This email is to inform you of an important change to retirement-eligible pay (“regular compensation”) for members receiving workers’ compensation. It should be shared with employees who process payroll and your affected MTRS members.
After a lengthy appeal process, the Massachusetts Supreme Judicial Court made a final ruling that supplemental payments, such as sick or vacation pay, made in conjunction with workers’ compensation payments are not “regular compensation” under Massachusetts public retirement law.
Therefore, if you have an employee who is out on workers’ compensation (not working) and is receiving any form of supplemental pay, you cannot take retirement deductions from the supplemental compensation. Deductions taken from supplemental pay should cease, beginning with your next possible payroll run.
Please note that you should continue to take deductions from sick, vacation or personal leave not associated with workers’ compensation supplemental pay. You should also continue to take deductions from sick, vacation or personal leave when a member is working part-time and simultaneously receiving workers’ compensation under Section 35 for partial incapacity.
Since July 2022 we have asked employers to provide information about workers’ compensation on Part 2 of the retirement application and have been using this information to correct our records. MTRS is still in the process of developing a plan of action regarding active employees. In the meantime, please start to compile the following information per employee:
- Employee name and last 4 SSN
- Date range employee was receiving workers’ compensation benefits (not working)
- Payroll records showing the supplemental pay and corresponding MTRS deductions taken
The MTRS has filed legislation to restore the practice of allowing members to use supplemental pay while receiving workers’ compensation payments. As you know, the legislative process is unpredictable and therefore, we are unable to predict whether the legislature will make any changes regarding the issue in the future.
Please contact your assigned Employer Services representative.