Attorney General's Opinion
Attorney General Richard Blumenthal
March 20, 1997
Messrs. Kevin P. Johnston and Robert G. Jaekle
Auditors of Public Accounts
210 Capitol Avenue
Hartford, CT 06106-1559
Dear Messrs. Johnston & Jaekle:
This is in response to your request for an opinion regarding the settlement of an employment dispute with Marc Schillinger, a former state employee. Specifically, you inquire "whether the Governor, upon the recommendation of the Attorney General, has the authority under Section 3-7(c) [of the General Statutes] to compromise a claim in a manner which is not in accordance with Section 5-162 and 5-155a of the General Statutes."
As you know, neither the Governor nor any other State official can act in a way that directly contravenes a statute. Having reviewed and discussed the Schillinger matter, this compromise was in accordance with pertinent statutes.
To summarize the factual background, in September of 1995, the Office of the State Comptroller (OSC) completed a major reorganization of its upper level management. As a result, some job classifications were rendered obsolete, and a new one was created. One of the employees affected by this reorganization was Marc Schillinger. Mr. Schillinger's job classification of Assistant Chief Administrative Officer was scheduled to be eliminated. As Assistant Chief Administrative Officer, Mr. Schillinger was paid $84,610 in MP (Managerial Pay Plan) 72 at the time of the reorganization.1 The OSC offered him a new position as Associate Fiscal Administrative Officer in which he would have been paid $53,529 in MP59, an annual difference of approximately $31,000. After raising a number of possible legal claims against the Comptroller concerning this change in position, including claims of age discrimination, Mr. Schillinger entered into an Agreement and Release (hereinafter Agreement) with the OSC on September 25, 1995 under which, inter alia, he would retire and receive a lump sum payment of $24,411.84. For the purposes of retirement, this sum was divided over the last three years of Mr. Schillinger's employment with the State.
As a result of our review, this office determined that the Agreement should be recommended to the Governor for approval under the provisions of Section 3-7(c) of the General Statutes, which states,
[u]pon the recommendation of the attorney general, the governor may authorize the compromise of any disputed claim by or against the state or any department or agency thereof, and shall certify to the proper officer or department or agency of the state the amount to be received or paid under such compromise. Conn. Gen. Stat. 3-7(c).
This office recommended compromise of the claim in accordance with the terms of the Agreement. That Recommendation sets forth in detail the legal justification for entering into the compromise. In essence, we concluded "that Mr. Schillinger has some colorable legal claims upon which he might prevail if his claims were brought to trial," and that if he prevailed "a judgment ... could easily exceed the ... compromise amount." The Governor approved the compromise, as did the Retirement Commission.
Specifically at issue in your request for opinion is 5 of the Agreement which provides:
For the purposes of ascertaining the average of Marc Schillinger's three highest years earnings under the plan provisions of the State Employees Retirement System, the said $24,411.84 will be apportioned in thirds to each separate twelve month period comprising such average.
Your request presupposes that this provision violated Sections 5-155a and 5-162 of the General Statutes. We conclude that this provision did not violate those statutes.
Dealing first with Section 5-155a, your request states that "since the Retirement Act is incorporated into a collective bargaining agreement, this may be a violation of Section 5-155a of the General Statutes which limits actions of the Retirement Commission which are inconsistent with the provisions of the Pension Agreement." That statute provides, in part:
[i]n conducting the business of the system, including its oversight functions, the Retirement Commission shall act ... in accordance with the provisions of ... applicable collective bargaining agreements.
Conn. Gen. Stat. 5-155a(c) (emphasis added). As set forth in the factual background, supra, Mr. Schillinger was a managerial employee, not covered by Chapter 68 of the General Statutes, Collective Bargaining for State Employees, or the Pension Agreement referenced in your letter. That Agreement resulted from collective bargaining conducted pursuant to that Chapter. Thus, there was no collective bargaining agreement governing retirement rights which was applicable to Mr. Schillinger. Since there was no collective bargaining agreement applicable to Mr. Schillinger, it was impossible for the Retirement Commission to have acted inconsistently with an applicable collective bargaining agreement in approving the settlement Agreement. Thus, the Retirement Commission did not violate Section 5-155a in approving the Agreement, this Office did not recommend that the Governor approve a compromise not in accordance with that statute, and the Governor did not compromise a claim not in accordance with that statute.
We turn next to an analysis of Section 5-162 in light of the Agreement. Retirement income under the State Employees Retirement Act, Chapter 66 of the General Statutes, is based on years of service and "base salary." "Base salary" is defined in Section 5-162 of the General Statutes as:
the average covered earnings received by a member for his three highest-paid years of state service, disregarding any general temporary reduction or any reduction or nonpayment for illness or other absence which does not exceed ninety days; and "covered earnings" means the annual salary, as defined in subsection (h) of section 5-154, received by a member in a year, limited by one hundred thirty per cent of the average of the two previous years' covered earnings.
Conn. Gen. Stat. 5-162(b)(2). "Salary" is defined in subsection (h) of Section 5-154:
(1) any payment, including longevity payments and payments for accrued vacation time under section 5-252, for state service made from a payroll submitted to the comptroller; and (2) the cash value of maintenance furnished by the state; and (3) fees received from the state in whole or in part in lieu of or in addition to item (1) above and established in the satisfaction of the Retirement Commission, to the extent that the employee has made retirement contributions on such fees; and (4) compensation paid by the United States to state employees who are employees of the United States Purchasing and Finance Office; and (5) compensation paid to employees of the Connecticut Institute for Municipal Studies established by section 1-135. Conn. Gen. Stat. 5-154(h).
Paragraph 4 of the Agreement states that the "lump sum payment of $24,411.84 ... will for all purposes be treated as wages earned in calendar year 1995, except as otherwise provided in Paragraph 5 ...." Your request does not question the propriety of the lump sum payment to Mr. Schillinger being considered salary for retirement, or any other purposes. Indeed, as more fully set forth in the Recommendation for Compromise, since the settlement amount was premised on Mr. Schillinger having claims under state and federal employment law, the settlement amount was properly deemed to be "wages" or "salary." Had Mr. Schillinger brought a claim under the federal Age Discrimination in Employment Act (ADEA) and prevailed, that statute provides for the award of wages for individuals discriminated against in employment on the basis of their age.
Under the State Employees' Retirement System, the salary of an individual is one of the two factors used in computing retirement income. It would be inconsistent with the ADEA to treat a compensatory award of salary which should have been paid, as not being "salary" for the purposes of the Retirement Act. In addressing the amendments made to the ADEA in 1978, the Congressional Conference Committee stated that under the ADEA, "'amounts owing' [in any civil action brought by a person alleging discrimination on account of age who demonstrates a violation of the ADEA] contemplates ... items of pecuniary or economic loss such as wages, fringe, and other job-related benefits." Conf. Comm., Age Discrimination in Employment Act Amendments of 1978, H.R. Rep. No. 950, 95th Cong., 2d Sess. 13, P.L.95-256,92 Stat. 535 (1978).
Although the cases discussed below deal with the award of back-pay in employment discrimination arising under Title VII of the Civil Rights Act of 1964, the principles apply to the award of back-pay under other federal statutes addressing employment discrimination, such as the ADEA and the Americans With Disabilities Act (ADA).
The purpose of the back-pay provision of Title VII is to make victims whole for injuries sustained from past employment discrimination. Albemarle Paper Company v. Moody, 422 U.S. 405, 419, 95 S.Ct. 2362, 2372, 45 L.Ed.2d 280 (1975). Since the object of compensatory relief under Title VII is to make the victim whole, courts must "as nearly as possible, "'recreate the conditions and relationships that would have been had there been no'" unlawful discrimination." International Bhd. Teamsters v. United States, 431 U.S. 324, 372, 97 S.Ct. 1843, 1873, 52 L.Ed.2d 396 (1977) (quoting Franks v. Bowman Transp. Co., 424 U.S. 747, 769, 96 S.Ct. 1251, 1266, 47 L.Ed.2d 444 (1976) (in turn quoting Local 60, United Bhd. of Carpenters and Joiners v. NLRB, 365 U.S. 651, 657, 81 S.Ct. 875, 879, 6 L.Ed.2d 1 (1961) (Harlan J., concurring))). ...
Further, once a pattern and practice of unlawful discrimination has been proven and the claimant has established his individual entitlement to back-pay, any "'uncertainties in determining what an employee would have earned but for the discrimination, should be resolved against the discriminating [party].'" Rios II, 542 F.2d at 587 (quoting Hairston v. McLean Trucking Co., 520 F.2d 226, 233 (4th Cir.1975) (in turn quoting Johnson v. Goodyear Tire & Rubber Co., 491 F.2d 1364, 1380 n. 53 (5th Cir.1974))).
Rios v. Enterprise Ass'n Steamfitters Union 638 of U.A., 860 F.2d 1168, 1175-76 (2d. Cir. 1988). In Cox v. American Cast Iron Pipe Co., 784 F.2d 1546, cert. denied, 479 U.S. 883 (11th Cir. 1986), the Circuit Court held that the prevailing plaintiffs were entitled to more than straight salary. In order to make them whole, the plaintiffs received interest, overtime, and fringe benefits such as vacation and sick pay. Similarly, since the settlement amount was premised on the existence of colorable claims, the settlement was properly deemed to be "salary" for the purposes of the State Employees' Retirement System.
Further, in those instances where an employee is terminated in violation of the ADEA and ordered reinstated, in addition to the award for pay between the date of termination and the date of the judgment, employers have been required by the courts to pay into pension funds amounts sufficient to bring plaintiffs' pension amounts up to the level where it would have been but for the ADEA violation. Syvock v. Milwaukee Boiler Mfg. Co., 665 F.2d 149, 161 (7th Cir. 1981); Loeb v. Textron, Inc., 600 F.2d 1003, 1021 (1st Cir. 1979). Mr. Schillinger was not reinstated, but retired. All that was done in his case was that the settlement amount, paid in recognition of the existence of potentially legitimate claims of employment discrimination, was attributed to income to bring his pension income up to the level it would have been if that amount had been awarded to him by a court for an ADEA violation. Accordingly, it was proper to treat the settlement amount as wages for retirement purposes. Thus, the only remaining question is whether 5 of the Agreement, which provides for the division of the settlement amount over the last three years of Mr.. Schillinger's state service for the purposes of computing his retirement income, was inconsistent with Section 5-162. We conclude that it was not. If, instead of dividing the settlement amount, it had been attributed to the highest paid year of Mr. Schillinger's employment, the 130% limit provision of Section 5-162 might have been triggered, though the result in terms of Mr. Schillinger's monthly retirement would have been virtually identical.2 This limit provides that the salary in the highest paid year of state service cannot exceed 130% of the average of the two previous years' earnings. By dividing the settlement over the last three years, the 130% limit did not become an issue.
There is no language in Section 5-162 which prohibits the division over three years of lump sum payments made in settlement of potential employment discrimination claims. In fact, there is no language in that Section which addresses in any fashion how such payments should be treated. The only manner in which the settlement amount could have been treated which arguably might have violated the provisions of Section 5-162, would have been including the entire amount in the highest paid year of Mr. Schillinger's employment, and disregarding the 130% limit.3 Your request assumes that since a settlement which included the entire payment in the highest salary year might have violated the statute, then dividing the settlement amount over three years must also violate the statute. The statutory language does not support this conclusion..
We are guided in this analysis by well established principles of statutory construction. "First, we look to the words of the statute in order to discern [its meaning.]" Westport Taxi Service v. Westport Transit District, 235 Conn. 1, 40, 664 A.2d 719 (1995). As has been pointed out, there is nothing in Section 5-162 which prohibits dividing settlement amounts over the three highest years for retirement purposes. "Courts should not read into clearly expressed legislation provisions which do not find expression in its words." Gomeau v. Forrest, 176 Conn. 523, 527, 409 A.2d 1006 (1979). Similarly, we cannot infer from the existence of the 130% limit a ban on the division of settlement amounts over three years. "Where the language is clear and unambiguous, we will not speculate as to some supposed intention." Robinson v. Unemployment Security Board of Review, 181 Conn. 1,6, 434 A.2d 293 (1980). Here, the language of Section 5-162 is clear and unambiguous and does not extend itself to the instant situation. Had the provisions of Section 5-162 been construed in such a manner as to preclude the inclusion of the entire settlement amount as "wages", it would have violated the principles set forth in the employment discrimination decisions discussed above, which require that the person be made whole and placed in the position he or she would have been in had the discrimination not occurred. Since the purpose of make whole relief is to make the party whole, and retirement benefits are an element of benefits which must be restored, Section 5-162 with the 130% limitation should not be construed in a manner that would frustrate or interfere with the requirements of the ADEA.
There is nothing in the language of Section 5-162 which prohibits the treatment of the settlement amount as set forth in the Agreement entered into between Mr. Schillinger and OSC. It follows that by approving the Agreement, the Retirement Commission did not attempt to authorize a violation of that statute. Further, since Mr. Schillinger was not subject to the collectively bargained Pension Agreement, the Commission could not authorize an act with respect to him which was in violation of that agreement.4 Since the Agreement did not violate the provisions of Section 5-155a or 5-162, this office did not recommend that the Governor compromise the claim in violation of those statutes, and the Governor did not authorize or attempt to authorize a compromise of a claim in violation of those statutes.
Very truly yours,
Robert A. Whitehead
Assistant Attorney General
1 Mr. Schillinger was assigned to MP pay plan as a "managerial employee" as that term is defined in Section 5-270(g) of the General Statutes, and not covered by Chapter 68 of the General Statutes, Collective Bargaining for State Employees, or the Pension Agreement referred to in your request for advice.
2 Based on figures provided to this office by the Retirement Division of the OSC, by dividing the settlement amount over the three years, Mr. Schillinger's base salary for retirement purposes was $90,869.21. Based on his years of service, the other variable in retirement computation, Mr. Schillinger's monthly retirement salary will be $2610.22. Had the settlement amount been included all in the last year of his employment, it might have triggered application of the 130% limit resulting in a base salary for retirement purposes of $90,516.47. Based on his years of service, this would have resulted in a monthly retirement salary of $2600.09, resulting in a difference of $10.11 per month. It is that amount which is at issue here.
3 Based on information supplied by the Retirement Division of the OSC, including the entire lump sum in Mr. Schillinger's highest year of income and not applying the 130% would have resulted in Mr. Schillinger's retirement income being the same as dividing it over the three years, as was done. In short, both dividing the settlement amount over three years and attributing it all to the last year without applying the 130% limit, result in a retirement salary of $2610.22 per month. Attributing the settlement amount all to the last year with the application of the limit results in a retirement salary of $2600.09 per month. The difference is the same $10.11.
Further, the 130% limit has not been construed by the Retirement Commission to be absolute. The "Summary Plan Description" of Tier I of the State Employees' Retirement System states, "mandatory overtime earnings are not subject to this limitation." Like all state agencies, the Retirement Commission has the authority to construe and apply the statutes within its jurisdiction so long as it does not violate the clear, express language of those statutes. Thus, had the Commission included all of the settlement amount in the highest paid year of Mr. Schillinger's employment and not applied the 130% limitation, that may have been a construction and application of Section 5-162 which did not violate the clear, express language of that statute.
4 In any case, even if Mr. Schillinger were a collective bargaining employee covered by the Pension Agreement, that Agreement would not have been violated since it contains the same language as in Section 5-162 and we have concluded that that statute was not violated.