Thursday, March 8, 2012

Florida Police, Teachers Win Major Contract Clause Victory on Pensions

In George Williams et al. v. Rick Scott et al. (March 6, 2012, Fl. Cir. Ct.) Case No. 2011-CA-1584, Florida police officers, teachers and other public employees defeated attempts to unilaterally increase their employee contributions to Florida's pension system.  Read the full decision here.

On May 26, 2011, Florida's governor, Rick Scott, signed a bill unilaterally increasing public employees' contribution to that state's pension system by three percent (3%) and changing cost-of-living adjustments.  The bill effectively lowered all employees salaries and provided no new benefits to employees.  Florida's public employee labor unions never agreed to the changes and quickly filed a lawsuit challenging the constitutionality of the unilateral change to employees' pension benefits on Contract Clause grounds.  After initially losing an injunction, the employees' unions moved for summary judgment in late 2011.

The court found "the legislature is precluded... from abridging in any way the unconditional contract rights of the plaintiffs."  The court also found the three percent increase was "substantial as a matter of law" and noted the lifetime costs of employees ranged from tens to hundreds of thousands of dollars.  The court further stressed the state of Florida failed to prove a "compelling state interest" for the increase, noting "They merely produced evidence that the state faced a significant budget shortfall; this is not enough."  Indeed, the court noted the legislature could have made the same savings without violating its contract, but "All indications are that the Florida Legislature chose to effectuate the challenged provisions... in order to make funds available for other purposes."

As a result, the Court ordered the State to stop deducting the additional three percent from employees' salaries and reimburse millions of dollars withheld from employees since July 1, 2011.