Employers Cannot Recoup GML §207-a(2) Payments through WCL §§25(4)(a) and 30(2): Matter of Schulze v. City of Newburgh Fire Department

Introduction

Matter of Schulze v. City of Newburgh Fire Department, 2025 NYSlipOp 02101 (2025), addresses a firefighter’s overlapping disability benefits and the extent to which a municipal employer may recoup supplemental pension‐bridge payments under the Workers’ Compensation Law (WCL). Adam Schulze, a paid firefighter with the City of Newburgh, was permanently partially disabled on duty, drawing (1) full salary under General Municipal Law (GML) §207-a(1), (2) performance‐of‐duty (POD) retirement benefits under Retirement and Social Security Law (RSSL) §363-c and GML §207-a(2), and (3) workers’ compensation benefits. The City sought to intercept Schulze’s WCL award as reimbursement for its GML §207-a(2) payments. The question was whether WCL §§25(4)(a) or 30(2) authorize such direct reimbursement.

Summary of the Judgment

The New York Court of Appeals unanimously held that neither WCL §30(2) nor §25(4)(a) permits a municipality to receive direct reimbursement from a firefighter’s workers’ compensation award for the supplemental pension payments it made under GML §207-a(2). The Court explained that:

“Salary or wages” under WCL §30(2) refers only to GML §207-a(1) payroll payments to active firefighters, not to retirement supplements under §207-a(2).
“Payments … in like manner as wages” under WCL §25(4)(a) do not encompass pension supplements made after retirement.
The proper mechanism to prevent duplicative payments for POD retirees is GML §207-a(4-a), which automatically reduces an employer’s supplemental obligation by the amount of final workers’ compensation awards.

Accordingly, the Appellate Division’s order affirming the Workers’ Compensation Board was affirmed, denying the City’s claim for direct reimbursement.

Analysis

Precedents Cited

Matter of Harzinski v. Village of Endicott, 126 AD2d 56 (3d Dept 1987): Held that GML §207-a(2) payments are not “wages” under WCL §§25(4)(a) or 30(2).
Matter of Borelli v. City of Yonkers, 39 NY3d 138 (2022): Characterized GML §207-a(2) payments as pension supplements rather than contractual wages.
Selected Third Department decisions (Georges, McQueer, Tricarico): Illustrate an employer’s procedural option to request retroactive WCL awards to align with retirement dates.

The Court relied heavily on Harzinski’s conclusion that GML §207-a(2) payouts fall outside the wage‐credit provisions of the WCL. Borelli reinforced the distinction by examining the nature and calculation of pension supplements.

Legal Reasoning

The Court’s reasoning proceeds in three steps:

Statutory Definitions: WCL §2(9) defines “wages” as the money rate under the hiring contract at the time of injury. GML §207-a(2) payments are pension supplements—calculated to bridge the gap between a POD pension and pre‐injury salary—and not part of the firefighter’s pre‐retirement contract rate.
Textual Analysis of WCL Provisions:
- WCL §30(2) credits “salary or wages paid … under GML §207-a” only in the context of §207-a(1) active‐payroll benefits; §207-a(2) did not yet exist when the provision was enacted in 1951.
- WCL §25(4)(a) entitles an employer who “made payments … in like manner as wages” to reimbursement, but §207-a(2) payments occur post‐retirement and are not “like wages” for active employees.
Legislative History & Purpose:
- 1951 amendments to WCL §30(2) aimed to protect municipalities paying full salaries under §207-a(1) from double‐dipping by firefighters.
- 1930’s introduction of WCL §25(4)(a) addressed advance wage payments pending WCL awards, not post‐retirement pension supplements.
- GML §207-a(2) (1977) was specifically designed to shift cost from local payrolls to the State pension system, moving disabled firefighters off municipal payrolls altogether.

Impact

This decision clarifies the interplay among three statutory benefit streams for disabled firefighters and sets firm boundaries on municipal recoupment rights:

Employers must use GML §207-a(4-a) to adjust supplemental payments prospectively when workers’ compensation awards are finalized; they may not intercept WCL funds directly under WCL §§25(4)(a) or 30(2).
Municipalities are encouraged to timely request WCL awards that align with retirement dates to avoid retroactive overpayments.
Court of Appeals solidifies Harzinski’s longstanding rule and reaffirms Borelli’s characterization of pension supplements.

Future cases will rely on this decision to delineate an employer’s exclusive remedies for avoiding duplicative firefighter benefits.

Complex Concepts Simplified

General Municipal Law §207-a(1): Requires municipalities to continue paying disabled firefighters their full pre‐injury salary while on the payroll. These payments are creditable against WCL awards under WCL §30(2).
General Municipal Law §207-a(2): Obliges employers to supplement a retired firefighter’s pension so that total post-retirement income equals pre-injury salary. These are pension supplements, not wages, and are reduced by WCL awards only under §207-a(4-a), not WCL §§25(4)(a) or 30(2).
POD vs. ADR Retirement: POD (Performance-of-Duty): 50% of final average salary, not reduced by WCL awards; municipal supplement under GML §207-a(2) is reduced by WCL awards via GML §207-a(4-a).
ADR (Accidental Disability): 75% of final average salary, reduced by WCL awards under RSSL §363(e)(3); municipal supplement under GML §207-a(2) similarly interacts.
WCL §§25(4)(a) and 30(2): §25(4)(a): Employer advance wage credit—applies only to wage‐like payments before a WCL award. §30(2): Credits employer salary payments under GML §207-a(1) against a firefighter’s WCL award.
GML §207-a(4-a): Automatically reduces the employer’s supplemental GML §207-a(2) obligation by the amount of WCL benefits “finally determined payable.” It is the exclusive remedy to avoid double‐payment for POD retirees.

Conclusion

Matter of Schulze v. City of Newburgh Fire Department reaffirms that municipal employers may not intercept a firefighter’s workers’ compensation award under WCL §§25(4)(a) or 30(2) to recoup GML §207-a(2) supplemental payments. The decision underscores the precise interplay of disability benefits—active‐payroll wages (GML §207-a(1)), retirement supplements (GML §207-a(2)), state pension benefits (RSSL §§363, 363-c), and workers’ compensation—and channels employer recoupment exclusively through GML §207-a(4-a). Municipalities must therefore align their procedural strategy—requesting timely WCL awards concurrent with retirement—to ensure pension supplements properly reflect final compensation determinations.