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Miami

Cypen & Cypen
SPECIAL SUPPLEMENT
for
NOVEMBER 30, 2009

Stephen H. Cypen, Esq., Editor

FIREFIGHTERS’ CERTIFICATION PAY INCLUDED IN “EARNINGS” UNDER CITY PENSION PLAN:  A Florida Circuit Court was recently presented with cross motions for summary judgment filed by City of Delray Beach and by Board of Trustees of the City of Delray Beach Police Officers and Firefighters Retirement System.  The issue before the Court was whether firefighter and police certification pay was included in the definition of earnings under the City's Retirement System Ordinance.  Certification pay is compensation paid to City employees for obtaining, and maintaining state certification in certain categories.  Pursuant to Chapters 175 and 185, Florida Statutes, the City maintains a retirement system for firefighters and police officers.  Board is responsible for administration of the retirement system.  Contributions to the retirement system are made by the City and by firefighters and police officers based on a percentage of earnings.  The contributions are made on a regular basis, and employee contributions are deducted from pay.  It is undisputed that the City did not include a percentage of certification pay in contributions made to the retirement plan, and deductions were not made from firefighter or police earnings to cover employee contributions to the plan for certification pay.   Earnings was defined as follows:  “Basic wages paid to a member, excluding overtime, bonuses, and any other non-regular payments.”  Certification pay was not specifically addressed; therefore, the question was whether certification pay was part of wages or was excluded as a “bonus or other non-regular payment.”  Of course, the City took the position that certification pay was a bonus, stressing that certification pay was treated differently from normal salary payments.  Firefighters and police officers were paid a base salary every two weeks, while certification pay was paid only once a month.  The City also argued that including certification pay in the definition of earnings would create a new benefit without actuarial support.  In response, Board asserted that certification pay had none of the indicia of a bonus.  Although paid monthly, certification pay was a regular, recurring payment and was part of normal remuneration due a firefighter or police office holding state certifications.  Board stressed that certification was, in most cases, a prerequisite to the position held.  For example, a paramedic could not hold a position as paramedic without state certification, so certification pay for a paramedic holding a state paramedic certification was part of the basic wages of a paramedic.  Pension statutes are to be liberally construed in favor of intended recipients.  With that maxim in mind, the Court concluded that certification pay was included in the definition of earnings under the pension plan.  The Court found instructive the actual plan language, which excluded from basic wages bonuses and “any other non-regular payments.”  Use of the term “other” suggested that bonuses are non-regular, which would be consistent with common understanding that a bonus is a sporadic, irregular reward for exemplary service.  Once earned, certification pay became part of the normal remuneration due the certified employee.  The Court was not persuaded by the argument that including certification pay in the definition of earnings amounted to an unauthorized amendment of the retirement ordinance.  The issue was not amendment of the plan, but merely an issue of interpretation of the pension plan.  No doubt including certification pay as pensionable earnings will have a financial impact on the City and on retired employees.  The Court was not unmindful of such impact; however, the issue was whether certification pay should have been included in calculation of earnings in the first instance, not one of financial impact at this time.  Thus, the Court granted the Board's motion for summary judgment and denied the City’s motion.  We were privileged to serve as co-counsel for our regular client Board of Trustees of the City of Delray Beach Police Officers and Firefighters Retirement System.  City of Delray Beach v. Board of Trustees of the City of Delray Beach Police Officers and Firefighters Retirement System, Case No. 2006 CA  007168 AA (Fla. 15th Cir., November 25, 2009). 

 


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