Public Sector Pensions in Maryland -- lost for "disloyal" or "unfaithful" service
DON'T PUT YOUR PENSION AT RISK BY DISLOYAL OR UNFAITHFUL SERVICE
Many public sector employees are not aware that, under Maryland Law, a public pension earned through employment with a Maryland County or City, can be denied after many years of service because the pension board deems the employee's service "disloyal" or "unfaithful". For example, the Baltimore County Pension Ordinance defines "creditable service" as service to the County that is "loyal and faithful." Even though the Baltimore City pension law does not contain similar language, the Maryland Court of Appeals held that a "faithful service" requirement is implied in the ordinance.
In short, a City or County employee can work for many years, only to be denied his pension because the pension board does not approve of the employees' conduct. In one Maryland case, a police officer engaged in illegal drug use. The pension board denied his pension contending that extended drug use constituted disloyal and unfaithful service. The Maryland Court of Special Appeals upheld that decision despite the fact that the drug use occurred off the job.
Disqualifying misconduct is not necessarily limited to egregious criminal acts. Recently, in a Maryland jurisdiction, an employee was fired for conduct that could be considered sexual harassment of another employee. The jurisdiction is threatening to deny that employee his pension after more than 20 years of service unless he drops the appeal of his termination. Although his conduct did not constitute a crime of any kind the jurisdiction took the position that being terminated under such circumstances could be considered disloyal or unfaithful service, thus placing his pension at risk.
Employees of the State of Maryland do not appear to face the same risk. The Maryland Attorney General wrote an advisory opinion on the subject and refused to follow the Court's lead. He refused to imply a requirement that service be loyal and faithful in order for it to be credited toward a pension.
This issue recently became newsworthy in the case of former Baltimore City Mayor Sheila Dixon. As part of her plea bargain the City of Baltimore agreed to pay her the pension she had earned during her lengthy tenure in Baltimore politics. Nonetheless, that pension was used as a bargaining chip by the prosecutor and other political figures in their attempt to oust the mayor.
Pension boards and politicians writing pension laws, should understand that an employee works for many years and part of his compensation is the service credit he accrues. In some jurisdictions that compensation is the financial equivalent of 30% or more of his compensation. Other parts of an employee's compensation package are not placed at risk because of misconduct on or off the job. Once paid, wages, salary, bonuses, health insurance, etc. cannot be taken back. There is no reason why pension benefits should be treated differently. In the case described above of the employee accused of sexual harassment, were twenty years of faithful service wiped out because he crossed the line of acceptable conduct at the end of his career?
The case of convicted spy, Robert Hanson, points out the most important reason for changing the law. As an FBI agent Hanson betrayed his country giving the Russian government important national secrets. His conduct is believed to have led to the deaths of several American operatives. When he was caught he was long past the point when he could have retired but he was threatened with denial of his pension. However, he was the father of numerous children and the sole support for his family. As part of a plea bargain, and for humanitarian reasons, the U.S. Government allowed his family to receive his pension. Those humanitarian reasons are, perhaps, the strongest reasons for why the law should be changed. Even if an employee is guilty of serious misconduct, other people, likely innocent people, can be negatively impacted by the denial of a pension. For example, the disabled wife of a philandering husband who engages in sexually harassment on the job could lose her entitlement to all or part of the employee's pension benefits. Maryland's family law recognizes that a pension can be the largest "marital asset" in a divorce and protects the rights of both husband and wife to that asset. The husband cannot divorce her without consideration of her interests in the pension. Why should the jurisdiction be able to divest her of her interest in the pension merely because her husband commits some sort of misconduct which the pension board deems "disloyal"?
No Maryland appellate court has yet sustained the denial of a pension for conduct that was less than criminal. Nonetheless, public employees should avoid putting their pension at risk by avoiding improper conduct -- on the job or off the job.