COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. Division of Administrative Law Appeals

John F. Scaduto,

Petitioner

v. Docket No. CR-07-493

Boston Retirement Board,

Respondent

Appearance for Petitioner:

Michael C. Akashian, Esq.

Landman Akashian LLP
77 Summer Street
Boston, MA 02110

Appearance for Respondent:

Edward McKenna, Esq.

66 N Street
South Boston, MA 02127

Administrative Magistrate:

Sarah H. Luick, Esq.


SUMMARY OF DECISION

Although Petitioner's holiday, uniform allowance and sick time buy-out pay differentials in his union contract are not regular compensation, his educational, longevity, public safety, and shift commander pay differentials are regular compensation, and should have been included in the calculation of his retirement allowance. Despite inquiring before he received his first retirement check which if any of his pay differentials were part of his retirement calculation, Petitioner never received a response in writing from Respondent. Although the appeal was filed months after the first retirement check was received, Petitioner's appeal is timely filed.


DECISION

Pursuant to G.L.c.32, §16(4), Petitioner, John Scaduto, is appealing the calculation of his retirement allowance by Respondent, Boston Retirement Board, as not including all the union contract pay differentials he received. He discussed his contention with Respondent after receiving an estimate of his retirement allowance, but never received a written response from Respondent. He filed an appeal after he began receiving his retirement allowance. A hearing was held December 16, 2008, at the offices of the Division of Administrative Law Appeals (DALA), 98 North Washington Street, 4th Floor, Boston, MA 02114, pursuant to G.L.c.7, §4H.

Various documents are in evidence. (Exs. 1 - 11.) One tape was used. The parties file pre-hearing memoranda. (Exs. A & B.) Petitioner testified and presented the testimony of Gary Bolles and Richard Brown, both co-workers who were involved as union negotiators on the collective bargaining agreements (CBA) covering Mr. Scaduto's last three years of employment. The parties made arguments on the record. The record was held open for additional evidence, and for the filing of briefs by January 31, 2009. No briefs were filed.

FINDINGS OF FACT

1. John F. Scaduto, d.o.b. 3/9/58, worked for the Suffolk County Sheriff's Department with Boston Retirement System membership, from 1991 for fifteen years. He last worked at the level of a Correction Officer/Captain and Shift Commander. He held prior employment as an Intermittent Part-Time Police Officer in Billerica, as a
Correction Officer for the Department of Correction, and as a Correction Officer/
/Sergeant for the Middlesex County Sheriff's Department. (Exs. 2, 3 & 9. Testimony.)

2. Mr. Scaduto retired effective December 2, 2005 under Option B. He received a Group 4 job classification at the time of his retirement. (Exs. 2, 3, 8 & 9. Testimony.)

3. While working for the Suffolk County Sheriff's Department, Mr. Scaduto was a union member and served as a union negotiator for the 2003-2005 CBA. This CBA was not signed until after his retirement on December 28, 2005, but contained some retroactive pay increases he was entitled to. The previous CBA covering 2000-2003 remained in effect until the subsequent CBA was approved. (Ex. 11. Testimony.)

4. The 2000-2003 CBA provided Mr. Scaduto with a base salary and various pay differentials. His employer took retirement deductions from his base salary and from some but not from all of the pay differentials he received. Mr. Scaduto's 2005 pay stubs did not show which differentials had retirement deductions taken from them. The union negotiators for the 2000-2003 CBA and for the 2003-2005 CBA, tried unsuccessfully to have the employer recognize all the pay differentials as subject to retirement deductions. (Exs. 4 & 11. Testimony.)

5. The pay differentials Mr. Scaduto received through the time of his
retirement included those for education, longevity, uniform allowance, public safety, shift commander, and fitness. He also received holiday pay and sick time buy-outs. (Exs. 4, 5 & 11. Testimony.)

6. Effective September 3, 2005, the public safety pay differential was incorporated into the base pay amount and was no longer listed in the CBA as a pay differential. (Exs. 4 & 11. Testimony.)

7. Mr. Scaduto's pay stub for the pay period that ended December 9, 2005, reflected a total gross pay of $91,214.24. Mr. Scaduto's statement of account with the Boston Retirement System for the calendar year ending December 31, 2004 listed an accumulated deductions balance as of December 31, 2003 of $84,383.96. The December 31, 2004 balance was $90,753.15. He contributed $5,862.89 in deductions during 2004. (Exs. 4 & 7. Testimony.)

8. The CBA at Article XIX, Section 1 sets forth pay scales that list the annual base salaries. With at least ten years of service, according to Article XIX, Section 2, Mr. Scaduto was "placed in the maximum of the grade to which … [he was] permanently appointed." The top grade he held was CO-5. This is the Correction Officer/Captain level. By July 2002, the top step was $1,254.28. During Mr. Scaduto's last three years of work, he was at the top step, and his base salary increased from $1,254.28 to $1,291.91, to $1,353.51, and then to $1,380.58 by October 1, 2005 due to receipt of retroactive pay increases. (Exs. 4, 5 & 11)

9. The CBA at Article XIII, Section 1 lists thirteen paid holidays. Section 2 explains that if a holiday falls on a regularly scheduled work day or during vacation, the employee receives "an additional day-off or an additional day's pay." Section 5 provides for overtime rates of pay if the employee "works on Thanksgiving Day, Christmas Day, or New Year's Day." Mr. Scaduto received $2,226.31 for holiday pay in 2004, and $1,536.47 in 2005. (Exs. 4, 5 & 11.)

10. The CBA at Article XV, Section 5 addresses an "Annual Redemption of Sick Leave:"
A. An employee who has used fewer than five (5) sick days in the twelve-month
period ending December 31 of any year … may elect to redeem sick days in a
lump-sum cash payment ….

Section 5 also contains an alternative to this lump-sum cash payment:

B. [A]n employee may elect to convert such leave to vacation on a one-for-one
basis …

At Section 6, the following provision is included:

A. As of the effective date of the retirement … the County shall redeem a percentage of the employee's accrued but unused sick leave ….

(Ex. 11) Mr. Scaduto received a sick time buy-out in each of the years, 2003-2005, of $1,505.13. (Exs. 4 & 5.)

11. The CBA at Article XVIII, Section 3 at A provides payments regarding uniforms. If the employee is required to wear a uniform, he receives "an annual uniform allowance." The allowance is "an annual lump sum amount for the purchase of uniform items and an hourly differential for the upkeep of uniform items." At Section 3, A, 1, the amount of the annual lump sum is $450.00 "payable no later than the first pay period in January of each year." At Section 3, A, 2, "[T]he hourly differential … [is] $.22 for all regularly-scheduled hours actually worked." Mr. Scaduto received a uniform pay differential of $8.80 per week. Section 3, C provides that when the employee retires, "the allowance payable for the calendar year will be prorated and paid to him …." (Exs. 4, 5 & 11.)

12. The CBA at Article XIX, Section 7 sets forth a longevity program. Mr. Scaduto had at least ten but under fifteen years of service. Section 7, B provided him with $520.00 per year, "made to employees on the anniversary dates of their employment." He received this pay in each year, 2003-2005. (Exs. 4, 5 & 11.)

13. The CBA at Article XIX, Section 11 provides a pubic safety differential
to "all members of the bargaining unit … of $1.54 per regularly-scheduled hour actually
worked." Mr. Scaduto received a public safety differential of $61.40 per week until the
public safety differential became part of the base salary. (Exs. 5 & 11. Testimony.)

14. The CBA at Article XIX, Section 12 provides "an educational incentive
differential" for those bargaining unit members with advanced academic degrees. For a bachelors degree, the employee receives "$1.20 per hour for all regularly-scheduled actual hours worked." A side letter to the 2000-2003 CBA contains a provision that bargaining unit members having a minimum of fourteen years as a Lieutenant or Captain will be paid at the rate of bachelor's degree. Mr. Scaduto was paid the incentive at the associates degree level of $28.80 per week in 2002, but at the bachelors degree level of $48.00 per week by 2005 due to his work experience. (Exs. 5, 6 & 10. Testimony.)

15. The CBA at Article XIX, Section 15 provides for a "Fitness Bonus." There is "a cash payment of $800.00 payable no later than December 15th each year" when the employee passes the annual requirement of a wellness and fitness program. Mr. Scaduto always passed the program to receive this lump sum payment. He received $800 for each year, 2003-2005. (Exs. 5 & 11. Testimony.)

16. The CBA at Article XIX, Section 10, at A provides a "$1.00 differential paid to shift commanders for all regularly-scheduled hours actually worked." Mr. Scaduto received this recurrent pay differential at $6.00 per week for each year, 2003-2005. (Exs. 5 & 11. Testimony.)

17. Mr. Scaduto filed for retirement with the Boston Retirement Board, and in February 22, 2006, the Board provided him with a "Retirement Option Selection Form" with estimated amounts under the three retirement options. He chose Option B and signed the form on March 7, 2006. Mr. Scaduto wrote next to his signature: "I do not agree with presented figures and will be appealing." He submitted the form, and a Board staff person signed-off on his selection on March 9, 2006. The Board did not respond to his statement. (Exs. 2 & 3. Testimony.)

18. Thereafter, Mr. Scaduto had talks with staff at the Boston Retirement Board to learn which pay differentials had been included and which had been excluded as regular compensation in calculating his retirement allowance. He never received a response in writing from the Board. (Exs. 2, 3 & 9. Testimony.)

19. Mr. Scaduto received his first retirement allowance check sometime in 2006. During 2005 and 2006, Suffolk County Sheriff Department Correction Officer/Captains, Robert T. O'Brien and Gary Bolles, and a Correction Officer I, John O'Callaghan, after they began receiving their retirement allowance checks, filed appeals with CRAB because they contested the Boston Retirement Board's calculation of their retirement allowances as leaving out the pay differentials they had received. Mr. Scaduto had received these same pay differentials. He had already retired but had not yet received his first retirement check when he learned about these CRAB appeals. (Testimony)

20. The DALA decision in Mr. O'Brien's appeal, O'Brien v. Boston Ret. Bd.,
CR-06-60, was issued on March 2, 2007. Mr. Scaduto learned the outcome of the DALA decision in Mr. O'Brien's case, understanding that at least some of the excluded pay differentials he and Mr. O'Brien had both received were found to be regular compensation that had been erroneously excluded from the calculation of Mr. O'Brien's retirement allowance (Administrative Notice of CR-06-60. Testimony.)

21. Because his co-workers had appealed, and because he understood Mr.
O'Brien had prevailed in his appeal, Mr. Scaduto decided he would also contest the calculation of his retirement allowance. He filed an appeal with CRAB on July 3, 2007. At that time he had no knowledge of the outcome of the appeals of Mr. Bolles and Mr. O'Callaghan. (Ex. 1. Testimony.)

Conclusion

TIMELINESS OF APPEAL

I find the appeal filed by Mr. Scaduto of the calculation of his retirement allowance to be timely pursuant to G.L.c.32, §16(4).

Mr. Scaduto wrote on his retirement option selection form in March 2006 that he questioned the correctness of his estimated retirement allowance. He also spoke to staff at the Boston Retirement Board at and around that time about which of his pay differentials had been included and which had been excluded in the estimated retirement allowance information he had received. No written response was ever provided to him by the Board. He received his first retirement check sometime in 2006. At that time he still had no idea what was included or excluded in the retirement calculation from among the pay differentials he had received. He was aware that fellow retiring Suffolk County Sheriff Department co-workers with the same concerns he had about exclusion of most of the pay differentials in the calculation of their retirement allowances, had filed appeals with CRAB during 2005 and 2006. He also learned that Mr. O'Brien's appeal had resulted in a DALA decision where some of the pay differentials the Boston Retirement Board had excluded were now to be included in calculating Mr. O'Brien's retirement allowance. He decided when he knew all this that he would also file an appeal with CRAB.

Mr. Scaduto is seeking correction of an error in how the Boston Retirement Board calculated his retirement allowance. See, G.L. c. 32, § 20(5)(c)(2). Because Mr. Scaduto never received anything in writing from the Board in response to his inquiries about the pay differentials being treated as regular compensation, and in light of the Board never providing him with any right to appeal the Board's calculation of his retirement allowance, I find the appeal is timely filed. G.L. c. 32, § 16(4) recognizes that the member is entitled to get notice from the retirement board about how it has acted against his interests before he must decide whether or not to appeal his grievance to CRAB within fifteen days after receipt of that notice. Respondent failed to provide this notice to Mr. Scaduto at any time.


MERITS

In terms of the various pay differentials Mr. Scaduto received, a number of them should have been included as regular compensation in his retirement calculation, but were not. This is an error on the part of the Boston Retirement Board that can now be corrected pursuant to G.L. c. 32, § 20(5)(c)(2).
In pertinent part, G.L. c. 32, § 1 defines regular compensation as follows:
the salary, wages or other compensation in whatever form, lawfully determined for the individual service of the employee by the employing authority, not including bonus, overtime, severance pay for any and all unused sick leave, early retirement incentives, or any other payments made as a result of giving notice of retirement, … In the case of police officers, firefighters and employees of a municipal department who are employed as fire alarm signal operators or signal maintenance repairmen, money paid for holidays shall be regarded as regular compensation rather than as overtime and shall be included in the salary on which deductions are to be paid to the annuity savings fund ….

The case of Boston Association of School Administrators and Supervisors v. Boston Retirement Board, 383 Mass. 336, 341 (1981), explains how payments such as the pay differentials Mr. Scaduto received have to be routine, regular, repeat, predictable, automatically given out, and not just paid to one employee. Whether or not retirement deductions were taken from the amounts received for the differentials each year is not dispositive of whether or not the payments are regular compensation. Bower v. CRAB, 393 Mass. 427, 428 (1984). The more recent case of Bulger v. CRAB, 447 Mass. 651, 656 and 658 (2006) re-affirms the determinations made in these two cases as to what regular compensation can include, while recognizing that employees may be paid for their work in distinct ways, and not just in cash salaries.

PERAC's regulation on regular compensation is consistent with these case law
interpretations that call for the payments to be recurrent, ordinary and automatic in how they are received. The regulation also provides direction to determine whether a payment is regular compensation. 840 CMR 15.03(1)(a)(1) through (5) explains the payment must have been paid to the member, been paid for services the member provided, be made as per the terms of a CBA, and be available to all members similarly situated such as a longevity payment provision in a CBA where recurrent payments are made based on length of service. 840 CMR 15.03(c) permits inclusion of lump sum and retroactive payments that would have been regular compensation if received at the time the services were rendered. 840 CMR 15.03(d)(1) through (6) includes further examples of what is regular compensation when "the general criteria in 840 CMR 15.03(1)(a) through (c)" have been satisfied. Included are the annual salary from an approved salary schedule, amounts paid as educational incentives, amounts paid for length of service, and amounts paid as premiums for shift differentials.

On the other hand, 840 CMR 15.03(2)(a) through (g) lists examples of "extraordinary ad hoc" payments that will not be regular compensation. Included are pay for working beyond the normal work schedule, premiums paid for working holidays other than if the pay is authorized by law, bonuses, payments in lieu of or for unused vacation or sick time, or for other leaves, severance pay, amounts received as an early retirement incentive, and amounts received as a result of the member having given notice of retiring.


The educational differential in the 2000-2003 CBA satisfies the regular compensation test. Mr. Scaduto has an associate's degree, but he also satisfied the criteria of the side letter in the CBA once he had fourteen years of service as a Captain to be paid at the bachelor's degree level. He did not need to do anything extra at work to secure it. It was regular, predictable, and automatic, and he was not singled out for this benefit. The $28.80 per week extra pay, and later, the $48 per week extra pay, are regular compensation. The PERAC regulation on regular compensation is satisfied because the Payment was recurrent, was addressed within the CBA, and was to be paid to all employees similarly situated. 840 CMR 15.03(1)(a) through (c).

The longevity differential Mr. Scaduto received is regular compensation. It was paid out annually and automatically to all employees. It was not paid out in a higher amount once the employee gave notice of retirement, and the specific length of service criteria that triggered entitlement to a particular level of payment shows it was not in the nature of a bonus or ad hoc payment. Christenson v. CRAB, 42 Mass. App. Ct. 544, 548 (1997). Likewise, the public safety and shift commander pay differentials Mr. Scaduto received are regular compensation. Both were within the CBA, and both were regular, recurrent and automatically given out. Neither of these benefits were unique to Mr. Scaduto, or given to him in contemplation of his retirement. Rather, these pay differentials were directly tied into his base salary level. These pay differentials satisfy the criteria of 840 CMR 15.03(1)(a) through (d).

In contrast to these differentials is the Fitness Bonus. It does not meet the test to be regular compensation. It was only received when the employee passed the annual fitness test, so that it was not given out automatically, or regularly, and was not necessarily recurrent to each and every employee subject to Mr. Scaduto's CBA. Also, as per G.L. c. 32, § 1 and the definition of regular compensation, the payments for the thirteen holidays cannot become part of Mr. Scaduto's retirement calculation. Section 1 is specific in only including holiday pay as regular compensation for police officers, fire fighters and other employees of municipal departments who work as signal operators or signal maintenance repairmen. Captains/Shift Commanders/CO-5 employees of the Suffolk County Sheriffs Department do not satisfy that criteria. Otherwise, this same provision refers to holiday pay as overtime pay which is specifically excluded from being regular compensation under Section 1. Also, the sick time buy-outs that Mr. Scaduto received cannot be regular compensation due to the clear language in the G.L. c. 32, § 1 definition of regular compensation that excludes sick time buy-outs. It is in the nature of being "severance pay for any and all unused sick leave." It does not matter that to receive it, the employee had not given notice he is retiring. It converts sick leave time
into a cash payment. It is also not automatic, and need not occur so that sick leave time
can continue to increase. 840 CMR 15.03(2)(d).

These conclusions parallel those reached in the cases of O'Brien, supra, and Bolles v. Boston Ret. Bd., CR-06-389 (DALA, 2007). Mr. O'Brien and Mr. Bolles were also Suffolk County Sheriff's Department employees who by the time they were retiring were Captains and Shift Commanders subject to the same 2000-2003 CBA as Mr. Scaduto. Mr. O'Callaghan's appeal, O'Callaghan v. Boston Ret. Bd., CR-06-613 (DALA, 2008), was also successful in terms of the wrongful exclusion from his retirement calculation of his longevity payment, but consistent with O'Brien and Bolles in not finding his fitness and holiday pay differentials to be regular compensation.

In O'Brien, Bolles and O'Callaghan the uniform allowance was found to be regular compensation. But, these cases were decided before the case of Pelonzi & PERAC v. CRAB, 451 Mass. 475 (2008). Mr. Pelonzi sought to include in his retirement calculation as regular compensation, the value of the personal use of a car he was provided by his employer to carry out his duties, including being "on-call" at all times in the event of an emergency. To be able to have personal use of this car was included in his employment contract, but the Court concluded the value of this benefit was not regular compensation because the personal use of the car was not payment for services. The Court explained:
[T]he city contemplated the automobile as a tool, or piece of equipment, that would enable … [Mr. Pelonzi] to perform his job more effectively …. [It] was
not intended to compensate … [him] for his service to the city … but rather given to him to use in connection with his professional duties.

Id at 480. The ruling in this case has since been followed to also prevent the value of the use of a parking space provided to help the worker perform her duties from being regular compensation. Parente v. State Bd. of Ret., CR-08-187 (DALA, 2008); Patz v. State Bd. of Ret., CR-07-297 (DALA, 2008).


The reasoning in Pelonzi, supra, will prevent the uniform allowance Mr. Scaduto received from being regular compensation. He received the annual lump sum allowance to purchase the uniform he had to wear and the pay differential to maintain the uniform. The uniform, like the car in Pelonzi, is a tool or piece of equipment required to be used by Mr. Scaduto in performing his job and not pay for working at his job.

In light of the foregoing discussion, the case is remanded to the Boston Retirement Board to re-calculate Mr. Scaduto's retirement allowance to include the educational, longevity, public safety, and shift commander pay differentials as regular compensation, but to exclude from regular compensation the holiday pay, fitness bonus, uniform allowance and differential, and sick time buy-outs.

SO ORDERED.

DIVISION OF ADMINISTRATIVE
LAW APPEALS


/s/
Sarah H. Luick, Esq.
Administrative Magistrate

DATED: July 24, 2009