January 13, 2009
Earlier this month, (January 5) new requirements became effective which impact the hiring of public pension retirees. The Legislative action was in response to allegations of ‘double dipping’ – earning a pension and full salary from public employment. School districts and other public employers must carefully review the new requirements with counsel before engaging such hiring.
New Reporting Requirements
Effective January 5, 2009, school districts and BOCES must annually report to the State Comptroller and the appropriate retirement system (the one retired from), information about those they are employing who are also earning a public pension. Reportable information includes: the name, date of birth, place of employment, current position, and all earnings of each retiree employed. The new law also requires school districts and BOCES to report all money earned by the retiree in excess of the earnings limit - currently $30,000. (See Retirement and Social Security Law Section 217.)
Another new law also requires school districts to report to the State Education Department and the Attorney General, information about attorneys providing legal services to the school district or board. Information to be filed includes:
(a) all lawyers who provide legal services to such district or board;
(b) their classification as employees or independent contractors; and
(c) all remuneration and compensation paid for all legal services rendered to the district or BOCES ). (See Education Law Section 2053)
To date, no specific form for the information has been developed and it appears none will be.
Retiree Waivers
Another area the Legislature and Board of Regents took up, coincidentally on the same day, was the waiver process for rehiring retirees. There the goal was to close various “loopholes” in the waiver process. New provisions under Retirement and Social Security Law Section 211 apply to all retirees while new Education Department Regulations apply to school employees. Both require careful review.
(a) New York Retirement and Social Security Law Section 211
Recall Section 211 of the New York Retirement and Social Security Law applies to the waiver process – when one seeks to earn more than the statutory limit from a public entity while still earning a full public salary. This was amended effective October 7, 2008.
Additional provisions limit when a waiver may be granted. Specifically:
(a) the retired person is properly certified where such certification is required;
(b) the prospective employer has prepared a detailed recruitment plan to fill the vacancy on a permanent basis; and
(c) there is an “urgent need” for the retiree's services in a position “as a result of an unplanned, unpredictable and unexpected vacancy, sufficient time is not available to recruit a qualified individual,” and the “hiring shall be deemed as non-permanent rather than a final filling of such position,” or the prospective employer has undertaken extensive recruitment efforts to fill a vacancy and, as a result, has determined that there are no available non-retired persons qualified to perform the duties of the position.
This latter point will be looked at very closely by those assessing waiver applications. The Legislative goal here was to avoid immediate rehires of retirees as well as ensure a genuine process was being implemented to secure a permanent replacement.
An additional new provision specifically prohibits a retiree from returning to work in the same or similar position from which the person retired for a period of one year following retirement. This is significant as well. The position need NOT be in the same district. For example, a retired building principal may not return to work as a principal in another school district if the rehire is within a year of her retirement date.
(b) Commissioner’s Regulation 8 N.Y.C.R.R. Section 80-5.5
The Education Department Regulations were permanently adopted a month after the law took effect (November 11, 2008.) The final rule (NYS Education Commissioner‘s Regulation 8 N.Y.C.R.R. Section 80-5.5) provides guidance with respect to retiree waivers pertaining to those working in schools districts and BOCES.
Like Section 211, 8 N.Y.C.R.R. Section 80-5.5 provides that a waiver permitting a retired person to work in the same or similar position from which he/she retired shall not be granted for one year from retirement.
Importantly, the regulations limit waivers to one year in most cases, going further than New York Retirement and Social Security Law Section 211 (which limits waivers to two years). Approval of the Commissioner may be renewed for up to a year, but only in instances of extreme hardship or other unexpected and unforeseen circumstances beyond the control of the district or board. Additional approval shall not be sought upon expiration of a renewal, unless the retired person is employed in a position as a certified teacher in a teacher shortage area or in a high need school, or in extreme circumstances where a district or BOCES is prohibited by law or otherwise from hiring a permanent replacement for a position, and such employment has been approved.
To obtain a waiver, the prospective employer must file a written request for approval of the employment of a retired person. The request to the Commissioner must certify:
(a) the retiree is duly qualified and competent;
(b) the retiree is physically fit to perform the duties to be assigned;
(c) the retiree is properly certified as a teacher where such certification is required;
(d) specific reasons why there is a need for the services of the particular retiree;
(e) specific reasons why the employment of the particular retiree is in the best educational interests of the district or the board; and
(f) there are not readily available other persons who are not retirees, qualified to perform the duties to be assigned.
The written request for approval must also include documentation to establish either:
(a) the district or board has undertaken an extensive and good faith recruitment search for a certified and qualified candidate and determined there are no available non-retirees qualified to perform the duties of such position.; or
(b) there is an urgent need for the retired person's services in such position as a result of an unplanned, unpredictable and unexpected vacancy requiring an immediate temporary interim appointment, precluding the district or board from conducting an extensive recruitment search.
When providing documentation, the district or BOCES must include evidence it: (a) considered all certified and qualified non retired candidates before requesting approval from the commissioner; and (b) advertised for the particular position in a sufficiently broad manner appropriate for that position, based on the geographic location of the district or board and on any prior historical shortages for that position in the district or board.
In the case of an emergency appointment, the district or board must describe the selection process employed for the interim appointment.
The new notice and documentation provisions are enhancements of the old process but also very likely information districts and boards had provided under the old rules. In a somewhat interesting twist, the new regulation also requires annual notice when a district or BOCES employees a retiree, even when that retiree has been approved by the Commissioner. The retiree’s compensation package must be disclosed as well. Publishing on the district website, if there is one, would meet this new requirement.
Increased Penalty for Pension Fraud
Perhaps the most significant change in the new law is the penalty for non-compliance. Failure to adhere to the above requirements may result in the criminal offense of defrauding the pension system. Effective October 7, 2008 the crime of defrauding a pension system was enhanced to Class E and D felonies, up from a misdemeanor.
This Legal Alert provides a brief analysis or comments on matters related to labor and employment law. This alert does not purport to be a substitute for advice of counsel on specific matters.
If you have questions relating to this topic or wish further information, please contact Edward A. Trevvett at (585) 419-8643 or the Harris Beach attorney with whom you usually work.
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