Public Sector Case Notes
| Jurisdiction | California,United States |
| Author | By Kerianne Steele and Alejandro Delgado |
| Publication year | 2019 |
| Citation | Vol. 33 No. 4 |
By Kerianne Steele and Alejandro Delgado
Kerianne Steele is a shareholder of Weinberg, Roger & Rosenfeld. She provides general representation to labor unions, primarily in the public sector. Alejandro Delgado is an Associate in the Los Angeles office of the firm. He represents and advises public sector unions in all aspects of labor and employment law.
Cal. Fire Local 2881 v. Cal. Pub. Employees' Ret. Sys., 6 Cal. 5th 965 (2019)
The first issue before the California Supreme Court was whether the opportunity to purchase additional retirement service (ARS) credit was a vested right protected by the California Constitution's contract clause. The second issue was, if the opportunity to purchase ARS credit is constitutionally protected, whether the Legislature's elimination of that benefit in the California Public Employees' Pension Reform Act of 2013 (PEPRA) constituted an unconstitutional impairment of public employees' vested rights.
The case arose when the labor organization representing employees of the Department of Forestry and Fire Protection filed a petition for a writ of mandate against the California Public Employees Retirement System (CalPERS), challenging the elimination of the opportunity to purchase additional ARS credit. Since 2003, many public employees had been able to purchase up to five years of ARS credit, which is treated like ordinary service credit upon an employee's retirement. As a result, participating employees could receive pension benefits calculated on the basis of up to five more years of public employment than they actually worked. PEPRA effectively repealed the statute granting public employees the opportunity to purchase ARS credit but did not alter the rights of employees who had already purchased such credit. The trial court denied the employees' petition, concluding that the elimination of that opportunity by PEPRA did not violate the Constitution, and the First District Court of Appeal affirmed the lower court's decision.
The California Supreme Court affirmed. The court held that the opportunity to purchase ARS credit was not a term and condition of public employment protected from impairment by the contract clause. The court found there was no indication that the Legislature intended to create a contractual right to purchase ARS credit. The court reasoned that, unlike core pension rights, the opportunity to purchase ARS credit was not granted as deferred compensation. The court further stated that it could find no basis for concluding that the opportunity to purchase ARS credits is protected by the contract clause, and, in the absence of constitutional protection, it could be altered or eliminated at the discretion of the Legislature. Thus, according to the court, the elimination of the opportunity to purchase ARS credit by PEPRA did not implicate the Constitution.
Notably, the court declined to address the issue of whether the elimination of the opportunity to purchase ARS credit was an unconstitutional impairment of public employees' vested rights. The court noted that that the scope of constitutional protection afforded public pension rights in its prior decisions has come to be referred to as the "California Rule," in part because it has not been widely adopted by other jurisdictions. Because the opportunity to purchase ARS credit was not a term and condition of public employment protected from impairment by the contract clause, the court found that its elimination does not implicate the Constitution and there was no reason to address or alter the continued application of the California Rule.
The court will address the California Rule soon in one or more of the many pension-related cases on its docket.
Boling v....
To continue reading
Request your trial