The recent decision by the Massachusetts Supreme Judicial Court, Ralph J. Maher v. Retirement Board of Quincy , SJC-10182 (Nov. 6, 2008), serves as a stark cautionary tale to public employees, and as a reminder that courts take a hard line against misconduct that involves an abuse of authority or integrity. Public employees breaking the law must be aware that they risk not only criminal charges, but loss of their pensions as well.

General Laws chapter 32, §15 identifies a number of pension-related penalties awaiting public employees who engage in certain misconduct. Public employees who misappropriate funds or property can lose their retirement allowance up to the cost of their misappropriation and prosecution. G.L. c. 32, §15(1). Public employees convicted of misuse of government funds or property, or crimes related to improper police or licensing duties, lose their retirement allowance as well as their contributions to the system. G.L. c.32, §15(3) & (3A). Public employees who are convicted of crimes that relate to their job lose their pension, but not their contributions to the retirement system, under state law. G.L. c.32, §15(4).

The case of Maher dealt with the last penalty. Here, Quincy’s former chief plumbing and gas inspector broke into the city’s personnel office in order to remove critical portions of his personnel file. He sought to improve his chances of being re-appointed to his position, which paid $125,000 a year. Instead, he was indicted on charges of breaking and entering; stealing in a building; and wanton destruction of property. He ultimately pleaded guilty, served six months of unsupervised probation, and paid a total of $900 in fines and restitution.

After he officially retired, the Quincy Retirement Board instituted proceedings to forfeit the inspector’s pension, under G.L. c.32, §15(4). The Board ultimately voted to forfeit the pension, a loss of approximately $576,000.

The SJC ruled that the loss of the pension did not violate the U.S. Constitution’s prohibition on “excessive fines.” The Eighth Amendment states: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” The Court had little difficulty concluding that forfeiture of a $576,000 pension was not a grossly disproportionate fine for illegal efforts to retain a $125,000 a year job, especially considering the damage inflicted to the public trust by the employee’s criminal conduct.

Interestingly, the SJC did not discuss whether the crimes actually related to his position for purposes of G.L. c.32, §15(4), given that his crimes involved property, as opposed, arguably, to his official job duties.

Public employees who even daydream about engaging in misconduct may want to think twice about whether actions are worth risking losing their job, health insurance, freedom, and pension.

Police officers and firefighters injured in the performance of their jobs are entitled to “leave without loss of pay” under G.L. c.41, §111F. For full-time public safety officers, the amount of wages paid during their period of disability is relatively easy to calculate – the officer’s base pay plus most stipends and differentials (detail and overtime wages are excluded). The wages payable to disabled part-time police officers and firefighters, whose schedules frequently fluctuate from week to week, are relatively harder to determine. In Becker v. Town of Newbury, #07-P-1068 (October 9, 2008), the Appeals Court answered how to calculate the injured-on-duty benefits to part-time officers – municipalities must pay no less than the employee’s average earnings during the 12 months preceding the injury. The Court rejected the argument that the employer must pay weekly wages earned by the employee at the time of the injury. For example, the officer here earned an average of $145 per week during the past year, but was scheduled to earn $400 during the week of her injury. The Court ruled she is entitled to only $145 per week. On the bright side, the rule will benefit officers if the situation was reversed. For example, an employee who earned an average of $400 per week, but was anticipated to receive only $145 during the week of injury, will receive $400 per week for the duration of the disability or until the employee is retired.

Part-time police officers and firefighters injured in the line of duty are eligible for an additional statutory benefit, if the injury is severe enough. Recognizing that a part-time officer disabled from municipal work may be disabled from their “regular occupation” as well, the General Court added G.L. c.32, §85H provides wages of an entry-level police officer or firefighter to part-time officers whose work-related disability disables them from their “regular occupation.” (This payment is in addition to any §111F payment discussed above). The Appeals Court ruled that the outside employment must be a “regular occupation” and must “constitute at least a substantial source of income.” Here, the Court concluded that the part-time police officer’s fledgling private investigator business, which never turned a profit, did not meet this criteria. Therefore, the court ruled, she was ineligible to receive the wages of an entry-level police officer under G.L. c.32, §85H.

In School Comm. of Lowell v Oun, 07-P-184 (Sept. 25, 2008), the Appeals Court upheld an arbitrator’s decision to reinstate three wrongfully-terminated teachers with full back pay and benefits.  In a possibly disturbing signal that could disrupt future judicial review of arbitration cases, the Court hinted that it can freely review evidentiary decisions of an arbitrator and significantly broaden the “public policy” arguments that may overturn arbitration awards.  The decision simultaneously discourages and encourages public employers to litigate “final and binding” arbitration decisions.

            In this case, Lowell schools terminated three teachers pursuant to G.L. c. 71A, § 4, which mandates that “all children shall be placed in English language classrooms” conducted by teachers “fluent and literate in English.” The Massachusetts Department of Education (“DOE”) provides guidelines and regulations for determining a teacher’s fluency.  These guidelines and regulations specify that if a teacher’s fluency is not apparent during classroom observation, then it may be demonstrated through testing. 

Here, all three teachers had professional, or tenured, status and were born outside of the U.S.  Prior to their terminations in 2003, all three teachers had received satisfactory evaluations.  Lowell Schools conducted no classroom observation and instead tested the teachers several times, including exams unapproved by the DOE.  The teachers failed these exams.  As a result Lowell then terminated the teachers.

            In a controversial part of his decision, the arbitrator excluded the teachers’ DoE test scores because they were unable to cross-examine the DoE test graders and because the School failed to evaluate the teachers’ fluency through classroom observation.  Without the DoE scores, the arbitrator concluded that the School could not justify its termination of the teachers.  As a separate basis to reinstate the teachers, the arbitrator reasoned that Lowell’s reliance on the DoE scores, even if valid, violated state anti-discrimination law because Lowell never used the test against native English-speaking teachers. 

            Lowell Schools appealed the arbitrator’s decision to the Superior Court.  The Superior Court ruled in favor of the teachers.  Lowell Schools appealed again.  The Appeals Court upheld the arbitrator’s decision to exclude the test scores.  As the court acknowledged, an arbitrator’s legal conclusions and factual findings, even if incorrect, are beyond judicial review.  Instead of relying on this cornerstone of arbitration law and dismissing Lowell Schools’ complaint out of hand, the Court reviewed the arbitrator’s reasoning in excluding the test results before it concluded that there was no error.  This extended analysis, therefore, should be considered dicta and non-precedential. 

More troubling, however, is the Court’s discussion of the public policy limitation. A court may overturn an arbitration decision on public policy grounds only if (1) the public policy is well-defined and dominant and ascertained by reference to the laws and legal precedents and not from general public interest considerations; (2) the discharged employee’s disfavored conduct must be integral to the performance of employment duties; and, (3) the reinstated employee’s conduct would have required dismissal.  Here, the Schools took issue with the arbitrator’s findings that the decision not to test native English speakers for fluency violated state anti-discrimination law, that the personal qualities of the teachers overrode any fluency problems, and that the Schools retrain and reassign, not terminate, teachers with fluency problems.  In an invitation to public employers to litigate arbitration decisions on this issue, the Court refused to state whether the employer’s assertions, if true, fall within the public policy basis to overturn awards.  The Court ruled that the arbitrator’s conclusion that the Schools inadequately assessed the fluency of the teachers is sufficient to reinstate the teachers and is immune from judicial review.   

In Driscoll v. Worcester Telegram & Gazette, #07-P-344 (September 25, 2008), the Appeals Court has ruled that a 21-year veteran paper deliverer for eight major newspapers is an “employee” and therefore eligible for unemployment benefits. The Court rejected the employer’s gambit of classifying news carriers as “independent contractors.” To support its argument that the newspaper deliverer was not an “employee,” the newspaper actually boasted that the delivererhad the independent authority to decide “whether to wrap the papers in plastic or rubber bands, and where to purchase these supplies.” Thankfully, the Court rejected this evidence as trivial and noted how the terms and conditions of employment were controlled and directly supervised by the employer. This victory for the news carrier entitles him to very modest financial and job assistance as he attempts to transition to a new employer.