COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. DIVISION OF ADMINISTRATIVE LAW APPEALS


Appeal of:

Nicholas Salmon,


Petitioner

v. CR-07-484

Teachers' Retirement System and Fall River Retirement System,

Respondents

Appearance for Petitioner:

Brian Goldberg, Esq.,

Law Office of Patrick T. Matthews
251 Bank Street
Fall River, MA 02720

Appearance for Respondent:
Teachers' Retirement System:

Robert Fabino, Esq.

Teachers' Retirement System
One Charles Park
Cambridge, MA 02142

Appearance for Respondent:
Fall River Retirement System:

Lane Rideout, Esq.

285 College Highway
P.O. Box 479
Southampton, MA 01073

Administrative Magistrate:

Joan Freiman Fink, Esq.

SUMMARY OF DECISION

The Petitioner has not met his burden of demonstrating entitlement to purchase creditable service for the period of time that he served as a Health Educator for the City of Fall River from 1994 through 2002. During that period of time, the Petitioner was deemed an independent contractor and not an employee and as such, in accordance with the provisions of G.L. c. 32, § 3(5), he is not eligible to purchase this service.

DECISION

Pursuant to G.L. c. 32, §16(4), the Petitioner, Nicholas Salmon, is appealing the June 12, 2007 decision of the Respondent, Teachers' Retirement System, denying his request to purchase the service he rendered with the City of Fall River during the period of 1994 through 2002 as a Health Educator. The decision of the Teachers' Retirement System was predicated on the determination by the Fall River Retirement System that the Petitioner was not eligible for membership in its retirement system from 1994 through 2002 as he was deemed to be an independent contractor. The appeal was timely filed in accordance with the provisions of G.L. c. 32, § 16(4).

A hearing pursuant to G.L. c. 7 §4H was held on July 15, 2009 at the offices of the Division of Administrative Law Appeals, 98 North Washington Street, Boston, MA Various documents were entered into evidence at the hearing (Exhibits 1 - 15). The Parties' Joint Pre-Hearing Memorandum was marked as "A" for identification. The Petitioner, Nicholas Salmon, testified in his own behalf. One cassette tape recording was made of the hearing. The record was left open until August 21, 2009 for the filing of written closing memoranda and for the submission of Exhibit 15, the section of the Rules of the Fall River Retirement System relating to membership in 1994.

FINDINGS OF FACT

Based on the testimony and evidence presented, I make the following findings of fact:

1. The Petitioner, Nicholas Salmon, d.o.b. 2/4/66, commenced employment with the City of Fall River Board of Health in June of 1994 as a Health Educator. He was hired by the Board of Health on a year to year basis and was required to sign an employment contract each year. (Testimony of the Petitioner, Exhibit 13.)

2. The Petitioner's employment as a Health Educator was funded solely by a grant from the Massachusetts Tobacco Control Program. (Exhibit 13.)

3. The Petitioner's duties as a Health Educator entailed providing education to the community about the dangers of smoking. As part of his job responsibilities, the Petitioner set up educational programs at the public schools and also conducted tobacco compliance checks at local stores. (Testimony of the Petitioner.)

4. The official Job Description for the position of Health Educator provides that: "the educator will be responsible for most of the city's public health smoking program. They will perform surveys, interviews with the business community and general public at large and will work closely with unions; assist all non-smoking groups and educate all on second-hand smoke and all related health effects. Assist those who wish to kick the habit." (Exhibit 12.)

5. The job description for the position of Health Educator did not require that the individual holding the job possess a Department of Education certification (Testimony of the Petitioner; Exhibit 12.)

6. The Petitioner remained as a Health Educator with the City of Fall River Board of Health until August of 2002 when the grant that funded the Health Educator position expired. (Testimony of the Petitioner.)

7. Section III of the employment contract that the Petitioner signed each year with the City of Fall River Board of Health provided as follows: "The parties intend that an independent contractor/employer relationship will be created by this contract. Board is interested only in the results to be achieved, and the conduct and control of the work shall lie solely with the Educator. Educator is not to be considered an agent or employee of the Board nor of the City of Fall River for any purpose . . . ." (Exhibit 13.)

8. The Petitioner read each contract every year and understood the terms including the terms relating to his classification as an independent contractor. (Testimony of the Petitioner.)

9. The Petitioner was employed on a full-time basis as a Health Educator and worked from 9 a.m. to 4 p.m. five days a week. (Testimony of the Petitioner.)

10. The Petitioner received vacation leave and sick leave as well as health and dental insurance through the Massachusetts Tobacco Control Program Grant. (Exhibit 10.)

11. The Petitioner's office was located within the Fall River City Hall building. He had his own telephone extension and his office supplies were provided by the City of Fall River.

12. The Petitioner did not receive a W-2 from the City of Fall River. Rather, he received a Form 1099 each year. (Exhibits 10 & 11.)

13. The Petitioner never became a member of the Fall River Retirement System during his eight year tenure as a Health Educator with the Fall River Board of Health and did not have retirement deductions taken from his compensation. (Stipulation of the parties.)

14. After leaving his employment with the City of Fall River on August 30, 2002, the Petitioner accepted a position effective September of 2002 as a teacher/football coach with the City of New Bedford Public School System. He has remained a teacher/football coach with the City of New Bedford up to and including the present date. He became a member of the Teachers' Retirement System in September of 2002. (Testimony of the Petitioner.)

15. On June 8, 2006, the Petitioner filed an application with the Teachers' Retirement System to purchase his prior service with the City of Fall River as a Health Educator. (Exhibit 3.)

16. By letters dated January 24, 2007, and May 31, 2007, the Teachers' Retirement System asked the Fall River Retirement System whether it would accept liability pursuant to G.L. c. 32, § 3 (8)(c), for the Petitioner's prior service with Fall River. (Exhibit 5 & 6.)

17. The Fall River Retirement System denied the Teachers' Retirement System's request to accept liability for the Petitioner's prior service on the grounds that the Petitioner was an independent contractor as listed in his employment contract. (Exhibits 7 & 9.)

18. The Rules and Regulations of the Fall River Retirement System which were in effect in 1994 granted membership to employees who worked a minimum of twenty (20) hours per week. (Exhibit 15.)

19. On June 12, 2007, the Teachers' Retirement Board denied the Petitioner's request to purchase creditable service for the period of 1994 through 2002 when he was employed as a Health Educator by the City of Fall River Board of Health. (Exhibit 1.)

20. By letter dated June 12, 2007, the Petitioner filed an appeal of this decision with the Contributory Retirement Appeal Board. (Exhibit 2.)


CONCLUSION

There are two issues to be decided in this case: (1) whether the Fall River Retirement System properly determined that the Petitioner was not entitled to membership as a result of his employment as a Health Educator during the period of June of 1994 through August of 2002 because he was an independent contractor rather than an "employee," and consequently, whether the Fall River Retirement Board properly declined the request of the Teachers' Retirement Board to accept liability pursuant to G.L. c. 32, § 3 (8)( c ) for Mr. Salmon's work as a Health Educator; (2) whether the Teachers' Retirement System properly denied the Petitioner's request to purchase creditable service for his prior service as a Health Educator for the Fall River Board of Health between June of 1994 and August of 2002.

After reviewing the testimony and evidence presented in this appeal, I conclude that the Fall River Retirement System correctly determined that the Petitioner's service as a Health Educator to the Fall River Board of Health was performed as an independent contractor and not as an employee. As such, the Fall River Retirement System lacked the authority pursuant to G.L. c. 32, § 3 (2)(d) to grant him membership. I also conclude that since the Petitioner was properly excluded from membership with the Fall River Retirement System, he cannot purchase his prior service pursuant to G.L. c. 32 § 3(5). Therefore, the decision of the Fall River Retirement System declining to accept liability for this service at the request of the Teachers' Retirement System was proper. Finally, I conclude that the Petitioner is not entitled to purchase his service as a Health Educator with the Fall River Board of Health from the Teachers' Retirement System as he did not meet the definition of teacher as outlined in G.L. c. 32, § 1 and 807 CMR 4.02.

G.L. c. 32, § 3(5) provides in pertinent part that:

Any member of any system who had rendered service as an employee of any governmental unit other than that by which he is presently employed for any previous period … in a position which was not subject to an existing retirement system … or any member of any system who rendered service in any governmental unit other than that by which he is presently employed, in a temporary, provisional or substitute position and who was excluded from membership by the rules of any board, may before the date any retirement allowance becomes effective for him, pay into the annuity savings fund of the system …. (Emphasis supplied.)

In order for the Petitioner to receive creditable service for his work as a Health Educator from 1994 through 2002, he must demonstrate that he was erroneously excluded from membership with the Fall River Retirement System or the Teachers' Retirement System pursuant to G.L. c. 32, § 3(2)(d); or assuming, for argument's sake, that he was ineligible for membership, he must demonstrate that he can purchase his non-membership service with the Teachers' Retirement System in accordance with the provisions of G.L. c. 32, § 3(5).
G.L. c. 32, § 3(2)(d) including its various subsections defines eligibility for membership in a retirement system. Section 3(2)(d) grants retirement boards the authority to "exercise full jurisdiction" with respect to the eligibility for membership of "part-time, provisional, temporary provisional, seasonal or intermittent employment or service of any employee in any governmental unit …." (Emphasis supplied.)

As a prerequisite for the exercise of jurisdiction by a board pursuant to Section 3 (2)(d) the person in question must be an employee of a governmental unit. (Emphasis supplied.) G.L. c. 32, § 1 defines employee as a person whose regular compensation is paid by any political subdivision of the commonwealth. G.L. c. 32, § 1 likewise defines regular compensation as "the salary, wages, or other compensation in whatever form, lawfully determined for the individual service of the employee by the employing authority."

DALA has traditionally held that work performed as an independent contractor does not fall within the meaning of employee as defined in G.L. c. 32, § 1 and as such, independent contractors are not entitled to membership in contributory retirement systems. In the case of Harriet Allen v. Middlesex County Retirement Board, CR-88-672 (DALA), aff'd (CRAB 1989), the Petitioner sought to purchase creditable service for the period of time that she worked as a psychologist with the Wilmington, MA school department. The Petitioner was denied the right to purchase this service as she was determined to be an independent contractor, not an employee, as she was hired and worked as a consultant and therefore was not eligible for membership in the retirement contractor.

In determining whether an individual is to be considered an employee or an independent contractor, it is necessary to consider the totality of the circumstances surrounding his or her employment. Kelley v. Rossi, 395 Mass. 659, 664 (1985.) In the case of Jeffrey Dinger v. Barnstable County Retirement Board, CR-05-60 (DALA 2005), Mr. Dinger sought to purchase creditable service for the period of time that he was employed by the Special Sheriff of Barnstable County to manage the adult education program at the County Jail and House of Correction. DALA held that Mr. Dinger was an independent contractor based on the employment agreements that he signed that listed him as an independent contractor as well as the fact that he received no benefits and his failure to demonstrate that his contract work was the same work performed by regular employees. In Dinger, DALA noted that there are many factors to be considered in determining whether someone is an employee or an independent contractor including:
Whether the person was employed for an indefinite period of time, or served for a specific period of time under a contract, and whether or not the person was eligible for benefits such as sick leave or health insurance. Decisions have considered whether a person received a W-2 form or a 1099 form, whether a person worked during regular business hours and whether an employee was eventually hired as a permanent employee with retirement membership for the same work for which he seeks creditable services. Decisions focus on whether wages were subject to availability of grant monies leading to an element of uncertainty of funding.

After careful consideration of the facts in this case, I conclude that the Petitioner was an independent contractor, rather than an employee, during the course of his employment as a Health Educator. Consequently, the Fall River Retirement System lacked the authority pursuant to G.L. c. 32, § 3(2)(d) to grant him membership as the Rules and Regulations of the Fall River Retirement System in effect during the relevant period of time provided that in order a member of the system, an individual must be an employee who worked a minimum of twenty hours per week.

In the current case, the totality of the circumstances surrounding Mr. Salmon's work as a Health Educator support the finding that he was an independent contractor and not an employee.

In the first instance, Mr. Salmon worked as Health Educator for the Fall River Board of Health pursuant to yearly employment contracts. (Exhibit 13.) These employment contracts unequivocally and unambiguously provided that Mr. Salmon's employment was as an independent contractor and not as an employee. Section III of the employment contract provided as follows:
The parties intend that an independent contractor/employer relationship will be created by this contract. Board is interested only in the results to be achieved, and the conduct and control of the work shall lie solely with the Educator. Educator is not to be considered an agent or employee of the Board nor of the City of Fall River for any purpose and the Educator is not entitled to any of the benefits that Board or the City of Fall River provides for any of their respective employees. It is further understood that Educator is free to contract for other employment with other parties while under contract with the Board, provided said employment does not interfere with the obligations contained in this contract. (Emphasis supplied.)

At the hearing, the Petitioner testified that he read and thoroughly understood the terms of each employment contract prior to signing it including the Section that listed his employment status as an independent contractor as well as the Section confirming that the employment contract embodied the entire understanding between himself and the Fall River Board of Health.

The Petitioner further testified that he was aware of the fact that his continued employment with the Fall River Board of Health was totally contingent upon receipt of monies from the Massachusetts Tobacco Control Program Grant and that there was no guarantee that his employment would last longer than the term of the individual Employment Contract signed by the parties. No evidence was presented at the hearing to the effect that the position of Health Educator would be funded by any other source once the funding from the Massachusetts Tobacco Control Program Grant ended. Moreover, no evidence was introduced that the Fall River Board of Health had any ongoing program involving education of the public on the dangers of smoking other than the program specifically funded by the Tobacco Control Program Grant. The Petitioner testified that his employment ended in August of 2002 when he was informed that the funding from the Massachusetts Tobacco Control Program had in fact expired.

The employment contracts signed yearly by Mr. Salmon also provided that the control and conduct of the work he performed as the Health Educator lay solely within his own discretion. Thus, although the general parameter of the work he was expected to work was outlined in his written job description, the Petitioner was granted discretion as to how to accomplish his mission to educate the public as to the dangers of smoking. In addition, the employment contracts explicitly provided that Mr. Salmon was free to contract with other employers during the same period of time for additional employment as long as he met the requirements of his position as the Health Educator.

The City of Fall River Board of Health provided the Petitioner with yearly 1099 forms noting "nonemployee compensation" rather than W-2 forms. On the service purchase application form completed by the Petitioner with the Teachers' Retirement System, the Senior Accounting Clerk in Fall River, Claudia St. Pierre-Mello, wrote that the Petitioner's employment status was as a Consultant/Vendor, another indication that the Petitioner, as the Health Educator, was determined to be an independent contractor and not an employee of the City of Fall River. Moreover, the Petitioner's health and dental insurance were paid by the Massachusetts Tobacco Control Grant and not by the City of Fall River.
Arguing in his own behalf, the Petitioner notes that the existence of a written contract or the classification of an individual by an employer is not dispositive of the issue of whether the individual is an independent contractor or an employee.

In the case of Nielsen v. Westfield Retirement Board, CR-00-1026 (DALA 2001), an Inspector of Wires for the City of Westfield was found to be an employee even though he was referred to by his employer as a "vendor." See also Dana Crowley v. Contributory Retirement Appeal Board, 73 Mass. App. Ct. 1103 (2008).
Notwithstanding the Petitioner's argument, both the Nielsen case and the Crowley case are distinguishable from the current case. In Nielsen and Crowley, Mr. Nielsen and Ms. Crowley were treated as vendors, i.e., independent contractors, by their employing authority. Subsequently their status was changed to employee and they were permitted to become members of the retirement system. However, they performed the same exact work under the same exact working conditions both before and after they became members of their respective retirement systems. One of the important factors considered in both the Nielsen decision and the Crowley decision was whether the employer exerted control over the employee as to the details of the job performance as well as the parties' understanding of the nature of the relationship.

In this case, the Petitioner was completely cognizant of the fact that the employment contract explicitly referenced his position as an independent contractor. In addition, he exercised a degree of independence and self-control over his work performance.

For the foregoing reasons, I conclude that during the period of time that he served as a Health Educator with the Fall River Board of Health from 1994 through 2002, the Petitioner was an independent contractor, not an employee, and as such, he was not eligible to become a member of Fall River Retirement System based on this service.

I further conclude that the Fall River Retirement System properly declined the request of the Teachers' Retirement System to accept liability pursuant to G.L. c. 32, §3(8)(c) for this service.

The Petitioner is a current member of the Teachers' Retirement System as a result of his employment as a teacher/coach at New Bedford High School. He requested that the Teachers' Retirement System allow him to purchase creditable service for his work as a Health Educator for the Fall River Board of Health and consequently, the Teachers' Retirement System asked the Fall River Retirement System to accept liability pursuant to G.L. c. 32, § 3(8)(c).

Section 3(8)(c) provides in pertinent part that:
Whenever any retired member or beneficiary receives a pension or survivor's allowance from a system pertaining to one governmental unit in a case where a portion of such pension or survivor's allowance is attributable to service in a second governmental unit to which another system pertains, the first government governmental unit shall be reimbursed in full, … by the second governmental unit for such portion of the pension as shall be computed by the actuary…

The action of the Teachers' Retirement System in requesting that the Fall River Retirement System accept liability pursuant to Section 3 (8)(c) implies that the Fall River Retirement System would be considered the "second system" to which the second governmental unit pertains. However, the statute requires that the reimbursement sought by the Teachers' Retirement System be "attributable to service in a second governmental unit to which another system pertains." Since the Petitioner was not eligible to become a member of the Fall River Retirement System as a result of his employment as a Health Educator, the Fall River Retirement System is not required to reimburse the Teachers' Retirement System for this service. In McCarthy v. Taunton Retirement Board, CR-89-828 (DALA 1993), DALA held that "implicit in the meaning of the word 'pertains' [in § 3(8)(c)] is the concept of belonging or membership." In Hartnett v. Bristol County Retirement Board, CR-02-624 (DALA 2003), DALA held that "where a member of a retirement system seeks to buy back prior service in a different system, the 'different' system is not required to accept liability for that service where the former employee was not entitled to membership in that system when rendering that 'prior' service."

The Petitioner, currently a member of the Teachers' Retirement System as a result of employment as a teacher/coach at New Bedford High School, likewise was not eligible for membership with the Teachers' Retirement System during the period of time that he served as Health Educator with the Fall River Board of Health as he was not a "teacher" as that term is defined in G.L. c. 32, § 1 and 807 CMR 4.02. In accordance with the provisions of 807 CMR 4.02, an individual must meet the following criteria in order to qualify for membership with the Teachers' Retirement System:

1. The individual is covered by a contractual agreement for employment with one or more school committees or boards of trustees or by any combination of such committees and boards.

2. The contractual agreement requires not less than half-time service.

3. The individual holds a certificate granted by the board of education, has been granted a waiver pending certification by the board of education …

4. The individual has a contractual agreement which requires that the individual be certified by the board of education as a condition of employment.

In the current case, in his position as Health Educator, the Petitioner was not employed by a school committee or a vocational board of trustees nor did his position require certification by the Department of Education. As such, he was not eligible for membership with the Teachers' Retirement System during the period of time that he worked as a Health Educator with the City of Fall River Board of Health.

The decision of the Teachers' Retirement Board declining to grant the Petitioner creditable service for the period of time from 1994 through 2002 when he served as a Health Educator with the Fall River Board of Health is hereby affirmed.


SO ORDERED.

DIVISION OF ADMINISTRATIVE LAW APPEALS

Joan Freiman Fink
Administrative Magistrate

Dated: October 16, 2009