Metropolitan News-Enterprise


Friday, May 21, 2010


Page 1


S.C. to Decide if State Fund Workers May Be Furloughed


By a MetNews Staff Writer


The California Supreme Court has voted unanimously to consider whether attorneys, administrative law judges and hearing officers who work for the State Compensation Insurance Fund can be furloughed.

The justices, at their weekly conference in San Francisco on Wednesday, said they would decide whether the First District Court of Appeal was correct when it ruled in March, in California Attorneys, Administrative Law Judges and Hearing Officers in State Employment v. Schwarzenegger (2010) 182 Cal.App.4th 1424, that such furloughs violate the Insurance Code.

The court action, which the court took on its own motion, was not announced until yesterday because the court’s own employees were on furlough Wednesday, as they and other court workers statewide have been on the third Wednesday of every month since last summer.

The justices also established an expedited briefing schedule, requiring the governor to file an opening brief by June 9. The union representing the employees will have until June 29 to respond, and the governor’s reply brief is due July 9.

The court further advised that:

“Review in this case may be undertaken in conjunction with possible consideration of similar issues in cases that are pending in the courts of appeal.”

The justices last month denied Schwarzenegger’s request the court transfer to itself seven appeals regarding the governor’s authority to furlough some 200,000 employees three days per month.

In the SCIF case, 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 Sacramento 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 SCIF on the basis of Sec. 11873.

San Francisco Superior Court Judge Peter J. Busch agreed with the workers, opining 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.”

The appellate court affirmed. Justice Stuart R. Pollak, writing for the court, said 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 Schwarzenegger’s 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. 


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