Cypen & Cypen   Miami
Home Attorney Profiles Clients Resource Links Newsletters navigation
825 Arthur Godfrey Road
Miami Beach, Florida 33140

Telephone 305.532.3200
Telecopier 305.535.0050

Click here for a
free subscription
to our newsletter

Cypen building

May, 1998

Stephen H. Cypen, Esq., Editor

FLORIDA LEGISLATURE PASSES 175/185 AMENDMENTS: After more than three years of urging by employees and employee groups, the Florida Legislature passed HB 3075, which makes extensive amendments to Chapters 175 and 185, Florida Statutes. Effective October 1, 1998, the 142 page Bill was presented to the Governor on May 12, 1998. In accordance with Article III, Section 8(a) of the Florida Constitution, the Governor has fifteen consecutive days from date of presentation to act on the bill -- until Midnight May 27, 1998. Unlike with bills passed by Congress, there is no such thing as a "pocket veto." Thus, if the Governor approves the bill or fails to veto it prior to the aforesaid date, it will become law. As of press time, the Governor had not acted. When HB 3075 does become law, we will issue a special edition dealing with its specific provisions. Lawton, don't fail us now.

MOST AMERICANS WORRY ABOUT RETIREMENT MONEY: A survey conducted by SunAmerica and reported in BNA indicates that 80% of Americans between the ages of 25 and 55 are worried that they will not have enough money to live on when they retire. Almost half of those surveyed said they may not be able to retire at all (!), citing the need to work in order to support themselves during retirement. Forty per cent of respondents said they had no money saved for retirement beyond those assets held in an employer-sponsored pension plan.

OLDER WORKERS VALUABLE, BUT HARD TO FIND: The National Council on Aging (NCOA) is a Washington, D.C.-based group of 7,500 individuals who work in behalf of older persons. A recent NCOA survey reported in BNA disclosed that 97% of employers believe older workers are thorough and reliable in completing their work and 94% say older workers do not miss time from work because of health problems. However, over 60% of employers do not know where to find older workers. Ironically, although almost one-half of respondents say they expect to employ more older workers in the future, only 10% of those companies have developed a strategic plan for those workers.

ZIP CODE CHIC: Your zip code can tell a lot about you, including (to a degree) your wealth. The top five zip codes in Florida, ranked by 1997 per capita income, are as follows: 33480 (Palm Beach) - $74,765.00; 33149 (Key Biscayne) - $43,159.00; 33156 (Pinecrest) - $42,520.00; 33496 (Boca Raton) - $39,711.00 and 33154 (Surfside/Bal Harbour/Bay Harbor Islands/Indian Creek) - $38,936.00. Incidentally, Indian Creek is a small island just west of Surfside, where, we would guess, the per capita income of the 52 residents exceeds $1,000,000.00!

THE FRENCH ARE, WELL, ... FRENCH: In a reversal of a prior reversal, the French government is backing away from previously-announced plans to allow creation of 401(k)-like private sector pension funds. After their upset victory in June, new Socialist leaders indicated that they might not kill earlier-authorized private pension plans, but would just revise them (see C&C Newsletter for August, 1997). Because of a budget change authorizing new fiscal incentives to existing institutional investors, the Minister of Economy and Finance has flip-flopped and now says the solution to viability of the retirement system must be found within the existing framework. BNA has been keeping tabs on this continuing saga. C'est la vie.

TITLE VII ACTION NOT NECESSARILY BARRED BY WORKERS' COMP SETTLEMENT: An employee who was attacked by her supervisor at work settled her workers' compensation claim with the employer-carrier "on account of the alleged work related accident." The settlement agreement released the employer from all workers' compensation liability, but not the Title VII action that was then pending. Nevertheless, the trial court granted summary judgment for the employer based on its belief that the election of remedies doctrine barred the employee from seeking relief under Title VII. In partially reversing, the District Court of Appeal discussed the nature of Title VII of the Civil Rights Act of 1964: to address sexual harassment and to compensate for intangible injury to personal rights. (Workers' compensation, on the other hand, is directed at compensating a worker for lost resources and earnings, purely economic injuries.) Thus, the appellate court did affirm that part of the summary judgment dealing with the claims for physical injuries and economic losses. Moniz v. Reitano Enterprises, Inc., 23 Fla. L. Weekly D803 (Fla. 4th DCA, March 25, 1998).

EDUCATORS PUSH FOR REINSTATEMENT OF ADEA EXEMPTION: When the Age Discrimination in Employment Act was amended in 1986 to prohibit mandatory retirement from most employees, there were temporary exemptions for state and local police and firefighters and for tenured university professors. The exemptions expired on December 31, 1993, but the public safety community succeeded in having its exemption lifted on a permanent basis, retroactive to December 31, 1993 (see C&C Newsletter for October, 1996). Thus, a state or local government -- except for Florida and any state having its own prohibition on mandatory retirement -- has the option to set mandatory retirement ages for public safety officers without violating ADEA. Citing the unique nature of faculty tenure, the National Commission on the Cost of Higher Education and others are pushing for restoration of the expired exemption. According to BNA, legislation addressing the issue is proceeding through both Houses of Congress. As with the public safety exemption, the American Association of Retired Persons is opposed. Forgive us, perhaps we are missing something: what is the "unique nature" of faculty tenure that could possibly put it in the category of public safety jobs which have significant physical requirements and where age is the most valid predictor of fitness?

SOUTH FLORIDA WILL GET FIRST IRS CITIZEN ADVOCACY PANEL: As part of President Clinton's desire for a kinder and gentler Internal Revenue Service, the Treasury Department will form a Citizen Advocacy Panel in South Florida. This and other CAPs are supposed to provide citizen input into enhancing IRS customer service by identifying problems and making recommendations for improvement of IRS systems and procedures; elevate identified problems to the appropriate IRS official and monitor the progress to effect change; and refer individual taxpayers to the appropriate IRS office for assistance. BNA reports that the South Florida CAP will consist of seven to twelve volunteers who should have some experience in community affairs, communications or customer service.

MUTUAL FUNDS INCREASE: Just in the month of February, assets in mutual funds increased by almost $250 Billion to $4.8 Trillion, a jump of over 5%. The categories for short-term funds are split into taxable and tax-free money market funds. Categories for long-term funds include stock funds, taxable bond funds, municipal bond funds and hybrid funds. The last category, which is new, includes balanced, flexible portfolio, income-mixed and asset allocation funds. These data are from an Investment Company Institute survey reported by BNA.

ALABAMA EMPLOYEES TO RECEIVE RETIREMENT INCENTIVES: Alabama's state employees who are eligible to retire will be able to choose one of two retirement incentive options: either a $12,500.00 cash bonus or a cash bonus equal to the value of their accrued sick leave not in excess of 150 days. To be eligible for an incentive option, reports BNA, an employee must retire after July 1, 1998 and before October 2, 1998.

IRS SCOFFLAWS SHOULD MOVE TO MONEY CENTERS: IRS data from 1996 show that conviction rates in Los Angeles, Chicago, Boston and Detroit were well below the national average. On the other hand, convictions in Pensacola, Memphis, Greensboro and Charlestown were twice the national average. So, if you have a penchant to commit tax fraud, first move from your small town to a big city.

OPM ISSUES FINAL DISABILITY RETIREMENT RULE: As we previously reported (see C&C Newsletter for February, 1997), the Office of Personnel Management was proposing a rule to liberalize (and standardize) procedures for federal employees to apply for disability retirement benefits. OPM has issued a new rule which applies to federal employees in the Civil Service Retirement System and the Federal Employees Retirement System: current employees may submit disability applications directly to their employing agency; former employees may submit applications within one year of separation either to their former employing agency or to OPM. The new rule is effective May 8, 1998, according to a BNA report.

CalPERS BACKTRACKS, A BIT: While CalPERS has in fact followed through with its draft standards of specific characteristics of the domestic boards that it will expect as a shareholder (see C&C Newsletter for July, 1997), CalPERS has backed off of two controversial provisions. In an interview with BNA, a CalPERS spokesman confirmed that the giant fund had dropped director term limits and mandatory retirement ages as standards for director independence. It seems as though CalPERS rejected the idea of a one-size-fits-all definition of independence. Also, CalPERS would have had to explain a provision that smacked of age discrimination.

BUCK SURVEYS DEFINED BENEFIT PENSION PLAN ASSUMPTIONS: Buck Consultants, Inc. has issued its latest annual survey on economic assumptions used for funding defined benefit pension plans. For the 1996 plan year, the average funding interest rate for plans surveyed was 8.19% vs. 8.10% for 1995. The highest concentration of plan sponsors, 31%, used a funding interest rate of 8%. The assumed average annual salary increase rate was 5.37% compared to 5.47% the year before. The accrued benefit (projected unit credit) actuarial cost method for determining contributions was most common, used by 70% of the plans. At 17%, the frozen initial liability was a distant second.

THE RETIREMENT SECURITY FOR THE 21ST CENTURY ACT INTRODUCED: HR 3788, the Retirement Security for the 21st Century Act, has been introduced into the House of Representatives. The Act would repeal the annual 25% of compensation limit on contributions to defined contribution plans and increase the dollar amount of elective deferrals to 401(k) plans, 403(b) plans and 457 plans; grant workers who change jobs the opportunity to roll over eligible distributions between 401 plans, 403 arrangements and 457 nonqualified governmental deferred compensation plans; allow anyone over 50 to increase his or her savings by $5,000.00 the amount that can be contributed to salary reduction plans; and provide greater clarity and flexibility regarding tax treatment of benefits under retirement plans in the public and tax exempt sectors. The law would also allow state and local government employees to use funds from their defined contribution plans to purchase qualified service credits in their defined benefit plans. This legislation appears similar to, but more extensive than, the proposed Enhanced Savings Opportunities Act (see C&C Newsletter for April, 1998).

S&P 500 INDEX OUTPERFORMS STOCK FUNDS, BUT OTHER INDEXES DO NOT: Over the past fifteen years the S&P 500's 17.2% annual return has beaten the 14.8% earned by the average stock fund. Last year, only 10% of all stock funds beat the S&P 500. But other indexes have not fared quite as well. For the 10-year period ended in 1997, the average small growth-company fund gained 16.73% per year, while the Russell 2000 grew at only 15.76%. And while the average international stock fund grew at an annual rate of 14.1% over the past ten years, the EAFE Index gained just 11.4%. So, when it comes to investing in index funds, the old adage "if you can't beat 'em, join 'em" is not universally true.


1984:   "Most managers have very little incentive to make the intelligent-but-with-some-chance-of-looking-like-an-idiot-decision. Their personal gain/loss ratio is all to obvious: If an unconventional decision works out, they get pat on the back and, if it works out poorly, they get a pink slip."
1986:   "Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
1992:   "Unlike the Lord, the market does not forgive those who know not what they do."
1995:   "This was a year in which any fool could make a bundle in the stock market. And we did. To a paraphrase President Kennedy, a rising tide lifts all yachts."
1996:   "Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals."
The Oracle of Omaha is widely known for his "Buffettology."

WORKERS' COMP CLAIMANT NOT ENTITLED TO PTD PRIOR TO REACHING MMI: Section 440.02(34)(f), Florida Statutes, defines "catastrophic injury" as a permanent impairment constituted by an injury that would otherwise qualify an employee to receive disability income benefits under Title II or supplemental security income benefits under Title XVI of the federal Social Security Act as the Social Security Act existed on July 1, 1992, without regard to any time limitations provided under that Act. Only claimants with catastrophic injuries are eligible for permanent total benefits. Section 440.15(1)(b), Florida Statutes. The "date of maximum medical improvement" means the date after which further recovery from, or lasting improvement to, an injury or disease can no longer reasonably be anticipated, based upon reasonable medical probability. Section 440.02(8), Florida Statutes. Although obtaining MMI is not a condition precedent to entry into the federal Social Security disability system, the Workers' Compensation Law authorizes permanent total disability benefits only in case of total disability adjudged to be permanent. Section 440.15(1)(a), Florida Statutes. That the Workers' Compensation Law provides incentives for permanently totally disabled workers to obtain federal disability income benefits does not speak to whether a worker's disability is properly determined permanent instead of temporary. City of Pensacola Firefighters v. Oswald, 23 Fla. L. Weekly D1000 (Fla. 1st DCA, April 15, 1998).

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.

Site Directory:
Home // Attorney Profiles // Clients // Resource Links // Newsletters