DISABILITY RETIREMENT AND THE PROBLEM EMPLOYEE

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DISABILITY RETIREMENT AND THE PROBLEM EMPLOYEE
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Diana Ruiz Deputy County Counsel, Sacramento
Countyrepresents SCERSruizd_at_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
  (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.

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EMPLOYEE TERMINATED FOR CAUSE MAY 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 cause unrelated to
  disability is ineligible to apply for disability
  retirement benefits
• The timeliness of an application is not
  determinative of eligibility.

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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.

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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.
• Duffs 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.

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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 benefits of one-half his
  salary where there is no indication whatsoever
  that he even reported a work-related injury.

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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
  Haywoods 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.)
• Smiths dismissal did not preempt an otherwise
  valid claim for DR benefits because Smiths 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

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Smith HOLDINGS

• Smiths 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.

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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.

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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

• Cant 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

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Problem Employee Accommodation

• Is inability to get along with ones 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 OToole v. Retirement Bd. of S.F. (1983)
• 139 Cal.App.3d 600.)