Opinion ID: 2575877
Heading Depth: 4
Heading Rank: 1

Heading: Plaintiffs lack vested contract rights.

Text: ¶ 28 Plaintiffs assert their interests under the first exception, claiming that a public employee has a vested contractual interest in exchanging 100% of the unused sick leave hours for medical and life insurance at retirement. We disagree. ¶ 29 Both parties argue that a public employee obtains vested rights to retirement benefits only when he has satisfied all conditions precedent. [27] We agree that parties must satisfy all conditions precedent before the rights vest. The pivotal question is at what point state employees satisfy the requisite conditions precedent to vest a protectable property interest in using 100% of their unused sick leave hours for medical and life insurance. ¶ 30 As always, we first look to the plain language of the statute to determine the conditions precedent. Based on the statute and the accompanying regulations, [28] the State contends that the statutory scheme unambiguously dictates that an employee may not receive retirement benefits until that employee actually retires. Plaintiffs, on the other hand, interpret the statutory language to mean that any member who chooses to bank unused sick leave has a vested property interest to use that sick leave for medical and life insurance benefits at retirement. We disagree with both parties' statutory interpretations. ¶ 31 Instead, we find the statutory language ambiguous as to when an employee's right to redeem the unused sick leave for medical and life insurance vests. Section 67-19-14.2 states that [a]n agency may offer the []Program to an employee who is eligible to receive retirement benefits in accordance with Title 49, Utah State Retirement and Insurance Benefit Act. [29] One might expect Title 49 to provide direction on the conditions precedent necessary for an employee to be eligible to receive retirement benefits. ¶ 32 Title 49, however, fails to clarify when an employee is eligible to receive retirement benefits. The Title, with its eight parts and forty-four statutory sections, speaks of service credits, benefits, and allowances but fails to explain the distinctions, including when an employee is eligible for each. The State argues that retirement benefits are synonymous with allowances. Plaintiffs, on the other hand, argue that if an employee is earning service credits, an employee is eligible for retirement benefits but not for allowances. Our research indicates that neither retirement benefits nor allowances are used to define or explain one another, and that employees are generally eligible for service credits upon the effective date of employment. [30] ¶ 33 Absent clear language regarding or an obvious interpretation of eligible to receive retirement benefits in section 67-19-49 and Title 49, we conclude that the statutory language is ambiguous. It is clearly capable of more than one logical meaning within the statutory scheme. For example, a state employee might be eligible to receive retirement benefits when she reaches the length of service required for retirement and the age required for retirement, and submits her signed notice of retirement to the appropriate office or official of state government. Alternatively, one might be eligible to receive retirement benefits when reaching the service and age minimums, even if he continues to work. Additionally, one might be considered eligible to receive retirement benefits when one is employed in a full-time position by the State, in an agency or position for which there exists a retirement program under the extensive provisions of Title 49. While one or more of these possibilities may seem more logical, useful, or fair than another, such is not the question we face. Unable to accurately discern from the naked language alone which of the possible meanings is the meaning intended by the legislative drafters, we have no choice but to examine other appropriate evidence of what meaning is correct. ¶ 34 Moreover, the plausible interpretations of the isolated word eligible in both section 67-19-14.2 and Title 49 also render the statutory language ambiguous. The State suggests that one is eligible when one is qualified to receive an allowance. [31] UPEA, on the other hand, argues that because Title 49 never refers to eligibility in relation to allowance but rather only in respect to service credits, eligible to receive retirement benefits cannot be synonymous with qualified to receive an allowance. ¶ 35 Furthermore, our prior case law suggests that eligible to receive retirement benefits is an ambiguous phrase. In Hansen v. Public Employees Retirement System Board of Administration, for instance, we struggled with how to define eligibility for retirement benefits. [32] We held there that an employee who has neither served the necessary years to qualify for pension, nor attained the retirement age[] has no vested rights in the pension or retirement system [33] and that since the plaintiff had neither served the time requisite to entitle him to retire and receive a pension, nor had he attained retirement age, he had no vested rights in a pension or the retirement system. [34] This interpretation adds to the ambiguity because it implies that an employee may be eligible to receive retirement benefits upon attaining retirement age, serving a requisite number of years, qualifying for retirement benefits, or some combination thereof. ¶ 36 Consequently, we conclude that section 67-19-14.2 lacks a clear meaning for eligible to receive retirement benefits because the language gives rise to several plausible interpretations. As noted, it may refer to the time at which the employee walks out of the building for the last time and actually retires, or perhaps to the point when, after having worked for the State the requisite number of years to receive contributions to the Utah Retirement System, the employee chooses yet to continue state employment. It may also mean the condition described under Utah Code sections 49.12.201, 49.13.201, 49.14.201 and any of the other general membership requirements to the sixteen retirement acts listed under Title 49. [35] Each of those sections applies to any full-time employee whose employer chose to participate in the described program and who is earning service credits. Both the statutory language and Utah case law are ambiguous as to whether employees' property rights vest at eligibility for retirement, actual retirement, or eligibility for the payout. ¶ 37 We accordingly turn to the available indications of legislative intent to determine at what point all conditions precedent are satisfied for the vesting of employees' right to redeem unused sick leave for medical and life insurance under the Program. [36] The legislative intent behind these particular retirement benefits is clearly stated as inducements to work for the state [37] and to reduce sick leave abuse. [38] Logically, no incentive exists if, as the State urges, the agency may offer the benefit only on the occasion of the employee leaving his or her state job by retirement. A benefit not known until the very day on which the employee can do nothing to earn it, is no incentive at all. ¶ 38 In fact, the undisputed evidence before the district court was that state agencies routinely described the availability of the sick leave conversion to prepaid medical and life insurance at retirement to their employees for the very purpose described in the statute: to encourage state employees to remain state employed in the face of lower wages than available elsewhere, and to encourage limited use of sick leave. ¶ 39 Thus, we conclude that state agencies inviting employees to participate in the Program during the course of their state employment constituted an offer by the State. ¶ 40 We also conclude, however, that the State's offer was to exchange the unused sick leave for a benefit upon retirement, but not necessarily any particular benefit. The various changes in the statutory scheme from 1979 to 2004 clearly demonstrate that the Legislature intended to reserve the ability to modify the menu of available benefits, and did not intend to bind the State forever to redeem 100% of the unused sick leave hours for any one use, and in particular not necessarily for medical and life insurance. ¶ 41 The critical issue is at what point employees can act to accept the offer to redeem banked sick leave exclusively for medical and life insurance. This is an important question because employees' property interest to use these accrued hours for medical and life insurance vests only after an acceptance of the State's offer to redeem them in such a way. ¶ 42 In our review of the statutory language and relevant legislative history, we are compelled to conclude that the State intended employees to accept the offer to redeem the hours for unused sick leave only upon retirement. For example, the regulations promulgated pursuant to the statute provide that [u]pon retirement from active employment, an employee may be offered a retirement benefit program, according to Section 67-19-14.2. [39] We can only interpret this to mean that at the time of retirement an employee is offered a choice of the manner in which the hours may be exchanged for other benefits of value. Those choices can only be from those delineated in the then-current statutory version of the Program. Only at that point may the employee accept that particular offer to redeem the hours in the manner set forth in the current statute. Moreover, as a matter of ordinary contract law, until accepted, the State's offer is subject to unilateral modification. Thus, a property interest in accumulated sick leave hours for the specific purpose of exchanging them for paid medical and life insurance cannot vest, as a matter of law, until the employee retires. The result is that the first exception to the general rule is of no consequence in our analysis of Plaintiffs' claims.