California Supreme Court Upholds Furloughs Of State Employees Based On Legislative Approval Of Furloughs Contained In State Budget

October 11, 2010 | Bulletin No. 952306.1

In Professional Engineers in California Government v. Schwarzenegger, (--- Cal.Rptr.3d ---, Cal., October 4, 2010), the Supreme Court considered challenges by several public employee unions to Governor Schwarzenegger’s Executive Order S-16-08 directing two-day per month furloughs on state employees. David W. Tyra of Kronick Moskovitz Tiedemann & Girard represented the Governor and presented argument on his behalf to the Supreme Court. The Supreme Court rejected the challenge to the furlough finding that the Legislature validated the furlough program through budget legislation.

Note

For further discussion on this case, please see our Legal Alert entitled, "Furlough Of Correctional Officers Did Not Violate Labor Code", November 9, 2011.

h3>Facts

On December 1, 2008, Governor Schwarzenegger declared a fiscal emergency and called the Legislature into special session to address the budget crisis. When the special session failed to yield any solutions to the State's budget crisis, the Governor, on December 18, 2008, issued Executive Order S-16-08 that instructed the DPA to implement "a mandatory two-day-a-month unpaid furlough of most state workers employed in the executive branch" that would begin on February 1, 2009, and continue through June 30, 2010.

Numerous state employee unions filed lawsuits asserting the Governor did not have the authority to unilaterally implement the furlough. On January 30, 2009, the Sacramento County Superior Court ruled that the Governor had the authority to impose the furlough. The unions appealed the trial court's decision.

On February 19, 2009, three weeks after the trial court ruled in favor of the Governor, the Legislature enacted the revised Budget Act of 2008 and the Budget Act of 2009. These budget acts reduced "appropriations for employee compensation ... by an amount that reflected the savings the Governor sought to obtain through the two-day-a-month furlough program." The legislation also stated "that the specified reduction in the appropriations for employee compensation could be achieved either through the collective bargaining process or through 'existing administration authority.'"

Supreme Court Decision

The Supreme Court held that the Legislature's enactment of the revised 2008 Budget Act and the initial 2009 Budget Act validated the two day per month furlough program.

The Court held that "when the Legislature enacted, and the Governor then signed, legislation revising the 2008 Budget Act, the validity of the mandatory furlough program fundamentally changed." The Legislature "explicitly reduced the 2008-2009 fiscal year appropriation for state employee compensation to a level reflecting the reduced compensation to be paid to employees under the Governor's furlough plan." Therefore, the "Legislature no longer had 'fully funded' the provisions of the Memoranda of Understanding ("MOU") between the State and the unions supporting the higher level of pay that previously had been approved, and thus, under Government Code sections 3517.6 and 3517.7, the provisions of the applicable MOUs that supported the higher level of pay the employees had been receiving prior to the implementation of the furloughs no longer were effective."

The Court further found that "it is reasonable to interpret language in the relevant provision of the new budget legislation as a legislative endorsement of the two-day-a-month furlough plan — as one permissible method of achieving the reduction in employee compensation mandated by the revised budget legislation, thereby validating the plan that the Governor lacked authority to impose unilaterally." In short, the revised 2008 Budget act authorized the furlough that had already been ordered by the Governor.

While holding that the furloughs had been approved by the Legislature, the Supreme Court did not accept the Governor's claim "that either the constitutional authority granted to him by the California Constitution or the existing statutory provisions pertaining to the terms and conditions of state employment granted him or the DPA the authority unilaterally to impose a mandatory unpaid furlough on state employees." The Court ruled against the Governor's claim "that either the constitutional authority granted to him by the California Constitution or the existing statutory provisions pertaining to the terms and conditions of state employment granted him or the DPA the authority unilaterally to impose a mandatory unpaid furlough on state employees."

Questions

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David W. Tyra | 916.321.4500