Raleigh, N.C. — After retiring from the North Carolina Department of Transportation in 2004, Jack Petty returned to the working world for a private company that contracts with the DOT. That decision caught Petty in the state’s double-dipping laws, forcing him give back part of his retirement benefits. He is fighting back with a high-powered lawyer and possible class-action lawsuit.
Petty owes the state nearly $61,000, which is taken out of his retirement checks at a rate of $1,000 a month.
“It was just a shock. It just shocked me that I could not work for a private entity that has nothing to do with the DOT retirement, state retirement,” said Petty, who retired after working as a DOT surveyor in the western part of the state for 37 years. “As long as I stayed healthy, I wanted to keep working until I was 66, 67 or at least 65.”
Because Petty works for a contractor, the state Treasurer's Office wrote him a letter last year and said he was only allowed to receive half his DOT salary and that he'd have to pay some money back.
“I’m absolutely convinced that the state has no right to do this,” said Gene Boyce, Petty’s attorney. “It’s a question of unequal treatment, because there are a lot of other people in Jack’s position who are not being penalized, but he is.”
Boyce has filed a lawsuit on Petty's behalf and points to a state statute that says double-dipping laws only apply to employers who participate in state retirement plans, which Petty's current employer does not. Boyce says many state retirees are working in the same capacity.
In letters to Petty, the state Treasurer’s Office says he should have known he would get in trouble because he was sent brochures and rules when he retired. State Treasurer Janet Cowell declined to comment on the lawsuit or double-dipping laws because of the pending legal matter.
The WRAL Investigates team spoke with a Raleigh attorney, who is not involved in the case, about how the law is written.
“The law was intended to prevent state employees from going to another state agency and double dipping,” said attorney Woody Webb. “They’re basically doubling their salary, and that’s what they are trying to prevent.”
Since retirees often leave at the top of the pay grade, the state could hire someone new for less. Boyce said he believes Petty’s case could affect others.
“It could be a class-action if there’s 10, 15, 100 people that are being penalized and having their pay docked,” he said.
Boyce has won big cases before. In the 1990s he fought the state for making retirees pay income tax on retirement benefits and won a $799 million settlement.
As for Petty, he is still working for a private contractor, but he works part-time in order to keep his retirement pay and health benefits. He says his case needs a closer look.
“For 37.5 years, I paid into our retirement system. Six percent of my salary every pay day, I paid into this retirement system,” Petty said.
The State Employees Association of North Carolina released a statement, saying the lawsuit "raises an important legal issue."
"Since we have no knowledge of the exact facts of this case, SEANC has no current opinion on the merits of this case. However, SEANC will watch it closely as it proceeds through the courts, and we will likely seek to weigh in if the case reaches the N.C. Court of Appeals," SEANC's statement continued.