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The Petitioner, Joseph Zygmunt, appealed timely under G.L. c. 32, § 16(4) the May 2, 2007 decision of the Respondent, State Board of Retirement, to exclude "stand-by" pay in the calculation of his superannuation retirement benefits. (Ex. 1)
I held a hearing on June 18, 2008 at the office of the Division of Administrative Law Appeals, 98 North Washington Street, Boston. I admitted eight documents into evidence. (Exs. 1-8) The Petitioner testified on his own behalf. The Respondent called no witnesses. There is one cassette tape of the hearing.
Based on the evidence presented by the parties, I make the following findings of
1. Joseph Zygmunt, d.o.b. 10/3/38, worked at Quincy Mental Health Center from 1982 to 2004, when he retired. (Ex. 3)
2. During his tenure at Quincy Mental Health Center, a locked unit, Mr. Zygmunt worked in the maintenance department. In 1992, he was promoted to Institution Maintenance Foreman and remained in that position until his retirement. (Testimony)
3. Mr. Zygmunt supervised three employees: a painter, a handyman, and a steam fireman. Each of the employees, along with Mr. Zygmunt, performed whatever tasks were necessary for the maintenance of the facility. (Testimony)
4. The Official Position Description, Form 30, for Institution Maintenance Foreman lists the following duty: "1. Provides or arranges for on-call coverage on a 24 hour basis to handle emergencies, equipment or utilities problems at the facility." (Ex. 3)
5. On nearly all days during the year, Mr. Zygmunt provided the on-call coverage himself. When Mr. Zygmunt was not available for coverage, he would appoint one of his employees to provide coverage. (Ex. 7, Testimony)
6. Pursuant to Section 7.8 of his collective bargaining agreement, Mr. Zygmunt was compensated for the days that he provided on-call coverage. The agreement refers to coverage as "Stand-by Duty." He was paid $10.00 for each weekday and $20.00 for each weekend day or holiday that he performed stand-by duty. (Ex. 8, Testimony)
7. Section 7.8(D) of the collective bargaining agreement expresses a preference for the Institution Maintenance Foreman to perform stand-by duty. (Ex. 8)
8. When Mr. Zygmunt was on stand-by duty, he was issued a pager so that he could be contacted immediately. He was required to remain within one half hour of the Mental Health Center so that he could quickly respond to emergencies. (Ex. 8, Testimony)
9. Section 7.8(C) of the collective bargaining agreement provides: "If any employee assigned to stand-by duty is not available to report to duty when contacted, no stand-by pay shall be paid to the employee for the period."
10. Examples of emergencies that Mr. Zygmunt responded to are a clogged or damaged toilet, electrical problems, or a malfunctioning generator. (Testimony)
11. Mr. Zygmunt responded to approximately twenty-five to thirty stand-by calls each year. (Testimony)
12. Pursuant to the collective bargaining agreement, when Mr. Zygmunt responded to an emergency call, he was compensated for a minimum of four hours of work at time and a half. (Testimony)
13. According to the only payroll records in evidence, from January 2000 to March 2002, Mr. Zygmunt received stand-by duty pay (denoted by "SBY" and the dollar amount) nearly every week. The amounts vary according to the number and type of days that Mr. Zygmunt was on stand-by duty. (Ex. 7)
14. During the vast majority of weeks, Mr. Zygmunt was credited his weekly stand-by pay on Saturday. Though he was sometimes credited on other days, it is clear from the records that Mr. Zygmunt was only compensated once per week for whatever stand-by duty he performed that week.
15. Mr. Zygmunt submitted his Early Retirement Application on January 7, 2002 and retired effective March 15, 2002.
16. A Salary Request and Release Form originally addressed to Donna Shetler, a Department of Mental Health human resources officer, was filed with the State Board of Retirement on February 20, 2002. The regular compensation listed on the Form does not include any stand-by duty payments to Mr. Zygmunt. (Ex. 3)
17. When he was filling out his retirement application, someone told Mr. Zygmunt that his stand-by pay would not be included in the calculation of his pension because stand-by pay is not regular compensation.
18. On December 28, 2006, the State Board of Retirement received a letter from Mr. Zygmunt requesting that his stand-by pay be included as regular compensation for purposes of calculating his pension.
19. After Mr. Zygmunt submitted some payroll records to the Board, the Board, after taking a vote, denied his request in a letter dated May 2, 2007.
20. Mr. Zygmunt filed an appeal of the Board's decision with the Contributory Retirement Appeal Board on May 10, 2006.
The decision of the State Board of Retirement is reversed. The Board shall calculate the deductions that should have been withheld from Joseph Zygmunt's stand-by pay. After Mr. Zygmunt pays into the retirement system the deductions that should have been withheld, the Board shall recalculate Mr. Zygmunt's superannuation retirement allowance to include his stand-by duty pay as regular compensation. G.L. c. 32, § 5(2)(a) provides that a superannuation retirement allowance shall be "based on the average annual rate of regular compensation received by such member" (emphasis added) during the member's last three years, or highest paid three years, of creditable service. Regular compensation as defined in G.L. c. 32, § 1 is "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 . . . ."
The Petitioner contends that his stand-by payments should have been included as regular compensation in calculating his retirement allowance, since the payments meet the definition of regular compensation outlined in G.L. c. 32, § 1. The Respondent advances several arguments in opposition to the Petitioner's request. First, the Board argues, the Petitioner waived his right to challenge the calculation of his regular compensation because he failed to challenge the calculation before his retirement in March, 2002. Second, the Board contends that the stand-by payments do not meet the definition of regular compensation because they were not "remuneration geared to work or services performed." See Boston Ass'n of Sch. Adm'rs & Supervisors v. Boston Retirement Bd., 383 Mass. 336, 341 (1981). Finally, the collective bargaining agreement states that employees who perform stand-by duty shall be "reimbursed" $10.00 for the period; the Board argues that the stand-by payments were reimbursements and thus not regular compensation.
After careful consideration of all the evidence presented in this case, I conclude that Mr. Zygmunt's stand-by duty payments are regular compensation for the purpose of calculating his superannuation retirement allowance. The stand-by duty payments are regular compensation because they are "ordinary, recurrent, or repeated payments not inflated by any extraordinary ad hoc amounts such as bonuses or overtime pay." Pelonzi v. Retirement Bd. of Beverly, 451 Mass. 475, 479 (2008) (citations omitted); see also Bulger v. Contributory Retirement Appeal Bd., 447 Mass. 651, 658 (2006) (payments that are "recurrent," "regular," and "ordinary" held regular compensation); Bower v. Contributory Retirement Appeal Bd.,393 Mass. 427, 429 (1984) (regular compensation points to recurrent or repeated amounts); Boston Ass'n of of Sch. Adm'rs & Supervisors v. Boston Retirement Bd., 383 Mass. 336, 340-41 (1984) (same); Gooding v. Danvers Retirement Bd., CR-02-710 (DALA dec. 7/22/03; no CRAB decision) (stand-by pay ruled regular compensation where stand-by coverage was assigned every four weeks on a rotating basis in accordance with a collective bargaining agreement).
Mr. Zygmunt was required by his job description to "provide or arrange for on-call coverage on a 24 hour basis." On-call coverage, or stand-by duty, required Mr. Zygmunt to remain within half an hour of his place of employment so that he could timely respond to any emergency after being paged on an employer-supplied pager. He was compensated $10.00 for each week day and $20.00 for each Saturday, Sunday or holiday on which he performed stand-by duty. Mr. Zygmunt testified that he received nearly daily stand-by pay for the last ten years of his employment. Though the payroll records submitted by the Board cover only twenty-six months, they corroborate Mr. Zygmunt's testimony. By and large Mr. Zygmunt was compensated on Saturdays for performing stand-by duty throughout the week. The specific dates that stand-by pay was credited varied occasionally, but the records make clear that Mr. Zygmunt was compensated weekly for performing his stand-by duty. The stand-by payments were not "extraordinary ad hoc payments." Pelonzi, 451 Mass. at 479, quoting Bulger, 447 Mass. at 658. Quite to the contrary, Mr. Zygmunt was paid on a regular basis for fulfilling his duty.
The Board contends that Mr. Zygmunt's stand-by duty pay is not "remuneration geared to work or services performed." Boston Ass'n, 383 Mass. at 341. The Board appears to argue that, because Mr. Zygmunt was not called into work on an emergency every day that he was on stand-by duty, the payments are not geared to work or services performed. This cramped reading of the case law fails to recognize the imposition on Mr. Zygmunt's freedom to travel while he was on stand-by duty. The service performed by Mr. Zygmunt was wearing a pager in his off hours and staying close enough to his workplace to respond within half an hour. The compensation Mr. Zygmunt received was geared to this service. See Boston Ass'n, 383 Mass. at 341.
The Board's argument that the stand-by payments were reimbursements, which are not considered regular compensation, is also unavailing. It is true that the collective bargaining agreement says that the person on stand-by duty "shall be reimbursed" for completing his duty. Calling the payments reimbursements, however, does not make them the kind of reimbursements that are not regular compensation. The cases cited by the Board involve reimbursements for travel expenses like mileage, meals, hotels, transportation, parking and tolls. See Turner v. Teachers' Retirement Bd., CR-00-1009 (DALA decision 5/25/01; no CRAB decision) (transportation, mileage, meals, hotel accommodations and related incidentals); Stamas v. Teachers' Retirement Bd., CR-97-656 (DALA decision 3/3098; no CRAB decision) (mileage); Dukakis v. Teachers' Retirement Bd., CR-94-895 (DALA decision 10/20/95; no CRAB decision) (transportation, mileage, meals, hotel accommodations, parking, and tolls). Reimbursements for travel expenses are not regular compensation because the employee performs no work or services in return for the payment. See Dukakis, supra; Stamas, supra; Turner, supra. Mr. Zygmunt, on the other hand, was not being reimbursed for any expenses. As discussed above, he was being compensated for wearing a pager while off-duty and remaining close enough to his workplace to respond within half an hour. The stand-by duty pay was paid for Mr. Zygmunt's services and is, therefore, not a reimbursement.
Finally, the Board argues that Mr. Zygmunt waived his right to challenge the calculation of his superannuation retirement allowance by requesting that his stand-by pay be included in regular compensation more than four years after his effective retirement. Mr. Zygmunt did not waive his right to challenge the calculation of his retirement allowance. To support its argument, the Board cites a number of cases that stand for the proposition that post-retirement option changes are prohibited because they would violate the actuarial soundness of the retirement system. See, e.g., Nouna v. State Bd. of Retirement, CR-06-638 (DALA decision 9/27/07; no objections filed). These cases are inapposite. First of all, option choice is governed by statute, and there is no provision for post-retirement option changes in the statute. See G.L. c. 32, § 12(1). Moreover, in contrast with retirement options, which are based upon the employee's choice, Mr. Zygmunt had no choice in determining what pay should be included in his regular compensation because regular compensation is defined in G.L. c. 32, § 1.
Errors in retirement benefit calculations must be corrected pursuant to G.L. c. 32, § 20(5)(c)(2). Mr. Zygmunt was informed erroneously by his employer that his stand-by pay is not regular compensation and should not be included in his retirement application. Mr. Zygmunt brought the error to the Board's attention, albeit more than four years after he had been receiving retirement benefits. The Board voted to deny Mr. Zygmunt's request to correct the error, and informed him of the vote by letter dated May 2, 2007. Mr. Zygmunt timely appealed the Board's denial on May 10, 2007. The Board made an error in calculating Mr. Zygmunt's retirement allowance by not including the stand-by duty payments as regular compensation. Now, the Board must correct its error. Mr. Zygmunt cannot waive the duty of the Board to recalculate his superannuation retirement allowance in accordance with the statutory definition of regular compensation. See G.L. c. 32, § 1 and G.L. c. 32, § 20(5)(c)(2).
The Board shall recalculate the Petitioner's superannuation retirement allowance to include his stand-by duty payments as regular compensation, after receipt of the deductions that should have been withheld.
DIVISION OF ADMINISTRATIVE LAW APPEALS
Kenneth J. Forton