Cypen & Cypen
JUNE 8, 2004
Stephen H. Cypen, Esq., Editor
In an article entitled “Miami Vise - Squeezed Between Ultrarich and Wretchedly Poor, the County Can’t Seem to Find its Business Footing,” Forbes gives Miami-Dade its booby prize this year. In the last five years, a net 151,000 people, many middle-class residents, have left to go elsewhere. Meanwhile, 238,000 people have arrived from abroad. During the same period, job growth has limped along at an average .6% annually. Based on 2002 Census data on large cities, Miami had the highest poverty rate, 31%. Personal income is also a sagging indicator. And the region has the third-highest crime rate of any metro area in Forbes’s Best Places for Business and Careers survey. Thus, Miami-Dade has dropped to 139 out of 150 on that survey, on a par with Detroit and Toledo. In all fairness, Forbes does mention the bright spots. Standard & Poor’s recently bumped up Miami’s bond rating three notches to A+. Crime is easing. Construction is booming. The region is becoming an even more vibrant cultural center. Plus, new jobs will abound if Miami is selected to become the permanent Secretariat of the Free Trade of the Americas.
U.S. Department of Labor Overtime Regulations issued in April 2004 will go into place automatically in 32 states (including Florida) and the District of Columbia, according to plansponsor.com (see C&C Newsletter for April 22, 2004, Item 4). The remaining 18 states, however, have their own overtime requirements, some of which track the old, replaced federal rules. In certain states, legislative action is required to make changes. The federal rule is a minimum standard. Although states can have their own requirements, they cannot be less generous with overtime eligibility.
A former top executive of the United Way in Washington,
D.C. was sentenced to 27 months in prison for stealing from the charity.
According to washingtonpost.com, he pleaded guilty to taking $500,000.00
from United Way and its pension fund. He was also ordered to pay restitution.
The ex-head is a Turkish national, not a U.S. citizen, and could face
deportation proceedings once he is released from prison. The scandal
has severely hurt the Capital-Area United Way: after collecting $45
Million in pledges for 2001, the charity is headed for a third straight
year of raising less than half that amount. Oh, the miscreant’s
name? Oral Suer!
On April 22, 2004 the Equal Employment Opportunity Commission approved final regulations under the Age Discrimination in Employment Act, providing that altering, reducing or eliminating retiree benefits from eligibility from Medicare or State-sponsored retiree health benefits programs will not be considered an ADEA violation (see C&C Newsletter for May 12, 2004, Item 6). A report from Mellon indicates that AARP is challenging EEOC’s authority to grant such exemption, claiming it failed to make a strong enough case to support the public policy argument. If AARP’s challenge to the rules is not upheld, AARP may turn to Congress for legislative help (as it has often done in the past).
Title II of the Americans with Disabilities Act of 1990 provides that “no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs or activities of a public entity, or be subjected to discrimination by such entity.” The United States Supreme Court was presented with the question of whether Title II exceeds Congress’ power to abrogate a state’s immunity under §5 of the Fourteenth Amendment. Determining whether Congress has constitutionally abrogated a State’s Eleventh Amendment immunity requires resolution of two predicate questions: (1) whether Congress unequivocally expressed its intent to abrogate and (2) if so, whether it acted pursuant to a valid grant of constitutional authority. The first question is easily answered because ADA specifically provides for abrogation. With regard to the second question, Congress can abrogate state sovereign immunity pursuant to a valid exercise of its power under §5 of the Fourteenth Amendment. Section 5 legislation is valid if it exhibits a congruence and proportionality between an injury and the means adopted to prevent or remedy it. Title II is an appropriate response to the history of inadequate provision of public services and access to public facilities. As such, Title II is a valid exercise of Congress’ §5 enforcement power. (The high court recently determined that Title I of ADA, dealing with employment, was not a valid exercise of Congress’ §5 power because the historical record and the statute’s broad sweep suggested that its true aim was not so much enforcement, but an attempt to rewrite the court’s Fourteenth Amendment jurisprudence.) The underlying case arose when two paraplegics sued the State of Tennessee, claiming they were denied access to, and the services of, the State court system by reason of their disabilities. Tennessee v. Lane, Case No. 02-1667 (U.S., May 17, 2004).
In Palm Beach County, the County Administrator has sole authority to discipline or terminate County employees. The County Merit System Rules require that prior to termination, notice shall be provided informing an employee of the reason for proposed termination. A pre-termination conference is conducted by the department head, with the personnel director and director of Office of Equal Opportunity present. After considering all the evidence, the department head decides whether to affirm the recommendation to discharge the employee or take other action as deemed appropriate. Thus, the County Administrator’s power to terminate employees is delegated to the department head. Nowhere in the rules is any decision-making authority delegated to the committee as a whole. Nevertheless, intended or not, the department head deliberates with the panel to determine whether to terminate the employee. As such, members of the panel participate in the decision-making authority delegated to the department head, subjecting their meeting to the Florida Sunshine Act. Similarly, meetings of a grievance committee are also subject to the Sunshine Act because it is the final hearing body for all matters determined to be grievances, and exercises the authority to uphold, modify or deny any grievance. Dascott v. Palm Beach County, Florida, 29 Fla. L. Weekly D998 (Fla. 4th DCA, April 21, 2004).
DePaola was terminated from the Town of Davie Fire Department. After being terminated, DePaola filed a grievance but he was told he was not entitled to a grievance. He requested that the union take the grievance to arbitration, but no action was taken. DePaola filed a complaint in the circuit court seeking declaratory and injunctive relief. Dismissing the suit, the trial court agreed with the Town, that DePaola had the option of either pursuing a grievance under the Collective Bargaining Agreement or electing to challenge his termination at a personnel review board. In accordance with Section 447.401, Florida Statutes, a career service public employee who is also a union member may contest a disciplinary action taken by his employer either through the union or by filing a civil service appeal, but may not pursue both avenues for relief. Here, the Town did not process the grievance. As a result, DePaola was not precluded from seeking alternative relief. Thus, the appellate court reversed and remanded for further proceedings. By the way, the trial court also incorrectly concluded that DePaola would have been limited to an administrative appeal or certiorari review, not a de novo action in the trial court. DePaola v. The Town of Davie, Florida, 29 Fla. L. Weekly D1052 (Fla. 4th DCA, April 28, 2004).
A state statute provides that normal (unreduced) retirement is attainment of age 60 with 5 or more years of creditable service or attainment of age 50 with 25 years of creditable service. Typically, covered employees retire once they have attained 25 years of creditable service and age 50, going on to employment with other unrelated employers. An amendment to the statute provides that a member reaching age 60 with 5 years of service may elect to retire and receive a normal service retirement allowance but remain employed for up to one year (or two years, if appropriately extended). In a Private Letter Ruling, IRS’s Employee Plans Technical Office not the Employee Plans Determinations program, concluded that continued payment of pension benefits from the plan will not violate the rule against in-service distributions from a pension plan. In passing, IRS also noted that because the distribution option commences only after attainment of age 60, there is no issue with respect to the additional tax imposed by section 72(t) of the Internal Revenue Code. Private Letter Ruling 200420030 (February 19, 2004).
The American Benefits Council represents Fortune 500 employers and other organizations that assist employers of all sizes in providing benefits to employees. Collectively, the Council’s members either sponsor directly or provide services to retirement and health plans covering more than 100,000,000 Americans. The Council has just published a paper entitled “Pensions at the Precipice: The multiple threats facing our nation’s defined benefit pension system.” Much like the CIEBA report released a few months ago (see C&C Newsletter to April 7, 2004, Item 2), the Council believes that defined benefit pensions face an unprecedented series of policy and legal threats that endanger their continued existence. These threats have reluctantly pushed many employers to the precipice of outright abandonment of such programs. In order to preserve these plans -- and the retirement security they deliver to American families -- Congress must decide whether to adopt the urgently needed policy prescriptions or to continue down the current road of policy hostility that will likely lead to the demise of these plans. The Council prepared its paper to (1) provide background on defined benefit plans and the defined benefit system, (2) articulate the unique and unprecedented confluence of threats to the system and (3) set forth the policy solutions that will alleviate these threats and stop the erosion of the retirement futures of millions of Americans. In 35 pages, the Council discusses the following four threats to today’s defined benefit system and what it believes must be done in each area to ensure defined benefit pension plans remain a viable retirement plan designed for employers and employees in the 21st Century:
The National Association of Securities Dealers has recently issued two Notices to Members:
As in the past, the National Association of State Retirement Administrators has sent a letter to Wilshire Associates, raising concerns about the alarmist tone of its newest report (see C&C Newsletter for June 3, 2004, Item 4), which again presents a “distorted and misleading view of the fiscal condition of state pension funds.” Specific NASRA concerns include:
The guy who collected his mother’s pension check for eighteen years after she died and sent the pension fund a forged obituary, pleaded guilty in Federal Court to one count of mail fraud (see C&C Newsletter for March 22, 2004, Item 3). Phillip W. Hyde, 62, faces up to five years in prison, three years of probation and a $250,000.00 fine. In all, the pension fund lost $317,678.00 from the scheme.
Copyright, 1996-2004, all rights reserved.
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.