Jill Mayer v. Board of Trustees, Etc. ( 2024 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2902-22
JILL MAYER,
Petitioner-Appellant,
APPROVED FOR PUBLICATION
v. October 24, 2024
APPELLATE DIVISION
BOARD OF TRUSTEES OF
THE PUBLIC EMPLOYEES'
RETIREMENT SYSTEM,
Respondent-Respondent.
__________________________
Argued September 18, 2024 – Decided October 24, 2024
Before Judges Currier, Marczyk and Paganelli.
On appeal from the Board of Trustees of the Public
Employees' Retirement System, Department of the
Treasury, PERS No. xx0187.
William M. Tambussi argued the cause for appellant
(Brown & Connery, LLP, attorneys; William M.
Tambussi and Joseph T. Carney, on the briefs).
Joseph A. Palumbo, Deputy Attorney General, argued
the cause for respondent (Matthew J. Platkin, Attorney
General, attorney; Sookie Bae-Park, Assistant
Attorney General, of counsel; Robert E. Kelly, Deputy
Attorney General, on the brief).
The opinion of the court was delivered by
CURRIER, P.J.A.D.
In this matter, we consider whether an employee in the Public
Employees' Retirement System (PERS) who submits an application for
retirement benefits and thereafter, prior to the effective retirement date, begins
the process to attain a nomination for a Superior Court judgeship, has violated
N.J.A.C. 17:1-17.14(a)(2), which requires a person collecting PERS retirement
benefits to complete 180 days severance from their employment prior to any
further public employment in New Jersey. Specifically, under the regulation,
if the retiree has a "pre-arranged agreement for reemployment" prior to their
effective retirement date, the retiree has not satisfied the severance of
employment requirement. N.J.A.C. 17:1-17.14(a)(2)(v).
Here, appellant Jill Mayer took steps towards a judicial nomination prior
to her effective retirement date. She was nominated by Governor Phillip D.
Murphy and confirmed by the Senate in the weeks after her retirement date.
Prior to taking the judicial oath, the Division of Pensions and Benefits
(Division) advised Mayer there was no complete termination of the
employment relationship because of the "pre-planning that occurred prior to
[her] December 1, 2021 retirement and during the 180 days after [her]
retirement." Therefore, if Mayer began employment as a Superior Court
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judge, she could no longer collect her PERS pension and benefits. The PERS
Board (Board) affirmed the decision.
After a careful review, we determine the Board mistakenly applied the
regulation to these specific circumstances. The regulation prohibits a "pre -
arranged agreement," not "pre-planning" that occurs prior to a retirement date.
The nature of the judicial selection process precludes any ability to make an
"arrangement" for the position as an individual seeking a judgeship has no
control over the process. There also was no "agreement" that Mayer would be
offered the judgeship until, at the earliest, the date the Senate confirmed the
nomination, which did not occur until after her retirement date.
Arguably, the Senate confirmation could be described as an offer of
employment and there will be no "agreement" until Mayer takes the oath of
office. Certainly, there was a "mutual understanding" after confirmation. But
we need not parse the semantics since this agreement or understanding
occurred only after the effective retirement date.
And, as Mayer has not yet taken the judicial oath, considerably more
than 180 days have passed since she terminated her prior employment.
Therefore, we reverse the Board's final administrative decision.
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I.
After working for the State of New Jersey in the Department of Law and
Public Safety, Division of Criminal Justice, for more than twenty-five years,1
Mayer submitted an application in August 2021 for retirement benefits
effective December 1, 2021. On this application, Mayer certified she had
"made no pre-arrangement to return to public employment after retirement in
any capacity." The Division submitted its Certification of Service and Final
Salary on September 5, 2021, also certifying "that the employee did not make
a pre-arrangement to return to employment with this location in any capacity."
In late October 2021, Mayer submitted a Judicial Questionnaire to the
Governor's Office "in consideration for appointment to the New Jersey State
Judiciary." She was interviewed by the Governor's Office on November 18.
On December 8, 2021, the Bureau of Retirements (the Bureau) notified
Mayer that the Board had approved her application for retirement benefits
effective December 1, 2021. The Bureau informed Mayer:
If you are considering working after retirement, you
should be aware of the restrictions imposed by law
and regulations governing post-retirement
employments. It is your responsibility to inform your
prospective employer that you are receiving retirement
benefits from a New Jersey public retirement system,
1
Mayer served as the Acting Camden County Prosecutor for the final two
years of her employment.
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and to understand the impact employment will have on
those retirement benefits. In some instances, your
retirement benefits may be suspended or even
cancelled entirely, and if this occurs, you will be
responsible for the repayment of any benefits you
were not entitled to receive. You may also be required
to re-enroll in your former retirement system or a
different retirement system, and make pension
contributions to that system. Please read Fact Sheet
#86 regarding Post-Retirement Employment
Restrictions located on the Division of Pensions and
Benefits' website . . . .
Upon reading Fact Sheet #86, if you have any
additional questions regarding return to public
employment, please contact the Office of Client
Services . . . .
On December 13, Governor Murphy issued a Notice of Intention (NOI) 2
for the nomination for appointment of Mayer as a Judge of the Superior Court.
On December 19, Mayer submitted a Senate Judiciary Committee
Questionnaire.
A week later, on December 28, Mayer contacted a Judges' Benefits Aide
from the Administrative Office of the Courts—Human Resources (HR
employee), asking for guidance regarding collecting her PERS pension and
"opt[ing] out of participating in any judicial pension or health benefits." The
HR employee replied quickly, advising Mayer she could waive enrollment in
2
"No nomination [for the office of Judge of the Superior Court] shall be sent
to the Senate for confirmation until after [seven] days' public notice by the
Governor." N.J. Const. art. VI, § 6, ¶ 1.
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the Judicial Retirement System (JRS) and forego health benefits. The HR
employee referred Mayer to an employee (pension representative) more
familiar with the pension benefits to "provide any important information
regarding break in service requirements." The pension representative
responded promptly, informing Mayer of the requirement to "have a bona fide
severance of employment which would be [thirty] days from [her] retirement
date or from [her] [B]oard approval [date], which was [December 8, 2021]." 3
On January 3, 2022, Governor Murphy officially nominated Mayer to
the position of Judge of the Superior Court. Her nomination was approved by
the Senate Judiciary Committee and forwarded to the Senate for confirmation.
On the morning of January 10, 2022, shortly before the Senate was
scheduled to vote on Mayer's nomination, the pension representative contacted
Mayer and left her the following voicemail:
Hi Jill, this is [the pension representative] from
Pensions giving you a call[.] [I] just want you to hold
off on accepting any position in order to [not]
jeopardize your PERS pension Prosecutor[s'] Part
Retirement[.] [I] did send this to external audit to
review and they do believe that there might be an
issue because . . . you are retiring from the state
system and . . . you would be going into another state
3
This information was incorrect. There is a thirty-day break in service
requirement if a retiree accepts employment with another employer in a
position which is not covered by the retiree's retirement system. See N.J.A.C.
17:2-6.2.
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system, another job with the judiciary, [so] you
actually need 180 [days] bona-fide severance . . . .
[J]ust hold off on any acceptance and I'm just waiting
for upper management to review so it will take some
time alright?
Mayer's nomination was confirmed by the Senate later that day.
On January 19, 2022, the pension representative spoke with Mayer and
memorialized the conversation in an email, providing Mayer with the
applicable regulation—N.J.A.C. 17:1-17.14(a)(2)—and advising if she
accepted the Judiciary position, she would not meet the 180-day bona fide
severance retirement requirement. The representative further stated that if
Mayer did not sever her employment for 180 days, she could no longer collect
her PERS benefits. An auditor with the Division's external audit unit provided
Mayer with the same information.
In June 2022, Mayer contacted the pension representative and asked for
confirmation that the Division concurred with her calculations that the 180 -day
bona fide severance period began on December 8, 2021, and ended on June 6,
2022. Mayer advised she intended to meet with the Camden County
Assignment Judge to schedule a swearing-in date. The representative replied
she would let Mayer know when the representative received an answer.
In August 2022, the Division's Acting Director, John D. Megariotis,
informed Mayer by letter that the Division "ha[d] reviewed the scenario under
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which [Mayer was] requesting to accept a judgeship after [her] retirement from
the PERS Prosecutors' Part." Megariotis referenced N.J.A.C. 17:1-17.14(a)(2)
and concluded that if Mayer accepted the position of Superior Court Judge "at
any time in the future, [her] retirement would be non-bona fide because there
would not have been a complete termination of employment of the
employer/employee relationship."
Megariotis explained:
As previously indicated, your employer for the
purposes of determining bona fide severance of
employment is the State of New Jersey. Since you
were employed by the State of New Jersey prior to
your retirement from PERS Prosecutors' Part, you
must have a complete termination of the
employer/employee relationship with the State of New
Jersey for a period of at least 180 days from the date
of your retirement, with no pre-arranged agreement,
such as pre-planning or promise of any future full or
part time employment, with the State of New Jersey.
Megariotis stated the employer/employee relationship was not severed "due to
pre-planning that occurred prior to [her] December 1, 2021 retirement and
during the 180 days after [her] retirement."
Mayer appealed the Division's decision to the Board, which affirmed the
decision on January 13, 2023, "substantially for the reasons set forth in" the
Division's August 2022 letter. The Board stated:
Based on the undisputed factual record as detailed
above, the Board found that [] Mayer was in violation
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of the return to employment regulations. The records
provided establish that [] Mayer has pre-planned her
return to public employment by engaging in the
judicial nomination process during the months of
October, November[,] and December 2021,
immediately prior to her December 1, 2021,
retirement, in violation of N.J.A.C. 17:1-17.14.
Because [] Mayer did not separate from her previous
employment according to both IRS and PERS rules
and regulations, her retirement would be deemed non-
bona fide if she were to have accepted the Judgeship.
Therefore, the Board determined that were [] Mayer []
to accept this judicial nomination her retirement
would be deemed non-bona-fide; she would not be
able to collect a Prosecutors Part pension benefit and a
judicial salary simultaneously. Additionally, a
determination that the retirement was not bona fide
requires the return of all benefits received during the
invalid retirement.
After Mayer again appealed to the Board, it reconsidered the appeal but
reaffirmed its previous determination in an April 20, 2023 final administrative
determination, finding Mayer "ineligible to collect her PERS Prosecutors[']
Part pension and accept a Judgeship with the State of New Jersey." The Board
stated:
[Mayer] sought to return to the same employer well
before her retirement became due and payable, and
took substantial steps toward doing so during that time
period. The process of appointment was completed
days after her original due-and-payable date, and
months before 180 days had passed since her
retirement date.
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The Board concluded that Mayer "had pre-planned her return to public
employment by engaging in the judicial nomination process during the months
of October, November[,] and December 2021, immediately prior to her
December 1, 2021 retirement in violation of N.J.A.C. 17:1-17.14." Therefore,
her retirement was deemed non-bona fide, and Mayer could not begin work as
a Superior Court judge and simultaneously collect her PERS pension benefits.
II.
On appeal, Mayer contends the Board erred in its decision because she
did not terminate her employment relationship with the State of New Jersey
with a pre-arranged agreement for reemployment. Therefore, her retirement
complied with a bona fide severance as defined under N.J.A.C. 17:1-
17.14(a)(2), and she was permitted to accept a Superior Court judgeship and
collect her PERS pension and benefits.
Our review of an administrative agency's decision is limited. Allstars
Auto Grp., Inc. v. Motor Vehicle Comm'n, 234 N.J. 150, 157 (2018).
We will not reverse [the] agency's decision unless: (1)
it was arbitrary, capricious, or unreasonable; (2) it
violated express or implied legislative policies; (3) it
offended the State or Federal Constitution; or (4) the
findings on which it was based were not supported by
substantial, credible evidence in the record.
[Univ. Cottage Club of Princeton N.J. Corp. v. N.J.
Dep't of Env't Prot., 191 N.J. 38, 48 (2007).]
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Although "we must give deference to the agency's findings of facts, and
some deference to its 'interpretation of statutes and regulations within its
implementing and enforcing responsibility,' we are 'in no way bound by the
agency's interpretation of a statute or its determination of a strictly legal
issue.'" Utley v. Bd. of Rev., Dep't of Lab., 194 N.J. 534, 551 (2008) (first
citing Jackson v. Concord Co., 54 N.J. 113, 117-18 (1969); then quoting In re
Appeal by Progressive Cas. Ins. Co., 307 N.J. Super. 93, 102 (App. Div.
1997); and then quoting Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93
(1973)).
The Division, "part of the Department of the Treasury, administers the State
public pension systems," including PERS and the JRS. Burgos v. State, 222 N.J.
175, 184 (2015). PERS is a "qualified governmental defined benefit plan[]
pursuant to sections 401(a) and 414(d) of the federal Internal Revenue Code of
1986 [(IRC)] . . . , as amended, or such other provision of the federal Internal
Revenue Code, as applicable, . . . , and other guidance of the federal Internal
Revenue Service." N.J.S.A. 43:3C-18(a) (citing 26 U.S.C. §§ 401(a), 414(d)).
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The New Jersey Legislature tasked the Division with protecting the qualified
status4 of the State's pension plans. N.J.S.A. 43:3C-18(c). To do so, the
Legislature authorized the Division Director to modify the provisions of the
PERS plan—"by promulgating a rule or regulation" "when a modification is
required to maintain the qualified status of the retirement plans under the
Internal Revenue Code of 1986, applicable regulations of the U.S. Treasury
Department or other guidance of the federal Internal Revenue Service." Ibid.The governing regulation here, N.J.A.C. 17:1-17, was directly promulgated by
the Division's Acting Director pursuant to that authority. N.J.S.A. 43:3C-
18(c); see Special Adopted New Rules, 44 N.J.R. 1157(a) (Apr. 2, 2012)
(codified at N.J.A.C. 17:1-17).
N.J.A.C. 17:1-17.14 requires that PERS "pay retirement benefits to a
member only when there is a bona fide severance from employment," pursuant
to IRC §§ 401(a), 414(d). N.J.A.C. 17:1-17.14(b), (c). A severance from
employment is not "bona fide" if either the separation from the employer is for
fewer than 180 days, or the employee's relationship with the employer is not
"complete[ly] terminat[ed]." N.J.A.C. 17:1-17:14(a)(2).
4
The Board explains that this "qualified status" gives all PERS members the
significant tax advantage of deferring tax on the income used to fund their
pensions (i.e., pre-tax contributions).
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The regulation lists five conditions under which an employee's
relationship with the employer has not been "complete[ly] terminat[ed]":
i. Employment or reemployment in a part-time
position;
ii. Employment or reemployment in a position that
is not covered by the Defined Benefit Plan;
iii. A change in title;
iv. Employment or reemployment as a contract
employee, a leased employee, or an independent
contractor; or
v. Termination of employment with a pre-arranged
agreement for reemployment.
Notably, conditions i.- iv. "do[] not constitute a complete termination of
the employee's relationship with the employer" if they occur within 180 days
of the employee's termination of employment. See N.J.A.C. 17:1-
17.14(a)(2)(i) to (iv). However, subparagraph (v) describes a condition that
invalidates the "complete termination of the employee's relationship with the
employer" if it occurs at the time of the "[t]ermination of employment." If the
employee has a pre-arranged agreement with the employer for reemployment
at the time of the termination of employment, the employee does not have a
bona fide severance from employment, regardless of when the employee
returns to work for the same employer. See N.J.A.C. 17:1-17.14(a)(2)(v).
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Mayer asserts the Board erred in finding she violated N.J.A.C. 17:1-
17.14(a)(2) because her retirement was bona fide effective December 1, 2021,
and on that date, she did not have a "pre-arranged agreement for rehire by the
State."
After a careful review, we are satisfied the Board did not apply the
standard articulated in the governing regulation and its interpretation of that
standard was unreasonable.
In its final administrative determination, the Board concluded Mayer
violated N.J.A.C. 17:1-17.14 because she "had pre-planned her return to public
employment by engaging in the judicial nomination process during the months
of October, November[,] and December 2021, immediately prior to her
December 1, 2021, retirement." However, "pre-planning" is not the regulatory
language; instead, a person may not collect their PERS pension if they have
retired with a "pre-arranged agreement for reemployment." N.J.A.C. 17:1-
17.14(a)(2)(v) (emphasis added).
The meaning of the phrase "pre-arranged agreement" in N.J.A.C. 17:1-
17.14(a)(2)(v) is plain, even without resorting to dictionary definitions or rules
of construction. The words are commonplace and universally understood.
However, a reference to dictionary definitions is useful to confirm the
unequivocal meaning of the phrase. An "agreement" is a "mutual
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understanding between two or more persons about their relative rights and
duties regarding past or future performances; a manifestation of mutual assent
by two or more persons." Black's Law Dictionary 84 (12th ed. 2024).
"Arrange" can mean both "to make preparations for" and "to bring about an
agreement," Merriam-Webster's Collegiate Dictionary 68 (11th ed. 2020), but
here its past participle is used in the regulation as an adjective to modify
"agreement." The prefix "pre" means "in advance" or "beforehand." Id. at
975. On its face, then, this phrase refers to a "mutual understanding" between
parties that was either planned or agreed to before the designated event—the
"[t]ermination of employment."
Extending that interpretation to include "pre-planning" or taking
"substantial steps toward" reemployment is not a reasonable interpretation of
the regulation. Therefore, the Board's interpretation of the unambiguous
phrase "pre-arranged agreement" to include an employee's unilateral "pre-
planning" a return to employment is not reasonable and does not require our
deference.
Under the plain language of the regulation, we consider then whether
Mayer had a pre-arranged agreement to return to state employment when she
retired on December 1, 2021. We determine she did not.
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Regardless of a person's intent, hope and planning, the process to secure
a Superior Court judgeship is unique and beyond the individual's control. A
person must complete a comprehensive questionnaire and be selected by the
Governor's office for an interview. Thereafter, the individual must
successfully pass extensive background checks into their personal and
professional lives, criminal history, and financial status. The person is
evaluated by local and statewide vetting committees and must attain the assent
of their local senators. If the Governor chooses to nominate an individual for a
judgeship, the person must appear before the Senate Judiciary Committee for
questioning and its approval. And finally, the nomination must be confirmed
by the full Senate.
Mayer was confirmed by the Senate in January 2022, after her December
retirement date. There was no agreement prior to her retirement date for her to
return to state employment. The State did not offer her employment before she
retired.
Although she clearly planned and took steps towards attaining a
judgeship prior to her retirement, those were unilateral actions. Whether she
eventually secured a gubernatorial nomination and Senate approval was not
within her control. She could not and did not "arrange" an "agreement" prior
to her retirement. Moreover, the nomination and Senate approval did not
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occur until after Mayer's retirement date. Therefore, the January 2022 Senate
confirmation does not affect a determination of Mayer's bona fide severance of
service, because it was not in place before her "[t]ermination of employment."
See N.J.A.C. 17:1-17.14(a)(2)(v).
In addition, to date, Mayer has not accepted the offer of employment as
she has not taken the judicial oath of office. Nevertheless, the Board contends
the post-retirement agreement reached in January 2022 renders Mayer's
severance of employment non-bona fide under N.J.A.C. 17:1-17.14(a)(2)(ii).
This sub-section provides that "[e]mployment or reemployment in a position
that is not covered by [PERS]" within 180 days of termination of employment
"does not constitute a complete termination of the employee's relationship with
the employer[.]" N.J.A.C. 17:1-17.14(a)(2)(ii). The Board asserts that
because Mayer had "a fully[] developed agreement with the State allowing her
to return at any time from January 10 forward," she "continued the employer-
employee relationship," and, thus, did not have a bona fide severance of
service.
The Board did not specifically present this interpretation of the
regulation in its final administrative decision. However, like our discussion
above, the Board has added language to the plain words of the regulation to
reach an unreasonable interpretation. The Board posits an interpretation that
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the regulation prohibits PERS pension distributions, not only to an employee
who was "[e]mploy[ed] or reemploy[ed] in a position that is not covered by
[PERS]" within 180 days of their retirement, but also to one who reached a
"fully[] developed agreement" with their employer during the 180 days
following their retirement, even if they did not accept the position or begin
employment.
Again, the phrase "[e]mployment or reemployment" is not ambiguous,
and the Board's interpretation of that phrase is not owed deference. The
meaning of this phrase is clear and unequivocal on its face. A person must be
employed—working at a paying job. "Employment" is "[t]he quality, state, or
condition of being employed; the condition of having a paying job." Black's
Law Dictionary 663 (12th ed. 2024).
Mayer has not been employed by the State since her retirement almost
three years ago. In addition, the Board has not demonstrated an expansive
interpretation of "[e]mployment or reemployment" is necessary to safeguard
the qualified status of PERS.
In short, the unique process required to attain a Superior Court judgeship
prevents a person from making an "arrangement" for the position. They must
run the uncertain and unforeseeable gauntlet of politics and unknown
roadblocks that may or may not finally result in a gubernatorial nomination
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and subsequent Senate confirmation. The individual has no control over the
ultimate decision—that is left to the political entities and ultimately the full
Senate.
The Board unreasonably misinterpreted its own regulations by inserting
new language into a clearly written provision. Mayer did not arrange for re -
employment with the State prior to her retirement date. She did not begin
employment with the State even after securing a new position. Therefore, she
has not violated N.J.A.C. 17:1-17.14(a)(2). Mayer is entitled to accept the
judgeship by taking the judicial oath of office without foregoing her PERS
pension and benefits.
The Board acted arbitrarily, capriciously and unreasonably under the
presented circumstances.
Reversed.
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