Employment Client Alert: Bus Driver’s Retirement Starts Early Under CERL

In Mary Porter v. Board of Retirement of the Orange County Employees’ Retirement System, 2013 S.O.S. G047507 (December 18, 2013), the California Court of Appeal reminded municipalities they must enact clear statutory language effectuating their intentions, if they seek to avoid double recoveries by industrially injured workers who qualify for both workers’ compensation and disability retirement. Without such statutes, non-safety employees are entitled to receive disability retirement benefits from the day following the last day of regular employment, even if that overlaps with temporary total disability benefits due from workers’ compensation.

Ms. Porter, a bus driver for the Orange County Transportation Authority (“County”), sustained an industrial injury that required her to miss time from work. While she was off, she received temporary total disability and permanent disability benefits as mandated by the California Labor Code. When it was determined that her permanent disability precluded her return to available work, she applied for disability retirement under Government Code section 31724, part of the County Employees Retirement Law of 1937 (“CERL”). Following protracted litigation, which involved two prior appeals, the trial court ruled Ms. Porter was entitled to disability retirement following her last day of regular work with pay (February 15, 2000). In doing so, the trial court rejected the County’s contention that retirement should not begin until the day following Ms. Porter’s last receipt of workers’ compensation benefits (June 21, 2000).

On the County’s appeal, the appellate court affirmed the trial court’s ruling. At issue was interpretation of section 31724’s provision that unless the retiree consents to an earlier date, retirement under CERL is not effective until the expiration “of any leave of absence with compensation” pursuant to Labor Code section 3201 et seq. The Court rejected the County’s argument that Ms. Porter was on “leave of absence with compensation” while she received workers’ compensation disability payments.

To reach its conclusion the court relied on CERL’s definition of “compensation” – “remuneration paid in cash out of county or district funds, plus any amount deducted from a member’s wages for participation in a deferred compensation plan …” – The Court also cited section 31724’s legislative history. The statute’s “leave with compensation” language arose from changes the Professional Peace Officers Association (“PPOA”) requested in 1973. PPOA wanted to prevent counties from retiring a member “as soon as he is determined to be incapacitated.” From this history the Court deduced “the legislative intent … was to protect safety members from being forced into retirement and depriving them from receiving a year’s salary …” Excluding workers’ compensation benefits from “compensation” under section 31724 is consistent with that purpose in that it maximizes an employee’s recovery.

Finally, the Court was not persuaded by the County’s warning that ruling for Ms. Porter would award her with a double recovery. While acknowledging that avoidance of a double recovery is a permissible goal of city government, the Court emphasized that it was the municipality’s obligation to ensure its legislative scheme clearly effectuated that goal. In the absence of a “charter, statutory provision, or a ‘contractual provision between the parties specifically affording a credit to the employer,'” public policy obligated the Court to liberally construe both workers’ compensation and pension legislation to resolve ambiguity in favor of extending benefits.

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January 7, 2014