Adjunct Law Prof Blog

Extraordinary salary increases excluded in determining the individual’s final average salary for retirement purposes.

 

Matter of Palandra v New York State Teachers' Retirement Sys., 011 NY Slip Op 04357, Appellate Division, Third Department

Maria Palandra was employed by the Elmont Union Free School District and eventually became its superintendent of schools. In 2000, Palandra and the school district entered into a contract setting her salary and providing that she would receive payment for her accumulated vacation and sick leave upon her retirement.

Subsequently the parties entered into a new agreement that eliminated the career increment provision and barred Palandra from receiving payment for unused leave time upon her retirement. Instead, Palandra’s was retroactively raised to $224,268, with increases in following years capped at 5%.

Ultimately the New York State Teachers’ Retirement System [TRS] excluded those increases from the calculation of Palandra's final average salary and reduced her retirement benefits accordingly. Palandra sued but Supreme Court dismissed her petition.

The Appellate Division affirmed the lower court’s ruling, noting that “In order to calculate [Palandra’s] retirement benefits, [TRS] must rely upon her final average salary, defined as "the average regular compensation earned . . . during the three years of actual service immediately preceding [her] date of retirement" as mandated by Education Law §501[11] [b]. Accordingly, the Retirement System will act to prevent the artificial inflation of that figure by excluding "any form of termination pay or compensation otherwise paid in anticipation of retirement."

The court explained that Palandra had received extraordinary salary increases in the 2001-2002 and 2002-2003 school years and, indeed, had altered the terms of prior agreements to do so. Moreover, the latter increase was accompanied by the elimination of her contractual rights to obtain payments for accumulated leave time upon her retirement and an optional one-time only increment, "items that were facially excludable from her final average salary.”

The Appellate Division, conceding that “material in the record that could support a different result,” held that the Retirement System could “rationally concluded from the above evidence that the 2001-2002 and 2002-2003 salary increases were made in anticipation of [Palandra’s] retirement and excluded them from her final average salary."

The court also rejected Palandra’s claim that the System's “otherwise rational determination” was rendered arbitrary and capricious by the delay in issuing it.

The decision is posted on the Internet at:

 

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_04357.htm

Reprinted by permission New York Public Personnel Law

Mitchell H. Rubinstein

NY Legislatures And Double Dipping

A disturbing August 17, 2009 New York Times article highlights the practice of some New York Legislatures who retire on day one and start work on the same job on day two. Hence, they are double dippers.  The article does not provide much of a discussion of the legal issues, but it sure does smell.

Mitchell H. Rubinstein 

10th Issues Important Association Discrimination Decision Under the ADA

  In Trujillo v. PaciCorp., ___F.3d___(10th Cir. May 7, 2008), the Tenth Circuit held that a couple with disabled son (brain tumor) stated a cause of action with evidence that their termination was due to son’s medical expenses. This is a lengthly decision. The court describe association discrimination claims as follows:

Disability discrimination includes “excluding or
otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association.” Id. at § 12112(b)(4). This prohibition is known as the “association provision” of the ADA. See Den Hartog v. Wasatch Acad., 129 F.3d 1076, 1082 (10th Cir. 1997). “A family relationship is the paradigmatic example of a ‘relationship’ under the association provision of the
ADA.” Id. (citing 29 C.F.R. § 1630.8). The Trujillos’ relationship to their son is protected by the association provision.

The Tenth also held that plaintiffs stated a cause of action under ERISA Sectin 510 which it decribed as follows:

The Trujillos also contend PacifiCorp terminated them in violation of
ERISA. Section 510 of ERISA makes it illegal for an employer to terminate any person “for the purpose of interfering with the attainment of any right to which such [person] may become entitled to under [an employee benefit plan].” 29 U.S.C. § 1140. To make a prima facie case of interference with ERISA benefits, the Trujillos must establish “by a preponderance of the evidence [] that [their] discharge was motivated by an intent to interfere with employee benefits protected by ERISA.” Phelps v. Field Real Estate Co., 991 F.2d 645, 649 (10th Cir. 1993).

Mitchell H. Rubinstein