Cavoretto v. City of Richmond

DEVINE, P. J. Plaintiffs, retired firemen who receive pensions from the City of Richmond, brought this action to recover amounts which the city had deducted from their pension payments because of awards which the pensioners received under the Workmen’s Compensation Insurance Act of the State of California.

The deductions were made pursuant to article XI, section 17 of the city charter, which provides that anyone who receives a pension and who is also entitled to workmen’s compensation shall receive a monthly payment equal only to the monthly pension. The city is insured for workmen’s compensation by the State Compensation Insurance Fund. When a pensioner is awarded workmen’s compensation, a check is sent by the fund to the finance department of the city, which then sends the cheek to the pensioner together with the city’s check for the balance of the pension sum. If the workmen’s compensation amount exceeds the earned pension payment in any month, only the compensation cheek is sent, and a credit for the excess is taken by the city and is applied in later months.1

The sources of the pension fund are contributions from the employees, equal contributions by the city, and awards and gifts made to the fire and police departments and their mem[728]bers. The moneys in the pension fund are kept in the same bank accounts as the general tax moneys collected by the city. More particularly, employee contributions to the pension fund are commingled in the same bank accounts with city contributions to the fund. Since March 1964, the city has maintained separate ledger accounts on its books for revenue. received from employee contributions and from city contributions to the fund, but this is merely a bookkeeping device.

Section 3751 of the Labor Code reads: “No employer shall exact or receive from any employee any contribution, or make of take any deduction from the earnings of any employee either directly or indirectly, to cover the whole or any part of the cost of compensation under this division. Violation, of this section is a misdemeanor.” Respondents contend that the city’s practice violates the statute because pension benefits are partly composed of employees’ contributions. . The trial court agreed, and allowed the city a partial credit only, a credit which bears the same ratio to compensation liability as the city’s contribution bears to the total contributions to the pension fund.

In City of Los Angeles v. Industrial Acc. Com. (Fraide) 63 Cal.2d 242 [46 Cal.Rptr. 97, 404 P.2d 801], and in City of Los Angeles v. Industrial Acc. Com. (Morse) 63 Cal.2d 263 [46 Cal.Rptr. 110, 404 P.2d 814], it was held that a city which is a self-insurer of workmen’s compensation may not make a deduction of the whole amount of workmen’s compensation payments from an employee’s benefits under city charter provisions (disability pension in Fraide, widow’s pension in Morse), where the employee has contributed to the pension fund, but only a deduction proportionate to the city’s contribution to the pension fund. Labor Code section 3751 simply forbids the use of the earnings of an employee for payment of workmen’s compensation. The judge in our ease regarded the decisions as controlling.