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Cypen & Cypen
April 17, 2014

Stephen H. Cypen, Esq., Editor

1. PUBLIC PENSIONS AND LESSONS OF SUCCESS: Do we learn more from success or failure? When it comes to state-and local-government pensions, according to Elizabeth Kellar, we tend to focus on the plans that are struggling. But there are valuable lessons to learn from public sector retirement plans that have remained well funded and from governments that have successfully negotiated changes to put their pension systems on a path to full funding. Given all the headlines about Illinois's seemingly endless struggle to reform its pensions, some might be surprised to learn that that the Illinois Municipal Retirement Fund, the state's second largest public pension, is a model of fiscal responsibility. What distinguishes IMRF from Illinois's other three statewide plans, which are struggling, is that all 2,900 governments that participate in it are required to pay 100% of their annual required contribution. As a result, IMRF has remained more than 80% funded, even after investment losses that public and private plans suffered from the 2008 recession. It is also noteworthy that IMRF is separate from the Illinois state government, and its assets are not included in the state's financial statements. (State law does, however, determine certain employee benefits.) IMRF maintains fully funded reserves for employees and retirees, has a highly diversified portfolio and assumes a 7.5% return on investments, even during periods of stock-market growth. This long-term approach helps the fund ride out market swings. There is no one-size-fits-all approach to strengthening state and local pension plans. Each has a unique legal framework, and a solution that works for one government may be totally off the mark elsewhere. But while solutions for retirement plans can vary from place to place, there is no debate about the importance of an adequate retirement income for government workers.

2. PROSPECTIVE WAIVER OF FMLA RIGHTS PERTAINS TO VIOLATIONS THAT HAVE YET TO OCCUR: Paylor appealed the district court’s grant of summary judgment for her former employer, Hartford, on her claims of interference and retaliation under the Family Medical Leave Act of 1993. Although Paylor signed a severance agreement with Hartford ostensibly waiving her FMLA claims, she argues that those claims were “prospective” and therefore not waivable under Department of Labor regulations. In the alternative, she argued that her signing of the severance agreement was not knowing and voluntary, and that the severance agreement was void as contrary to public policy. The U.S. Court of Appeals for the Eleventh Circuit found no merit in Paylor’s arguments, and therefore affirmed. The prohibition on “prospective” waiver means that an employee may not waive FMLA rights, in advance, from violations that have yet to occur.  At bar, conduct she claimed of happened before execution of the severance agreement. By signing the agreement and accepting its severance benefits, Paylor settled all claims for past conduct against her employer. Paylor V. Hartford Fire Insurance Company, Case No. 13-12696 (U.S. 11th Cir. April 8, 2014).

3. PAID SICK LEAVE LAW IN CONNECTICUT DID NOT ADVERSELY AFFECT JOBS: Two years ago Connecticut became the first state in the country to require that companies provide paid sick time for their employees, even for part-time workers. reports that as the proposal moved through the legislature, the Connecticut Business and Industry Association warned that the added cost of the mandate ultimately would have to be borne by employers and their workers, through lower wages, reduced benefits or elimination of positions. But those dire predictions did not come true.  A survey finding, which could influence future debates on paid sick laws outside of Connecticut, was that almost two-thirds of businesses in Connecticut reported small or no increases in cost. Forty-seven percent of respondents reported no change, and 19% reported a cost increase of less than 2%. Despite lobbying efforts by the business community before the bill became law, three-quarters of respondents now say they support the law. Opponents of paid sick day requirements said that workers will take off work when they were not really sick, but the survey found 86% did not report any known cases of abuse. About one-third of businesses saw an increase in usage of paid-sick days, but even so, about a third of workers still did not use a single sick day in the past 12 months. When employees did miss a day, businesses adjusted by temporarily assigning their work to other people on staff, allowing workers to swap shifts and putting work on hold. The Connecticut law allows employees to accrue up to five paid sick days per year, as long as they worked in a reasonably large business -- defined as one with 50 employees or more. Even after the law went into effect, only a small proportion of workers were covered -- between 12% and 18% of the state’s 1.7 million workers. The Connecticut legislature included exemptions for small businesses, manufacturers and nationally chartered nonprofits, in addition to per diem workers and temporary workers.

4. CHICAGO MAYOR CHANGES PENSION STRATEGY: Mayor Rahm Emanuel still wants to raise Chicago property taxes as part of a plan to shore up city pension systems, but he no longer is asking state lawmakers to do the dirty work. Faced with blistering criticism from Gov. Pat Quinn and significant reluctance from state lawmakers, says the mayor has revised his pension proposal to ensure that the politically unpalatable task of a property tax hike instead would fall solely to the Chicago City Council. That change makes it easier for lawmakers to vote for the city pension bill, and could help Emanuel score a big political victory. But approval of the measure still would do nothing to solve the most immediate financial problem at City Hall -- a large increase next year for the pension funds of police and firefighters, who would not be covered by state legislation. The flurry of movement on the city pension situation started with Quinn, who originally declined to weigh in on the mayor’s plan. However, the re-election seeking Democratic governor, who would have to sign the bill into law, now says he did not like the property tax increase.

5. NYC COMPTROLLER TARGETS 20 LARGE COMPANIES ON SUPPLIER-DIVERSITY PROGRAM DISCLOSURES: Apple Inc., Pfizer Inc. and Qualcomm Inc. are among 20 companies targeted by the New York City Retirement Systems, calling for disclosure of their supplier-diversity programs on purchasing goods and services from businesses owned by minorities, women, veterans/disabled individuals and other types of owners. Supplier diversity is the next frontier for companies seeking to manage risk, and create sustainable shareowner value. The five New York City pension funds held a combined $5.8 billion in the targeted companies, according to The comptroller has requested the companies to make annual disclosure of quantitative goals for supplier-diversity programs and progress to achieving those goals, along with disclosure of the ways supplier-diversity goals are reinforced throughout the company, including oversight by the board of directors and senior management, and executive and other employee compensation incentives related to the goals. He also seeks disclosure of the amount spent with diverse suppliers in absolute terms and relative to the total supplier spending, broken out by supply category. The New York City funds own shares having a combined value of $1.2 billion in Apple, $520 million in Pfizer and $347 million in Qualcomm, the three largest by market value of the systems’ holdings in the 20 companies.

6. HOW STATES RAN ELECTIONS: Voters across the country waited less time in line to cast their ballots in 2012 than in 2008, a sign that states were doing a better job at running elections, says The elections index rates how well states conducted the 2012 elections according to 17 criteria, including, whether voters can register or find voting information on line; how long they have to wait in line; how many voters must use provisional ballots; the handling of mail-in, military and overseas ballots; and voter registration rate and turnout. Forty states improved their ratings from the 2008 election. Average wait time at polls inched down about three minutes, from more than 14 minutes in 2008 to just over 11 minutes in 2012. South Carolina, which had waits of more than an hour in 2008, cut its time to about 25 minutes. Florida's waiting time was the worst [of course], and at 45 minutes it was far longer than the 29 minutes voters waited in 2008. Last May, Florida passed legislation to increase the number of early voting locations and hours, reversing a 2011 cutback to early voting that was blamed for the long lines. The previous practices reviewed in the report no longer reflect today's voting laws because of last year's reforms, Florida’s Secretary of State said. The best performer was North Dakota, which also was rated tops in 2010's midterm elections and in 2008. The state does not require voter registration and does not use provisional ballots, used in other states when a voter's registration is in question. Minnesota, Wisconsin and Colorado also received high ratings. Rated last was Mississippi, which also came in last in the 2010 and 2008 rankings. For one thing, the state does not collect much data on election performance.

7. ADULT TRUTHS: I have a hard time deciphering the fine line between boredom and hunger.

8. TODAY IN HISTORY: In 1947, Jackie Robinson bunts for his 1stmajor league hit.

9. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources.

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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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