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REVIEW OF SELECTED 2002 CALIFORNIA LEGISLATION: Employment: Protecting Injured or Ill Peace Officers: Mandating Advanced Disability Payments
by: Martin Jensen
I. Introduction
Peace officers who suffer an injury or an industrial illness on the job are fully compensated for a maximum period of one year. For many injured or ill peace officers, the time allotted is sufficient to fully recover and provides adequate compensation while injured. However, after the end of the one-year period, the employer would decide whether or not to continue compensating the injured or ill peace officer until the disability retirement claim was resolved. Many claims were not decided within the one-year period, so many officers were left without compensation after a year. As a result, peace officers may have exhausted all of their temporary disability time. The impetus for section 4850.4 of the California Labor Code arose from this critical time period. Supporters of section 4850.4 of the California Labor Code believe that this situation can be resolved through the enactment of this legislation because it mandates employers to make advanced disability payments.
II. Legal Background
A. Time Frame and Compensation
Injured or ill peace officers are entitled “to leave of absence pay, in the amount of their full salary, in lieu of temporary disability payments, for up to one year.” For that period of time, the employee receives full tax-sheltered compensation. The result is a higher salary for the officer during the period that the officer is ill or injured because the officer is no longer paying taxes on his base salary.
When the temporary disability period ends, the employer may elect to make advanced disability payments to any officer that is approved for a disability allowance and covered under section 4850 of the California Labor Code. If the employer elects to make the advanced disability pension payments, the payments must amount to at least fifty percent of the highest compensation earnable by the peace officer for the three consecutive years of employment prior to the date of the disability retirement, or meet the optional settlement that is available in the permanent disability retirement application process. The advanced disability pension payments are also tax sheltered. Any compensation that the employer makes to the injured peace officer is fully reimbursed by the Public Employees’ Retirement System. Problems began to emerge as employers opted not to make advanced disability pension payments, and processing of disability retirement claims took months or even years to resolve, often leaving the injured or ill peace officer in a dire financial position.
B. Covered Entities
Under existing law, entities that are members of the Public Employees’ Retirement System, County Employees Retirement Law of 1937, or the Los Angeles City Employees’ Retirement Systems could elect to make advanced disability payments only to injured peace officers who had exhausted all of their temporary disability time. Public safety employees covered by this legislation “include police officers; firefighters; sheriffs; district attorney and State Department of Justice law enforcement personnel, members of the Highway Patrol, probation officers, …specified” peace officers, harbor and airport law enforcement, and certain lifeguards employed on a full time basis. Chapter 189 does not change who is covered under the Labor Code. These officers, should they be injured or become ill while on the job, remain eligible for temporary disability payments.
III. Chapter 189
A. Requirements
Chapter 189 adds section 4850.4 to the California Labor Code which requires covered employers to make advanced disability pension payments to an injured or ill peace officer upon the expiration of the temporary disability benefit time. Payments are to begin no later than thirty days after the employee’s last regular paycheck, including the expiration of all temporary disability time and sick leave. The advanced disability payments will continue until there has been a final determination by the employer on the disability retirement claim of the injured or ill peace officer. In addition, the State will reimburse the employer for the advanced payments even if the disability retirement claim is denied.
B. Exemptions and Withholdings
An employer does not need to make advanced disability payments if a physician determines that the peace officer is not injured or ill, if the employee suffers an injury outside the course of employment, or if there is proof of fraud surrounding the employee’s claim. Additionally, the payment of advanced disability benefits may be temporarily withheld if the employee does not comply with certain conditions. First, if the employee fails to file an application for disability retirement at least sixty days before the beginning of advanced disability payments, then the employer does not have to begin to make payments until the employee files the application. Second, if the employee fails to provide medical information or attend required medical examinations and evaluations the employer may withhold advanced disability benefits until the employee complies. Lastly, the payment can be withheld until the employee fully cooperates with the evaluation process of the retirement plan.
IV. Analysis
A. Shifting the Financial Burden
By enacting Chapter 189, the Legislature is attempting to shift the financial burden placed on peace officers that become ill or are injured on the job to the employer and the State. Chapter 189 is aimed at eliminating cases of injured or ill peace officers facing bankruptcy because employers have opted to provide advanced disability benefits upon the expiration of temporary disability benefits.
Supporters of Chapter 189 feel it is appropriate to shift the burden of paying the benefits because “it is within the power of the employer to make a determination on the employee’s retirement claim, and as a result the employer should compensate the employee of [the employer has] been dilatory in processing the disability retirement claim.” “The injured or ill peace officer should not be prejudiced by the employer’s lack of diligence in resolving the disability retirement claim in a timely manner.” In addition, “the employer has the financial resources to make advanced disability benefits to an injured or ill peace officer so it may be more fair and equitable to have the employer bear the financial burden while the employee awaits a determination on the disability claim.” Furthermore, the risk imposed on the employer, as opposed to the employee, is minimal because all advanced disability payments are fully recoverable by the employer through the Public Employee’s Retirement System. The risk imposed on the employer pales in comparison to the employee’s risk of losing everything if he must make ends meet on his own until a determination is made on the disability retirement claim.
However, due to the current economic crisis faced by public local and state agencies, this may not be the right time for this measure to be enacted. The time frame for when advanced disability payments will be reimbursed by the State is indeterminate, and it may take months or years to be repaid, leaving the employer to absorb the cost in the meantime. Even though employers are fully compensated for advanced disability payments, the initial costs that public, local and state agencies face may place an unfair burden on them during this fiscally constrained time.
B. Expediting Disability Retirement Claims
Another expected benefit of Chapter 189 is that it will expedite the processing of injury claims filed by peace officers. Prior to Chapter 189, employers could intentionally delay the processing of disability retirement claims. By requiring employers to make advanced disability payments, Chapter 189 provides an incentive for the employer to quickly process the employee’s claim in order to avoid making unnecessary payments. By the same token, the employees must fully comply with the provisions of the measure or the advanced disability benefits will be denied or withheld until the employee complies. The process of requiring all injured or ill employees to provide information and mandating employers to make advanced disability payments will make certain that all information is collected in a timely manner allowing the disability claim to be processed quickly. As a result, both employers and employees have a vested interest in ensuring that information is gathered and the claim is processed promptly.
However, Chapter 189 may not provide enough information for retirement systems to make a determination on the disability retirement claim. Chapter 189 requires that advanced disability payments be made as long as employees provide medical information in accordance with existing statutory provisions. However, existing statutory requirements are not well constructed and do not provide enough medical information. As a result, there is not enough information to process the disability retirement claim in a timely manner. Furthermore, Chapter 189 does not require examining physicians to have any training in industrial medicine, which may further impede the collection of information and slow the determination of a disability claim.
Nonetheless, Chapter 189 is aimed at securing the full employee cooperation regarding required medical information. Chapter 189 states that an injured or ill peace officer must fully cooperate with existing law related to medical information in order to receive advanced disability payments. If the employee fails to fully cooperate, advanced disability benefits could be cancelled or withheld until the employee is willing to cooperate. Supporters argue that these provisions will calm the concern that employees will not provide needed information to make a determination on the disability retirement claim.
C. Increased Utilization and Cost
After the enactment of Chapter 189 the utilization rate, meaning the number of people on advanced disability payments, may increase because employers are required to make advanced disability payments that will have an overall fiscal effect. Mandating advanced disability payments may not lead to more efficient claim determinations, but it may lead to greater costs to employers through increased advanced disability payments made to employees. Also, the tax-free nature of advanced disability payments may provide an incentive for employees to remain off the job. Opponents of Chapter 189 support this contention by claiming that injuries deemed compensable under section 4850 of the California Labor Code take almost twice the time to heal compared to Worker’s Compensation disability injuries.
However, the payment of advanced disability benefits is a wholly controllable cost if disability retirement claims are settled in a timely manner. Chapter 189 encourages employers to efficiently manage the disability retirement claims process and penalizes the employer, and ultimately the State, if the disability retirement claim is not settled expeditiously. In addition, encouraging efficiency in the resolution of disability retirement claims is sound public policy. Furthermore, there is no incentive for an injured or ill peace officer to remain off the job because he would be missing out on valuable overtime pay, which could be more lucrative than the tax-sheltered pay received while on temporary or advanced disability benefits.
V. Conclusion
Chapter 189 mandates the payment of advanced disability benefits to injured or ill peace officer after all temporary benefits have expired. Chapter 189 should alleviate the financial strain placed upon an employee who has exhausted all temporary disability payments while awaiting a decision on a disability retirement claim. In addition, Chapter 189 may expedite the disability retirement claims process. However, Chapter 189 may lead to an increase in the utilization and cost of advanced disability benefits unless employers can efficiently make a determination on the employees disability retirement claim. Chapter 189 also causes an initial out-of-pocket expense for the employer, and the indefinite status on the repayment of those advances to the employer may result in financial hardship for cities and counties. However, this seems to be a small price to pay to ensure that the people who lay their lives on the line everyday for the residents of California can be adequately provided for if they suffer an injury or become sick while on the job.
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