NJ Pension Law: What you don't know can certainly hurt you.

Seasoned practitioners of labor and employment law in New Jersey's governmental sector know that the big ticket item in the settlement of most cases concerns the aggrieved employee's pension. Pensions can be earned by way of service or disability. Most attorneys who do this kind of work often ignore or are unaware of a pesky regulation which requires settlement agreements to be submitted to the Division of Pensions for approval if they involve an employee resigning in exchange for the employer dropping disciplinary charges. N.J.A.C. 17:1-6.3. Not following this regulation can actually lead to missing issues that the parties may later regret, as was the case in Glen Ridge.

In the recently decided unreported case of Carr v. Borough of Glen Ridge, Dkt. No. A-1124-20 (App. Div. Jan. 5, 2022), the parties entered into a settlement agreement that violated State pension law and was therefore too good to be true. The employee, who had been found unfit to serve as a police officer for psychological reasons, accepted a $675,000 payment in exchange for his irrevocable resignation and a commitment from his employer not to contest his application for disability retirement.

The Division of Pensions rained on the plaintiff police officer's parade when they refused to approve his pension because of the irrevocable resignation provision. Plaintiff's counsel filed an application for the Court to revise the settlement to be modified to take out the irrevocable resignation language. The court said no, and the Appellate Division affirmed.

The Division on Pensions does not accept disability retirements as permanent. They reserve the right to reexamine disability registrants to determine whether they have recovered enough to be returned to duty. It seems obvious enough that to be returned to active duty, you need a job to be returned. For this reason, employees who agree to irrevocably resign from employment with their government agency disqualify themselves from obtaining a disability pension. Cardinale v. Board of Trustees, 458 N.J. Super. 260 (App. Div. 2019).

Lesson learned. Practitioners on both sides of the aisle need to make sure that they understand the complexities of governmental labor law in New Jersey before they take on cases or enter into settlements which they will later wish they hadn't. It is far better when dealing with a state agency to ask permission rather than beg for forgiveness. Had the settlement been conditioned on preapproval from the Division of Pensions, the attorneys involved would have been advised by the State Agency of the problems with the agreement and the current headaches could have been avoided.