DISABILITY RETIREMENT
AND
THE PROBLEM EMPLOYEE
1
Diana Ruiz
Deputy County Counsel,
Sacramento County
represents SCERS
[email protected]
2
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
(eligibility) to apply for disability retirement?
Can the problem employee establish
permanent incapacity?
Can the problem employee establish
service-connection?
Can the problem employee claim incapacity
as a result of the discipline process?
Answer to all of the above: SOMETIMES.
4
EMPLOYEE TERMINATED FOR
CAUSE MAY NOT BE ELIGIBLE
FOR DISABILITY RETIREMENT
5
THE TERMINATED EMPLOYEE
AND
DISABILITY RETIREMENT
THE CASE LAW
6
Legal Conclusions
The courts have held that:
An employee terminated for cause
unrelated to disability is ineligible to
apply for disability retirement
benefits;
The timeliness of an application is
not determinative of eligibility.
7
Exceptions To The
Ineligibility Rule
The employee is eligible to apply, if:
He was terminated for disability;
He was terminated to defeat a valid claim
for disability retirement;
His entitlement to a disability retirement
“matured” prior to the date of his
separation from service; or
He has not yet been terminated, only
suspended.
8
Eligibility Cases
Duff v. City of Gardena (1980) 108
Cal.App.3d 930 (PERS)
Haywood v. American River Fire Protection
Dist. (1998) 67 Cal.App.4th 1292 (PERS)
Smith v. City of Napa (2004) 120 Cal.App.4th
194 (PERS)
Willens v. Commission on Judicial
Qualifications (1973) 10 Cal.3d 451
(Judges’ Retirement Law)
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Duff v. City of Gardena
FACTS
Duff was a firefighter who failed to pass
probation due to poor job performance.
After termination, he filed for and was
awarded temporary total disability
workers’ comp benefits based on stress.
Two years after termination, he filed for
DR with PERS.
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Duff FINDINGS
Duff was terminated for cause not related
to disability.
Once terminated, he was no longer an
employee of the City of Gardena.
The workers’ comp award of total
temporary disability is not sufficient
evidence that Duff qualified for disability
retirement. (Summerford v. Bd. of
Retirement (1977) 72 Cal.App.3d 128.)
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Duff HOLDING
A probationary employee terminated for
cause has no vested interest in
retirement benefits and, thus, no right to
a hearing to determine permanent
incapacity or service connection.
Duff’s claim is barred by laches because
he never filed a workers’ comp claim
while on the job and never claimed
permanent disability until almost two
years after he was released from
probation.
12
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 benefits of one-half
his salary where there is no indication
whatsoever that he even reported a
work-related injury.”
13
Haywood FACTS
Firefighter was fired for insubordination
following progressive discipline.
Prior to termination, Haywood filed WC
claim for depression caused by discipline.
After termination, he filed timely DR
application claiming stress of discipline
caused depression and permanent
incapacity.
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Haywood FINDINGS
Haywood was fired for unwillingness to
do his job.
His unwillingness was not caused by a
medical condition.
Haywood was not dismissed for
disability.
Termination for cause completely severed
Haywood’s employment relationship with
the District.
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Haywood HOLDING
An employee terminated for cause is
ineligible to apply for disability retirement
benefits, provided:
• Termination was not the result of a
disabling medical condition; or
• Termination did not preempt an
otherwise valid claim for DR benefits.
The timeliness of the DR application does
not determine eligibility of terminated
employee.
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Haywood ANALYSIS
DR laws contemplate the potential
reinstatement of the employment
relationship if the member recovers from
the 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
relationship and thus precludes a potential
reinstatement 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 unable to perform
their duties, not for those who are
unwilling to do so.
DR laws are not intended as a means by
which unwilling employees can retire
early in derogation of the obligation of
faithful performance of duty.
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Smith FACTS
Firefighter was working light duty due to
a work-related back injury.
He was fired for failing competency/
performance tests (driving errors).
On termination date, he filed a DR
application based on back injury.
Retirement Board denied, citing
ineligibility per Haywood.
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Smith FINDINGS
Smith was dismissed for cause.
Smith was not terminated due to disability.
(His back injury did not cause him to fail
the competency tests.)
Smith’s dismissal did not preempt an
otherwise valid claim for DR benefits
because Smith’s claim had not yet
matured.
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Smith FINDINGS
Although Smith was found permanently
disabled and QIW in his workers’ comp
case, this did not occur prior to his
termination and did not establish a
matured right to disability retirement
predating his termination.
Remember: WC ≠ DR
22
Smith HOLDINGS
Smith’s termination for cause made
him ineligible for DR benefits.
Haywood rationale followed.
A claim for DR benefits matures only
when Retirement Board determines
that employee is permanently
incapacitated.
23
Smith Notes
The court declined to decide which event
actually extinguished the right to DR
benefits:
•
•
•
The effective date of termination,
The date of the decision to dismiss the
employee, or
The date of the underlying conduct giving
cause for the dismissal.
The court noted: Equity principles may
require different result, e.g., if handling of
DR application was unduly delayed.
24
Compare: Suspended Official
Is Eligible For DR
•
•
•
Willens v. Commission on Judicial
Qualifications (1973) 10 Cal.3d 451
Judge who was charged with a felony, but
not yet convicted, and was suspended from
office remained eligible to apply for DR
benefits.
Pension rights were “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 action recommending
•
termination pending, employee agrees to
resolve the disciplinary action and his WC
case for a lump sum plus his resignation
and waiver of any right to reemployment,
including any rights under Gov. Code §
31725.
Disciplinary action was for dishonesty, but
was arguably related to disability.
• Is employee eligible 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 incapacitating condition?
• Medication?
• Counseling?
•
When does a personality disorder simply
create a disgruntled employee?
In either case, need clear,
well-reasoned opinion
from medical expert.
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Personality Disorder &
Service-Connection
If a personality disorder is incapacitating, did
the job:
• Aggravate the underlying personality
•
•
disorder,
Temporarily increase the symptoms, or
Act as a passive stage on which the
symptoms of the underlying personality
played out?
Again, need clear medical
opinion!
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Progressive Discipline
•
•
May employee claim incapacity due to the
progressive discipline process? YES
(See Traub v. Bd. Of Retirement (1983) 34
Cal.3d 793)
Is there a good faith personnel action
defense in disability retirement
proceedings? No
Labor Code § 3208.3 not applicable to DR
31
Problem Employee &
Accommodation
•
•
Is inability to get along with one’s supervisor
proof of permanent incapacity?
No, provided employer can accommodate
employee with equivalent job reporting to
another supervisor.
(See Save Mart Stores v. WCAB (1992) 2
Cal.App.4th 720)
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Problem Employee &
Accommodation
•
•
What if employer makes no secret of the fact
they do not want to provide reasonable
accommodation to a problem employee?
Retirement Board must independently
determine whether accommodation is
possible.
(See O’Toole v. Retirement Bd. of S.F. (1983)
139 Cal.App.3d 600.)
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DISABILITY RETIREMENT BENEFITS