Public Employee Retirement Administration Commission v. Contributory Retirement Appeal Board

• Court: Massachusetts Supreme Judicial Court
• Decided: February 13, 2018
• Docket: SJC 12331
• Status: Published

Opinion

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SJC-12331

PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION COMMISSION vs. CONTRIBUTORY RETIREMENT APPEAL BOARD & others.1

Suffolk. November 6, 2017. - February 13, 2018.

Present: Gants, C.J., Gaziano, Lowy, Budd, & Cypher, JJ.

Public Employee Retirement Administration Commission. Contributory Retirement Appeal Board. Retirement. Public Employment, Retirement, Sick leave benefits, Vacation pay, Worker's compensation. Words, "Regular compensation."

Civil action commenced in the Superior Court Department on May 14, 2015.

The case was heard by Peter M. Lauriat, J., on motions for judgment on the pleadings.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Judith A. Corrigan, Special Assistant Attorney General, for the plaintiff. Michael Sacco for retirement board of Swampscott.

CYPHER, J. The plaintiff, the Public Employee Retirement

Administration Commission (PERAC), appeals from a Superior Court

1 Retirement board of Swampscott and Robert Vernava. 2

judge's decision affirming a determination by the Contributory

Retirement Appeal Board (CRAB) that sick or vacation payments,

when used to supplement workers' compensation payments, are not

"regular compensation" as defined in G. L. c. 32, § 1. PERAC

argues that CRAB's decision is incorrect as a matter of law. We

disagree, and for the following reasons we affirm the decision

of the Superior Court judge.

Background. The relevant facts are not in dispute. From

September 30, 1985, to July 7, 2012, Robert Vernava worked for

the town of Swampscott's department of public works. On June

13, 2010, Vernava sustained injuries while performing job-

related duties. He began receiving workers' compensation

benefits the same day. In addition to the workers' compensation

benefits, under G. L. c. 152, § 69, Vernava also received two

hours per week of sick or vacation pay (supplemental pay) in

order to maintain his union membership and life insurance.2

2 Employees who are unable to work because of injuries sustained on the job can seek benefits in lieu of salary under the workers' compensation act. See G. L. c. 152, §§ 29 ("no compensation shall be paid for any period for which wages were earned"), 34, 34A, 35. An employee's absence from work does not automatically diminish his or her accrued vacation and sick time. Under G. L. c. 152, § 69, which governs payments in excess of workers' compensation benefits for public employees, a public employer may pay an employee receiving workers' compensation all of that employee's accrued vacation and sick time "in part until any sick leave allowance which the employee has to his credit has been used." See School Comm. of Medford v. Medford Pub. Sch. Custodians Ass'n, 21 Mass. App. Ct. 947, 948 (1986) (public employee receiving workers' compensation 3

Pursuant to G. L. c. 32, § 7, on February 1, 2012, the town

of Swampscott filed an application seeking to retire Vernava

involuntarily for accidental disability. On June 28, 2012, the

retirement board of Swampscott (board) approved the application

and voted to involuntarily retire Vernava due to accidental

disability. Vernava received his workers' compensation benefits

and supplemental pay until July 7, 2012.

Under G. L. c. 32, § 7 (2), the effective date of an

employee's accidental disability retirement is the latest of the

following: (1) "the date the injury was sustained;" (2) "the

date six months prior to the filing of the written application

for such retirement;" or (3) "the date for which he last

received regular compensation for his employment in the public

service." Following the board's decision to retire Vernava

involuntarily, PERAC determined that Vernava's effective

retirement date was July 7, 2012, because this was the last day

Vernava received "regular compensation" in the form of his

supplemental pay. The board, while not agreeing with PERAC's

determination, was bound to follow PERAC's ruling.

benefits for total incapacity may not accrue rights to additional vacation and longevity pay for years in which he or she was incapacitated and receiving benefits). An employee may only receive so much of any "sick leave allowance payment as, when added to the amount of any disability compensation . . . will result in the payment to him of his full salary or wages." G. L. c. 152, § 69. 4

Vernava appealed from PERAC's determination to the division

of administrative law appeals (DALA). DALA reversed PERAC's

decision, finding that Vernava's supplemental pay did not

constitute "regular compensation" under G. L. c. 32, § 1. DALA

determined that Vernava last received such compensation on June

13, 2010, the date of his injury. Based on that determination,

DALA set Vernava's effective accidental disability retirement

date as August 1, 2011. This was because, with DALA's

determination that the supplemental pay was not regular

compensation, the latest occurring event under G. L. c. 32,

§ 7 (2), became the date six months prior to the filing of the

accidental disability application, here August 1, 2011, and not

the date Vernava last received regular compensation.

PERAC appealed from DALA's findings to CRAB, and CRAB

upheld DALA's decision. PERAC sought judicial review of CRAB's

decision pursuant to G. L. c. 30A, § 14. A Superior Court judge

affirmed CRAB's decision, and PERAC appealed. We transferred

the case to this court on our own motion, and now affirm the

Superior Court judgment.

Discussion. The issue before us is one of statutory

interpretation: whether the supplemental pay received pursuant

to G. L. c. 152, § 69, constitutes "regular compensation" as

defined by G. L. c. 32, § 1, when received in conjunction with 5

workers' compensation.3 "While we give weight to the experience

of both PERAC and CRAB, here they offer conflicting

interpretations. Ultimately, the issue is one of statutory

interpretation, which presents a question of law for the

court. . . . We are required to overturn agency decisions that

are inconsistent with G. L. c. 32, § 1" (citations omitted).

Pelonzi v. Retirement Bd. of Beverly, 451 Mass. 475, 478 n.8

(2008).

We begin with the language of the statute. See Bulger v.

Contributory Retirement Appeal Bd., 447 Mass. 651, 657 (2006).

General Laws c. 32, § 1, defines "[r]egular compensation," in

relevant part, as "compensation received exclusively as wages by

an employee for services performed in the course of employment

for his employer."4 PERAC argues that recurring payments of

3 Our interpretation of "regular compensation" in this case is limited to the receipt of supplemental pay in connection with workers' compensation benefits, for the purpose of determining an employee's effective date of retirement under G. L. c. 32, § 7. We need not address the effective date of retirement for public employees who are not receiving workers' compensation, such as those who voluntarily retire and use their supplemental pay before doing so. 4 General Laws c. 32, § 1, defines "[w]ages," in relevant part as:

"the base salary or other base compensation of an employee paid to that employee for employment by an employer; provided, however, that 'wages' shall not include, without limitation, overtime, commissions, bonuses other than cost- of-living bonuses, amounts derived from salary enhancements or salary augmentation plans which will recur for a limited 6

accrued sick leave or vacation time constitute regular

compensation. As we have held, the "straightforward and

unambiguous" language of § 1 indicates that "regular

compensation" is "ordinary, recurrent, or repeated payments not

inflated by any 'extraordinary ad hoc' amounts such as bonuses

or overtime pay." Pelonzi, 451 Mass. at 479. See Hallett v.

Contributory Retirement Appeal Bd., 431 Mass. 66, 70 (2000)

("the statutory intent [behind the definition of 'regular

compensation'] is clearly to exempt irregular payments of

compensation from the retirement base"). For payments to

constitute "regular compensation" they must also be "'ordinary'

remuneration" for the work performed. Rotondi v. Contributory

Retirement Appeal Bd., 463 Mass. 644, 653 (2012), quoting

Bulger, 447 Mass. at 658. Cf. Hayes v. Retirement Bd. of

Newton, 425 Mass. 468, 472 n.2 (1997) (plaintiff did not receive

regular compensation during time he received workers'

or definite term, indirect, in-kind or other payments for such items as housing, lodging, travel, clothing allowances, annuities, welfare benefits, lump sum buyouts for workers' compensation, job-related expense payments, automobile usage, insurance premiums, dependent care assistance, [one]-time lump sum payments in lieu of or for unused vacation or sick leave or the payment for termination, severance, [or] dismissal . . . amounts paid as early retirement incentives or any other payment made as a result of the employer having knowledge of the member's retirement, tuition, payments in kind and all payments other than payment received by an individual from his employing unit for services rendered to such employing unit, regardless of federal taxability . . . ." 7

compensation "merely because the city continued to carry him on

its payroll").

PERAC contends that, by the statute's own terms, the only

relevant exception to the definition of "[w]ages" in G. L.

c. 32, § 1, as used in "regular compensation," is sick and

vacation time payments that are received as a "[one]-time lump

sum payment," which Vernava did not receive. This is not,

however, the only exception contained in the definition of

"wages" under the statute. Another exception is for "payments

in kind and all payments other than payment received by an

individual from his employing unit for services rendered to such

employing unit." As discussed infra, Vernava, as an injured

employee on workers' compensation, no longer possessed the

ability to provide services to his employer. Moreover, that the

supplemental payments at issue are not expressly excluded by

statute does not preclude supplemental payments from falling

outside the scope of "regular compensation." See Pelonzi, 451

Mass. at 481-482 (holding personal use value of employer-issued

motor vehicle was not regular compensation even though this

value was not expressly addressed by Legislature). This is so

especially because the statutory definition of "wages" states

that its list of exceptions applies "without limitation." G. L.

c. 32, § 1. See Rodman v. Rodman, 470 Mass. 539, 542 n.5

(2015), quoting Condon v. Haitsma, 325 Mass. 371, 373 (1950) 8

(reasoning that "Legislature is presumed to be aware of

'preexisting law and the decisions of this court'").

Further, under PERAC's own regulations, regular

compensation must be "of indefinite duration." See 840 Code

Mass. Regs. § 15.03(1)(a)(3) (2010). In contrast, sick and

vacation time is limited in amount; Vernava used what remained

to supplement his workers' compensation payments while out on

disability.

PERAC also argues that CRAB misapplied three cases in

reaching its conclusion that sick and vacation pay does not

constitute regular compensation: Zelesky v. Commissioner of the

Div. of Pub. Employee Retirement Admin., 30 Mass. App. Ct. 106

(1991); Gendron vs. Worcester Regional Retirement Bd., No. CR-

06-1126 (DALA June 27, 2008); and McLoughlin vs. State Bd. of

Retirement, No. CR-09-99 (DALA June 7, 2013). We agree with

CRAB that these cases apply and support its conclusion.

In Zelesky, 30 Mass. App. Ct. at 109-110, the Appeals Court

held that supplemental payments to injured county jail employees

received under G. L. c. 126, § 18A,5 did not constitute regular

compensation. The court reasoned that "[i]mplicit in [§ 18A's]

language is the assumption that workers' compensation and the

5 General Laws c. 126, § 18A, provides that a county jail employee who is injured by a prisoner shall receive compensation equal to the difference between the employee's workers' compensation benefits and his or her "regular salary." 9

supplemental payment are not themselves regular compensation,

but instead are a substitute for an employee's 'regular

salary.'" Zelesky, supra, quoting G. L. c. 126, § 18A. We

agree with the Superior Court judge here that, like § 18A, the

language of G. L. c. 152, § 69, under which Vernava was entitled

to receive his supplemental pay, implies that supplemental pay

is "a substitute for an employee's 'regular salary.'" See

Zelesky, supra. Vernava's supplemental pay was not remuneration

for work performed; rather, it was made only where Vernava was

unable to perform work for his employer due to injury. See

Boston Ass'n of Sch. Adm'rs & Supervisors v. Boston Retirement

Bd., 383 Mass. 336, 341 (1981) (holding regular compensation

"refers to remuneration geared to work or services performed");

Zelesky, supra at 108-109.

DALA6 relied on Zelesky when deciding the Gendron case, in

which DALA held that payments from the petitioner's accrued sick

time used to supplement his workers' compensation benefits were

not regular compensation and should not be considered to

determine the effective date of the petitioner's retirement.

PERAC attempts to distinguish the Gendron decision, citing the

fact that the petitioner there did not receive a regular and

6 Under G. L. c. 32, § 16 (4), a Division of Administrative Law Appeals decision that is not objected to by any party or taken up by the Contributory Retirement Appeal Board (CRAB) on its own initiative becomes the final decision of CRAB. 10

recurring payment akin to Vernava's supplemental pay. However,

that decision clarifies that while the petitioner was receiving

workers' compensation, "he had regular retirement deductions

taken from either his accumulated vacation pay or from the

supplemental sick leave payments." See Gendron, supra at 2.

The petitioner's employer in that case could not have taken

"regular retirement deductions" without regular payments from

which to take those deductions. PERAC also contends that the

Gendron decision is distinguishable because much or all of that

petitioner's sick time was obtained via "a 'supplemental sick

leave' payment" that he did not earn, but that he had received

from his employer because he did not have many sick hours

accrued at the time of his injury. However, that petitioner

also received supplemental pay in the form of accrued vacation

time, and DALA found that neither the petitioner's supplemental

sick pay nor accrued vacation pay constituted regular

compensation.

PERAC further argues that CRAB was wrong to apply the

McLoughlin decision. In that decision, DALA held that sick and

vacation payments received years after the petitioner was able

to perform his job duties were not "ordinary and routine" and

did not constitute regular compensation. See McLoughlin, supra

at 8. PERAC attempts to differentiate Vernava from the

petitioner in the McLoughlin case and argues that it was wrong 11

for the DALA magistrate in that case to add a limiting

qualification to regular compensation. We disagree. In the

McLoughlin case, DALA relied on Zelesky and the Gendron decision

to apply sound reasoning to its decision. At the core of all

three cases is the premise that supplemental pay received while

an employee is no longer able to provide employment services for

his or her employer does not constitute regular compensation.

In these instances, as with Vernava, the employee is not merely

out sick or taking a vacation, but is not able to perform

services for the employer.

PERAC's remaining arguments focus on its assertion that

services have been rendered here for the time involved, thereby

bringing the supplemental pay within the definition of regular

compensation. PERAC contends that supplemental pay received in

conjunction with workers' compensation is earned prior to the

employee's injury and that, whether an employee is on workers'

compensation or is simply taking a day off from work, an

employee receiving earned leave time is performing the same

service for the employer. However, when an employee is in

Vernava's situation -- injured, on workers' compensation, and

inherently unable to provide services to his or her employer --

that employee has ceased providing services to the employer.

Similarly, one cannot obtain workers' compensation without first

performing services for his or her employer, but we have 12

previously held workers' compensation is not regular

compensation. See Hayes, 425 Mass. at 472. An attribute of

both workers' compensation and supplemental pay is that both are

earned by providing services to the employer and both are

received while the employee is no longer able to provide those

services. Therefore, PERAC's argument regarding past services

rendered is unavailing.

We also do not find persuasive PERAC's concern that

confusion will ensue if CRAB's interpretation is upheld.

Judgment affirmed.