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Eugene Water and Electric Board v. Public Employees Retirement Board

Supreme Court of Oregon, En Banc

June 6, 2019

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

          Argued and submitted January 17, 2019

          On review from the Court of Appeals. [*] (PERB 121420) (CA A158011)

          C. Robert Steringer, Harrang Long Gary Rudnick P.C., Portland, argued the cause and fled the brief for petitioner on review. Also on the briefs were Sharon A. Rudnick, William F. Gary and Erica R. Tatoian.

          Keith L. Kutler, Assistant Attorney General, Salem, argued the cause and fled the brief for respondent on review Public Employees Retirement Board. Also on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Philip Thoennes, League of Oregon Cities, Salem, fled the brief for amici curiae League of Oregon Cities, Association of Oregon Counties, Oregon School Boards Association, Special Districts Association of Oregon, Metro, and Lane County.

         [365 Or. 60] Case Summary:

         Petitioner, a public employer, sought judicial review of a Public Employees Retirement Board final order concluding that respondent was eligible for retirement benefits from the Public Employees Retirement System (PERS) for work he performed for petitioner while in a temporary/contract position. The Court of Appeals affirmed. Held: The legislature intended a person "in the service of a public employer," former 237.011 (1981), renumbered as ORS 238.015(1) (1995), to mean an employee of the public employer on that employer's payroll - not someone who, in hindsight, was determined to have a common-law employment relationship with the public employer.

         The decision of the Court of Appeals is reversed. The order of the Public Employees Retirement Board is reversed, and the case is remanded to the Public Employees Retirement Board.

         [365 Or. 61] NAKAMOTO, J.

         Respondent John Wigle first worked for petitioner Eugene Water and Electric Board (EWEB) as a temporary worker in a series of positions through a temporary-staffing company. EWEB, a public employer, later hired Wigle as a regular employee. When Wigle retired from EWEB, a dispute ensued over when Wigle had become eligible for retirement benefits from the Public Employees Retirement System (PERS). The outcome would affect the amount of Wigle's monthly retirement benefit.

         The dispute centers on what the legislature intended in a 1981 statute governing PERS eligibility. That statute provides in part: "No person may become a member of the system unless he is in the service of a public employer and has completed six months' service ***." Former ORS 237.011 (1981), renumbered as ORS 238.015(1) (1995) (emphasis added).

         In a contested case proceeding, the Public Employees Retirement Board (the board) concluded that, even though he was working through the temporary-staffing company, Wigle was eligible for PERS retirement benefits because he had worked for EWEB for six months. The Court of Appeals affirmed the board's order, rejecting EWEB's contention that Wigle became eligible only upon his later hire as a regular employee. Eugene Water and Electric Board v. PERB, 289 Or.App. 302, 410 P.3d 1026 (2017).

         We conclude that the legislature likely intended a person "in the service of a public employer" to mean an employee of the public employer on that employer's payroll- not someone who, in hindsight, was determined to have a common-law employment relationship with the public employer. In this case, EWEB placed Wigle on its payroll when he was hired as a regular employee. Accordingly, we reverse the decision of the Court of Appeals and the board's final order and remand the case to the board.

         I. BACKGROUND A. PERS Overview

         In 1953, the legislature enacted a comprehensive statutory scheme establishing a retirement system for public [365 Or. 62] employees in Oregon. In the Public Employes Retirement Act of 1953, the legislature declared:

"A system of retirement and of benefits at retirement or death for employes of public employers hereby is established and shall be known as the Public Employes Retirement System. Any similar system being operated by a public employer at the time this Act takes effect may be integrated into this system as hereinafter provided."

         Or. Laws 1953, ch 200, § 3, codified as former ORS 237.005 (1953). The statute in dispute was enacted as part of the 1953 Act. Or Laws 1953, ch 200, § 8.

         This court recently provided an overview of PERS that in two respects forms the backdrop for the dispute in this case. First, large numbers of public employers and employee members participate in PERS:

"Employees become PERS members after working six months in a qualified position for the state or other participating public employer. ORS 238.015(1); ORS 238A.100(1); ORS 238A.300(1). There are more than 330, 000 members in the PERS system, including current employees (active members), unretired former employees (inactive members), and retired former employees (retired members). And there are about 900 participating public employers, including all state departments and agencies, all school districts, and nearly all units of local government."

Moro v. State of Oregon, 357 Or. 167, 175, 351 P.3d 1 (2015) (footnote omitted).

         And second, PERS retirement benefits are funded through a combination of employee and employer contributions and investments of those contributions over time. The board "administers PERS and serves as trustee of the Public Employee Retirement Fund (the fund), which the board uses to pay member retirement benefits." Id. In carrying out its responsibility to ensure that the fund has enough assets to pay retirement benefits to PERS members, the board "relies on three sources to generate the fund's assets: member contributions; employer contributions; and investment income." Id.

         In overview, to "generate sufficient assets from those three sources to equal the retirement benefits owed [365 Or. 63] to PERS members[, ]" the board "attempts to prefund each member's benefits by collecting contributions both from that member and from his or her employer while the member is working" and then "invests those contributions over the course of the member's career and collects the income from those investments." Id. More specifically, the board "first determines the value of projected benefits for each member and then attempts to set current contribution rates so that, when invested, those contributions will grow and fully fund the benefits that the member will receive in retirement." Id. at 176-77. "Member contribution rates are set by statute at 6% of the member's salary." id. at 177. "Usually, employers pay for that contribution on behalf of their employees." Id. at 177 n 4. The board "may adjust only the employer contribution rates[, ]" and the board "sets employer contribution rates every biennium." Id. at 177. To set the employer contribution rates for PERS members like Wigle, the board "makes actuarial projections involving a member's career path, future earnings, and life expectancy, as well as anticipated earnings on investments." Id. at 179.

         B. Facts

         We take the facts, which are undisputed, from the record and the board's final order. See ORS 183.482(7) ("Review of a contested case shall be confined to the record, and the court shall not substitute its judgment for that of the agency as to any issue of fact or agency discretion.").

         Wigle worked in three temporary positions at EWEB. The first lasted only a few months. The second, which is central to the dispute, lasted almost one year. On November 1, 1982, Wigle started performing work as a residential analyst/inspector. EWEB placed Wigle in a "temporary/ contract position" through Kelly Services, a temporary-staffing company, after EWEB employees had interviewed and selected him. After working elsewhere, Wigle returned to EWEB for a third time, and, as before, worked less than one year in a temporary/contract position through Kelly Services. EWEB received federal funding for Wigle's temporary/contract positions, which were part of a program to provide residential customers with energy audits, through contracts with the Bonneville Power Administration (BPA). [365 Or. 64] For any given year of funding, BPA did not provide EWEB with a confirmed annual budget until approximately one month before the year started.

         While Wigle worked for EWEB in a temporary/ contract position, he reported to work at EWEB, without having to check in with Kelly Services. EWEB provided Wigle with everything needed for work: a desk, a badge and EWEB business cards identifying him as an employee, materials to use for inspections and audits, work overalls, and an EWEB fleet vehicle to drive to and from assignments. Wigle's duties were similar to those of EWEB's regular full-time employees, and he used EWEB-created ...


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