SYNOPSIS: Is the Illinois Government Apocalypse Starting? Analysis by John P. Campbell, Jr., J.D.
EDITOR’S COMMENT: Illinois citizens willingness to perpetually fund spiraling government pensions through higher and higher taxes is hitting an apex. We recently saw the Village of North Riverside, IL seek a declaratory judgment allowing them to do away with their Municipal Fire Department. We feel this may be a sign of things to come in our state where municipalities can’t keep up with generous and ever-increasing government “pension” structures. We assure our readers many other Illinois municipalities may be starting similar litigation for the same reasons.
When we reviewed the recent lawsuit filed by the Village of North Riverside in Cook County Chancery Court we learned they are seeking a declaratory judgment from the Court permitting them to “outsource” fire protection and thereby, do away with their fire department. Crazy? Unsafe? Reckless? Well, when you peel back the onion and see the massive pension funding problem faced by the Village, you may come to realize that they have no choice.
It goes without saying, we all want readily available fire/police/emergency services for ourselves and our loved ones. However, there are reasonable alternatives, and as the pleadings in this case appear to accurately outline, a 540% increase in pension funding obligations over the past 10 years is simply unsustainable for North Riverside or any fiscally responsible village/city/municipality. The annual pension outlay per firefighter went from $8K per year in 2003 to $45,474 per year in 2013!
Why? Well, more firefighters are retiring and living longer; well out-pacing their earlier pension contributions. It’s simple math. You can’t fund your personal 401K with $7,500 per year for 20 years and then “withdraw” $40,000 each year for the next 30 years –your 401K would dry up long before. This is, in effect, what is happening to government pensions in North Riverside and many, many other Illinois communities. Something has to give at some point.
Aside from the safety concern with eliminating the department, the Firefighters Union no doubt will argue the “right” to the pension for members. While it sounds nice to have a “right” to endless pension dollars, we can’t help draw a parallel to private bankruptcy, where pension and 401K money is lost where the money simply runs out (Does Enron ring a bell?).
Why is a public pension like a firefighter union pension different? Well, they will be quick to point out the town is not really out of money, they just need to generate more money to feed the pension monster via either
(1) Significant program cuts in other municipal areas or
(2) Greatly raise real estate or other taxes, both now and in future years.
However, most municipal budgets are as lean as they can get since the economic downturn in 2008. As defense counsel for a number of municipalities, we know budgets have been trimmed to the extent possible while still providing basic services to citizens. So what’s left? Your tax dollars folks!
In effect, the only way to “bailout” the pension crisis is to dramatically raise taxes to cover costs. What happens with that solution if folks move away or don’t move to that Village/City due to the high tax cost? This “solution” also pits public employees with these pensions against the remaining private workforce, who will be asked to kick in more of their paycheck to cover someone else’s pension. The private sector worker may pause and think “wait a minute, I don’t have a guaranteed pension for life. Why should I pay into yours?” Not a pretty situation at all. The reason we feel this may be an apocalyptic change is to consider the next 10 years where the cost of such firefighter pensions might follow the same financial curve where the annual pension outlay per firefighter could be $100K or more. We again ask political leaders who support the current status quo, just how we are going to keep this house-of-cards afloat? Last year, both House Speaker Madigan and Senate President Cullerton sent letters to State union leaders for their plan on how to make financial sense of state pensions; we are unaware of any substantive response.
Let’s make one thing clear as well; a good portion of Illinois’ public pension crisis was not caused exclusively by over-generous pension structures demanded by unions. State, County and Local Governments have to look in the mirror as well and honestly ask whether they have adequately met their pension funding obligations over the past two decades or more. This is a lesser advertised but very real problem. One thing not addressed in the pleadings of this case that we reviewed is any mention of the equitable contribution to the pension by the municipality over the past 10-20 years. We would be curious to know if North Riverside met a realistic pension contribution schedule to sustain the health of the fund. This is often a source of great debate and will likely be argued as part of this litigation.
Is there a solution? Well, there are certainly options. The Village of Glencoe, Illinois for example, has had a combined “public safety” workforce for the past 17 years. Their firefighters are trained as police and vice versa. They recognized tremendous savings with this structure and this relatively affluent community has no reported complaints of deficient police/fire coverage. Glencoe may be the model for other Illinois communities struggling with these pension costs like Riverside. Unfortunately, it may take a protracted legal battle to forge such change. We will report on the Village of North Riverside’s efforts down the road.
This article was researched and written by John P. Campbell, Jr., J.D. Please send thoughts and comments to John at firstname.lastname@example.org.
Synopsis: Is it wise to fire an employee who has made multiple, at times well founded, complaints with regard to harassment by co-workers? You may be surprised at the answer. Analysis by Shawn R. Biery, J.D.
Editor’s comment: We consider this an intriguing federal case which provides excellent guidance both to the extent that strong legitimate investigation can provide an excellent basis for multiple protections in defending future related litigation.
In Muhammad v. Caterpillar, Inc., No. 12-1723 (September 9, 2014) the Seventh Circuit affirmed the District courts grant of defendant-employer’s motion for summary judgment in a Title VII action alleging defendant had failed to take appropriate steps to stop plaintiff’s co-workers from subjecting him to sexual and racial harassment and claims for damage after subsequently suspended plaintiff in retaliation for complaining about said harassment.
By way of background, Warnether Muhammad alleged his coworkers at Caterpillar, Inc., created a hostile work environment by subjecting him to sexual and racial harassment and further argued his supervisor retaliated by suspending him after he complained about it. He was provided a right-to-sue letter from the Equal Employment Opportunity Commission, resulting in the suit discussed here. The federal district court however granted summary judgment for Caterpillar noting the company reasonably responded to the complaints of harassment, and no evidence suggested Caterpillar suspended Muhammad because he complained.
The court was clear to confirm they recite the facts in the record in the light most favorable to Muhammad. Suffice it to say, the offensive comments were both racially and sexually charged and came from three different employees, however they appear to have resulted in remedial action by the company after investigation. The company also responded to offensive comments which were scrawled on the walls of the bathroom nearest Muhammad’s with swift action being taken to immediately contact a third-party provider of painting services to have the graffiti painted over on several occasions. As part of the reporting, there was a discussion with Muhammad regarding following the chain of command in submitting complaints. The graffiti problem further was remedied by discussing it with all of Muhammad’s coworkers at a shift meeting, with another incident resulting in each person on Muhammad’s line being individually warned that anyone caught defacing the walls would be fired immediately. No more graffiti appeared.
Roughly six weeks later, an incident occurred that resulted in Muhammad’s suspension.
On that day, Muhammad left his work station during a non-break time to use the restroom, and checked the bid board for postings before returning to his station resulting in suspension pending the investigation of the alleged misconduct by the company. After that internal investigation, the suspension of Muhammad was deemed appropriate. Muhammad filed a grievance through his union representative and was allowed to return to work however was then later suspended a second time and then terminated based on his conduct with his coworkers upon his return. Following the settlement of his grievance of the termination, he returned to work at Caterpillar with no back pay, and was laid off due to a reduction in force in April 2009. He was later rehired at Caterpillar where he remains employed.
Based on incidents of August-October 2006, Muhammad filed his charges of harassment and retaliation with the EEOC, and in June 2009 he received his right-to-sue letter. Shortly thereafter he filed this suit, alleging that he was harassed with offensive comments about his perceived sexual orientation and his race and that Edwards suspended him in retaliation for reporting the offensive graffiti.
The federal district court granted summary judgment for Caterpillar. In rejecting the claim of sexual harassment, the court relied on the decision in Spearman v. Ford Motor Company, 231 F.3d 1080, 1085 (7th Cir. 2000), which held the Title VII prohibition on discrimination based on sex extended only to discrimination based on a person’s gender, and not that aimed at a person’s sexual orientation. The district court also ruled Caterpillar was not liable for any racial harassment by coworkers because, in the court’s view, the company’s responses to Muhammad’s complaints of harassment were reasonable. Finally, the court concluded Muhammad lacked evidence Edwards retaliated against him for complaining about the harassment.
The Court noted Muhammad’s argument, made for the first time on appeal, that his coworkers would not have harassed a female for her sexual preferences was speculation. At summary judgment, Muhammad did not produce evidence to support his assertions. They also noted that even if they set that problem aside, another more fundamental obstacle blocked Muhammad’s claim Caterpillar was liable for sexual and racial harassment: Caterpillar reasonably responded to Muhammad’s complaints. The evidence suggested there was only one secondary offensive remark and Muhammad admittedly did not report that secondary remark.
As for the graffiti, Caterpillar responded quickly each time Muhammad reported it, and stopped the problem permanently. Muhammad conceded the graffiti never reappeared after the individual warnings. The court accurately noted Title VII requires only that employers take action reasonably calculated to stop unlawful harassment; that requirement does not necessarily include disciplining the employees responsible for past conduct.
With those decisions, it left only Muhammad’s retaliation claim. Title VII also prohibits employers from retaliating against employees for their opposition to unlawful employment practices. However Muhammad only alleged the initial suspension constituted retaliation against him for his complaint of harassment. Caterpillar maintained Muhammad was suspended because he left his work station during a non-break time to check the bid board and when the supervisor Edwards attempted to discuss the impropriety of that action and other concerns with Muhammad, Muhammad responded disrespectfully, refused to talk with him, and walked away from him as he was speaking.
The federal court noted Muhammad made no effort to establish an admission of animus or to otherwise present direct evidence of it, and he failed to present evidence that rises above the type of speculation that is insufficient to survive summary judgment. Muhammad acknowledged he left his workstation during a non-break time to use the restroom, and he checked the bid board to see what jobs were posted in the plant before returning to the station. He conceded Edwards confronted him concerning his use of non-break time to check the bid board. Although he stated he did not walk away while Edwards was speaking to him, his testimony is vague as to what happened. He acknowledged in his testimony he did not want to discuss the situation with Edwards without union representation, and in his response to the motion for summary judgment he appears to employ that as a justification for his refusal to continue the conversation. Whether or not Muhammad walked away, it was undisputed Edwards approached Muhammad with a concern about his work performance, and some conflict arose in the course of discussing the matter.
The evidence submitted by Muhammad indicating the suspension was retaliatory in violation of Title VII was minimal. The court noted there was virtually no evidence, other than the possible temporal proximity, the conversation played a role in the suspension, and the courts have repeatedly held mere temporal proximity is rarely sufficient. There is no indication in the record the chain-of-command conversation was anything more than a reminder as to the proper procedures of the workforce. In fact, when asked in his deposition why he was suspended, Muhammad repeatedly stated either he did not know or he was told it was because of poor performance, not because of his complaint to Johnson. He later stated he believed it may be related to his decision to complain to Johnson directly about the harassment, but that was nothing more than speculation on his part. Accordingly for multiple reasons, the federal appeals court ruled the district court did not err in granting summary judgment on the retaliation claim as well.
The goal in any similar situation is to ensure the allegations are investigated and to take appropriate action if applicable. A side note derived from a study of this claim is the knowledge that additional protections provided by such appropriate investigation and action can avoid damages for claims which may then be filed in retaliation if the employee is not satisfied with a result or if the investigation reveals some inappropriate behavior by the complaining employee. The decision may be tempered somewhat by the fact this plaintiff returned to work for the employer, however I prefer to believe the court simply decided appropriately on the facts at hand. This article was researched and written by Shawn R. Biery, J.D, MSCC. Shawn can be contacted at 312-756-3701 or email@example.com.
Synopsis: How Illinois Judges and Legislators can make more than $1M per each year of service. Do We Want to Pay This Much for Government Workers at Any Level?
Editor’s comment: Our readers asked and here are the answers. Please note everything we outline in this article is completely “legal” but in our opinion, shocking. Right now, Illinois’ full Circuit Court judges with their constitutionally guaranteed annual 3% increase will make $203,770.66. Four years from now, they will be making $222,592,62. In 14 years, their annual judicial salaries will be $299,145.87. 25 years from now, they will be making $414,087.84. This “spiral” won’t stop until the IL Constitution is changed. A traffic court judge can make more than our Governor, Attorney General or any statewide official.
For all the fanfare, you may want to also note only 3 of the 5 Illinois pension programs were “reformed” last year. Nothing about the IL pension “reform” bill passed last year, not a word, made any change to these painfully generous judicial or legislative “pensions.” In fact, the IL legislature couldn’t touch judicial pensions because their pensions are guaranteed in the IL Constitution and require a constitutional amendment to be modified. IL Judges/Justices are vested in their pensions in only 9 years of service. We have no idea who picked that odd number or why. If they vest and get out of the jobs after the vesting time period, neither our judges or legislators put in one full year’s salaries to then be entitled to lifetime “retirement” benefits. Would you contribute $100K to then get $9M back over your lifetime—who wouldn’t? The reason we put “retirement” in quotes above is very few of IL judges or legislators stop working, they just start getting money from us and move into other jobs.
Both retired IL judges and legislators will go through their entire “pension” contribution amount in less than one year after retirement. Upon retirement, a full Circuit Court judge and legislator gets 85% of their highest salary in annual pension payments. Therefore full Circuit Court judges currently retire at pensions of approximately $170,000 per year. In four years, that starting annual pension number will be $178,074.09. In 14 years, $239,316.69. Once their contribution and the state’s match is quickly used up, their pensions are “unfunded” or “de-funded” which means they return to our current taxpayer-paid payroll even though their work is long over.
So, Here is How An IL Judge Can Get $1M For Each Year of Service
· As we outline, take as an example judge who gets his/her post at age 51.
· They start working for us on a salary of $170K and rapidly come up to $203K. In nine years of service, they will receive just under $2M in salary.
· When they retire, they will retire at about $170K or 85% of $203K. In the first ten years of “retirement or from age 60-70, they will receive $2M or so. Total income from us is now $4M.
· In the next ten years, or from 70-80 years old, they will receive about $2.5M. Total income from us is now $6.5M.
· If they live from 80-90 years of age, and lots of judges are living that long, they will receive more than $3M in that decade.
· That means they will have received more than $9M for nine years of judicial work.
Please also note all retired judges and legislators receive fully paid lifetime medical coverage from our tax dollars. The IL Supreme Court just ruled that post-employment benefit is protected by the IL Constitution and can’t be touched for existing/vested retirees. To our understanding, this healthcare benefit is simply a “freebie” on your dime—retirees don’t contribute a penny to this expensive lifetime benefit. Here is a link to consider. Please note the judges/justices in this link retired some time ago; new retirees will get lots and lots more: http://www.chicagonow.com/dennis-byrnes-barbershop/2012/05/retired-illinois-judges-raking-in-gluttonous-pensions/
Please note the vast majority of the money to pay retired judges/justice is coming from you and I and our current tax dollars—yes, we are paying for judges and legislators who retired 10, 20, 30 years ago. Less than 30% of the money for these pensions is coming from the paltry contributions from our past and current judges and legislators. IL Auditor General William Holland confirmed both the judicial and legislative “pension” systems cost IL taxpayers over $100M each in current dollars. We also have to pay the cost of the interest on the money the State is borrowing to fund the “unfunded” amounts. We assure you the $105B in pension debt is gone/spent and will have to be paid back by you, me, your grandkids and their grandkids. That number continues to rise dramatically.
This isn’t sustainable and can’t be made sustainable—who will/can reform it?
We vote all the Illinois government pensions come under scrutiny or investigation. We don’t see that coming from Governor Quinn who we understand is strongly supported with millions in campaign cash coming from folks that want IL taxpayers to keep paying billions for fake pensions for former gov’t workers. Governor Quinn has been in office for six years and the pension deficit was less than $50B when he got the job—it is over $100B and could be over $200B if he is elected and no changes are made to these current and lucrative plans. Governor Quinn’s campaign website makes no mention of needed reforms to improve this pension mess. Challenger Bruce Rauner is a successful and hard-working businessman and we hope his plans for moving new government workers into 401K plans is strongly considered. This crucial election is in 43 days, folks.
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