Civil actions commenced in the Superior
Court Department on August 22 and 24, 2018.
After consolidation, the case wase heard
by Jackie A. Cowin, J., on motions for judgment on the pleadings.
The Supreme Judicial Court on its own
initiative transferred the case from the Appeals Court.
Kenneth J. Hill for Public Employee
Retirement Administration Commission.
John M. Becker for the plaintiff.
Kimberly Parr, Assistant Attorney General,
for Contributory Retirement Appeal Board.
Michael Sacco for retirement board of
Thomas F. Gibson, Gerald A. McDonough,
Timothy J. Smyth, & Natacha Thomas, for Boston retirement system &
others, amici curiae, submitted a brief.
Matthew L. Feeney, Rachel L. Millette,
& Katherine A. Hesse, for Norfolk County retirement system & others,
amici curiae, submitted a brief.
Joseph O'Leary, an employee of the town of Lexington, elected to forgo
ten vacation days each year for seven years in exchange for payment until he
retired. The issue presented is whether
these payments in lieu of unused, accrued vacation time are to be included as
"regular compensation" for the purpose of calculating O'Leary's
pension. The retirement board of
Lexington (board), a magistrate in the Division of Administrative Law Appeals
(DALA), the Contributory Retirement Appeal Board (CRAB), and a Superior Court
judge all concluded that the payments in lieu of vacation time did not
constitute regular compensation. We
agree and therefore affirm.
Background. Pursuant to G. L. c. 32, public
employees who participate in the Commonwealth's retirement system (members) and
meet certain age and years of service criteria receive a government pension
(superannuation retirement allowance) at retirement. G. L. c. 32, § 5 (2). The amount received by each member is a
percentage of the highest average consecutive three-year period of his or her
"regular compensation" while an employee. G. L. c. 32, § 5 (2) (a). Over one hundred local retirement boards
throughout the Commonwealth, such as the board in this case, are responsible
for calculating and administering public retirement benefits to their
respective members. G. L.
c. 32, §§ 2, 20. The Public
Employee Retirement Administration Commission (PERAC) is the State agency
responsible for regulating and overseeing the work of local retirement boards. G. L. c. 7, §§ 49, 50.
On July 11, 2012, PERAC issued memorandum
no. 39/2012, an advisory memorandum to local retirement boards -- guidance
which is hereby invalidated, for the reasons discussed infra -- stating that
payments for unused vacation time may be considered as regular compensation
(and therefore counted for the purpose of calculating a member's retirement
benefit) if they meet two threshold requirements: (1) the payments must be part of the member's
base salary or "other base compensation," but payments that are of
limited duration or lack predictability do not count as other base
compensation; and (2) the payments must be for services performed. The memorandum further states that if the
payments satisfy both of these threshold requirements, the board then must make
findings regarding ten additional criteria to determine whether the payments
are considered regular compensation.
O'Leary's employment with the Lexington
police department was covered by a collective bargaining agreement that
included a "[v]acation [e]lection" provision. That provision allowed participants with at
least twenty years of service to convert up to ten unused vacation days into
compensation each year. Eligible
participants could make the election each December, and the compensation, if
selected, would be paid biweekly in the ensuing fiscal year. The provision stated:
Captains and Lieutenants with at least [twenty] years of service as a police
officer with the Lexington Police Department will have the option each December
to choose to convert up to ten (10) unused vacation days to compensation (i.e.,
the Vacation Election), with such compensation paid on a bi-weekly basis in the
ensuing fiscal year. The bi-weekly
vacation election payment shall begin on July 1, 2008 (FY09) and shall be
subject to all normal tax withholdings.
The value of the vacation election payment will be based on the
Officer's daily rate as of the fiscal year in which it is paid. The daily rate is defined as the base wage,
educational incentive and duty differential.
". . .
Election payment shall not be considered regular income for the purposes of
retirement, educational incentive payments, overtime calculation, holiday pay
or duty differential pay."
O'Leary chose to
convert ten unused vacation days into compensation beginning in 2008, when he
first became eligible. He made the same
election each year until his retirement in January 2015.
Shortly before his retirement, O'Leary
asked the board whether the payments he had received in lieu of taking vacation
time would be considered as regular compensation for purposes of calculating
his retirement allowance. When he
learned that the board did not consider these payments to be regular compensation,
he appealed to CRAB, which assigned the matter to DALA. DALA affirmed the board's decision. O'Leary then appealed to CRAB, which affirmed
the decision by DALA. See G. L.
c. 32, § 16 (4), second par.
O'Leary filed a complaint in the Superior Court seeking reversal of
CRAB's order. See G. L.
c. 30A, § 14. PERAC, which had
been joined at the request of the board as a necessary party in the proceedings
before DALA, also filed a complaint seeking a reversal of CRAB's order. The two complaints were consolidated, and all
parties subsequently filed cross motions for judgment on the pleadings. A Superior Court judge affirmed CRAB's
decision that the payments in lieu of vacation time were not regular
compensation. O'Leary and PERAC
appealed, and we transferred the case to this court on our own motion.
Analysis. As the facts are
undisputed, the issue involves a pure question of law (specifically, one of
statutory interpretation). We therefore
review the Superior Court judge's decision on a de novo basis. See Kraft Power Corp. v. Merrill, 464 Mass.
145, 147 (2013). The central question is
whether payments made in lieu of vacation time may be included as "regular
compensation" under G. L. c. 32, § 1, when calculating a
participant's retirement allowance provided for in G. L. c. 32,
§ 5. We conclude the answer is no.
"Regular compensation" is
defined in G. L. c. 32, § 1, as "compensation received
exclusively as wages[, i.e., the base salary or other base compensation of an
employee,] by an employee for services performed in the course of employment
for his employer." We previously
have held that the "'straightforward and unambiguous' language of § 1
indicates that 'regular compensation' is 'ordinary, recurrent, or repeated
payments not inflated by any "extraordinary ad hoc" amounts such as
bonuses or overtime pay.'" Public
Employee Retirement Admin. Comm'n v. Contributory Retirement Appeal Bd., 478
Mass. 832, 835 (2018) (Vernava), quoting Pelonzi v. Retirement Bd. of Beverly,
451 Mass. 475, 479 (2008).
Thus, we conclude that "regular
compensation" does not encompass payments, such as those at issue here,
that an employee chooses to receive annually or at some other interval, even if
the employee consistently elects to receive such payments. Such payments are not by their nature
"recurrent" or "repeated," but rather repeat only upon
specific election by the employee during the election period. See Vernava, 478 Mass. at 835. The employer cannot predict year to year
whether an eligible employee will opt to receive these buyback payments, or
how many hours of compensation an employee will elect to buy back.
In addition to being elective rather than
naturally recurring, periodic elective payments received in lieu of vacation
time are "amounts derived from salary enhancements or salary augmentation
plans which will recur for a limited or definite term," which is
explicitly excluded from the definition of "[w]ages" in G. L.
c. 32, § 1. In O'Leary's
collective bargaining agreement, for example, the election period is annual,
meaning the payment will last only one year.
Cf. Vernava, 478 Mass. at 836 (vacation time not considered "of
indefinite duration" because it is "limited in amount").
For all of these reasons, payment in lieu
of vacation time that requires an employee to select payment annually or at
some other interval is not "regular compensation." The 2012 PERAC memorandum is invalid to the
extent it directs otherwise because no elective, periodic vacation buyback
scheme, such as the one at issue here, could pass the first threshold
requirement and be considered part of an employee's "base
Retroactivity. O'Leary argues
that if we conclude, as we do, that periodic elective payments in lieu of using
vacation time are not "regular compensation," we should apply our
decision prospectively only because of the adverse effect it may have on those
participants whose retirement sums were calculated in reliance on the 2012
PERAC memorandum. We are not convinced.
"In general, when we construe a
statute, we do not engage in an analysis whether that interpretation is given
retroactive or prospective effect; the interpretation we give the statute
usually reflects the court's view of its meaning since the statute's
enactment." Eaton v. Federal Nat'l
Mtge. Ass'n, 462 Mass. 569, 587 (2012).
We did have occasion to consider prospective application in Eaton, where
our interpretation of the term "mortgagee" was different from the
meaning that commonly and widely had been ascribed to it up until the case was
decided. Id. at 587-588. Because we concluded that retroactive
application of our interpretation of the term likely would have resulted in
significant uncertainty in determining the validity of many land titles, we
limited our holding to prospective application only. Id. at 588-589. However, we have no such problem here.
In this case, none of the relevant
considerations provide reason to depart from the presumption of retroactive
application. As explained supra, our
interpretation is not novel, but rather is based on the plain language of the
statute. Indeed, the board, DALA, and
CRAB correctly interpreted the relevant statute consistent with our holding
Moreover, O'Leary has failed to provide
support for his contention that retirees whose pension amounts were calculated
pursuant to the 2012 PERAC memorandum may be required to repay any amounts
improperly paid out and may be subject to a recalculation and reduction of
future retirement payments, creating a "truly imminent" risk of
hardship. See Worcester Regional
Retirement Bd. v. Public Employee Retirement Admin. Comm'n, 489 Mass. 94, 105
(2022). This is especially true because
G. L. c. 32, § 20 (5) (c) (3), provides that, upon request,
retirement boards may "waive repayment or recovery of such amounts"
from members who inadvertently have been paid more than that to which they were
entitled. See Worcester Regional
Retirement Bd., supra ("Th[e] absence of specific evidence establishing
the likely occurrence of extraordinary hardship weighs in favor of the
presumption of retroactive application").
Conclusion. Payment in lieu of unused vacation time
requiring periodic election by an employee, whether annually or at some other
interval, does not qualify as "regular compensation." Accordingly, the judgment is affirmed.
board of Lexington and Public Employee Retirement Administration Commission.
 We acknowledge
the amicus briefs submitted by the Norfolk County, Leominster, and Somerville
retirement systems; and by the Boston, Brookline, and Fitchburg retirement
PERAC is responsible for the "efficient administration of the public
employee retirement system," G. L. c. 7, § 50, its
decisions and guidance are subject to review by CRAB, a three-member board
empowered to consider appeals filed on behalf of an aggrieved member subject to
a decision issued by either a retirement board or PERAC. G. L. c. 32, § 16 (4). Decisions issued by CRAB are "final and
binding" on the member, the retirement board, and PERAC. Id.
 Because, as
discussed infra, we conclude that the payments in lieu of vacation time cannot
meet the threshold requirements set forth in the PERAC memorandum, we need not
address the additional ten criteria.
 General Laws
c. 32, § 16 (4), second par., instructs that CRAB automatically must
assign any appeal in the first instance to a magistrate in DALA for a
hearing. The magistrate makes factual
findings and issues a binding decision on the board, PERAC, and the individual
member. This final decision may be
appealed to CRAB for further review, or CRAB may on its own initiative review
the final decision by DALA. Id.
 Although we
normally give weight to agency expertise, here PERAC and CRAB have different
views on the matter. See Public Employee
Retirement Admin. Comm'n v. Contributory Retirement Appeal Bd., 478 Mass. 832,
834 (2018) (Vernava), quoting Pelonzi v. Retirement Bd. of Beverly, 451 Mass.
475, 478 n.8 (2008). In any case, as the
question is one of statutory interpretation, ultimately it is for the court to
decide. See Vernava, supra.
 General Laws
c. 32, § 1, defines "[w]ages" in relevant part as "the
base salary or other base compensation of an employee." The provision goes on to delineate what the
term does not mean:
shall not include, without limitation, overtime, commissions, bonuses other
than cost-of-living bonuses, amounts derived from salary enhancements or salary
augmentation plans which will recur for a limited or definite term,
. . . [one]-time lump sum payments in lieu of or for unused vacation
or sick leave."
c. 32, § 1.
 We use the
term "buyback" to refer to payments, such as those at issue here,
"related to the selling back of vacation time by an employee as a result
of that employee not using that vacation time," as referenced in PERAC's
memorandum no. 39/2012.
 Because we
conclude that the statutory language is unambiguous, we do not address the
parties' legislative history arguments.
Additionally, it is not dispositive that the collective bargaining
agreement at issue stated that payment in lieu of vacation time would not be
considered regular compensation. General
Laws c. 32 is not one of the statutory provisions that a collective
bargaining agreement with public employees may overrule. See G. L. c. 150E, § 7
(d). See also National Ass'n of Gov't
Employees v. Commonwealth, 419 Mass. 448, 452, cert. denied, 515 U.S. 1161
(1995) ("[S]tatutes not specifically enumerated in § 7 [d] will
prevail over contrary terms in collective bargaining agreements").
 O'Leary and
PERAC argue that because the definition of "[w]ages" in G. L.
c. 32, § 1, specifically excludes only one type of vacation pay,
i.e., "[one]–time lump sum payments in lieu of or for unused vacation
. . . leave," see note 7, supra, payments not distributed as a
one-time lump sum are necessarily included in the definition of wages. We disagree.
We consistently have emphasized that "the maxim of negative
implication -- that the express inclusion of one thing implies the exclusion of
another –‑ 'requires great caution in its application'" (citation
omitted). Halebian v. Berv, 457 Mass.
620, 628 (2010). See, e.g., Verveine
Corp. v. Strathmore Ins. Co., 489 Mass. 534, 546 (2022); Reuter v. Methuen, 489
Mass. 465, 474 (2022); Commonwealth v. Garvey, 477 Mass. 59, 65 (2017). Caution is especially warranted here because
the payments in lieu of vacation time at issue are expressly excluded as
"amounts derived from salary enhancements or salary augmentation plans
which will recur for a limited or definite term." G. L. c. 32, § 1. Moreover, the list of excluded types of wages
in § 1 is provided "without limitation," further belying the
notion that the absence of some explicit words here necessarily excludes the
logical result derived from the statute's plain language. See Federal Nat'l Mtge. Ass'n v. Nunez, 460
Mass. 511, 519 (2011) ("we understand the phrase 'without limitation' to
mean the broadest reasonable definition of acts").
For the same reason, we are not persuaded
by O'Leary's argument that the exclusion from "[w]ages" of "all
payments other than payment received by an individual . . . for
services rendered," G. L. c. 32, § 1; 840 Code Mass. Regs.
§ 15.03(3)(f) (2010), creates the negative implication that payments that
are received by an individual for services rendered always will be classified
 For the same
reason, O'Leary's argument that retroactive application of our decision
violates G. L. c. 32, § 25 (5), also fails. General Laws c. 32, § 25 (5),
states that the pension law "shall be deemed to establish and to have
established membership in the retirement system as a contractual relationship
. . . , and no amendments or alterations shall be made that will
deprive any such member . . . of their pension rights or benefits
provided for thereunder, if such member or members have paid the stipulated
contributions." There are no
"amendments or alterations" at issue here; as discussed supra, we
merely have interpreted statutory language, not changed it.
 General Laws
c. 32, § 20 (5) (c) (3), states:
request of a member or beneficiary who has been determined to have been paid
amounts in excess of those to which he is entitled or at the request of a
member who has been determined to owe funds to the retirement system, the board
may waive repayment or recovery of such amounts provided that:
error in any benefit payment or amount contributed to the system persisted for
a period in excess of one year;
error was not the result of erroneous information provided by the member or
member or beneficiary did not have knowledge of the error or did not have
reason to believe that the benefit amount or contribution rate was in