Resignation in Lieu of Termination Disqualifies Public Employee from PERS Disability Retirement Benefits

April 17, 2019 by Andrew Baker

Ordinarily a public-sector employee who is terminated for cause loses the right to claim PERS disability retirement benefits. But how does this standard apply to an employee who is initially terminated for alleged cause, but who settles her termination grievance by converting the termination to a resignation with an agreement not to seek re-employment?

A recent Court of Appeal decision addressed this question and ruled that such a settlement disqualifies the employee from disability benefits. (Martinez v. PERS (4/4/19))

In reaching this decision, the Court deferred to a PERS precedential decision issued in 2013. In that case the PERS Board decided that when an employee settles a pending termination for cause by agreeing not to seek re-employment, the settlement is “tantamount to dismissal” and precludes disability retirement.

The only exception to this general rule would appear to be if the termination for cause is triggered by conduct that was the result of the employee’s disability. Otherwise, employees and their representatives should understand the PERS consequences of termination settlements that include a no-re-employment clause.

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