Everett ruled ineligible for retirement pay
By Barbara Arntsen
Published in News on September 2, 2004 2:00 PM
Former City Attorney Harrell Everett is not eligible for state retirement pay, according to the attorney general's office.
Michael Williamson, director of the retirement system, said Wednesday that the state attorney general's office agreed with his office that Everett shouldn't receive retirement benefits.
"We have received an informal opinion from the attorney general's office that confirms the 1989 opinion that Mr. Everett is not eligible to participate in the local government retirement program," Williamson said.
Everett retired from his position as city attorney in late June, and paperwork was submitted to the state retirement office by the city for Everett's retirement pay.
He didn't receive any payments while the question was being decided by the attorney general's office.
A spokesman for the retirement system said that it would not be possible to determine how much the city has paid in for Everett since it began making the contributions in 1974, but said it was in the thousands.
Everett is entitled to get back the money he personally paid into the system, but the city can only get the payments it made in the past year. The rest of the money stays in the retirement system's fund.
For purposes of retirement eligibility, state law defines an employee as a person regularly employed by local or state government. "Regular," as defined by the North Carolina Administrative Code, is an employee, "the duties of which require not less than 1,000 hours of service per year." If there is a question about what constitutes regular employment, the state decides.
City Manager Richard Slozak said Everett was a full-time employee, but Mayor Al King and Mayor Pro Tem Chuck Allen said he was not.
In a five-page letter to Williamson, Assistant Attorney General Robert Curran cited several Supreme Court rulings that supported his decision. He said that Everett wasn't eligible for retirement pay, unless the city had additional information it could offer that would show he wasn't an independent contractor.
Whether the city has additional information to offer regarding Everett's former employment status isn't known. Slozak was out of the office Thursday and couldn't be reached for comment. A message was left for Everett regarding the decision, but the call wasn't returned by the paper's deadline.
Curran said that the Internal Revenue Service, as well as most courts, used a "right to control" test to decide the full-time employment question.
Factors considered in determining right to control include the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the hiring party is in business; and the provision of employee benefits.
Slozak has said that the city paid Social Security taxes on Everett's salary and a retirement system match, but did not pay health insurance.
Everett also did not receive vacation or sick leave from the city.
Curran cited a decision by the Pennsylvania Supreme Court where a doctor who had been employed by his local school district as a school physician for 35 years was denied retirement participation.
In finding the doctor was an independent contractor, the court found significance in the fact that he was not present full time at the schools, and that he primarily worked in his private practice.
Everett is a partner in a private law firm, and he did not have an office in City Hall.
"While no information was provided as to the proportion of time Mr. Everett spent on city matters versus private practice, or the amount of income derived from either source, he clearly is engaged in an independent business, and has been so engaged throughout the years he served as city attorney," Curran wrote.
"Further, it could reasonably be inferred from the information provided by Mr. Everett and the city that Mr. Everett worked primarily from his law firm offices as opposed to offices provided by the city."
Since Everett worked from his own office, Curran said, he was free to use his own assistants over "whom he exercised full control." He was also free, within certain limitations, to determine when he performed the legal services for the city, as opposed to his own private practice.
Curran said that he supported the retirement system's previous determination that Everett was an independent contractor, rather than an employee.
Williamson said that he had spoken with Slozak about the decision and would send a letter, too.
"Before taking final action, I will be providing Mr. Everett and the city of Goldsboro an opportunity to provide additional information that might affect this case," Williamson said.