Attorneys across California watched with interest the March, 2019 decision by the California Supreme Court that upheld legislative rollbacks to some future retirement benefits. Thousands of state and local government workers were affected. However, the narrow ruling left a bigger question in limbo – can employers reduce vested pension benefits for current workers.
CalPERs Disability Retirement Air Time Benefit
The benefit at issue is known as “air time,” where government employees with at least five years of service could purchase up to five additional years of pension credits before retiring. That statute was repealed in 2013, and eliminated the right of pre-2013 employees who had not already done so to buy future pension credits.
The California Supreme Court’s 2019 decision stated that the mere opportunity to pay for higher pensions at a future date is not an actual pension benefit that would be protected by the worker’s employment contract, is not protected by the state constitution, and is therefore subject to legislative change. In other words, the benefit could be “altered or eliminated at the discretion of the Legislature,” stated the Court.
Union Attorneys Challenge CalPERs California Rule
The case at issue, Cal Fire Local 2881 v. CalPERS, has been watched carefully by attorneys as a test of a group of legal precedents that have become known as the “California Rule.” These have been applied for decades to prevent various governmental agencies from reducing promised pension benefits to retirees.
The case ensued as a challenge to former Governor Brown’s pension law which was passed during California’s 2012 recession due to concerns about the increase in pension debts. It required that public employees hired after 2013 would need to contribute more money to fund their pensions. It further placed a cap upon the amount of money that an employee could earn in retirement.
Governor Brown’s law also attempted to reduce pension expenses by cutting some lesser benefits that had been available to public employees, and one of those was air time.
Attorneys See Recent Case as Test of CalPERs California Rule
Cal Fire Local 2881 sued to reinstate the air time benefit for employees hired prior to 2013, arguing that the right to purchase air time could not be withdrawn without breaking the California Rule.
Unions and government agencies engaged in protracted legal arguments. The unions argued that once a benefit is given, it cannot be withdrawn without offering new compensation. Governmental agencies disputed the unions’ arguments, saying flexibility was crucial due to budgetary constraints.
California Supreme Court Excludes CalPERs California Rule from Decision
The court crafted their ruling to exclude the California Rule, and specifically limited their decision to address the airtime perk. The Court stated in their decision, “we have no occasion in this decision to address, let alone to alter, the continued application of the California Rule.”
Union representatives responded to the court’s decision, saying that it was not entirely unexpected, and that whether or not the air time benefit was a vested benefit was always questionable. They did express their relief that the California Supreme Court did not address the California Rule, leaving it intact, holding that at least for the present, vested benefits cannot be impaired.
An attorney for the League of California Cities read the ruling differently, however, and believes that the court left the door open for narrowing or eliminating the California Rule in the future.
CalPERs Disability Retirement Attorneys
Our attorneys have watched these legal maneuverings with interest and will continue to monitor future challenges to the California Rule should they occur. If you are a government employee whose benefits may be affected by the March 2019 ruling, our attorneys are available to help you understand exactly what the impact will be on your pension and benefits.
The disability lawyers at Cantrell Green are among the few attorneys who understand and specialize in CalPERS disability benefits. If you are unsure if qualify for CalPERs disability retirement benefits, call our experienced lawyers today. We would be happy to help you determine your eligibility for disability retirement under the CalPERs system.
This article applies to members of California Public Employees’ Retirement System (CalPERS); and does not reflect the rules, laws or regulations governing how other public retirement systems are administered. If you have question about another public employee retirement system, find your system, below – or call our attorneys at: 562-622-4800
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