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Cypen & Cypen
JULY 26, 2007

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001


According to the International Herald Tribune, for the first time in its 72-year history, the United Automobile Workers Union is entering contract talks in the United States with more retirees than active workers in its ranks. The shift has the greatest impact on medical costs, as Detroit automakers cover the health care expenses of both current and former union members -- more than 1.1 million of them combined, plus dependents. The annual bill totals about $12 Billion. So, even as the struggling car companies try to restructure, announcing plans in the last two years to shed more than 80,000 workers, their health care bill continues to rise as those people age. The car companies’ ability, or willingness, to continue paying those benefits, including negligible co-pays for drugs and doctors’ visits, will be a key sticking point when pivotal negotiations begin tomorrow between the UAW and the auto companies.


Williams was employed as a County corrections officer for 16 years. Prior to her termination, Williams lived with her boyfriend, who was a convicted felon on parole. Williams received a Disciplinary Action Report alleging that she had a close personal relationship and resided with a known felon, in violation Department Standard Operating Procedures. One procedure prohibited an employee, except in discharge of lawful duties, knowingly to associate with persons engaged in unlawful activities. Another prohibited employees from maintaining or developing close, personal, intimate or se.xual relations with inmates with whom employees become acquainted while the inmates are in the Department’s custody. The Department’s manual summarized the Department SOPs as follows:

Neither the County nor the Department can tell employees whom they may or may not privately associate with. What the County expects and requires is that the employees’ conduct, whether on-duty or off-duty, does not compromise the integrity of the employees of the Department or County, where that conduct is unbecoming of an employee of the County.

The County issued a termination letter based on the violations enumerated in the Disciplinary Action Report. Williams appealed her termination, but the County Manager upheld the termination. Neither the Department nor the County contended that the boyfriend was “engaged in unlawful activities” as prohibited by the SOP. The circuit court affirmed the County Manager’s decision, and second-level certiorari ensued. (Review on second-level certiorari is extremely limited, as the court is confined to determining whether the lower court provided due process and followed the correct law.) This particular petition fell into the rare category of cases in which the lower tribunal demonstrated a violation of a clearly established legal principle that resulted in a miscarriage of justice. When an officer is discharged for conduct not precisely written into departmental rule, the rule must not be of a character that is so amorphous that men of common intelligence must guess at its meaning. Neither the Department nor the County made any attempt to show that there exists a written rule prohibiting a corrections officer from living with a former felon and that violation of such rule is grounds for termination. Without more than the text of the SOPs and without more than the record presented by the County and the Department, Williams was not on adequate notice that merely living with her boyfriend subjected her to automatic termination. The appellate court found it was a departure from the essential requirements of law in affirming the termination of Williams on the basis of a non-existent regulation, granted the petition for writ of certiorari, quashed the circuit court’s order and remanded with directions to reinstate Williams’s employment. Williams v. Miami-Dade County, Florida, 32 Fla. L. Weekly D1764 (Fla. 3d DCA, July 25, 2007).


The U.S. Department of Labor wants to remind employers and employees that the federal minium wage increased to $5.85 on July 24, 2007. With this change, workers covered by the Fair Labor Standards Act will be entitled to be paid no less than $5.85 per hour. The law also requires that workers be paid on their regular paydays for all hours working during a pay period. The Fair Minimum Wage Act of 2007 amended FLSA to increase the federal minimum wage in three steps: to $5.85 per hour effective July 24, 2007; to $6.55 per hour effective July 24, 2008; and to $7.25 per hour effective July 24, 2009. The Department’s Wage and Hour Division, which enforces FLSA, has posted updated compliance assistance information on its website at Many states have minimum wage laws with provisions that differ from the federal law. When an employer is subject to both federal and state wage laws, the employer must comply with the provisions of each law. In Florida, the minimum wage is $6.67.


The California Public Employees’ Retirement System earned an estimated 19.1% return on investments for the 12 months ended June 30, 2007 -- the highest gain since 1997/1998 -- to total a whopping $247.7 Billion! The percentage gain more than doubled CalPERS’ assumed rate of 7.75%. Total assets increased by $36.5 Billion over the year. These gains will carry many CalPERS constituent plans to 100% full funding of retirement obligations. For the fourth straight year, annual returns were in the double-digits, to raise the 10-year average to 9.1%. Total assets have increased by $128 Billion over the last 10 years. Separately, the $170 Billion California State Teachers’ Retirement System posted a 20.1% return for the year ended June 30, 2007. The last time it did better than 20% was in 1986, when it posted a 26% return.


Smith appealed a final order of the Public Employees Relations Commission, which rejected a hearing officer’s recommendation that Smith’s termination be reduced to a sixty-day suspension without pay. On appeal, Smith argued PERC erred as a matter of law when it found that marital strife and emotional turmoil never qualify as mitigating factors in its review of agency action. Smith had worked for the Department of Corrections for 22 years, when, while arguing with his estranged wife, got into a violent confrontation with a fellow law enforcement officer. The State Attorney’s Office declined to pursue charges against Smith, but as a result of the incident, the Department terminated Smith’s employment. After hearing on the matter, a hearing officer determined that Smith’s long and distinguished service with the Department, as well as the emotional turmoil surrounding the incident, called for a mitigated penalty. The hearing officer recommended a sixty-day suspension without pay. PERC accepted all of the hearing officer’s findings of fact, but rejected the recommended penalty, and upheld Smith’s termination. In its final order, PERC stated that marital strife and emotional states are not mitigating factors in PERC proceedings. However, in 2001, the Legislature substantially amended provisions governing PERC’s discretion. The amendment severely limited PERC’s discretion with regard to most public employees:

If the commission finds that cause did not exist for the agency action, the commission shall reverse the decision of the agency head and the employee shall be reinstated with or without back pay. If the commission finds that cause existed for the agency action, the commission shall affirm the decision of the agency head. The commission may not reduce the penalty imposed by the agency head, except in the case of law enforcement or correctional officers, firefighters, professional health care providers, if the commission makes specific written findings of mitigation.

Instead of requiring review under the previous criteria, the new statute directed PERC simply to determine if cause existed for the employee’s discipline. If cause did exist, PERC was compelled to affirm the action; if cause did not exist, PERC was required to reverse the decision and reinstate the employee. Significantly, the Legislature removed all discretion with regard to the degree of punishment, except in cases involving law enforcement or correctional officers, firefighters and professional health care providers. Here, the hearing officer considered and credited Smith’s emotional turmoil. Although the hearing officer’s conclusions are not binding, PERC erred as a matter of law when it enunciated a policy that marital strife and emotional turmoil never qualify as mitigating factors. By failing to consider all the hearing officer’s findings regarding mitigation, PERC’s conclusion also contravenes a general requirement of the Administrative Procedure Act that an administrative agency may not increase a recommended penalty unless it reviews the complete record and justifies its actions in writing. The district court vacated PERC’s conclusion that marital strife and emotional turmoil will never qualify as mitigating factors, vacated the final order and remanded the cause for further proceedings. Smith v. Florida Department of Corrections, 32 Fla. L. Weekly D1750 (Fla. 1st DCA, July 24, 2007).


Section 286.011, Florida Statutes, requires governmental boards or commissions to conduct their business at open public meetings. The Legislature, however, has created a limited exception for attorney-client discussions. Section 286.011(8), Florida Statutes, provides exception therefrom if certain conditions are met:

...any board or commission of any state agency or authority or any agency or authority of any county, municipal corporation, or political subdivision, and the chief administrative or executive officer of the governmental entity, may meet in private with the entity’s attorney to discuss pending litigation to which the entity is presently a party before a court or administrative agency... .

Among other things, the entity’s attorney must advise the entity at a public meeting that he desires advice concerning litigation. The subject matter of the private meeting shall be confined to settlement negotiations or strategy sessions related to litigation expenditures. The entire session shall be recorded by a certified court reporter, whose notes shall be fully transcribed and filed with the entity’s clerk within a reasonable period of time after the meeting. The entity shall give reasonable public notice of the time and place of the attorney-client session and the names of the persons who will be attending the session. The transcript shall be made part of the public record upon conclusion of the litigation. The statute does not state that the entity’s attorney’s request for a private meeting must be made at a regularly scheduled meeting of the governmental entity. Rather, the statute refers to an announcement made at a “public meeting.” Section 286.011, Florida Statutes, sets forth requirements for all public meetings: such meetings must be open, reasonable notice must be given and minutes of the meetings must be taken. If the meeting at which the announcement is made by the attorney meets these requirements, the provisions of Section 286.011(8), Florida Statutes, requiring the announcement to be made at a public meeting would appear to be satisfied. AGO 2007-31 (July 10, 2007).


Watson Wyatt Worldwide has found that the rate of pension plan freezes among FORTUNE 1000 firms has slowed, and the majority of companies with defined benefit plans are committed to keeping them. An analysis of pension plan sponsorship among FORTUNE 1000 companies shows that the share of plan sponsors freezing their plans dropped from 7% in 2006 to 4% in 2007. New freezes reached their highest levels in 2006, when 42 additional firms on FORTUNE 1000 list had frozen plans. So, specifically, in 2007, the number of defined benefit plan sponsors (638) had new freezes or terminations of 25, amounting to 4%, with the cumulative number of plan sponsors with frozen or terminated plans at 138. Undoubtedly some companies will freeze their pension plans in the future, but it appears that the trend has peaked. With less regulatory uncertainty and funding volatility better under control, the environment is now a more positive one for pension plan sponsors. In addition, a Watson Wyatt study of 300 organizations with pension plan assets of more than $100 Million found that 59% of companies that have a defined benefit plan open to new hires have made a formal decision to keep their plans open. The remainder have not indicated that they have made a formal decision about their plans.


The Associated Press reports that, frustrated by delays in health care, injured Iraq war veterans accuse the Veterans Administration in a lawsuit of breaking the law by denying them disability pay and mental health treatment. The lawsuit against the U.S. Department of Veterans Affairs seeks broad changes in the agency as it struggles to meet growing demands from veterans returning home from Iraq and Afghanistan. Suing on behalf of hundreds of thousands of veterans, the lawsuit charges that the VA has failed warriors on numerous fronts. It contends the VA failed to provide prompt disability benefits, failed to add staff to reduce wait times for medical care and failed to boost services for post-traumatic stress disorder. The lawsuit also accuses the VA of deliberately cheating some veterans by allegedly working with the Pentagon to misclassify PTSD claims as pre-existing personality disorders to avoid paying benefits. (Nice.) The VA and the Pentagon have generally denied the charges. This case is bound to garner lots of publicity as it wends its way through the court system.


The former New Jersey State Senate president, who pleaded guilty to federal corruption charges last year and is serving a 39-month sentence, was stripped of his legislative pension because of illegal conduct while in office. The Associated Press, via the New York Times, reports that the state public employees’ pension board voted to deny the former politico the entire pension he earned during 19 years in the Senate. The decision followed a hearing at which his lawyer had argued for the lesser penalty of partial forfeiture. The $1,865 monthly pension was suspended after the former Senator pleaded guilty to federal fraud and tax evasion charges. This decision prohibits him from receiving future benefits based on his years of service in the Senate. When he gets out of federal prison, however, the disgraced ex-official will resume receiving a pension based on 11 years as the Mayor of New Brunswick.


“Life is what happens while you’re busy making other plans.” John Lennon

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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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