Ohioans Reject Anti-Union Law In Landslide Election

In their November 8, 2011 general election, voters in Ohio voted overwhelming to overturn a state law restricting public-sector employees' collective bargaining rights.  By a vote of 63% to 37%, voters rejected Ohio Senate Bill 5, which severely restricted collective bargaining rights in that state.  The 250-page bill increased the number of police and fire department employees prohibited from joining unions, prohibited unions from ensuring members pay their fair share for representation, and allowed employers to pick and choose what they wanted to bargain over, and, in some cases, whether they wanted to bargain at all.  Under Ohio law, the election means the S.B. 5 will not go into effect and current labor laws will remain in place.

Union Ordered to Pay Attorney's Fees to Expelled Members

In CDF Firefighters v. Maldonado (October 26, 2011, F061183) 2011 WL 5079589, the Court of Appeal held CDFF had to pay attorneys fees after losing a breach of contract case against former members, even though it voluntarily dismissed a related claim. The case turned on the interpretation of Civil Code section 1717. The section entitles some prevailing parties in breach of contract cases to attorney’s fees. However, there is an exception when “an action has been voluntarily dismissed.”

CDF Firefighters sued two former members for breach of contract after they failed to pay fines levied against them by the union. CDFF fined two members $22,000 to cover expenses for a trusteeship and $743 to reimburse another member for expenses. The two members were ultimately expelled from the union. The former members challenged their expulsion and sought to overturn the $22,000 fine in court. The trial court found the $22,000 fine improper. CDFF then dismissed the claim for $743 and the expelled members moved to recover the attorney’s fees they incurred.

CDFF argued that since it voluntarily dismissed the claim for $743, the expelled members were not “prevailing parties” and could not recover attorneys fees under Civil Code section 1717. They emphasized that their claim for the $22,000 and $743 were brought as one cause of action and argued that by dismissing the cause of action, they triggered the exception to Civil Code section 1717. The court, however, determined the claims for $22,000 and $743 arose from “two separate and distinct obligations,” regardless of how they were plead. As a result, the court concluded, voluntarily dismissing with regard to the $743 fine did not trigger the exception with regard to the $22,000 fine and ordered CDFF to pay attorneys fees.

Court of Appeal Denies CalPERS Credit for Lump Sum Back Pay

In Molina v. Board of Administration (2011) 2011 WL 4491809, the Second District Court of Appeal rejected an employee's argument that back pay should be counted toward service credit under the Public Employee's Retirement Law (PERL).  After Molina was terminated from his job with the City of Oxnard, he filed an action for wrongful termination and subsequently settled for a lump sum.  Following the settlement, Molina requested CalPERS increase his pension entitlement, characterizing the settlement amount as “back pay.”  However, CalPERS refused to recognize the settlement amount as earnable compensation and denied his request.

The Court held the settlement amount could not count towards the employee’s “compensation earnable” because it did not meet PERL’s requirements to be “payrate” or “special compensation.”

Payrate must “either: (1) [be] paid to similarly situated employees; or (2) [be] paid in accordance with a ‘publicly available pay schedule for services rendered on a full time basis during normal working hours.’ (Gov. Code, § 20636, subd. (b)(1).)”

To qualify as special compensation, one must show the pay “(1) was available to similarly situated employees under a labor policy or federal requirement; or (2) was determined by the CalPERS Board to have been available to other, similarly situated employees as required by PERL. (Gov.Code, § 20636, subd. (c)(2); 2 Calif. Code of Regs., § 571(b)-(d).”

The Court noted CalPERS had advised Molina and the city "that a portion of the settlement payment could potentially be eligible for inclusion in Molina's pension, but only if Molina were reinstated for  a full year in a valid position under a legitimate salary based on a salary schedule."   That never happened.  As a result, the Court rejected Molina’s appeal, leaving his existing pension calculation unaltered.

Governor Releases "Twelve Point Pension Reform Plan"

On October 27, 2011, Governor Edmund G. Brown Jr. released his 12 proposed major reforms for state and local pension systems. The governor stated the proposals “would end system-wide abuses and reduce taxpayer costs by billions of dollars over the long term” and cut in half the cost to tax payers of state employee pensions.

The “Twelve Point Pension Reform Plan” and its explanation are set forth as follows:

1. Equal Sharing of Pension Costs: All Employees and Employers: Will require that all new and current employees transition to a contribution level of at least 50 percent of the annual cost of their pension benefits.

2. “Hybrid” Risk-Sharing Pension Plan: New Employees: The “hybrid” plan will include a reduced defined benefit component and a defined contribution component. The hybrid plan will be combined with Social Security to provide an annual retirement benefit of about 75 percent of an employee’s salary. The 75 percent target is based on 30 years for safety employees and 35 years for non-safety.

3. Increase Retirement Ages: New Employees: For most new employees, retirement ages will be set at the Social Security retirement age, now 67. The retirement age for new safety employees will be less than 67, but commensurate with the ability of those employees to perform their jobs.

4. Require Three-Year Final Compensation to Stop Spiking: New Employees: Eliminates one-year rule to discourage efforts in the last year of employment to increase the compensation used to determine pension benefits.

5. Calculate Benefits Based on Regular, Recurring Pay to Stop Spiking: New Employees: Will require that compensation be defined as the normal rate of base pay, excluding special bonuses, unplanned overtime, payouts for unused vacation or sick leave, and other pay perks.

6. Limit Post-Retirement Employment: All Employees: Will limit all employees who retire from public service to working 960 hours or 120 days per year for a public employer. It also will prohibit all retired employees who serve on public boards and commissions from earning any retirement benefits for that service.

7. Felons Forfeit Pension Benefits: All Employees: Will require that public officials and employees forfeit pension and related benefits if convicted of a felony in carrying out official duties, in seeking an elected office or appointment, or in connection with obtaining salary or pension benefits.

8. Prohibit Retroactive Pension Increases: All Employees: Will eliminate unfunded liability from increased pension benefits.

9. Prohibit Pension Holidays: All Employees and Employers: Will prohibit all employers from suspending employer and/or employee contributions necessary to fund annual pension costs to avoid repeat of past where many public employers stopped making annual pension contributions during wall street boom years.

10. Prohibit Purchases of Service Credit: All Employees: Will avoid the investment risk associated with allowing purchase of service credit for time not actually worked.

11. Increase Pension Board Independence and Expertise: Will add two “independent” persons with financial expertise to the CalPERS Board and require that persons and their family are not eligible for CalPERS pension. Will also replace State Personnel Board representative on the CalPERS board with the Director of the California Department of Finance. Intended to achieve greater independence and greater sophistication.

12. Reduce Retiree Health Care Costs: State Employees: New state employees will be required to work for 15 years to become eligible any retiree health care and required to work for 25 years to become eligible for the maximum state contribution. Will encourage local governments to make similar changes.

These proposals will have to be debated and passed by the California Legislature before Governor Brown can sign them into law.

ATF Issues Open Letter on Firearms and Medicinal Marijuana

The federal Bureau of Alcohol, Tobacco, Firearms and Explosives issued an open letter to "All Federal Firearms Licensees" outlining the relationship between federal firearms regulations and state marijuana laws.  The letter explains federal law codified at 18 U.S.C. § 922(g)(3) prohibits unlawful users of controlled substances from possessing firearms or ammunition.  Federal law also makes it unlawful to sell firearms or ammunition to someone about whom there is reasonable cause to believe uses or possesses controlled substances, such as marijuana.  Therefore, the letter concludes, it is unlawful under federal law for medicinal marijuana card holders to buy or possess firearms or ammunition, regardless of a particular state's laws.