The end of an employment relationship can essentially be broken down into one of three "manners": termination, resignation, or death. However, there can be numerous causes and several may contribute, such as failure to pass probation, misconduct, finding another job, boredom, sickness, and even…retirement.
In 2011, there were no less than three published decisions about whether "retirement" can be the manner, if you will, for the end of the employment relationship. These three cases indicate that "retirement" is like a cause, but not necessarily a manner for which the employment relationship ends.
In Service Employees International Union, Local 1021 v. San Joaquin County, an employee terminated for misconduct requested an appeal. Pending the appeal hearing, the employee applied for a service retirement from the County retirement association. The Court held the employee's service retirement did not waive the employee's right to be heard on the appeal of his termination. "It was his termination by the County that separated him from employment so that he became eligible to collect retirement benefits."
In Hall-Villareal v. City of Fresno, after an employee was terminated for misconduct, she applied for service retirement from the City's pension trust. She then filed an appeal of her termination with the City's civil service commission. The court held the employee's receipt of a service retirement did not divest the commission of jurisdiction to hear her appeal under the City charter and municipal code. The employment was severed by a termination, not by the service retirement.
In Riverside Sheriffs' Assoc. (Sanchez) v. County of Riverside, a public safety officer was placed on involuntary unpaid leave because the County found that she was unable to perform the essential functions of her job with or without reasonable accommodation. The officer disagreed. The County applied for disability retirement with CalPERS and later approved the retirement over the objections of the officer. The officer requested an appeal hearing under the terms of the MOU which the County denied. The Court held that the officer was entitled to an appeal hearing both under the MOU and the Public Safety Officers Procedural Bill of Rights Act ("POBRA") for the County's "disciplinary actions" in denying the officer "wages and other benefits of her employment" when it forcibly placed her on unpaid leave.
These 2011 cases build upon previous cases including:
County of Los Angeles Dept. of Health Services v. Civil Service Commission (2009): An employee's service retirement after a termination for cause has no "transformative effect" on the discharge to the extent that, if the discharge was unlawful, the employee's retirement does not cure any unlawfulness.
Riverside Sheriffs' Association v. County of Riverside (2009): When an employer terminates a local safety officer for physical or mental unfitness for duty before the employer applies for and approves a disability retirement from CalPERS, the officer remains entitled to appeal the termination under the employer's rules unless or until there is a final determination upholding the involuntary disability retirement under the Public Employees' Retirement Law ("PERL").
Zuniga v. Los Angeles County Civil Service Commn. (2006): A voluntary service retirement by the employee during employment is akin to a "resignation."
With these cases in mind, here are some thoughts on what we can glean from the cases mentioned above:
• If an employee voluntarily takes a service retirement or disability retirement, the employee has essentially resigned. Make it clear to the employee that the employer "accepts" the resignation so that it is a binding agreement and that if the employee later decides he or she wants to come back, the agency does not necessarily have to take the employee back. Employers with a '37 Act system, however, are cautioned about Government Code section 31725 which provides that an employee who applies for disability retirement, but whose application is denied by the county retirement board, is entitled to reinstatement.
• If any employee facing termination for cause before receiving a final notice of termination files for a service or disability retirement, the employer should complete the termination proceedings, including noticing the employee of the right to appeal the decision. If you do not, institutional memory may fade and that employee could be rehired years later because newer management had no record of a termination. In addition, in cases of disability retirement, a termination for cause can sometimes cut off the employee's right to a disability retirement in certain circumstances.
• If the sole reason for an employee's separation from employment is because the employee qualifies for a disability retirement (i.e. the employee is substantially incapacitated from performing the essential functions of the job with or without a reasonable accommodation for a permanent or extended and uncertain duration), the employer should not separate the employee from employment until the effective date of the employee's disability retirement.
• If the employee is involuntarily retired for disability, which can occur with local safety members in a CalPERS agency, the employee has the right to appeal the employer's decision pursuant to the appeal procedures under PERL and may have a right to appeal the separation from employment under the employer's rules. Agencies should carefully evaluate the circumstances and consult legal counsel before committing to a course of action in these cases.
Employers should tread cautiously when the end of an employment relationship closely precedes or follows a retirement.
This article first appeared on the firm's California Public Agency Labor and Employment Blog. To view other blog posts, please visit www.calpublicagencylaboremploymentblog.com.