Employment Insurance workers sue state over privatization benefits

A group of state workers who are losing their jobs in Nevada's privatization of workman's compensation have filed a lawsuit saying they are being cheated out of retirement benefits.

Backed by the State of Nevada Employees Association, the nine workers sued in Carson District Court asking that Employers Insurance Company of Nevada be forced to pay for five added years of retirement credit. The case was assigned to District Judge Mike Fondi.

To protect EICON's 500 employees, the 1999 Legislature ordered the agency to buy up to five years pension credit for each worker eligible to retire Jan. 1 when EICON officially becomes a private mutual fund. The new company has agreed to do so for those workers who are 60 or who have 30 years of state service. But anyone under age 60 with less than 30 years doesn't qualify. The agency plans to lay them off as it goes private Jan. 1 without providing any enhanced benefits.

The reason EICON doesn't want to buy the pension credit is that it will cost them up to $12,000 a year for each added employee.

SNEA lawyer Norah McCoy said that's wrong, that state law makes those workers eligible to retire early on a reduced pension. She said EICON's refusal flies in the face of several expert and legal opinions that say those nine workers in the lawsuit are eligible for the five years pension credit. She said the Legislative Counsel Bureau said so in a July 15 opinion to Assemblywoman Bonnie Parnell, as did the attorney general's office in a formal opinion Dec. 10. George Pyne, administrator of the Public Employees Retirement System also agrees EICON should pay up under Nevada law.

With the official privatization of EICON just three days away, SNEA Executive Director Bob Gagnier said there was no choice but to sue.

He said six of the nine employees being denied the benefit have at least 20 years of state service and one, Maria Cable, has 24.8 years.

That means, Gagnier said, that after purchase of the five years credit, Cable would have 29.8 years service - about 70 days short of the 30 years needed to qualify unconditionally for her full pension.

"EICON has taken the position that unless the employees qualify for full retirement benefits by age or service, they don't have to pay," she said. "If an employee wants to retire and take reduced benefits, that's their business. That's the law. SB37 says all rights, liabilities and obligations must be assumed by the new EICON."

The 1999 Legislature privatized EICON at Gov. Kenny Guinn's request, saying that would let it compete with private industry for employment compensation insurance business. In the process, lawmakers were warned many of the 500 plus EICON employees would be laid off. While EICON has kept nearly 300 and many others have transferred to other state jobs, there are a number of senior workers who have chosen to retire. Most of those are old enough to retire without penalty.

The lawsuit was filed on behalf of those not yet 60 but who have chosen to retire despite the 4 percent they will lose in pension benefits for each year until either age 60 or the 30 year cutoff.