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DISABILITY RETIREMENT

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THE PROBLEM EMPLOYEE

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Diana RuizDiana Ruiz Deputy County Counsel, Sacramento Countyrepresents SCERSruizd@saccounty.net

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Who Is The Problem Employee?

The employee who:

• Cannot get along with anyone

• Violates policy

• Has blow-ups with supervisor

• Commits crimes

• Has been terminated for cause

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QUESTIONS

Does the problem employee have standing standing (eligibility) (eligibility) to apply for disability retirement?

Can the problem employee establish permanent incapacitypermanent incapacity?

Can the problem employee establish service-connectionservice-connection?

Can the problem employee claim incapacityincapacity as a result of the discipline processdiscipline process?

Answer to all of the above: SOMETIMESSOMETIMES.

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EMPLOYEE TERMINATED FOR CAUSE MAY NOTMAY NOT BE ELIGIBLE FOR DISABILITY RETIREMENT

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THE TERMINATED EMPLOYEE AND

DISABILITY RETIREMENT

THE CASE LAW

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Legal Conclusions

The courts have held that:

An employee terminated for causeterminated for cause unrelated to disabilityunrelated to disability is ineligibleineligible to apply for disability retirement benefits;

The timelinesstimeliness of an application is not determinative of eligibility.

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Exceptions To The Ineligibility Rule

The employee is eligible eligible to apply, if:

He was terminated for disabilityterminated for disability;

He was terminated to defeat a valid claimterminated to defeat a valid claim for disability retirement;

His entitlement to a disability retirement “matured”“matured” prior to the date of his separation from service; or

He has not yet been terminated, only suspendedsuspended.

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Eligibility Cases

Duff v. City of GardenaDuff v. City of Gardena (1980) 108 Cal.App.3d 930 (PERS)(PERS)

Haywood v. American River Fire Protection Haywood v. American River Fire Protection DistDist.. (1998) 67 Cal.App.4th 1292 (PERS)(PERS)

Smith v. City of NapaSmith v. City of Napa (2004) 120 Cal.App.4th 194 (PERS)(PERS)

Willens v. Commission on Judicial Willens v. Commission on Judicial QualificationsQualifications (1973) 10 Cal.3d 451(Judges’ Retirement Law)(Judges’ Retirement Law)

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Duff v. City of Gardena FACTS

Duff was a firefighter who failed to pass failed to pass probation probation due to poor job performance poor job performance.

After terminationAfter termination, he filed for and was awarded temporary total disability workers’ compworkers’ comp benefitsbenefits based on stress.

Two years after terminationTwo years after termination, he filed for DR with PERS.

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Duff FINDINGS  

Duff was terminated for cause not related terminated for cause not related to disability.to disability.

Once terminated, he was no longer an employee of the City of Gardena.

The workers’ comp awardworkers’ comp award of total temporary disability is not sufficient not sufficient evidenceevidence that Duff qualified for disability retirement. (Summerford v. Bd. of Retirement (1977) 72 Cal.App.3d 128.)

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Duff HOLDING  

A probationaryprobationary employee terminated for terminated for causecause has no vested interestno vested interest in retirement benefits and, thus, no right to a hearingno right to a hearing to determine permanent incapacity or service connection.

Duff’s claim is barred by lachesbarred by laches because he never filed a workers’ comp claim while on the job and never claimed permanent disability until almost two almost two yearsyears after he was released from probation.

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Duff POLICY  

Public policy would be violated if Duff prevailed because this would give “an employee, who served a probationary period of slightly over one year, lifetime disability benefitslifetime disability benefits of one-half his salary where there is no indication no indication whatsoever that he even reported a whatsoever that he even reported a work-related injurywork-related injury.”

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Haywood FACTS

Firefighter was fired for insubordinationfired for insubordination following progressive discipline.

Prior to termination, Haywood filed WC claim for depression caused by discipline.

After termination, he filed timely DR timely DR applicationapplication claiming stress of discipline stress of discipline caused depressioncaused depression and permanent incapacity.

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Haywood FINDINGS

Haywood was fired for unwillingnessunwillingness to do his job.

His unwillingness was notnot caused by a medical condition.

Haywood was not dismissed for not dismissed for disabilitydisability.

Termination for cause completely severedcompletely severed Haywood’s employment relationship with the District.

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Haywood HOLDING

An employee terminated for cause is ineligibleineligible to apply for disability retirement benefits, provided:

• Termination was not the result of a not the result of a disabling medical conditiondisabling medical condition; or

• Termination did not preempt an otherwise valid claim for DR benefits.

The timeliness timeliness of the DR application does does not determine eligibilitynot determine eligibility of terminated employee.

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Haywood ANALYSIS

DR laws contemplate the potential potential reinstatementreinstatement of the employment relationship if the member recovers from recovers from the disabilitythe disability prior to normal retirement age:

• The member can petition to return to work;

• The employer can reevaluate the member and insist on a return to work if the member has recovered from the disability.

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Haywood ANALYSIS

Termination for cause constitutes a complete severance of the employment complete severance of the employment relationshiprelationship and thus precludes a potential precludes a potential reinstatementreinstatement if the employer were to subsequently determine that the member was no longer disabled.

To interpret the statutes otherwise:• Overrides the power of public agencies

to discipline employees, and• Would reward poor employees with

early retirement.

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Haywood POLICY

DR benefits are intended for employees who become medically unablemedically unable to perform their duties, notnot for those who are unwilling unwilling to do so.DR laws are notnot intended as a means by which unwilling employeesunwilling employees can retire retire earlyearly in derogation of the obligation of faithful performance of duty.

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Smith FACTS

Firefighter was working light dutylight duty due to a work-related back injury.

He was fired for failing competency/ fired for failing competency/ performance testsperformance tests (driving errors).

On termination date, he filed a DR application based on back injury.

Retirement Board denied, citing ineligibility ineligibility per HaywoodHaywood.

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Smith FINDINGS

Smith was dismissed for causedismissed for cause.

Smith was not terminated due to disabilitynot terminated due to disability.(His back injury did not cause him to fail the competency tests.)

Smith’s dismissal did not preempt an dismissal did not preempt an otherwise valid claimotherwise valid claim for DR benefits because Smith’s claim had not yetnot yet maturedmatured.

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Although Smith was found permanently permanently disabled and QIWdisabled and QIW in his workers’ comp case, this did not occur prior to his termination and did not establish a did not establish a matured right to disability retirementmatured right to disability retirement predating his termination.

Remember: WC Remember: WC ≠ DR≠ DR

Smith FINDINGS

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Smith’s termination for causetermination for cause made him ineligibleineligible for DR benefits.

Haywood rationale followed.

A claim for DR benefits maturesDR benefits matures only when Retirement Board determinesRetirement Board determines that employee is permanently incapacitated.

Smith HOLDINGS

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The court declined to decidedeclined to decide which event actually extinguished the right to DR benefits:

• The effective date of terminationeffective date of termination,• The date of the decision to dismissdate of the decision to dismiss the

employee, or• The date of the underlying conductdate of the underlying conduct giving

cause for the dismissal.

The court noted:The court noted: EquityEquity principles may require different result, e.g., if handling of DR application was unduly delayedunduly delayed.

Smith Notes

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Compare: Suspended Official Is EligibleIs Eligible For DR

Willens v. Commission on Judicial Willens v. Commission on Judicial QualificationsQualifications (1973) 10 Cal.3d 451

• Judge who was charged with a felonycharged with a felony, but not yet convicted, and was suspended from suspended from officeoffice remained eligible to apply for DR eligible to apply for DR benefits.benefits.

• Pension rights were “vested”“vested” and could not be forfeited absent clear statutory intent.

• Contrary result would deny accused of the presumption of innocence.

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Hypothetical re Eligibility

• With disciplinary actiondisciplinary action recommending termination pendingtermination pending, employee agrees agrees to resolve the disciplinary action and his WC case for a lump sum plus his resignationresignation and waiver of any right to reemploymentwaiver of any right to reemployment, including any rights under Gov. Code § 31725.

• Disciplinary action was for dishonestydishonesty, but was arguably related to disabilityarguably related to disability.

• Is employee eligibleeligible for DR benefits?

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OTHER DISABILITY RETIREMENT ISSUES WITH THE PROBLEM

EMPLOYEE

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Problem Employee With Personality Disorder **

• Can’t get along with anyone

• Repeatedly challenges supervisor

• Is progressively disciplined

• Believes he is treated unfairly

• Files DR psych claim

** Personality order, by definition, preexisted county employment.

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Personality Disorder &Permanent Incapacity

• When is a personality disorder a permanently incapacitatingpermanently incapacitating condition?

•Medication?

•Counseling?

• When does a personality disorder simply create a disgruntled employeedisgruntled employee?

In either case, need clear, well-reasoned opinion from medical expertmedical expert.

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Personality Disorder &Service-Connection

If a personality disorder is incapacitating, did the job:

• AggravateAggravate the underlying personality disorder,

• Temporarily Temporarily increase the symptoms, or

• Act as a passive stagepassive stage on which the symptoms of the underlying personality played out?

Again, need clear medical clear medical opinionopinion!

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Progressive Discipline

• May employee claim incapacity due to the progressive discipline process? YESYES(See Traub v. Bd. Of RetirementTraub v. Bd. Of Retirement (1983) 34 Cal.3d 793)

• Is there a good faith personnel action defense in disability retirement proceedings? NoNoLabor Code Labor Code § 3208.3 not applicable§ 3208.3 not applicable to DR to DR

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Problem Employee & Accommodation

• Is inability to get alonginability to get along with one’s supervisor proof of permanent incapacitypermanent incapacity?

• NoNo, provided employer can accommodate employee with equivalent jobequivalent job reporting to another supervisoranother supervisor.

(See Save Mart Stores v. WCABSave Mart Stores v. WCAB (1992) 2 Cal.App.4th 720)

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Problem Employee & Accommodation

• What if employeremployer makes no secret of the fact they do not want to provide reasonable do not want to provide reasonable accommodationaccommodation to a problem employee?

• Retirement BoardRetirement Board must independently independently determinedetermine whether accommodation is possible.(See O’Toole v. Retirement Bd. of S.FO’Toole v. Retirement Bd. of S.F.. (1983)

139 Cal.App.3d 600.)