Handley v. New York State Teachers' Retirement System

in relation to Project Lead The Way, Inc. (hereinafter PLTW), a not-for-profit corporation created in 1997 to promote preengineering courses for middle and high school students. Prior to the times in question, petitioners were each employees of one or more public school systems covered by respondent. After obtaining positions with PLTW, each petitioner continued to be reported as an employee of a participating employer in respondent and were accumulating retirement service credit. However, after an investigation, respondent determined that petitioners were not entitled to service credit during such periods because they were not employees of participating employers or, alternatively, because they were not providing teaching services within the meaning of Education Law § 501.

Petitioners individually commenced these CPLR article 78 proceedings^[1] seeking, among other things, to annul and vacate respondent’s preliminary and final determinations. Supreme Court granted the petitions, finding that respondent acted arbitrarily and capriciously in denying petitioners service credit and/or reducing their retirement benefits. Specifically, Supreme Court determined that petitioners were providing teaching services within the meaning of Education Law § 501 during the applicable time periods and that respondent had failed to consider whether the participating employers had a good faith basis for designating petitioners as employees eligible for retirement credit. Supreme Court therefore remitted the matters to respondent. Respondent now appeals.^[2]

We reverse. As we recently articulated in two related and factually similar cases, the presence or absence of good faith on the part of the employer is irrelevant in determining whether retirement credits were properly conferred (see Matter of Blais v New York State Teachers’ Retirement Sys., 68 AD3d 1266 , 1268 [2009]; Matter of Jensen-Dooling v New York State Teachers’ Retirement Sys., 68 AD3d 1264 , 1265-1266 [2009], lv denied 14 NY3d 705 [2010]; see generally Education Law § 525 [3]). It was therefore error for Supreme Court to remit the instant matters to respondent to determine whether the educational institutions involved had a good faith basis for considering petitioners to be their employees.

The actual transactions between the contracting parties—and

not the labels assigned to their relationships pursuant to a contract or otherwise—determine whether an employer-employee relationship exists (see Matter of Blais v New York State Teachers’ Retirement Sys., 68 AD3d at 1268). Thus, the issue now before us distills to whether—even assuming that petitioners were providing teaching services within the meaning of Education Law § 501—a rational basis exists in the record to support respondent’s determinations that petitioners were not employees of the applicable educational institutions (see 68 AD3d at 1268-1269). We conclude that such a basis exists on the record before us.

Recognizing that, although there were a number of circumstances common to each petitioner, their situations also had distinct characteristics, respondent conducted separate investigations of each petitioner and the educational institutions claiming to employ them. In doing so, respondent reviewed, among other things, contracts between petitioners, the educational institutions and/or PLTW which outlined the terms of employment, petitioners’ job descriptions, questionnaires completed by the educational institutions and PLTW’s promotional materials, tax returns and cost projection reports. After notifying each petitioner of its preliminary determination that he or she was not entitled to retirement credit for the period under review, respondent invited petitioners to submit written information and documentation that might refute such determinations. Upon reviewing those submissions, respondent issued final determinations adhering to the preliminary determinations. Our own review of the record compels us to conclude that respondent reasonably determined that petitioners were not employees of the participating public employers.

For example, the record reveals that the salaries, benefits and expenses of all of the petitioners were ultimately paid by PLTW, and their job responsibilities involved developing and promoting the PLTW program nationally and were not specific to their school districts. With the exception of petitioner Niel Tebbano, none of the petitioners maintained offices at the facilities of the participating employers; they either worked from home or from PLTW’s offices.^[3] Additionally, petitioners all received their job assignments from PLTW In some cases, there was undisputed