Claims Filed with the California Civil Rights Department Regarding Calculation of CalPERS Disability Retirement Benefits

CATEGORY: Special Bulletins
CLIENT TYPE: Public Education, Public Employers
PUBLICATION: LCW Special Bulletin
DATE: Jul 17, 2023

On or about June 8, 2023, a law firm filed a complaint of discrimination with the Civil Rights Department (“CRD” [formerly the Department of Fair Employment and Housing]) and requested a right to sue notice on behalf of a former employee of Lake County who received a disability retirement through the California Public Employees’ Retirement System (“CalPERS”).  The narrative of the complaint purports to name CalPERS, the State of California, the County of Lake, and entities that contract with CalPERS to provide retirement benefits under the Public Employees’ Retirement Law (“PERL”) as defendants.  The notice and right to sue letters, along with a narrative of the complaint and a purported tort claim, were served on many, if not most, CalPERS contracting agencies.

The complaint indicates that the potential class of employees plaintiff seeks to represent consists of the following:

[A]ll persons who were employed by Defendants; who were at or over age 40 at the time they became members of the CalPERS system; who applied for and were granted ordinary disability retirement; whose retirement benefits are administrated by CalPERS; and either (1) who have ever received disability retirement benefit payments pursuant to Government Code section 21423, who were over age 41 at membership in CalPERS, and who at retirement were credited with 18.518 or fewer years of actual service; or (2) who have ever received disability retirement benefit payments pursuant to Government Code section 21098, and who at retirement were credited with 24.691 or fewer years of actual service; or (3) who have ever received disability retirement benefit payments pursuant to Government Code section 21424, and who at retirement were credited with 29.629 or fewer years of actual service.

The complaint alleges that provisions of the PERL, which are legislatively enacted and administered by CalPERS, discriminate against individuals based on their age.  The complaint further alleges that this amounts to disparate treatment and intentional discrimination, and failure to prevent discrimination, under the Fair Employment and Housing Act (“FEHA”).  The complaint also alleges breach of contract claims.  Given that the alleged wrongful conduct was the result of a legislatively adopted statute, it is not clear what theory would support a claim that would make contracting agencies liable for the statutory scheme or under a breach of contract theory.

The attachments to the CRD claim also contain a generic purported tort claim.  It is also unclear whether the theories advanced by the plaintiff would be subject to the Tort Claims Act or whether the attachment complies or substantially complies with the requirements of the Tort Claims Act.  Agencies should discuss with their counsel whether to overtly act on the tort claim, by providing a notice of rejection of the tort claim, or not respond, which ultimately results in a rejection  by operation of law. Agencies should also discuss with their counsel whether to notify their employment practices liability insurer.

At this time, it is uncertain whether a lawsuit will be filed, whether a class will be certified, and what theories will be alleged.   We are currently unaware of any agencies being served with a lawsuit.

Liebert Cassidy Whitmore attorneys are closely monitoring developments in relation to this Special Bulletin and are able to advise on the impact this could have on your organization. If you have any questions about this issue, please contact our Los Angeles, San Francisco, Fresno, San Diego, or Sacramento office.

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