On August 17, 2016, the First Appellate District Court of California published an opinion that threatens to destroy the ability of public employees to protect their pensions. For decades, a pillar of this state’s pension law has been that once an employee accepts and begins employment under a promised pension benefit, that promised pension could not subsequently be reduced without an offsetting “comparable new advantage” given to the employee. In other words, the pension promised to you when hired is the pension you are entitled to receive if you satisfy all the required criteria for receiving the pension by, for example, working the required number of years for your employer.
In Marin Association of Public Employees, et al. v. Marin County Employees’ Retirement Association, et al. (“Marin”), the court of appeal explicitly disposed of this long-standing requirement of a “comparable new advantage.” Marin considered whether the Public Employee Pension Reform Act’s (“PEPRA”) exclusion of various items of compensation from pension calculations, which resulted in a lower pension benefit for existing employees, constituted an unlawful violation of those employees’ “vested” pension rights because no “comparable new advantage” was provided to offset the reductions. The Marin employees argued that because no “comparable new advantage” was given, the reductions to their pensions was unlawful. The Marin court, however, inexplicably found that the “comparable new advantage” requirement was a myth, because prior statements by the California Supreme Court that a reduction in pension benefits “must” be accompanied by a “comparable new advantage” have been mistakenly understood to impose a legal requirement. According to the Marin court, the “comparable new advantage” is merely a suggestion, not an enforceable legal right. Therefore, the reduction of the employees’ pension benefits in Marin did not violate their vested rights and was lawful.
For practical purposes, Marin means that pension benefits for active employees may be reduced almost at whim for political expediency with little legal recourse. And, of course, we are sure all our clients understand how politically expedient it can be to reduce public employee pensions. As this law firm has counseled its clients for decades, a bedrock principle of negotiation at the bargaining table was that the employer could take away everything in a new contract except your pension. Now, however, because of Marin that may no longer be the case. Even though Marin considered pensions under the County Employees’ Retirement Law (“CERL”), its analysis and holding apply equally to all public employee pensions in any pension system, including CalPERS or any other city or county system. Because of this, Marin directly impacts every public employee in this state who expects to receive the pension promised to them.
As most of you know, this law firm has proudly been at the forefront in the fight to protect and advance public employee pension rights. We filed the first civil action in the state contesting PEPRA’s reductions to your pensions in the matter of Contra Costa County Deputy Sheriffs’ Assoc. et al. v. CCCERA, and successively obtained injunctive relief halting the implementation of PEPRA for thousands of Contra Costa County public employees. Accordingly, we do not intend to sit idly by with the emergence of this latest threat to your members’ pensions. This law firm intends to submit a letter to the California Supreme Court strongly urging it to consider the matter and overturn Marin, and in the event it does consider the case, permit us to file an amicus curiae brief in support of the employees.
We will keep all of you updated as the matter progresses.
