PERAC Memo #33 - 2018: CRAB's Order of Partial Stay Regarding Regular Compensation Status of Payments Made in Lieu of Unused Leave Time
CRAB's Order of Partial Stay Regarding Regular Compensation Status of Payments Made in Lieu of Unused Leave Time
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This memo supersedes Memo #26/2018 and Memo #39/2012 in light of CRAB's November 6, 2018 partial stay in O'Leary v. Lexington Retirement Board. Under the partial stay: retirees who retired on or before November 6, 2018 are unaffected; active members must no longer have contributions withheld on unused vacation pay going forward (but no refunds of prior contributions pending judicial review); and members retiring on or after November 6, 2018 must have vacation buyback payments excluded from their benefit calculation, with any contributions taken on such payments refunded at retirement. PERAC confirms the Order applies to all 104 retirement boards, not just Lexington.
Full Text
M E M O R A N D U M
TO: All Retirement Boards
FROM: Joseph E. Connarton, Executive Director
RE: CRAB's Order of Partial Stay Regarding Regular Compensation Status of Payments Made in Lieu of Unused Leave Time
DATE: December 5, 2018
In PERAC Memorandum #26 of 2018 ("Memorandum #26"), dated September 14, 2018, PERAC alerted the retirement boards to a July 23, 2018 CRAB decision (the "Decision") that rejected PERAC Memorandum #39 of 2012 ("Memorandum #39"), dated July 11, 2012, and involved the "Regular Compensation Status of Payments Made in Lieu of Taking Vacation Leave." O'Leary v. Lexington Retirement Board and PERAC, CR-15-30 ("O'Leary"). In Memorandum #26, PERAC informed the retirement boards that both PERAC and Mr. O'Leary had filed appeals in Suffolk Superior Court. As a result, PERAC instructed the retirement boards to continue to evaluate all existing vacation buyback plans in their usual manner, pursuant to Memorandum #39.
Following its review of PERAC's Emergency Motion for Stay, CRAB issued an Order of Partial Stay dated November 6, 2018. The Order provides:
Retired Members: Enforcement of the decision shall be stayed insofar as it would require recalculation of retirement benefits currently being paid to retired members, or refunding of past retirement contributions made by retired members. As to retirees, the status quo may remain in effect pending completion of judicial review.
Active Members: Enforcement shall be stayed only insofar as it would require refunding of contributions previously made by active members prior to retirement. No stay shall be in effect as to retirement contributions to be made in the future by active members. Going forward, no retirement contributions shall be collected on unused vacation pay.
Pre-Retirement Inactive Members: Enforcement shall be stayed pending judicial review, insofar as it would require refunding of retirement contributions previously made by members inactive prior to their retirement.
Future Retirees: No stay shall be in effect as to calculation of benefits for persons retiring in the future. Calculation shall not include unused vacation pay, and any retirement contributions made on unused vacation pay shall be returned at the time of retirement.
Petitioner-Appellant: No stay as to Joseph O'Leary. His retirement benefits have been calculated without the inclusion of unused vacation pay and that calculation shall remain in place pending appeal.
Application to All Retirement Systems
As PERAC was a named party to this matter, all retirement boards are bound by the Decision and Order. PERAC must apply the law equally to all boards throughout the Commonwealth, and CRAB plainly directed its instructions to "retirement systems" and "retirement boards" throughout.
Suspension of Prior Memoranda
This Memorandum suspends Memorandum #26/2018 and Memorandum #39/2012. PERAC will issue further memoranda as this case proceeds in the courts. Questions should be directed to Senior Associate General Counsel Ken Hill at Extension 945.