Las Vegas POA

Chief Not Entitled To Pension Credit For Severance Pay

Written on 06/05/2021
Will Aitchison

William Rogers was enrolled in the Police and Firemen’s Retirement System (PFRS) on March 1, 1995, the date he began working for the Borough of Weno­nah in New Jersey as a police officer. He advanced through the ranks to the level of Chief of Police.

In 2018, the Borough entered into a shared services agreement with a neighbor­ing town. Rogers received written notice from the Borough’s mayor concerning the adoption of an ordinance that implement­ed the Borough’s decision to disband the Department and eliminate the position of Chief of Police effective May 31, 2018. At that point, Rogers had served in the Wenonah Police Department for 24 years and three months.

Rogers and his union filed a claim against the Borough regarding his em­ployment. The claim was quickly settled, with the terms of the settlement agreement providing that the Borough would: (1) pay Rogers severance pay of five months payable in a lump sum equal to $39,506.33; (2) make all necessary contributions into the PFRS (both employer and employee contributions) so that Chief Rogers could obtain 25 years of service and qualify for his pension; and (3) provide medical benefits as set forth in his employment contract as if he had retired in good standing with 25 years of service. In return, Rogers was “required to continue to provide reason­able cooperation to the Borough through February 2019 regarding any issues that arose in the transition of police services provided to the Borough.”

The pension board denied Rogers eligibility for the additional service credit, finding that “because Rogers’ employment terminated on May 31, 2018, he was no longer employed as a Police Chief and therefore no additional service credit could accrue to his account after that date.” Rogers challenged the decision through the court system.

A New Jersey appeals court upheld the denial of the additional service credit. The Court reasoned that “in 2007, the Legislature enacted the Uniform Shared Services and Consolidation Act to facilitate shared services between municipalities to reduce property taxes through the reduc­tion of local expenses. The Act permits municipalities to enter into agreements to share law enforcement services. When the shared services agreement results in a single chief of police, the chief whose position is eliminated may elect either: (1) to accept a demotion of no more than one rank without any loss of seniority rights, impairment of tenure, or pension rights; or (2) to retire from service. Here, Rogers chose to retire. The Act does not permit the retiring chief to accrue creditable service beyond the date his position is eliminated or otherwise obtain an unearned pension benefit.

“We need look no further than the express terms of the settlement agreement. Rogers received five months’ worth of lump sum severance pay, and the related PFRS pension contributions, so that he could obtain 25 years of service and qualify for his pension. This transparent attempt to add additional service credit after his position was eliminated and the police department was disbanded amounted to nothing more than an unenforceable ad hoc effort to obtain special retirement pension benefits. The Board correctly determined that Rogers could not receive additional service credit for job duties he could no longer perform after his position was eliminated and the police department no longer existed.”

Rogers v. Department of the Treasury, 2021 WL 1558301 (N.J. Super. Ct. App. Div. 2021).

The post Chief Not Entitled To Pension Credit For Severance Pay appeared first on Labor Relations Information System.