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Vacation Pay Policy Found to Violate Labor Code Section 4850

An association for county deputy sheriffs brought an action on behalf of retired members who were on disability leave in the year prior to their retirement, challenging Los Angeles County's policy that denied them the option of cashing out accrued vacation pay when they retired immediately after their disability leave. This policy caused a reduction in retirement benefits as compared to other retiring members. The trial court found for the plaintiffs, and the Court of Appeal affirmed. The policy violated workers' compensation statutes that entitle public safety officers to take leaves of absence for disability without any loss of salary. Los Angeles County Professional Peace Officers' Ass'n v. County of Los Angeles (2008) 165 Cal.App.4th 63.

Labor Code section 4850 provides that when a public safety officer (like each plaintiff here) "is disabled, whether temporarily or permanently, by injury or illness arising out of and in the course of his or her duties, he or she shall become entitled, . . . to a leave of absence while so disabled without loss of salary"  ... The principle question in this case is whether Los Angeles County 's policies concerning payment for excess accumulated vacation hours violate section 4850. This is the problem: normally, a deputy Sheriff who has accumulated more than 320 hours of vacation time may defer the hours in excess of 320 to the following year. If the excess hours are not used by the end of that year, in reliance on the County Code , the County pays the deputy for the hours. If this "cash out" payment takes place during the deputy's final compensation measurement period (the period used to determine salary for purposes of retirement benefits), the cash out payment is "pensionable income." It is reported to the Los Angeles County Employees' Retirement Association and is part of the calculation of the deputy's salary for purposes of retirement benefits. ( Ventura County Deputy Sheriffs' Assn. v. Board of Retirement (1997) 16 Cal.4th 483 .) Such a cash out payment will effectively increase the deputy's retirement benefit for years to come. However, a deputy who retires in the year following a 4850 leave, that is, the year following a work-related injury, is compensated for the excess hours differently. The County will not cash out deferred excess hours if the deputy is on 4850 leave at any time during the deferral year. The hours remain in the deputy's account ( Los Angeles County Professional Peace Officers' Assn (2004) 115 Cal.App.4th 866, 868 ), but if the deputy retires in the year following 4850 leave, he or she will never have the opportunity to cash out or use the hours. That deputy is compensated for the hours at retirement. Under established law, that payment is not pensionable income. ( In re Retirement Cases (2003) 110 Cal.App.4th 426, 474-477 .) It is not reported to the Los Angeles County Retirement Association and does not become part of the pension calculation. This means that, for example, a deputy who has accumulated excess vacation hours, but who has never been injured on duty, might collect more in retirement benefits than a deputy who has been injured on duty, even if the two have the same employment history in terms of rank, years of experience, and so on. It also means that a deputy who retires after taking leave due to a non-job-related injury, perhaps a ski accident, might collect more than a deputy who retires after having suffered an injury in the course of his or her duties, even if the deputies are in other respects identical. Plaintiffs' theory is that this different treatment violates section 4850. The trial court agreed, as do we.

You can download the full text of the opinion here in PDF or Word format. A modification can be found at this link. There was no petition for review filed.

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