Public Employee Retirement Administration Commission v. Contributory Retirement Appeal Board ( 2018 )

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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
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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 . . . ."
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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)
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(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."
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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.
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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
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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.