Opinion ID: 1364463
Heading Depth: 3
Heading Rank: 2

Heading: Vail's Claim Violates HRS Chapter 88

Text: Vail argues that the plain language of HRS § 88-42 expressly mandates that per diem workers shall become members of the system, and therefore such workers cannot also be considered part-time employees to whom the ERS can deny membership under HRS § 88-43. Accordingly, Vail maintains that a per diem worker automatically qualifies for full-time membership service credit toward retirement. Both the ERS and Vail agree that a per diem judge is one of the class of per diem workers under HRS § 88-42. According to HRS § 88-21, the definitions section of chapter 88, a per diem worker is a person employed and compensated on an hourly or daily basis. HRS § 604-2, the statutory section which provides for the appointment of per diem district court judges, states in relevant part that such judges shall receive per diem compensation for the days on which actual service is rendered[.] Per diem judges are thus clearly compensated on [a] ... daily basis. Whether a per diem judge is also employed on a daily basis under chapter 88 is a question which requires a more complex analysis. Service under the chapter is defined as service as an employee paid by the State or county. HRS § 88-21. Also qualifying as service under the chapter is service during the period of a leave of absence ... if the individual is paid by the State or county during the period of the leave of absence[.] HRS § 88-21 in relevant part defines an employee as [a]n individual ... during the period of a leave of absence if the individual is in service, as defined in this part, during the period of the leave of absence[.] Thus, an individual who is not being paid during the period of a leave of absence is not an employee under the chapter during the period of that unpaid leave of absence. It therefore follows that an individual is an employee under the chapter while he or she is being paid by the State or county. Accordingly, a per diem worker, including a per diem judge, is only an employee, and therefore employed, on the days for which he or she receives compensation. The parties are thus correct that a per diem judge while performing his or her duties is a per diem worker under chapter 88. The circuit court agreed with Vail that he should get full-time service retirement credit for the entire period of his per diem judgeship despite the number of actual work days during that period. However, it is Vail's claim, rather than the ERS's interpretation, which would violate certain express statutory provisions of chapter 88. An ERS employee-member's retirement allowance under the system is based on a percentage of average final compensation multiplied by the total number of years of that member's credited service. HRS § 88-74. The calculation of a member's credited service is thus crucial to a correct determination of that member's retirement allowance. A member's credited service at retirement consists in relevant part of the member's membership service. HRS § 88-71. According to HRS § 88-21, a member's membership service is in relevant part all service rendered by a member. Service, as previously noted, is defined in relevant part as service as an employee paid by the State or county.  HRS § 88-21 (emphasis added). Based on the foregoing analysis, only the days for which Vail was actually paid by the State can qualify as service under chapter 88. Likewise, Vail's membership service can only comprise those days for which he was actually compensated. Consequently, Vail's credited service, upon which his retirement allowance must be based, can only include those days for which he was actually paid. To give Vail the full-time credit he claims for the entire period of his per diem appointment would violate the express method of calculating retirement allowances provided in HRS § 88-74 and would result in a substantial windfall to Vail in direct contravention of the mandates of chapter 88. In its reply brief, the ERS sets forth an instructive hypothetical that reveals the potential unjust and unreasonable result of Vail's interpretation of HRS §§ 88-42 and 88-43: Assuming a per diem employee worked over a period of 10 years, earning 5 years of [credited service] (based on actual service rendered), with an average final compensation of $10,000, and 3.5% as the applicable percentage, then a retirement allowance of $1,750 (5 × .035 × $10,000) would be earned and 1200 days of [actual] service [would have been] rendered (10 years × 12 months × 10 days per month) [to the employer]. But under [Vail's] theory, 10 years of [credited service] would be awarded even if only one day of [actual compensated] service per month was rendered, [for] a total of [only] 120 days [of actual service to the employer over the entire 10 year period]. The retirement allowance would then be $3,500 (10 × .035 × $10,000)[, a] 100% increase in retirement benefits ... while the employer received merely one-tenth [the amount] of [actual] service from the prior example, and [conceivably] not even one day of service for [any of] the month[s] of service credit claimed. (Emphasis in original.) Vail has failed to fulfill his burden of showing that the ERS's declaratory order was invalid. We hold that his claim is at odds with the specific mandates of chapter 88, and to sustain it would lead to an unjust and unreasonable result. For this reason alone, we must vacate the decision of the circuit court.