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
Secretary-Treasurer

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.



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. 

California Court of Appeals Limits Use of Secret Recordings in Administrative Investigations

In Telish v. State Personnel Board the California Court of Appeal clarified when an employer may use secret recordings. It is against the law for an employer to secretly record its employees. An employer may secretly record its employees if it is investigating a crime. But an employer may not fake a criminal investigation in order to secretly record its employees.

A police chief reported suspected criminal behavior by a DOJ employee to the the DOJ. The DOJ began a criminal investigation of Telish’s conduct. As part of that investigation, the DOJ asked the woman to record telephone conversations with Telish. These recordings were made without Telish’s consent.

The DOJ completed its investigation and submitted its findings to the Orange County District Attorney. The district attorney declined to prosecute. But the DOJ fired the employee because he violated company rules. The DOJ relied on the secret tape recordings to fire employee. The employee sued the DOJ saying the recordings violated California statutes.

The California Court of Appeal for the Second District upheld the termination. California Penal Code section 632 states one cannot secretly record someone. California Penal Code section 633 provides an exception to this rule. A law enforcement agency may record someone without their consent if the recording is part of a criminal investigation. Furthermore, a law enforcement agency may direct a private citizen to make the recording. Here, the accuser recorded the employee as part of a criminal investigation. Thus, the Court of Appeal ruled the recordings were appropriate under the exception in California Penal Codesection 633.

The employee argued the statutes prevented the use of the recordings in an administrative termination. The Court of Appeal did not agree. Nothing in the statutes prevents the employer from using a recording made as part of a legitimate criminal investigation in an administrative investigation. Here, the DOJ investigation originally focused on criminal activities. Therefore, when made, the recordings were pursuant to a valid criminal investigation. Thus, California Penal Code section 633 applies and the recordings may be used as part of an administrative investigation.

An employer may not lie and label an investigation “criminal” in order to secretly record its employees. There must be real facts that demonstrate an on-going criminal investigation. The recording must be made pursuant to that investigation.