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Massachusetts Supreme Court Ruling Determines Sick and Vacation Pay Are Not Regular Compensation In The Determination of a Retirement Date

After a workplace accident, a Massachusetts worker may have more to consider beyond the receipt of funds for lost wages and medical expenses. The Supreme Court addresses one of the related concerns in a recently issued Massachusetts workers’ compensation decision, SJC-12331. The injured employee in this case worked for a Massachusetts town’s department of public works for nearly 27 years. On the day he was injured, he began receiving workers’ compensation benefits as well as two hours per week of sick or vacation pay so that he could keep his union membership and life insurance.

The town decided to involuntarily retire the worker for accidental disability, allowed by G.L. c. 32, Sec. 7. The retirement board of the town approved the application, allowing the worker to receive his workers’ Legal News Gavelcompensation benefits and supplemental pay until July 7, 2012. G. L. c. 32, § 7 permits three possible retirement dates:  the date of the injury, the date six months prior to the filing of the written application for retirement, or the date on which he last received regular compensation for his employment in public service. The date must be the latest of the three. The Public Employee Retirement Administration Commission (PERAC) decided the employee’s last date of regular compensation was July 7, 2012, using his supplemental sick and vacation pay as the basis of their decision.

The employee appealed, and the division of administrative law appeals (DALA) reversed the decision, finding the supplemental pay was not “regular compensation” as defined by the statute. Instead, DALA found the retirement date to be six months prior to the filing of the application because the “regular compensation” ended on the day of the injury, making this one the latest of the three options. PERAC appealed this finding to the next level of administrative review (CRAB), which upheld DALA’s decision. Judicial review was then sought in the civil court system. The superior court also affirmed DALA’s decision, which then was appealed once more by PERAC and moved to the Supreme Court on their own motion.

The Supreme Court determined the central issue was whether or not the supplemental pay was “regular compensation” as defined by G. L. c. 32, § 1. The Court, while deferential to the administrative bodies deciding this case, noted the two bodies came up with conflicting interpretations of the statute and decided to bring finality and certainty to the issue. The Supreme Court has previously defined regular compensation as ordinary, recurrent, or repeated payments inflated by any bonus or overtime pay. Prior case law excluded the receipt of workers’ compensation by itself, but the Court had yet to address the use of sick and vacation pay.

The court distinguished the situation at hand from the prior acceptable definitions of “regular compensation” because the employee was unable to render his usual services to the employing unit while he was injured. The court reasoned that while sick and vacation pay are accrued during the course of employment, these benefits are excludable under the statute. The Court pointed to PERAC’s own regulations, which define regular compensation of “indefinite duration.” The court found the sick and vacation pay to be limited in amount. The employee used what remained at the time of his accident to supplement his workers’ compensation payments. The court summed up the attributes of workers’ compensation and supplemental pay as ones that are earned while the employee provides services to the employer and used when she or he is no longer able to provide services. DALA’s interpretation excluding the sick and vacation days was upheld and the judgment affirmed.

If you’ve been injured while working, the Massachusetts workers’ compensation attorneys at Karsner & Meehan can help you maximize the benefits you are eligible to receive. Call our office today at 508.822.6600 for a free, confidential consultation.

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