STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GILBERT M. RODRIGUEZ, )

)

)

Petitioner, )

)

vs. ) CASE NO. 92-1656

) DEPARTMENT OF ADMINISTRATION, ) DIVISION OF RETIREMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal administrative hearing in this case on May 18, 1992, in Tampa, Florida.

APPEARANCES

For Petitioner: Gilbert M. Rodriguez, pro se

18506 Turtle Drive

Lutz, Florida 33549

For Respondent: Stanley M. Danek, Esquire

Division of Retirement Cedars Executive Center 2639 North Monroe Street Building C

Tallahassee, Florida 32399 STATEMENT OF THE ISSUES

Whether the Respondent, Department of Administration, Division of Retirement, correctly classified Petitioner's "performance pay" as a "bonus". Such a classification prevents the portion of Petitioner's employment compensation designated as performance pay from being retirement creditable wages.

PRELIMINARY STATEMENT

By letter dated February 5, 1992, Petitioner, Gilbert M. Rodriguez (Rodriguez), requested a formal administrative hearing to contest the preliminary decision made by Respondent, Department of Administration, Division of Retirement (Division), to exclude the portion of his employment compensation designated as performance pay from his retirement creditable wages. The case was referred to the Division of Administrative Hearings on March 10, 1992, and was promptly scheduled for hearing.

During the hearing, which the parties agreed should be consolidated with the rule challenge proceeding for evidentiary purposes, Petitioner called three

witnesses and filed sixteen exhibits. Six additional exhibits were marked and entered into evidence as joint exhibits. The Respondent presented two witnesses and filed three more exhibits. Official recognition was taken of Chapters 121 [1985] through [1991], Florida Statutes, Rule 22B-6.001 [1986] through [1991], and Chapter 89-126, Laws of Florida.

A transcript of the proceeding was not ordered. The parties were granted leave until June 1, 1992, to submit certain late-filed exhibits, and until June 11, 1992, to file proposed findings of fact and conclusions of law. Rulings on the proposed findings of fact submitted by the parties related to the Recommended Order are in the attached Appendix.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. At all times material to these proceedings, Petitioner Rodriguez has been employed by the Hillsborough County Board of County Commissioners as the Director of the Department of Emergency Support Services. This position is exempt from the Hillsborough County Civil Service Act because it is a managerial/executive position under the jurisdiction of the County Administrator.

   
   

2. Petitioner's employment with the County allows him to participate in the Florida Retirement System administered by the Division.

   
   

3. On January 1, 1988, the County implemented a classification and compensation system for all positions under the jurisdiction of the County Administrator that are exempt from the Civil Service Act. This system is known as the Hillsborough County Exempt Service Classification and Compensation Plan (the Plan).

   
   

4. As an incumbent employee, Petitioner's salary was not reviewed or subjected to the compensation structure set forth in the Plan until October 1, 1988.

   
   

5. Effective October 1, 1988, Petitioner's compensation with the County was structured according to the Plan, as revised May 1988. During his performance rating prepared December 12, 1988, Petitioner's job performance from October 1, 1987 through September 30, 1988 was found to exceed standards. Under the Plan, this meant that his current annual salary could be increased. The salary action permitted by the Plan was a combination of salary adjustment "merit increase" and a one-year "performance pay" increase. The salary adjustment under the "merit increase" category became part of Petitioner's adjusted base salary. The "performance pay" was an increase created for a one- year term. It was not part of Petitioner's base salary. This method of creating a pay increase applied to Petitioner because his pay was already above the midpoint of the pay grade the Plan dictated the County was willing to pay for the performance of his particular job when completed to the required standard.

   
   

6. The division of salary increases above the midpoint into two separate categories was placed into the Plan in order to balance two distinct County interests. The first was to keep the maximum salary range in a pay grade aligned with the competitive salary indicators in the geographical area for the same type of work. The second was to annually reward each employee whose

   performance exceeded standards over the past year and to motivate continued high performance on a personalized basis.

   
   

7. The compensation approved for Petitioner for October 1, 1988 through September 30, 1989, was a "merit increase" of three percent of his current annual salary along with a one-year "performance payment" of eight percent of his current annual salary. This created an annual salary of $58,177,00 base pay with a one-year performance increase of $4,514.00. Petitioner's total compensation for the time period was $62,691.00.

   
   

8. The pay increase approved for Petitioner for October 1, 1989 through September 30, 1990, was a five percent "merit increase" and a four percent "performance payment" of his current salary. This gave Petitioner a new base pay of $61,090.00 with a one-year performance increase of $2,330.00. Petitioner's total compensation for the time period was $63,419.00.

   
   

9. From October 1, 1990 through September 30, 1991, Petitioner had the same base pay and one year performance increase as the year before. So did every other employee subject to the Plan. This salary designation violated the Plan because a "merit increase" was required before a one year "performance pay" increase could occur. However, "performance pay" was still classified in the usual manner and was not pledged by the County as a payment that would be reoccurring.

   
   

10. From October 1, 1991 to September 30, 1992, Petitioner's base salary is $66,020.42. The County no longer pays the "performance pay" previously in effect under the Plan. Instead, the part of Petitioner's salary designated as "performance pay" the year before was added into his base salary. As a result, retirement benefits are earned on Petitioner's entire salary in this pay period.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter, pursuant to Section 120.57(1), Florida Statutes.

    
    

12. In order to calculate Petitioner's "average final compensation," which would in turn determine his monthly retirement benefit, the Division of Retirement has to look at the five highest fiscal years of compensation for creditable service prior to retirement. Subsection 121.021(24), Florida Statutes, Rule 22-6.001(6), Florida Administrative Code.

    
    

13. During a significant portion of Petitioner's five highest fiscal years of compensation, his pay was controlled by the Hillsborough County Exempt Service Classification and Compensation Plan. When the Division applied Chapter 121, Florida Statutes, and applicable agency rules to Petitioner's pay received under the Plan, it was determined that the performance pay provisions were "bonuses" as defined by Rule 22B-6.001(11), Florida Administrative Code, as follows:

    
    

    22-6.001 Definitions. Whenever used in these rules, unless otherwise expressly stated, or unless the context or subject matter requires a different meaning, the following words and terms shall have the respective meanings indicated:

    * * *

    (11) BONUS -- Means a payment in addition to an employee's regular or overtime salary that is usually

    nonrecurring, does not increase the employee's base rate of pay and includes no commitment for payment in a subsequent year. Such payments are not considered compensation and, effective July 1, 1989, shall not be reported to the Division as salary, and retirement contributions shall not be made on such payments.

    1. A payment is a bonus if any of the following apply:

       1. The payments are not paid according to a formal written policy applying to all eligible employees equally, or

       2. The payments commence later than the eleventh year of employment, or

       3. The payments are not based on permanent eligibility, or

       4. The payments are paid less than annually;

    2. Bonuses shall include but not be limited to the following:

    1. Exit bonus or severance pay;

    2. Longevity payments in conformance with the provisions of 22B-6.001(11)(a) above;

    3. Salary increases granted due to an employee's agreement to retire, including increases paid over several months or years prior to retirement;

    4. Payments for accumulated overtime or compensatory time, reserve time, or holiday time worked, if not made within 11 months of the month in which the work was performed;

    5. Quality Instruction Incentives Program (QUIIP) Payments;

    6. Lump sum payments in recognition of employees' accomplishments.

    
    

14. The Division was correct in its legal interpretation of the compensation structure set forth in the Plan. "Performance pay" did not apply equally to all eligible employees and it was designed to be in effect for only a one-year time period. As a result, "performance pay" was properly classified as a "bonus" and was properly excluded from Petitioner's "average final compensation."

    
    

15. The fact that the County never reduced an employee's pay below the salary adjustments originally given that included "performance pay" is not persuasive. The Plan controls the employee-employer relationship as to compensation during the time periods it was in effect. See Bigelow v. Department of Environmental Regulation, 375 So.2d 12 (Fla. 1st DCA 1979).

RECOMMENDATION

Based upon the foregoing, it is RECOMMENDED:

Petitioner's "performance pay" received from October 1, 1988 through September 30, 1991, should be excluded from the calculation of his "average final compensation" by the Division.

DONE and ENTERED this 9th day of July, 1992, in Tallahassee, Florida.

VERONICA E. DONNELLY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1992.

APPENDIX TO RECOMMENDED ORDER

Petitioner's proposed findings of fact are addressed as follows:

1. Accepted. See HO #1 and #2.

2. Accepted.

3. Accepted. See HO #5.

4. Rejected. Contrary to fact.

5. Accepted. See HO #10.

6. Accepted.

7. Rejected. Contrary to fact.

8. Accepted.

9. Accepted.

10. Accepted.

11. Accepted.

12. Accepted.

13. Accepted.

14. Accepted.

15. Accepted.

16. Accepted.

17. Accepted.

18. Accepted.

19. Rejected. Irrelevant.

20. Accepted.

21. Accepted.

22. Accepted.

23. Accepted.

24. Rejected. Contrary to fact. Reestablished each year.

25. Accepted.

26. Accepted.

27. Accepted.

28. Accepted.

29. Accepted.

30. Accepted.

31. Accepted.

32. Accepted.

33. Accepted.

34. Accepted.

35. Accepted.

36. Accepted.

37. Accepted

38. Accepted.

39. Accepted.

40. Accepted.

41. Accepted.

Respondent's proposed findings of fact are addressed as follows:

1. Accepted. See HO #1.

2. Rejected. Irrelevant.

3. Rejected. Irrelevant.

4. Rejected. Irrelevant.

5. Rejected. Irrelevant.

6. Accepted. See HO #5, #6 and #10.

7. Accepted.

8. Accepted.

9. Accepted.

10. Accepted. See HO #10.

11. Accepted. See HO #7.

12. Accepted.

13. Evidence is rejected because calculations are incorrect.

14. Accepted.

15. Accepted.

COPIES FURNISHED:

GILBERT M RODRIGUEZ 18506 TURTLE DR

LUTZ FL 33549

STANLEY M DANEK ESQ DIVISION OF RETIREMENT

CEDARS EXECUTIVE CENTER/BLDG C 2639 N MONROE ST

TALLAHASSEE FL 32399 1560

A J McMULLIAN III DIRECTOR DIVISION OF RETIREMENT

CEDARS EXECUTIVE CENTER/BLDG C 2639 N MONROE ST

TALLAHASSEE FL 32399 1560

AUGUSTUS AIKENS ESQ

JOHN PIENO GENERAL COUNSEL

SECRETARY OF ADMINISTRATION DEPT OF ADMINISTRATION

435 CARLTON BLDG 435 CARLTON BLDG TALLAHASSEE FL 32399 1560 TALLAHASSEE FL 32399 1560

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the final order in this case concerning their rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 92-001656

Orders for Case No: 92-001656