Rules to Recognize Before Employing Retirees
Douglas Gerhardt, Esq | July 29th, 2009New York St
ate enacted new rules for hiring retired public employees, reporting attorney information and granting waivers. Public employers, including school districts, should become familiar with the new requirements and carefully review them before hiring retirees.
NEW REPORTING REQUIREMENTS
New York State Legislative action responded to allegations of ‘double dipping’ – earning a pension and full salary from public employment. Effective January 5, 2009, school districts and Board of Cooperative Educational Services (BOCES) must annually report to the New York State Comptroller and the appropriate retirement system (the one retired from), information about employees who are also earning a public pension. Required information includes: the name, date of birth, place of employment, current position, and
all earnings of each retiree employed. The new law also requires school districts and BOCES to report all money earned by the retiree in excess of the earnings limit - currently $30,000. (See NYS Retirement and Social Security Law Section 217.)
Another new law also requires school districts to report to the State Education Department and the State Attorney General, information about attorneys providing legal services to the school district or board. Information to be filed includes:
(a) all lawyers who provide legal services to such district or board;
(b) their classification as employees or independent contractors; and
(c) all remuneration and compensation paid for all legal services rendered to the district
or BOCES ). (See Education Law Section 2053)
It is unlikely a specific form will be developed for reporting this information.
RETIREE WAIVER RULES
The ‘waiver process’ for rehiring retirees was also augmented by the New York State Legislature and Board of Regents, coincidentally on the same day. The goal was to close various “loopholes” in the process. New provisions of the Retirement and Social Security Law Section 211 apply to all retirees while new Education Department Regulations apply only to school employees.
(a) New Law Applies - New York Retirement and Social Security Law Section 211
Section 211 of the New York Retirement and Social Security Law applies to a public employee seeking to earn more than the statutory limit ($30,000 in 2009) from a public entity while earning a full public pension. A waiver must be granted before the limit is exceeded.
Effective October 7, 2008, new rules apply to the waiver process. Specifically:
(a) employers must determine the retired person is properly certified
(where required);
(b) the prospective employer must prepare a detailed recruitment plan to
fill the vacancy on a permanent basis; and
(c) employers must demonstrate an “urgent need” for the retiree’s services in a position “as a result of an unplanned, unpredictable and unexpected vacancy, sufficient time is not available to recruit a qualified individual.”
Additionally, the “hiring shall be deemed as non-permanent rather than a final filling of such position,” or the prospective employer has undertaken extensive recruitment efforts to fill a vacancy and, as a result, has determined that there are no available non-retired persons qualified to perform the duties of the position. This latter point will be looked at very closely.
An new provision also prohibits a retiree from returning to work in the same or similar position from which the person retired for a period of one year following retirement.
This is significant. The position need NOT be in the same district or municipality. For example, a retired building principal may not return to work as a principal in another school district if the rehire is within a year of her retirement date. Advocates indicated this will curtail hiring qualified candidates when no others are available.
(b) New Regulations for School Employees (Commissioner’s Regulation 8 N.Y.C.R.R. Section 80-5.5)
New regulations on waivers are specific to retirees working in school districts and BOCES in New York State. They were permanently adopted a month after the law took effect (NYS Education Commissioner‘s Regulation 8 N.Y.C.R.R. Section 80-5.5,November 11, 2008.)
Similar to the new state law the regulations address waivers applicable to rehiring a retired person in the same or similar position from which he/she retired. Such a waiverwill not be granted until the person is retired for at least one year.
Education waivers are limited to one year (in most cases.) This goes beyond the new law (which would allow two year waivers). Education waivers can be extended with Commissioner approval for an additional one year but only in cases of extreme hardship or unexpected and unforeseen circumstances beyond the control of the school district or BOCES board.
Further, additional approval will not be granted upon expiration of a renewal, unless the retired person is employed in a position as a certified teacher in a teacher shortage area or in a high need school, or in extreme circumstances where a district or BOCES is prohibited by law or otherwise from hiring a permanent replacement for a position, and such employment has been approved.
In other words, the law allows waivers for two years, the regulation only one with the potential of an additional year (thus two) but it is improbable more than two years of a waiver will be permitted.
OBTAINING A WAIVER
To obtain a waiver, prospective employers must file a written request for approval. In the case of waivers for those working in school districts and BOCES, requests go to the Commissioner of Education and must certify:
(a) the retiree is duly qualified and competent;
(b) the retiree is physically fit to perform the duties to be assigned;
(c) the retiree is properly certified as a teacher where such certification is
required;
(d) specific reasons why there is a need for the services of the particular retiree;
(e) specific reasons why the employment of the particular retiree is in the best educational interests of the district or the board; and
(f) there are not readily available other persons who are not retirees, qualified to perform the duties to be assigned.
The written request must also include documentation to establish either:
(i) the district or board has undertaken an extensive and good faith recruitment search for a certified and qualified candidate and determined there are no available non-retirees qualified to perform the duties of such position.; or
(ii) an urgent need for the retired person’s services in such position as a result of an unplanned, unpredictable and unexpected vacancy requiring an immediate temporary interim appointment, precluding the district or board from conducting an extensive recruitment search.
When documenting, the district or BOCES must include evidence it: (a) considered all certified and qualified non retired candidates before requesting approval from the commissioner; and (b) advertised for the particular position in a sufficiently broad manner appropriate for that position, based on the geographic location of the district or board and on any prior historical shortages for that position in the district or board.
In the case of an emergency appointment, the district or board must describe the selection process employed for the interim appointment.
The new notice and documentation provisions enhance the old process by requiring information which very likely had been provided in the past. The difference of course is now it is mandated and failure to meet the mandate will result in a denial of the waiver.
Finally, once the process has been completed, school districts and BOCES which hire retirees must provide notice to the public that it has done so. The retiree’s compensation package must be disclosed as well. Publishing on the district website, if there is one, would meet this new requirement.
INCREASED PENALTY FOR PENSION FRAUD
Perhaps the most significant change in the law is the penalty for non-compliance. Failure to adhere to the above requirements may result in the criminal offense of defrauding the pension system. Effective October 7, 2008 the crime of defrauding a pension system was enhanced to Class E and D felonies, up from a misdemeanor.
So, while much of the new rules may amount to good practice, school districts should take great pains to adhere to all the new requirements because the penalty stakes have raised significantly.
Any public entities, including school district or BOCES, seeking to employ a retiree must check with counsel in advance to ensure complete compliance with all rules and laws.
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Tags: 403(b), boces, douglas gerhardt, education, education law, education planning, new laws, new york state legislation, pensions, retirees, state education department
About the Author: Mr. Gerhardt is a member of Harris Beach PLLC and practices with the Educational Institutions Team and the Labor & Employment Law Practice Group. Prior to joining Harris Beach, Mr. Gerhardt was General Counsel to the New York State Council of School Superintendents. Prior to joining the Council of School Superintendents in 2003, Mr. Gerhardt was Director of Government Relations and Assistant Counsel for the School Administrators Association of New York State for seven years.
