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Eugene Water and Electric Board v. Public Employees Retirement Board

Court of Appeals of Oregon

December 13, 2017

EUGENE WATER AND ELECTRIC BOARD, Petitioner,
v.
PUBLIC EMPLOYEES RETIREMENT BOARD and John T. Wigle, Respondents.

          Argued and submitted March 21, 2016

         Public Employees Retirement Board 121420; A158011

          C. Robert Steringer argued the cause for petitioner. With him on the briefs were Brett Applegate and Harrang Long Gary Rudnick P.C.

          Keith L. Kutler, Assistant Attorney General argued the cause for respondent Public Employees Retirement Board. On the brief were Ellen F. Rosenblum, Atttorney General, Anna M. Joyce, Solicitor General, and Matthew J. Lysne, Assistant Attorney General.

          Edmund J. Spinney argued the cause and fled the brief for respondent John T. Wigle.

          Before Ortega, Presiding Judge, and Lagesen, Judge, and Wollheim, Senior Judge.

         Case Summary: Petitioner Eugene Water and Electric Board (EWEB) seeks judicial review of a final order of the Public Employees Retirement Board (board), which determined that respondent Wigle became eligible for membership in the Public Employees Retirement System (PERS) six months after he began working at EWEB in a "temporary/contract position" and during which time he was paid through a third-party employment agency. EWEB asserts that Wigle did not become eligible for PERS membership until six months after his later hiring as a regular full-time EWEB employee. EWEB raises two assignments of error: (1) the board erroneously construed former ORS 237.011 (1981) as providing that a person employed by a public employer, but paid through a third-party employment agency, is "in the service of a public employer" and (2) the board failed to use the definition of "service" contained in its own rule-OAR 459-010-0003(1) (e)-which did not exist during the period Wigle was working for EWEB in a [289 Or. 303] "temporary/contract position." Held: Wigle became eligible for PERS membership six months after his start date as an employee of EWEB and for which he was paid through a third-party employment agency.

         [289 Or. 304] ORTEGA, P. J.

         Petitioner Eugene Water and Electric Board (EWEB) seeks judicial review of a final order of the Public Employees Retirement Board (board), which determined that respondent Wigle became eligible for membership in the Public Employees Retirement System (PERS) six months after he began working at EWEB in a "temporary/ contract position" and during which time he was paid through a third-party employment agency. EWEB asserts that Wigle did not become eligible for PERS membership until six months after his later hiring as a regular full-time EWEB employee. EWEB asserts two assignments of error: (1) that the board erroneously construed former ORS 237.011 (1981), renumbered as ORS 238.015(1) (1995)[1] as providing that a person employed by a public employer, but paid through a third-party employment agency, is "in the service of a public employer" and (2) the board failed to use the definition of "service" contained in its own rule-OAR 459-010-0003 (1)(e)[2]-which did not exist during the period Wigle was working for EWEB in a "temporary/contract position." We reject EWEB's arguments and agree with the board's determination. We therefore affirm.

         [289 Or. 305] The relevant facts are undisputed. Wigle began working for EWEB on November 1, 1982. EWEB employees interviewed Wigle and made the decision to hire him for what it considered a "temporary/contract position" to conduct residential energy audits and inspections. He reported to work at EWEB's offices and worked full time performing the same duties as the other regular full-time residential analysts/ inspectors. Wigle drove an EWEB truck, used EWEB office space and equipment, and used EWEB-created protocols to conduct the home audits and inspections. Further, Wigle was provided a badge and business cards that identified him as an EWEB employee. At the end of each week, Wigle would fill out a time card and submit it for approval to his EWEB supervisor, who would then forward it to Kelly Services, a temporary-staffing agency. Kelly Services would then issue Wigle's paychecks. That is, Wigle was "paid through" Kelly Services. Wigle's hourly pay was about the same as EWEB's regular full-time residential inspectors/analysts, but, unlike those employees, he did not accrue sick or vacation time, did not receive health insurance or other benefits, and did not make contributions to PERS. That arrangement continued until October 30, 1983, when Wigle left EWEB to work in another county. He returned to EWEB one year and four months later in the same position as before, and, on February 1, 1986, Wigle was hired as a regular full-time residential analyst/inspector with EWEB. Six months later, on August 1, 1986, Wigle was recognized as a PERS member, and EWEB began making contributions to PERS on his behalf. Wigle continued his employment with EWEB until he retired in 2011.

         At some point, EWEB's legal counsel determined that PERS would likely treat Wigle as a PERS-eligible employee from his November 1, 1982 date of hire. Consistent with its counsel's advice, EWEB notified PERS that Wigle's start date should be changed to November 1, 1982, and PERS invoiced EWEB $6, 442.30 for contributions and $33, 953.40 for earnings on the contributions. EWEB paid the invoice. After the invoice was paid, however, EWEB obtained a second opinion regarding the eligibility dates for employees who, like Wigle, had worked for EWEB but were paid through a temporary staffing agency before becoming regular full-time [289 Or. 306] employees. That opinion was contrary to the first, and EWEB requested by letter that PERS correct its records to reflect that Wigle's start date to determine PERS membership eligibility was February 1, 1986. That letter asserted that, under ORS 238.015(1) and OAR 459-010-0003(1), Wigle was not "in the service of a public employer" until his 1986 hiring as a regular EWEB employee because he had been paid by a staffing agency before then. PERS accepted the correction and notified Wigle of its staff determination that, based on the change to his start date, his retirement benefits would be reduced by about $325 per month. Wigle appealed that determination notice to an administrative law judge (ALJ). For the administrative hearing, PERS reversed its position and adopted Wigle's contention that he was PERS-eligible as of May 1, 1983, six months after he began working for EWEB on November 1, 1982.

         The ALJ viewed the issue as whether Wigle became eligible for PERS membership as of May 1, 1983 (six months after he began working for EWEB), or as of August 1, 1986 (six months after EWEB hired him into a regular position). For the ALJ, the issue turned on the meaning of the phrase "in the service of a public employer" as used in former ORS 237.011. The ALJ considered our case law concerning the meaning of "service" in another PERS statute, Aronson v. PERB, 236 Or.App. 17, 24, 236 P.3d 731 (2010) (construing "absent from the service" informer ORS 237.109(2) (1973) as "not working"), and construed former ORS 237.011 to ascertain the legislative intent under our usual methodology, PGE v. Bureau of Labor and Industries, 317 Or. 606, 610-12, 859 P.2d 1143 (1993), and State v. Gaines, 346 Or. 160, 171-72, 206 P.3d 1042 (2009), concluding that the term "in the service of" means the same thing as "employment." The ALJ also determined that, under common law and PERS rules, [3] Wigle was an employee as of November 1, 1982, and was therefore entitled to PERS membership as of May 1, 1983 (upon completing his first six months' employment with EWEB). The board affirmed and adopted the ALJ's conclusions.

         [289 Or. 307] On review, EWEB does not dispute that Wigle was an employee. Rather, EWEB argues, as it did before the board, that a two-pronged inquiry determines PERS-membership eligibility. That is, to be eligible, a worker must be an "employee, " and also receive a "salary, " defined in former ORS 237.003(8) (1981), renumbered as ORS 238.005(11)(a) (1995), in part, as "the remuneration paid an employe in cash out of the funds of a public employer in return for services to the employer." In EWEB's view, Wigle never received a "salary" under that definition when his paychecks were issued by Kelly Services because he was not paid "in cash out of the funds of a public employer." EWEB argues that the board's reasoning is "simplistic" in that it does not properly take into account the PERS statutory scheme and subsequent amendments to the PERS statutes as well as the board's administrative rules, namely, the definition of "creditable service, " ORS 238.005(6), and the definition of "service" in OAR 459-010-0003 (1)(e). According to EWEB, because employees of a public employer must contribute six percent of their "salary" to the Public Employees Retirement Fund under former ORS 237.071 (1981), renumbered as ORS 238.200 (1995), it "necessarily follows that work through a temp service, where the worker's salary is paid by the temp service rather than through the public employer's payroll, could not be a type of work that qualified as 'service' for purposes of PERS eligibility."

         Respondents answer that "in the service of a public employer" means nothing more than the performance of work or employment for a public employer. Moreover, the board asserts that a person is PERS-membership eligible if the person performs work for a public employer for six uninterrupted months, former ORS 237.011, and the person does not fall within any of the exceptions set forth in the PERS statutes. Moreover, respondents assert, even if receiving a "salary" is a requirement of PERS membership ...


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