Legislative Proposal Seeks to Provide Law Enforcement Officers Pay Status When Appeals of Termination Are Not Resolved Within 180 Days

Posted on February 4, 2009 by Frank Crivelli

 

This blog entry will focus upon our review of certain statutory proposals currently pending in the New Jersey Legislature concerning the pay status of law enforcement officers when appeals of termination are not resolved within 180 days. These proposals are set forth in Assembly Bill Number 3481. 

Assembly Bill 3481 concerns the suspensions of certain law enforcement officers and firefighters and supplements Title 40A of the New Jersey statutes and specifically amends N.J.S.A. 40A:14-150 and N.J.S.A. 40A:14-22. In essence, the bill allows certain law enforcement officers and firefighters to regain pay status when appeals of termination are not resolved within 180 days.

The first part of the bill provides:

When a law enforcement officer employed by a law enforcement agency…that is subject to the provisions of Title 11A of the New Jersey Statutes is suspended from performing his official duties without pay for a complaint or charges, other than (1) a complaint or charges relating to the subject matter of a pending criminal investigation…whether pre-indictment or post indictment, or (2) when the complaint or charges allege conduct that also would constitute a violation of the criminal laws of this State or any other jurisdiction, and the law enforcement agency employing the officer…seeks to terminate that officer’s…employment for the conduct that was the basis for the officer’s…suspension without pay, a final determination on the officer’s…suspension and termination shall be rendered within 180 calendar days from the date the officer…is suspended without pay.

 

Should a final determination of the discipline not be rendered within those 180 days, the proposal states that the officer shall, commencing on the 181st calendar day, begin to receive the base salary he/she was being paid at the time of the suspension and shall continue to do so until a final determination on the termination is rendered. Simply put, this addition to the statute would allow officers who are suspended without pay to begin collecting their base pay once again if the appeal of their termination is not resolved within 180 days. It goes without saying that this addition helps to alleviate the problem many officers find themselves in currently, namely being economically starved for an extended amount of time while trying to challenge their removal from employment.    

The proposal also instructs how the 180 day period should be calculated. While the 180 day period seems to be a favorable time period for the officers, it is important to note that this time period might be significantly extended and keep an officer without pay for a period much larger than 180 days. For example, time periods such as: (1) the period between an officer’s termination and the date on which his/her appeal is filed; and (2) the days that accrue during a postponement, should an officer have requested one, will not toll the 180 day period. Therefore, it is imperative that New Jersey public safety officers become intimately familiar with the events which can extend the 180 day time frame should this bill be accepted into law. That way, the officers can maximize their resources efficiently so as to ensure the time frame without pay remains as close to the 180 days as possible.

Next, it is important to note that if the Civil Service Commission denies the officer’s appeal, the officer will be required to reimburse his employing agency or department all of the base salary received during the period of the appeal. Put another way, if an officer has been receiving his base salary after the 180 day period expired and he/she ultimately loses, the officer has to pay all the monies he or she has received. Moreover, the proposal provides that if an officer fails to reimburse the employing agency for the payments, the employing agency may obtain a lien for those amounts on any property and income of the officer, including the officer’s pension, sick and vacation leave to which the officer is entitled.

Finally, the bill directs the Director of the Office of Administrative Law to establish a special unit, known as the Law Enforcement and Firefighter Unit, to deal with removal cases. The unit will be made up of Administrative Law Judges who are qualified and experienced in disciplinary matters and cases which fall under the purview of this statute. As a result of the establishment of this unit, the Office of Administrative Law will be better able to adhere to the 180 day time frame which will, potentially, result in quicker resolutions than what is currently being experienced for all parties involved.

Based on our review of these proposals, I am of the opinion that while many of the proposals are favorable to New Jersey public safety officers, the benefits are somewhat misleading. I believe the Legislature in: (1) installing a deadline for resolving cases regarding the termination of an officer; (2) allowing the officer to regain pay status when appeals are not resolved within that deadline; and (3) establishing the Law Enforcement and Firefighter Unit addresses a number of important concerns, namely forcing these types of cases to be resolved in an expedited fashion and allowing officers certain financial alleviation should an appeal persist for an extended amount of time.

However, (1) the various ways in which the 180 day deadline could be significantly extended; (2) the provision providing reimbursement to the employment agency in the event the appeal is unsuccessful; and (3) permitting a lien on an officer’s property to include his/her pension, severely undermines many of the advantages of the bill. Therefore, it is important that, if this bill passes, officers are mindful of what it specifically includes, excludes, and requires by way of affirmative action on the part of the member or association. Our office will keep apprised of the bill’s progression through the Legislature so make sure to check this blog periodically to ascertain any updates.
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NEW ISSUES ARISE UNDER RICHARDSON

Posted on December 1, 2008 by Frank Crivelli

 Since the New Jersey Supreme Court’s decision in Richardson v. Board of Trustees, Police and Firemen’s Retirement System, 192 N.J. 189 (2007), we have witnessed more denials of accidental disability applications based on the premise that the member suffered from a pre-existing illness or injury which contributed to the overall disability that prevented the member from returning to employment. However, where the scenario gets particularly interesting is when the pre-existing injury or illness was the result of a work related traumatic event. One would think that such a denial does not make sense under the Richardson decision as a “traumatic event,” as redefined by the Supreme Court,  and the resulting injuries sustained therefrom should not qualify or be viewed as a pre-existing illness or injury. Such a scenario and situation has not been addressed by New Jersey courts and is ripe for review to further flush out this new and evolving area of the law. 

 While the last paragraph may sound like a tongue twister, we will try to explain it in plain english. New Jersey courts are currently grappling with scenarios revolving around multiple injuries caused by separate traumatic events which together cause a member to be permanently disabled from performing his or her job. However, the Police and Firemen’s Retirement System, Public Employees' Retirement System and Teachers' Pension and Annuity Fund do not believe that a person with multiple injuries that occurred as the result of multiple traumatic events should be entitled to receive accidental disability benefits. As a result, the various pension funds have been disqualifying applicants with multiple injuries caused by multiple traumatic events. 

          In Richardson, the New Jersey Supreme Court revisited the “traumatic event” standard under the accidental disability retirement provision of the Police and Firemen’s Retirement System, N.J.S.A. 43:16A-1. After conducting an exhausting analysis of conflicting court decisions which interpreted the traumatic event standard differently and the legislative history of the amendments to the accidental disability statutes, the Court opined that a “traumatic event” is essentially the same as what has been historically understood as an “accident” to be. An “accident” as defined under Richardson, is an unexpected, external happening that directly causes injury and is not the result of pre-existing disease alone or in combination with work. Based on establishing this baseline definition of “accident,” the Court held that in order to obtain accidental disability benefits, a member must prove amongst other things that he or she is totally and permanently disabled as a direct result of a traumatic event that is:

1.   Identifiable as to time and place;

2.   Undesigned and unexpected; and

3.   Caused by a circumstance external to the member (not the result of pre-existing disease that is aggravated or accelerated by the work).

          The Richardson Court also provided examples of situations that satisfy the newly enunciated traumatic event standard. The first example depicted a police officer who suffers a heart attack while chasing a suspect. The Court instructed that the police officer in such a situation has not experienced a traumatic event. In that case, the work effort, alone or in combination with a pre-existing disease, was the cause of the disabling injury. However, the Court stated if that the same police officer became permanently and totally disabled during the chase solely because of a fall, the officer has suffered a traumatic event that would give rise to an award of accidental disability benefits. Thereafter, the court provided another example. A gym teacher who develops arthritis from the repetitive effects of his work over the years has not suffered a traumatic event as defined and articulated under Richardson. Such a disability is the result of degenerative disease and is not related to an event that is identifiable as to time and place. On the contrary, the same gym teacher who trips over a riser, is injured and becomes permanently and totally disabled as a result of the fall, has satisfied the accidental disability standard. 

          In sum, the Court held that a member who is injured while performing his or her ordinary duties does not disqualify him or her from receiving accidental disability benefits; some injuries sustained during the ordinary work effort will pass muster and others will not. However, the polestar of the inquiry is whether, during the regular performance of his or her job, an unexpected happening, not the result of pre-existing disease alone or in combination with the work, has occurred and directly resulted in the permanent and total disability of the member. 

In our next post, we will look further into Richardson and whether members with multiple injuries resulting from multiple traumatic events should qualify for accidental disability benefits.

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Extension of Effective Date for New IRS Regulations

Posted on October 13, 2008 by Frank Crivelli

 After much concern regarding the new Treasury Regulations promulgated by the Internal Revenue Service (“IRS”) and their potential impact on members of government pension plans, the IRS and the Treasury intend to extend the date by which a governmental plan must comply with final regulations on distributions from a pension plan upon attainment of normal retirement age. Under the extension, the new Treasury Regulations will be effective for a governmental plan for plan years beginning on or after January 1, 2011.     

As described in two previous blog entries, the IRS modified Treasury Regulation §1.401(a)-1 to provide an exception to the rule that pension benefits be paid only after retirement by permitting a pension plan to commence payment of retirement benefits to a participant after the participant has attained normal retirement age even if the participant has not yet had a severance from employment with the employer maintaining the plan. 

 

The new regulations also require a pension plan’s normal retirement age to be an age that is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed.  In the case of a retirement plan where substantially all of the participants are qualified public safety officers, a normal retirement age of age 50 or later is deemed not be earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed. 

 

Notice 2007-69, which provided temporary relief for certain plans that may have to change their definitions of normal retirement age to satisfy the new regulations, indicated that the new regulations do not contain a safe harbor or other guidance with respect to a normal retirement age conditioned on the completion of a stated number of years of service.  The notice requested comments on whether and how a pension plan with a normal retirement age conditioned on the completion of a stated number of years of service satisfies the requirement in §1.401(a)-1 that a pension plan be maintained primarily to provide for the payment of definitely determinable benefits after retirement or attainment of normal retirement age and how such a plan satisfies the pre-ERISA vesting rules. 

 

Based upon this, in Notice 2008-98, the IRS indicated its intention to amend the new regulations to change the effective date for governmental plan to plan years beginning on or after January 1, 2011.  Moreover, the notice provided that government plan sponsors may rely on this notice with respect to extension until such time as the new regulations are so amended. 

 

Although the implementation of the new regulations has been delayed, it is critical to keep apprised of the comments regarding whether a pension plan with a normal retirement age conditioned on the completion of a stated number of years of service satisfies the new regulations. Clearly, the resolution of this issue could drastically impact many public safety officers not only in New Jersey, but across the country. Periodic updates to this website regarding these regulations will be posted as more information becomes available.    

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New IRS Regulations and Impact on PFRS Retirement System

Posted on October 10, 2008 by Frank Crivelli

              Recently, there has been much concern over new Department of Treasury regulations promulgated by the Internal Revenue Service (“IRS”) and their effect upon State legislated pension systems for public employees. This entry summarizes the new regulations and their potential impact on the members of the Police and Firemen’s Retirement System (“PFRS”). After conducting research and for the reasons set forth in detail below, it our belief the new Treasury Regulations will not alter the ability of a PFRS member to retire under any existing PFRS law, including the special retirement provision allowing retirement prior to attaining the age of 50. 

 

By way of background, the New Jersey State PBA reported that the IRS adopted regulations that would prohibit any public safety officer in a state legislated pension system from retiring before the age of 50. As most public safety officers are aware, there is currently no minimum retirement age for a member of PFRS to qualify for a pension. In fact, all that is needed to qualify for a PFRS pension is twenty-five (25) years of service and retirement credits paid into the system. Specifically, N.J.S.A. 43:16A-11.1, entitled “Special Retirement; resignation with 25 years of creditable service; allowance; death benefit”, provides in pertinent part:

 

Should a member resign after having established 25 years of creditable service, he may elect “special retirement,” provided, that such election is communicated by such member to the retirement system by filing a written application, duly attested, stating at what time subsequent

to the execution and filing thereof he desires to be retired…

 

[N.J.S.A. 43:16A-11.1(a).]   

   

Treasury Regulation §1.401(a)-1 was recently modified. The modifications require qualified pension plans to revise the definition of normal retirement age to an age that is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed. In addition, the regulations provide that a normal retirement age of at least 62 is deemed to be not earlier than the typical retirement age for the industry in which the covered workforce is employed. Thus, a plan satisfies this provision if its normal retirement age is age 62, or if its normal retirement age is the later than age 62 or another specified date, such as the later of age 62 or the fifth anniversary of plan participation. This is known as the “safe harbor” provision. 

For retirement plans that set a retirement age between age 55 and 62, it is generally expected that the employer will make a good faith determination of the typical retirement age for the industry in which the covered workforce is employed. In most instances, the employer will be given deference in setting the retirement age. However, this assumes that the determination is reasonable under the facts and circumstances of the particular situation.

 

Alternatively, a normal retirement age that is lower than age 55 is presumed to be earlier than the earliest age that is reasonably representative of the typical retirement age for the industry of the relevant covered workforce absent facts and circumstances that demonstrate otherwise.  

 

Significantly, for our purposes, in the case of a retirement plan where substantially all of the participants in the plan are qualified public safety officers, a normal retirement age of age 50 or later is deemed not to be earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed.  Specifically, the new regulation will provide the following once in effect:

 

Age 50 safe harbor for qualified public safety employees. A normal retirement age under a plan that is age 50 or later is deemed to be not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed if substantially all of the participants in the plan are qualified public safety employees (within the meaning of section 72(t)(10)(B)).

 

Under §72(t)(10)(B), a qualified public safety employee means any employee of a State or political subdivision of a State who provides police protection, firefighting services, or emergency medical services for any area within the jurisdiction of such State or political subdivision. The definition clearly encompasses the members of PFRS.

 

          Non-government plans are required to adopt these modifications for the first plan year beginning after June 30, 2008. Government plans, such as PFRS, are not subject to the new regulation until plan years beginning on or after January 1, 2009. For PFRS and other State plans, this would mean the regulation would not take effect until July 1, 2009. Consequently, members retiring in the short-term need not be concerned.

 

          It has become the concern of many labor organizations that these new regulations will preempt the “special retirement” provision of PFRS, which allows members to conceivably retire prior to attaining the age of 50. At this juncture, I am of the opinion that the regulations will not preempt the “special retirement” provision of the PFRS. Moreover, I do not believe these regulations will affect a PFRS member’s ability to retire after establishing twenty-five (25) years of creditable service, even though the member may not have reached the age of 50.     

    

          Under the wording of the regulations, a normal retirement age of 50 or above is required for a plan in which substantially all of the participants are qualified public safety officers/employees. In addition to the “special retirement” provision, N.J.S.A. 43:16A-5 states in pertinent part:

 

Any member in service who has attained age 55 years may retire on a service retirement allowance upon filing a written and duly executed application to the retirement system, setting forth at what time, not less than one month subsequent to the filing thereof, he desires to be retired. Any member in service who attains age 65 years shall be retired on a service retirement allowance forthwith on the first day of the next calendar month, except that a member hired prior to January 1, 1987 may remain a member of the system until the member attains age 68 years or 25 years of creditable service, whichever comes first.

[N.J.S.A. 43:16A-5(1).]

 

          It is our position that N.J.S.A. 43:16A-5 sets the normal retirement age for PFRS at 55 because this is when a member can apply and receive retirement benefits. In addition, the statute sets the mandatory retirement age at 65. Since the normal retirement age is 55, which satisfies the regulations requirements for plans covering qualified public safety officers, PFRS would remain unaffected by the new regulations because it is compliant with same. Furthermore, I believe the “special retirement” provision, which allows members to retire prior to attaining the age of 50 after obtaining twenty-five (25) years of service, is indeed just that, a “special” provision that falls outside of the purview of these regulations. These regulations address the normal retirement ages, whereas N.J.S.A. 43:16A-11.1 specifically deals with the special situation of a member establishing twenty-five (25) years of service. 

 

          Undoubtedly, many labor organizations across the State will be keeping a close watch upon these regulations. In fact, a letter authored by Frederick Beaver, Director of the State Department of Treasury, has been posted on the State PBA website. In this letter Mr. Beaver concurs with our conclusion that the regulations will not affect PFRS members’ retirement ability upon completion of twenty-five (25) years of service. 

 

          Our office will be keeping you up to date on this important topic. Periodic updates will be posted regarding the various issues surrounding these regulations as more information becomes available.                  
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