1.
FOR FLSA OVERTIME EXEMPTION, AGREEMENT TO COMPENSATE POLICE OFFICER’S
AT-HOME CANINE CARE MUST BE REASONABLE:
The Fair Labor Standards Act requires employers to
pay overtime wages equal to one and one-half times the employee’s
regular rate for work performed in excess of 40 hours per week. Law
enforcement employers are governed by a slightly more permissive regime
for computing overtime hours. Leever sued the city for unpaid overtime
wages pursuant to FLSA, alleging that the city failed to compensate
her for overtime work spent caring for her assigned police dog. The
city claimed it was exempt from the overtime provisions of FLSA, pursuant
to regulation, because it had a “reasonable agreement” to
compensate Leever for her overtime work by way of a bi-weekly flat
fee. A collective bargaining agreement in effect provided that an officer
permanently assigned to canine duty shall receive a salary differential
of $60 per pay period for the care and feeding of a dog. Leever claimed
that she spent, on average, 28 off-duty hours per week caring for her
dog. In reversing a summary judgment for the employer, the United States
Court of Appeals held that an agreement under the regulation must take
into account some approximation of the hours actually worked, or reasonably
required to be worked. Here, the appellate court found that the lower
court could not have concluded that the agreement for off-duty compensation
was reasonable. Note, the court remanded for further proceedings, but
did not determine that the agreement was unreasonable as a matter of
law. The court made clear that it was not suggesting the rate of pay
for home canine care must be equal to the rate of pay for law enforcement
work. The court took no position on that issue, although the Wage and
Hour Administrator’s position is that dog care activities do
not have to be compensated at the same rate of pay as paid for law
enforcement activities. Leever v. City of Carson, Case No. 02-16525
(U.S. 9th Cir., March 4, 2004).
2. GREAT
SOURCE FOR VETERANS AND MILITARY WEBSITES:
Although a little bit off our usual subjects, we did come across a
comprehensive listing of Veterans and Military Websites. This Homepage
contains links to over 100 other web pages. And if you are searching
for a long-lost military buddy, there are even locator resources and
registries. Visit the site directly at http://members.aol.com/veterans/warlib6.htm.
3.
CONSUMER NET WORTH, DEBT RISE:
According to a short piece from plansponsor.com, the Federal Reserve reports
that rising house and stock prices pushed the total net worth of United States
households to $44.41 Trillion at the end of last year. The previous record was
$43.58 Trillion, reached in the first quarter of 2000 (right at the market peak).
The year-end figure was a 5.1% increase from the third quarter of 2003, the fifth
consecutive quarterly increase. At the same time, consumer credit outstanding
rose $14.3 Billion in January, to $2.016 Trillion. The latest increase is in
addition to the $8.3 Billion rise in December (to $2.002 Trillion). However,
consumer credit last quarter grew at a 3.7% annual pace, down from 6.2% in the
third quarter..
4.
CALSTRS ADOPTS MUTUAL FUND GUIDELINES:
In January, California Treasurer Philip Angelides proposed Mutual Fund
Protection Principles. Angelides, who sits on the California Public Employees’ Retirement
System and the California State Teachers’ Retirement System, was joined
by the New York State Comptroller and the North Carolina Treasurer. Now, $117
Billion CalSTRS, third in size to CalPERS, has adopted those guidelines. The
following is a short summary of these mutual fund protection principles, which
in some cases are more stringent than the proposals being discussed by Congress
and the SEC:
1. Shareholder Reforms. Mutual fund shareholders must receive an annual
statement of the charges, expressed in dollars, charged to the account
for management, 12b-1 fees and other distribution expenses. The management
fee schedule must be reasonable and must contain breakpoints that provide
meaningful economies of scale to shareholders. Only independent directors
of the fund may vote to approve fees.
2. Board Reform. At least three-quarters of the mutual fund board
and the chairman must be independent, and shall not have had any material
business or employment relationships with the fund company, advisor
or any service provider for at least the last five years. The independent
directors must meet at least annually with the chief compliance officer
of the fund and advisor, as well as the independent auditor -- without
management present.
3. Manager Reform. The mutual fund must disclose in its annual report
compensation of the portfolio manager, together with methods and factors
used to derive compensation. Each portfolio manager and senior management
of the advisor must reveal in any annual report the number of shares
owned in the fund, including all purchases and sales in the fund for
the previous twelve months. A portfolio manager and any other research,
marketing or senior executive of a mutual fund company or the advisor
who purchases shares in one of its own mutual funds must hold those
shares for at least twelve months.
4. Fund Disclosure. The mutual fund must disclose its security holdings
on a quarterly basis. A mutual fund must disclose in its annual report
information on the trading costs of the fund, including turnover, and
a schedule of commissions paid to, and shares traded with, broker dealers.
A mutual fund must disclose in its annual report the amount of soft
dollars paid by the fund, together with a schedule of the brokers utilized
to execute trades and a list of the soft dollar services purchased
through the trades. A mutual fund must disclose in its annual report
all investment professionals, in addition to the portfolio manager,
who are involved in management of the mutual fund, any turnover among
such personnel in the last twelve months and all other products and
mutual funds managed by the portfolio managers.
Any public pension plan that invests in mutual funds should consider
these principles
.
5.
DECISION OF STATE COURT IN ADMINISTRATIVE REVIEW OF DISABILITY
DENIAL PRECLUDES SUBSEQUENT DISCRIMINATION ACTION:
Garcia, an Hispanic police officer, suffered a heart attack, leaving
him totally and permanently disabled, unable to perform his duties as
a police officer. He applied to the pension board for duty-related disability
benefits equal to 65% of his total salary. Examination by the board’s
three physicians left little doubt that the officer was disabled. However,
because whether the disability occurred in the line of duty remained
uncertain, the board awarded only nonduty-related benefits -- 50% of
total salary. The issue of service-connection was to be determined later.
Subsequently, in a closed session, the board voted to deny the officer’s
duty-related benefits and to continue his nonduty-related benefits. The
officer timely sought administrative review in state court, seeking reversal
of denial of his duty-related pension benefits. In that proceeding he
raised no issue other than that the board’s decision was arbitrary
and capricious. While his state court appeal was pending, the officer
filed Title VII charges with the Equal Employment Opportunity Commission,
and subsequently a lawsuit in federal court against the board. After
the state court affirmed the board’s decision, the federal court
dismissed the employment discrimination action. Affirming the lower federal
court decision, although on different grounds, the federal appeals court
found that the judgment of a state court sitting in an administrative
review capacity has preclusive effect on claims and issues brought in
subsequent lawsuits according to the law of the state where the judgment
was rendered. A reading of the federal court of appeals’ decision
reveals at least two distinctions between Illinois and Florida: (1) Illinois
apparently has no “presumption” of service-connection for
cardiac related conditions and (2) meetings -- at least those applicable
to disability determinations -- do not have to be held in the “sunshine.” Garcia
v. Village of Mount Prospect, Case No. 02-2869 (U.S. 7th Cir., February
23, 2004)
6.
NCPERS ENCOURAGES CORPORATE GOVERNANCE POLICY:
National Conference on Public Employee Retirement Systems has
adopted a resolution on responsible corporate governance for public pension
plans, encouraging all member pension funds to develop and implement
due diligence policies with the following principles:
1. Establish a list of standards and a code of conduct for vendors.
2. Develop a list of resources that can be used to rate or survey
how investment managers have cast their proxies on key issues.
3. Develop a model proxy voting guideline/shareholder resolution policy
statement.
4. Develop a sample questionnaire for companies that will identify
greed-driven CEO pay schemes and highlight appropriately established
incentive-based CEO compensation plans.
5. Develop a sample investment policy statement for index investing
that weeds out companies demonstrating bad corporate policy.
6. Develop list of questions that can be incorporated into all requests
for proposal, including issues like privatization and involvement in
organizations that oppose the well-being of public pension funds.
7. Develop a position regarding off-shore tax havens and the trend
of companies to reincorporate in such countries in order to avoid taxes
and weaken shareholder rights.
8. Develop standards that will force companies back toward ethical
corporate governance, with a view toward true value production for
the long-term investor.
We all owe a debt of gratitude to “The Voice for Public Pensions.”
7.
NCTR PUBLISHES WISCONSIN LEGISLATIVE COUNCIL STUDY:
National Council on Teacher Retirement has published the Wisconsin
Legislative Council “2002 Comparative Study of Major Public Employee
Retirement Systems.” Dated December 2003, the report compares significant
features of major state and local public employee retirement systems
in the United States. The report compares retirement benefits provided
to general employees and teachers, rather than the benefits applicable
only to narrower categories of employees such as police, firefighters
or elected officials. The 2002 report includes data from the same 85
public employee retirement systems that have been compared in each of
the previous reports. Although the report does not cover all major public
employee retirement systems, it does include at least one statewide plan
from each state. Because the same public employee retirement systems
have been covered in the report over time, it can be used to determine
long-term trends in public employee retirement systems. Plans in the
report cover almost 16,500,000 participants, about 70% of whom are active
employees. The 37-page report contains a wealth of information including
surveys of normal and early retirement provisions; contribution and vesting
requirements; retirement benefit calculations; post-retirement annuity
increases and taxes; and actuarial and accounting information. Readers
can view the whole report http://www.nctr.org/contents/pdf/02wrsreport.pdf.
8.
MACHO PHILLY COPY TO BECOME WOMAN:
Press reports on Heladio Gonzalez, a 36-year member of the Philadelphia
police force, who was all toughness and swagger. Now, Gonzalez, 57, will become
the first transgender officer in the department’s history. He recently
delivered a letter to his supervisor announcing his decision to live and work
as a woman. The Police Commissioner said in a written statement that the department “will
be supportive in this officer’s lifestyle decision.” Officer Heladio
Gonzalez will no longer be teaching firearms at the Police Academy. Officer Maria
Gonzalez will. Nice happy ending (beginning?).
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