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"Regular Compensation" as Applied to Determination of an Employee's Effective Retirement Date

- The Interplay of M.G.L. c.32 and M.G.L. c.152

Under M.G.L. c.152, the Worker Compensation statute, worker compensation benefits are supplemented by vacation and sick pay. In 2018, however, the Supreme Judicial Court held that this supplemental sick and vacation pay does not constitute “regular compensation” for the purposes of determining the effective date of retirement under M.G.L. c.32. Public Employee Retirement Administration Commission v. Contributory Retirement Appeal Board, 478 Mass. 832 (2018) (“Vernava”).

Subsequent to the Vernava decision, the Public Employee Retirement Administration Commission (PERAC) issued a memorandum, in which it opined that the SJC’s decision applied to determining the date of retirement only when retirement is based on accidental disability (M.G.L. c.32, §7), and not to any other form of retirement, such as ordinary disability (§6) or superannuation (§5). PERAC then issued a second memorandum in which it informed PERAC’s 104 retirement systems that they were bound by this opinion. Five local retirement boards disagreed and sought declaratory relief in a case that was recently decided in Worcester Regional Retirement Board v. Public Employee Retirement Administration Commission, SJC-13137 (Feb. 4, 2022). They asked the Court to determine the application of its prior opinion to forms of retirement other than to accidental disability, and further asked the Court to opine whether PERAC’s opinions were binding on the local systems.

The Superior Court had held that the SJC’s 2018 decision determining the date of last payment of “regular compensation” was not limited to accidental disability retirement but applied to all forms of retirement. The SJC agreed. While the Court recognized that there were slight differences in wording among sections 5, 6, and 7, it concluded that, when determining the date of retirement under any of these sections, the only reasonable date to use is the date on which the employee last performed services.

The Court also rejected PERAC’s request that its decision be applied only prospectively. The Court noted that its interpretations of statutes generally apply back to the date of enactment and there must be good reason to depart from the general rule. The Court pointed to the lack of specific evidence that extraordinary hardship on retirees was likely as a result of its ruling.

However, the SJC also dismissed the claim that sought a declaration on the question of whether PERAC’s opinions are binding on the retirement systems it oversees, finding that there was no actual controversy for this “abstract question unmoored from any particular circumstance.”

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