Opinion 2002 - 2


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

VOLUNTEER FIREFIGHTERS - Service Award Programs (service credit after entitlement age); (voluntary waiver of right to begin receiving award at entitlement age)

GENERAL MUNICIPAL LAW 215(4), (6), 217(c), 218(b), (c), 219(b), 219-a(2)(b): A service award program may provide for a participant to earn service credit after attaining the program's entitlement age, subject to the 40 year maximum provided for in article 11-A of the General Municipal Law. To implement that feature, a service award program may permit a participant to waive voluntarily the right to begin receiving his or her service award upon reaching entitlement age in order to continue to earn credit after entitlement age. A service award program, however, should not be structured so as to permit a participant to begin receiving payment of his or her service award at the program's entitlement age and to continue to earn service credit while receiving such payment.

You ask whether a service award program for volunteer firefighters may permit a participant to earn service credit after attaining the program's entitlement age. If so, you ask whether a service award program may permit a participant who reaches the program's entitlement age to defer payment of his or her service award in order to continue to earn service credit after entitlement age. Finally, you also ask whether a service award program may permit a participant to begin receiving payment of his or her service award at the program's entitlement age and to continue to earn service credit while receiving such payment.

Article 11-A of the General Municipal Law (214 et. seq.) authorizes certain "political subdivisions" to establish, and thereby become the "sponsor" of, service award programs for volunteer firefighters (General Municipal Law 215[10], 216[1], [2], 216-a). The purpose of these programs is to facilitate the recruitment and retention of volunteer firefighters, through the payment of a form of municipally-funded deferred compensation for the performance of certain activities in connection with providing fire protection and other emergency services to the local government sponsor of the program (see 1994 Opns St Comp No. 94-32, p 57).

Service credit under a service award program is referred to as a "year of firefighting service" (see, e.g., General Municipal Law 217[a], [b], 218[b], 219[b]). Section 217(c) of the General Municipal Law provides that a "year of firefighting service" must be credited under a service award program for each calendar year after the establishment of the program in which an "active volunteer firefighter" accumulates at least 50 points. Points must be granted for the performance of certain activities selected from a statutory list, in accordance with a system established by the sponsor of the program (id.). Insofar as here relevant, the only express limitation on crediting "years of firefighting service" to an active volunteer firefighter is, in effect, that a service award cannot be based on more than 40 "years of firefighting service" (see General Municipal Law 218[b], 219[b]).

Both a "defined contribution plan" and "defined benefit plan" service award program must be administered by the political subdivision that establishes the program, in accordance with standards and procedures established by the political subdivision (General Municipal Law 219-a[2][b]). In the case of defined contribution plan service award programs, section 218(c) of the General Municipal Law generally provides that "[b]enefits shall be available and commence when the participating volunteer firefighter reaches entitlement age " Although there is no comparable provision relating specifically to defined benefit plan service award programs (see General Municipal Law 219), the term "entitlement age," applicable to both types of service award programs, is defined in section 215(4), in pertinent part, as "the age designated by the sponsor at which a program participant is entitled to begin receiving an unreduced service award." Section 215(6), also applicable to both defined contribution plan and defined benefit plan service award programs, defines the term "nonforfeitable," in pertinent part, as the unconditional and legally enforceable right to receive benefits under a service award program "that will begin at the entitlement age specified in the program." None of these provisions, nor any other provision of article 11-A, however, expressly prohibits a program sponsor, in setting forth standards and procedures for its service award program, from permitting a participant to earn points toward a "year of firefighting service" after attaining entitlement age.

Thus, because the only express limitation on the accumulation of such service credit is that it may not exceed 40 years, we believe that, subject to the 40 year maximum, a service award program may provide for a participant to earn service credit after attaining the program's entitlement age. In support of this conclusion, we note that permitting active volunteer firefighters to continue earning service credit after entitlement age is consistent with the statutory purpose of retaining the services of volunteer firefighters.

Having concluded that a service award program may permit a participant to continue earning service credit after entitlement age, we also note that the above-quoted provisions of section 218(c) require payment of a defined contribution plan service award to "commence" on entitlement age. Similarly, the above-quoted provisions of section 215(6), applicable to both defined contribution plan and defined benefit plan service award programs, refer to the unconditional and legally enforceable right to receive benefits under a service award program "that will begin at the entitlement age specified in the program." Therefore, as a rule, it appears that a participant in a service award program has a right to begin receiving his or her service award upon reaching entitlement age.

It is well-established, however, that "[a]n employee may waive any right which he has including statutory and even constitutional rights unless such waiver would violate public policy" (Rosen v New York City Teachers' Retirement Board, 282 App Div 216, 218, 122 NYS 2d 485, 487, affirmed 306 NY 625), such as rights relating to retirement benefits (see, e.g., Rosen, supra; Carroll v Grumet, 281 AD 35, 117 NYS2d 553, lv denied 281 Ad 863 119 NYS2d 922, app dismissed 305 NY 692; see also Ballentine v Koch, 89 NY2d 51, 651 NYS2d 362). We believe, therefore, that a service award program may permit a participant who reaches the program's entitlement age to waive voluntarily the right to begin receiving his or her service award upon reaching entitlement age in order to continue to earn service credit after entitlement age.

With respect to the foregoing conclusion, because a service award cannot be based on more than 40 years of service credit, it is also our view that a participant's total accumulation of service credit, both before and after entitlement age, remains subject to the 40 year maximum. Moreover, since a participant ordinarily has a right to begin receiving his or her service award upon reaching entitlement age, we believe that any program providing for such a waiver generally must permit a participant to terminate the waiver and begin receiving his or her service award at any point after the participant reaches entitlement age. Further, we wish to emphasize that the authority for a service award program to permit a participant to continue to earn service credit after attaining entitlement age is permissive. There is no statutory requirement that a service award program contain such a feature. In considering whether to offer this feature, local government officials should carefully evaluate the impact on both program cost and administration.

Article 11-A is silent on the specific issue of whether a service award program may permit a participant to begin receiving payment of his or her service award at the program's entitlement age and, at the same time, to continue to earn service credit. In the absence of an express prohibition (compare Retirement and Social Security Law 101[a], 211, 212), and in light of the statutory purpose of retaining the services of volunteer firefighters, it could be argued that a program may provide for a participant to begin receiving payment at entitlement age and continue to earn additional service credit at the same time (cf., e.g., Roddy v Valentine, 268 NY 228). In this regard, however, to the extent that a service award is akin to a pension benefit (compare General Municipal Law 214[1] [receipt of service award not deemed to constitute membership in any state or local pension or retirement system]), it also is arguable that permitting the simultaneous receipt of payment and accrual of additional service credit would be inconsistent with the fundamental nature of a pension (see, e.g., Lecci v Nickerson, 63 Misc 2d 756, 759, 313 NYS2d 474, 477, describing a pension as "a form of compensation withheld or deferred until the completion of continued and faithful service." [emphasis added]) . In addition, we note that the simultaneous payment of service awards and accrual of service credit would significantly complicate the already difficult task of administering defined benefit service award programs (cf. Report on Volunteer Firefighter Length of Service Award Programs 2001-PS-2, Office of the State Comptroller, Division of Municipal Affairs, July 2001) and may give rise to a question as to potential adverse impact on the manner in which the programs are treated for tax purposes (see, gen., 26 USC 457[e][11]). Accordingly, in the absence of clear statutory direction, we believe that a service award program should not be structured so as to permit a participant to begin receiving payment of his or her service award at the program's entitlement age and to continue to earn service credit while receiving such payment.

In sum, therefore, it is our opinion that a service award program may provide for a participant to earn service credit after attaining the program's entitlement age, subject to the 40 year maximum provided for in article 11-A of the General Municipal Law. To implement this feature, a service award program may permit a participant who reaches the program's entitlement age to waive voluntarily the right to begin receiving his or her service award upon reaching entitlement age in order to continue to earn credit after entitlement age. A service award program, however, should not be structured so as to permit a participant to begin receiving payment of his or her service award at the program's entitlement age and to continue to earn service credit while receiving such payment.

January 31, 2002

Bruce A. Bates, Secretary
Springs Fire District