In the Matter of Susan Gonzalez v New York State & Local Retirement System et al.
Attorneys and Parties
Brief Summary
Whether a full-time municipal appointee paid a nominal $1 salary by a participating employer but largely funded by a nonparticipating nonprofit is entitled to retirement service credit as 'active service.'
The Comptroller denied additional service credit for 1999–2001, applying Retirement and Social Security Law § 609(a)(1)(iii) to conclude that the $1 annual City salary fell below minimum wage and did not qualify.
The Appellate Division annulled the Comptroller’s determination and remitted for reconsideration.
The Comptroller misapplied Retirement and Social Security Law § 609(a)(1)(iii) [part of § 609(a)(1) that sets a minimum-wage-based calculation for members who work less than 30 hours per week] to a full-time employee. Under Retirement and Social Security Law § 609(c) [eligibility depends on 'active service' with a participating employer] and § 601(a) ['active service' means being paid on the payroll of a participating employer], and with the City’s certification of 80 hours each pay period, petitioner satisfied the statutory definition of active service. Per 2 NYCRR 318.2(a)(2) [wage-based calculations apply only when the employer has not certified hours], reliance on minimum-wage conversions was improper; the determination lacked a reasonable statutory basis and substantial evidence, notwithstanding the Comptroller’s general authority under Retirement and Social Security Law § 74(b) [Comptroller has exclusive authority to determine retirement benefits].
Background
Petitioner was appointed Director of Recreation for the City of Buffalo and joined the New York State & Local Retirement System on July 12, 1999. From July 1999 through June 2001, due to the City’s fiscal hardship, the Police Athletic League (PAL) paid most of her compensation, while the City paid her $1 per year and provided benefits. No Retirement System contributions were deducted or made during this period. In 2020 and 2022, applications sought additional service credit for that period. The Retirement System advised that PAL was not a participating employer and initially calculated only .02 years of credit based on the $1 salary, later revising it to zero. At hearing, the Hearing Officer granted credit for the full-time Director role. On administrative appeal, the Comptroller reversed, concluding that petitioner was ineligible under § 609(a)(1)(iii). The City’s records certified 80 hours each pay period, and testimony from the Mayor, petitioner, and her predecessor confirmed full-time duties.
Lower Court Decision
The Hearing Officer granted petitioner service credit for July 1999 through June 2001 based on her full-time City position. On administrative appeal, the Comptroller denied the application, applying Retirement and Social Security Law § 609(a)(1)(iii) and minimum-wage calculations; the Article 78 proceeding was then transferred to the Appellate Division.
Appellate Division Reversal
The Appellate Division held that § 609(a)(1) governs part-time employees, not full-time employees with certified hours, and that 'active service' under §§ 609(c) and 601(a) focuses on payroll status with a participating employer. Because the City certified 80 hours per pay period and petitioner was on the City’s payroll, the Comptroller’s reliance on minimum-wage conversions was unreasonable and unsupported by substantial evidence. The court annulled the determination and remitted for reconsideration consistent with its opinion.
Legal Significance
Clarifies that Retirement and Social Security Law § 609(a)(1)’s minimum-wage, part-time calculation cannot be used to deny service credit to full-time employees whose hours are certified by a participating employer; eligibility hinges on payroll status for 'active service' under §§ 609(c) and 601(a). While the Comptroller’s interpretations receive deference under § 74(b), they must still be reasonable and supported by substantial evidence.
For full-time municipal employees on a participating employer’s payroll with certified hours, nominal pay or outside funding does not defeat eligibility for retirement service credit; the Comptroller may not substitute part-time, minimum-wage formulas for certified full-time service.