Benefits November 21, 2011

Printing Company Accused of Firing Capable Worker with Cancer

November 21, 2011 (PLANSPONSOR.com) – Journal Disposition, the former operator of IPC Print Services, Inc. in St. Joseph, Michigan, has agreed to settle a disability discrimination suit brought by the U.S. Equal Employment Opportunity Commission (EEOC) for $55,000.  
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The lawsuit charged that Journal Disposition terminated a long-time employee who had been diagnosed with cancer because he exhausted his time under its short-term disability insurance policy. The policy provided 26 weeks of leave within a rolling 12-month period. Prior to the exhaustion of his leave, the employee returned to work, and began working part-time hours while he received chemotherapy. He was able to perform all the essential functions of his job, however, when his benefit was exhausted under the policy, the company summarily terminated him and made him eligible for rehire once he was able to work full-time.

According to the EEOC, at the time of the discharge, the employee made an accommodation request to continue working part-time until his chemotherapy ended five months later. The company acknowledged the request, but applied the policy without considering any other factors, such as his ability to perform the job, the reasonableness of his request or if the request provided an undue hardship to the company. The EEOC states this conduct violates the Americans With Disabilities Act (ADA), and filed suit after first attempting to reach a pre-litigation settlement through its conciliation process.

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Under the terms of the consent decree, Journal Disposition will pay the employee $55,000. Since the employer no longer operated the facility, no other equitable relief was required.

Benefits November 21, 2011

Michigan Court Approves Taxing of Pensions

November 21, 2011 (PLANSPONSOR.com) - A divided Michigan Supreme Court has given approval for the State to impose a 4.35% personal income tax on pensions.
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The Detroit Free Press reports the main component of the personal income tax changes — ending the blanket exemption for all public pension and most private pension income above certain thresholds — survived. However, the court unanimously struck down provisions in the new tax law that would have phased out for wealthier taxpayers the use of personal tax exemptions.   

The court found that provision, effectively raising taxes on higher income earners, is barred by the state constitutional ban on a graduated income tax, according to the news report.  

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The new tax on pensions was expected to raise about $225 million in the first three quarters of 2012 and $343 million in the state’s 2012-13 fiscal year. Those numbers will be reduced by about $60 million in 2012 and $90 million in 2013 because of the court’s decision to strike down the phase-out of the personal exemption for wealthier taxpayers (those earning $75,000 and above for a single person, and $150,000 and above for couples).  

Governor Rick Snyder said he would work with the legislature to address the shortfall. Proponents of the tax exemption said they will renew pressure on lawmakers to restore them.  

The new law keeps the pension income tax exemption for retirees who will be at least 67 in 2012, and a portion of them for retirees who will be between the ages of 60-66. The court majority said taxing pension income does not violate a provision in the state Constitution that describes the pensions of state retirees as “a contractual obligation…which shall not be diminished or impaired.”  

Writing for the majority, Justice Stephen Markman said the constitutional protection of pension income is trumped by the legislature’s power of taxation, and that rescinding a tax exemption is not the equivalent of reducing the underlying benefit.  

Justice Michael Cavanagh, who wrote the dissenting opinion, said he believes the state Constitution included tax exemptions, like those previously granted to pensioners, within the definition of accrued financial benefits that could not be impaired.  

The Detroit Free press said the ruling came in response to a request by Snyder for an advisory opinion from the Supreme Court after a group of state retirees filed a challenge to the new law.

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