No, not another reality cops-and-robbers; this is a lengthy circumnavigation of the CA police on-the-job injury compensation and its relationship with Section 104.

No doubt Detective Clarence William Speer was on the disabled list due to job-related sickness or injury. And no doubt CW didn’t get his compensation therefor until he cashed out his accumulated vacation pay and sick pay when he retired, many years later.

CW claimed the cashout, or a substantial portion thereof, was what he accumulated while on the disabled list. He couldn’t come up with numbers despite plenty of time, so Judge Halpern didn’t give him a fourth try (although one continuance was for the birth of a grandchild, with which I am in total sympathy. Let me tell you about my grandchildren…if you have lots of time.).

But CW’s claim that the cashout was nontaxable founders on the fact that the accruals he received were not truly compensation for the time he could not work due to sickness or injury. He cashed out fringes accumulated while disabled. But since the fringes that he cashed out were suspended until after his disability ended, they weren’t support payments to carry him while he was on the DL.

Judge Halpern: “During each of his disability leaves of absence, Mr. Speer received periodic payments of his base salary and he accrued fringe benefits, such as vacation time and sick leave, that would translate into additional payments to him only after his disability leave of absence ended. Indeed, if a covered employee were to forgo the vacation time and the sick leave accrued during a disability leave of absence (as Mr. Speer claims he did), decades might pass until the employee retired and cashed out the forgone benefits. Mr. Speer’s accrual of vacation time and sick leave while on temporary disability leave did not provide him with an immediate benefit that he could use to support himself while on such leave. The fringe benefit represented by the accrual was, thus, fundamentally different from the normal temporary disability allowance payable under the Workers’ Compensation Act and for which the continuation of his base salary under LAAC sec. 4.177 substituted.” 144 T. C. 14, at pp. 12-13.

To be Workers’ Comp, they must compensated the worker while disabled, not years later, or after he ceased to be disabled.

Oh yes, the full citation: Clarence William Speer and Susan M. Speer, 144 T. C. 14, filed 4/16/15.