Lynch v. City of New York, 23 N.Y.3d 758 (2014)
Retirement and Social Security Law § 480(b) only applies to temporary ITHP (Increased-Take-Home-Pay) programs in place as of 1974 for Tier 1 and 2 members of public employee retirement systems, and does not require public employers to pay any portion of a Tier 3 employee’s pension contribution.
Summary
This case concerns whether New York City must make ITHP pension contributions for police officers and firefighters appointed after July 1, 2009, who are Tier 3 members of the NYC pension funds. The Court of Appeals held that Section 480(b) of the Retirement and Social Security Law only applies to temporary programs in place in 1974 for Tier 1 and 2 members, and not to Tier 3 employees. Thus, the City can deduct 3% from Tier 3 employees’ wages for pension contributions. The Court emphasized the legislative history and the overall design of the tiered pension system to reach its conclusion, emphasizing cost-saving measures.
Facts
Prior to July 1, 1973, employees joining the City retirement system were classified as Tier 1, and those joining between July 1, 1973 and July 26, 1976 were Tier 2. Legislation in 1963 allowed the City to assume a portion of police and fire employees’ annuity contributions, increasing their take-home pay (ITHP). This ITHP benefit was temporary and extended annually. The 1973 pension reforms created Tier 2 and extended temporary benefits for *present* members of existing (Tier 1) systems. In 2009, the Governor vetoed a bill extending Tier 2 coverage to police officers and firefighters appointed from July 1, 2009, through June 30, 2011, leading these employees to become Tier 3 members. Tier 3 required employees to contribute 3% of their annual wages to their pensions.
Procedural History
The Patrolmen’s Benevolent Association (PBA) and other unions sued the City, alleging violations of Retirement and Social Security Law § 480(b) and other laws. Supreme Court initially ruled that the City violated § 480(b). The Appellate Division modified, holding the City violated § 480(b) and was liable for conversion of wages. The Court of Appeals granted the City’s motion for permission to appeal.
Issue(s)
Whether Retirement and Social Security Law § 480(b) requires the City of New York to make Increased-Take-Home-Pay (ITHP) pension contributions on behalf of New York City police officers and firefighters appointed on or after July 1, 2009, who are Tier 3 members.
Holding
No, because Section 480(b) only encompasses temporary programs in place as of 1974 for Tier 1 and 2 members of a public employee retirement system, and does not obligate a public employer to pay any portion of a Tier 3 public employee’s statutorily required pension contribution.
Court’s Reasoning
The Court reasoned that while § 480(b) does not explicitly limit its application to specific tiers, its legislative history indicates it was intended to extend temporary benefits for “present members” of programs in place in 1974. At that time, the ITHP programs for NYC police officers and firefighters applied only to Tier 1 and 2 employees. The court emphasized that the legislature would have had to *include* this benefit for tier 3 employees to make it available to them; instead they required them to contribute 3% of their wages. Making ITHP permanent for Tier 1 and 2 members did not implicitly expand coverage to Tier 3. The Court cited the Governor’s veto of extending Tier 2 status to lessen pension costs and the implausibility of silently undoing that veto by creating a non-contributory pension for Tier 3 members. The Court also considered related Administrative Code provisions and legislative memoranda that consistently referred to ITHP benefits for Tier I and II members only. Regarding § 508-a, referencing ITHP in connection with death benefits for survivors of tier 3 employees, the Court noted that this section uses the qualifier “if any”, suggesting that ITHP was not automatically applicable to tier 3 members. In sum, the court found that interpreting § 480(b) to apply to Tier 3 employees would be inconsistent with the overall design of the tiered pension system and the cost-saving reforms implemented over time. As the Governor’s Approval Memorandum for section 480(b)’s predecessor stated, this provision was meant to “extend temporary retirement benefits for present members” of the programs to which it referred (Governor’s Approval Mem, Bill Jacket, L 1973, ch 383 at 2, 1973 McKinney’s Session Laws of NY at 2343).