Pension "double-dipping" stopped

Pension "double-dipping" stopped

Source: Office of the State Comptroller

On June 1, 2014, New York State Comptroller Thomas P. DiNapoli and Nassau County District Attorney Kathleen Rice announced the guilty plea of a retired police officer charged with receiving pension payments from the New York State and Local Police and Fire Retirement System in violation of law.

The investigation was made possible by a 2012 law, proposed by DiNapoli, which gave the State Comptroller access to the Sate Department of Taxation and Finance's wage reporting system to identify state retirement system retirees working for local governments whose earnings exceed post-retirement earnings limitations.

The retired officer pleaded guilty to permitting falsification of records of the retirement system, a Class D felony. As part of his guilty plea, he must repay the almost half-a-million dollars that he acquired illegally. 

Although the officer was repeatedly notified of the earnings limitations on post-retirement public employment and the requirement to report his public employment income, he chose not to do so, pocketing $465,647 in unlawful pension payments while earning a final full-time salary of $112,000 in pubic employment following his retirement from his police officer position.

The Comptroller noted that following his retirement the officer took a job at a SUNY community college without notifying his office of his return to public employment, failed to comply with the earnings limitations that apply to public retirees collecting a public pension, didn’t obtain a waiver allowing him to earn above the legal limit; and joined the State University’s Optional Retirement Program, all while continuing to receive his full retirement allowance.*

Essentially, except with respect to post-retirement payments for service while on jury duty or serving in the office of inspector of election, or as poll clerk or ballot clerk under the election law, or as a notary public or commissioner of deeds, or as a retiree elected to public office, §150 of the Civil Service Law requires the suspension of a retired public employee’s pension or annuity payments during any post-retirement public employment by a New York State agency or a political subdivision of the State. 

However, relevant provisions of the Retirement and Social Security Law, the Education Law and local law or charter permits limited earnings by a retired employee returning to public service, including such employment as a consultant, without forfeiting his or her pension payments during such employment. §211 of the Retirement and Social Security Law sets out the earning limitations with respect to the employment of retired persons without diminution of his or her pension payments while §212 of the Retirement and Social Security Law provides that there are no limitations on the amount a retired public employee returning to public service may earn on or after the calendar year in which he or she attains age sixty-five.

The case was investigated by Comptroller DiNapoli’s Division of Investigations and Division of Retirement Services jointly with Nassau District Attorney personnel.

Reports of allegations of fraud involving taxpayer money may be submitted to the State Comptroller by calling the toll-free Fraud Hotline at 1-888-672-4555, by filing a complaint online at investigations@osc.state.ny.usor by mailing a complaint to: Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236.

* The Comptroller said that State law, the so-called Axelrod amendment, bars a retiree's collecting a public pension from a public retirement of this State from enrolling in SUNY's Optional Retirement Program upon his or her returning to public employment..

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The First Amendment prohibits a State’s collecting an agency shop fee from an individual on behalf of an employee organization that the individual does not wish to join or support

The First Amendment prohibits a State’s collecting an agency shop fee from an individual on behalf of an employee organization that the individual does not wish to join or support

Harris v Quinn, USSC #11-681, decided June 30, 2014

The U.S. Supreme Court held that the First Amendment prohibits the collection of an agency shop fee that is used subsidize speech on matters of public concern by an employee organization that the employee does not wish to join or support.

Illinois' Home Services Program allows Medicaid recipients who would normally need institutional care to hire a "personal assistant" (PA)* to provide home-care services. Although the recipient or his or her representative [Customer] exercise predominant control over the employment relationship with the PA, Illinois, subsidized by the federal Medicaid program, pays the PA’s salary.

The Supreme Court’s decision sets out the following events leading to this litigation:

[1] The Illinois State Labor Relations Board, in 1985, stated that “[t]here is no typical employment arrangement here, public or otherwise; rather, there simply exists an arrangement whereby the State of Illinois pays [RAs] . . . to work under the direction and control of private third parties."

[2] The Board, responding to a petition submitted by Service Employees International Union (SEIU) seeking to represent PAs, held that “it is clear . . . that [Illinois] does not exercise the type of control over the petitioned-for employees necessary to be considered in the collective bargaining context envisioned by  [Section 6 of the Illinois Public Labor Relations Act], their 'employer' or, at least, their sole employer."

[3] In 2003 then Governor Rod Blagojevich “circumvented” the Board’s rulings when he issued an Executive Order, which Order was later codified by the Legislature,** solely, in the words of the court, to permit PAs to join a labor union and engage in collective bargaining under Illinois' Public Labor Relations Act (PLRA).

Also, noted the Supreme Court, employee organizations had entered into collective-bargaining agreements with the State that contain an agency-fee provision. This provision requires all bargaining unit members who do not wish to join the union to pay the union a fee for the cost of certain activities, including those tied to the collective-bargaining process.

The Supreme Court distinguished PAs from “State employees” as follows:

In the case of full-fledged public employees, the State establishes all of the duties imposed on each employee, as well as all of the qualifications needed for each position, vets applicants and chooses the employees to be hired, provides or arranges for whatever training is needed, and it supervises and evaluates the employees' job performance and imposes corrective measures if appropriate. 

In contrast, said the court, insofar as the PAs involved in this case are concerned, their job duties as personal assistants are specified in their individualized Service Plans, which plans must be approved by the Customer and the Customer's physician and “Customers have complete discretion to hire any personal assistant who meets the meager basic qualifications that the State prescribes” and the Customer "is responsible for controlling all aspects of the employment relationship between the Customer and PA without limitation. Further, noted the Supreme Court,  PAs  “also appear to be ineligible for a host of benefits under a variety of other state laws” that are available to employees of the State as the employer.

As to the relationship of the PA’s to the employee organization is concerned, the court said that where the employee organization is recognized or certified as the exclusive representative for Rehabilitation Program employees for the purposes of collective bargaining, the First Amendment prohibits the collection of an agency fee from Rehabilitation Program PAs who do not wish to [1] join or [2] support the employee organization because the First Amendment does not permit a State to compel personal care providers to subsidize speech on matters of public concern by an employee organization that they do not wish to join or support. In particular, the court said “[The PAs bring this action do not “challenge the authority of the SEIU-HII to serve as the exclusive representative of all the personal assistants in bargaining with the State. All they seek is the right not to be forced to contribute to the union, with which they broadly disagree.”

The bottom line: The Supreme Court said “If we accepted Illinois' argument, we would approve an unprecedented violation of the bedrock principle that, except perhaps in the rarest of circumstances, no person in this country may be compelled to subsidize speech by a third party that he or she does not wish to support. The First Amendment prohibits the collection of an agency fee from personal assistants in the Rehabilitation Program who do not want to join or support the union.”

Insofar as “speech” is concerned, this decision would not appear to impact on the State as the employer or political subdivisions of the State as the employer of individuals in the Classified Service or the Unclassified Service in contrast to the type of "employer-employee relationship" between Illinois’ PAs and the State of Illinois.

New York State's Civil Service Law  §208.3(a), with respect to the State as the employer, and §208.3(b), with respect to political subdivisions of the State as the employer, provide that an employee organization that is the exclusive representative of employees for the purposes of the Article 14 of the Civil Service Law, the Taylor Law, shall be entitled to have   deducted from the wage or salary of the employees in such negotiating   units who are not  members  of  said  employee  organization  the  amount   equivalent  to  the  dues  levied by such employee organization, and the   state comptroller shall make such deductions and  transmit  the  sum  so   deducted  to  such  employee  organization proved that the employee organization has established and maintained  a   procedure  providing for the refund to any employee demanding the return   any part of an agency shop fee deduction which represents the employee's   pro rata share of expenditures by the organization in aid of  activities   or causes of a political or ideological nature only incidentally related   to terms and conditions of employment. As to the “joining an employee organization” aspect of the Supreme Court’s ruling addressing “freedom of association,” the Taylor Law provides that an employee is not required to become a member of the employee organization and those electing not to become a member of the employee organization pays an agency shop fee in lieu of dues, typically a lesser amount.

*Illinois law establishes an employer-employee relationship between the person receiving the care and the person providing it, providing that that the person receiving home care--the "customer"--"shall be the employer of the [personal assistant]." 89 Ill. Admin. Code §676.30(b). The decision notes that “Many of these personal assistants are relatives of the person receiving care, and some of them provide care in their own homes.”

** Ill. Comp. Stat., Chapter 20, §2405/3(f ), declaring personal assistants to be "public employees" of the State of Illinois--but "[s]olely for the purposes of coverage under the Illinois Public Labor Relations Act."

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Whether a timely demand for arbitration has been made is for the court to determine

Whether a timely demand for arbitration has been made is for the court to determine

Village of Chester v Local 445, Intl. Bhd. of Teamsters, 2014 NY Slip Op 04775, Appellate Division, Second Department

In this CPLR Article 75 proceeding the Village of Chester asked Supreme Court to permanently stay the arbitration of a disciplinary grievance. Supreme Court denied the Village’s petition, which ruling was affirmed by the Appellate Division.

The Village and the Village of Chester Police Benevolent Association (PBA) entered into a collective bargaining agreement (CBA). Article 12 of the CBA provided for a “contract disciplinary procedure” in lieu of any statutory disciplinary procedure. In the event disciplinary charges were filed against a member in the collective bargaining unit, Article 12 required the PBA or the individual charged to file a grievance with the Chief of Police within 15 days of the receipt of the notice of charges.

Citing Matter of County of Rockland, 51 NY2d 1, the Appellate Division explained that in this instance the threshold determinations to be made concerned [1] was there a condition precedent to arbitration, and if so, [2] had it been timely met is for the court to determine.

Supreme Court found that a letter sent to the Chief of Police constituted the filing of the grievance and that it was timely filed. Accordingly, said the Appellate Division, Supreme Court “properly denied the petition to permanently stay arbitration” and correctly granted PBA’s the cross petition to compel arbitration.

Arbitration, said the Appellate Division, “is essentially a creature of contract in which the parties themselves charter a private tribunal for the resolution of their disputes and are free to enlarge, restrict, modify, amend or terminate their agreement to arbitrate."

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