ALBANY, N.Y. (CN) - A change to New York pensions froze out new firefighters whose union contracts were still in negotiation, the state's highest court ruled.
As New York grappled with the near-meltdown of Wall Street and a state budget deficit projected in the billions in 2009, the state decided to place new members of the New York State and Local Police and Fire Retirement System in a new tier of pension benefits - Tier 5 - that required them to kick in 3 percent of their salaries.
Firefighters already on the payroll, however, had contracts that required the municipalities to underwrite their so-called noncontributory pension plans.
New York estimated that the change would produce savings of about $1 billion a year over the next three decades.
Though the law took effect in January 2010, the multiyear collective bargaining agreements that the city of Yonkers had with its local firefighter union expired at the end of June 2009. Yonkers said that any firefighter hired after that contract expired were not eligible for noncontributory pension benefits.
Its unions responded by filing improper labor practice charges with the Public Employment Relations Board. Arguing that Yonkers should have applied the just-expired collective bargaining agreements' noncontributory provisions to the new hires, the union cited both an exception contained in the legislation that created Tier 5 and the so-called Triborough Law.
After the case was referred to arbitration, Yonkers received an adverse decision and asked the Court of Appeals for a stay.
The Court of Appeals held, 4-2, last week that the union could not arbitrate termination of the noncontributory retirement plan because state civil service and retirement laws bar public employers from negotiating pension benefits not already prescribed by statute or contract.
The issue was "the meaning of the words 'in effect'" as contained in the Tier 5 legislation and "specifically whether expired collective bargaining agreements are 'in effect' for purposes of that statute because of the so-called Triborough Law," according to the majority opinion.
The Triborough Law, which dates to 1982, guarantees that provisions of an expired contract will continue while a public employer and union negotiate a new agreement.
"Here, however, the part of the CBA that required noncontributory plans is rendered unlawful by Article 22 of the Retirement and Social Security Law, which prohibits such plans, unless the Section 8 exception is applicable," Judge Eugene Pigott wrote for the court, abbreviating collective bargaining agreement.
The words "in effect" appear in the Section 8 exception to Article 22, which authorized Tier 5.
The firefighters' union argued that the Section 8 exception applied because it covers contracts that have expired but remain in effect because of the Triborough Law.
"This was not the Legislature's intent," Pigott wrote. "If the Legislature had intended to invoke the Triborough doctrine, it would certainly have made that explicit.
"Instead, the Legislature, having set forth the Section 8 exception for CBAs that are 'in effect,' expressly states that eligibility to join a CBA's retirement plan 'shall not apply upon termination of such agreement.'"
That interpretation finds support in a memorandum outlining the bill's intent that then-Gov. David Paterson wrote, according to the ruling.
"Under the union's interpretation of the statute, the Legislature would have been creating a loophole whereby a union, by the simple expedient of refusing to reach agreement on a new CBA, could ensure the continuation of noncontributory pension benefits to new hires, conceivably ad infinitum," Pigott wrote.
"Instead, it is clear that the Legislature intended to honor only agreements providing for noncontributory status that had not expired at the time the statute became effective."
In a separate opinion citing the Yonkers ruling, the court vacated an arbitration award that the Appellate Division confirmed for a firefighters' union in Oswego, N.Y. That union's city contract had expired on Dec. 31, 2009.
Joining Pigott in the majority in both the Yonkers and Oswego decisions were judges Victoria Graffeo, Susan Read and Robert Smith.
Chief Judge Jonathan Lippman dissented in both cases, joined by newcomer to the court, Judge Jenny Rivera.
Lippman's dissent in the Yonkers case focused on the Triborough Law and on a 2006 Court of Appeals decision that found "all terms of a CBA remain in effect during collective bargaining of a successor agreement."
Newly hired firefighters should therefore be party to the contract that contained a noncontributory provision, according to the dissent.
"Absent action by the Legislature, the court cannot ignore the provisions of the Triborough doctrine," Lippman wrote. "The majority's interpretation of the statute, in reality, does just that."
The city of Yonkers was represented by Terence O'Neil of Bond Schoeneck & King in Garden City. Richard Corenthal of Meyer, Suozzi, English & Klein in New York City argued for Yonkers Fire Fighters Local 628, IAFF, AFL-CIO.
The city of Oswego was represented by Earl Redding of Roemer Wallens Gold & Mineaux in Albany. Oswego City Firefighters Association, Local 2707, was represented by Mimi Satter of Satter & Andrews in Syracuse.
The New York State Professional Firefighters Association, IAFF, AFL-CIO, submitted amicus curiae briefs.
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