COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Division of Administrative Law Appeals
Richard J. Anderson,
v. Docket No. CR-04-353
Newton Retirement Board,
Appearance for Petitioner:
Richard J. Anderson, pro se
3 Danecca Drive
Whitman, MA 02382
Appearance for Respondent:
Marie M. Lawlor, Esq.
City of Newton Law Department
1000 Commonwealth Avenue
Newton, MA 02459
Sarah H. Luick, Esq.
Pursuant to G.L.c.32, §16(4), the Petitioner, Richard J. Anderson, is appealing the April 5, 2004 decision of the Respondent, Newton Retirement Board, denying inclusion as regular compensation for purposes of his retirement allowance calculation, a one time payment he received of $3,000. (Ex. 1) The appeal was timely filed. (Ex. 2) A hearing was held October 11, 2007 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 - 14) The parties entered into some agreements of facts. ("A") One tape was used. The Petitioner testified. Both parties made arguments on the record.
FINDINGS OF FACT
1. Richard J. Anderson, d.o.b. 6/16/42, worked for the Newton School Department from September 1968 to October 21, 2003. He last worked in the job of Data Processing Systems Manager. ("A". Exs. 9, 11, 12 & 14. Testimony)
2. Mr. Anderson held civil service status in the job of Data Processing Systems Manager. He was not a member of a union with a collective bargaining agreement. (Exs. 11 & 12. Testimony)
3. In and around 1990-1991, Mr. Anderson's position was labeled as having an unaligned status by the City of Newton. A memorandum issued on October 12, 1990 from the Newton Division of Personnel addressed the unaligned positions. The report noted the positions had standard benefits including; a month of vacation when the employment is for twelve months, fifteen days a year sick leave "with unlimited accumulation," and medical insurance and life insurance "on standard terms afforded by the City of Newton plan(s)." A meeting was held November 5, 1990 to discuss these positions and to address basic employment conditions as well as similarities or differences among positions such as managerial or confidential, civil service support positions, and administrative support positions. The meeting also discussed the before and after collective bargaining era conditions of employment. The report acknowledged that these employees could gain membership in the Newton Retirement System. (Exs. 5 & 13. Testimony)
4. The results of the meetings were that three groups of employees emerged "from eleven (11) non-aligned positions." One group of three jobs called Confidential Managerial Positions did not include Mr. Anderson's job as they were positions exempt from civil service. Another group with five positions was called Civil Service Appointment Positions. This group included Mr. Anderson's job, which was called Manager of Computer Services. These positions all carried civil service law protections. The last group was called Administrative Support Positions, and included three positions. These were non-civil service jobs. These three jobs were viewed as "at will" employment positions to be "renewed by annual appointment action." The results included not agreeing to a past practice demand that the benefits that other Newton employees receive, including the union employees, should also be received by these unaligned employees. The report results found this "umbrella" approach to be "inappropriate." (Ex. 13)
5. Mr. Anderson as an unaligned employee had an individual conference regarding his work in and around late 1990 - January 1991. (Exs. 5, 6 & 7. Testimony) He ended up being subject, along with the other three employees found to also be subject to civil service protections, to the following "standard benefits:"
Vacation … of one month … for 12-month employees …
Personal Sick Leave … 15 days per annual employment
period with unlimited accumulation …
Personal Business Leave allowance …
Medical Plan coverage and Life Insurance allowance … on
standard terms afforded by the City of Newton plan(s) …
Access to full-contributory annuity plans …
Retirement system membership on a full contributory basis …
Within the City of Newton … Retirement System … (Ex. 7)
No longevity payments were included. (Ex. 7)
6. A collective bargaining agreement entered into in April 2001 between the Newton School Committee and the Newton Teachers Association Union/Unit E, covered the following positions with the Newton School Department; "Administrative Technology Aide, Network Specialist, Administrative Information Specialist/Trainer, Financial Analyst, Transportation Assistant, coordinator of Transportation & Purchasing, Theater Technical Assistant, Children's Program Coordinator, Senior Adult Program Coordinator, Adult/ESL Program Coordinator, Newton Community Education Administrative Assistant, Lifetime Learning Program Coordinator, School Information Specialist, Production Center Manager, Support Services Project Assistant, Instructional Technology Support Aide, Student Information Specialist Assistant, and Creative Arts Committee Coordinator." This employment contract contained a longevity clause at Article 28. The employee with at least ten years of service could receive longevity pay increments. The payments were made on a "pro-rata basis," and "on or before December 1 of each year." There was also an enhanced longevity clause for Unit E members with at least fifteen years of service. (Ex. 8) They could, elect an increase in their longevity payment of up to $1,000 per year for up to three (3) consecutive years in addition to the [regular] longevity payments … Unit E members who wish to exercise this option must notify t he Superintendent in writing by February 15 of the school year preceding the school year in which the longevity under this option is to be paid. (Ex. 8)
7. Due to budgetary financial constraints, Mr. Anderson learned that his particular job was going to stop as of the close of May 2003. There was though, a new position that was being created called, Manager of Information Systems within the Newton School Department. Mr. Anderson felt this was basically the same job he had been performing. He was told about this event by the Superintendent at or around the time budget matters were being discussed, about six months prior. Mr. Anderson decided that if his particular job was going to be abolished that he would consider retiring if Newton was going to adopt an Early Retirement Incentive Program. The City of Newton ended up not having this program. At and around that time, Mr. Anderson needed only a year or two more time on the job to reach an 80% level of retirement benefit. Mr. Anderson received his written notice that his position was going to be abolished. The new job was posted the next day. He did not apply for this job. He does not recall receiving any civil service rights in regard to this job action. ("A". Testimony)
8. This course of events lead Mr. Anderson to enter into an agreement with his employer to provide him with an ability to continue working through the close of August 2003 as well as to continue to be on the payroll through October 21, 2003. In return for this agreement, Mr. Anderson signed a release that he was accepting this agreement in lieu of pursuing any other rights he might have in regard to his employment. (Ex. 4. Testimony)
9. Mr. Anderson entered into this termination agreement in November 2003. The Unit E Union was a signer on this agreement along with the School Department and Mr. Anderson. The written agreement was just covering Mr. Anderson's employment, and the agreement recognized that he would "be leaving the employ of the Newton Public Schools on or before August 31, 2003." (Ex. 4) It contained the following:
In recognition of his meritorious service … [the School Department] will pay a reduction in force severance bonus to Mr. Anderson, which shall be in addition to whatsoever other payments he may be entitled to under his individual employment contract … such as vacation pay, regular longevity pay, sick leave buy-back, retirement allowance and/or enhanced longevity …
The severance bonus shall be coordinated with the enhanced longevity plan and with the other contractual entitlements of Mr. Anderson in the following manner:
Richard Anderson shall remain on the payroll through August 31, 2003, using accumulated sick leave to cover the 43 workdays in July and August. He has 34 days of unused vacation as of June 30, 2003, which he shall use to stay on the payroll for an additional 34 workdays, at which time he shall leave the employ of the Newton Public Schools. In addition, he shall receive a $3,000 longevity payment …
As a condition of receiving the foregoing reduction in force severance payments, Mr. Anderson will sign a release of all claims of any kind against the [School Department] …. (Ex. 4)
10. Mr. Anderson filed for superannuation retirement for an effective date of retirement of October 21, 2003. The Newton Retirement Board voted to approve this retirement and to be effective October 21, 2003. ("A". Exs. 9, 10 & 12)
11. Mr. Anderson chose an Option A retirement allowance. The Newton Retirement Board provided an estimated calculation on the amount of his allowance that factored into it as regular compensation the $3,000 longevity payment he received in his November 2003 agreement. (Exs. 11, 12 & 14)
12. Then, in February 2004, the Newton Retirement Board sought Mr. Anderson's individual agreement from November 2003 from the Newton School Department. The Board explained that they now understood Mr. Anderson "was issued a one-time $3,000 payment on 10/31/03 that will have to be reviewed for a determination as to whether the School Dept. used proper payroll classification as pensionable earnings." Retirement system deductions had been taken out of the $3,000 payment by the Newton School Department. (Exs. 1 & 3)
13. Thereafter, the Newton Retirement Board recalculated Mr. Anderson's retirement allowance without inclusion of the $3,000 longevity payment. This lowered his overall retirement allowance under Option A. (Ex. 12)
14. By letter of April 5, 2004, the Newton Retirement Board informed Mr. Anderson that this $3,000 one time payment could not be included in his retirement calculation. The Board noted how he never received "a recurring longevity payment while employed by the Newton School Dept." The Board found this one time payment was not meeting the necessary standard of being "regular and recurring." Mr. Anderson was provided with his rights to appeal this determination. (Ex. 1)
15. Mr. Anderson filed a timely appeal. (Ex. 2)
The definition of regular compensation in G.L.c.32, §1 excludes "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." The regulations of the Public Employee Retirement Administration Commission (PERAC) at 840 CMR 15.03 addresses regular compensation. 840 CMR 15.03(2)(f) states: "Any other payments made as a result of the member giving notice of retirement" are excluded. 840 CMR 15.03(1)(d)(5) does permit longevity payments to be regular compensation. But, the label of the payment as longevity cannot make an otherwise non-regular compensation payment connected to the fact of the member retiring, regular compensation.
In Boston Association of School Administrators and Supervisors, et al v. Boston Retirement Board, et al, 383 Mass. 336, 341 (1981), the Supreme Judicial Court addresses the issues pertinent to determining whether Mr. Anderson's one time $3,000 payment called a longevity payment, can be viewed as regular compensation for retirement purposes. The Court explained that regular compensation has to "safeguard against the introduction into the [retirement] computations of adventitious payments to employees which could place untoward, massive, continuing burdens on retirement systems." The Court explained that regular compensation means;
Recurrent or repeated amounts of compensation not inflated by extraordinary ad hoc payments. This view is confirmed when we go to the definition of "regular compensation" in section 1. The last generic phrase takes its color of meaning from "salary" and "wages" … and the whole refers to remuneration geared to work
or services performed; moreover "regular" as it modifies "compensation," imports the idea of ordinariness or normality as well as the idea of recurrence. All this contrasts with "overtime" and with the compendious "bonus" which are to be excluded from the compensation that figures in computing retirement benefits ….
The case of Christensen v. Contributory Retirement Appeal Board (CRAB), 42 Mass.App.Ct. 544 (1997) involved a new longevity plan and a teacher who was subject to a collective bargaining unit and not to an individual contract. The Appeals Court found this longevity plan did provide to Ms. Christensen an actual longevity payment and so was not a payment to her in contemplation of her retirement even if it worked to boost her retirement allowance. The Court found the payments were "based exclusively on longevity and do not inherently operate to augment retirement pay." Id., at 548. This requirement of being exclusively a longevity payment is addressed in the case of Barry v. Teachers' Retirement Board, CR-00-1115 (DALA, 9/7/01) (No CRAB Decision ) A large salary increase was found not to be regular compensation for retirement purposes.
There is a definite link between the … salary increase and Petitioner's final year of employment, unlike the situation in Christensen … the Petitioner's 12% salary increase was a one time, extraordinary payment made to convince him to remain for the full school year. Id., at 6.
No evidence shows Mr. Anderson would have received the $3,000 longevity payment but for his retirement and the termination agreement benefits package he received in exchange for him taking no action to challenge the abolition of his position. He argues he was for years wrongfully excluded from receipt of such benefits like longevity pay which other Newton School Department employees receive. That reasoning cannot transform the reality that it was a one-time only payment directly connected to his retirement. It is not G.L.c.32, §1 regular compensation.
For these reasons, the decision of the Respondent Board is affirmed.
DIVISION OF ADMINISTRATIVE LAW APPEALS
Sarah H. Luick, Esq.
DATED: February 1, 2008
This information is provided by the Division of Administrative Law Appeals.