCormick previously served as Interim Executive Deputy Director of the Thruway Authority/Canal Corporation and, prior, as Assistant Deputy Director of State Operations for Governor Cuomo, aiding in the development of implementation strategies for the Governor’s initiatives. Before this role, she was Deputy Commissioner in the Division of Business Advocacy and Research for Empire State Development. She also served as Director of the Office of Budget Studies for New York State Comptroller from 2005 to 2007 and was Secretary to the State Senate Finance Committee for the Minority. Ms. McCormick has a B.A. from SUNY Empire State College and an M.P.A. from the University at Albany. 

Linda Lacewell has been appointed as New York State's first Chief Risk Officer. She will design and oversee an enterprise risk management system for state agencies and authorities. Since January, Ms. Lacewell has been building and implementing the first statewide system for ethics, risk and compliance in agencies and authorities, with over a dozen agencies and authorities participating to date. This system will now operate under her as Chief Risk Officer, with the Special Counsels for Ethics, Risk, and Compliance continuing to report to her. Ms. Lacewell will continue her advisory role in the Executive Chamber as Counselor to the Governor. Ms. Lacewell was formerly Special Counsel to the Governor, as well as the architect of OpenNY, a state-of-the-art open data initiative. She was formerly Special Counsel to Attorney General Cuomo, where she oversaw the public pension fund pay-to-play investigation and the out-of-network health insurance investigation, both of which led to nationwide systemic reform. She spent nine years as an Assistant U.S. Attorney for the Eastern District of New York, including two years on the Enron Task Force, and received the Henry L. Stimson Medal and the Attorney General’s Award for Exceptional Service. She earned her Bachelor of Arts degree from New College of the University of South Florida and her Juris Doctor with honors from the University of Miami School of Law. She clerked for a United States District Judge for the Southern District of Florida. She is an Adjunct Professor of Law at New York University School of Law, teaching Ethics in Government, and was formerly an Adjunct Professor of Law at Fordham University School of Law, teaching International Criminal Law.

Camille Joseph Varlack has been appointed Special Counsel to the Superintendent for Ethics, Risk and Compliance for the Department of Financial Services. Ms. Varlack formerly served as a Principal Law Clerk for the New York State Supreme Court and, prior, Assistant Vice President and Counsel at AXA Financial, Inc. Earlier in her career, she was an Assistant District Attorney for the Kings County District Attorney’s Office, Legal Assistant in the Law Department of News Corporation and an Investigative Assistant for the New York State Attorney General. Ms. Varlack has a B.A. from the State University of New York at Buffalo and a J.D. from Brooklyn Law School.

Maureen Coleman has been recommended to serve as General Counsel for the Environmental Facilities Corporation. This recommendation requires approval by the Environmental Facilities Corporation Board. Ms. Coleman previously served as Assistant Counsel to the Governor, focusing on energy and environment, where she advised the Governor and policy staff on legal matters related to the environment, agriculture and energy. Prior to this role, she held a number of roles at the Department of Environmental Conservation, where she served for 13 years, beginning as an Assistant Legislative Counsel and culminating in Bureau Chief of Water and Natural Resources for the Department’s Office of General Counsel. She was also Vice President of Law and Regulation and Assistant Secretary of Seligman Investment Companies at J.W. Seligman & Co. Incorporated. Ms. Coleman has a B.A. from College of Saint Rose, a joint M.S. in Industrial and Labor Relations from Cornell University and Baruch College, and a J.D. from Brooklyn Law School.

Geraldine Reilly has been appointed to serve as Chair of the Unemployment Insurance Appeal Board, of which she is currently a member. Ms. Reilly previously served as Chief of Staff and Counsel to Assemblywoman Catherine Nolan and, prior, was part of the program and counsel staff for the New York State Assembly. She has held a number of labor-related positions, including Labor Relations Liaison for New York State Electric and Gas, Manager of Labor Relations for the Triborough Bridge and Tunnel Authority and Labor Relations Specialist for the New Jersey Transit Rail Operation. Ms. Reilly has a B.A. from Brooklyn College and a J.D. from Seton Hall University School of Law.

Randall T. Douglas has been appointed to serve on the Unemployment Insurance Appeal Board. Mr. Douglas is currently serving an unprecedented sixth term as Essex County Chairman of the Board of Supervisors and 12th year as Town of Jay Supervisor, during which he continues to lead both municipalities through the biggest disaster and recovery efforts in their history following Hurricane Irene in 2011. He also serves as President-Elect of the New York State Association of Counties, is a member of the Board of Directors of the Adirondack Association of Towns and Villages and sits on the resolutions committee for the New York State Association of Towns. He previously served in the Maintenance Department at the Adirondack Correctional Facility in Ray Brook, NY, where he supervised inmate maintenance crews. He was also Vice Chair of the Essex County Democratic Party, a liaison to the Staten Island/Sandy Victims Property Acquisition Committee and a Board Member of the North Country United Way. He studied criminal justice at Clinton Community College and attended the Dennis A. Pelletier County Government Institute.

Tracy McKibben has been nominated as Trustee of the New York Power Authority. Ms. McKibben is currently the Founder and President of MAC Energy Advisors LLC., a consulting company that assists clients on alternative energy, renewable energy, water and clean technology investments. Previously, she was Managing Director and Head of Environmental Banking Strategy for Citigroup Global Markets, and served on the National Security Council at The White House as Director of European Economic Affairs and European Union Relations, as well as various senior advisory roles within the U.S. Department of Commerce. Ms. McKibben holds a B.A. from West Virginia State University and a J.D. from Harvard Law School.

Michael Fascitelli has been nominated as a Commissioner of the Port Authority of New York and New Jersey. Mr. Fascitelli is the Founder of MDF Capital LLC, previously serving as President and Chief Executive Officer of Vornado Realty Trust as well as President of Alexander’s Inc. Mr. Fascitelli continues to serve as a Trustee of Vornado Realty Trust. Prior to joining Vornado, he was a Partner at Goldman, Sachs & Co. Currently, he is a Trustee of Starwood Waypoint Residential Trust, as well as a Board Member at Child Mind Institute, Rockefeller University and Urban Land Institute. Mr. Fascitelli holds an MBA, with highest distinction, from Harvard Business School and a B.S. in Industrial Engineering, Summa Cum Laude, from the University of Rhode Island.

Andrew Stone has been nominated as a Director of the New York Convention Center Operating Corporation (Javits). Mr. Stone is currently the Managing Partner and CEO of Petra Capital Management, and he has been involved in all phases of the firm’s development since its founding. Prior to founding Petra, Mr. Stone was a Managing Director and head of the Principal Transactions Group (“PTG”) at Credit Suisse First Boston where he was responsible for the firm’s worldwide real estate effort, including debt origination, equity investments and securitization. Prior to CSFB, Mr. Stone was Senior Managing Director in charge of the Mortgage, Asset- Backed and Real Estate Securities Group at Daiwa Securities America. Mr. Stone founded the department and was responsible for managing the origination, trading, structuring and sales of all mortgage and asset-backed securities. Prior to Daiwa, Mr. Stone was Managing Director and head of the Mortgage and Asset-Backed Group at Prudential Bache. Mr. Stone received his B.S. from the Wharton School of the University of Pennsylvania with dual majors in finance and entrepreneurial management and his M.B.A. from the University of Chicago with a double concentration in finance and marketing.

Hamilton "Tony" James has been nominated as a Commissioner of the Port Authority of New York and New Jersey. Mr. James is currently the President and Chief Operating Officer of The Blackstone Group. Prior to joining Blackstone, Mr. James was Chairman of Global Investment Banking and Private Equity at Credit Suisse First Boston, and Chairman of the Banking Group at Donaldson, Lufkin & Jenrette. He is a Director of Costco Wholesale Corporation, is a former member of the President's Export Council – Subcommittee on Technology and Competitiveness, and serves as a trustee at many organizations including the Second Stage Theatre, The Metropolitan Museum of Art, Woods Hole Oceanographic, the Wildlife Conservation Society. Mr. James holds his B.A. and M.B.A. from Harvard College and Harvard Business School.

Nicholas Melissinos will be appointed Special Counsel to the Commissioner for Ethics, Risk and Compliance at the Division of Human Rights. Currently, Mr. Melissinos is Assistant Corporation Counsel at the New York City Law Department's Special Federal Litigation Division, and prior, has held roles at private law firms. He volunteers for the LeGaL Foundation to provide guidance for LGBTQ participants and at the NYC Bar Association, where he is a member of the LGBT Rights Committee. Mr. Melissinos holds a J.D. from Brooklyn Law School and a B.A. from George Washington University.

Michael Shollar will be appointed Special Counsel to the Commissioner for Ethics, Risk and Compliance at the Department of Taxation and Finance. For nearly ten years, Mr. Shollar served in the Richmond County District Attorney's Office as an Assistant District Attorney in the Investigations Bureau and the Appeals Bureau. He holds a J.D. from Northwestern University School of Law and a B.A. from the University of Rochester.

Kevin Hickey has been appointed Special Counsel to the Commissioner for Ethics, Risk and Compliance at the Office of Temporary and Disability Assistance. Mr. Hickey currently serves as the Director of Litigation at the Office of Temporary and Disability Assistance, and has previously worked as Assistant Attorney General in the Office of the New York Attorney General as well as in private law firms. He holds a J.D. from Albany Law School and a B.S. from SUNY University at Albany.

Courts will strictly construe the terms of a disciplinary settlement agreement setting out the reason permitting the employee to be summarily terminated from his or her position

Courts will strictly construe the terms of a disciplinary settlement agreement setting out the reason permitting the employee to be summarily terminated from his or her position

2015 NY Slip Op 01181, Appellate Division, First Department 

Supreme Court denied an Article 78 petition filed by an individual [Plaintiff] seeking to annul the appointing authority’s decision to terminate his employment. The court held that the parties' disciplinary settlement agreement executed in 2012 served to waive Plaintiff's right to appeal or seek judicial review of his termination of employment “in all scenarios.”

The 2012 settlement agreement's introductory paragraph stated that the parties agreed to settle Plaintiff's violation of an earlier disciplinary settlement agreement that addressed Petitioner’s violation of the appointing authority’s policy concerning the "Sales of Goods and Services in Hospital." 2012 settlement agreement provided that should Plaintiff engage in misconduct that was the "same or similar to" that constituting the violation of the prior agreement, to be determined solely by the Director of Labor Relations or her designee, he would be terminated and could not appeal the penalty in any administrative or legal forum.*

The Appellate Division reversed the Supreme Court’s decision and remanded the matter “for further consideration” as the Supreme Court “never reached the merits of Plaintiff’s petition.”

The Appellate Division explained that courts should not "adopt an interpretation that renders a portion of the contract meaningless," citing Wallace v 600 Partners Co., 205 AD2d 202. In this instance, said the court, the appointing authority terminated Plaintiff for allegedly taking leave under color of the Family Medical Leave Act (29 USC §§ 2611 et seq.) without obtaining prior approval from his department or the Office of Labor Relations.

Such conduct is not the "same or similar to" the sale of goods in the hospital  and,  hence, the terms and conditions of set out in Paragraph 1 of the 2012 settlement agreement, including Plaintiff's waiver of judicial review, are inapplicable. The Appellate Division said that to hold otherwise “would be to render superfluous paragraph three, which speaks to the penalty for failing to adhere to policies and procedures generally, but does not include such additional restrictions.”

Further, noted the court, the employer “failed to follow” its own procedures and the terms of the settlement agreement by effectively precluding Plaintiff “from having an opportunity to explain why he should not be terminated.”

Similarly, Taylor v Cass, 122 A.D.2d 885, illustrates impact of a settlement agreement providing for a disciplinary probation award that provided that the appointing authority could summarily terminate the employee without any hearing if, in the opinion of his superior, "his job performance was adversely affected by his intoxication on the job during the next six months.”

Taylor was terminated during his disciplinary probationary period without a hearing for failing to give a fair day’s work and sleeping during scheduled working hours. However, there was no allegation that he had been intoxicated on the job as a reason for his dismissal as a disciplinary probation employee.

Taylor sued, challenging his dismissal and won reinstatement with back salary. The Appellate Division said that Taylor’s dismissal was improper because Taylor was not terminated for the sole reason specified in the settlement: intoxication on the job.

* Paragraph three of the agreement separately provided that Plaintiff agreed to adhere to departmental policies and procedures and would be terminated for his failure to do so, but provided no limitation on who would determine his guilt, nor did it waive any judicial review.

The decision is posted on the Internet at: http://www.nycourts.gov/reporter/3dseries/2015/2015_01181.htm

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Certification to teach in the position sought critical to teacher’s reinstatement from a preferred list following his or her layoff

Certification to teach in the position sought critical to teacher’s reinstatement from a preferred list following his or her layoff

2015 NY Slip Op 04492, Appellate Division, Second Department

A teacher [Teacher] certified to teach Spanish, was appointed as a foreign language teacher in the school district’s elementary school. Teacher taught Spanish and acquired tenure in that position.

The school board [Board] subsequently abolished the elementary school Spanish teacher position for economic reasons and Teacher’s name was placed on a "preferred eligible list" for appointment to any vacancy which may arise in a similar position within seven years from the date that her position was abolished as provided by Education Law §§2510[3][a]; 3013[3][a]).

In 2011, the Board of Education created a new a full-time position of "French/Spanish Teacher 7-12" and appointed an individual who was certified to teach both French and Spanish to fill that vacancy.

Teacher commenced a CPLR Article 78 in the nature of mandamus to compel the Board to appoint her to a position of part-time Spanish teacher. 

Teacher argued that the Board, in effect, had created "a teaching position that is [part-time] Spanish and [part-time] French," and that she was entitled pursuant to Education Law §§2510(3)(a) and 3013(3)(a) to be appointed to the purported part-time Spanish teacher position.

Supreme Court denied the petition and dismissed the proceeding on the merits and Teacher appealed.

The Appellate Division affirmed the Supreme Court’s action, explaining that "[CPLR] Article 78 relief in the form of mandamus to compel may be granted only where a petitioner establishes a clear legal right to the relief requested." In determining whether Teacher is entitled to re-employment pursuant to Education Law §§2510 or 3013 in this action, "the threshold question must be one of certification to teach in the position sought. Absent such certification, re-employment rights cannot attach."

Noting that Teacher did not challenge the propriety of the Board's decision to create a single full-time position encompassing instruction of both French and Spanish, the Appellate Division ruled the her “claim must fail because, as [Teacher] conceded, she lacks the dual certification necessary for [appointment to] the full-time position.”

Thus, held the Appellate Division, as Teacher “failed to demonstrate a clear legal right to the relief sought,” the Supreme Court properly denied the petition and dismissed the proceeding on the merits.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2015/2015_04492.htm

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The Layoff, Preferred List and Reinstatement Manual - a 645 page e-book reviewing the relevant laws, rules and regulations, and selected court and administrative decisions. For more information click on http://booklocker.com/books/5216.html

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