Mastagni Holstedt, APC Attorneys are Recognized in Sacramento Magazine's Top Lawyers List

Congratulations to the Firm's Attorneys Selected for the 2016 Honor 

Mastagni Holstedt, APC continues to be a top-ranked firm throughout the Sacramento region. The firm continues to flourish and has expanded its prominence state-wide, representing clients throughout California in a wide range of civil law matters. Our attorneys have earned a reputation for professionalism, sharp legal acumen and the dedicated pursuit of justice. Whether at the bargaining table, in the courtroom or before a host of state and federal agencies, boards and commissions, our team of legal professionals has the knowledge, experience and skill to help across a range of practice areas. 

Mastagni Holstedt, APC Firm Attorneys Represented Several Practice Areas in This Year's List: 

Labor & Employment- David E. Mastagni, Isaac S. Stevens, Kathleen Mastagni Storm, Jeffrey R.A. Edwards, Judith A. Odbert; Civil Litigation & Personal Injury- David P. Mastagni, Phillip R.A. Mastagni, and Daniel Osier; Workers' Compensation- John R. Holstedt, Craig E. Johnsen, Stuart Woo, and Cameron S. Huey; Professional Liability- Kenneth E. Bacon.

Ninth Circuit Denies En Banc Review of Flores v. City of San Gabriel

In an order issued August 23, 2016, the Ninth Circuit Court of Appeals issued an order denying the City of San Gabriel's request to reconsider en banc its decision in Flores v. City of San Gabriel.  Although the City has publicly stated its intention to seek review in the United States Supreme Court, this order will likely result in Flores remaining the controlling authority in the Ninth Circuit. Supreme Court review is rarely granted and the Court is currently split 4-4.

Assuming the Supreme Court does not grant review, in the Ninth Circuit the FLSA requires employers to include cash payments made in lieu of health benefits into the overtime, i.e. regular rate, of pay.  Additionally, the Court held that contributions provided to employees for the purchase of health care that were not paid out as cash must be included in the regular rate under certain circumstances.  A benefits plan can only pay out an incidental amount as cash and retain the ability to exclude the payments into an employee's benefit plan from being included the overtime rate of pay.  In Flores, the court required non-cash benefit plan contributions that amounted to between 53% and 58% of the total amount the City paid on behalf of its employees pursuant to its Flexible Benefits Plan, to be included in the overtime rate.

NLRB Improves Backpay Formula for Unlawfully Terminated Workers

In a recent 3-1 decision, the National Labor Relations Board ("NLRB") modified its backpay formula to make unlawfully terminated workers whole. In King Soopers, the NLRB found that its previous formula was inadequate to fully compensate workers who were unlawfully terminated. Specifically, the Board found search-for-work expenses and interim work expenses should be treated as a separate component of the backpay award, rather than an offset against interim wages.

When an employee is terminated for union activities, he or she is required to find and maintain interim employment to mitigate damages while the unfair labor practice case is decided. The pay the discriminatee receives from interim employment is deducted from the backpay award. However, the search for interim employment, and sometimes the interim employment itself, often causes the discriminatee to endure additional financial hardship. This is especially true if the discriminatee is forced to relocate, commute longer distances, or pay for additional training for the interim employment.

In the past, the NLRB treated search-for-work expenses and interim employment expenses as offsets to interim earnings. This prevented discriminatees who were unable to find interim employment to receive any compensation for search-for-work expenses. Similarly, discriminatees whose interim job wages were less than their total expenses were not compensated for the amount of expenses that exceeded their interim wages.

The Board now treats search-for-work expenses and interim work expenses as a separate component of the backpay award. The purpose of make-whole relief is to restore, as nearly as possible, that which the discriminatee would have earned if he or she had not been unlawfully terminated, and to deter future unfair labor practices. The Board found that this new formula better serves both purposes. As a result, discriminatees who prevail on their unfair labor practices will be fully compensated for the financial hardships caused by their unlawful terminations.

The Public Employment Relations Board currently treats search-for-work expenses and interim employment expenses as offsets to interim earnings. But PERB will likely follow suit and treat search-for-work expenses and interim job expenses as a separate component of the backpay award to ensure discriminatees are fully compensated.

New Law Requires Public Officials to Disclose Compensation Increases

Gov. Jerry brown signed SB 1436 on Monday, which requires local governments to announce any increases in pay or benefits for their executives, publicly before they are adopted. Senator Patricia Bates (R-Laguna) introduced the bill in response to the outrageous pay increases some public executives in California had provided themselves, as illustrated by the City of Bell scandal.  The new law requires a report on future increases in open session that includes a summary of the benefit and salary increases.

This bill addresses concerns of hypocrisy that some public executives call for transparency in rank and file public employee compensation while discretely providing themselves lavish compensation packages.  As Senator Bates noted, “Local agency executives, such as agency CEOs and city managers, are offered fringe benefits including health care coverage and pensions in amounts that can have a significant long-term impact on the budget and that deserve particular scrutiny by the public.”

Court of Appeal Breaks from Supreme Court Precedent in Upholding Prospective Reduction of Pension Benefits

The attack on public employee pensions continues with the California Court of Appeal's recent decision in Marin Association of Public Employees et al. v. Marin County Employees' Retirement Association et al. The Court of Appeal upheld the Marin County Employees' Retirement Association's ("MCERA") implementation of the Pension Reform Act (A.B. 197) in the face of constitutional challenges by employee organizations.

MCERA is subject to the County Employees Retirement Law of 1937 (often referred to as "CERL" or "the '37 Act.") In 2012, the Legislature passed the Public Employees' Pension Reform Act ("PEPRA"), which, in part, excluded forms of pay from the "compensation earnable" used to calculate employees' pension benefits.

After PEPRA's enactment, MCERA implemented policies to effectuate these changes. Under the new policy, MCERA would begin to exclude standby pay, administrative response pay, call-back pay, cash payments for waiving health insurance, and other pay items from employees' final compensation after January 1, 2013. Four employee organizations and four plaintiffs challenged these changes on the basis that they were unconstitutional impairments of current employees' vested rights under the state and federal contract clauses.

The court found PEPRA's prospective changes to pension calculations, and MCERA's implementation of such changes, were constitutional. The court agreed that current employees have vested rights to a "substantial" and "reasonable" pension, but held they do not have an "immutable entitlement to the most optimal formula for calculating the pension." Rather, in the court's view, pensions are subject to "reasonable" modification before they become payable.

The court's ruling abandons over fifty years of California Supreme Court rulings protecting public employee pension rights. In 1955, the California Supreme Court issued its ruling in Allen v. City of Long Beach, which established that any changes to pension benefits that result in a disadvantage to employees must be accompanied by comparable new advantages.

In this case, the court did not follow this precedent and claimed the Supreme Court did not intend its use of "must" to to be literal or inflexible. Rather, the court preferred the formulation that a disadvantageous change to pension benefits only "should" be accompanied by a comparable new advantage. In any event, the court determined under the facts of this case, that the employees received a comparable advantage to the reduction in their pension benefits in the form of reduced employee contributions to the retirement system. Since MCERA excluded standby pay, administrative response pay, and call-back pay from pension calculations, it would no longer collect retirement contributions on such pay. This ruling seemingly ignored the fact that, for years, employees contributed to MCERA to fund pension benefits that included such pay.

This case has significant limitations and is sure to be promptly challenged in the California Supreme Court.

Court of Appeal Rules Correctional Deputies Can Carry Firearms Off-Duty Without CCW

On August 11, 2016, the Court of Appeal, Fifth Appellate District ruled in a published decision that correctional deputies under Penal Code section 830.1(c) have the same right to carry firearms off-duty as as enforcement deputies and police officers who are peace officers under Penal Code section 830.1(a).

In Stanislaus County Deputy Sheriffs' Association v. County of Santa Clara et al., the County argued correctional deputies were not entitled to the same rights as enforcement deputies under the Penal Code because they cease to have peace officer status or authority outside of their particular custodial assignments.  But the Court rejected that claim, finding that correctional deputies under section 830.1(c) are treated the same as section 830.1(c) peace officers with regard to the exemption.  As a result, the Court rejected distinguishing between them and and found that "Section 830.1, subdivision (c), declares without any qualification that a custodial deputy is a peace officer."