AGO 1950 No. 295 - Jul 5 1950
COMPULSORY RETIREMENT OF CITY EMPLOYEES HOLDING MEMBERSHIP IN THE STATE WIDE [[STATEWIDE]]CITY EMPLOYEES' RETIREMENT SYSTEM.
After two years have elapsed from the date upon which a city makes membership in the Statewide City Employees Retirement System available to its employees, miscellaneous personnel covered by the Retirement Act are subject to compulsory retirement at age sixty-seven (67), and uniformed personnel are subject to compulsory retirement at age sixty-four (64). The legislative authority of a participating city is without power to retain in employment miscellaneous personnel beyond age sixty-seven (67), and uniformed personnel beyond age sixty-four (64). City officials and appointing authorities are also without power to retain employees beyond compulsory retirement ages set forth herein. In the event that an employee covered by the Retirement System is retained beyond compulsory retirement age, the Retirement Board must consider such employee to be retired, and compute retirement benefits as of the proper retirement date. Benefit payments, however, must be suspended during the period of time during which an employee is retained in employment beyond compulsory retirement date. The Board of Trustees of the Retirement System is not required to bring action against a city to force removal from employment at compulsory retirement age, and the legislative authority of a city or an appointing official who extends the employment of a member beyond compulsory retirement date does so at its or his own peril. A city is without authority to place in employment an employee who is beyond the age for compulsory retirement.
[[Orig. Op. Page 2]]
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July 5, 1950
Donald H. Webster, PhD [[Ph.D.]]
Bureau of Governmental Research and Services
University of Washington
266 J. Allen Smith Hall
Seattle 5, Washington Cite as: AGO 49-51 No. 295
In your letter of April 4, 1950, you requested an opinion of this office in respect to a number of specific questions, all of which arise in connection with the "Statewide City Employees Retirement System established by Chapter 71, Laws of 1947 (Rem. Supp. 1947, Sec. 9592-130 et seq.), as amended by Chapter 171, Laws of 1949, which will be referred to herein as the Retirement Act."
In delivering the opinion requested, we will try to take up each question proposed in order, and answer the same. This may in some cases result in redundancy, but will on the whole, we hope, achieve the clarity desired.
"Under Sec. 14 (a) and (c), Ch. 71, Laws of 1947 (Rem. Rev. Stat. (1947 Supp.) Sec. 9592-143)), with the exception of the extension of the time for retirement for two years by the legislative authority for 'miscellaneous personnel' and for four years for 'uniformed personnel' of the city, is retirement (a) for 'miscellaneous personnel' in the service of a city compulsory at the age of sixty-five, and (b) for 'uniformed personnel' (policemen) at age sixty?"
Opinion: Section 14 of the Retirement Act deals with service retirement, which subject is the heart of any retirement law. In order to fully appreciate the scope of such a section, it is necessary to refer to the "Purpose of the Act" which is found in section 2 (9592-141 Rem. Supp. 1947) and which reads as follows:
"The purpose of this act is to provide for an actuarially sound system for the payment of annuities and other benefits to officers and employees and to beneficiaries of officers and employees of cities and [[Orig. Op. Page 3]] towns thereby enabling such employees to provide for themselves and their dependents in case of old age, disability and death, and effecting economy and efficiency in the public service by furnishing an orderly means whereby such employees who have become aged or otherwise incapacitated may, without hardship or prejudice, be retired from active service."
Analyzing the purpose as expressed above, we find, (1), the establishment of an actuarially sound system; (2), provision for annuity and other benefits payable to officers and employees of the municipality in question, and to beneficiaries of such persons. These annuities and other benefits are to enable the persons concerned to provide for themselves and their dependents in case of age, disability and death; (3), effecting of economy and efficiency in public service by furnishing an orderly means whereby employees who have become aged or otherwise incapacitated may, without hardship or prejudice, be retired from active service. For the purpose of our present discussion, we need not tarry overlong in connection with statements 1 and 2, above. The first of these purposes is achieved by various provisions in connection with the computation of benefits and the investment of funds, while the second is provided for where the right to retire after a certain age is granted, or death or disability benefits are made available.
The third purpose, which is the essence of our present discussion, is effected by paragraphs (a) and (c) of section 14 (9592-143 Rem. Supp. 1947) referred to specifically in your question. The first of these paragraphs deals with miscellaneous personnel which is defined in section 3 (9592-132 Rem. Supp. 1947) of the Retirement Act as " * * * officers and employees other than those in the uniformed police or fire service, * * * " and section (c) which provides for uniformed personnel, also defined in the same section of the act, to mean "any employee who is a policeman in service or who is subject to call to active service or duty as such."
In connection with both categories of employees, it should be noted a compulsory retirement age is fixed. With reference to miscellaneous personnel, this subject is handled as follows: "Each member included in the miscellaneous personnel in service on the effective date, who, on or before such effective date, has attained the age of sixty-five (65) years or over shall be compulsorily retired forthwith: * * * Members included in the miscellaneous personnel attaining age sixty-five (65) after the effective date shall be retired [[Orig. Op. Page 4]] on the first day of the calendar month next succeeding the month in which the member shall have attained sixty-five (65): * * *." In connection with both of these statements, there are two provisos. The first reads "That none of such members shall be subject to compulsory retirement until two years after the effective date:" and the second, "That the legislative authority of the city shall have the privilege at all times of extending time for retirement to attainment by such member of age sixty-seven (67)."
In connection with uniformed personnel, as provided for in paragraph (c), the language is identical with that found in paragraph (b), with the exception of the fact that the basic age is sixty (60) and the age to which an extension may be granted is sixty-four (64).
We cannot imagine language which could express a legislative intent more clearly. The compulsory nature of retirement is spelled out with great exactitude, and the age limits are set forth with precision.
Returning for a moment to section 2, supra, we see that one of the purposes of the Retirement Act, namely "* * * furnishing an orderly means whereby such employees who have become aged or otherwise incapacitated, may, without hardship or prejudice, be retired from active service." is achieved by the provisions of section 14 (a) and (c), as compulsory retirement of aged employees enables a city to promote economy by providing an orderly means of replacing employees, and our opinion is that miscellaneous personnel must be retired at not more than age sixty-seven (67), and uniformed personnel retired at not more than age sixty-four (64), except for the first two years in which a municipality participated after the effective date of its entrance into the System.
"(a) In the event city 'miscellaneous personnel' or 'uniformed personnel' are retained by virtue of action by the legislative authority of a cityfor more than two years or four years, respectively, beyond the compulsory retirement age prescribed by Sec. 14 (a) and (c) ((Rem. Rev. Stat. (1947 Supp.) Sec. 9592-146)), then is the Board of Trustees of the state‑wide city employees' retirement system obliged to consider such city employees as retired during the period of employment [[Orig. Op. Page 5]] for more than two years after age for retirement for 'miscellaneous personnel' and for more than four years for 'uniformed personnel', and is the said Board of Trustees of the state‑wide [[statewide]]City Employees Retirement System precluded from paying any retirement allowance to such municipal employees during their period of employment for more than two years or four years, respectively, after the age of retirement by virtue of Sec. 25, Ch. 71, Laws of 1947 ((Rem. Rev. Stat. (1947 Supp.) Sec. 9592-154))? (b) If city employees are thus retained by the appointing officer without action by the legislative authority of a city, is the Board of Trustees precluded from paying any retirement allowance to such municipal employees during their period of employmentfor more than two years or four years, respectively, after the age of retirement by virtue of Sec. 25, Ch. 71, Laws of 1947 ((Rem. Rev. Stat. (1947 Supp.) Sec. 9592-154))?"
Opinion: We can find no authority in the Law which would allow the legislative authority of a city to extend employment rights to an employee after age sixty-seven (67) in the case of miscellaneous personnel, or after age sixty-four (64) in the case of uniformed personnel. The only possible exceptions to this statement would be where the city was within its first two years of participation, or where an employee over the ages mentioned was employed in a position as set forth in section 11, paragraph (d) (9592-140 Rem. Supp. 1949) of the Retirement Act and was not eligible because he was not a regular, full time employee earning more than $50 a month. Further, elective officials, due to the fact that they were serving a term of office, would also be exempt.
At this point, it should be noted that section 5 (9592-134 Rem. Supp. 1947) of the Retirement Act provides for participation by a city in the Retirement System and reads in part as follows:
"* * * Whenever any city has elected to join the retirement system proper authorities in such city shall immediately file with the board an application for participation under the conditions included in this act on a form approved by the board. * * *" (Emphasis supplied)
[[Orig. Op. Page 6]]
Obviously the legislative body of a municipality, charged as it is with making laws to govern such municipality, may do so directly or may, as in the case of the Retirement Act, freely adopt a state statute. Where a statute such as the said Retirement Act is adopted, it automatically becomes, by reference at least, a portion of the body laws governing the municipality in question. Further, by the very terms of the Retirement Act, a city can only participate in the Retirement System "* * * under the conditions included in this act * * *."
In view of this situation, any action by the legislative authority of the municipality in question, or by any official of the said municipality which would defeat an express purpose of the Retirement Act would be not alone to act contrary to the laws governing the city, but would also do violence to the position in which the city had placed itself. This is true whether the legislative authority or an official should refuse to apply the compulsory retirement feature of the Retirement Act or refuse to abide by any other section of the law, as for example, the sections which require contributions for pension purposes by the city.
In the event that the legislative authority of a city should retain an employee beyond compulsory retirement date, the Board of the Retirement System would have no choice but to consider the employee retired, as otherwise the said Board would be remiss in its duties in not applying sections 14 (9592-143 Rem. Supp. 1947) and 15 (9592-144 Rem. Supp. 1949) of the Retirement Act. This subject is covered in section 14 and in section 15 (a) which provides in part
"A member, upon retirement for service, shall receive a retirement allowance subject to the provisions of paragraph (b) of this section which shall consist of * * *."
If city employees are retained after their proper compulsory retirement age, as explained above, either by the action of the appointing officer or by the legislative authority of the city, it would appear that the Board of Trustees must not only consider the said employee to be retired as provided by the law, but must withhold payment of retirement benefits under the provision of section 25 (9592-154 Rem. Supp. 1947) of the said Retirement Act, which reads in part as follows:
"The payment of any retirement allowance to a member who has been retired from service shall be suspended during the time that the beneficiary is in receipt of compensation for service to the State of [[Orig. Op. Page 7]] Washington, any municipal corporation, or other public service thereof paid from direct or indirect, state or municipal taxes or revenues, or revenues of publicly owned utilities, except as to the amount by which such retirement allowance may exceed such compensation for the same period. It is the intent of this section to prevent any retired person from being able to receive both his retirement allowance and compensation for service to public institutions in the State of Washington: * * *"
These conclusions are reached because as explained above the appointing authority in any city is subject to the ordinances and laws governing employment conditions in the said city, and would be retaining the employee in violation of law and without authority. We find no power in this regard residing in the legislative authority, as distinguished from an official, as the statute seems, by its terms, to leave no discretion in connection with retirement system legislation in such a body after once the Retirement Act has been adopted except the right to withdraw under section 9 (c) (9592-138 Rem. Supp. 1949) of the said Retirement Act. Further, section 25, quoted above, shows very clearly that no employee shall receive a retirement benefit while he is in receipt of remuneration from a city of the state.
"(a) If 'miscellaneous' and 'uniformed' city employees are retained on the city payroll for a periodin excess of the two and four-year extended periods respectively prescribed by the legislative authority of the city under Sec. 14 (a) and (c) of Ch. 71, Laws of 1947 (Rem. Rev. Stat. (1947 Supp.) Sec. 9592-143)), are such employees required to contribute to the retirement system during the period of their employment after the expiration of the two and four-year extended period for 'miscellaneous' and 'uniformed' personnel respectively? (b) If city employees are thus retained, when they eventually retire, is the age and service record computed as of the date when compulsory retirement should have taken place or when the employment relationship with the city actually terminated?"
[[Orig. Op. Page 8]]
Opinion: An employee who has reached compulsory retirement age has only one right under the Retirement Act. This right is to receive retirement benefits. Where such an employee is retained in employment after retirement age is reached, there would seem to be no way of including him in membership in the Retirement System. It is true that membership is provided for in section 11 (9592-40 Rem. Supp. 1949) of the Retirement Act, and such section contains no age limit. However, it is submitted that one section of a law cannot be read without regard to the complete act of which it is a part; hence section 14 must be considered as a part of the act, and continued membership cannot be granted where compulsory retirement at ages set forth therein is required. (b) If city employees are retained beyond the compulsory retirement date, their rights vest as of their retirement date, as set forth in sections 14 and 15, discussed at some length above. It should be noted that section 15 provides as follows:
"A member upon retirement from service shall receive a retirement allowance subject to the provisions of paragraph (b) of this section, which shall consist of, (1) an annuity which shall be the actuarial equivalent of his accumulated normal contributions at the time of his retirement, and, (2), a pension provided by the contributions of the city, equal to the annuity purchased by the accumulated normal contributions of the member."
Computations are based upon the time at which the member is retired, which, in the case of a compulsory retirement, is governed by section 14, supra. The fact that the member was retained in employment and paid, does not mean that the retirement allowance shall be computed at a later date. Actually the retirement allowance must be computed as of the proper retirement date, and payments by the Retirement Board are merely held in suspension during the period in which the employee is retained in employment in controversion of the controlling statute.
"(a) Is the state Board of Trustees obligated to initiate any action to compel a city to retire municipal employees at the expiration of the two-year and four-year period of extension for 'miscellaneous' and 'uniformed' personnel respectively prescribed by Sec. 14 (a) and (c) of Ch. 71, Laws of 1947 ((Rem. Rev. Stat. [[Orig. Op. Page 9]] (1947 Supp.) Sec. 9592-143)) in the event a city continues to retain employees on its payroll after the expiration of the two-year extension period prescribed by Sec. 14 (a) and (c) of Ch. 71, Laws of 1947 ((Rem. Rev. Stat. (1947 Supp.) Sec. 9592-143))? (b) If city employees are thus retained, are the city officials liable for the salary paid during the period in excess of two years for which they are retained?"
Opinion: The Board of Trustees of the Retirement System has its duties set forth in section 8 (9592-137 Rem. Supp. 1949) of the Act. Nowhere in the section do we find any obligation upon the Board to initiate an action to compel a city to retire an employee. The Board is charged with the operation of the system and the payment of benefits. Section 25, referred to above in detail, protects the board where retirements are not made according to the law by a municipality, and there seems to be no obligation for the board to go further in this matter. (b) The liability of city officials where an employee is retained after compulsory retirement age might well be a subject for court decision. We find no authority in this state in connection with this question and no sanctions in the Retirement Act itself. May we point out, however, the legislative authority of the city has by its application authorized participation "* * * under the conditions included in the Act", and by its action has incorporated by reference the Retirement Act into the laws governing the administration of the city. It would seem, therefore, that all city officials are bound by the provisions of the Retirement Act, and to retain an employee after compulsory retirement age is to do violence to the specific provisions set forth above; hence the legislative authority or city official retaining an employee beyond retirement age does so at its or his own peril.
"May 'miscellaneous personnel' who have reached the age of sixty-seven and 'uniformed personnel' who have reached the age of sixty-four be employed by a city? If so, are such employees precluded from becoming members of the state‑wide city employees' retirement system?"
Opinion: We find no direct prohibition in the Retirement Act concerning the employment of miscellaneous personnel who have reached the age of sixty-seven (67), and uniformed personnel who have reached the age of sixty-four [[Orig. Op. Page 10]] (64). However, we must point out that such employees are subject to immediate retirement under the provision of section 14, previously discussed in detail. To hire an employee over such age in a position covered by the system would be not alone to violate the purpose of the act, but would be to do a vain act, as such a person cannot render any service to the city, and his employment would certainly militate against the theory of "furnishing an orderly means whereby such employees who have become aged * * * may * * * be retired from active service."
Very truly yours,
Assistant Attorney General