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Cypen & Cypen
MARCH 2, 2006

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001


The percentage of personal income derived from Social Security is 59.1% for people 85 and older, according to new research from the Employee Benefit Research Institute. That percentage drops to 51.9% for people ages 80 to 84, 48.2% for people ages 75 to 79, 40.5% for people from 70 to 74 and 31.6% for people 65 to 69 years old. Looking at data from 2004, EBRI also found that people 85 and older derived 21% of their income from pensions and annuities; that percentage is 23.2% for people 80 to 84, 22.2% between the ages of 75 and 79, 21.9% for people 70 to 74 and 18.3% for those 65 to 69 years old. Earnings make up just 3.4% of overall income for those 85 and older, but climbed to 36.9% of income for people ages 65 to 69. Finally, average annual income for people 85 and older is $17,325; it is $19,118 for ages 80 to 84, $20,278 for those 75 to 79 years old, $23,597 for people 70 to 74 and $28,082 for people ages 65 to 69. Very enlightening.


The Deficit Reduction Act of 2005 increases the Federal Deposit Insurance Corporation’s coverage on retirement accounts from $100,000 to $250,000. DRA, which became law on February 8, 2006, increases FDIC coverage applicable to individual retirement accounts and other retirement accounts held in FDIC-insured banks or thrifts from $100,000 to $250,000. In accordance with FDIC regulations, the maximum insurance coverage level generally passes through to the interest of each participant in a qualified retirement plan with funds in an FDIC-insured account. (In other words, with respect to an employee benefit plan, deposit insurance coverage is based on the interest of each participant.) The effective dates for these changes is the date on which final regulations are promulgated. Interested persons should check for such effective dates. Note that the maximum coverage limit applicable to all other consumer accounts has not changed, remaining at $100,000. However, starting in 2010, the FDIC coverage limit will be adjusted for cost of living increases (in five year periods, in $10,000 increments).


In a recent workers’ compensation case, claimant sought review of a final order holding that, although he was a police officer, his hypertension was not compensable. The appellate court affirmed because the judge of compensation claims correctly determined that claimant’s hypertension did not result in any kind of disability. This short appellate decision is of very little precedential value. However, it should serve as a reminder that although hypertension is statutorily-presumed to be accidental and suffered in the line of duty, there is no presumption that hypertension -- or any other condition, for that matter -- is disabling. Miller v. City of Delray Beach Police Department, 31 Fla. L. Weekly D465 (Fla. 1st DCA, February 13, 2006).


If you live in Maine, New York, Connecticut or Washington, D.C., you are a big spender at tax time, according to MSN.Money. If you live in Alaska or Alabama, you get to keep a bigger slice of what you make. While Internal Revenue Service tends to monopolize our attention when it comes to taxes, it is not the only government agency with its hand out. Many of the taxes that command a piece of our income are collected at the state and local level, and they vary widely. Where you live can have a big impact on how much you pay in taxes each year. The spread might not be enough to make you pull up stakes and move to a new state, but it can give you a case of tax envy. The state and local burden ranges from 6.4% (Alaska) to 13% (Maine). Add in the federal tax burden and the disparity widens to 8.5 percentage points, from 33.5% at the top (Connecticut) to 25% at the bottom (Alaska). The national average for state and local tax burden is 10.1%; add in federal taxes and the average is 29.1%. Florida comes in at number 46 (8.8% for state and local) and number 26 (27%, including federal taxes). Incidentally, the nonprofit Tax Foundation, source of the above statistics, has yet to announce “Tax Freedom Day” -- the day when average Americans have earned enough to pay their taxes for the year. April 17 was declared National Tax Freedom Day last year, a vast “improvement” over 2001's record of May 2.


Sehie, a former emergency dispatcher, sued her former employer for claims arising under the Fair Labor Standards Act of 1938. The issue was whether time Sehie spent attending and traveling to and from counseling sessions that the employer mandated are compensable under FLSA. Sehie had become angry and upset because she was instructed to work a second shift, so she abruptly left work. Between leaving work and returning the next day, Sehie spoke with her therapist and took medication for her stress. When she returned to work, Sehie reported the absence as a work-related injury. The employer required Sehie to submit to a fitness for duty evaluation, which showed she was fit for duty but, as a condition of continued employment, that she attend weekly psychotherapy sessions. Sehie eventually resigned and sued the employer for time she spent attending and commuting back and forth to the counseling sessions, because this time was beyond her normal 40 hour work week. The appellate court affirmed the lower court judgment in favor of Sehie, as attendance at the sessions was a mandatory condition of her continued employment and was for the employer’s benefit. The appellate court declined to find, as a general rule, that federal regulations prevent compensation for the time an employee spends during nonworking hours receiving employer-required treatment for a work-related injury. Sehie v. City of Aurora, Case No. 04-2308 (U.S. 7th Cir., December 27, 2005).


White males, denied employment with the city’s fire department, challenged consent decree imposed in settlement of 1977 Department of Justice suit, pursuant to which city scores municipal civil service exam separately for white males, blacks and women. The trial judge granted the city’s motion for summary judgment. On appeal, the judgment was substantially reversed. To the extent that the court’s prior decisions were unclear, it has now clarified that when a governmental unit employs a race-conscious remedy, it need not have already made a formal finding of past discrimination. In addition to showing past discrimination, the city must also convince the court that when job applicants were denied employment, lingering effects of past discrimination still necessitated a race-conscious remedy. Thus, the city must properly define a “qualified applicant.” As to narrow tailoring, the durations of the remedies in this case were breathtakingly long. Moreover, separate scoring violates Title VII because it has the practical effect of requiring different cutoff scores, based solely on race and sex, for continuing further in the hiring process. Finally, the separation by race violates Article I, Section 3, of the Louisiana Constitution. Dean v. The City of Shreveport, Case No. 04-31163 (U.S. 5th Cir., February 10, 2006) (revised opinion).


According to Money, 16% of large employers are likely to freeze pension plans in 2006. Brrrrrrrrrrrrrrrr.


Those words, according to Winston Churchill, are the secret to success. You need to be a hungry fighter, and a hungry fighter never quits. Success is largely hanging on after others have let go. For example:

  • Doctor Seuss was rejected 23 times.
  • Michael Jordan was cut from his high school basketball team.
  • Henry Ford went broke five times.
  • The University of Bern rejected Albert Einstein’s Ph.D. dissertation.
  • And Churchill himself took three years to get through 8th grade.

So what’s your excuse?

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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