Should State Employees File for CalPERS's Disability Retirement and Take an Interim Service Retirement?

No, although frequently State employees are encouraged by their employers, their workers’ compensation attorneys, their doctors or even their union representatives to file for disability retirement and request a service-retirement while waiting for CalPERS to make a decision on the disability retirement application. Employees often do this because of the enormous financial distress imposed by having no job and no pay.

But if you file for disability retirement and simultaneously retire for service, you will often lose twice!

First, if you file for disability retirement you lose by taking on the financial and legal burden of proving disability.  A better strategy is to demand that your employer reasonably accommodate your medical condition. If the employer says that it cannot return you to your job or return you to another position in your job classification, with or without reasonable accommodation, then your employer is obligated to do three things:

  1. The employer must file the disability-retirement application and bear the financial and legal burden of proving its claim that you cannot be accommodated.

  2. The employer must find a way to keep you on the payroll, or, at the very least, it must pay you the estimated disability retirement allowance WHILE it awaits a decision from CalPERS on its application.

  3. The employer must also keep all your insurances in full force while its application is pending before CalPERS.

If State employers implemented these three things, there would be no need for you to take your service-retirement because your financial crisis would have been largely adverted. So, why do you suppose your return-to-work coordinators NEVER TOLD YOU ABOUT THE STATE EMPLOYER’S DUTIES?

Second, if you take your service-pension you stand to lose again if CalPERS’s denies that the that you are disabled. You lose the opportunity to demand reinstatement to your job, or, if unable to actually perform the job duties, reinstatement to the active payroll. Once you have taken a service-retirement, you have essentially resigned your job.

So what should you do to avoid these problems? It is imperative that the you get appropriate legal help as soon as your treating doctor says that you have permanent work limitations or restrictions – especially if it is likely that your employer will say it cannot accommodate your medical condition.

The State employer will likely serve a lengthy Option Letter on you in which many options are described – except the three described above that actually benefit you. The Option Letter covers its sins of omission by noting that it “may not describe all the available options. Right, you bet!

The way the system is suppose to work is that if CalPERS grants the State employer’s application for disability retirement, then you will smoothly transition from the active payroll to the roll of retired employees.

If CalPERS denies the State employer’s disability retirement application, then your employer must either reverse that decision through an administrative hearing or judicial review. Again, the financial and legal burden of these proceedings fall on the State employer. If the CalPERS’s denial is not reversed, the State employer must reinstate you to your former position and pay the back pay and benefits differential between the estimated disability retirement advances and the employee’s actual pay and benefits.