Transcript WALKING THE WALK AND TALKING THE TALK

Colorado Municipal League
Public Employment and Pension Law
Update
May 30, 2008
Sybil Kisken, Esq.
Of Counsel
Davis Graham & Stubbs LLP
and
Cindy Birley, Esq.
Partner
Davis Graham & Stubbs LLP
Tel: (303) 892-9400
IRS Circular 230 Disclosure. Tax advice set forth in this communication is not intended or written to be used, and
cannot be used, by the taxpayer, for the purpose of avoiding penalties that may be imposed upon the taxpayer.
847201.1
OVERVIEW






Recent Supreme Court Decisions
The Evolution of Garcetti
Family & Medical Leave Act Changes
Classification & Pay Issues
New I-9
Revising Municipal Policies & Darr v. Telluride




Qualified Retirement Plan
Determination Letter Process
Pick-up Contributions
Public Contracts for Services
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RECENT SUPREME COURT DECISIONS

Federal Express Corp. v. Holowecki (2/27/08)
Holding: Completed EEOC intake questionnaire form and 6page affidavit qualified as a “charge” under ADEA
Any document that can reasonably be construed as a request
for action to protect the employee’s rights constitutes a
discrimination “charge”
EEOC urged to consider revisions to its forms and procedures
to “reduce the risk of further misunderstandings”
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RECENT SUPREME COURT DECISIONS (cont’)

Sprint/United Mgmt. Co. v. Mendelsohn (2/26/08)

Holding: Tenth Circuit improperly concluded that “me too”
should have been allowed as evidence of discrimination in
employee’s discrimination case stemming from her
termination. Employee sought to introduce evidence of five
former employees who claimed they were discriminated
against by different supervisors, in different divisions.

Evidence is not per se admissible or per se inadmissible; the
facts of each case must be considered.
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RECENT SUPREME COURT DECISIONS (cont’)

CBOCS West Inc. v. Humphries (5/27/08)
Holding: Section 1981 encompasses retaliation claims.

Watch for Engquist v. Oregon Dep’t of Agriculture
(argued 4/21/08)
Issue: Whether public employees may bring “class of one”
equal protection claims; Ninth Circuit said “no” because “to
forbid arbitrary or malicious firings of public employees would
completely invalidate the practice of public at-will
employment”
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EVOLUTION OF GARCETTI v. CEBALLOS

Garcetti v. Ceballos, 547 U.S. 410 (2006) held:
“When public employees make statements pursuant to their
official duties, the employees are not speaking as citizens for
First Amendment purposes, and the Constitution does not
insulate their communications from employee discipline.”

In the two years since the decision, courts have grappled with
whether speech is part of an employee’s official duties, or
whether it is that of a private citizen
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EVOLUTION OF GARCETTI v. CEBALLOS (cont’)

Elements of First Amendment retaliation claim:
1. Was speech made as part of official duties or as private
citizen on a matter of public concern
2. If as private citizen on matter of public concern, does
employee’s interest in commenting upon matters
outweigh interest of the employer in promoting efficiency
3. If balance tips in favor of employee, employee must
show speech substantial or motivating factor in
detrimental action
4. Employer may demonstrate it would have taken same
action in absence of speech
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EVOLUTION OF GARCETTI v. CEBALLOS (cont’)

Casey v. West Las Vegas Independent School Dist.,
473 F.3d 1323 (10th Cir. 2007):
Employee complained to the federal government about school
board’s lack of compliance with Head Start regulations =
OFFICIAL DUTIES
Employee complained to New Mexico Attorney General about
school board’s lack of compliance with open meetings law =
PRIVATE CITIZEN
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EVOLUTION OF GARCETTI v. CEBALLOS (cont’)

Clark-Wine v. Colorado Springs, 2008 WL 179266 (D. Colo.
2008):
Employee terminated as manager of real estate services.
Court analyzed 7 “expressions”:
1. Participation on committee to discuss gender
discrimination issues in city = OFFICIAL DUTIES—even
though voluntary, report given to City manager only, no
individualized expression
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EVOLUTION OF GARCETTI v. CEBALLOS (cont’)
2, 3, 4, 5. Activities/comments regarding sale/transfer/use of
property = OFFICIAL DUTIES; facts considered included that
expressions were on City’s e-mail system or letterhead, within
job description, not expressed outside institutional channels
6.
Request for audit of employee’s division = OFFICIAL
DUTIES; “as manager . . . employee is inherently responsible
for managing its activities . . . and alerting City officials to any
perceived noncompliance”
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EVOLUTION OF GARCETTI v. CEBALLOS (cont’)
7.
Memo to employee relations manager = INTERNAL
PERSONNEL CONCERN, on City stationary, signed with her
job title, not published outside of City channels
But see Ashcraft v. Beicker, 2008 WL 538919 (D. Colo. 2008):
Deputy sheriff complained to undersheriff that sergeant was
spreading false rumors about deputy sheriff’s wife’s sexual
promiscuity = PUBLIC CONCERN because complaint
questions the integrity of and alleges impropriety by a police
officer
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FAMILY & MEDICAL LEAVE ACT CHANGES

Servicemember Family Leave

FMLA amended effective January 28, 2008 to permit a
spouse, son, daughter, parent or next of kin (defined as
“nearest blood relative”) to take up to 26 workweeks of jobprotected leave to care for a member of the Armed Forces,
including a member of the National Guard or Reserves, who is
undergoing medical treatment, recuperation, or therapy, is
otherwise in outpatient status, or is otherwise on the
temporary disability retired list, for a serious injury or illness.”
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FMLA CHANGES (continued)

Expanded scope of leave: “Qualifying exigency”

The FMLA also has been expanded to allow 12 weeks of
traditional FMLA leave for “qualifying exigency . . . arising out
of the fact that the spouse, or a son, daughter or parent of an
employee is on active duty (or has been notified of an
impending call or order to active duty) in the Armed Forces in
support of a contingency operation.”

Term “qualifying exigency” to be defined by FMLA regulations
at some unknown date
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FMLA CHANGES (continued)

Combined total of no more than 26 workweeks

No more than a total of 26 workweeks of leave may be taken
under the FMLA, whether Servicemember Family Leave or a
combination of Servicemember Family Leave and traditional
leave

Examples:
-12 weeks birth of child + 14 weeks to care for service member
-12 weeks “qualifying exigency” + 14 weeks to care for service member
-26 weeks to care for service member
-6 weeks for birth of child and 6 weeks for “qualifying exigency”
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FMLA CHANGES (continued)

Proposed New FMLA Regulations

U.S. Department of Labor issued proposed new FMLA
regulations substantially overhauling initial FMLA regulations
and providing new certification forms.

Comment period ended April 11, 2008.

Stay tuned for publication and implementation . . .
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FMLA DECISION

Bass v. Porter (10th Cir. 2008):

FMLA claim dismissed because not brought within 2-year
statute of limitations since employee could not rely on 3-year
statute of limitations applied only to “willful” violations

Court adopted FLSA definition of “willful” for FMLA purposes:
employer “knew or showed reckless disregard for whether its
conduct was prohibited by FMLA”

Employer fired employee for excessive absenteeism when he
failed to submit sufficient FMLA certification by deadline
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CLASSIFICATION & PAY ISSUES

Employee versus Independent Contractor

Misclassification of workers cost federal government
estimated $34.7 billion in unpaid taxes between 1996 and
2004

30% of IRS audits this year will be based on employee
classification issues

IRS software allows it to note when employers give W-2 and
1099 to the same person in a year
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CLASSIFICATION & PAY ISSUES (continued)

U.S. House Bill 6111 (introduced 5/21/08) would amend FLSA
to clarify that misclassification of individuals is a prohibited act
 Would require employers to keep records and notify
workers of their status as employee or independent
contractor
 Would allow for liquidated damages and civil penalties

U.S. House Bill 5804 (introduced 4/15/08) would amend
Internal Revenue Code to clearly define an independent
contractor and increase penalties for violating
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CLASSIFICATION & PAY ISSUES (continued)

Exempt versus Non-Exempt from Overtime
 In January, Golden company paid $842,000 in back
wages for failing to pay overtime. Because some exempt
employees were not paid the minimum weekly rate of
$455/week, the entire job classification lost its exemption
 New issue: Overtime claims for use of technology
(Blackberries, cell phones, e-mail, etc.); consider
developing policy
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CLASSIFICATION & PAY ISSUES (continued)

DOL opinion letter on shift substitutions by public
employees (3/17/08)
 Employee may substitute for another employee if public
employer approves the substitution and the substitution
is solely at the option of the involved employees
 Employer is not required to pay overtime for the
additional hours worked for which the substituting
employee was not originally scheduled to work
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NEW I-9

Make sure you are using the new I-9 issued in late 2007

Handbook with instructions, and discussion of issues related
to new I-9, available to download at:
www.uscis.gov
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REVISING MUNICIPAL POLICIES
& DARR v. TELLURIDE

Darr v. Telluride, 495 F.3d 1243 (10th Cir. 2007)

Darr hired in 2001 as deputy marshal pursuant to town’s
personnel policies and procedures. Manual contained
disclaimer that it was not a contract. In 2002, Darr and other
employees notified of proposed revisions to policies and
opportunity to provide comments. New policies passed and
requirement of opportunity for notice and hearing before being
terminated was omitted. Darr signed acknowledgment form
regarding new policies.
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REVISING MUNICIPAL POLICIES
& DARR v. TELLURIDE (continued)

In 2003, Citizen Advisory Board created to facilitate
communication about health and safety issues. CAB critical of
policing methods, and Darr. CAB’s chair discussed Darr on a
local radio show. In 2003, Darr was terminated for, among
other things, his “aggressive and heavy-handed demeanor.”
Darr sued.

Old policy and new policy contained disclaimer that no
contractual relationship created by policies
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REVISING MUNICIPAL POLICIES
& DARR v. TELLURIDE (continued)

No procedural due process violation in changing policy
because: (1) old policies had a contractual disclaimer and
indicated “under revision”; (2) notice was sent to employees
that policies were being revised; (3) employees notified of
hearing date to provide comments; (4) employees could ask
questions and make comments at the hearing; (5) employee
signed acknowledgment of new policies; (6) new policies had
a contractual disclaimer.

No liberty interest violation for CAB’s statements because
CAB is not legislative body, not imbued to speak on behalf of
town, no input into personnel decisions, and CAB’s conduct
did not reflect official town policy or custom.
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REVISING MUNICIPAL POLICIES
& DARR v. TELLURIDE (continued)

No breach of contract or promissory estoppel claim based on
old policies’ termination procedures.

No violation of substantive due process, although court noted
that “[a] public employee with a property interest in continued
employment has a substantive due process right not to be
terminated for arbitrary or capricious reasons.”
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QUALIFIED RETIREMENT PLAN

Why is qualified status for retirement plans important?
– Employer contributions not taxable to members when
made (only when distributed)
– Earnings not taxed to trust or members until distributed
– Favorable tax treatment to member when distribution
received (i.e., rollover to IRA)
– Certain plans qualify so that members (and employer) are
exempt from Social Security taxes
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QUALIFIED RETIREMENT PLAN (continued)
 What is a qualified retirement plan?
 Plan meets requirements of Code Section 401(a)
 Assets held in trust and for exclusive benefit of members and
beneficiaries
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DETERMINATION LETTER PROCESS
 IRS Determination Letter for 401(a) Qualified Plans
 Staggered filing cycles:
 Governmental plans filing cycle: February 1, 2008 to
January 31, 2009
 Increased Scrutiny of Governmental Plans
 Questionnaire to be sent to 200 government plan
representatives
 Failure to reply could open a compliance check
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PICK-UP CONTRIBUTIONS
•
•
Pre-tax treatment for Code Section 414(h) employer pick-up
contributions
– Contributions “picked-up” by employing unit treated as
employer contributions
– Excluded from gross income of employee until distribution
to employee
Revenue Ruling 2006-43 – Formal Action Required Prior to
January 1, 2009
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PUBLIC CONTRACTS FOR SERVICES
•
•
Illegal Aliens – Public Contracts for Services
– C.R.S. Sections 8-17.5 – 101 et seq.
– Requires contractors, when entering into public contract
for services, to verify legal status of their employees
through federal basic pilot program
SB 08-193
– Changes definition of “basic pilot program” to
“E-verify,” program’s new name
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PUBLIC CONTRACTS FOR SERVICES (continued)
–
–
Excludes from definition of “public contract for services,”
agreements relating to:
 offer, issuance or sale of securities
 agreements for investment advisory services or fund
management services, and
 grants, awards or contracts for higher education
research
Creates state program as alternative to E-verify, that
requires contractor to verify legal status of newly hired
employees
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APPENDICES
Appendix I
Sybil Kisken, Esq. Resume
Appendix II
Cindy Birley, Esq. Resume
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SYBIL KISKEN, ESQ. RESUME
Contact Information:
(303) 892-7497
[email protected]
Davis Graham & Stubbs LLP
th
1550 17 Street
Suite 500
Denver, CO 80202
Sybil Kisken is Of Counsel at Davis Graham & Stubbs LLP with over 15 years of
experience in employment and labor law, including almost 10 years working as an
Assistant City Attorney for the City and County of Denver. When she left the City, she
was the Assistant Director of the Litigation Section of the City Attorney’s Office,
overseeing eight lawyers practicing exclusively in employment and labor law. She also
supervised for a period of time the attorneys handling personal injury and excessive
force claims against the City.
Sybil has handled cases at all levels, including cases before Colorado’s state and
federal district courts, the Colorado Court of Appeals, the Colorado Supreme Court, and
the U.S. Court of Appeals for the Tenth Circuit. She also has filed briefs with the U.S.
Supreme Court.
In addition to her litigation experience, Sybil advises clients regarding all types of
employment-related matters, including those involving allegations of discrimination,
harassment and retaliation, and medical-related issues (which frequently implicate the
Americans with Disabilities Act, the Family and Medical Leave Act, and worker’s
compensation law). Sybil also advises on issues unique to public sector employment,
including constitutional claims. She approaches each case or client question with both
legal expertise and practical insight.
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SYBIL KISKEN, ESQ. RESUME (continued)
Education/Professional Associations
Juris Doctorate, summa cum laude, University of Arizona, Tucson, Arizona, 1990
B..A., magna cum laude, in Speech Communication, University of Alaska, Fairbanks, Alaska, 1987
American Bar Association
Colorado Bar Association
Denver Bar Association
Board of Directors, Rocky Mountain Chapter of the French-American Chamber of Commerce
Board of Trustees, Denver International School
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CINDY BIRLEY, ESQ. RESUME
Contact Information:
(303) 892-7347
[email protected]
Davis Graham & Stubbs LLP
th
1550 17 Street
Suite 500
Denver, CO 80202
Cindy Birley is a Partner at Davis Graham & Stubbs LLP with over 20 years of
experience in the employee benefits and executive compensation field. Ms. Birley’s
practice emphasizes benefit plans for the public sector and tax-exempt employers. She
has in-depth knowledge of the Internal Revenue Code and the Employee Retirement
Income Security Act of 1974 (“ERISA”). Ms. Birley’s expertise includes designing and
drafting all types of qualified and nonqualified plans and health and welfare plans.
Employee Benefits Experience for Public Sector and Tax-Exempt Employers
Ms. Birley:



Designs and drafts 403(b) tax-sheltered annuity plans, money purchase pension
plans, defined benefit pension plans, including 414(h) pick-up plans, Deferred
Retirement Option Plans (DROP Plans), 457 and other deferred compensation plans,
and other plans for public sector and tax-exempt employers.
Has extensive experience with public sector and tax-exempt employers, including
experience with many city plans, county plans, statewide systems, and plans for
school districts and churches.
Drafts legislation to be incorporated into state statutes and local ordinances.
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CINDY BIRLEY, ESQ. RESUME (continued)
Public Sector and Tax-Exempt Employee Benefits Experience (cont’d.)

Designs and drafts retiree health savings plans (and integral part trusts), 401(h) accounts and VEBAs.

Performs comprehensive compliance audits and reviews.

Regularly advises Retirement Boards and Boards of Trustees.

Consults plan administrators on administration and plan interpretation issues.

Regularly coordinates with City Attorneys, County Attorneys and Assistant Attorneys General regarding public
sector plan issues.

Provides guidance on governmental domestic relations orders, including preparation of numerous model
domestic relations orders for complex retirement plans.

Has submitted to, negotiated with, and obtained from IRS numerous determination letters and private letter
rulings for plans for public sector and tax-exempt employers.

Provides advice regarding fiduciary liability, reporting and disclosure, distribution issues and excise taxes.
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CINDY BIRLEY, ESQ. RESUME (continued)
Education/Professional Associations
LL.M. in Taxation, University of Denver, Denver, Colorado, 1990
Juris Doctorate, University of Michigan, Ann Arbor, Michigan, 1984
B.B.A., summa cum laude, in Accounting, University of Iowa, Iowa City, Iowa, 1981
Certificate as a Certified Public Accountant in the State of Iowa
American Bar Association
Colorado Bar Association
Denver Bar Association
American Society of Pension Professionals & Actuaries
National Association of Public Pension Attorneys
Denver Chapter of the Western Pension & Benefits Conference
Colorado Municipal League
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CINDY BIRLEY, ESQ. RESUME (continued)
Publications
“Compliance Issues for Qualified Plans,” 52nd Annual Tax Institute (University of Denver Graduate Tax
Program, July 25-26, 2002)
“New Trends in Public Sector Plans,” Trusts & Estates (September 2001)
“Deferred Retirement Option Programs” (co-authored with Kent Eichstadt), The NAPPA Report (February
1998)
Federal-State Reference Guide for Social Security Coverage and FICA Reporting by State/Local
Government Employers, A Federal-State Cooperative Publication (July 1995) (“Federal-State Reference
Guide”) (Ms. Birley was a contributor)
“Participant-Directed Accounts in Retirement Plans: 1991 DOL Proposed Regulations” (co-authored with
Deborah K. Distler), The Colorado Lawyer (November 1991)
“Plan Design: Flexible Compensation” (co-authored with Richard A. Rose), Benefits Law Journal (Autumn
1990)
Awards
Received the Hammer Award in 2001 from Vice President Al Gore’s National Partnership for Reinventing
Government for her contribution to the Public Employers Compliance Strategy Team in creating the FederalState Reference Guide.
Ms. Birley is recognized in the 2008 edition of The Best Lawyers in America in Employee Benefits Law.
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