Court Finds Certification Pay Should Have Been Used in Pension Calculations

November 30, 2009 ( – A Florida court has determined that police and firefighters' certification pay should have been included in earnings for the purpose of calculating pension contributions and employee deferrals by the city of Delray Beach.

The Palm Beach County court was charged with determining whether firefighter and police certification pay was, prior to March 11, 2004, included in the definition of earnings under the City’s Retirement System Ordinance. Certification pay is compensation paid to city employees for obtaining, and maintaining, state certification in certain categories.

In rejecting the city’s argument that certification pay is a “bonus,” the court found instructive the actual language used in Section 33.60 of the Ordinance, which excludes from basic wages bonuses and “any other non-regular payments.” The court said the use of the term “other” suggests that bonuses are non-regular, and certification pay is a regular monthly payment earned by an employee for maintaining a state certification.

“Once earned, certification pay becomes a part of the normal remuneration due the certified employee. The fact that this remuneration is paid separately is of no moment,” the court order said.

With this the court also rejected the city’s argument that including certification pay in the definition of earnings would create a new benefit without actuarial support.

The court chastised both parties for not resolving the issue further. According to the court order, the dispute between the city and the Board of Trustees of the City of Delray Beach Police Officers and Firefighters Retirement System over whether certification pay is a part of earnings under the Ordinance has existed for more than 13 years. The court said the ambiguity could have been, and should have been, addressed 13 years ago by a simple amendment to the ordinance clarifying employee rights, and the City’s obligations.

The court also noted that a timely application to the court for declaratory relief would have resolved the issue long ago. “As it is, this Court is now left with the task of belatedly determining the meaning of “earnings” under Section 33.60 with material financial implications to both the City and retired City firefighters and police officers,” the court order said.