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Miami

Cypen & Cypen
NEWSLETTER
for
AUGUST 16, 2007

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001

1. HOW MUCH DO AMERICANS DEPEND ON SOCIAL SECURITY?:

The National Center for Policy Analysis, a conservative think tank, has published a paper on Americans’ dependence upon Social Security. According to the Executive Summary, Social Security benefits over the next 75 years will exceed payroll tax revenues by $4.6 Trillion. To close this enormous fiscal gap, one proposal is to cut benefits of high-income workers. Many low-income workers depend almost entirely on Social Security for their retirement income, but it is often assumed that high-wage workers can maintain their standard of living without Social Security benefits due to their private pensions and savings. Surprisingly, however, even high-wage workers depend on Social Security for a substantial portion of their retirement income and would significantly change their consumption and saving behavior in the absence of Social Security. Specifically:

  • Social Security accounts for virtually all of the discretionary consumption of households with modest preretirement incomes (less than $50,000 a year for couples or $25,000 for singles).
  • It is equal to about one-third of the consumption of the highest-earning households (couples with retirement incomes of $500,000 and singles with $250,000).

The study is based on modeling of representative households. Living standards are measured by dollars available for discretionary consumption after subtracting such “off the top” expenditures as taxes, contributions to tax-favored savings, mortgage payments, college tuition and life insurance premiums. The model assumes that, all things being equal, people will try to maintain their standard of living by evening out their consumption over their remaining lifetimes. There are two ways people can smooth their lifetime consumption: (1) they can borrow in order to increase their current consumption or (2) they can save in order to increase their future spendable income. Borrowing requires them to lower their future standard of living (as they pay back the debt), while saving requires them to lower their current standard of living (by cutting spending). However, there may be difficulties for lower income people. Due to their current obligations, they often cannot increase their retirement savings. Also, they are limited in their ability to borrow in order to increase their current consumption. If Social Security were abolished tomorrow, younger households would have many years to adjust, but only the wealthiest would be able to spread the loss of Social Security benefits evenly over the whole of their remaining lives. The high-earners would reduce their consumption by about 18% for every remaining year of life. People with less income could not adjust fully to the loss of Social Security benefits by reduced consumption and increased savings.

2. FLORIDA RETIREMENT SYSTEM CONTRIBUTION RATES WILL REMAIN THE SAME THIS YEAR, INCREASE NEXT:

The Florida Legislature has enacted Chapter 2007-84, effective July 1, 2007. The law establishes required employer retirement contribution rates for each membership class and subclass of the Florida Retirement System as follows:

Membership Class Percentage of Gross Percentage of Gross
Compensation, Compensation,
Effective July 1, 2007 Effective July 1, 2008


Regular Class 8.69% 9.59%

Special Risk Class 19.76% 22.01%

Special Risk Administrative
Support Class 11.39% 11.90%

Elected Officers Class --
Legislators, Governor, Lt.
Governor, Cabinet Officers,
State Attorneys, Public
Defenders 13.32% 14.99%

Elected Officers Class --
Justices, Judges 18.40% 20.46%

Elected Officers Class --
County Elected Officers 15.37% 17.15%

Senior Management Class 11.96% 13.35%

DROP 9.80% 10.89%

As usual, the Legislature found that a proper and legitimate state purpose is served when employees and retirees of the state and its political subdivisions, and the dependents, survivors and beneficiaries of such employees and retirees, are extended the basic protections afforded by governmental retirement systems. These persons must be provided benefits that are fair and adequate and that are managed, administered and funded in an actuarially sound manner, as required by Section 14, Article X of the State Constitution, and Part VII of Chapter 112, Florida Statutes. Therefore, the Legislature has determined and declared that the act fulfills an important state interest.

3. WORKERS COMPENSATION FOR FLORIDA FIRST RESPONDERS:

On June 8, 2007, Florida Governor Jeb Bush approved Chapter 2007-87. The term “first responder” as used in the section means a law enforcement officer, a firefighter or an emergency medical technician or paramedic employed by state or local government. A volunteer law enforcement officer, firefighter or emergency medical technician or paramedic engaged by the state or local government is also considered a first responder. For the purpose of determining benefits under the section as to employment-related accidents and injuries of first responders, the following shall apply:

  1. An injury or disease caused by exposure to a toxic substance is not an injury by accident arising out of employment unless there is a preponderance of evidence establishing that exposure to the specific substance involved, at the levels to which the first responder was exposed, can cause the injury or disease sustained by the employee.
  2. Any adverse result or complication caused by a smallpox vaccination of a first responder is deemed to be an injury by accident arising out of work performed in the course and scope of employment.
  3. A mental or nervous injury involving a first responder and occurring as a manifestation of a compensable injury must be demonstrated by clear and convincing evidence. For a mental or nervous injury arising out of employment unaccompanied by a physical injury involving a first responder, only medical benefits under Section 440.13, Florida Statutes, shall be payable for the mental or nervous injury. However, payment of indemnity as provided in Section 440.15, Florida Statutes, may not be made unless a physical injury arising out of injury of the first responder accompanies the medical or nervous injury.

In cases involving occupational disease, both causation and sufficient exposure to a specific harmful substance shown to be present in the workplace to support causation shall be proved by a preponderance of evidence. Permanent total supplemental benefits received by a first responder whose employer does not participate in the social security program shall not terminate after the first responder attains the age of 62. The term “occupational disease” means only a disease that arises out of employment as a first responder and is due to causes and conditions that are characteristic of and peculiar to a particular trade, occupation, process or employment, and excludes all ordinary diseases of life to which the general public is exposed, unless the incidence of the disease is substantially higher in the particular trade, occupation, process or employment than for the general public.

4. SOME OTHER NEW FLORIDA LAWS:

As a result of the 2007 Session of the Florida Legislature, several bills that may be of interest to our readers became law:

Chapter 2007-27 (effective October 1, 2007). The law amends Section 943.13(6), Florida Statutes, to provide that in order to be eligible for the presumption set forth in Section 112.18, Florida Statutes (presumption for tuberculosis, heart disease or hypertension), while employed with an employing agency, a law enforcement officer, correctional officer or correctional probation officer must have successfully passed the physical examination required by the subsection upon entering into service as a law enforcement officer, correctional officer or correctional probation officer with the employing agency, which examination must have failed to reveal any evidence of tuberculosis, heart disease or hypertension. A law enforcement officer, correctional officer or correctional probation officer may not use a physical examination from a former employing agency for purposes of claiming the presumption set forth in Section 112.18, Florida Statutes, against the current employing agency. This amendment closes a loophole through which more than one correctional officer has squeezed (see C&C Newsletter for October 20, 2005, Item 4 and C&C Newsletter for November 23, 2005, Item 1). The law also amends Section 943.137, Florida Statutes, to allow an agency employing law enforcement officers, correctional officers or correctional probation officers to establish tobacco-use standards.

Chapter 2007-32 (effective July 1, 2007). The act amends Section 1.01(14), Florida Statutes, to expand the term “veteran” to include one who has served during Operation Enduring Freedom (from October 7, 2001 to a date thereafter prescribed by presidential proclamation or by law) and Operation Iraqi Freedom (from March 19, 2003 to a date thereafter prescribed by presidential proclamation or by law).

Chapter 2007-42 (effective July 1, 2007). Cited as the “Florida Highway Patrol Sergeant Nicholas Sottile Act,” the act amends Section 447.3075, Florida Statutes, to provide that any state law enforcement agency that has 1,200 or more officers shall be in a bargaining unit that is separate from officers in other state law enforcement agencies. If the application of the section requires that a new state law enforcement bargaining unit be created, a question concerning representation is not deemed to have arisen regarding the new unit or the existing unit.

Chapter 2007-45 (effective July 1, 2007). The act amends Section 321.24(6), Florida Statutes, to provide that the director of the Florida Highway Patrol may present to an officer who retires from the Florida Highway Patrol Auxiliary after a minimum of 20 years of service one complete uniform, including the badge worn by that officer; the officer’s service handgun, if one was issued as part of the officer’s equipment; and an identification card clearly marked “RETIRED.”

Chapter 2007-51 (effective July 1, 2007). The act repeals Section 295.101, Florida Statutes, which provided that a veteran’s employment preference expires after a person eligible pursuant to Section 295.07, Florida Statutes (the general provision for veterans’ preference in appointment and retention), has been applied and been employed by the state or any agency of a political subdivision in the state.

Chapter 2007-92 (effective July 1, 2007). The act creates Section 112.0801(2), Florida Statutes, to provide that “retiree” means any officer or employee who retires under a state retirement system or a state optional annuity or retirement program or is placed on disability retirement and who begins receiving retirement benefits immediately after retirement from employment. In addition to such requirements, any officer or employee who retires under the Public Employee Optional Retirement Program established under Part II of Chapter 121, Florida Statutes, shall be considered a retired officer or employee or retiree if he (1) meets the age and service requirements to qualify for normal retirement as set forth in Section 121.021(29), Florida Statutes, the Florida Retirement System or (2) has attained the age specified by Section 72(t)(2)(A)(i) of the Internal Revenue Code (59 1/2) and has 6 years of creditable service. Section 112.0801, Florida Statutes, has been redesignated as subsection (1) and still provides that any state agency, county, municipality, special district, community college or district school board that provides life, health, accident, hospitalization or annuity insurance for its officers and employees and their dependents upon a group insurance plan or self-insurance plan shall allow all former personnel who have retired, and their eligible dependents, the option of continuing to participate in such group insurance plan or self-insurance plan. The premium cost cannot exceed the premium cost applicable to active employees. Because, on its face, Section 112.0801(1), Florida Statutes, is not limited to the Florida State Retirement System, we assume the amendment was not an attempt so to limit the definition of “retiree.” However, the requirement that one begin receiving retirement benefits “immediately after retirement from employment” could be a significant change. Note: the identical amendment appears as part of Chapter 2007-100, also effective July 1, 2007, but we are not sure why.

Chapter 2007-93 (effective October 1, 2007). The act amends Section 112.071(2)(c)2a, Florida Statutes (the agency investigation exemption from the Public Records Act), to exempt a request made by a law enforcement agency to inspect or copy a public record that is in the custody of another agency and the custodian’s response to the request, and any information that would identify whether a law enforcement agency has requested or received that public record. When the criminal intelligence information or criminal investigative information is no longer active, the fact that the law enforcement agency had requested or received that public record becomes available to the public.

Chapter 2007-107 (effective July 1, 2007). The act creates Section 741.313, Florida Statutes, to require an employer to permit an employee to request and take up to 3 working days of leave from work in any 12-month period if the employee or a family or household member of an employee is a victim of domestic violence. The leave may be with or without pay, at the employer’s discretion. The section applies if the employee uses the leave from work to seek an injunction for protection against domestic violence; obtain medical care or mental health counseling, or both; obtain services from a victim-services organization; make the employee’s home secure from the perpetrator of the domestic violence or seek new housing to escape the perpetrator; or seek legal assistance in addressing issues arising from the act of domestic violence. The section applies to an employer who employs 50 or more employees and to an employee who has been employed by the employer for 3 or more months. The sole remedy for any person claiming to be aggrieved by a violation of this section is to bring a civil suit for damages or equitable relief, or both, in circuit court. The person may claim as damages all wages and benefits that would have been due to the person up to and including the date of the judgment had the act violating the section not occurred, but the person may not claim wages or benefits for a period of leave granted without pay. However, the section does not relieve the person from the obligation to mitigate his damages.

5. COACH WOODEN’S RULES:

From the Book of Lists, here are legendary basketball coach John Wooden’s Rules to Live By:

  • Faith, hope and charity.
  • Make each day your masterpiece.
  • Drink deeply from good books.
  • Freedom from desire leads to inner peace.
  • Failure to prepare is preparing to fail.
  • Ability may get you to the top, but it takes character to keep you there.
  • Help others.
  • It is better to trust and be disappointed occasionally than to distrust and be miserable all the time.
  • Almost anyone can stand adversity, but to test a person’s character, give him power.

Fine advice.

6. QUOTE OF THE WEEK

“I have no use for body guards, but I have very specific use for two highly trained Certified Public Accountants.” Elvis Presley


Copyright, 1996-2007, 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.


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