Terminating the Employment Relationship

f. Does Dismissal Cut Off an Employee’s Ability to Obtain a Disability Retirement?

A member cannot be substantially incapacitated from the performance of his or her usual duties if they have no “usual duties” to perform. Therefore, termination of an employee by the employer for reasons other than the disability may cut off the employee’s ability to qualify for a disability retirement. 203 For PERS agencies, it does not necessarily matter when the employee files the application for disability retirement. If he or she is terminated for reasons other than disability prior to receiving disability retirement benefits, the termination severs the member’s qualification for a disability retirement. 204 However, where the cause for dismissal is the result of a disabling medical condition, or where the dismissal would be preemptive of an otherwise valid claim for a disability retirement, then a dismissal will not sever an employee’s right to disability retirement. 205 The right to a disability retirement pension does not arise at the time of injury, but rather when there is a determination that the employee is no longer capable of performing his or her duties of the position. 206 For ’37 Act agencies, it is unclear if a dismissal for reasons other than disability prior to a retirement board’s determination on an application for disability retirement cuts off the employee’s ability to obtain a disability retirement. If, however, an employee is terminated for reasons unrelated to his or her disability, the retirement board may find the employee no longer has “usual” duties from which the individual has become incapacitated. Accordingly, it may cut off the terminated employee’s ability to obtain a disability retirement.

Smith v. City of Napa 207 A fireman sustained a back injury and had been placed on light duty. After an appeal of an earlier termination, the civil service commission reinstated him on the condition he successfully complete certification in four areas identified as deficient within three months of his return. Prior to the test, the fireman asked to postpone the testing process because he was feeling “stress” in completing the tasks that he believed was related to his physical injury. The chief denied his request. The fireman failed the test and he was subsequently terminated on December 15, 2000. In affirming the dismissal, the commission concluded that two medical opinions authorized the administration of the test that his physical condition did not contribute to his failing the test and that “testing” stress was not a valid excuse to postpone the test because firefighters are required to perform duties under immense stress. On the same day of his dismissal, the fireman filed an application for disability retirement with PERS dated August 31, 2000. The city determined that the fireman was ineligible for a disability retirement because of his dismissal. The fireman appealed the city’s determination and the ALJ upheld the denial of disability retirement. The court held that the timeliness for an application for CalPERS disability retirement benefits is a procedural issue without any significance to the substantive entitlement to a disability retirement. The court noted that even if an agency dismisses an employee solely for a cause unrelated to a disabling medical

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