(1) For "highest average compensation" and "final average compensation" purposes:

(a) for a member initially hired prior to July 1, 2011, compensation means the total compensation earned during 36 consecutive calendar months divided by 36; and

(b) for a member initially hired on or after July 1, 2011 in a PERS, SRS, or GWPORS-covered position, compensation means the total compensation earned during 60 consecutive calendar months divided by 60.

(2) Lump-sum payments of paid leave, including banked holiday time, vacation, personal, sick, or compensatory leave must be used to extend the compensation on the basis of either the regular hourly rate in effect for the employee at the time of termination and on identified future regular payroll reports, or the monthly salary earned at the time of termination.

(3) The lump-sum payment of paid leave, including banked holiday time, vacation, personal, sick, or compensatory leave, for members whose monthly compensation varies will be extended by multiplying their hourly rate times 2,080 (the assumed number of hours worked in a fiscal year) divided by 12 to determine the monthly wage going forward.

(4) Lump-sum payments for banked holiday time, compensatory leave, sick leave, or vacation leave paid without termination of employment will not be considered as compensation for any purpose regardless how the payout is classified, including identifying the payout as a bonus.