Hessel v. New York City Emp. Retirement System
| Decision Date | 20 February 1974 |
| Citation | 33 N.Y.2d 381,353 N.Y.S.2d 169,308 N.E.2d 688 |
| Parties | , 308 N.E.2d 688 In the Matter of Paul W. HESSEL, Appellant, v. NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, Respondent. |
| Court | New York Court of Appeals Court of Appeals |
Julius Venner, New York City, and Paul W. Hessel, pro se, for appellant.
Norman Redlich, Corp. Counsel, New York City (Jesse J. Fine and Stanley Buchsbaum, New York City, of counsel), for respondent.
We are asked to determine whether lump-sum payments made to a retired employee of the New York City Housing Authority, representing accrued annual leave and retirement terminal leave are to be included in the computation of retirement benefits under the formula established by the Administrative Code which uses as its salary base the annual salary or compensation earnable (by an employee) in either his last year of service or, at the retiree's election, his three-year average compensation.
Petitioner, a lawyer employed by the Housing Authority for 23 years, retired as General Counsel on January 1, 1972 upon reaching the mandatory retirement age. His gross salary during the last year of city service was $31,221.79. Electing to have his retirement benefits based upon his final year's salary, rather than his three-year-average compensation, he contends that he is entitled to have included in his final year salary, for retirement benefit purposes, the lump-sum payments made to him for 'terminal leave' and for 'retirement terminal leave'. 'Terminal leave' is granted on the basis of the amount of unused annual leave and overtime for which he may be paid upon termination of employment up to a maximum of 72 days. 'Retirement Terminal Leave' is leave granted with pay, at the discretion of the Housing Authority Chairman, to retiring employees with over 10 years service up to a maximum of one month for every 10 years of service. Petitioner had attained the maximum accrued annual leave of 72 days and was also awarded the maximum retirement terminal leave. Following his retirement, he received two cash payments totaling $12,749.57 for these purposes which he now asserts should be added to his regular salary for the final year of service, in the computation of his benefits.
Prior to 1964, a retiring employee who was entitled to vacation and terminal leave, and who had not reached mandatory retirement age, would begin his leave on his last day of active employment, receiving biweekly payments during the accrued leaves, and then formally retire at the expiration of his leaves. An employee reaching mandatory retirement age would arrange his leave to start on such a date that his terminal leaves would expire on the day before his mandatory retirement date. However, on January 1, 1964, by formal resolution, employees were given the opportunity of electing to receive a lumpsum payment for terminal leave and retirement terminal leave, thereby making the employee eligible for retirement benefits the day after his last day of work, rather than waiting for the expiration of his terminal leave and retirement terminal leave.
The record discloses that lump-sum payments in lieu of terminal leave were neither intended to nor have they been included in determining retirement benefits for employees since 1964, the time when employees were granted the election to receive the lump-sum payments in lieu of terminal leaves.
Special Term concluded that '(s)ince the lump sum payment received by the petitioner for this Terminal Leave and Retirement Terminal Leave was only in lieu of time off, which he could have taken while still being on the payroll, it may not be added to his compensation for the years prior to his retirement for the purpose of calculating his retirement benefits.' The Appellate Division unanimously affirmed and we agree. Section B3--42.0 (subd. a, par. 7) of the Administrative Code of the City of New York defines, in pertinent part, the basis for retirement benefits as the 'member's annual salary or compensation Earnable by him for city-service in the year prior to his retirement' (emphasis supplied). The payments made to petitioner for terminal leave and retirement terminal leave were not earnable by him for city service in the year prior to his retirement. These payments accrued on petitioner's retirement and were necessarily made to him after he had left city service, and in fact were not payable until petitioner had actually left city service. The code provision is unequivocal in establishing as its basis the compensation earnable in the year prior to retirement. The statutory scheme governing these benefits prior to 1964 clearly...
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