University of Pittsburgh v. United States

This case presents the question whether retirement payments the University of Pittsburgh (“University”) made to former tenured faculty members were “wages” subject to FICA tax. Although the matter is not free from doubt, I would hold the payments were not wages because they were given primarily in exchange for the faculty members’ relinquishment of tenure, which is a property interest in continued employment absent cause or financial exigency. See North Dakota State Univ. v. United States, 255 F.3d 599 (8th Cir.2001).

The problem of defining “wages” in this case presents a contrast between two…