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NY Can’t Slash Veteran’s $10,000 Lotto Winnings

(CN) - New York cannot take half of a Vietnam veteran's $10,000 lottery winnings, despite a state law on recouping public assistance, an appeals court ruled.

Walter Carver received public assistance from New York City through the state-funded Work Experience Program from 1993 to March 2000.

Seven years after those benefits were terminated, Carver hit the lotto jackpot.

The state's Lottery Division and Office of Temporary Disability Assistance took half of Carver's winnings, however, under a social services law that lets New York reimburse itself for public assistance benefits paid to a $600-or-more lotto winner in the past 10 years.

When Carver was enrolled in WEP, he received $176 every two weeks, plus food stamps, as long as he worked 35 hours per week. Unless he missed work, this added up to minimum wage.

For the first couple years, Carver sorted mail at Coney Island Hospital. Then he worked at the Staten Island Ferry terminal in Manhattan, where he swept, spread salt in the winter and picked up trash.

After the disability agency refused to reconsider the decision to take half of Carver's winnings, the Vietnam War vet went to court.

He noted that rescinding his public-assistance benefits meant that his take-home pay from 1993 to 2000 amounted to less than the state minimum wage, in violation of the Fair Labor Standards Act.

The New York Supreme Court dismissed the petition, however, finding that Carver was not a federally protected employee covered by the federal minimum wage law.

Since the Appellate Division reversed as to the FLSA count, however, the state Supreme Court granted Carver's petition on remand.

Ordered to return $5,000 to Carver, the state reached a settlement with the veteran and then appealed.

New York's highest judicial authority, the Court of Appeals, affirmed 4-2 Thursday.

"Carver's particular situation compels the conclusion that he is entitled to minimum wage," Chief Judge Jonathan Lippman wrote for the majority. "While participating in the WEP, Carver worked 35 hours per week, and the state concedes that this is not the norm. Additionally, the state's actions here led to a particularly unfair result in that Carver was taxed on the full amount of his $10,000 lottery winnings, while being forced to surrender half of those winnings to the state."

Lippman added: "Had Carver spent most of his hours receiving training, or education in how to obtain employment outside of the [Work Experience Program] WEP, we might have reached a different conclusion."

Judge Eugene Pigott meanwhile joined a dissent by Judge Sheila Abdus-Salaam that says program participants are not city "employees" entitled to minimum wage.

"In its effort to fit the square peg of assistance into the round hole of employment under FLSA, the majority defies the will of Congress, ignores the teachings of the Supreme Court and needlessly creates a split in authority between this court and the Tenth Circuit," Abdus-Salaam wrote. "Because the majority's decision sows confusion in this important area of federal law, courts throughout New York and, potentially, the nation must now struggle in vain to reconcile the majority's illogical holding with the relevant legislative scheme and common sense, and thus the majority's opinion will likely reverberate in unfortunate ways throughout the legal system."

Kristi Berner, a spokeswoman for the Office of Temporary Disability Assistance, wrote in an email that "This case precedes the current administration, and OTDA plans to cooperate fully with the decision."

Susan Antos, an attorney for 69-year-old Carver, said in an email that the ruling "provides dignity to people like Mr. Carver, who worked in exchange for their public assistance grants and believe that their work has value."

Doug Cohen, a spokesman for the state attorney general, declined to comment on the ruling.

Carver also filed a federal class action against the city, and the Second Circuit advanced that case in September 2010. That case has been closed, however, pending resolution of the state court proceedings.

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