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.

Court Reaffirms Peace Officers' Constitutionally-Protected Right to Privacy While Partially Undressed

Following the Ninth Circuit, the Court of Appeals for the Third Circuit found a female deputy sheriff had a reasonable expectation of privacy while partially undressed and undergoing a decontamination process.  Doe, a deputy sheriff in Luzerne County, Pennsylvania was surreptitiously filmed by a male officer while undergoing decontamination. The male officer uploaded the video onto his work computer and called several officers into his office to view the footage.   He then put in on a county-wide server.  Doe filed a 1983 action against the county and the officer, alleging violations of her right to privacy under the Fourteenth Amendment and her right to be free from unlawful searches and seizures under the Fourth Amendment.

The trial court granted the county's motion for summary judgment. The Third Circuit reversed on the Fourteenth Amendment claim and affirmed on the search and seizure claim.  After looking to other circuits, the court concluded a deputy sheriff has a constitutionally-protected privacy interest in his/her partially clothed body. The court noted:

Although the issue of whether one may have a constitutionally protected privacy interest in his or her partially clothed body is a matter of first impression in this circuit, other circuits—including the Second, Sixth and Ninth Circuits—have held that such a right exists. See, e.g., Poe v. Leonard, 282 F.3d 123, 136–39 (2d Cir.2002) (finding that plaintiff, a female civilian who was participating in a police training video, alleged sufficient facts to raise a triable issue of whether her constitutional right to privacy was violated where the male police officer surreptitiously filmed her in the dressing room while topless and without a bra); York v. Story, 324 F.2d 450, 454–56 (9th Cir.1963) (finding that the plaintiff properly stated a claim for a violation of her constitutional right to privacy where she alleged that, while reporting a sexual assault, a male police officer deceived her into permitting him to photograph her genitals and exposed breasts under the pretext of an investigation), cert. denied, 376 U.S. 939, 84 S.Ct. 794, 11 L.Ed.2d 659 (1964); Brannum v. Overton Cnty. Sch. Bd., 516 F.3d 489, 497–98 (6th Cir.2008) (finding a privacy violation where a middle school's surveillance cameras recorded the plaintiff students in their undergarments while in the school locker room)
(Doe v. Luzerne County (3d Cir., Oct. 12, 2011, 10-3921) 2011 WL 4823387.)

The court concluded the male deputy’s filming did not implicate the Fourth Amendment because it was conducted for personal reasons.

Court of Appeal Permits Waiver of POBR Rights In Limited Circumstances

In Lanigan v. City of Los Angeles (Cal. Ct. App., Oct. 4, 2011) 2011 WL 4552533, the Court of Appeal for the Second District overturned the trial court, finding POBR protections can be waived in a minority of discipline cases. The case concerned a Los Angeles police officer facing several serious discipline charges resulting from his treatment of an officer from another department. The Department proposed termination and the officer entered into a detailed settlement agreement under which he was reinstated.  He also agreed to specific future discipline in the event of additional disciplinary charges being filed against him for harassing or failing to cooperate with officers of an outside agency, and agreed to waive several of his rights under POBR.

Within a year, the officer again faced discipline charges for providing false information and failing to cooperate with an LASD officer.  In response, the Department processed his resignation pursuant to the settlement agreement.  He petitioned for peremptory writ of mandate to obtain judicial review of the LAPD’s decision. The lower court issued a writ ordering the city to set aside its acceptance of the officer's resignation and reinstate him to his position.

The Court of Appeal overruled the trial court, but acknowledged the provisions of POBR are not subject to a blanket waiver because POBR was established for a public purpose. Instead, the Court looked to the California Supreme Court's ruling in County of Riverside v. Superior Court (2002) 27 Cal.4th 793 and concluded a waiver of POBR rights could be permitted in certain unusual circumstances. In this case, the Court noted the officer did not waive all of his POBR rights and his waiver applied to discipline for a specific type of alleged misconduct. The Court also emphasized the original settlement was in lieu of almost certain termination.

This case primarily concerned statutory rights.  Other pre-termination rights have a federal constitutional dimension that presents additional barriers to waiver.  In Walls v. Central Contra Costa Transit Authority (9th Cir. 2011) 653 F.3d 963, the court found a public employee had not waiver his Skelly rights.  The court noted "federal courts 'indulge every reasonable presumption against waiver of fundamental constitutional rights' and 'do not presume acquiescence in the loss of fundamental rights.'" The court therefore concluded "a waiver [of the right to a pre-termination hearing] should not be implied and should not be lightly found."