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.

Court of Appeal Rules Overtime is Defined By Collective Bargaining Agreement

The California Court of Appeal issued an opinion in Vranish v. Exxon Mobil Corporation. The Court ruled collective bargaining agreements (CBA) meeting certain requirements define overtime for covered employees, not the California Labor Code.

In Vranish, Exxon Mobil employees regularly worked 12-hour shifts. They worked 7 consecutive days followed by 7 days off. The employees were represented by a labor organization and had a CBA. Under the CBA, employees only received overtime compensation if they worked more than 12-hours in a workday, or more than 40 hours in a workweek. However, Labor Code section 510 states employees must receive overtime pay if they work more than 8 hours in a single day.

The employees filed suit to recover overtime pay for regularly working more than 8 hours in a workday. But the Court ruled the Labor Code’s definition did not apply to the employees. Labor Code section 514 states the Labor Code’s definition of overtime does not apply to employees covered by a valid CBA meeting certain requirements. Since the CBA in this case met all of the requirements under section 514, the CBA defined overtime rather than the Labor Code.

9th Circuit: Pooling Premiums Not a Vested Contract Right

On February 13, 2014, the Ninth Circuit issued an opinion in Retired Employees Association of Orange County, Inc. v. County of Orange (2/13/2014) 9th Cir. 12-56706. The Retired Employees Association of Orange County (“REAOC”) filed a lawsuit against the County of Orange when the County decided to stop pooling retired and active employee health insurance premiums.

From 1985 to 2007, the County pooled health insurance premium rates for retired and active employees. Pooling the premiums balanced active and retiree rates and helped lower premium costs for retirees.  But on January 1, 2008, the County and various labor unions reached an agreement to reform the County’s health care program. The agreement split the insurance rate pool so active employee health benefit premiums were separate from those of retired employees.  REAOC sued, arguing the County’s longstanding practice of pooling premiums, and the County’s representations to employees regarding that practice, created an implied contract right for employees who retired prior to January 1, 2008.

California law states where a County intended to create a contractual obligation by resolution or ordinance, the contract may include implied terms derived from experience and practice. The California Supreme Court stated vested health benefits can be implied under certain circumstances from a county ordinance or resolution.

REAOC contended the County established a vested right for retirees to have their health benefit premiums pooled in the future by adopting the pooling scheme year after year. However, the Ninth Circuit held the resolutions supported enrollment in County health plans at a specific rate for a given year, but did not create a vested right to have benefit premiums pooled in the future. In other words, the Board’s approval of health premium pooling in years prior, by itself, did not create an ongoing contractual right.

Governor Vetoes Union Rep-Member Privilege, Signs Bills on Brady List Protections, Bargaining, Release Time

The Governor took action on several bills affecting public safety labor rights.  The Governor vetoed AB 729, which would have protected labor leaders from having to testify about communications with members.  In his veto message, the Governor wrote, "I don't believe it is appropriate to put communications with a union agent on equal footing with communications with one's spouse, priest, physician or attorney.  Moreover, this bill could compromise the ability of employers to conduct investigations into workplace safety, harassment and other allegations."  The Governor's veto underscores the importance of connecting employees with a union lawyer on the onset of disciplinary investigations to ensure privileged communications.

The Governor also vetoed AB 1373 which would have extended the statute of limitations for survivors of public safety officers to file for death benefits related to tuberculosis, cancer, and blood-borne diseases. The bill was co-sponsored by CPF and PORAC.

The Governor signed AB 313 which amended POBR to prohibit disciplining peace officers solely because they are placed on a Brady list.  The law does not prohibit employers from disciplining peace officers for the underlying conduct which may have caused them to be put on a Brady list or considering the Brady list for determining how much discipline someone gets.  PORAC sponsored the bill. Loni Hancock (D-Berkeley), Donnelly (R-Barstow), Bill Monning (D-Santa Cruz), Tom Ammiano (D-San Francisco), and Mark Leno (D-San Francisco) voted against the bill.

The Governor also signed AB 537 which requires agencies to approve tentative agreements within 30 days, preventing them from delaying final ratification of contracts after the parties have TA'd at the table.  The bill also requires that if an MOU has an arbitration clause, the arbitrator- not a court or the agency- must decide if the procedural requirements for arbitration are met.

The Governor also signed AB 1181 which amended the MMBA to require employers give labor leaders reasonable time off for testifying at personnel hearings, PERB hearings, and bargaining. The MMBA already required reasonable time off for meeting and conferring.

PERB: No Duty to Bargain Over Retired Peace Officers' CCWs

In Riverside Sheriffs' Association v. County of Riverside (2013) 38 PERC ¶ 21, PERB ruled an employer does not have to meet and confer with a union about the CCW policy for retirees because retirees are not in the bargaining unit.  PERB reaffirmed that employers do not have to negotiate policies affecting retirees or other employees outside a union's bargaining unit unless those decisions affect current bargaining unit members in a significantly adverse way.

California Supreme Court: Charter Cities Can Have Binding Arbitration

In City of Los Angeles v. Superior Court (Engineers & Architects Association) (June 20, 2013) --- P.3d ---, 2013 WL 3064811, the California Supreme Court ruled charter cities with binding arbitration cannot refuse to arbitrate contract grievances. The ruling overturns an earlier Court of Appeal decision that decided charter cities cannot “delegate” wage and hour disputes to arbitrators.

The case centered on the City of Los Angeles’ unilateral decision to implement furloughs in 2009. The Engineers & Architects Association was in contract and filed a grievance challenging the furloughs. But, even though the contract had binding arbitration, the City refused to arbitrate, claiming it had special powers to impose furloughs and the arbitration clause did not apply. The union sued and won at the trial court, but the Court of Appeal intervened and ruled it was illegal for the City to delegate its power to set wages to an arbitrator, citing cases that require the governing body of a city or county exercise its discretion to set employee wages.

The Supreme Court overturned the Court of Appeal. The Court ruled that by ratifying the MOUs, the City made discretionary choices in the exercise of its salary-setting and budget-making authority and was therefore bound by the MOU. The Court also rejected the City’s claim it could not agree to an MOU which would impair its ability to take all necessary actions to carry out its mission in an emergency. The City also claimed that, because the mayor has to propose a budget annually, and the Council has to enact it annually, the MOU cannot restrict the choices available to the mayor and Council in later years. The Court quickly dispatched with this claim, pointing out that the City’s position, if correct, would make any multi-year deal with contractors, creditors, and vendors unenforceable.

AB 76 Guts Local Labor Associations' Access to Public Records

AB 76 makes key provisions of the California Public Records Act optional for local governments.  Among the provisions that would be optional under the new law are the requirements local agencies respond to public records requests within 10 days and provide requestor’s with electronic versions of public records.  These provisions are critical to labor associations who need prompt responses to public records requests, especially during contract negotiations.  The Assembly and Senate passed the bill, which contains other provisions related to the budget.  It is currently on the Governor’s desk awaiting signature. 

Since the provisions received significant attention earlier this week, Assembly Speaker John Perez promised to pass a replacement bill that leave the Public Records Act intact.  However, it looks like the State Senate will not act on his replacement bill.  Senate President Pro Tem Darryl Steinberg announced today the Senate won’t take up Perez’s bill, noting the changes to the Public Records Act are designed to save money, not stifle access to records.  That’s because if the provisions are mandatory, the State has to reimburse local governments for compliance, but if its optional, the State doesn’t have to reimburse them.  While local labor associations have other access to records under the MMBA and state labor laws, unlike the MMBA, the CPRA has a powerful enforcement mechanism giving associations teeth when they have to force an employer to turn over public records.

Court: No Right to Pre-Interview Access to IA File

In Association of Orange County Deputy Sheriffs v. County of Orange, (June 12, 2013) G047167, the Court of Appeal ruled the County did not have to meet and confer with the DSA before it banned deputies from reviewing IA files before their IA interviews.  In Orange County, there was a longstanding practice where peace officers being IA'd could review the IA file before their interview.  Then, in 2011, the Sheriff banned anyone under investigation from reviewing the file before their IA interview.  The DSA sued, arguing the County had to meet and confer before making this kind of change to a past practice.

The Court decided the County did not have to meet and confer of this kind of a change to a past practice.  The Court reasoned that restricting access to IA files before the IA interview is not a "working condition" under the MMBA.  The Court looked to two other cases in reaching its conclusion.  In Pasadena Police Officers Assn. v. City of Pasadena (1990) 51 Cal.3d 564, the California Supreme Court ruled employers do not have to give officers pre-interview discovery.  Similarly, in Association for Los Angeles Deputy Sheriffs v. County of Los Angeles (2008) 166 Cal.App.4th 1625, the court ruled law enforcement agencies can ban so-called "huddling" between counsel and officers after critical incidents.  In this case, the Court said pre-interview access to an IA file was like pre-interview discovery and the no "huddling" rule.  As a result, the Court decided it is not a "working condition."

The Court did agree the meet and confer requirement extends to changes in existing and acknowledged past practices, even if they are not formalized in a written agreement or rule.  However, the Court decided agencies only have to meet and confer if the past practice counts as wages, hours, or terms and conditions of employment.  Since the Court decided pre-interview access to the IA file did not count as a working condition under the MMBA, it ruled meet and confer rules did not apply.  Still, the Court left the door open to associations and agencies including these requirements in their MOUs if they chose to.

California Court Uphold Employees' Right To Vacation Pay On Termination

California Labor Code section 227.3 requires employers immediately pay a terminated employee for all his vested vacation time. In Howard Choate et al., v. Celite Corporation (May 2, 2013) B239160, the Court of Appeal decided the right provided in section 227.3 can only be waived if a negotiated collective bargaining agreement clearly and unmistakably waves that right.

Under their collective bargaining agreement, Plaintiffs in Howard earned their vacation based on hours worked the previous year and there was no waiver of section 227.3. However here was no past practice of paying out next year’s vacation time. Until the lawsuit, neither the terminated employees nor their union had objected to this practice. The court found the parties' past practice of not enforcing the vacation rule did not count as a clear and unmistakable waver of section 227.3. Therefore, the Court said the Plaintiffs were entitled to be paid for time earned. However, the court did not grant special penalties to Plaintiffs because it said the employer did not act “willfully”.

PERB Charges San Jose With Labor Law Violations Over Pension Initiative

On March 8, 2013, the Public Employment Relations Board issued a complaint against the City of San Jose related to Measure B, that City's attempt to strip employees of their retirement security.  The complaint alleges the City "knowingly provided inaccurate information" to the union about "its fiscal obligations regarding retirement benefits."  The City has been widely criticized for using pension numbers "not based on reality."

The complaint also alleges the City refused to meet and confer with the union and moved forward with Measure B without completing the labor relations process.  Accordingly, the complaint alleges the City violated Government Code sections 2503, 3505, and 3506.5.  Now the City must respond to the allegations with 20 days and the case will proceed to a hearing in front of judge with the Public Employment Relations Board.

Assemblymember Eggman Introduces Bill to Slash Interest Due on Debts to Employees, Others

Under current law, when employees or labor associations win a judgement against a public entity, the agency has to pay interest on the debt until they pay it off.  The interest rate is set at 7% or 10%, depending on the type of case.  Now Assemblymember Susan Eggman has introduced AB 748 to let cities and counties pay minimal interest on these debts, jeopardizing employees' and unions' rights across the State.

Eggman's law would cap the interest a public agency has to pay at no greater than the rate on the "Pooled Money Investment Account."  That rate has been less than 1% for the past three years.  As a result, employees who are illegally terminated or denied their wages would receive much less interest on their awards than the interest they have to pay on their personal loans, mortgages, and credit card payments.  Cities win, employees lose.  Eggman previously served on the Stockton City Council were she voted to withhold employees' wages, even though they were guaranteed by labor contracts.

Mastagni Law App Puts POBR and FFBOR on Your Mobile Device

Mastagni Law is rolling out the new Mastagni Law App.  The free app is available for Apple and Android devices.  The Mastagni Law App provides first responders and private citizens with helpful resources and emergency tools to assist with on-the-job injuries and life-changing events.  The app features easy-to-use resources on the Peace Officers' Bill of Rights and Firefighters' Bill of Rights.  Other features include:

• Accident Log to record pertinent information at the scene of a vehicle accident
• Ability to capture photos of accident scene and vehicle damage
• Medical Log in the event you are injured, an automated calendar will keep track of your doctor appointments, dates and allows for notes on medical recommendations
• 24-Hour access to call our attorneys to report a Critical Incident
• Exposure Report to submit to our attorneys in the event you have been exposed to a potentially hazardous element
• Helpful resources on Contract Negotiation

Michigan Voters Considering Constitutional Right to Collective Bargaining

After a string of stinging defeats at the ballot box, labor leaders in Michigan are trying to turn the tide by establishing a state constitutional right to collective bargaining.  Next Tuesday, Michigan voters will go to the polls to decide Proposal 2, which would create a state constitutional amendment locking in union rights in the state.  Proposal 2 would:

• allow police officers and firefighters to negotiate safe staffing levels
• establish a constitutional right to form a union and bargain collectively
• invalidate any attempts by the state legislature to limit collective bargaining rights
• override state laws about employees hours and conditions of employment 
• mandate binding arbitration for some police groups

If passed, Proposal 2 would be the first of its kind in the country.  The campaign to pass Proposal 2 got a big boost earlier today, when President Clinton endorses the measure.  

Court Finds Impairment of Pension Benefits Unconstitutional Under Contract Clause

In Cherry, Jr. et al. v. Mayor and City Council of Baltimore City, et al., (D. Md., September 20, 2012), Case No. MJG-10-1447, a federal judge ruled Baltimore's plan to impair firefighters' and police officers' pensions is unconstitutional under the Contract Clause of the federal Constitution.  The Contract Clause provides that "No State shall...pass any...Law impairing the Obligation of Contracts..."  The Clause frequently comes into play when the government tries to pass laws to get out of its own contractual obligations, including collective bargaining agreements.

To pass muster under the Contract Clause, a law that impacts the government's contracts has to pass several tests.  The test at the center of the Cherry decision is the "reasonable and necessary" test.  To pass this test, there have to be unforeseeable consequences to the contract and the law impairing the contract must be the least drastic impairment.  In Cherry, the Court ruled the City failed this test because the unions offered more balanced approaches.

While the ruling in Cherry decision vindicates public employees in Baltimore, several California cities are trying to impair their contractual obligations.  Mastagni Law attorneys David E. Mastagni, Isaac S. Stevens, and Jeffrey R. A. Edwards are litigating similar challenges against the cities of Los Angeles, Stockton, and Pacific Grove.

Court of Appeal Upholds Injunction to Stop City from Outsourcing Jobs

In Costa Mesa City Employee’s Association v. City of Costa Mesa et al. (CA4/3 G045730), the Fourth District Court of Appeal upheld a preliminary injunction enjoining the City of Costa Mesa (the City) from outsourcing City jobs.  The Court’s order stops the City from outsourcing work preformed by Costa Mesa City Employees’ Association (CMCEA) or laying off CMCEA members as a result of outsourcing.

Costa Mesa wanted to outsource several city services. CMCEA filed suit to stop the City’s outsourcing plan for violations of Government Code sections 37103 and 53060. The lawsuit also alleged the plan violates the parties’ Memorandum of Understanding (MOU) because the City did not meet with CMCEA to determine which jobs should be contracted out and how to mitigate layoffs; rather, it unilaterally decided to outsource many jobs. The trial court granted a preliminary injunction and the Fourth District affirmed.

In its opinion, the Fourth District decided there would be irreparable harm if CMCEA members lost their jobs.  The Court also decided a preliminary injunction was appropriate because losing a job and income is a greater harm than the citizenry’s interest in cost-effective government.

The Fourth District found that the City’s outsourcing plan violated both the parties’ MOU and state law. The Court found that the City violated the MOU because there was no evidence the City included CMCEA in the decision-making process.  The Court also found that Government Code sections 37103 and 53060 generally prohibit cities from contracting with a private entity, unless the contract is for “special services.”  The Court decided the only things that counted as “special services” in Costa Mesa are operation of the City’s jail and administration of its payroll services.  As a result, the Court concluded that there was enough evidence that CMCEA would win its lawsuit since CMCEA members were able to do the work.

Report: Stockton Losing Experienced Officers

KCRA News reports the City of Stockton is facing a new problems after filing for bankruptcy.  According the report, "experienced police officers are leaving in droves."  A big part of the problem is that the "new cuts in the bankruptcy, essentially eliminating Senior Officer Pay, are causing a flight of officers, the veteran officers that you want to keep: they know the streets, they know the crime," according to Mastagni Law partner David E. Mastagni.  The recent attention to the flight of officer comes after bond holders argued employees aren't paying their fair share in the bankruptcy.  However, "I think if anybody's not bearing their fair share, it's the bond market," Mastagni said. "The cops are the ones out there jumping fences and putting their lives on the line."  Watch the full report here.

Sacramento Business Journal: Mastagni Law Brings in Muscle to Audit Cities' and Counties' Books

The Sacramento Business Journal reports Mastagni Law has teamed up with forensic accountants to audit the books of cities and counties claiming financial problems.  The article profiles Shayleen O. Mastagni who came in-house at the firm after working as a Senior Vice President at Perry-Smith Accounting and Bridget Sanders, Senior Manager at the accounting firm Wallace Valuation Advisors. According to Shayleen Mastagni,  "The question is are you going broke or blowing smoke with financial obligations not due for 30 years?"  To answer that question, both women scrutinize the books to see if agencies are hiding money or facing legitimate financial problems.

Lawsuits Filed to Stop Attacks on Retirement Security

Legal challenges are already underway to local pension initiatives passed by voters Tuesday in San Diego and San Jose.  The initiatives, both named "Measure B", attack public employees' pensions in those cities.

San Diego's Measure B creates a new retirement tier replacing defined benefits with a 401(k) and lowers public safety's maximum retirement benefit to 80% of salary.  The measure also caps city payroll at 2011 for five years, risking massive layoffs for the city.  

The legal challenge to the San Diego measure started even before the election.  Unions filed an unfair practice charge with PERB in February because city leaders refused to meet and confer about the changes.  PERB quickly granted their request for injunctive relief and filed a lawsuit in San Diego to stop the measure from going before voters.  While the court initially ruled against PERB, the case was promptly appealed and oral arguments are scheduled for June 13, 2012.  PERB also issued a complaint against the city.

The San Jose measure seeks to shift the city's contributions to the pension system to employees, likely 16% of their salaries.  It also provides that if the cost-shifting provision is struck down, as many expect it will be, the city can dramatically slash salaries to make up the difference.  The plan also limits disability retirements, lets the city council take away retirees' cost-of-living-adjustments, and prices retirees out of the city health insurance plan.

San Jose police and firefighters immediately filed lawsuits in state court to stop enforcement of the measure.  The firefighters lawsuit, Robert Sapien et al. v. City of San Jose et al. seeks declaratory and injunctive relief and a writ of mandate prohibiting enforcement of Measure B.  It argues the measure violates California state constitutional protections related to due process, the prohibition on breaking public contracts, and restrictions on seizing property.  The POA's lawsuit, San Jose Police Officers' Association v. City of San Jose et al. makes similar claims and also alleges violations of freedom of speech, separation of powers, the MMBA, the parties' MOU, and the California Pension Protection Act.  The City of San Jose also filed a preemptive lawsuit in federal court seeking a declaration that the measure is not unconstitutional.

Wisconsin Exit Polls: Voters Like Unions, Not Recalls

Despite Governor Walker's win in Tuesday's recall election in Wisconsin, exit polls show the majority of voters in that state support public employees unions.  The exit polls also showed voters had strong opinions about recall elections, with more than 60% of voters saying they should only be allowed for official misconduct and 10% of voters saying recall elections should never be allowed.

PERB: Management Cannot Unilaterally Adopt "Zero Tolerance" Drug Testing

In Fairfield-Suisun Unified School District (May 8, 2012) PERB Dec. No. 2262, the Public Employment Relations Board ruled management must give advance notice and an opportunity to meet and confer before adopting a "zero tolerance" drug policy.  The case started when an employee refused to disrobe in front of a technician during a drug test.  The employer responded by terminating him, citing their "zero tolerance" drug testing policy.  The union then filed an unfair labor practice charge with PERB.

The "zero tolerance" policy had been on the books since 1996, but had never been used before.  The union never received advance notice of the policy or an opportunity to meet and confer.  Management claimed the union waived meet and confer because so much time had passed since it was implemented.  To support their claim, the District provided evidence a union representative received a copy of the District's agenda packet describing the policy back in 1996.  PERB, however, rejected the District's argument, finding insufficient evidence the union knew about the policy's details.

The District also claimed federal law required it to have a "zero tolerance" policy on drug testing.  However, PERB examined the specific federal regulations and found that federal law did not require termination or the specific details of the testing procedure.  As a result, PERB found the contours of the policy were subject to meet and confer ordered the District to put the employee back to work and to give him back pay.