Municipal and school district audits issued during the week ending February 5, 2021

New York State Comptroller Thomas P. DiNapoli announced the following municipal and school district audits were issued during the week ending February 5, 2021.

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

 MUNICIPAL AUDITS

Town of Owasco – Real Property Tax Exemptions Administration (Cayuga County)  

The assessor did not properly administer select real property tax exemptions. Granted property exemptions were not always properly applied for or supported. Of the 99 property tax exemptions that auditors reviewed, 75 of the exemptions totaling over $4.1 million were not properly applied for or supported. Property owners received $4,014 in 2019 town tax reductions for these unsupported exemptions.

 

Stamford-Harpersfield-Kortright Fire District – Financial Activities (Delaware County)  

The board did not establish adequate controls or provide adequate fiscal oversight of the treasurer. As a result, district assets were not safeguarded. The board did not adequately monitor fiscal operations and properly document disbursement approvals. The board also did not conduct required audits or adopt a procurement policy, investment policy or code of ethics, as required. Although the treasurer’s financial records and reports that auditors reviewed were accurate, and financial transactions were appropriate and properly accounted for, the treasurer performed all financial duties, including receiving and disbursing cash, signing district checks and maintaining the accounting records, with no oversight.

 

SCHOOL DISTRICT AUDITS

Groton Central School District – Cash Management (Cayuga County, Cortland County and Tompkins County)

School district officials did not maximize interest earnings. During the audit period, the district’s interest earnings totaled $72,555, but the district could have earned another $367,963 if officials invested available funds in a financial institution that offered higher interest rates. Business officials did not develop and manage a comprehensive investment program or comply with the district’s board of education’s investment policy. District officials should solicit interest rate quotes to maximize interest earnings and prepare monthly cash flow forecasts.

 

The Workers' Compensation Law provides the exclusive remedy if an employee is injured by a coworker while both are performing the duties of their positions

In an action to recover damages for personal injuries, the petitioners* appealed the Supreme Court granting the respondents, a Police District and a coworker, respective motions to dismiss the complaint insofar as they were named as a defendants.

The genesis of this action was an accident involving a police officer [Plaintiff] operating a Police District police motorcycle in his official capacity colliding with a Police District vehicle operated by another Police District police officer. Supreme Court granted the Police District's motion to dismiss Plaintiffs' complaint based on the Police District's argument that Plaintiffs' action was barred by the exclusivity provisions of the Workers' Compensation Law. Plaintiffs appealed the court's ruling.

The Appellate Division held that Supreme Court "properly granted" the Police District's motion explaining that in considering a motion to dismiss a complaint pursuant to CPLR 3211(a)(1), "the documentary evidence must utterly refute the plaintiff's factual allegations, conclusively establishing a defense as a matter of law."

Citing Gould v Decolator, 121 AD3d 845, the Appellate Division observed that the Police District had submitted documentary evidence conclusively establishing that the Petitioners' causes of action insofar as asserted against it were barred by the exclusivity provisions of the Workers' Compensation Law.

In addition, the Appellate Division opined that Supreme Court properly awarded summary judgment to Plaintiff''s coworker as the Workers' Compensation Law was "designed to ensure that an employee injured in the course of his or her employment will be made whole and to protect a co-employee who, acting within the scope of his or her employment, caused the injury." Further, the court observed that Workers' compensation qualifies as an exclusive remedy when both the plaintiff and the defendant are acting within the scope of their employment, as co-employees, at the time of injury," citing Macchirole v Giamboi, 97 NY2d 147. 

The Appellate Division also noted that §29[6] of the Workers' Compensation Law provides that the right to compensation or benefits under this chapter, "shall be the exclusive remedy to an employee ... when such employee is injured or killed by the negligence or wrong of another in the same employ" and a coworker has the protection of this exclusivity provision if he "was acting within the scope of his employment and was not engaged in a willful or intentional tort."

The Appellate Division held that, in this instance, the defendant police officer had established his prima facieentitlement to judgment as a matter of law dismissing the complaint insofar as asserted against him by establishing that both he and the Plaintiff were co-employees acting within the scope of their employment when the Plaintiff was injured.

* A police officer and his spouse suing derivatively were the petitioners in this action.

Click HERE to access the Appellate Division's decision.

 

New York State Comptroller appoints senior budget and policy staff

On February 3, 2021 New York State Comptroller Thomas P. DiNapoli announced the appointment of Maria Doulis as deputy comptroller and Todd Scheuermann as assistant comptroller in the Division of Budget and Policy Analysis. These appointments are to fill currently vacant positions.

Ms. Doulis is a recognized expert on New York’s budget and fiscal issues and has broad experience in leading policy and research development. She has written extensively on government budgeting, labor relations, public workforce and infrastructure issues, and is well-respected for her ability to distill complex research into understandable and actionable reports. She was most recently the vice president for Strategy, Operations and Communications at the Citizens Budget Commission (CBC), where she oversaw the organization’s research, operations, communications and other critical functions. Ms. Doulis was also the director of NYC studies and held several research positions at CBC. She has served as an adjunct lecturer and taught a capstone course for graduate students.

She has a bachelor’s degree in Political Science from Queens College, a master’s degree in Public Administration from George Washington University, and completed her doctoral coursework in public policy and quantitative research methods at the Robert F. Wagner Graduate School of Public Service at New York University.

Mr. Scheuermann has held high-level positions in the New York State Senate and the state Division of the Budget over his 25-year career in state government.

Prior to joining the Comptroller’s office, Mr. Scheuermann was the secretary to Senate Finance Committee. He oversaw a team of budget and revenue analysts and was the lead budget negotiator for the Senate Majority Conference. He spent the greater part of his professional career in different positions within the state Division of the Budget, developing budget and policy recommendations for major programs and state agencies.

He has a bachelor’s degree in Political Science from the University of Illinois Urbana Champaign and a master’s degree in Public Administration from Ohio State University.

 

An administrative penalty or sanction must be sustained by a judicial tribunal absent a showing that the penalty is shocking to one's sense of fairness

The petitioner [Plaintiff] in this CPLR Article 78 proceeding was found to have violated 48 RCNY 6-25[a][9], a provision prohibiting a representative of a party appearing in a proceeding before Office of Administrative Trials and Hearings [OATH] from submitting any documents "which he or she knows, or reasonably should have known, to be false, fraudulent or misleading."

OATH found Plaintiff had violated 48 RCNY 6-25[a][9] by submitting "fraudulent receipts on behalf of two separate clients in support of their claims" and permanently barred Plaintiff from appearing before it as a nonattorney representative. Plaintiff appealed

Supreme Court overturned OATH's decision and remanded the matter to it "for an in-person hearing on the issue of whether [Plaintiff] had violated OATH's rules." OATH, in turn, appealed the Supreme Court's ruling.

The Appellate Division, citing Matter of Kelly v Safir, 96 NY2d 32, reversed the Supreme Court's decision on the law, explaining that an administrative penalty or sanction must be upheld unless it is "so disproportionate to the offense as to be shocking to one's sense of fairness."

OATH had determined the Plaintiff had submitted fraudulent receipts on behalf of two separate clients in support of their claims that they had missed their hearing dates because their cars broke down on their way to their separate hearings. The Appellate Division held that "[u]nder the circumstances, the penalty here is not shocking to one's conscience."

In addition, the Appellate Division noted that the record indicated that Plaintiff was given the opportunity to submit a written rebuttal to the charges after he was informed of the claims made against him and that OATH reviewed his submission before rendering its final determination.

The Appellate Division, observing that Plaintiff had the opportunity to submit a written rebuttal, opined that this opportunity sufficed "as a remote method of appearing before the Chief Administrative Law Judge, and is allowed for by OATH's own rules," citing  Matter of Thornton v New York City Dept. of Educ., 167 AD3d 444.

Click HEREto access the text of the Appellate Division's opinion.

Determining if a private entity is required to pay its employees assigned to provide services to a public entity "prevailing wages and supplements"

Executive Cleaning Services Corporation [Cleaning] employed six individuals to perform cleaning services at the Ossining Public Library [Library] pursuant to a agreement between the parties. Library, however, "did not represent that it was a public agency or that the prevailing wage law applied" until a Cleaning employee told Library that "Cleaning had failed to provide compensation for the work performed under the contract."*  

Library then notified Cleaning that it, as a public employer subject to Article 9 of the New York State Labor Law, would withhold final payment under the agreement until the prevailing wage issue was resolved. Library also advised the Department of Labor [Department] of the employee's complaint. This resulted in the Department's Bureau of Public Work investigating the matter and concluding that the service Cleaning was providing Library was subject to the prevailing wage provisions of Article 9.

Ultimately the Commissioner of Labor affirmed, in full, its hearing officer's findings and recommendations that:

1. Assessed Cleaning for an underpayment of $16,671.57 in wages and supplements;

2. Determined that Cleaning's underpayment was non-willful "[g]iven [Cleaning's] inexperience, and [Library's] failure to provide a written contract and prevailing wage-rate schedules;" and

3. Cleaning be assessed interest at the rate of 6% per year on its underpayment, as well as a civil penalty in the amount of 5% of the underpayment and interest.

Cleaning filed a CPLR Article 78 challenging the Commissioner's decision coupled with a petition for declaratory judgment seeking, among other things, a court determination that its employees were not subject to the prevailing wage provisions of Labor Law Article 9 for services provided Library because [1] Library was not a public agency within the meaning of Labor Law §230(3) and [2] the work performed was not "construction-like" labor.

The Appellate Division agreed with Cleaning that the work performed for Library by its employees was not subject to the prevailing wage provisions of Labor Law Article 9, explaining that:

1. §17 of Article I, of the New York State Constitution provides, in pertinent part, that "[n]o laborer, worker or mechanic, in the employ of a contractor or sub-contractor engaged in the performance of any public work ... shall ... be paid less than the rate of wages prevailing in the same trade or occupation in the locality within the state where such public work is to be situated, erected or used;"

2. This constitutional mandate is implemented by Labor Law Article 8, which, in pertinent part, requires the payment of prevailing wages to "laborers, work[ers] or mechanics" performing construction-like labor in connection with certain public work contracts, citing Labor Law §220[3][a]; and

3. Article 9 of the Labor Law extended such prevailing wage protections to certain types of service contracts and, in particular, Labor Law §231[1] provides that "[e]very contractor shall pay a service employee under a contract for building service work a wage of not less than the prevailing wage in the locality for the craft, trade or occupation of the service employee" and  Labor Law §230[2] provides that "any person performing work in connection with the care or maintenance of an existing building ... for a contractor under a contract with a public agency** which is in excess of [$1,500]" and expressly encompasses "building cleaner[s]."

The Appellate Division, citing Matter of M.G.M. Insulation, Inc. v Gardner, 20 NY3d at 475, opined that the Court of Appeals rejected the proposition that "an entity may be considered the 'functional equivalent' of a public agency for prevailing wage purposes"***and held that "Executive Cleaning's contract with [Library] is not subject to the prevailing wage provisions of Labor Law Article 9," and annulled the Commissioner's determination.****

In the words of the court as Cleaning's agreement with Library was "not subject to the prevailing wage provisions of Labor Law Article 9, the Commissioner's determination must be annulled" and "in light of our determination, [Cleaning's] remaining contentions are academic." 

However, citing  Matter of Paladino v Board of Educ. for the City of Buffalo Pub. Sch. Dist., 183 AD3d 1043, the Appellate Division, noting that Cleaning's request for declaratory relief is not authorized in a proceeding transferred to it pursuant to CPLR 7804 (g), severed that part of its action and remitted the issue to Supreme Court "for entry of an appropriate judgment."

* The Appellate Division noted that "a payroll issue delayed the employee's payment, but the employee was eventually compensated."

** Labor Law §230 [3] defines a public agency as "the state, any of its political subdivisions, a public benefit corporation, a public authority or commission or special purpose district board appointed pursuant to law, and a board of education."

*** The Appellate Division, in a footnote in its opinion, confirmed "the existence of authority holding that, as education corporations, public libraries are generally considered to be "separate and distinct from the municipalit[ies] that created [them]."

**** Citing  Matter of Paladino v Board of Educ. for the City of Buffalo Pub. Sch. Dist., 183 AD3d 1043, the Appellate Division noted that as Cleaning's request for declaratory relief is not authorized in a proceeding transferred pursuant to CPLR 7804(g), it severed  that part of this action and remitted it to Supreme Court for entry of an appropriate judgment.

Click HERE to access the Appellate Division's decision.