Monday, May 20, 2019
Page 1
Court of Appeal:
No Relief for Man Put in Higher Tax Bracket Through Lump Sum Payment of Back Wages
Majority: Statute Applicable to Civil Service Employees Doesn’t Authorize Tax Reimbursement
Dissent: ‘Compensation,’ As Used in Statute, Covers All Consequences of Wrongful Discharge
By a MetNews Staff Writer
A wrongfully discharged state Civil Service employee is not entitled to reimbursement for the boost in income taxes that results from a lump sum payment of back wages, Div. Two of the Fourth District Court of Appeal held Friday in a 2-1 decision.
Justice Carol D. Codrington wrote the majority opinion, in which Acting Presiding Justice Art McKinster concurred. Justice Marsha Slough dissented.
The majority’s opinion affirms San Bernardino Superior Court Judge Gilbert G. Ochoa’s denial of Patrick Barber’s petition for a writ of mandate aimed at forcing the California State Personnel Board (“SPB”) to pay him about $145,000. He estimates that’s how much more in taxes he had to pay on six years’ of back salary—based on the lump payment putting him in a higher tax bracket—than if he had received the wages over the course of the six years.
Barber, who was fired as a parole agent, has received about $500,000 in back pay and benefits, pursuant to Div. Two’s 2014 unpublished opinion in Barber v. California State Personnel Board, E057014. There, McKinster wrote that “the findings at the SPB hearing are different from those alleged in the notice of adverse action…and, therefore, termination of his employment violates his due process right to notice of the charges against him and an opportunity to defend.”
Codrington’s Opinion
In Friday’s opinion, Codrington said:
“Barber argues that awarding him such relief is consistent with the remedial statutory purpose of Government Code section 19584, of making an improperly terminated employee whole by restoring the employee to the financial position he or she would otherwise have occupied had employment not been wrongfully interrupted. We disagree. Barber is not entitled to increased tax liability recovery under section 19584 or to such recovery as equitable relief, because such relief is not statutorily authorized.”
She explained:
“The Legislature included in its definition of ‘salary’ “other special salary compensations, if sufficiently predictable.’…The common meaning of ‘compensation’ is ‘payment.’
The jurist quoted the Sixth District Court of Appeal’s 2014 opinion in Department of Corrections & Rehabilitation v. State Personnel Board as saying (with emphasis added):
“Section 19584’s use of the word ‘compensation’ unambiguously sweeps broadly and encompasses all earned payments.”
Codrington declared:
“Increased tax liability is neither earned nor a payment. Therefore, it is not ‘salary’ or ‘special salary compensation’ within the meaning of section 19584.”
She said Barber was “made whole” to the extent the statute permits.
Slough’s Dissent
Slough set forth:
“My disagreement with the majority reduces to a single word. They interpret ‘compensations’ as referring to payments an employee earns for work. Since gross-up awards are not payments earned through work, but rather payments ordered to compensate for income lost by operation of the tax laws, the majority concludes such awards aren’t authorized by the statute.
“I take a different view of the meaning of the word ‘compensations.’ I believe the word is broad enough to cover compensating the employee for work and for injuries related to the wrongful termination. Thus, I interpret ‘special salary compensations’ as being a catchall provision that allows the SPB and courts to fashion appropriate remedies to ensure the employee is made whole.”
Dissent Criticized
Criticizing the dissent, Codrington said:
“We disagree with the dissent’s broad construction of the section 19548 language, ‘other special salary compensations,’ as encompassing gross-up recovery for increased tax liability….
“Even though the term, ‘compensation,’ alone, can be construed broadly to include compensation that is not salary, we conclude the legislature intended to limit the scope of the term used within the section 19584 definition of salary by preceding the term, ‘compensation,’ with the limiting terms, ‘special salary.’ By doing so, the statute narrows the category of recoverable compensation to income paid for work performed. We therefore conclude section 19584, as currently written, does not allow gross-up recovery for increased tax liability as a recoverable category of damages. Furthermore, it is not within this court’s authority to add to section 19584 this additional category of recoverable compensation, because it is not encompassed by the statutory language, ‘other special salary compensation.’ ”
Dissenter Shoots Back
Slough responded:
“This rhetoric is empty and unnecessary. It is our job as a court to interpret statutes in a way that is true to their plain meaning and puts their purpose into effect…. Where the text and the purpose support a broad interpretation, we should follow the Legislature’s lead. Adopting a hyper-narrow interpretation of such a statutory provision—as the majority does here—isn’t a recognition of the limits of our authority, but an erroneous trimming of the statute, in this case one which leaves the purpose of the statute on the cutting room floor.”
The case is Barber v. California State Personnel Board, E068719.
Copyright 2019, Metropolitan News Company