The Petitioner is not entitled to a recalculation of his retirement allowance that includes earnings that he received as a part-time Building Inspector in the Town of Hampden. The varying amounts of 80% of the total permit fees he received per annum as payment for those services are not “regular compensation” as it is defined in G.L. c. 32, § 1.
Pursuant to G.L. c. 32 § 16(4), the Petitioner, Lance Trevallion, is appealing from the June 1, 2017 decision of the Respondent, Hampden County Regional Retirement Board (HCRRB), denying his request to include his compensation as Building Inspector in the Town of Hampden as regular compensation in the calculation his retirement allowance. (Respondent Exhibits 7 and 8.) The Petitioner’s timely appeal was received on June 7, 2017. I have marked the Petitioner’s letter of appeal as Petitioner Exhibit 6.
I held a hearing on October 15, 2018 in Room 320 at 436 Dwight Street, Springfield, MA. The Petitioner testified in his own behalf. The HCRRS presented no witnesses. Both parties stated their arguments for the record. The hearing was digitally recorded. Both parties filed pre-hearing memoranda of law. (Petitioner-Attachment A with Petitioner Exhibits 1-5; Respondent-Attachment B with Respondent Exhibits 1-8.
FINDINGS OF FACT
Based upon the testimony and documents submitted at the hearing in the above-entitled matter, I hereby render the following findings of fact:
- The Petitioner, Lance Trevallion, 67 y.o.a., is the Building Inspector for the Town of Wilbraham. He has been employed in this capacity since 1998 and has been a member of the Hampden County Regional Retirement System (HCRRS) since July 13, 1998. (Petitioner Testimony and Petitioner Exhibit )
- On or about January 1, 2007, the Petitioner became the part-time Building Inspector in the Town of Hampden. He began contributing into the HCRRS from his earnings in Hampden. He also remained employed in the Town of Wilbraham. (Id.)
- At the time he was hired by the Town of Hampden, the Petitioner was not provided with any explanation as to how he would be compensated. (Petitioner Testimony and Attachment B.)
- The Petitioner eventually learned that all 4 Building Inspectors in the Town of Hampden (Building, Plumbing, Electrical and Health) were all paid for their work by receiving 80% of the cost of each permit. (Petitioner Testimony and Petitioner Exhibit 1.)
- Building permits for smaller building projects such as roofing, siding, wood stoves or window replacements in Hampden are based on a fixed fee. Typically, these smaller projects are based on $50.00 per inspection and normally one inspection is required. During the Petitioner’s employment in the Town of Hampden, he retained 80% of this fee and 20% was returned to the Town of Hampden for administrative purposes. The Building Inspector reviews the application and accompanying documents, issues the permit and performs the inspections. Often times, multiple inspections are required. (Petitioner Testimony.)
- Building permits for larger projects are based on the cost of construction (new homes, additions, renovations and commercial construction). Inspections follow after the issuance of a permit. On a single family home there would be an average of 5-8 inspections. On larger projects such as the $9 million dollar Country Club in 2014, the $5 million dollar church in 2014, or the $6 million dollar solar field, inspections are required almost daily. There are often several inspections during a single day. Construction on projects of this size generally takes 6-9 months. Properly submitted close-out documents from all architects and engineers must be reviewed prior to the issuance of a Certificate of Occupancy. (Id.)
- The following are figures for the cost of construction of all projects in the Town of Hampden from 2008 through 2015:
(Petitioner Testimony and Attachment A.)
- The number of permits that the Petitioner issued during his employment in the Town of Hamden varied from month to month. The amounts he received in earnings also varied from month to month. (Petitioner Testimony.)
- The Petitioner left his employment as part time Building Inspector in the Town of Hampden on January 1, 2016. (Id. and Attachment B.)
- On or about March 8, 2016, the Petitioner requested information from the HCRRB regarding the amount of his retirement allowance pursuant to Options A, B and C if he retired effective June 15, 2017. (Respondent Exhibit 1.)
- In a letter dated May 9, 2016, Karen Martin, Administrative Assistant at the HCRRB set forth the estimated retirement allowances pursuant to each option. She also notified the Petitioner that these figures were based upon his regular compensation from the Town of Wilbraham, and, that the HCRRB had requested an opinion for the Public Employee Retirement Administration Commission (PERAC) as to whether his earnings from the Town of Hampden constituted regular compensation. (Respondent Exhibit 2.)
- During the course of researching the data related to the Petitioner’s request to have his Town of Hampden earnings utilized in the calculation of his retirement allowance, the HCRRB discovered a large increase in the Petitioner’s earnings from 2013 through 2015. His earnings in 2012 were approximately $88,000.00. From 2013 through 2015, his earnings varied from between approximately $148,000 and approximately $157,000.1(Attachment B.)
- In a letter dated June 16, 2016, Julianne Bartley, Executive Director of the HCRRB, requested an advisory opinion from PERAC concerning the issue of the Petitioner’s earnings in the Town of Hampden. (Respondent Exhibit 4.)
- In a letter dated July 27, 2016, Joseph E. Connarton, Executive Director of PERAC, informed Mr. Bartley that payments structured in the manner in which they were between the Petitioner and the Town of Hampden cannot be includable in regular compensation because they are not regular, recurring, pre-determined and non-discretionary. Mr. Connarton cited both PERAC’s regulation, 840 CMR 15.03(1), applicable to the time period prior to July 1, 2009 2 and Chapter 21 of the Acts of 2009, enacted as 840 CMR 15.03(3)(a)(b)3 to apply to time periods after July 1, 2009. He noted that it was readily seen that the payments made to the Building Inspector in this case were not pre-determined, non-discretionary or guaranteed. Mr. Connarton attached a copy of PERAC Memorandum # 24, 2009. (Respondent Exhibits 5 and 6.)
- In a letter to Executive Director Bartley dated April 21, 2017 the Petitioner requested that the HCRRB include his earning from the Town of Hampden as regular compensation. (Respondent Exhibit 7.)
- In a letter dated June 1, 2017, Executive Director Bartley informed the Petitioner that the HCRRB had voted to deny his request and would return his accumulated deductions. (Respondent Exhibit 8.)
- The Petitioner’s timely appeal was received on June 7, 2017. (Petitioner’s Exhibit 6.)
 840 CMR 15.03(3)(a)(b) defines regular compensation for time periods after July 1, 2009 as follows:
3) During any period of active service subsequent to July 1, 2009 the term “Regular Compensation,” as defined by G.L. c. 32, § 1, shall be determined subject to the following:
(a) to be considered regular compensation, any compensation to an employee must be compensation received exclusively as wages by an employee for services performed in the course of employment for the employer.
(b) “wages” shall mean the base salary or other base compensation of an employee paid to that employee for employment by an employer including pre-determined, non-discretionary, guaranteed payments paid by the employer to similarly situated employees, provided, that “wages” shall include payments made by the employer to the employee because of the character of the work, because of the employee’s length of service, because of the time at which the work takes place is a condition of employment in a particular position, because of educational incentives, and payments for holding the training, certification, licensing or other educational incentives approved by the employer for the performance of services related to the position the employee holds and payment made by the employer to the employee calculated as a percentage of base pay. (Emphasis added.)
The Petitioner is not entitled to prevail in this appeal. “Regular compensation” is defined in the PERAC regulations that apply to both the period before July 1, 2009 and from and after July 1, 2009, as well as in a long line of retirement cases, as regular, recurring, pre-determined and non-discretionary. Such compensation is also ordinary, repeated and of indefinite duration, not incidental. 840 CMR 15.03(1), 840 CMR 15.03(a)(b), Pelonzi v. Retirement Board of Beverly, 451 Mass. 475, 478 (2008) and Hallet v. Contributory Retirement Appeal Board, 431 Mass. 66, 70 (2000).
As PERAC Executive Director Connarton aptly noted in his letter of July 27, 2016, payments structured in that manner of those paid to the Petitioner in this case cannot be included in regular compensation, because they were not regular, recurring, predetermined and non-discretionary. They were not guaranteed. Should there have been any single month during the Petitioner’s employment in the Town of Hampden in which there were no permit applications, the Petitioner would not have been paid. He had no base pay. Further, the number of permits varied each month as did the amount of earnings he received. The Respondent is correct in its contention that there was no predictability as to what the Petitioner would earn from month to month or year to year. Rather, his earnings they were actually an “indirect” form of compensation and are outside of the scope of the definition of regular compensation as set forth in G.L. c. 32, § 1.
Based on the foregoing, the decision of the HCRRB denying the Petitioner’s request to include his earnings from the Town of Hampden in his regular compensation for retirement purposes is affirmed.
Division of Administrative Law Appeals,
DATED: March 8, 2019