Sunday, August 28, 2016

California court ruling on public sector pensions

California Policy Center: On August 17, 2016 the First Appellate District Court ruled on the lawsuit brought by the Marin Association of Public Employees against the Marin County Employees’ Retirement Association (MCERA) and State of California. The case was brought after MCERA eliminated pay items considered pensionable following the States enactment of the California Public Employees’ Pension Reform Act of 2013.
The Act mostly just enacted lower benefit formulas for employees hired after 2013. For existing employees, the Act did little of substance other than attempting to eliminate pension spiking, which is the practice of increasing an employee’s retirement allowance by increasing final compensation and including various non-salary items such as unused vacation pay, pay for uniform allowances, pay for equipment or vehicle use, and adding service credit for unused sick time, vacation time or leave time.
The Marin County Employees Association sued claiming they were entitled to those benefits because they were a “vested right” based on the legal theory that once a pension benefit is enhanced it can never be taken away, something commonly referred to as the “California Rule”.

When you hire on in the public sector you are promised a retirement vesting schedule.   If the vesting schedule is changed, then the employee must be compensated, proportionally according to time worked under the prior schedule.  The employee then has the choice to quit, the contract is honored; also the agency has the chance to fire the employee.

Why is this a court case?  The ruling is obvious to any bonehead hiring agency, why wasn't it stated in the employment contract in the beginning?

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