The County Employees Retirement Law of 1937 provides that a member who is permanently incapacitated shall be retired for disability despite age if, among other conditions, the members incapacity is a result of injury or disease arising out of and in the course of the members employment, and that employment contributes substantially to that incapacity or the member has completed 5 years of service and not waived retirement in respect to the particular incapacity or aggravation thereof, as specified.

This bill would specify that any member who is classified as a peace officer, as defined, shall be retired for disability upon meeting the criteria of this provision, regardless of the members rank, position, or duty at the time of injury or at the time of application for permanent incapacity require, for purposes of determining permanent incapacity of certain members employed as peace officers, that those members be evaluated by the retirement system to determine if they can perform all of the usual and customary duties of a peace officer, as specified. The bill would apply to members who file applications for disability on or after the effective date of the act, except for cases on appeal at that time. The bill also would also make nonsubstantive changes to that provision.

The County Employees Retirement Law of 1937 provides that a member who is permanently incapacitated shall be retired for disability despite age if, among other conditions, the members incapacity is a result of injury or disease arising out of and in the course of the members employment, and that employment contributes substantially to that incapacity or the member has completed 5 years of service and not waived retirement in respect to the particular incapacity or aggravation thereof, as specified.

This bill would specify that any member who is classified as a peace officer, as defined, shall be retired for disability upon meeting the criteria of this provision, regardless of the members rank, position, or duty at the time of injury or at the time of application for permanent incapacity. The bill would also make nonsubstantive changes to that provision.

SENATE COMMITTEE ON

PUBLIC EMPLOYMENT AND RETIREMENT

Dr. Richard Pan, Chair

2017 - 2018 Regular

Bill No: AB 283 Hearing Date: 7/10/17

Subject: County employees’ retirement: permanent incapacity

SOURCE: Sacramento County Law Enforcement Managers’ Association

ASSEMBLY VOTES:

DIGEST: This bill requires ‘37 Act County Boards of Retirement, when evaluating whether a member employed in a peace officer position has a permanent incapacity for purposes of approving a disability retirement application, to determine if the member can perform all the usual and customary duties of a peace officer, as specified.

ANALYSIS:

Existing law:

1. Establishes the County Employees Retirement Law of 1937 (‘37 Act) which governs 20 independent county retirement associations.
2. Requires peace officers, as specified, to be free from any physical, emotional or mental condition that might adversely affect the exercise of powers of a peace officer and meet standards developed by the Commission on Peace Officer Standards and Training (POST) to attain peace officer status.
3. Provides that a member permanently incapacitated for the performance of a duty must be retired for disability regardless of age, if:
   1. The incapacity is a result of injury or disease arising from, and in the course of, the member’s employment, and that employment substantially contributes to the incapacity, or
   2. The member has completed five years of service, and
   3. The member has not waived retirement due to the incapacity, or aggravation thereof, as specified.
4. Pursuant to Mansperger v. Public Employees' Retirement System (1970)

6 Cal.App. 3d 873, incapacitated for the performance of duty means the substantial inability of the applicant to perform his or her usual duties.

1. Defines a peace officer in Penal Code Section 830 as any person who comes within the provisions of Chapter 4.5 of the Penal Code who otherwise meets all standards imposed by law on a peace officer and includes in addition to police, sheriff, deputies, several other categories of positions including security officers of municipal utilities and water districts, park rangers of water districts, welfare fraud investigators, child support inspectors, and various other law enforcement related positions.
2. Provides that the restriction of peace officer functions of any public officer or employee shall not affect his or her status for purposes of retirement.
3. Pursuant to Attorney General Opinion (90 Ops. Cal. Atty. Gen. 7 (2009), distinguishes between a person attaining the status of a peace officer and a person exercising the powers of a peace officer. Thus, a person who has attained the status of a peace officer may have his or her right to exercise the powers of a peace officer restricted for no longer being able to meet one of the POST criteria, but he or she would retain his or her status as a peace officer.
4. Pursuant to Harmon v. Board of Retirement (1976), 62 Cal. App. 3d 689, holds that a policy by a sheriff employer that all employees be capable of all POST certification requirements does not preclude a retirement board from finding that the employee is not permanently incapacitated for his or her usual duties and requiring the employee be returned to duty in a position that does not require the performance of one of the POST duties.

This bill:

1. Provides that for any member employed in a position classified as a peace officer under Section 830 of the Penal Code, in determining permanent incapacity, as specified, the member shall be evaluated by the existing procedure established by the retirement association, to determine if that member can perform all of the usual and customary duties of a peace officer who is described under Section 830 of the Penal Code.
2. Specifies that these amendments to existing law enacted during the 2017-18 Regular Session of the Legislature apply to any member who files an application for disability on or after the effective date of this measure, except that the amendments shall not apply to an appeal brought before the effective date of this measure.

Background

Under existing law, ‘37 Act retirement boards determine whether an applicant for a disability retirement is permanently incapacitated for “the performance of duty” and apply other standards, as specified, in making their determination whether the applicant is eligible for a disability retirement.

Some boards use a narrow (stricter) standard and interpret “performance of duty” as the duties required of the position in which the member is employed at the time of the member’s application for disability. Other boards utilize a broader (more accommodating) definition that comprises the duties required of all general peace officers as required for certification by POST and not the duties of a specific classification. Thus, a board using the former standard might not find that a high ranking, desk bound officer is eligible for a disability retirement for an injury that prevents the member from sustained, significant physical activity since that activity is not within the usual and customary duties of the member’s job class. However, boards using the latter standard would award the member the disability retirement because the injury no longer permits the member to fulfill one of the duties of all peace officers, i.e., a physical stamina sufficient to give chase and effect arrests.

It is unclear how many of the twenty ‘37 Act Retirement systems use the narrow standard and how many use the broader standard. According to the author, Sacramento County Employees’ Retirement System and Los Angeles County Employees’ Retirement System use the narrow standard; Alameda, Contra Costa, and Ventura, use the broader standard.

This bill appears to be attempting to establish a uniform definition of “performance of duty” in order to resolve different interpretations among various ‘37 Act retirement boards in favor of an interpretation that provides greater access to disability retirements to police officials.

Concerns

Narrow v. broader standard of “usual and customary duties”

AB 283 would impose on all ‘37 Act counties the broader standard of “usual and customary duties of a peace officer” over the narrow standard “the applicant’s usual duties” when a board is determining whether the member is permanently incapacitated.

Overturning applicability of Mansperger to ’37 Act County retirement systems

This bill appears to overturn case law in Mansperger and Harmon that allows ‘37 Act County Retirement boards to assess a peace officer’s service related disability application based on the duties actually performed by the employee, rather than a broader class of duties required of all peace officers required to attain peace officer status.

In short, this bill would make it easier for peace officers (not just police or sheriff’s deputies) to receive a disability retirement based on an incapacity that prevents the applicant from performing a task that might not be required of the applicant in his or her current duties but that is a criteria for attaining the status of a peace officer.

Economic Incentives to Retire on Disability

Because a peace officer’s service related disability retirement allowance is in significant part tax exempt, a disability retirement can provide more take-home dollars than a regular service retirement, especially one that is based on a higher salary grade and subject to a higher income tax rate. There can be a strong economic incentive for members to seek a disability retirement. When an employer has a significantly high rate of disability retirements in relation to service retirements among its employees, an institutional culture can develop that can increase the incentive to retire on disability.

Additionally, employers could have an incentive to use disability retirements under this new, broader standard to force out disfavored employees or provide an unwarranted higher pension to favored employees. Since the cost of the employee salary moves off the employer’s budget and essentially to the pension system, there is an economic incentive to employ disability retirements strategically rather than in compliance with their policy purpose of ensuring that an injured public servant is taken care of if he or she can no longer perform his or her duties after a career of protecting the people.

Increasing pressures on Defined Benefit Systems and Future Cost Burdens

The major concern raised by this bill is that since it creates conditions for a potential increase in disability retirements, the costs of those retirements are not reflected in the actuarial valuations upon which the employer and employee contributions have been based.

Thus, if the bill results in greater than expected disability retirements among highly paid peace officer managerial ranks, the retirement systems will need to increase future contribution rates to reflect those costs. This pattern is contrary to the purpose of a defined benefit retirement system in which contributions are collected during the career of the employee and invested in the marketplace in order to minimize future costs for providing the retirement benefit.

Such concerns might be somewhat mitigated if the bill applied only to new employees hired after the effective date of the legislation so that increased anticipated additional costs could be accounted for in actuarial valuations and prefunded over the employees’ careers.

Pressure on State System, Local Government, and General Fund

By weakening the holding in Mansperger, this bill could create pressure either through legislation or litigation to revisit the narrow standard used by the California Public Employees’ Retirement System (CalPERS).

If the bill results in higher experience of peace officer disability retirements than previously assumed by ‘37 Act county retirement boards, associated future increases in pension contribution rates will create funding pressures on local government.

Because substantial portions of peace officer disability retirements are tax exempt, unanticipated increases in disability retirements arising from this bill would result in fewer revenues to the General Fund.

Related/Prior Legislation

None known.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT:

Sacramento County Law Enforcement Managers’ Association (source)

American Federation of State, County and Municipal Employees, Local 685

Association for Los Angeles Deputy Sheriffs

Association of Deputy District Attorneys

California Association of Professional Employees

California Fire Chiefs Association

Fire Districts Association of California

Fraternal Order of Police

Long Beach Police Officers Association

Los Angeles County Deputy Probation Officers

Los Angeles County Professional Peace Officers Association

Los Angeles County Probation Officers Union

Sacramento County Deputy Sheriffs’ Association

OPPOSITION:

None received.

ARGUMENTS IN SUPPORT: According to the sponsor, “regardless of rank these officers must meet certain standards throughout their careers and can be subjected to the physical demands of the job at any time.” This bill “will ensure that a peace officer who is hurt while performing their statutory duty is afforded consistent disability status regardless of assignment or rank at the time of injury.”

ASSEMBLY THIRD READING

ATR Bill Id:AB 283

Author:(Cooper)

As Amended Ver:March 23, 2017

Majority vote

SUMMARY: Requires retirements systems established pursuant to the County Employees Retirement Law of 1937 ('37 Act) to use existing procedures established by the system when evaluating peace officers for determining whether that member can perform his or her duties. Specifically, this bill:

1. Specifies that any member who is classified as a peace officer must be, for purposes of determining permanent incapacity, evaluated by the existing procedure of the retirement system to determine whether that member can perform all usual and customary duties of a peace officer.
2. Specifies that this bill applies to any member who files an application for disability on or after the effective date of this measure, except that it does not apply to an appeal brought before the effective date of this measure.

EXISTING LAW:

1. Establishes the '37 Act, which governs 20 independent county retirement associations, and provides for retirement systems for county and district employees in those counties adopting its provisions. Currently 20 counties operate retirement systems under the '37 Act.
2. Contains several optional provisions that counties operating retirement systems established under the '37 Act can adopt that require safety members to retire once they reach a certain age.
3. Establishes comprehensive public employee pension reform through enactment of the Public Employee Pension Reform Act (PEPRA) that applies to all public employers and public pension plans on and after January 1, 2013, excluding the University of California and charter cities and counties that do not participate in a retirement system governed by state statute.
4. Requires peace officers to be free from any physical, emotional or mental condition that might adversely affect the exercise of powers of a peace officer.
5. Provides that a member permanently incapacitated for the performance of a duty must be retired for disability regardless of age, if:
   1. The incapacity is a result of injury or disease arising from, and in the course of, the member's employment, and that employment substantially contributes to the incapacity; or
   2. The member has completed five years of service; and
   3. The member has not waived retirement due to the incapacity, or aggravation of the incapacity.

FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS: According to the author, "The hazards of being a peace officer never stop, regardless of the assignment or rank. A sworn peace officer has a statutory responsibility to respond to serious crime, emergency situations and even natural disasters when ordered to do so. This includes sworn law enforcement managers. This bill builds consistency within the law and will give those managers the right to their earned disability retirement benefits if they are injured on duty, and that injury leads to a permanent disability." The author further adds that, "This bill is prospective and it will not apply to cases under appeal when the bill is signed into law."

Determination of Incapacity: Court Ruling

The issue of determining incapacity arose in litigation as it relates to causation. In Curtis v. Board of Retirement of Los Angeles County Employees Retirement Association (App. 2 Dist. 1986) 223 Cal. Rptr. 123, 177 Cal.App.3d 293, the court ruled that when considering a county employees' application for disability retirement, "the county board of retirement is faced with the question as to whether an employee is permanently incapacitated for performance of a duty and whether such permanent incapacity is a result of injury or disease arising out of, and in the course of, an employee's employment. Causation is a secondary issue, and permanent incapacity is the major issue."

Analysis Prepared by: Michael Bolden / P.E.,R., & S.S. / (916) 319-3957 FN: 0000235