PERAC Memo #20 - 2004: Post-Retirement Earnings Limitations in G.L. c. 32, § 91

Post-Retirement Earnings Limitations in G.L. c. 32, § 91

Summary

This memo reminds governmental units of the post-retirement earnings and hours restrictions under G.L. c. 32, §91, which caps public-sector retiree employment at 960 hours per calendar year and limits combined salary plus pension to no more than the current salary of the position from which they retired; disability retirees are additionally subject to §91A. Boards should note that these limits apply regardless of job title (e.g., "consultant" or "independent contractor"), apply across all public employers, and cannot be circumvented through corporate formation or detail billing arrangements. While treasurers and retirees bear primary compliance responsibility, boards should be prepared to advise employers on proper application of the statute and monitor for potential violations.

Full Text

Memorandum # 20/2004

M E M O R A N D U M TO: All Governmental Units FROM: Joseph E. Connarton, Executive Director RE: Post-Retirement Earnings Limitations in G.L. c. 32, § 91 DATE: May 19, 2004 All government units who employ public retirees must consider the impact of G.L. c. 32, § 91 on those employees. As you may know, § 91 limits the earnings of all retirees, superannuation and disability, who work in the public sector after retirement. The public sector is broadly defined as the Commonwealth and its political subdivisions, including cities, towns, authorities, districts and the like.
This section of the law limits a member who is receiving a retirement allowance to 960 hours of employment within the public sector in any calendar year. In addition, the salary for such public sector employment when added to the member’s retirement allowance cannot exceed the salary that is currently being paid for the position from which the member retired. A person who has retired for superannuation (as opposed to a disability retiree) can be employed in the private sector or in the public sector in another state without limitation. Disability retirees’ employment is also limited by the provisions of G.L. c. 32, § 91A.
It is important to note that retirees and the Treasurers of units hiring retirees have primary responsibility for assuring compliance with G.L. c. 32, § 91. Treasurers should devise a system, with the assistance of such employees, to assure that both the hour and earnings limitations are followed. Employers should consult with retirement boards as needed to assure the statute is being properly applied.
It is important to keep in mind: • § 91 applies to both superannuation and disability retirees.
• § 91 applies to any public employment, regardless of whether or not it occurs in the same governmental unit from which the employee retired. • It is irrelevant whether an employee-retiree chooses to classify him or herself as a “consultant” or “independent contractor” – the § 91 earnings limitations still apply. • A retiree may not avoid the limitations in § 91 by forming a company if the primary reason for the formation is to avoid the limitations.
• Earnings for “details” which are paid by city or town payroll are included in the § 91 limitations, regardless of whether the city or town ultimately bills a private entity for the work. • The § 91 limitations only apply to retirees, not survivors or beneficiaries.
We trust the foregoing is of assistance. If you have further questions or concerns, please contact this office.