Although the Public Employee Disability Act was enacted 43 years ago, questions still arise from time to time on the implementation of the Act. The most important provision of this Act provides as follows:
Whenever an eligible employee suffers any injury in the line of duty which causes him to be unable to perform his duties, he shall continue to be paid by the employing public entity on the same basis as he was paid before the injury, with no deduction from his sick leave credits, compensatory time for overtime accumulations or vacation, or service credits in a public employee pension fund during the time he is unable to perform his duties due to the result of the injury, but not longer than one year in relation to the same injury.This provision also turns out to be the one that continues to raise the most questions, such as the following:
1. When an employee is collecting PEDA benefits, does he or she also accrue other benefits, such as vacation, personal and sick leave?
Answer: Believe it or not, no appellate or supreme court decision has squarely addressed this question, leaving it somewhat up in the air. To further confuse matters, different public employers interpret the statute differently. The Act says “…he shall continue to be paid by the employing public entity on the same basis as he was paid before the injury…” A fair interpretation of this sentence is that “to be paid” limits the employer’s responsibility to continue wages. Additionally, since PEDA payments are considered to be in the nature of insurance, like worker’s compensation, the common sense meaning would be that the employer is liable only for payment of the amount of wages and not other employment benefits.
2. Are PEDA benefits subject to employment taxes.
Answer: IRS Publication 15(a) defines payments that are exempt from employment tax as follows:
State and local government employees, such as police officers and firefighters, sometimes receive payments due to an injury in the line of duty under a statute that is not the general worker's compensation law of a state. If the statute limits benefits to work related injuries or sickness and does not base payments on the employee's age, length of service, or prior contributions, the statute is "in the nature of" a worker's compensation law. Payments under a statute in the nature of a worker's compensation law are not sick pay and are not subject to employment tax.
IRS Publication 15(a) page 15
The IRS characterization of PEDA payments as being “in the nature of worker’s compensation” bolsters the argument that only payment of wages is owed and not accrual of benefit time.