O'Keefe v. Utah State Retirement Bd.

Decision Date12 December 1996
Docket NumberNo. 950742-CA,950742-CA
Citation929 P.2d 1112
Parties305 Utah Adv. Rep. 28 Joseph W. O'KEEFE, Jr., Petitioner, v. UTAH STATE RETIREMENT BOARD, Respondent.
CourtUtah Court of Appeals



Joseph W. O'Keefe, Jr. (petitioner) seeks review of the State Retirement Board's (the Board) adoption of the decision of an Administrative Hearing Officer (AHO), refusing to accept retirement system contributions from petitioner's employer, Ogden City, for hours petitioner worked in excess of forty hours per week. We affirm.


Petitioner is a peace officer employed by Ogden City throughout the entire period of this controversy. On July 1, 1985, Ogden City initiated a program whereby its peace officers, under certain prescribed and agreed upon circumstances, could be required to work more than forty hours per week. In 1989, Ogden City and its peace officer employees, including petitioner, reached an agreement to treat any hours worked in excess of forty hours per week, up to forty-three hours per week, in either of two ways: (1) the peace officers could use the three hours in question (commonly referred to as "GAP" time) as compensatory time, and Ogden City would not pay compensation for the GAP time; or (2) they could treat the GAP time as regular work hours, paid at regular, not overtime rates, and Ogden City would make retirement contributions on this additional compensation. 2 If allowed by the Board, the effect of the additional compensation and retirement contributions accrued in petitioner's final three years of employment would increase his monthly retirement allowance by $122.34 to $124.68 per month, depending on petitioner's retirement date.

In 1990, Ogden City began sending employer and employee contributions to the Utah Retirement Systems (URS) for those employees who chose to treat the GAP time worked as "regular compensation." URS received and credited these contributions to the appropriate participating members' accounts including petitioner's. In 1991, due to an administrative oversight, Ogden City sent no GAP time contributions to URS. In 1992, Ogden City forwarded the required contributions for both 1991 and 1992. After receipt of the 1992 contributions, URS determined that the GAP time contributions were ineligible for retirement fund purposes, and refunded them to Ogden City for the appropriate years.

During the period from 1992 to the hearing date, petitioner asserted that both the original 1990 contributions and subsequent GAP time contributions were eligible and should not have been refunded. URS, on the other hand, treated the contributions as ineligible, from the time it had actual knowledge of the GAP time issue. Actual knowledge did not occur until sometime in 1992, when an employee sought to retire with GAP time wages included as part of his compensation.

During this same period, URS officials, Ogden City representatives, petitioner, and others similarly situated, met in an attempt to resolve their differences. At these discussions, URS agreed to conditionally accept GAP time contributions, pending formulation of a permanent policy covering GAP time contributions. Petitioner, nevertheless, believed that a permanent policy had been adopted and that URS was accepting the contributions unconditionally. All parties agreed to request that the Board's actuary, Wyatt and Associates, determine any actuarial impact which would result from including GAP time wages in compensation for retirement purposes.

The actuary responded to URS on June 2, 1994, and stated as follows:

As explained to us, Ogden police officers have a 43-hour work week. However, officers are allowed a choice between (i) taking direct pay for the three hours over 40, or (ii) taking this time as additional comp time. Most officers take the time as comp time, but as they approach retirement, officers can and do switch to taking this as pay. By doing so, they increase their Average Annual Compensation, resulting in a higher retirement benefit.

This policy increases the employer's contribution rate from 9.8% to 11.7%. Our calculation assumes that all members elect to maximize their retirement benefit--i.e., they will be able to plan well enough in advance to increase their retirement benefits by 7.5% (the ratio of the 3 extra hours to the 40 hours they were being paid for earlier).

On July 12, 1994, URS notified petitioner of its decision that any hours over forty per week would be considered overtime and thus ineligible for calculating retirement benefits. URS reportedly based its decision on the actuary's report and its determination that "any administrative, i.e., URS decision to include GAP time would indeed be adding a benefit with a potential cost to all employers and employees, not just to Ogden City and its employees, should be decided by the Legislature, not URS." URS then resolved to permanently refuse to accept GAP time contributions. 3

The AHO affirmed URS's decision to refuse GAP time contributions. The Board adopted the AHO's Findings of Fact, Conclusions of Law and Order of Denial as its order. Petitioner now seeks review of that decision.


Petitioner raises three issues on appeal: (1) did the Board err in determining that the GAP time was "overtime" for retirement purposes; (2) is the Board equitably estopped from denying petitioner's GAP time contributions; and (3) did the Board's decision interfere with petitioner's right to contract with his employer?


"In the absence of an express or implied grant of discretion to an agency to interpret statutory language, this court reviews an agency's statutory construction as a question of law under a correction-of-error standard." Allred v. Utah State Retirement Bd., 914 P.2d 1172, 1174 (Utah App.1996). Because the statute in question contains no express or implied statutory grant of discretion to the agency, we review the Board's interpretation for correctness. See id. (construing similar provisions elsewhere in state retirement act). We review the Board's determination on the issue of equitable estoppel for correctness, affording a degree of deference to the agency. See Trolley Square Assocs. v. Nielson, 886 P.2d 61, 65 (Utah App.1994). Finally, resolution of petitioner's claim of interference with contract requires us to assess the statutory authority of the Board and is thus a question of law which we review for correctness. See generally Park City Educ. Ass'n v. Board of Educ., 879 P.2d 267, 269 (Utah App.), cert. denied, 890 P.2d 1034 (Utah 1994).

I. Meaning of "Overtime"

The central issue in this case is one of statutory interpretation. We must determine what "overtime" means for purposes of the Public Safety Retirement Act (PSRA), the retirement act applicable to peace officers. Utah Code Ann. §§ 49-4-101 to 49-4-704 (1994 & Supp.1996). This determination is essential because the PSRA specifically excludes overtime wages from compensation considered for purposes of calculating retirement benefits. The statute provides:

(a) "Compensation," "salary," or "wages" means the total amount of payments which are currently includable in gross income made by an employer to an employee covered under the retirement system for services rendered to the employer as base income. Base income shall be determined prior to any salary deductions or reductions for any salary deferral or pretax benefit programs authorized by federal law.

(b) "Compensation" includes performance-based bonuses and cost-of-living adjustments.

(c) "Compensation" does not include:

(i) overtime....

Id. § 49-4-103 (Supp.1996). We note that while "overtime" appears to be a critical term for purposes of the Utah Public Employees Retirement System--the Utah Legislature specifically chose to exclude overtime from compensation in the Public Safety and Firefighter's Retirement Acts while including it in others 4--it is undefined by Title 49 5 or the various public employee retirement acts, including the PSRA, contained therein. Accordingly, we turn to familiar principles of statutory construction for guidance.

We begin by examining the statute's plain language and resort to other methods of statutory interpretation only if the language of the statute is ambiguous. State v. Vigil, 842 P.2d 843, 845 (Utah 1992). In examining the plain language of the statute, we attempt to give meaning to each part of the statute so as to give effect to all of the statutory terms. Schurtz v. BMW of N. Am., Inc., 814 P.2d 1108, 1112 (Utah 1991). If doubt remains, "the court should analyze the act in its entirety and harmonize its provisions in accordance with the legislative intent and purpose." In re Worthen, 926 P.2d 853, 866 (Utah 1996) (quotation marks and citations omitted). Within these confines, we attempt " 'to give effect to the intent of the legislature in light of the purpose the statute was meant to achieve.' " Sullivan v. Scoular Grain Co., 853 P.2d 877, 880 (Utah 1993) (quoting Reeves v. Gentile, 813 P.2d 111, 115 (Utah 1991)).

The applicable version of the Utah State Retirement Act states that "title shall be liberally construed to provide maximum benefits and protections." Utah Code Ann. § 49-1-102 (1994). This statement, however, provides us little guidance in interpreting the language in question; allowing petitioner's overtime to be included would provide maximum benefits to him, whereas excluding it would arguably provide maximum protections to the system as a whole.

The stated purpose of the PSRA is to establish a retirement system for public safety employees which provides the following:

(1) a uniform system of membership;

(2) retirement requirements;

(3) benefits for public safety employees;

(4) funding on an actuarially sound basis;

(5) contributions by employers and employees; and


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