Supreme Court Shoots Down Excessive Force Case

On November 9, 2015, the Supreme Court ruled that qualified immunity protected a state trooper who shot and killed a dangerous driver in Mullenix v. Luna.

On March 23, 2010, Sergeant Randy Baker of the Texas Police Department followed Israel Leija to a drive-in restaurant with a warrant for his arrest. When Sergeant Baker approached Leija's vehicle and told him he was under arrest, Leija sped off and a high speed chase ensued. During the case, Leija called dispatch and threatened to shoot any officer he saw if they did not abandon pursuit. Leija was also intoxicated.

State Trooper Chandrin Mullenix also responded to the call. While other officers set up three sets of spike strips in hopes of disabling Leija's vehicle, Mullenix called dispatch to propose shooting to stop Leija's car. Mullenix's supervisor instructed him to "stand by" and "see if the spike strips worked first." However, it was unclear whether Mullenix heard his supervisor's command.

Once Mullenix spotted Leija's vehicle coming up the overpass, Mullenix fired six shots. Four bullets hit Leija in his upper body, killing him.

The issue for the Court was whether Mullenix violated clearly established law. Qualified immunity protects "all but the plainly incompetent and those who knowingly violate the law." The Court found no clearly established law barred Mullenix from claiming qualified immunity. As such, Mullenix was entitled to summary judgment against plaintiffs' claim of excessive force in violation of the Fourth Amendment.

In the sole dissent, Justice Sotomayor argued Mullenix should have waited to see if the spike strips worked before shooting. The majority of the Court was not persuaded. The Court emphasized that spike strips don't always work and officers manning those strips are vulnerable to gunfire. According to the majority, Sotomayor's reasoning was in error. Namely, it is not for the courts to decide whether an officer should use one tactic over another.

Although the Court refrained from considering what tactics and officer should use, many agencies' use of force policies do. Some agencies are now moving toward banning the practice of shooting at cars to disable the vehicle. In such cases, an officer may be immune from civil liability, but can still be punished by the department for insubordination or violation of policy.

Peace Officer's Employer May Not Condition Reinstatement From Disability Retirement

A peace officer who recovers from the injury that led to their industrial disability retirement is entitled to reinstatement without any conditions, according to the recent court ruling in Department of Justice v. CalPERS.

Angelita Resendez was employed by the California Department of Justice as a peace officer until her industrial disability retirement in December 2008. She developed a spine condition as a result of several on-the-job injuries. But in September 2009 she applied to CalPERS for reinstatement. Based on a medical evaluation of Resendez, CalPERS notified her in 2010 that she was eligible for reinstatement. DOJ then offered Resendez reinstatement on the condition that she complete medical and psychological exams and submit to a background check. Resendez rejected DOJ’s offer.

Next, DOJ made multiple appeals to overturn CalPERS' determination about Resendez. But these appeals were denied. The Superior Court also ordered DOJ to provide Resendez backpay to 2010 when CalPERS determined she was eligible for reinstatement. DOJ then appealed to the Court of Appeal.

On October 13, 2015, the Court of Appeal ruled in favor of CalPERS and Resendez. CalPERS was correct to limit its analysis to whether Resendez had recovered from the injury that caused her disability. The law requires CalPERS to order a medical exam and then determine if the employee is fit to return to duty. And Government Code section 1031 sets the minimum standards for peace officers. But CalPERS is not authorized to identify new conditions that might disqualify the employee; it must stick to the original disability.

The court also ruled that Government Code section 21193 creates a two-step process for reinstatement. First, CalPERS must determine the employee is fit to return to duty. Second, the employee's former employer must offer reinstatement.

Here, CalPERS properly determined Resendez was fit to return to duty. So DOJ had a mandatory duty to offer Resendez reinstatement. It had no authority to condition her reinstatement on medical exams and background checks. However, once DOJ has reinstated Resendez it may terminate, demote, or transfer her for failing to meet the minimum standards set by Government Code section 1031.

This ruling provides strong protections for peace officers who have been forced into disability retirement by on-the-job injuries. Once a peace officer recovers from such an injury they are entitled to reinstatement with their former employer. An employer has a mandatory duty to offer reinstatement and may not put conditions on the offer.

AG: CHP Can Disclose Brady List to Prosecutors

The California Highway Patrol and other law enforcement agencies are allowed to disclose some Brady information about their officers to prosecutors without a Pitchess motion.

On October 13th the Attorney General issued a legal opinion about the steps prosecutors must take to get Brady material about peace officers.  The Attorney General said CHP could give prosecutors a list of its officers who have been found guilty of dishonesty, moral turpitude, or bias, without a Pitchess motion being filed without violating Pitchess statutes or the Public Safety Officers Procedural Bill of Rights Act (POBRA).

Under the its proposed “External Brady Policy,” CHP would create a list of its officers who have been found guilty of dishonesty, moral turpitude, or bias within the last five years. This list would include the names of officers and the earliest date of any misconduct. But it would not describe the misconduct. Prosecutors could search this Brady list for CHP officers who might be called to testify as witnesses in criminal trials. If a likely witness was on the list, a prosecutor could then file a Pitchess motion to view the officer’s personnel records. Also, an officer whose name was put on the list would be notified and could file an administrative appeal challenging their inclusion on the list. 

The Attorney General noted that several police departments have adopted similar Brady policies and the Supreme Court approved one of these policies in Johnson. So CHP would not violate Pitchess statutes by creating and sharing a Brady list. She also said CHP was part of the prosecution team for Brady purposes, and CHP was qualified to create a Brady list. 

Although the Attorney General’s legal opinion is only advisory and is not binding on local law enforcement agencies, it is has a lot of influence. Officer associations should be aware of their agency’s Brady policy and ensure that the confidentiality of peace officer personnel records is protected. While Brady lists may be created and shared, POBRA and Pitchess procedures must still be followed.

Brown Signs Bill to Stop Scapegoating of Collective Bargaining

Last Friday, Governor Brown signed SB 331, the "Civic Reporting Openness in Negotiations Efficiency Act".  Legislators introduced the Act after some local governments adopted policies targeting labor negotiations, while keeping negotiations with city managers and outside contractors secret. These ordinances typically required information about pending collective bargaining be released to the public even before tentative agreements were reached. Many observers have been concerned these policies, while pitched as promoting transparency, were designed to prevent effective collective bargaining and obscure controversial management compensation and risky outside contractor spending.

Now, under the Act, local governments that claim to be concerned about transparency in contract negotiations cannot only target labor groups, but must apply the same rules equally to all contract negotiations.  Under the Act, any local government that has adopted a such an ordinance must also report on contracts made with private entities. A public agency must have an independent auditor report on the cost of any proposed contract, disclose all offers and counter offers, and approve the contract in open session. The bill states these procedures give the public a meaningful opportunity to participate in approving contractions.

New Law Bars Public Employers From Searching Cell Phones, Personal Devices Without Warrant

On October 8, 2015, Governor Brown signed S.B. 178, the California Electronic Communications Privacy Act (CalEPCA).  CalEPCA prevents a government entity from compelling disclosure of electronic data without warrant. The Act covers both personal devices and online services that store personal data. To waive this protection, the authorized user must give consent to the government agency seeking the information.

Public safety agencies often have policies that apply to "personal communication devices" (PCD). It's likely, however, that many of these sections violate CalEPCA.  For example, some Lexipol PCD policies used by many departments permit administrative searches of both department-issued and personally owned devices.  Under these policies, the employer can track the employee's location, inspect message content, and access online information.  Some Departments have attempted to compel employees to turn over text messages or phone logs without a warrant.

Now, absent an emergency or the employee's consent, the agency needs a warrant to get any of this information. Many public safety departments will have to change their current policies to conform to CalEPCA. As a mandatory bargaining subject, the department and union will have to "meet and confer" to adopt a new policy governing PCDs.

Ninth Circuit: Time Spent Transporting Gear is Noncompensable Under the FLSA

On September 4, 2015, in Balestrieri v. Menlo Park Fire Protection District, the Ninth Circuit ruled the time firefighters spent transporting their gear to temporary duty stations for overtime shifts was noncompensable under the Fair Labor Standards Act ("FLSA").

Under the FLSA, as amended by the Portal-to-Portal Act, employees are not paid for time before and after work that is not "integral and indispensable" to the employee's principal duties. Since a firefighter is free to take his or her gear home and go straight to the "visiting station" for the overtime shift without having to return to the "home station" to retrieve the gear, this activity was not integral and indispensable to the firefighter's duties. By way of analogy, the court stated, "no one would expect to pay an office worker for the time it takes to shave and put on a tie.." Similarly, the District was not required to pay firefighters for time transporting their gear.

In addition, the court held payments for unused leave time were not part of the firefighters' "regular rate" of pay and should not be used to calculate overtime rates under the FLSA. It is well settled that payments for vacation buyback are not included in regular rate of pay for overtime. However, circuit courts are split on whether sick leave buyback is excluded from regular rate of pay. In Balestrieri, the parties' Memorandum of Understanding did not separate sick leave and vacation leave. The court was unable to differentiate between unused sick leave buyback and unused vacation buyback. Consequently, the issue of whether sick leave buyback should be included in an employee's regular rate of pay remains unsettled in the Ninth Circuit.

Fair Pay Act Heads to Governor for Signature

On August 31, 2015, the California Senate unanimously passed SB 358. Titled the "Fair Pay Act," this bill amends California Labor Code section 1197.5 which prohibits wage disparities based on gender. SB 358 strengthens the procedures and protections for employees who report a violation of section 1197.5. Importantly, section 1197.5 applies to public employers. With these new protections, public employees may use section 1197.5 more efficiently to challenge discrepancies in wages between genders within classifications.

The Fair Pay Act requires an employer justify a disparity in wages between men and women who perform the same job. A wage differential is appropriate when the employer reasonably applies one of the following factors: 1) a merit system; 2) a seniority system; 3) a system which measures earnings by quantity or production; or 4) a bona fide factor other than sex such as education, training, or experience. For the last element, the employer must demonstrate the factor is not based on or derived form a sex-based differential in compensation, is job related with respect to the questioned position, and is consistent with a business necessity. If the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential, then the employer may not use this factor as a defense.

The Fair Pay Act also adds additional protections for employees who complain about wage disparities. Employers may not fire, discriminate, or retaliate against an employee who invokes the Fair Pay Act's provisions. Employees may disclose their own wages, discuss the wages of others, and inquire about another employee's wages without fear of reprisal.

To enforce the Fair Pay Act, an employee can either file a confidential complaint with the Department of Labor Standards Enforcement or bring a civil action. Any civil action must be commenced within one year of the alleged violation.

This bill is one of the most aggressive attempts in the country to remedy the wage disparity between genders. According to the Los Angeles Times, women in California on average make 84 cents to every dollar earned by a man. Nationally, the average is 74 cents. Women of color are even more disadvantaged with Latinas making only 44 cents to every dollar earned by a man.

Governor Signs Bill Setting Standards for Use of Police Body Cameras

On October 3rd, Governor Jerry Brown signed into law Assembly Bill 69 by Assemblyman Freddie Rodriguez (D-Pomona).  Law enforcement agencies requiring their officers to wear body cameras must now comply with a uniform set of standards.

Currently there is no state requirement that law enforcement agencies adopt body cameras for their officers in the field. However, many local agencies have either adopted such a policy or are likely to do so in the near future. AB 69 is meant to prevent the development of a patchwork quilt of rules across the state. It sets statewide standards for the use of police body cameras.

In November 2014 a study by the U.S. Department of Justice titled, “Implementing a Body-Worn Camera Program: Recommendations and Lessons Learned,” recommended standards be adopted for the use of body cameras. AB 69 seeks to implement those recommendations by requiring:

• Agency procedures on data collection and storage must follow “best practices”;
• Agency rules must explicitly prohibit agency personnel from accessing recorded data for any unauthorized or personal use, and from uploading recorded data onto the Internet;
•  Agency rules must provide sanctions for unauthorized access or use of recorded data;
• Supervisors must immediately take custody of officers’ cameras after a use of force incident or officer involved shooting, and must be responsible for downloading the data;
• Data must be categorized according to the type of event recorded;
• “Non-evidentiary” data (data that does not necessarily have value to aid in an investigation or prosecution) must be retained for a minimum of 60 days;
• “Evidentiary” data must be retained for a minimum of 2 years (and longer if relevant to a criminal prosecution) in any of the following situations:
• Use of force incident or officer involved shooting;
• Detention or arrest of an individual;
• Formal or informal complaint against the officer or agency.

• Logs of access and data deletion must be retained permanently;
• Third party vendors used for data storage must be reputable and have procedures in place to prevent tampering, provide for automatic data backup, and meet legal requirements for chain-of-custody concerns.

Law enforcement agencies will need to update their policies on body cameras to conform to these new requirements. Peace officer associations should make sure their members are made aware of all rules about body cameras and recorded data to prevent any causes for discipline. Also, associations should negotiate with agencies about an officer’s right to view data recorded from body cameras, which is not addressed by AB 69 but raises POBR concerns.

AB 69 faced almost no opposition as it moved through the Legislature, receiving only one “no” vote and receiving no public opposition. It goes into effect January 1, 2016.

Appellate Court Rules Los Angeles May Not Require Police Officers to Pay for Training

The California Court of Appeal for the Fourth Appellate District ruled in In Re Acknowledgment Cases the City of Los Angeles ("City") may not force former employees to pay for their academy training. The City had adopted an ordinance which required officers who quit to pay a pro rated portion of their training. These policies have been used throughout California as a tactic to prevent officers from transferring to other agencies. Some policies even demand repayment wages during probation. The Court of Appeal here ruled the City's policy violated California Labor Code section 2802.

The City requires all of its police officers to attend and graduate from the Los Angeles Police Academy. In early 1990, the City realized many of the police officers it trained left within a few years to join other agencies. To discourage employees from leaving, the City enacted an ordinance which required officers who left the City within five years of employment and joined another law enforcement agency within one year of leaving the City to reimburse the City for a portion of the academy costs. Former officers sued when the City attempted to recoup its training cost loses under this ordinance.

The officers argued Labor Code section 2802 and other wage protection statutes, including the Fair Labor Standards Act, prevented the City from recovering the cost of training. Section 2802 requires an employer to reimburse its employees for any costs incurred by the employee as a direct consequence of his or her employment. A good example of this is a travel reimbursement. The question here was whether training is a reimbursable expense under section 2802.

The Court of Appeal concluded the City might be able to recover some training cost, but not all of the costs demanded. The court noted that no court had previously ruled on whether training costs were reimbursable under section 2802. However, the Department of Labor Standards Enforcement ("DLSE") did issue an opinion letter concluding if the training was required by law, then the employee bore the cost of the training. However, if the training was just required by the employer, then the employer had to reimburse the employee for the training costs.

The Court of Appeal adopted the same analysis as the DLSE. The academy training consisted of 644 hours of statutorily mandated Commission on Peace Officer Standards and Training ("POST") courses and 420 hours of training specific to the City. The Court of Appeal concluded the City could require reimbursement for the POST training, but could not require reimbursement for the  City specific training.

In the end the Court of Appeal invalidated the entire reimbursement ordinance as the City failed to present evidence apportioning the costs. At trial, the case was tried on an all-or-nothing basis--either the reimbursement ordinance was enforceable or it was not. The Court of Appeal ruled no part of the acknowledgment could be enforced and invalidated the entire ordinance. Because the ordinance was invalidated, the court did not reach the officers' other claims, including that the acknowledgement violated the FLSA.

This case stands in contrast with Oakland v. Hassey where the court upheld a similar policy. To encourage police officers to stay with the department longer, Oakland entered into a MOU with the Oakland Police Officers' Association in 1996 authorizing the city to require those who went through training at its academy to reimburse the city for training costs if the person left the police department before completing five years of service. In the instant case, the Court of Appeal distinguished Oakland v. Hassey because that case did not consider the application of section 2802.

This case calls into question the legitimacy of similar ordinances and policies throughout the state.

The California Public Safety Labor Blog Makes the Cut in the Expert Institute's Legal Blog Competition

From a field of more than 2,000 potential nominees, the California Public Safety Labor Blog has received enough nominations to join 250 legal blogs participating in one of the largest competitions for online writing today. With your support we can win this competition and reach a wider audience of public safety employees. You can vote for the blog by clicking on the nomination image on the side bar of this blog or by clicking here. Voting ends on October 7 so vote as soon as you can.

Founded in 2011, The Expert Institute is a technology-driven platform for connecting qualified experts in every field with lawyers, investment firms, and journalists looking for technical expertise and guidance. The Expert Institute also maintains one of the internet’s most visited blogs on expert witnesses, in addition to an extensive case study archive and expert witness resource center.

California Supreme Court Grants Review of Mastagni Holstedt, APC Workers Compensation Case

The California Supreme Court agreed to hear oral arguments on one of Mastagni Holstedt, APC's workers compensation cases. At issue in the case is whether a permanent peace officer is entitled to the maximum temporary disability benefit as a result of an on the job injury.

Officer John Larkin was injured in a motor vehicle accident in November of 2008 while employed as an active police officer with the City of Marysville. He received benefits under Labor code section 4850 which expired. He then received temporary disability benefits. The temporary disability benefits are paid at two thirds the weekly earning rate. Officer Larkin's weekly earnings were $1008 resulting in a $671 weekly temporary disability benefits rate.

However, Labor Code section 4458.2 states temporary disability benefits are paid at the maximum statutory rate for eligible peace officers. The maximum rate in 2008, the time of the case, was $916 per week. Labor Code section 4458.2 makes reference to Labor Code section 3362 which defines who is eligible for the maximum benefit. Labor Code section 3362 states that every person registered as an active police officer shall be considered an employee of the municipality he or she works for.

Labor Code section 3362 has evolved over time. Originally the language included only men and specified the peace officer had to be a volunteer to receive the maximum benefit. However, the California State Legislature in 1989 modernized the statute including both genders and removing the word "volunteer." This evidences the intent of the legislature to provide maximum benefits to all peace officers.

Officer Larkin challenged the lower compensation rate in front of the Workers' Compensation Appeals Board. He argued he was entitled to the full $916 per week rather than the $671 per week. The Workers' Compensation Appeals Board argued that since Labor Code section 3362 only applied to volunteer peace officers, Officer Larkin was not entitled to the maximum temporary disability benefit. On appeal, the California Court of Appeal for the Third District upheld the Workers' Compensation Appeals Board determination.

Mastagni Holstedt, APC appealed the decision to the California Supreme Court. In its briefs, the firm argues all officers, regardless of status, are entitled to maximum benefits. This is the clear language of the statute which must be followed by the court system. By reading extra terms into the statute, the Court of Appeal created an absurd result which harms peace officers across the state.

Oral argument for the case will be held on September 2, 2015 at 9 AM in San Francisco. The case will be argued by Mastagni Holstedt, APC attorney Brian A. Dixon. Mastagni Holstedt, APC attorney Gregory G. Gomez assisted in drafting the briefing materials for the case.

CalPERS Pension Benefits Generate Over $30 Billion in Economic Activity

The California Public Employees' Retirement System (CalPERS) released a study today demonstrating retirement benefits paid out by CalPERS generated $30.9 billion in economic activity across the State. For every one dollar of public funds invested in CalPERS, the fund returns $9.64 of economic activity throughout the state. CalPERS benefits paid directly to members have large impacts in the housing, restaurant, and health care industries. CalPERS also invests $25.7 billion dollars in California businesses, supporting millions of jobs across the state. The report breaks down the economic impact by state congressional district so tax payers can see how CalPERS benefits their local economy.

For eight decades, CalPERS has built retirement and health security for State, school, and public agency members who invest their lifework in public service. CalPERS serves more than 1.7 million members and administers benefits for more than 1.4 million members and their families in the health program. CalPERS is the largest defined-benefit public pension in the United States. The current market value of the CalPERS general fund is approximately $304 billion dollars.

California Supreme Court Finds Limited Exception to Employees' Access to Supervisor Notes Under FFBOR

On August 24, 2015, the California Supreme Court issued a decision in Poole v. Orange County Fire Authority. The Court held Government Code section 3255 did not compel the County to provide a firefighter the opportunity to review and respond to a supervisor's personal notes regarding the firefighters work performance if the notes were not used for a personnel purpose. The supervisor did not share the notes or make them available to anyone with authority to take adverse disciplinary action against the firefighter. For these reasons, the Court held the supervisor's notes did not constitute a file "used for any personnel purposes by his or her employer."

Under the Firefighters Procedural Bill of Rights Act ("FFBOR"), a firefighter has the right to review and respond to any negative comment that is "entered in his or her personnel file, or any other file used for any personnel purpose." In Poole, a supervisor maintained raw notes on his subordinates. The notes documented factual occurrences for his reference when writing employees' annual reviews. Some of the occurrences in the supervisor's notes described instances where the employees had failed to complete assigned duties. The supervisor did not make these notes available to anyone with authority to take adverse action against the firefighter and not all of the notes were documented in annual performance reviews. The Court considered the narrow question of whether the FFBOR required the supervisor to provide employees the opportunity to review and respond to negative comments in his notes that were not included in the employees' annual performance evaluations or performance improvement plans.

It is well established that employers must provide firefighters and public safety officers an opportunity to review and respond to negative comments entered into files used for personnel purposes. For example, in Venegas the appellate court concluded that an index card maintained by internal affairs documenting all complaints against an officer constituted a file "used for... personnel purposes," because it would be available to those responsible for disciplinary action. In addition, in County of Riverside, the county was required to disclose to a police officer adverse comments in a file containing the results of a background investigation the county used to determine whether to continue to employ the officer. And in Aguilar, the appellate court held an officer was entitled to review and respond to an uninvestigated citizen's complaint placed in a confidential investigative file. These cases remain authoritative in compelling employers to provide firefighters and public safety officers the opportunity to review and respond to adverse comments placed in files "used for... personnel purposes."

The Court distinguished this case from other cases interpreting similar statutes on the basis that the supervisor's notes were not available to anyone making personnel decisions in the future. Based on a unique set of circumstances, this case clarified FFBOR protections are not triggered by a supervisor's private notes that were not used for any personnel action.

California Attorney General Releases Title and Summary for Pension Busting Initiative

On August 11, 2015, the Office of the Attorney General released its title and summary for former San Jose Mayor Chuck Reed's pension busting initiative. The highly divisive initiative would strip pensions from public employees and allow voters to modify compensation packages at will. Fortunately, the Office of the Attorney General's title and summary highlight the problems with this initiative.

 

All ballot initiatives must be submitted to the Office of the Attorney General prior to being placed on the ballot. The Office of the Attorney General creates a title and summary of the initiative to appear on the actual ballot. 

 

The title the Office of the Attorney General gave Reed's initiative is "Public Employees. Pension and Retiree Healthcare Benefits. Initiative and Constitutional Amendment." The summary aptly states the initiative, "[e]liminates constitutional protections for vested pension and retiree healthcare benefits for current public employees." This language demonstrates how drastic this reform is and how it will prejudice California's public employees. The summary also notes the long term effects of the initiative are unknown and "depend heavily on future decisions made by voters, governmental employers, and the courts."

 

Mastagni Holstedt, APC has used the Contracts Clause in California’s Constitution to protect vested employee benefits 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.

 

This pension "reform" effort is led by Democrat Chuck Reed and his lawyers. As we blogged previously, the initiative amends the California Constitution to allow voters to impair employment contracts. While Reed claims his measure will not impair current employees' pensions, even Daniel Borenstein of the Contra Costa Times has acknowledged "the initiative would amend the state Constitution to give voters the right through an initiative or referendum to reduce the future pension accrual rate for current employees…Reed and DeMaio should be honest about it, or abandon the measure."

 

Additionally, the Constitutional amendment would abolish pensions for employees hired after January 1, 2019 and replace them with a "defined-contribution" system unless changes to benefits are approved in an election.  In a defined-contribution system, employees have to pay in a fixed amount with no guarantee of what their retirement income would be.  As a result, this approach shifts the risk and could prevent thousands of public employees from retiring.

 

The proposal is not limited to retirement benefits.  It provides, "Voters have the right to use the power of initiative or referendum... to determine the amount of and manner in which compensation and retirement benefits are provided to employees of a government employer."  As a result, the Constitutional Amendment would likely be used to pursue local voter initiatives to bypass collective bargaining to reduce public safety compensation or due process rights.

 

The proposal also seriously jeopardizes death and disability benefits for public safety employees. The new proposal states it shall not be “interpreted to modify or limit any disability benefits provided for government employees or death benefits for families.” But death and disability benefits are often an integral part of a pension plan. As noted by the Legislative Analyst's Office, death and disability benefits are usually prefunded through a pension plan's normal cost. If voters can modify, or even eliminate, pensions for public employees, this necessarily means the funding for death and disability benefits will be cut.  The measure does not provide any means of securing those benefits.

 

The proposal also seeks to insulate future measures from legal challenge by eliminating the jurisdiction of the Public Employment Relations Board to hear unfair practice charges regarding future measures which impair vested rights or collective bargaining agreements. 

 

Now that the initiative has a summary, the proponents must furnish the required number of signatures in order to make the November 2016 ballot. You can help stop this initiative by educating your family, friends, and community members about the drastic and detrimental effects of this initiative and encourage them not to sign any petition supporting the initiative. You can help stop future attempts to impair retirement benefits by opposing all candidates who endorse this imitative.

Mastagni Holstedt, APC Files Amicus Brief at California Supreme Court

Mastagni Holstedt, APC attorneys filed an amicus brief with the California Supreme Court about the application of the California Public Records Act (“CPRA”). The CPRA defines the electronic communications of public officials as public documents. Therefore, any public citizen may acquire the electronic communications of public officials through an information request.

The California Court of Appeal for the Sixth District held when a public official sends an electronic communication using a personal cell phone or e-mail account, those documents are not public records. In its brief, Mastagni Holstedt argues the ruling is incorrect and explains some of the unintended consequences to labor associations. The ruling allows public officials to do business behind closed doors, circumventing the purpose of the CPRA. Furthermore, it prevents public unions and other entities from holding public officials accountable by limiting their access to information.

Mastagni Holstedt, APC filed the brief to bring important legal arguments to the Court’s attention, ensuring the rights of employee organizations are protected. Mastagni Holstedt attorneys David E. Mastagni, Isaac S. Stevens, and Jeffrey R. A. Edwards represent the amici in the matter.

Mastagni Holstedt, APC Protects Retirement Rights in the Court of Appeal

Mastagni Holstedt, APC filed an amicus brief with the California Second Appellate District, Division One. At issue are adjustable retirement health subsidies under the City of Los Angeles’ retirement system. In 2006, the City of Los Angeles passed an ordinance which allowed the Board of the Los Angeles Fire and Police Pension System to provide an adjustable retirement health subsidy. This adjustable rate would allow the City to increase contributions as costs increased over time.

However, in 2011, the City of Los Angeles passed an ordinance freezing future increases to the subsidy. Los Angeles employee organizations brought suit alleging this violated their vested right to a variable subsidy. The trial court agreed and ordered the City to increase the subsidy pursuant to the 2006 ordinance.

The City appealed the decision arguing it had plenary authority to modify the pension subsidy as it was a type of “employee compensation.” In its brief, Mastagni Holstedt, APC argues a pension subsidy is not salary, but is instead a vested benefit. The California courts have already held on numerous occasions a pension benefit, once vested, cannot be revoked. The California Constitution’s Contracts Clause prohibits such an action. Thus, the City cannot arbitrarily revoke a benefit by reforming it as “employee compensation.”

Mastagni Holstedt, APC thanks the employee organizations who joined the firm in fighting back against the destruction of employee benefits.  Mastagni Holstedt attorneys David E. Mastagni, Isaac S. Stevens, and Ian B. Sangster represent the amici in the matter.

California Public Safety Labor Blog Nominated for Best Legal Blog Award

Mastagni Holstedt, APC's California Public Safety Labor Blog has been nominated for the award of Best Legal Blog by the Expert Institute. Currently, the contest is accepting nominations for blogs for the contest. The more nominations the blog receives the greater its chance of making it to the voting rounds. We need your support in nominating our blog for this contest. Please visit the Expert Institute's website and nominate this blog for consideration. The deadline to submit nominations is August 21, 2015. Your support is what allows us to provide top quality legal information to thousands of public servants in California.

The Expert Institute is a New York based networking legal site that connects practitioners to expert witnesses. Their company is founded around the 21st century ideal that knowledge is power.

U.S. Supreme Court Strikes Down Law Allowing Police to Search Hotel Registries

On June 22, 2015, the U.S. Supreme Court held in City of Los Angeles v. Patel that police searches can no longer be conducted on hotel and motel registries without a warrant absent consent or exigent circumstances. The case considered the constitutionality of Los Angeles Municipal Code 41.49. The Code stated all hotel and motel operators shall make their records available to any officer of the Los Angeles Police Department for inspection at any time. If operators failed to turn over these records, they could be charged with a misdemeanor. A group of motel operators and lodging associations challenged the law, asserting such searches were unreasonable under the Fourth Amendment.

The U.S. Supreme Court ultimately held searches without warrants of hotel and motel registries are unconstitutional absent consent or exigent circumstances. The Court stated the subject of a hotel registry search must be afforded the opportunity to obtain pre-compliance review before a neutral decision maker.

The Supreme Court outlined several ways an officer may search hotel registries absent a special need or consent from the operator. First, an officer could serve the hotel operator with an administrative subpoena, allowing the hotel operator an opportunity to challenge the subpoena in front of a judge before suffering any penalties for refusing to comply. An officer also could apply for a warrant. Additionally, if officers fear the destruction of the records while awaiting an available judge, they are permitted to guard the registry until a hearing could occur.

California Supreme Court Clarifies Pitchess Process Protects Officer Privacy

On July 6, 2015, the California Supreme Court reversed the Court of Appeal to protect the confidentiality of peace officers' personnel files.  In People v. The Superior Court of San Francisco County, the Supreme Court held District Attorneys offices must file Pitchess motions to review personnel files, ending attempts by some DAs offices to have unfettered access to officers' private information.

Evidence Code section 1043 and 1045 regulate access to peace officers' personnel files in California. The sections make peace officers' personnel files preemptively confidential, but permit parties that have a reason to believe the personnel records contain information material to a case to file what's typically called a Pitchess motion, to gain access to relevant parts of a file.  If party makes a preliminary showing, a judge reviews potentially relevant portions of the file and decides if they are material to the case and must be turned over.

This process applies in criminal cases, but also civil and administrative cases.  In criminal cases, another feature of this process is a prosecutor's duties under Brady v. Maryland.  Under that case, a prosecutor must disclose information that may help a criminal defendant in court.

In San Francisco, the Police Department had a Brady policy that took into account officer privacy and prosecutors' Brady obligations.  Under the policy, the Department had a Brady committee consider potential Brady issues, permitted comment by the affected employee, and made a recommendation to Chief, who decided whether to inform the DA.  The DA then had to file a Pitchess motion to access relevant portions of the officer's file.

But recently, some DAs claimed their Brady duty is so broad that they are entitled to unfettered access to peace officers' personnel files so they can decide what to give criminal defendants.  In this case, the trial court and the Court of Appeal agreed with this conclusion.

The Court of Appeal held prosecutors could access peace officer personnel records without filing a Pitchess motion for two reasons.  First, it concluded disclosing peace officers’ personnel records to the DA did not count as a “disclosure” within the meaning of the statute.  Second, the Court interpreted an exception to the Pitchess process about “investigations” to apply any time a criminal defendant filed a Pitchess motion.  The Supreme Court disagreed with this reasoning.

The Supreme Court noted the Pitchess process balances officers’ privacy with the needs of prosecutors to perform their duties under Brady.  It found the limited exception allowing direct access showed the Legislature did not intend DAs to have direct access under normal circumstances.  Second, Supreme Court disagreed the argument a Pitchess motion triggers a DA’s right to investigate an officer.  The Court defended peace officers noting, “A police officer does not become the target of an investigation merely by being a witness in a criminal case.”  The Supreme Court explained the exception applied, instead, to cases where the DA needs to do a criminal investigation of the officer’s own conduct.

Thus, the Supreme Court held, "the prosecution does not have unfettered access to confidential personnel records of police officers who are potential witnesses in criminal cases. Rather, it must follow the same procedures that apply to criminal defendants, i.e., make a Pitchess motion, in order to seek information in those records."

Supreme Court to Decide Challenge to CTA's Fair Share Fees

On June 30, 2015, the United States Supreme Court agreed to hear a constitutional challenge to the California Teachers Association's ability to collect fair share fees from non-members who benefit from CTA contracts.

Fair share fees, also called agency fees, are fees paid by employees who benefit from a union contract, but opt out of full membership.  Many unions, particularly in public safety, have voluntary membership rates above 99%.  But other unions have lower voluntary member rates for a variety of reasons and rely on fair share fees to finance contract negotiations and other core union activities.

Courts have long considered fair share fees constitutional in the public sector since the Supreme Court's 1977 decision Abood v. Detroit Bd. Of Ed., 431 U.S.209, 232.  But courts require unions who collect them to divide their core labor activities from other other activities and assess a fair share fee that only covers the cost of core activities.  In California, these rules are part of PERB's regulations. They require unions to give non-members written notice about agency fees and, depending on their size, prepare audited financial statements.  In this way, the courts balance the rights of non-members with the needs of the unions that provide critical services.

But the Supreme Court indicated recently it may change that balance and let non-members free ride on union benefits.  Last year, in Harris v. Quinn, the Supreme Court held the First Amendment prohibited fair share fees from some types of organized workers.  In the opinion, the Court disparaged fair share fees and invited another challenge.  But that case involved home health care workers who did not have a traditional union-member relationship and did not apply to other types of employees.  Now, the Court will hear a direct challenge to fair share fee requirements under California's regulatory scheme in its October term.

PERB Clarifies Jurisdiction Over "Mixed Unit" Associations with Peace Officer and Non-Peace Officer Members

In County of Santa Clara (2015) PERB Decision 2431-M, the Public Employment Relations Board  found PERB has jurisdiction over charges brought by labor associations representing mixed units.

This case involved the Santa Clara County Correctional Peace Officers Association, which represents one bargaining unit, the Correctional Employees Unit.  That unit is composed of peace officers under Penal Code section 830.1(c) and non-peace officer correctional officers.  This type of unit is sometimes called a "mixed unit."

There has been a dispute about whether PERB has jurisdiction over charges brought by or against labor associations representing peace officers, but also other employee classifications. The reason there is a dispute is that Government Code section 3511, part of the MMBA, exempts "persons who are peace officers" from the 2001 changes to the MMBA that gave PERB jurisdiction over the Act. Some parties claimed this meant PERB does not have jurisdiction over claims brought by labor associations representing mixed units, since those units contain peace officers.  The Board heard oral argument on this issue two years ago, but that case settled before the Board issued a decision.

Since this case also involved a mixed unit, the Board clarified its jurisdiction over these units.  The Board wrote "we make explicit PERB's authority to hear charges, such as the present one, that are brought by employee organizations, including employee organizations representing or seeking to represent units including persons who are peace officers."

The Board explained, "MMBA section 3511 precludes jurisdiction only with respect to charges brought by peace officers, not employee organizations."  The Board found support for this distinction in the MMBA's own definition of person which refers to a natural person, distinguishing it from an entity, such as a labor association.  Likewise, the Board noted the Legislature gave it jurisdiction over factfinding requests without a restriction on mixed units.

Mastagni Holstedt senior associate Jeffrey R. A. Edwards represented the Santa Clara County Correctional Peace Officers Association in the matter.

PERB Tackles Vested Rights Issues in Finding Unions Refused to Bargain Over Employee Pension Contributions

On June 3, 2015 in County of San Luis Obispo (2015) PERB Decision No. 2427-M, PERB held two unions unlawfully refused to bargain over employee pension contributions. In reaching this decision, PERB ruled San Luis Obispo's independent retirement system did not provide employees with vested rights for employee contributions. This case demonstrates PERB's willingness to decide vested rights issues, potentially providing labor organizations with an alternative forum to litigate such issues.

The County of San Luis Obispo maintains the San Luis Obispo Pension Trust ("Trust") as its own independent retirement system. The County requested to bargain with two unions over a proposed increase in employee contributions to the retirement system. The unions argued, among other things, that the employee contributions constituted vested contractual rights and the unions could not lawfully bargain over such vested rights. During this time, the unions were litigating cases in superior court over similar issues. If the unions agreed to bargain over employee contribution rates, they risked weakening their position in the pending superior court litigation.

The outcome of the case hinged on whether the Trust provided vested rights regarding certain employee contribution rates. If PERB determined the pension benefits were vested at the current employee contribution rates, the unions would have been within their rights to refuse to bargain over proposed increased contributions for the same fixed level of pension benefit. However, PERB held the current employee contribution rates were not vested and immutable under the Trust's governing documents. PERB determined the Trust's language did not show a clear intent to create vested rights in particular contribution rates or benefits. Since the employee contributions were negotiable, PERB ruled the unions unlawfully refused to bargain over the County's proposed changes to the contribution rates.

This case demonstrates PERB's willingness to decide vested rights issues in determining whether a refusal to negotiate pension benefits constitutes an unfair labor practice. Although the County prevailed under the circumstances in County of San Luis Obispo, this case could benefit labor organizations in the future by providing an administrative forum with labor expertise to determine vested rights issues. This decision also shows the danger for labor organizations and employers to refuse to negotiate over proposals where bargaining obligations are unclear.

Stress Caused by a Supervisor is Not a Disability

The California Court of Appeal recently reaffirmed that stress caused by a supervisor is not a disability under the Fair Employment and Housing Act ("FEHA"). To prove a violation of FEHA a plaintiff must demonstrate some other source of the stress to demonstrate a disability.

In Higgins-Williams v. Sutter Medical Foundation, the Plaintiff alleged her employer violated FEHA. FEHA requires that employers meet with employees who have disabilities and find a reasonable accommodation for those employees. Failure to engage in this interactive process constitutes a violation of the statute.

The plaintiff alleged she suffered from debilitating stress due to her interactions at work with human resources and her manager. Her physician diagnosed her as having adjustment disorder with anxiety. Her physician cited her supervisors as the cause of her mental issues. The plaintiff took an extended medical leave to address her stress. Her physician recommended she be assigned to different supervisors. Sutter, her employer, did not provide the plaintiff with new supervisors. After months of negotiations, terminated the plaintiff's employment. The plaintiff sued, alleging Sutter failed to meet with her in good faith and accommodate her disability in violation of FEHA.

The California Court of Appeal for the Third District decided stress caused by a supervisor is not a disability under FEHA. To establish a case of mental disability discrimination under FEHA, a plaintiff must show three elements. First, that she suffers from a mental disability. Second, that she is qualified to do the job with or without reasonable accommodation. Third, that the employer took an adverse employment action against her because of the disability.

Here, the court upheld a prior decision ruling the inability to work under a particular supervisor because of anxiety and stress related to the supervisor's standard oversight of the employee's job performance is not a disability under FEHA. The only cause of the plaintiff's stress in this case was her supervisors. Thus, she was not disabled under FEHA. Without a disability there is no need to accommodate the employee and the employer incurs no liability under FEHA.

Chuck Reed Tries New Tactic in Pension Assault

Chuck Reed announced a new strategy to attack pensions in California today.  The text of new proposal has several features designed to take away employees retirement benefits.

It would abolish pensions for employees hired after January 1, 2019 and replace them with a "defined-contribution" system unless changes to benefits are approved in an election.  In a defined-contribution system, employees have to pay in a fixed amount with no guarantee of what their retirement income would be.  As a result, this approach shifts the risk and could result in thousands of public employees unable to retire.

The proposal is not limited to retirement benefits.  It provides, "Voters have the right to use the power of initiative or referendum... to determine the amount of and manner in which compensation and retirement benefits are provided to employees of a government employer."  As a result, the measure could be read to allow voter initiatives to eliminate or change MOUs, severely limiting collective bargaining in California.

The proposal also seeks to prevent the Public Employment Relations Board from hearing unfair practice cases involving ballot measures to strip employees of bargained-for compensation.

Proposal to Subject Officers in Critical Incidents to Special Prosecutor Fails in the Assembly

AB 86 was 86'd in the Assembly today.  Under the proposed bill, every officer-involved shooting would have to be reviewed by a special prosecutor appointed by the Attorney General.  This review would have been in addition to department and district attorney reviews.  The bill was among several bills that failed to advance through the Assembly Appropriations Committee earlier today.

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."

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.

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.

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.

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.

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.