Pursuant to G. L. c. 32, § 7, on February 1, 2012, the town filed an application seeking to retire Mr. Vernava involuntarily for accidental disability.

On June 28, 2012, the retirement board of Swampscott approved the application and voted to involuntarily retire Mr. Vernava due to accidental disability. He received his workers' compensation benefits and supplemental pay until July 7, 2012.

Following the board's decision to retire Mr. Vernava involuntarily, the Public Employee Retirement Administration Commission ("PERAC") determined that Mr. Vernava's effective retirement date was July 7, 2012 because this was the last day he had received "regular compensation" in the form of his supplemental pay.

The division of administrative law appeals ("DALA") reversed PERAC's decision, finding that Mr. Vernava's supplemental pay had not constituted "regular compensation" under G. L. c. 32, § 1. DALA determined that Mr. Vernava had last received such compensation on June 13, 2010, the date of his injury.

(Based on that determination, DALA set Mr. Vernava's effective accidental disability retirement date as August 1, 2011. It reasoned that because the supplemental pay was not regular compensation, the latest occurring event under G. L. c. 32, § 7 (2), became the date six months prior to the filing of the accidental disability application – August 1, 2011 – and not the date Mr. Vernava had last received regular compensation.)

PERAC appealed from DALA's findings to the Contributory Retirement Appeal Board ("CRAB"), which upheld DALA's decision. PERAC then sought judicial review of CRAB's decision. A trial court affirmed CRAB's decision, and the dispute reached the Supreme Judicial Court of Massachusetts.

Massachusetts Law

General Laws c. 32, § 1, defines:

regular compensation

as:

compensation received exclusively as wages by an employee for services performed in the course of employment for his employer.

It defines:

wages

as:

the base salary or other base compensation of an employee paid to that employee for employment by an employer; provided, however, that "wages" shall not include, without limitation, overtime, commissions, bonuses other than cost-of-living bonuses, amounts derived from salary enhancements or salary augmentation plans which will recur for a limited or definite term, indirect, in-kind or other payments for such items as housing, lodging, travel, clothing allowances, annuities, welfare benefits, lump sum buyouts for workers' compensation, job-related expense payments, automobile usage, insurance premiums, dependent care assistance, [one]-time lump sum payments in lieu of or for unused vacation or sick leave or the payment for termination, severance, [or] dismissal … amounts paid as early retirement incentives or any other payment made as a result of the employer having knowledge of the member's retirement, tuition, payments in kind and all payments other than payment received by an individual from his employing unit for services rendered to such employing unit, regardless of federal taxability.

Under G. L. c. 32, § 7 (2), the effective date of an employee's accidental disability retirement is the latest of the following:

the date the injury was sustained;

the date six months prior to the filing of the written application for such retirement;

or

the date for which he last received regular compensation for his employment in the public service.

The Massachusetts Supreme Judicial Court's Decision

The court affirmed the trial court.

In its decision, the Supreme Judicial Court explained that the issue was whether supplemental pay received pursuant to G. L. c. 152, § 69, constituted "regular compensation" as defined by G. L. c. 32, § 1, when received in conjunction with workers' compensation benefits.

The court then rejected PERAC's contention that recurring payments of accrued sick leave or vacation time constituted regular compensation in this situation. Rather, the court said, for payments to constitute "regular compensation," they must be "ordinary" remuneration for work performed.

The court decided that the sick and vacation time Mr. Vernava used to supplement his workers' compensation payments while out on disability, which was "limited in amount," did not constitute regular compensation.

Simply put, the court concluded that supplemental pay received while an employee was no longer able to provide employment services for his or her employer did "not constitute regular compensation." In these instances, the court said, the employee was "not merely out sick or taking a vacation," but was not able to perform services for the employer.

The case is Public Employee Retirement Administration Commission v. Contributory Retirement Appeal Board, No. SJC-12331 (Mass. Feb. 13, 2018).