Friday, July 29, 2011

Supreme Court Rejects Police Chief's Retaliation Claims

The U. S. Supreme Court reversed the Third Circuit Court of Appeals in holding that retaliation claims brought under the petition clause of the First Amendment must relate to a matter of public concern to liability. Borough of Duryea, Pa. v. Guarnieri (June 20, 2011) 2011 WL 2437008.

Chief Guarnieri successfully grieved his termination through the applicable collective bargaining agreement.  After being awarded reinstatement, the governing body issued eleven directives controlling the manner in which he performed his duties.  The Chief filed the second grievance challenging the directives and obtained another favorable arbitration award instructing the agency to withdraw or modify certain directives on grounds, including that they interfered with the delegation of authority, they violated the collective bargaining agreement, and were vague.

Chief Guarnieri then proceeded to bring a Federal action against the governing body and certain of its members under section 1983 based upon his allegation that the directives constituted retaliation for the filing of his initial grievance.  Perhaps, in light of the recent Supreme Court ruling limiting the First Amendment speech protections of public employees (Garcetti v. Ceballos), Guarnieri brought his claims under the Petition Clause, rather than the speech clause, of the First Amendment.  The Petition Clause protects the right “to petition the government for a redress of grievances.”  He also added claims for retaliation based upon denial of overtime payments.  Guarnieri prevailed in the District Court, as the jury awarded approximately $142,000.00 in damages and fees.  The defendants unsuccessfully appealed to the Third Circuit, arguing that Guarnieri’s grievances did not involve matters of public concern and, therefore, should be afforded no First Amendment protection. In upholding the jury verdict, the Third Circuit stated, “A public employee who has petitioned the government for a formal mechanism, such as the filing of a lawsuit or grievance, is protected under the petition clause from retaliation for that activity, even if the petition concerns a matter of “solely private concern.”  The defendant appealed and Supreme Court granted review.

The Supreme Court, in an opinion authored by Justice Anthony Kennedy, held that a public employee must show that his speech related to a matter of public concern in order for the protections of the petition clause to apply.  In so doing, the Court, essentially applied the standards set forth in Garcetti v. Ceballos to Petition Clause claims.  Garcetti had held that, in order to prevail on a First Amendment retaliation claim, a public employee must show that the speech involved matter of public concern, in that the speech was not part of the employee’s official duties. Guarnieri had unsuccessfully argued that the public concern requirement did not apply to the petition clause-based claims.  Justice Kennedy explained the rationale for his decision by asserting that public employees must accept certain limitations on their freedom, and that the public concern requirement is intended to protect the government’s interest.  The Court noted that applying a different standard to petition clause claims would allow public employees to circumvent the protections the Court had afforded to governmental interests in Garcetti.  The Court’s opinion did elaborate on the definition of “public concern” in suggesting that it related matters such as communication to the public or advancing a political or social point of view beyond the employment context.  The Court held that “a complaint about a change in the employee’s own duties does not constitute a petition involving the a matter of public concern.”

The Supreme Court’s decision further limits the scope of constitutional protection afforded to public employees under the first amendment.  However, this case involved claims under the United States Constitution, not state or federal labor law.  In California, it remains unlawful under the Meyers-Milias-Brown Act for a local government agency to interfere with or retaliate against represented public employees for pursuing a grievance process or other concerted activity such as arbitration. Further, under Government Code section 3304(a) of the Public Safety Officers Procedural Bill of Rights Act, “no public safety officer shall be subject to punitive action, or denied the motion, or be threatened by any such treatment because of ... the exercise of any rights under any existing administrative grievance procedure.”

Thursday, July 28, 2011

California Supreme Court to Hear Challenge to City's Purported Fiscal Emergency

The California Supreme Court recently depublished City of Los Angeles v. Superior Court (Engineers and Architects Association) (2011) 193 Cal.App.4th 1159, and granted review.  The decision of our Supreme Court to grant review appears to reflect a greater willingness of the courts to provide judicial oversight of local bureaucrats attempting break contractual obligations by declaring fiscal emergencies, rather than negotiate concessions or seek bankruptcy protection.

Some prominent law firms representing public agencies have been advocating that the Los Angeles case supported their contention that agencies can suspend MOUs merely by declaring fiscal emergencies and that the resulting contract violations could not be arbitrated because declarations of emergency are not subject to review, and that more cities should declare emergencies to avoid contractual obligations.   These firms contend that review of cities' declarations of emergency and suspension of MOU terms is an improper delegation of cities' salary setting and budget making powers.  Under this rationale, cities' would not need Chapter 9 bankruptcy, because they could avoid court oversight of their true financial situation and any reorganization plan by suspending contractual obligations at their discretion.

This expansive reading of the Los Angeles case conflicts with Prof'l Engineers in Cal. Gov't v. Schwarzenegger (2010) 50 Cal.4th 989, 1043, where in our Supreme Court held the establishment of an emergency does not provide any substantive power to take an action not already authorized, but only avoids meet and confer obligations.   The Supreme Court will likely address the ability of local agencies to suspend their contractual obligations through misuse of emergency declarations in this case.

Wednesday, July 27, 2011

Brown Vetoes AB 455

Governor Jerry Brown vetoed AB 455 which would have given recognized employee organizations input in the composition of personnel commissions.  In his veto message, the governor noted that "[w]hile intended to create more balanced commissions and address concerns relating to individual commissions, this measure imposes a a top down, one-size-fits-all solution on all merit and personal commissions statewide." 

Wednesday, July 20, 2011

CalPERS: "We are back"

CalPERS posted a gain of 20.7% in its investment portfolio for the fiscal year ending June 30, 2011, marking its largest market gains since 1997.  CalPERS investments grew across the board: stock value is up 30.2%, private equity stakes increased 25.3% and real estate assets increased 10.2% in value.  CalPERS investments now stand at $237.5 billion, up from $200.5 billion last year and $165 billion in 2009.

The average annual growth rate of CalPERS' investments plays a critical role in the cost of participation in the plan and employer contribution rates.  CalPERS' critics regularly attack its target growth rate of 7.75% and make forecasts assuming a growth rate as low as 2-3%.  However, as a result of its higher-than-expected growth, CalPERS now stands at 8.38% growth averaged over 20 years despite the big hits to the fund in 2008 and 2009 and appears well on its way to being fully recovered from the effects of the recession.

Monday, July 18, 2011

CalPERS Takes a Stand on Vested Pension Rights

On Thursday, July 14, 2011, CalPERS released a position paper on the status of pension benefits earned by public servants under the system. The paper, Vested Rights of CalPERS Members: Protecting the pension promises made to public employees, interprets sections of the Public Employment Retirement Law (PERL) CalPERS enforces and related state and federal constitutional provisions. The position paper explains CalPERS pensions are vested rights under the federal and state Contract Clauses. It also explains CalPERS' fiduciary duty to members and cautions CalPERS may take legal action "[i]n the event CalPERS questions whether changes in the PERL or other applicable law may cause an unconstitutional impairment of its members’ vested rights..."

Wednesday, July 13, 2011

Little Known Group Seeks to Ban Collective Bargaining, Slash Pensions in California

A Santa Barbara-based organization calling itself the California Center for Public Policy recently announced it has submitted three proposed California constitutional amendments to the California Attorney General to begin the process for qualifying for the ballot. The first amendment would prohibit public sector collective bargaining in California, the second amendment would increase taxes on retired public servants receiving more than $100,000 in pension benefits and the third amendment would raise the CalPERS retirement age to 65 for most employees and 58 for public safety employees. It would not make any change to the retirement age in systems organized under the County Employees Retirement Law of 1937 (CERL). The little known group is not widely believed to have the resources to successfully qualify these initiatives for the ballot.

Tuesday, July 12, 2011

New Department of Labor App Allows Employees to Track Hours Worked and Wages

The US Department of Labor has released a free application for iPhones and iTouch that will assist employees in tracking their hours worked, meal periods and rest breaks, overtime and wages owed. The application is titled "DOL-Timesheet" and is available for free on the apple website, and is expected to be released soon for other phones. This application will provide workers a valuable tool to establish their wage and hour claims where the employer has failed to keep accurate records. Under the FLSA and California labor law, employees can establish wage claims by reasonable inference where accurate records are not available.

In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946) the court recognized that employees may establish their claims by reasonable estimates and averages. The court found, "Where the employer's records are inaccurate or inadequate and the employee cannot offer convincing substitutes ... the solution ... is not to penalize the employee ... on the ground that he is unable to prove the precise extent of uncompensated work. Such a result would place a premium on an employer's failure to keep proper records ... it would allow the employer to keep the benefits of an employee's labors without paying due compensation as contemplated by the [FLSA]." Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946).

This application will provide a much more accurate record of hours worked and strong evidence for courts to estimate the claims of other employees. Secretary of Labor Hilda L. Solis stated "This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay." The Labor Department indicated the calculator will be updated to allow workers to keep track of their tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest. The application can be found at or on itunes.

Monday, July 11, 2011

AB 455: Bill Adds Provision Granting Employee Organizations Input on Appointees to Personnel and Merit Commissions

The Senate and Assembly both passed a bill introduced by Assemblymember Nora Campos which would add a provision to the Meyers-Milias-Brown Act affording recognized employee organizations input in the composition of personnel commissions. AB 455 provides that where personnel commissions or merit commissions are established to administer personnel rules or the merit system, an employee organization may nominate half the commissioners. The governing body of the agency shall appoint the commissioners nominated by the employee organization as well as the other half of the commissioners that the agency has selected. The commission members then select an additional member as a chairman. The bill also states when there are multiple bargaining units represented by different recognized employee organizations, the organization which represents the largest number of employees will be the organization who nominates the commission members.

This legislation is opposed by labor law firms representing public agencies because it is considered an impediment to their agenda of eliminating promotional rules requiring a testing process and hiring from a list, as well as eliminating seniority based layoffs and bumping rights. Some agencies and their advocates seek to eliminate civil service protections to allow local government bureaucrats to make hiring, promotional and layoff decisions at their whim. California’s civil service systems were created to eliminate patronage and corruption in public employment. This law would provide an equitable balance and transparency to the commissions that have broad discretion in determining hiring and promotional process, disciplinary procedures, and other personnel guidelines. This legislation will enhance public confidence in government by guaranteeing the impartiality and independence of the commissions and the rules they administer.

AB 455 was enrolled on July 6, 2011 and as of now is waiting to be signed by the Governor.