In a case involving the Gloucester Retirement Board and two members of the Gloucester Police Patrolmen’s Association, MassCOP Local 344, the Division of Administrative Law Appeals (“DALA”) confirmed that all compensation earned by reserve police officers, including detail pay, must be counted towards the $5,000 earnings threshold in G.L. c. 32, § 4 (1)(o).

This DALA award confirms prior guidance issued by the Public Employee Retirement Administration Commission (“PERAC”) advising retirement boards to include all compensation earned by reserve or permanent-intermittent officers towards the $5,000 earnings requirement—a requirement that until 2019 had not been imposed on prior reserve or permanent-intermittent officers’ service.

In 2019, the Supreme Judicial Court held that permanent-intermittent officers were required to purchase their creditable service. See Plymouth Ret. Bd. v. Contributory Ret. Appeal Bd., 483 Mass. 600 (2019). Prior to this decision, reserve and permanent-intermittent officers were awarded creditable service for time spent on their respective lists—even if they did not perform any work—as long as they were subsequently appointed and eligible for duty as provided in G.L. c. 32, § 4 (2)(b). Though the SJC clearly recognized that § 4 (2)(b)’s purpose was “to provide former PIPOs with creditable years of service in recognition of their service as police officers,” it required that PIPOs pay into the retirement system for the creditable service that they earned, and it applied the $5,000 earnings threshold articulated in G.L. c. 32, § 4 (1)(o). Id. at 610. These requirements were applied to all service performed after July 1, 2009.

In March 2022, the Gloucester Retirement Board sent a request to PERAC asking that it reconsider its prior guidance directing retirement boards to include all compensation, including detail pay, towards the $5,000 threshold. The Board’s request came after a review of City payroll records confirmed that a number of Gloucester police officers who had previously served the City as reserves exceeded the $5,000 threshold only because of compensation for details. The Board argued that the SJC’s 2019 decision requiring payment for creditable service meant that the term “compensation” in § 4 (1)(o) must be defined as “regular compensation,” otherwise these officers would be benefiting from a “prohibited exemption to the statutory payment formula.”

PERAC declined to reconsider its prior directive and the Board appealed to the Contributory Retirement Appeal Board (“CRAB”) which referred the matter to DALA for determination. Once the affected individuals of MassCOP Local 344 were made aware of the appeal, they intervened.

DALA ultimately sided with PERAC (and the Intervenors who were represented by Sandulli Grace attorney Lauren Kopec) confirming that all compensation earned by reserve officers counts towards the $5,000 threshold. DALA confirmed PERAC’s power to issue memoranda interpreting G.L. c. 32 which are binding on retirement boards unless they are “manifestly unreasonable,” and here DALA found PERAC’s guidance to be the opposite. DALA agreed that the terms “compensation” and “regular compensation” were distinct terms carefully employed by the Legislature, and that interpreting the $5000 threshold to include service that would fit into the definition of “regular compensation” would effectively preclude the majority of service performed by reserve or permanent-intermittent officers who “have schedules which by their very nature are sporadic and not guaranteed.” Since it could not have been the Legislature’s purpose to effectively gut the benefit conferred by § 4 (2)(b), DALA affirmed PERAC’s definition of the term “compensation” in § 4 (1)(o).

The Gloucester Retirement Board has filed an appeal, which is pending.