Results of the 3% Case Status Conference

Based on the results of the January 18th status conference, MEA Legal has updated its Frequently Asked Questions document.

The following are the major changes to that document:

9. What time period does the decision cover?

The money held in the escrow account, which is to be sent to the districts for distribution, is for the period of July 1, 2010 – September 3, 2012. The Supreme Court ruled the end date is when the 2012 law took effect and Judge Borello of the Court of Claims has confirmed this. For those who opted out of paying the 3% under the 2012 law because they opted out of retiree health benefits, money taken after September 3, 2012 has already been returned by deposit in the employee’s 401(k) account. For those who opted in to paying the 3% because they opted in to retiree health benefits, any money taken out after September 3, 2012 goes toward retiree health care. If retire health care is not available upon retirement, contributions paid by choice under the 2012 law will be returned as provided in PA 300.

10. Will I get a refund?

Per the Supreme Court and the Court of Appeals, the case will be remanded to the trial court “which shall direct the return of the subject funds, with interest, to the relevant employees.”

ORS has announced that reporting units will receive a transfer of the contribution and interest funds with the January 22, 2018 school aid payment. This does not mean that employers will disburse the funds on that date.

We expect for individuals who worked for districts that have closed or dissolved since 2010 to receive a check directly from the Office of Retirement Services. Such individuals should make sure ORS has a current address on file.

13. When the money is returned, will it be subject to taxes?

But for the actions of the state, the money would have been wages. Therefore, in our view, the refund will be subject to employment taxes. If the original contribution was not subject to FICA, the reimbursement will likely be subject to FICA. Conversely, if the original contribution was subject to FICA, you should not be taxed twice. Only your employer will know whether FICA was taken out of the original contribution. MEA cannot provide tax advice to individuals. If you have questions about the taxability of your individual refund, please consult your tax advisor.

14. What happens if there is an issue with my refund, but I am not a member in good standing?

Only members in good standing are entitled to the full range of legal services available under the MEA Legal Representation Policy. An individual must be in good standing at the “time of the action complained of” and must maintain active membership in good standing for the entire time legal services are provided. Under the Legal Representation Policy, we have the right to deny representation when it appears that an individual became a member for the purpose of receiving legal representation. Signing up for membership contemporaneous with a dispute over a refund will result in a denial.

15. Has anything happened in the Court of Claims (trial court) since the Supreme Court issued its December 20, 2017 decision?

Yes. A status conference was held with Judge Stephen L. Borello on January 18, 2018. We believe an order will be issued as a result of that status conference. Based on discussions held, we believe the order will provide for the disbursement of the escrow funds to the reporting units (school districts and participating colleges) on January 22, 2018. The Court has scheduled a second status conference for February 5, 2018. The purpose of the second status conference is to review progress of disbursement to the reporting units and discuss any issues related to disbursement.

16. Will the Plaintiffs argue for additional interest as a prevailing party and attorney fees?

Yes. However, since the state does not agree to either, the parties have agreed to a briefing schedule. The Court of Claims will issue a decision on those issues thereafter.

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