Metropolitan News-Enterprise


Monday, March 22, 2010


Page 1


C.A.: Governor Cannot Furlough State Fund Workers


By a MetNews Staff Writer


The First District Court of Appeal ruled Friday that Gov. Arnold Schwarzenegger may not impose mandatory furloughs on the attorneys, administrative law judges and hearing officers who work for the State Compensation Insurance Fund.

Affirming the decision of San Francisco Superior Court Judge Peter J. Busch, Div. Three concluded that Insurance Code Sec. 11873(c) precludes the governor from reducing the number of hours worked by SCIF employees.

That code section provides that “the positions funded by the State Compensation Insurance Fund are exempt from any hiring freezes and staff cutbacks otherwise required by law.”

In December 2008, the governor issued Executive Order No. S-16-08, declaring that the state was facing a fiscal and cash crisis and that a furlough of state employees was necessary to reduce spending and improve the state’s ability to meet its financial obligations.

Schwarzenegger directed the Department of Personnel Administration to “adopt a plan to implement a furlough of represented state employees and supervisors for two days per month, regardless of funding source.”

The California Attorneys, Administrative Law Judges and Hearing Officers in State Employment—which goes by the acronym CASE and is the exclusive collective bargaining representative for approximately 3,400 legal professionals in more than 80 different state departments, boards, and commissions—filed suit in Sacarmento Superior Court, seeking to enjoin enforcement of the order.

CASE contended that the governor lacked statutory authority to order a furlough, that salary-setting is a legislative rather than an executive function, and that a furlough would contravene provisions of the Government Code and of the memoranda of understanding between the state and the unions.

A Sacramento Superior Court judge denied CASE’s petition, but before judgment was entered, issued a minute order clarifying that the ruling only applied to represented employees of executive branch agencies and did not address the governor’s authority to order furloughs for any independently elected constitutional officers or other elected statewide officials and their employees.

Shortly thereafter, CASE and three individual plaintiffs filed suit in the San Francisco Superior Court against Schwarzenegger, the Department of Personnel Administration, the state controller, and the president of SCIF seeking an injunction prohibiting the imposition of furloughs on represented employees of employed by SCIF on the basis of Sec. 11873.

Busch asked the parties to brief whether the San Francisco action should be stayed under the doctrine of exclusive concurrent jurisdiction until the Sacramento matter was fully resolved.

He determined that the issue presented a “close call,” and “[b]ut for the clarification order…the exclusive concurrent jurisdiction argument would be rather strong.”

Although the Sacramento court’s minute order did not refer explicitly to SCIF employees, Busch noted these employees are not “employees of executive branch agencies” to whom the Sacramento court considered its ruling to exclusively apply, and found that there was no conflict in adjudication.

As for the merits of the case, Busch opined that the term “staff cutback” as used in Sec. 11873 “has to be read in its commonsense meaning,” and a furlough program designed to reduce the availability of staff “is a cutback for purposes of the statute.”

Writing for the appellate court, Justice Stuart R. Pollak agreed with both of Busch’s determinations.

Pollak emphasized that neither State Fund itself nor any of the individual members of CASE were parties to the Sacramento proceedings.

“If the Sacramento judgment is not binding as to the parties or issues in this action, no prejudice can result from considering those issues in this case,” he said.

The justice further reasoned that this case “neither threatened nor produced a conclusion that is irreconcilable with the judgment in the Sacramento action” since the legal issues resolved in each proceeding were “entirely different,” with the present action involving an issue which was not considered in the Sacramento proceedings.

Pollak also explained that an interpretation of Sec. 11873 as limiting the governor’s authority to impose furloughs on SCIF employees was consistent with the language of the statute, the larger statutory scheme, and the legislative history of the State Fund authorizing legislation.

He reasoned that a “cutback” occurs, for purposes of Sec. 11873, “whether hours are reduced or employees are terminated.” Pollack posited that any reduction in total hours worked by SCIF employees “is the same whether achieved by a furlough imposed on all employees or the layoff of only some employees.”

The justice also suggested that allowing the furlough of SCIF employees would not achieve the stated purpose of the executive order—to improve the state’s ability to meet its financial obligations—since any cost savings realized would accrue, not to the benefit of the state’s general fund, but to the ledger account maintained for the exclusive use of the State Fund. 

Presiding Justice William R. McGuiness and Justice Peter J. Siggins joined Pollak in his decision.

The case is California Attorneys, Administrative Law Judges and Hearing Officers in State Employment v. Schwarzenegger, 10 S.O.S. 1481.


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