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Miami

Cypen & Cypen
NEWSLETTER
for
OCTOBER 28, 2010

Stephen H. Cypen, Esq., Editor

1. NEW RULE WOULD REDEFINE “FIDUCIARY”:   Department of Labor, Employee Benefits Security Administration, has proposed a rule under Employee Retirement Income Security Act that, upon adoption, would protect beneficiaries of pension plans and individual retirement accounts by more broadly defining the circumstances under which a person is considered to be a “fiduciary” by reason of giving investment advice to an employee benefit plan or a plan’s participants.  The proposal amends a thirty-five year old rule that may inappropriately limit types of investment advice relationships that give rise to fiduciary duties on the part of an investment adviser.  The proposed rule takes account of significant changes in both the financial industry and the expectations of plan officials and participants who receive investment advice; it is designed to protect participants from conflicts of interest and self-dealing by giving a broader and clearer understanding of when persons providing such advice are subject to ERISA’s fiduciary standards.  For example, the proposed rule would define certain advisers as fiduciaries even if they do not provide advice on a “regular basis.”  Upon adoption, the proposed rule would affect sponsors, fiduciaries, participants and beneficiaries of pension plans and individual retirement accounts, as well as providers of investment and investment advice-related services to such plans and accounts.  The entire rule is available at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title29/29cfr2510_main_02.tpl. 29 CFR Part 2510.

2. PHILADELPHIA WANTS STUDY OF FIREFIGHTING DIRECTION:   Philadelphia fire officials, faced with budget problems and complaints about the administration’s commitment to public safety, have asked the state to fund a first-ever study of the city’s needs for a 21st-century fire department.  The request came on the same day that City Council bashed the administration’s decision to save money by putting fire companies on temporary closings known as “rolling brownouts.”  Top administration officials asked the city’s state-appointed overseer to study everything about providing fire safety, from deployment of fire companies to management structure and revenue.  The move signaled a willingness by the administration to seek independent review of any restructuring of the fire department, according to report from philly.com.  The Philadelphia Fire Department, with about 2,150 uniformed officers and 110 civilian employees, responded to 221,000 emergency medical calls and 48,000 fire calls in 2009.  Advocates of reducing the departments say the 56 engine companies and 27 ladder companies serve a city that has fewer people and fewer fires than the department was designed to handle.  The administration closed seven fire companies in 2009 in the face of a $1 billion deficit in the city’s five-year plan.  It then instituted the rolling brownouts to save $3.8 million dollars in 2010-11, saying City Council failed properly to fund the budget.  The union, however, has repeatedly questioned how the administration can make such decisions without a study of their impact. 

3. SCENTS AND SENSIBILITY:   The City of Detroit has settled for $100,000 an Americans with Disabilities Act lawsuit by an employee who had chemical sensitivity making her allergic to a co-worker’s perfume.  Apparently the City got nervous after the federal judge denied its motion to dismiss and its motion for summary judgment.  In addition to the cash settlement, the city is required to post the following notice on all bulletin boards, and include the language in a new employee handbook:

Our goal is to be sensitive to employees with perfume and chemical sensitivities.  In order to accommodate employees who are medically sensitive to the chemicals in scented products the City of Detroit requests that you refrain from wearing scented products, including but limited to colognes, after-shave lotions, perfumes, deodorants,  body/face lotions, hair sprays or similar products, the City of Detroit also asks you to refrain the use of scented candles, perfume samples from magazines, spray or solid air fresheners, room deodorizers, plug-in wall air fresheners, cleaning compounds or  similar products.  Our employees with medical chemical sensitivities thank you for your cooperation.

We think the City of Detroit should hire somebody who knows how to write in proper English.   McBride v. City of Detroit, Case No. CA #2:07-CV-12794 (E.D. Mich.)

4.  TRENDS IN EMPLOYMENT-BASED RETIREMENT PLAN PARTICIPATION:   A recent Issue Brief from Employees Benefit Research Institute examines the level of participation by workers in public-and-private-sector employment-based pension or retirement plans, based upon the most recent data currently available (for 2009).  It shows that the employment-based retirement system remains a critical source of Americans’ retirement income security, and is under pressure from the recent economic downturn.  Among full-time, full-year wage and salary workers ages 21-64 (those with the strongest connection to the work force), 61.8% worked for an employer or union that sponsors a plan.  This level is almost a percentage point lower from 2008 and almost 8 percentage points lower than the sponsorship high point of 69.4% in 1999.  Among full-time, full-year wage and salary workers ages 21-64, 54.4% participated in a retirement plan in 2009.  While the 2009 participation level for this full-time, full-year group is little changed from 54.8% in 2008, it does mark the second straight annual decline and is down almost 6 percentage points from the high of 60.4%, measured in 1999.  Among all workers (including those who are not offered a retirement plan), 39.6% participated in a retirement plan in 2009, the first time in 15 years it dropped below 40%.  Wage and salary workers in the South, West and Southwest had the lowest participation levels, while the upper Midwest and Northeast had the highest levels.  North Dakota had the highest participation level, at 64.2%.  At 42.9%, Florida had the lowest percent.

5.  DEPUTY SHERIFF’S VOLUNTARY TIME ON ARREST WARRANT SERVICE TEAM NOT INCLUDED IN PENSION CALCULATION:  Shelden worked as a deputy sheriff for the Marin County, California, Sheriff’s Department.  Marin County had developed a backlog of approximately 10,000 unserved arrest warrants.  Hoping to reduce that backlog, the sheriff decided to create an arrest warrant service team to serve the outstanding warrants.  The sheriff asked Shelden if he wanted to work as a member of new team, and Shelden agreed.  Shelden’s work schedule, like that of all deputy sheriff’s in Marin County, was established by a collective bargaining agreement between the county and local deputy sheriff’s association.  Under that agreement, the standard work schedule consisted of 156 hours in a 28-day period, broken into 13-12 hour days.  The agreement required deputies to work three consecutive days one week and four consecutive days the next.  The cycle would then be repeated, with the exception that the deputies would be granted an additional day off each 28-day period.  The sheriff decided that the arrest warrant service team would work “on an overtime basis” so as not to detract from his deputies’ regular duties.  Shelden and his superiors agreed that Shelden would work one eight-hour shift each day on his first day off.  Shelden followed that schedule for four years, each week submitting a request for overtime, which was approved.  The sheriff removed Shelden from the arrest warrant service team, and established a new policy that no deputy could serve on the team for more than three months at a time.  After working as a deputy sheriff for nearly 30 years, Shelden retired.  He asked the Marin County Employees Retirement Association to include the overtime pay he earned while working on the arrest warrant service team when calculating his retirement benefit.  MCERA denied the request, explaining that Shelden was not entitled to retirement benefits based on overtime that he had served voluntarily.  An administrative law judge to whom MCERA had referred the matter also rejected Shelden’s request, because the hours served were not part of Shelden’s normally-scheduled or regular working hours.  Thereafter the superior court entered judgment in favor of MCERA, and Shelden sought review.  The pivotal issue on appeal was whether the overtime hours Shelden worked can properly be characterized as “compensation earnable” under applicable law.  The statute’s plain language makes clear the general rule that overtime premium pay is not included in the term “compensation earnable”, but it also sets forth an exception.  Compensation earnable does include premium pay for hours worked within the normally scheduled regular working hours.  Therefore, the issue was further reduced to whether the overtime hours that Shelden worked on the arrest warrant service team were within his normally scheduled or regular working hours.  Because the parties presented conflicting evidence on this point, the lower court’s conclusion was well-supported, and, therefore, affirmed.  Shelden v. Marin County Employees Retirement Association, Case No. A-124912 (Cal. App 1st September 24, 2010).

6. FEDERAL GOVERNMENT NIXES “ALL CAP” ROAD SIGNS:   In a nod to the fading eyesight of the nation’s growing number of Baby Boomers (and in the category of “you have got to be kidding”), the federal government is requiring communities around the United States to change street name signs from all capital letters to a combination of capital and lowercase letters.  The government says the signs will make them easier to read, according to usatoday.com.  Cash-starved localities also will have to dig deep for new, more effective traffic signs to make them easier to see at night, especially by older drivers.  The issue is how well a sign reflects light from an automobile’s headlights back toward the vehicle.  Signs that fail to meet minimum standards must be replaced by 2015, but communities will be allowed to change the signs as they wear out.  Gee, what a great concession. 

7. HOUSTON POLICE USE DATABASE TO WATCH PAWNED ITEMS:   Chron.com reports the Houston police are using a privately-owned online database of pawned merchandise to bust thieves and recover stolen property, a crime-solving tool enlisted by more than two dozen other law enforcement agencies in the area.  For a $90,000 annual fee, Houston detectives can log into a nationwide data base and view paperwork on items taken in by most of the city’s 133 pawn shops, as well as thrift stores, scrap yards and pawnshops in all 50 states.  Along with the item’s description and serial number, the required picture identification of the person who pawned the merchandise is displayed.  In the first few weeks of using the service, the city recovered stolen property valued in excess of the annual fee.  Previously, the pawnshop detail assigned 10 to 12 officers to check stores and retrieve copies of pawn tickets issued to customers.  A large number of clerks were also needed to enter information taken from 3 to 4-million pawn tickets collected annually.  And, the copied pawn tickets had to be stored in a rented warehouse.  Now, from computers on their desks, a few detectives review information stored in the database, and still have time to review transactions at 18 Houston pawnshops that have not converted to the database.  Detectives can also find the pawn history of an individual or even query the entire apartment complex or neighborhood to see who is frequently pawning merchandise.  So far, more than 3,000 law enforcement agencies nationwide have subscribed.  Chalk up one more for technology.

8. FEWER COPS, MORE BARS WORRY MANY:   The plan by an ex-NHL star to open a large sports bar and restaurant in the Detroit suburb of Royal Oak is adding to a debate over whether the city’s scaled-back police force can handle more bars and more drinkers.  The city has four pending applications for liquor licenses, including a 10,000-square-foot sports bar, with an unknown seating capacity.  Further, a theater complex under construction could draw as many as 2,000 patrons.  Royal Oak’s police force is down to 65 officers from 103 in 2007.  Police layoffs are expected to spread in Michigan, yet new bars and eateries are opening as the economy rebounds.  Nearby Pontiac asked the county for help in creating regulations for bars hoping to open.  That city had 200 police officers in the1990’s, but now has 74.  Some officials want to know if they can require the person obtaining a liquor license to provide professional security in place of police officers, freep.com reports.  Anyway you look at it, the picture is not pretty.

9. WILL FLORIDA ENACT “SORE LOSER” ELECTION LAW?:   Washingtontimes.com reports that a Florida Senate committee has recommended making it tougher for political candidates to switch or leave parties in mid-campaign, a move spurred by Florida Governor Charlie Crist’s bolt from the Republican party to run as an independent for U.S. Senate.  The Florida Senate Ethics and Elections Committee also calls for a sore-loser statute that would prohibit party-affiliated candidates who lose a primary from re-entering the race as an independent.  The issue is whether Florida law regarding candidates who change political parties while running for office is unambiguous and expansive enough to promote the state’s interests in political stability and maintaining integrity in the various routes to the ballot, said a report released by the committee.  The committee suggested the candidates be registered with a party—or be declared independent—one year before they must qualify for the office they seek.  Since the qualification deadline for federal office is typically about 6 months before the November general election, candidates would be locked into a party or non-party status about 18 months before the final election, effectively preventing last-minute party-switching for personal political gain.  Florida law currently says candidates can change their party status up to 6 months before a general election. 

10. NEW YORK AG SUES FEDEX OVER CONTRACTOR ISSUE:   New York Attorney General Andrew Cuomo is suing Federal Express’s ground package delivery unit, alleging its classification of drivers as independent contractors illegally deprives them of legal protections workers enjoy.  The lawsuit, according to The Associated Press, accuses FedEx of concocting an elaborately structured scheme to cast its driver employees as independent contractors, while regulating drivers’ hours, job duties, routes and even the clothing they wear on the job.  In response to the lawsuit filed in New York State Supreme Court, FedEx said numerous federal and state courts, as well as the Internal Revenue Service, has upheld the company’s contractor system.  However, Cuomo’s lawsuit alleges FedEx is violating state labor laws by classifying drivers as contractors, seeking an injunction and unspecified restitution/damages.

11. ALL PUNS INTENDED:  A conscience is what hurts when all your other parts feel so good.

12. OXYMORON:   Why isn't the number 11 pronounced onety one?

13. AGING JOKES:   We've put more effort into helping folks reach old age than into helping them enjoy it.

14. FABULOUS RANDOM THOUGHTS:  A bank is a place that will lend you money, if you can prove that you don't need it.

15. QUOTE OF THE WEEK:   “Plans are only good intentions unless they immediately degenerate into hard work.”  Peter Drucker

16. 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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