No, California public employees can’t commit felonies on the job and then keep their pensions earned while they were perpetrating their crimes.
“When misconduct turns into outright criminality, it is beyond dispute that public service is not being faithfully performed,” the state Court of Appeal has concluded. “To give such a person a pension would further reward misconduct.”
The February ruling in a “felony forfeiture” case from Contra Costa and a similar December appellate court ruling in one from Los Angeles County correctly reject arguments from two firefighters that they are entitled to their full retirement pay despite their felonious conduct while working.
Contra Costa Fire Capt. Jon Wilmot stole hundreds of items from county firehouses, everything from tools and toilet paper to binoculars and chain saws, costing his employer $33,000. Los Angeles County Fire Capt. Tod Hipsher while on duty ran an illegal bookmaking operation and directed the physical intimidation of clients who failed to pay their gambling debts.
The law firm representing both firefighters has appealed the ruling in the Hipsher case to the state Supreme Court and plans to do the same in the Wilmot case. But they will have a tough fight there if the high court takes the case.
The Supreme Court already has ruled that reasonable modifications to retirement payments are permissible if they protect the integrity of the pension system. In 2019, the Supreme Court upheld the state’s elimination of a perk known as “air time,” which allowed employees to purchase extra pension service credit for time they hadn’t actually worked.
Then in 2020 the high court upheld the elimination of “pension spiking” practices in Alameda, Contra Costa and Merced counties, where workers had been adding unused vacation or other deferred leave cashed out upon retirement to their base salary to boost their pension checks 25% or more.
The appellate and Supreme Court rulings on felony forfeiture, air time and pension spiking all support the constitutionality of provisions contained in 2012 pension law changes championed by then-Gov. Jerry Brown.
While the rulings conclude that pension promises can be altered in some limited cases, none of them allow the state or local governments to modify the underlying pension calculation rates that have made public employee pensions in the state excessively costly.
Even if the court were to allow such changes, it’s almost unthinkable that the labor-backed majority in the state Legislature would implement them. Thus, pension reformers’ only possible route to meaningful change would be through an initiative to amend the state Constitution.
Meanwhile, at least Brown’s modest, incremental, common-sense 2012 changes are sticking — most recently with the felony-forfeiture ruling. By enacting that portion of the law, the appeals court noted in the Wilmot case, “the Legislature moved to close an egregious loophole that allowed public funds to reward criminality.”
Indeed, the justices concluded, the punishment for felony behavior on the job is “rather temperate.” The punishment only applies to felonies related to the job. The employee does not lose all his or her pension benefits, only those since the time the crime was commissioned. And the employee gets back the portion he or she contributed toward the pension for that time.
Wilmot, for example, stopped working in 2012 and collected his full pension until after he entered his guilty plea. In April 2016, the Contra Costa retirement system retroactively reduced his payments from about $105,000 a year to $34,000 annually.
Wilmot lost 13 years of service credit, from when he started embezzling from his fire district in 2000 to his retirement at the end of 2012. And his pension was recalculated based on his salary before his crimes.
The pension system also retrieved about $250,000 in overpayments Wilmot had already collected. But it gave him back a nearly identical amount for the pension payments he had made during the disallowed 13 years.
Wilmot’s attorneys argue that he’s being punished for a political reason, to assuage public outrage, rather than for a good public policy reason. The appellate court judges didn’t buy it.
Felony forfeiture, the justices ruled, quoting from the trial court judge, “take(s) back from Wilmot what he never rightfully earned in the first place — namely pension rights for a period when he was violating his trust as an employee by embezzling from his employer.”
It’s a small victory in the quest to fix California’s broken pension system.
