Does serving as a court-appointed special master count as 'employment' that cuts into a retired Maryland judge's pension?

Plain-English summary

A retired Maryland judge drawing a judicial pension had been proposed as a special master in a large asbestos damages lawsuit, where the parties (including the State) would share the cost of the masters' pay. The state retirement agency asked whether that arrangement triggered the judicial pension law's offset rule, which reduces a retired judge's pension dollar-for-dollar once the judge's pension plus pay from public-funded "employment" exceeds the salary the pension itself is based on. The Attorney General concluded that serving as a special master is "employment" for this purpose, since the court controls how the master does the work the same way an employer controls an employee, rather than treating the master as an independent contractor. But because the statute's offset applies only to compensation "from municipal, county, State, or federal funds," the opinion concluded the reduction reaches only the portion of the master's pay that actually comes from public sources, not any part paid from private funds.

Currency note

This opinion was issued in 1988. 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

Does a retired judge lose part of their pension by taking a paid position as a special master?
It depends on the funding source. The opinion concluded that accepting a special master appointment is "employment" under Article 73B, §56(c)(1), so if the judge's pension plus the public-funded share of the master's pay exceeds the salary the pension is based on, the pension is reduced dollar-for-dollar by the excess.

Why did the opinion treat a special master as an "employee" rather than an independent contractor?
The opinion applied the common-law master-servant test from a Workers' Compensation Act case, reasoning that the appointing court selects and appoints special masters, sets how they're paid, controls their conduct by order, can discharge them, and assigns them work that is part of the court's regular business of deciding cases, all hallmarks of an employment relationship rather than independent contracting.

Does pay from private parties in the lawsuit reduce the judge's pension the same way?
No. The opinion concluded that the statutory offset reaches only compensation coming from "municipal, county, State, or federal funds," so a retired judge who also receives compensation from private sources in the same matter does not have that private-source pay counted against the pension, since the judge is still only taking a "single dip" of public funds.

Why doesn't the same offset apply to a retired judge who works as, say, an independent-contractor consultant for the State?
The opinion explained that the General Assembly had amended the parallel offset provisions for other State retirement systems to also cover "a contract for personal services," reaching independent contractors, but never made that same change to the judges' pension statute, so the judges' offset still applies only to "employment" in the traditional master-servant sense.

Background and statutory framework

The request arose from a specific pending case: a massive asbestos damages action in the Circuit Court for Anne Arundel County, where the court had set up a special-master process to resolve factual issues, with costs shared pro rata by the State and the participating defendants (the State's share was estimated at roughly one-third). One of the candidates recommended by the parties for a special master role was a retired judge already drawing a judicial pension under Article 73B, §56(a).

The judicial pension offset in §56(c)(1) lets a retired judge accept employment paid from public funds only if the judge notifies the Retirement Systems and reports the compensation in advance, and requires the pension to be reduced dollar-for-dollar whenever the pension plus the public-funded pay exceeds the compensation the pension itself was based on. To decide whether special-master service counted as "employment" for this rule, the opinion compared how the same term is used in Maryland's other public retiree offset statutes: those provisions once described only "temporary employment," and the Retirement Systems read that narrowly to cover master-servant relationships, not independent contractors. In 1983 the General Assembly amended the employees' and teachers' versions of the offset to also reach "a contract for personal services," which the agency then applied to independent contractors. Because the General Assembly never made the same amendment to the judges' pension offset in §56(c)(1), the opinion concluded that provision still covers only traditional employment, not independent-contractor arrangements.

Applying the common-law employment test the Court of Appeals used to construe the Workers' Compensation Act, the opinion found the circuit court would select and appoint the special masters, set their pay, control their conduct through its own orders, retain power to discharge them, and assign them work (deciding cases) that is part of the court's regular business, all pointing to an employer-employee relationship rather than independent contracting. Because the special masters would therefore be "employees" of the court, a retired judge serving in that role accepts "employment" within the meaning of §56(c)(1).

On the scope of the offset itself, the opinion read the statute's own language, applying only to compensation coming from "municipal, county, State, or federal funds," together with a Court of Appeals observation that the judicial pension law is meant to prevent "double-dipping" from public funds without limiting a retired judge's private income. It concluded the offset should reduce the pension only by the amount that the pension plus the public-funded portion of the master's compensation exceeds the pension base, leaving any privately funded portion of the master's pay untouched.

Citations and references

Statutes:
- Article 73B, §56(a)
- Article 73B, §56(c)(1)
- Article 73B, §56(c)(2)
- Article IV, §3A of the Maryland Constitution
- §1-302(f) of the Courts Article
- Former Article 73B, §11(15)
- Former Article 73B, §86(9)
- Former Article 73B, §117(14)
- Former Article 73B, §145(13)
- Chapter 560, Laws of Maryland 1983
- Article 73B, §11(15)(a)
- Article 73B, §86(9)(a)
- Article 73B, §117(14)(a)
- Article 73B, §145(13)(a)
- §11-101(ii)(3) of the State Finance and Procurement Article
- Rule 2-541(a)(2)
- Rule 2-541(a)(3)

Cases:
- Hargrove v. Board of Trustees, 310 Md. 406, 410, 529 A.2d 1372 (1987)
- Carolina Freight Carriers v. Keane, 311 Md. 335, 339, 534 A.2d 1337 (1988)
- Hinton v. Columbia River Packers Ass'n, 117 F.2d 310, 313 (9th Cir. 1941)
- Kiecker v. Pacific Indemnity Co., 5 Wash. App. 871, 491 P.2d 244, 248 (1971)
- Comptroller v. Crofton Co., 198 Md. 398, 403, 84 A.2d 86 (1951)
- Bostetter v. Fahrney-Keedy Memorial Home, 20 Md. App. 234, 241, 316 A.2d 301 (1974)
- Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628 (1987)
- Brady v. Ralph Parsons Co., 308 Md. 486, 499, 520 A.2d 717 (1987)
- Attorney General v. Waldron, 289 Md. 683, 723 n.21, 426 A.2d 929 (1980)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1988/Volume73_1988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Retirement Systems—Judicial Pension Plan—Special Masters—"Employment"—Service as Special Master is "Employment," But Offset Applies Only To Portion of Compensation Received From Public Funds.

July 1, 1988

Mr. Bennett H. Shaver
Executive Director
Maryland State Retirement
and Pension Systems

You have requested our opinion on whether the offset provisions of Article 73B, §56(c)(1) of the Maryland Code apply to the pension of a retired judge who is appointed as a special master in circuit court. Specifically, you pose the following questions:
1. Does the term "employment" in Article 73B, §56(c)(1) include service as a special master?
2. If service as a special master is "employment" under Article 73B, §56(c)(1), does the offset provision apply to the total compensation received for service as a special master or only to the portion of the compensation that comes from public funds?
For the reasons stated below, we conclude as follows:
1. Service as a special master is "employment" under Article 73B, §56(c)(1).
2. The offset provision of §56(c)(1) applies only to the portion of a special master's compensation that is received from public funds.

                               I
              Asbestos Case Special Masters

Currently pending in the Circuit Court for Anne Arundel County is a massive damages action by the State against numerous asbestos manufacturers. As part of its effort to manage the case, the court has adopted procedures by which the parties may submit various factual issues for resolution by special masters. Pretrial Order No. 7, at 1 (January 12, 1988). Pursuant to this order, the parties have submitted to the court the names of those whom they recommend as special masters. One of the candidates selected by the parties to serve as one of the special masters (or as an alternate) is a retired State judge who is entitled to receive a judicial pension under Article 73B, §56(a).
The order provides that "all costs of proceedings before the special masters charged to the parties shall be borne by the State and the participating defendants on a pro rata basis ...." Pretrial Order No. 7, at 21.1 The parties estimate that the State will pay approximately one-third of the total costs payable by the parties. Whether the court will provide any financial assistance towards the masters' compensation is unclear, although the court will provide the masters with office space and support personnel.

                                     II
                            Statutory Offset

A. Adjustment Provision
Article 73B, §56(a) provides that "[a] judge, after termination of his service, shall be paid [a] pension ... until his death." Article 73B, §56(c)(1) provides for an adjustment of a judicial pension as follows:

    Except as provided in paragraph (2) of this subsection, a retired judge eligible for benefits under this subtitle may accept employment in which all or part of the compensation for the employment comes from municipal, county, State, or federal funds, if he immediately notifies the board of trustees of the Employees' Retirement System of his intention to accept the employment and specifies the compensation to be received for the employment. The annual retirement allowance receivable by the former judge plus the annual compensation for the position may not exceed in amount the compensation upon which the retirement allowance is based. During any period in which the total of the annual retirement allowance and the annual compensation for the position in fact exceeds the compensation upon which the retirement allowance is based, the retirement allowance shall be reduced by that amount necessary to bring the former judge's total compensation within the limit specified in this subsection.2

Under this section, a retired judge may accept local, State or federal governmental "employment." However, when a retired judge's total income from public employment plus his or her pension benefits exceed the compensation on which the pension benefits are based, the statute requires a dollar-for-dollar offset of pension benefits for each additional dollar of public employment salary. See Hargrove v. Board of Trustees, 310 Md. 406, 410, 529 A.2d 1372 (1987); 69 Opinions of the Attorney General 260 (1984).3

B. "Employment"
To determine whether a retired judge who is appointed to serve as a special master has accepted "employment" for purposes of Article 73B, §56(c)(1), we must construe that term "in a manner consistent with the goal the legislature was trying to achieve." Carolina Freight Carriers v. Keane, 311 Md. 335, 339, 534 A.2d 1337 (1988).
In our view, the General Assembly used the word "employment" to describe the conventional relationship of a master and servant; it did not intend to include an independent contractor within that term.4

We derive this construction primarily by comparing Article 73B, §56(c)(1) with other pension law offset provisions that apply more broadly. See Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628 (1987) (a provision's "relationship to earlier and subsequent legislation" bears on legislative purpose.)
Prior to July 1, 1983, the offset provision applicable to retired members of the State Employees' Retirement System described the effect of "temporary employment in which all or part of the compensation ... comes from State funds ...." Former Article 73B, §11(15). The offset provision formerly applicable to retired members of the Teachers' Retirement System was likewise worded to describe the effect of such "temporary employment." Former Article 73B, §86(9). See also former Article 73B, §§117(14) and 145(13). The Retirement Systems applied these provisions to retirees who were temporarily rehired by the State if, but only if, the relationship between the State and the employee was that of master and servant; it did not read these provisions as applicable to retirees who were independent contractors.
Then, in Chapter 560 of the Laws of Maryland 1983, the General Assembly reworded the employees' and teachers' offset provisions so that they apply to "temporary employment or ... a contract for personal services with the State, local school system, library, community college or a participating municipal corporation ...." Article 73B, §§11(15)(a), 86(9)(a), 117(14)(a), and 145(13)(a).
In light of this legislative change, the Retirement Systems now applies these offset provisions to independent contractors. The agency continues to construe the term "employment" to refer to master-servant relationships only, but it takes the statutory phrase "contract for personal services" to refer to independent contractors.5

Significantly, the General Assembly did not amend Article 73B, §56(c)(1) to extend the offset for retired judges beyond "employment" to "a contract for personal services" also. In light of the administrative construction given the term "employment," we can only assume that the General Assembly meant to continue to exclude independent contractors from §56(c)(1). We do not know why the General Assembly made this policy choice. As we recently observed, however, "it is a proper exercise of the General Assembly's judgment to determine the scope and applicability of [the policy against double-dipping] and the circumstances under which it may be overridden by other policy considerations." 73 Opinions of the Attorney General at 309 (1988).

C. Applicability to Special Masters

A special master "serves at the pleasure of the appointing court and is an officer of [that] court ..." Rule 2-541(a)(3). Under the court's order in the asbestos case, the special masters are to make certain factual findings, but these findings are subject to further review by the court or jury. Pretrial Order No. 7, at 13. The masters' procedures are set by the court. Pretrial Order No. 7, at 12.
In Brady v. Ralph Parsons Co., 308 Md. 486, 499, 520 A.2d 717 (1987), the Court of Appeals construed the terms "employer" and "employee" in the Workers' Compensation Act. The Court, describing these terms as "equivalent to and synonymous with the words 'master' and 'servant,' " summarized the common law test as "whether the employer has the right to control and direct the servant in the performance of his work and in the manner in which the work is to be done." 308 Md. at 499.
Though the courtroom is far from a construction site, the same basic principle applies. In terms of the specific criteria identified by the Court of Appeals in Brady, the circuit court in this case will have selected and appointed the special masters, set the basis on which their wages will be paid, and controlled their conduct by order. The circuit court also has the power to discharge the special masters. Rule 2-541(a)(3). Finally, the special masters' work "is part of the regular business of the employer", judging cases. 308 Md. at 499. Unquestionably, the court controls the special masters in the performance of their work and the manner in which the work is to be done. For this reason, the special masters are employees of the court, not independent contractors. Thus, a retired judge who is appointed as a special master accepts "employment" for purposes of Article 73B, §56(c)(1).

We turn next to the question of whether the offset provision of §56(c)(1) applies to the total compensation paid to the special master or only to the portion that comes from public funds. Article 73B, §56(c)(1) provides in pertinent part:

 The annual retirement allowance receivable by the former judge plus the annual compensation for the position may not exceed in amount the compensation upon which the retirement allowance is based. During any period in which the total of the annual retirement allowance and the annual compensation for the position in fact exceeds the compensation upon which the retirement allowance is based, the retirement allowance shall be reduced by that amount necessary to bring the former judge's total compensation within the limit specified in this subsection.

In Attorney General v. Waldron, 289 Md. 683, 723 n.21, 426 A.2d 929 (1980) the Court of Appeals observed that "the [judicial] pension law is intended to prevent 'double-dipping' by reducing pension benefits if a retired judge accepts employment compensated by '[public] funds,' ... but this in no way limits income from private sources." If we were to construe the offset in §56(c)(1) to apply to compensation paid from both public and private sources, we would be applying the language beyond the General Assembly's intent. When a retired judge simultaneously receives a State pension and private funds, the judge is "receiving only a 'single dip' of public funds ...." 69 Opinions of the Attorney General at 269.
Although the statutory language is ambiguous, we believe the goal of preventing double-dipping can be accomplished by interpreting the offset requirement of §56(c)(1) as applicable only to compensation coming from public funds. Thus, we believe that a retired judge's judicial pension need be reduced only to the extent that the retirement allowance and the portion of the special master's compensation that comes from public funds together exceed the amount on which the retirement allowance is based. Article 73B, §56(c)(1) does not affect the portion of the special master's compensation from non-public sources.6

                             III
                         Conclusion

In summary, it is our opinion that:
1. Service as a special master is "employment" under Article 73B, §56(c)(1).
2. The offset provision of §56(c)(1) applies only to the portion of a special master's compensation that is received from public funds.

       J. Joseph Curran, Jr., Attorney General
       Sharon Krevor-Weisbaum, Staff Attorney

Jack Schwartz
Chief Counsel
Opinions & Advice

1
Rule 2-541(a)(2) provides: "The court may appoint a special master for a particular action and shall prescribe the compensation, fees, and costs of the special master and assess them among the parties."
2
The exception "in paragraph (2) of this subsection" applies to temporary assignments to a court under Article IV, §3A of the Maryland Constitution. For this service, a judge receives a per diem payment that does not affect the judge's retirement allowance. §1-302(f) of the Courts Article.
3
The masters' compensation will come in part from State funds, because the State's pro rata share will be paid out of FY 1989 appropriated funds allocated to the Asbestos Litigation Division of the Office of the Attorney General. See FY 89 Budget Analyst's Rep. at 4. The fact that the funds are to be paid as a litigation cost borne by the State as a party and not as an employer does not change the fact that the compensation comes from State funds. Similarly, if the court itself provides part of the compensation, the funds will come from county funds. Thus, there is no question that "all or part of the compensation ... comes from municipal, county, State or federal funds." Article 73B, §56(c)(1).
4
The core definition of "employment", the "act of employing or the state of being employed; that which engages or occupies; that which consumes time or attention ...," could include both those in a conventional master-servant relationship as well as those holding the status of independent contractors. Black's Law Dictionary 471 (rev. 5th ed. 1979). See Hinton v. Columbia River Packers Ass'n, 117 F.2d 310, 313 (9th Cir. 1941) (the term "employment" is broad enough to include independent contractors); Kiecker v. Pacific Indemnity Co., 5 Wash. App. 871, 491 P.2d 244, 248 (1971) ("employment" encompasses both an employee and an independent contractor). Like many other legal terms, however, the meaning of "employment" varies from one context to another. See Comptroller v. Crofton Co., 198 Md. 398, 403, 84 A.2d 86 (1951); Bostetter v. Fahrney-Keedy Memorial Home, 20 Md. App. 234, 241, 316 A.2d 301 (1974).
5
This interpretation is supported by the definition of "services" in the Procurement Law, which provides that "... 'services' includes services provided by attorneys, accountants, physicians, consultants, and other professional persons who are independent contractors, as opposed to State employees." §11-101(ii)(3) of the State Finance and Procurement Article.
6
Ordinarily, a retired judge who accepts employment for which the compensation comes from public funds is to "specif[y] the compensation to be received for the employment." §56(c)(1). A retired judge who cannot report in advance because of uncertainties about the level or source of compensation should make arrangements with the Retirement Systems for an alternative form of reporting.