Did a Kentucky retiree’s paid service on a public board count as reemployment that voided retirement?

Plain-English summary

The Kentucky Attorney General concluded in 2015 that membership on a public board created by statute did not count as employment for Kentucky Retirement Systems purposes. A retired member could therefore receive the board per diem without affecting retirement under the provision the opinion reviewed.

The question arose when a State Police Retirement System member joined the retirement board while still employed, retired, and was told a per diem would count as reemployment. The AG distinguished public office from employment: board members governed the institution and were not directed or removable by it as ordinary employees would be.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did receiving the board per diem make the retiree an employee in the AG’s analysis?

No. The AG said board service remained public office rather than employment, despite the per diem.

Why did the retirement system question the payment?

It viewed board membership plus per diem as reemployment during the post-retirement separation period. The AG rejected that classification for this statutory board role.

What distinction controlled the opinion?

The AG distinguished a law-created public office, whose holder exercised public authority, from employment under an institution’s direction and removal power.

Background and statutory framework

The Retirement Systems asked about a retired police employee serving on its board. The AG compared the reemployment restriction in KRS 61.637(17)(a) with the trustee per diem in KRS 61.645(7). It cited Am. Commerce Ins. Co. v. Brown, 168 S.W.3d 386, 388 (Ky. Ct. App. 2004), on employment factors and Nichols v. Marks, 215 S.W.2d 1000 (Ky. 1948), on public office.

Citations and references

Statutes: KRS 61.637(17)(a); KRS 61.645(7).

Cases: Am. Commerce Ins. Co. v. Brown, 168 S.W.3d 386, 388 (Ky. Ct. App. 2004); Nichols v. Marks, 215 S.W.2d 1000 (Ky. 1948).

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Pages/Opinions.aspx
• Original Word document: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG15-010.doc

Original opinion text

OAG 15-010

August 13, 2015

Subject: Whether a member of a state board is an employee for the purposes of the Kentucky Retirement Systems

Requested by: William A. Thielen, Executive Director

Kentucky Retirement Systems

Written by: Matt James

Syllabus: A member of a state board is not an employee for the purposes of the Kentucky Retirement Systems, and may receive a per diem payment for service on a board.

Statutes construed: KRS 61.637; KRS 61.645

OAGs cited: OAG 80-501; OAG 80-347

Opinion of the Attorney General

William A. Thielen, Executive Director of Kentucky Retirement Systems, has requested an opinion of this office regarding whether a member of a state board receiving a per diem is an employee for the purposes of the Kentucky Retirement Systems. We advise that a member of a state board is not an employee for the purposes of the Kentucky Retirement Systems.

An active state police employee was elected to the Kentucky Retirement Systems Board of Trustees to fill the position dedicated to “a member or retired from the State Police Retirement System” by KRS 61.645(1)(c). Subsequent to his election, the police employee retired. Prior to the employee’s retirement, he did not receive a per diem for board duties due to receiving a salary from the state treasury. Subsequent to the police employee’s retirement, Kentucky Retirement Systems advised him that he would not be eligible for the per diem compensation provided by KRS 61.645(7), which provides that “trustees who do not otherwise receive a salary from the State Treasury shall receive a per diem of eighty dollars ($80) for each day they are in session or on official duty, and they shall be reimbursed for their actual and necessary expenses.” Kentucky Retirement Systems advised the retired police employee that he is not eligible for the per diem because he was elected when he was still active as a police employee, and therefore did not complete the mandatory separation of service, as it maintains that board membership coupled with receipt of per diem payments is employment under KRS 61.637. At issue is whether the retired police employee is eligible for the per diem payments.

KRS 61.637(17) provides restrictions on reemployment in state agencies following retirement. KRS 61.637(17)(a) provides for retirees of the Kentucky Retirement Systems generally:

Except as provided by paragraphs (c) and (d) of this subsection, if a member is receiving a retirement allowance from one (1) of the systems administered by Kentucky Retirement Systems, or has filed the forms required to receive a retirement allowance from one (1) of the systems administered by Kentucky Retirement Systems, and is employed in a regular full-time position required to participate in one (1) of the systems administered by Kentucky Retirement Systems or is employed in a position that is not considered regular full-time with an agency participating in one (1) of the systems administered by Kentucky Retirement Systems within three (3) months following the member's initial retirement date, the member's retirement shall be voided . . . .

KRS 61.637(17)(a) provides that if a member receives or files for a retirement allowance, and is employed in a regular full-time position or a position that is not considered regular full-time within three months of the retirement date, that member’s retirement is voided. 105 KAR 1:390 provides further regulations governing reemployment which follow KRS 61.637(17). Kentucky Retirement Systems maintains that “board membership coupled with receipt of per diem payments is employment pursuant to KRS 61.637” as a “position that is not considered regular full-time.”

Regarding whether service on a public board and payment of a per diem constitutes employment, “there is no one fact or circumstance that is conclusive as to whether the master servant relationship exists; however, the right to direct what work shall be done and the manner it shall be done and the power to discharge the alleged employee from service are the most prominent factors.” Am. Commerce Ins. Co. v. Brown, 168 S.W.3d 386, 388 (Ky. Ct. App. 2004). Applying these criteria, public board members are not employees of the institutions they govern. Public board members direct the work that shall be done by the institutions they govern; the institutions do not govern them. Institutions generally do not have the power to remove their board members; board members are generally elected or appointed independently of the institutions they govern.

Rather, service on a public board created by statute is a public office, and not public employment. In Nichols v. Marks, 215 S.W.2d 1000 (Ky. 1948), the court stated the general distinction between public office and public employment:

The general rule in determining whether or not a position is a public office or one of public employment appears to be that a position is a public office when it is created by law, is continuing in nature, and the incumbent, in the fulfillment of his duties, exercises some portion of the sovereign power, in the performance of which the public is concerned; while a public employment is a position which lacks one or more of these elements.

Id. at 1003. Service on a public board created by law is therefore a public office and not public employment. In OAG 80-501, discussing a Board of Aldermen, we advised that “a member of the Board is not an employee as such nor can he be construed to be one . . . . A member of the Board of Alderman is undoubtedly a public officer . . . .”

Cases and authority from other jurisdictions confirm this interpretation. “Members of boards or commissions in this State, unless provided for otherwise by legislation, are not employees in the usual sense of the word or within the meaning of the Pension Law. Historically they have been regarded as public officers and not public employees.” Wharton v. Everett, 229 A.2d 492, 494 (Del. Super. Ct. 1967). In Chavero v. Local 241, Div. of the Amalgamated Transit Union, 787 F.2d 1154 (7th Cir. 1986), the court considered whether union board members were employees for the purposes of Title VII:

Directors are traditionally employer rather than employee positions. Although a director may accept duties that make him also an employee, a director is not an employee because he draws a salary. Rather, the primary consideration is whether an employer-employee relationship exists. . . . Although the board undertakes investigations of all grievances and disputes between union members and the company, it reports to no one other than itself. As such, the individual board members are not employees . . . .

Id. at 1157 (citations omitted). Other jurisdictions have similarly reasoned that board members are not employees, including in the context of retirement systems.

In summary, we advise that members of public boards are not considered employees for the purposes of the Kentucky Retirement Systems. Since service on a public board does not constitute employment, a member of a public board who is retired from one of the Kentucky Retirement Systems may receive a per diem without affecting the member’s retirement.

JACK CONWAY

ATTORNEY GENERAL

Matt James

Assistant Attorney General