Tuesday, May 19, 2015

CBS13 Interviews David Mastagni About Military Equipment for Law Enforcement

CBS13 interviewed Mastagni Holstedt partner David P. Mastagni about President Obama's call to limit military equipment in law enforcement agencies.  In the interview, Mastagni explained, "Obama's dead wrong" and the policy "is going to decrease public safety [and] put the public at risk, increase the risk of law enforcement officers' injury or death in the line of duty.  He explained, "the equipment that is necessary to meet and exceed the criminal threat is the type of equipment he is seeking to ban."

Thursday, May 14, 2015

Court of Appeal Gives Retroactive Effect to Firefighter Injury Presumption

The California Court of Appeal ruled statutory changes to workers' compensation injury presumptions apply to cases pending prior to the change in the statute. In doing so, the Court of Appeal overruled the Workers' Compensation Appeals Board ("WCAB") who refused to apply the presumption to a pending case. This decision could affect the presumptions involved in many workers compensation cases.
The facts of Lozano v. W.C.A.B. are tragic. William Lozano worked as a firefighter for a Department of Defense installation. Lozano was diagnosed with stomach cancer and succumbed to the disease in September of 2007. In November of 2009, Lozano's wife and two young children filed a workers compensation claim alleging the stomach cancer was work related.
On January 1, 2009 the legislature amended the Labor Code so that firefighters like Lozano could take advantage of the cancer presumption. This means the family would not need to prove Lozano's employment caused stomach cancer. Rather, the court would assume the cancer was from his employment and the employer would have to prove the cancer was not job related.
The Agreed Medical Examiner ("AME") concluded Lozano was exposed to carcinogens as part of his work activities. However, he could not conclusively say the carcinogens caused Lozano's cancer. However, if the firefighter cancer presumption applied to Lozano's case, the AME concluded the cancer should be presumed as work related.
The WCAB determined the presumption did not apply to Lozano's case. The WCAB noted Lozano was not a qualifying firefighter under the statute at the time of his death. The WCAB refused to apply the statutory change retroactively because the Legislature did not provide for retroactive application in the statute.
The Second District Court of Appeal reversed the WCAB's decision and held the presumption did apply to Lozano's claim. In general new statutes operate prospectively unless the Legislature clearly indicates otherwise. However, this general rule does not apply to new statutes that simply alter procedural or evidentiary statutes to trials occurring after enactment. Thus, if a new statute alters substantive legal rights, like who is liable for an injury, that statute cannot be applied retroactively. But, if the statute only alters procedural rights, like who has the burden of proof, the statute can be applied retroactively.
Here, the presumption test does not change who is liable for the injury, but rather who has the burden of producing evidence. Making the cancer presumption available to firefighters like Lozano only addresses the procedure to follow, not the substantive legal rights. Thus, the Court of Appeal overruled the WCAB and allowed Lozano's heirs to retroactively apply the cancer presumption.
This case should help a great number of public safety employees in the future. The instant statute only dealt with firefighters working at Department of Defense facilities. But the court's logic could be applied to any new statute which changes the evidentiary burdens for workers compensation claims. Thus, when the legislature changes the statute to help more people, any pending claims can take advantage of that new rule.

Wednesday, May 13, 2015

Illinois Supreme Court Blocks Attack On State-Funded Pensions

The Illinois Supreme Court blocked an attack on state employees and their pensions when it upheld a lower court ruling on May 8, 2015. In Pension Reform Litigation v. Pat Quinn, the Court struck down a 2013 law aimed at slashing state-funded public employee pensions. The Court ruled the law violated the Illinois State Constitution’s contracts clause.

In 1970, Illinois ratified an amendment to its constitution protecting state-funded pensions. From 1970 until 2013, the funding for the state-funded pensions stagnated, having only 41% of the funding necessary to meet the fund’s liabilities. Conversely, the Illinois Municipal Retirement Fund is funded at 96%. The IMRF is not state funded.

To meet growing concerns with its state-funded pensions and other budgetary issues, the Illinois state legislature passed Public Act 98-599. The heart of PA 98-599 aimed to cut state-funded pensions. The bill sought to delay eligibility for members. It also capped the maximum salary used to calculate benefits. PA 98-599 then tried to effectively reduce base pension amounts for some members. Senator Kwame Raoul, one of PA 98-599’s chief sponsors, characterized the bill as sacrificing state employee pensions to protect state finances.

Former Governor Pat Quinn signed PA 98-599 in 2013. Five separate lawsuits challenging the law’s validity were immediately filed. The lawsuits, all decided in this case, claimed that PA 98-599 violated Illinois’s contracts clause. Just like the California's contracts clause, the Illinois Constitution prohibits the impairment of state pensions. PA 98-599’s proponents characterized the bill as an exercise of the legislature’s emergency police powers. The Illinois Supreme Court disagreed. The Court ruled that the PA 98-599 violates the Illinois Constitution.

The Illinois Supreme Court warned against a slippery slope of unnecessarily using police powers. Writing for the Court, Justice Lloyd Karmeier instructed that emergency police powers must be reserved for true emergencies. If not, “no rights or property would be safe from the State. Today it is nullification of the right to retirement benefits. Tomorrow it could be renunciation of the duty to repay State obligations. Eventually, investment capital could be seized.” Justice Karmeier further explained that “crisis is not an excuse to abandon the rule of law. It is a summons to defend it.” The Court pointed to the possibility of raising taxes to meet the fund’s needs.

The Illinois pension victory represents just one battle in that state’s fight. Though the ruling came from the Midwest, the fallout hits close to home. Just like Chuck Reed here in California, Governor Bruce Rauner wants to amend the Illinois constitution so that he can gut state-funded pensions.

Similar attacks on retiree benefits have failed in California on similar grounds.  In Stockton, the superior court found a fiscal emergency declaration does not authorize City to renegotiate a closed labor contract.  In Los Angeles, a court determined a fiscal emergency declaration does not permit freezing retiree medical benefits or imposing furloughs, and in Pacific Grove the court found a local ballot measure capping PERS pension contributions violated California's contracts clause.  Mastagni Holstedt attorneys David E. Mastagni and Isaac S. Stevens represented the employee groups in Stockton and Los Angeles.  Mastagni Holstedt attorney Jeffrey R. A. Edwards represented the employee groups in Pacific Grove.

Friday, May 8, 2015

California Senate Bans Grand Jury Investigations of Officer Involved Critical Incidents

On May 7, 2015, the California Senate voted to ban the use of grand juries to investigate officer involved critical incidents. Specifically, Senate Bill 227 prohibits a grand jury from inquiring into an offense or misconduct that involves a shooting or the use of excessive force by a peace officer that lead to the death of a person being detained or arrested by the peace officer.

Under current law there are two tracks a district attorney can take to file a case. Under one track, the district attorney can file a complaint in criminal court and schedule a preliminary hearing.  At the preliminary hearing the district attorney and the defense attorney present witnesses and evidence subject to cross-examination in open court. The judge then makes a determination of probable cause based on the evidence. If there is probable cause, the judge issues an information which lays the foundation for the criminal case.

The district attorney can also send the case to a grand jury. The grand jury then hears evidence presented in secret. The district attorney is allowed to present evidence favorable to his or her case without calling all relevant witnesses and without cross-examination. The grand jury decides if there is probable cause. If the grand jury dismisses the indictment, then the proceedings remain secret.

Senator Holly Mitchell, D-Los Angeles, argued the lack of transparency in the grand jury process and in grand jury deliberations has fostered an atmosphere of suspicion regarding the justice system and officer involved critical incidents. According to Senator Mitchell, requiring a district attorney to bring the case through a complaint allows the public to view the proceedings. If the public does not agree with the district attorney the public can then remove the district attorney at the next election.

The bill passed the senate on May 7 by a vote of 23-12. All of the "yes" votes came from Senate Democrats. The bill now moves to the Assembly for further review.

Wednesday, May 6, 2015

Cashed Out Vacation and Sick Leave Earned During Labor Code § 4850 Leave Not Tax Exempt

The United States Tax Court recently decided that not all benefits earned during a leave of absence under Labor Code § 4850 are tax exempt.  In Clarence William Speer v. Commissioner of Internal Revenue, the Tax Court ruled that the government can tax accrued vacation and sick leave earned during a disability leave of absence.

After serving the citizens of Los Angeles for over 25 years, LAPD Detective Clarence Speer retired from public service in 2009.  On account of duty related injury, Speer took temporary disability twice during his decade’s long career.  Speer first took temporary disability leave in 1982. In 2007, Speer used temporary disability leave for the second time.

At retirement in 2009, Speer had accumulated 541 hours of unused vacation time. Speer also accrued 800 hours of unused sick leave. Combined, the unused benefits had a value of $53,513.  After cashing out the $53,513 at retirement, the City of Los Angeles reported that amount as income on Speer’s 2009 W-2. Since Speer earned some of the cashed out benefits while on temporary disability, Speer excluded the $53,313 from his 2009 income tax return.

Labor Code § 4850 allows police officers and firefighters a one year leave of absence in lieu of workers' compensation. When the disability ends, compensation for that disability also stops. The government cannot tax workers’ compensation income under 26 United States Code § 104(a)(1). As a statute that resembles a workers’ compensation statute, the income tax exemption applies to Labor Code § 4850.

Not only is disability pay exempt from income tax, but Labor Code § 4850(a) entitles police officers to temporary disability leave without any loss of salary. This means that vacation and sick leave continue to accrue during paid disability leave. Naturally, Speer claimed the benefits earned during his disability time as exempt from income tax.

The Tax Court disagreed with Speer. Citing Boyd v. City of Santa Ana, the Tax Court stated that compensation paid while on disability leave was not salary, but compensation for injuries. Since Speer could not take vacation or sick time during his temporary disability, he could not benefit from the accrued vacation or sick time while on disability. Speer’s only benefit from the accrued vacation and sick time came after his disability ended.  The Tax Court ruled that any payments received by Speer after his disability ended were not part of Speer’s Labor Code § 4850 compensation. Thus, the income tax exemptions did not apply to Speer’s cashed out leave.

All compensation received during a police officer or firefighter's leave of absence under Labor Code § 4850 is tax exempt. When cashed out after a leave of absence, the government can tax vacation and sick time earned during that Labor Code § 4850 leave.

Friday, April 17, 2015

Chuck Reed Provides a Preview of His Threatened Assault on the California Constitution

On April 10, 2015, the Reason Foundation held their third annual Pension Summit. The Summit focused on a recent report by the Foundation which concluded the 2012 Public Employees' Pension Reform Act failed to fix California's pension problems. The keynote speaker for the event was former San Jose Mayor Chuck Reed. Reed presented his 2016 ballot initiative aimed at dismantling California pensions at the event. IAFF Local 522, along with other public employee organizations, picketed the event, letting Reed know his pension busting efforts are not welcome in Sacramento.

Pat Cook, in blue,
Local 522
After a string of court losses invalidating local governments' efforts to break their contractual obligations, Reed seeks to undermine Californians' constitutional rights by eliminating or altering the Contracts Clause in California’s Constitution. Currently, both the United States' Constitution and California’s Constitution include a Contracts Clause barring public entities from taking actions impairing contracts. The courts have construed the Contracts Clause as requiring the state, counties, and cities to provide promised pension benefits. In Allen v. City of Long Beach the California Supreme Court held an employee has a vested (i.e. contractual) right to receive the pension benefits his public employer promised him.

Mike Feyh, in green, Local 522 Director of Membership Services
The Contracts Clause prevents public entities from walking away from all their contractual obligations, not just pension obligations. The Contracts Clause protects all Californians from legislation that impairs contracts with public entities, such as bond repayment obligations and commercial contracts. Without it, public entities would likely not even be able to borrow from the bond market, because financial institutions would not be able to rely on agencies' promises to repay their debts. While Reed's goal is to attack public employees' property rights in their pension, his efforts could undermine governments' contracts with private citizens, vendors, businesses, and lenders.

In recent years, California courts have rejected local governments’ attempts to impair employees’ vested benefits to address supposed “fiscal emergencies.” Our office vindicated both the U.S. and California Contracts Clauses in several high profile court battles: Stockton (fiscal emergency declaration does not authorize City to renegotiate a closed labor contract), Los Angeles (fiscal emergency declaration does not permit freezing retiree medical benefits or imposing furloughs), Pacific Grove (Ballot measure capping PERS pension contributions unconstitutional).  Similar rulings were obtained by the police and fire unions in San Jose invalidating in substantial measure Reed’s San Jose pension impairments.

To circumvent these Constitutional protections, Reed's initiative would grant public entities Chapter 9 Bankruptcy type powers to unilaterally modify their contractual obligations, but without the creditor protections and judicial oversight of bankruptcy proceedings. Reed abandoned a similar initiative on the ballot for the 2014 election after unsuccessfully suing Attorney General Kamala Harris over the title and summary her office assigned to it.

Chris Andrew, Local 522
 City Vice President

Reed’s initiative would modify the Contracts Clause to allow public entities to impair their contractual obligations by majority vote of their governing body. Reed’s new initiative would likely accomplish this by repealing the California Contracts Clause altogether or singling out public employees for elimination of their Constitutional rights. Either approach is repugnant. Excluding public employees’ contracts from the Contracts Clause would allow governments to redirect money promised to public safety employees for politicians' personal spending priorities (politicians rarely return savings to the tax payers). Eliminating the Contracts Clause altogether would threaten everyone's contracts with the government.

Reed’s new initiative also fails to account for the Contracts Clause of the U.S.  Constitution which provides the same protection against impairments of contract. Even if Reed succeeds in altering the California Constitution, future attacks on vested pension benefits will likely remain unconstitutional under the U.S. Constitution.  California courts have held that the California and United States Contracts Clauses are construed the same. (See for example San Bernardino Public Employees Assn. v. City of Fontana and Kern v. City of Long Beach.) In the last 47 years, no court in the Ninth Circuit has upheld a public agency’s attempt to impair its own contractual obligations. (See So. Cal. Gas Co. v. Santa Ana.) Thus, damaging the California Constitution will not insulate Mr. Reed’s agenda from Constitutional protection.

Public employees are already working to expose Reed’s new initiative for what it is: an attempt to use the ballot box to accomplish what the courts already prohibited governments from doing. Keep an eye on this blog for continuing updates on Reed’s efforts to rewrite our Constitution.


Wednesday, April 8, 2015

PERB Greatly Expands Representation Rights to Include Interactive Process Meetings

The Americans with Disabilities Act requires an employer to accommodate an employee’s disability. The employer must meet with an employee and discuss reasonable accommodations. Does an employee get a representative at these meetings? The Public Employment Relations Board answered this question with a resounding “yes” in Sonoma County Superior Court (2015) PERB Decision No. 2409-C.

In the case, a trial court employee was diagnosed with a serious illness. She requested a meeting with her employer to discuss reasonable accommodations. She wanted a union representative during the meetings. The employer said no. The union filed an unfair practice charge.

PERB held an employee has a right to representation during an interactive process meeting. An employee may have a representative present in two contexts. First, an employee has a right to a representative during a discipline proceeding. Second, the employee has a right to a representative when engaging in labor activities. This includes activities like filing a grievance or bargaining.

PERB decided an ADA meeting is like a grievance. The meeting is a negotiation on the appropriate accommodation. This directly concerns working conditions. This is the perfect scenario for a labor representative. The representative has unique knowledge of the labor relationship. The representative can use this knowledge to negotiate with the employer. Thus, the employee must be allowed a representative during an interactive meeting.

Employees are often stressed and concerned when engaging in the interactive process. Employers can take advantage of this stress and exploit the employee. A representative can protect the employee and level the playing field during these negotiations.