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A private entity may not become a participating employer in the New York State Employees? Retirement System

A private entity may not become a participating employer in the New York State Employees? Retirement System
Matter of Carle Place Hook Ladder & Hose Co. No. 1 Inc. v DiNapoli, 22 Misc 3d 1106(A)

The Carle Place Hook, Ladder and Hose Co. No. 1, Inc., initially incorporated as the Mineola Park Hook and Ladder in 1910 as what is currently denominated a not-for-profit corporation, contracted with the Town of North Hempstead to provide for fire protection for years 2004-2008 on a ?flat fee basis.? This contract stated that the Company ?is an independent contractor? and also states that the employees of the fire department are not considered employees of the Town of North Hempstead.

In April 2007, the Company asked to become a participating employer in the New York Employees? Retirement System in order to enroll its one full-time-paid employee, Michael Squittieri, in the System.

As it had done with respect similar applications filed by the Company in both 1982 and 2003, the Retirement System rejected the Fire Company?s application to become a participating employer.
The Retirement System determined that "pursuant to Retirement and Social Security Law §§30 and 31 [it] was ineligible to participate in the System" because it "was a private organization which provided a public service pursuant to contract.?*

The System also determined that the Fire Company is neither ?a public or quasi-public organization created by the Legislature nor a fire district within the meaning of Retirement and Social Security Law §2(19). The System said that eligibility to become a participating employer ?does not extend to an independent fire company operating under a contract with a fire protection district or municipality.?

In its written determination, the System advised the Company that it was ?ineligible to participate pursuant to RSSL Section 31 as it is not a public or quasi public agency that is created by or derives its power from the legislature of New York State." The decision noted that ?In order to be eligible to participate pursuant to this section an organization must not only be engaged in public service but also be created in whole or part or derive powers from the New York State Legislature.?

The Company then filed an Article 78 petition challenging the System?s decision, contending that the Company now falls within the ambit of Not-For-Profit Corporation Law §1402 (e)], which, in pertinent part, provides that: ?A fire, hose, protective or hook and ladder corporation heretofore incorporated under any general law or a fire corporation hereinafter incorporated under this section shall be under the control of the city, village, fire district or town authorities having, by law, control over the prevention or extinguishment of fires therein.?

Justice George B. Ceresia rejected the Company?s theory of eligibility and dismissed the complaint. He ruled that ?In any event, even if, pursuant to Section 1402, the Company could be viewed as deriving its power from the legislature of the state, Retirement and Social Security Law §31 (a) affords ? the Comptroller discretion to accept or not accept an applicant into the Retirement System.?

Justice Ceresia concluded that the Comptroller did not abuse his discretion in denying the Company?s application and that his determination with respect to its 2007 application ?mirrored the two-previous decisions regarding the Company in its prior applications.?

The court also noted other similar situations in which the System has denied applications to become participating employers in the Retirement System, citing Matter of Charles A. Field Del. Serv. [Roberts], 66 NY2d 516.

* State law may provide that certain employees of a private entity are eligible for membership in a public retirement system such as the employees at the statutory contract colleges at Cornell and Alfred Universities pursuant to RSSL Section 40.2(a).

Full post as published by New York Public Personnel Law on March 10, 2010 (boomark / email).