Summary

Charter schools that are receiving services from pensioners or have contractual relationships with those retirees may be violating Delaware law.

Is your school being provided services by a retiree receiving a State of Delaware pension? Does your school have a contractual relationship with a retired teacher, administrator or other employee?

If so, you need to know about enforcement actions being taken by the Delaware Pension Office to curtail what it views as violations of Delaware law and the regulations governing pension-creditable positions.

Several state agencies, including charter schools, have recently been the subject of whistleblower complaints alleging that retirees who are currently receiving monthly pension checks are also receiving payments from those schools in violation of Delaware law. This practice, apparently rampant throughout state government and in particular by traditional public school districts, is being investigated on a case-by-case basis by the Pension office and the Attorney General's office.

In some cases, the state has ceased the pension checks and healthcare coverage for retirees, and in a few instances it has also announced its intention to seek reimbursement of pension payments made to the retirees. Depending on the number of years for which the individual has been working and receiving pension checks simultaneously, that amount can easily exceed $100,000.

While the enforcement actions to date have focused on pensioners, the State or Internal Revenue Service may also impose taxes and other penalties on you – the "employer" – for failing to properly classify these individuals. If you have any questions about these requirements, the classification of anyone working for your school or about the enforcement actions generally, please contact us to discuss.

We at Saul Ewing are proud to serve Delaware's charter schools and we are available at any time to answer your questions.