41 A.D.2d 452 | N.Y. App. Div. | 1973
These are appeals from: (1) a judgment of the Supreme Court at Special Term in the first above-entitled action, entered August 16, 1972 in Albany County, which denied petitioner’s application, in a proceeding pursuant to CPLR article 78, for an order enjoining the respondent from recomputing petitioner’s final average ¡salary as defined in paragraph b of subdivision 9 of section 302 of the Retirement and Social Security Law by excluding certain items; (2) a judgment of the Supreme Court at Special Term in the second above-entitled action, entered August 16,1972 in Albany County, which dismissed petitioner’s application, in a proceeding pursuant to CPLR article 78, for an order directing the respondent to recalculate petitioner’s final average salary as defined in paragraph b of subdivision 9 of section 302 of the Retirement and Social Security Law by including certain items; and (3) an order of the Supreme Court at Special Term in the third above-entitled action, entered August 16, 1972 in Albany County, which, in an action for a decláratery judgment, denied, with one exception, plaintiff’s motion for summary judgment and declared that section 431 of the Retirement and Social Security Law was not unconstitutional as applied to lump sum payments for accrued sick leave credits and termination pay.
These cases raise questions as to which items should be included in computing for pension purposes the “ final average salary” of appellants, employees of the Nassau County Police Department and members of the Policemen’s and Firemen’s Retirement System. Certain statutory provisions are applicable to all three cases. Unless otherwise indicated, all references are to the Retirement and Social Security Law.
At the core of the above definition is the term “ annual compensation ’ ’, which is itself defined in paragraph a of subdivision 2 of section 302 as ‘ ‘ the salary or wages annually earnable by a member, including maintenance, or any allowance in lieu thereof, received by the member.” (Emphasis added.)
THE WEBER CASE.
Appellant Weber, a patrolman in the Nassau County Police Department for over 20 years, retired on February 23, 1970. The contract then in effect between Nassau County and the Patrolmen’s Benevolent Association of the Nassau County Police Department provided, inter alla, that upon retirement after 20 years of service, a patrolman was entitled to a lump sum payment for termination pay computed on the basis of three days’ pay for each year of completed service. Respondent computed appellant’s “final average salary” by including all forms of compensation received during the final three years, including the lump sum termination payment in its entirety. In 1972, respondent, alleging that an error had been made, recomputed the final average salary, taking into consideration only nine days’ (three days for each of the last three years) worth of termination pay, thereby reducing appellant’s benefits. Special Term found that termination pay had been earned at a rate of three days per year of service, and denied the petition.
Appellant contends that, since paragraph d of subdivision 9 of section 302, which sets forth an alternative means of computing “ final average salary ”, prohibits the inclusion of “ any form of termination pay ”, the Legislature, must be presumed to have intended to allow the inclusion of the full amount of termination pay in ‘ ‘ final average salary ’ ’ as computed under paragraph b of subdivision 9 of section 302, since the latter contains no such prohibition. While we agree that the absence from paragraph b of subdivision 9 of a prohibition such as that contained in paragraph d of subdivision 9 evinces a legislative
Appellant urges that since, under the contract, termination pay is received “ upon separation from service, after twenty (20) years ”, such pay is only “ earned ” upon retirement. We disagree. Termination pay could be treated as having been earned in the 20th year of service, as appellant contends, only if such pay was a component of compensation for the 20th ‘-year alone. We view termination pay as having been earned by a full 20 years of service, and, of course, each year of service contributed equally to the amount of pay so earned. This conclusion is borne out by the fact that the quantum of termination pay is directly related to the total number of years of service.
Furthermore, the only significance of the 20th year is that previously earned termination credits then become vested. If the first year of vesting was to be treated as the year in which the first 20 years’ credits were earned, a patrolman who had served an additional three years, thereby earning an additional three days’ credits per year which vested at the end of each such year, would have a lesser amount of termination pay included in his “final average salary” than a fellow officer with ‘ ‘ only ’ ’ 20 years ’ total service. Obviously, the Legislature could not have intended such an illogical result. Since termination pay must be treated as earned over the 20-year period rather than in the 20th year, the Comptroller was correct in determining that the amount ‘ ‘ earned during [the last] three consecutive years ” (§ 302, subd. 9, par. b) is that amount representing three years’ worth of termination credits (nine days).
Appellant further contends that for two years he had received retirement benefits which had been determined by including in ‘ ‘ final average salary ’ ’ the full amount of termination pay, and thus a contractual right to the continuance of such payments was established between himself and the Retirement System in accordance with the decision of the Court of Appeals in Kranker v. Levitt (30 N Y 2d 574). Such a contract, it is urged, cannot be impaired without violating section 7 of article Y of our State Constitution.
We are in accord with Special Term’s holding that no contract had been established requiring the inclusion of full termination pay in the computation of final average salary. In our view, Kranker did not hold that a course of action of the Comptroller must have existed for a given period of time before constituting a contract,
The judgment in the Weber case should be affirmed, without costs.
THE LECCI CASE.
Appellant Lecci retired from the Nassau County Police Department on January 2, 1971, where he had been employed for more than 21 years. Under a contract then in effect between the employer and the Patrolmen’s Benevolent Association, an employee, upon retirement in good standing after 20 years’ service, became entitled to a lump-sum cash payment for termination pay computed on an entitlement basis of three days for each year of service, and four days for each year in completed service after January 1, 1972.
With regard to termination pay, the same issues are presented as were before us in the Weber case, and our decision there is controlling. The respondent was not required to include more than nine days’ termination pay in Lecci’s “final average salary ”.
The includability of a lump-sum payment for sick pay presents a somewhat different problem, for there is no prior administrative practice which might be said to give rise to a contract. Appellant argues that the enactment in section 431 of a provision prohibiting the inclusion of any sick leave pay in
The judgment in the Leed case should be affirmed, without costs.
THE GBEENWALD CASE.
The questions in this appeal are raised by an action for declaratory judgment. Appellant and those he represents have not retired from their employment with the Nassau County Police Department. By chapter 503 of the Laws of 1971, the Legislature enacted section 431, effective April 1, 1972. That section provides, inter alla, that lump sum payments for accumulated but unused sick leave, accumulated but unused vacation pay, and “ any form of termination pay ” shall not be included in the salary base for computing retirement benefits. On March 8, 1971, a collective bargaining agreement was entered into between the Nassau County Policei Department and the Policemen’s Benevolent Association, retroactive to January 1, 1971, providing that, after 20 years of service, retirees would receive termination pay computed on a basis of three days per year of completed service and four days for each year of such service on or after January 1,1972. The agreement also contained provisions for lump-sum payments for accumulated and unused sick leave and lump-sum payments for accumulated but unused vacation credit. Appellant sought a declaration that section 431 was unconstitutional under section 7 of article V of the New York State Constitution. Special Term denied the requested relief
At the outset, we reaffirm our holding in the Weber and Leeci cases as to how much, if any, termination pay and sick leave pay is includable in computing final average salary. In determining whether section 431 works an unconstitutional-impairment of contractual rights, the question is whether individuals, in accepting or continuing in public employment, did so in reliance upon a reasonable expectation that their retirement benefits would be computed by taking into consideration certain forms of compensation which the public employer had voluntarily chosen to pay. The fact that a contract grants to them the right to receive such payments does not, of course, in and of itself, establish a right to have the payments included in the computation of retirement benefits.
Considering the applicability of section 431 to termination pay, we refer to our holding today in the Weber case, and to the reasoning in the Kranker case, and conclude that a “ contract ” having been established with regard thereto, the retroactive application of section 431 would indeed constitute a deprivation of constitutionally protected rights. We therefore hold that employees who were members of the retirement system on or before the effective date of section 431, and who were the beneficiaries of collective bargaining agreements entered into on or before that date, shall be entitled to have included in the computation of their ‘ ‘ final average salary ’ ’ an amount of termination pay such as has been accrued in the last three years of their employment.
In the case of accumulated but unused sick leave credits, we have held in the Lecci case that there was a valid statutory prohibition against the inclusion of such payments in final average salary, and that prior to the enactment thereof, no administrative practice, such as would establish a Kranker-type contract, had evolved. Thus, there was no reasonable basis for the expectation that such sick leave payments would be included in the computation of retirement benefits. Therefore, section
Appellant challenges the decision at Special Term insofar as that decision limited the number of vacation days which could be included in the computation of final average salary to 30 in reliance upon the limitations imposed in the Kranker case. Appellant contends that the limitation in Kranker was based upon the fact that the collective bargaining agreement under which Kranker’s rights were determined itself limited the number of vacation days for which a lump sum payment could be made to 30. Here, however, the collective bargaining agreement would, in some circumstances, allow employees to accrue unused vacation pay to a maximum of 60 days, and appellant contends that the lump-sum payment, which is to be included in the corn-nutation of final average salary, should be measured against this maximum. We disagree. The limitation to 60 of the number of unused vacation days for which a lump-sum payment will be made, does not bear any reasonable relation to the actual number of unused vacation days which.are “ earned ” in any given year of service. Therefore, that limitation should similarly bear no relation to the maximum number of days of vacation credit which can be included in the determination of final average salary. Moreover, the decision in Kranker to allow the inclusion of up to 30 days’ vacation pay was based upon a contract established by administrative practice, rather than by the terms of a particular collective bargaining agreement. In fact, nothing in the Kranker decision makes reference to a limitation in the collective bargaining agreement of which Kranker was a beneficiary, the 30-day limitation having been established by the Comptroller many years earlier apparently without regard to the agreement covering Kranker. We therefore conclude that the contract benefits which are constitutionally protected from impairment by section 431 in this case are similarly limited to those which were so protected under the Kranker decision.
Herlihy, P. J., Cooke, Kane and Main, JJ., concur.
Judgment in the Weber case affirmed, without costs.
Judgment in the Lecci case affirmed, without costs.
Order in the Greenwald case, modified, on the law, so as to declare so much of section 431 of the Retirement and Social Security Law as prohibits the inclusion of termination pay in final average salary unconstitutional, and, as so modified, affirmed, without costs.
. § 7 [Membership in retirement system; benefits not to be diminished nor impaired.] After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired;.
. The constitutionality of section 431 as regards other forms of lump sum payments, including termination pay, is again before us in the Greenwald case.
. In its decsion in Greenwald, Special Term did so read Kranker in determining the applicability of section 431 to termination pay. As shall be demonstrated here and in our discussion of Greenwald, we think that position was erroneous.
. The four-day provision would not apply to Lecci, since he did not have any years of service after January 1,1972.
. Since the contract provides for entitlement to four days’ termination pay for years of service on or after January 1, 1972, the maximum number of days which can be included in final average salary, will be nine for employees retiring on or before December 31, 1972, 10 for employees retiring on or after January 1,1973 but not later than December 31,1973, 11 for employees retiring on or after January 1, 1974 but not later than December 31, 1974, and 12 for employees retiring on or after January 1,1975, provided that the number of days of entitlement per year is not reduced by a collective bargaining agreement which is hereafter entered into.