California Supreme Court Rejects Charter City Attack on MOU’s

August 6, 2013 by Dalisai Nisperos

In a California public labor law case, City of LA v. Superior Court of LA, the California Supreme Court rejected a charter city’s argument that it has the unilateral authority to furlough employees and need not arbitrate the employees’ claim that the furloughs violate their MOU.

After it declared a fiscal emergency, the City of Los Angeles adopted an ordinance that allowed it to impose mandatory furloughs on city employees.  Approximately 400 city employees represented by the Engineers & Architects Association (the “Union”) filed grievances asserting that the furloughs violated the wage and workweek terms of their MOU.  The City not only denied the grievances, arguing that the furloughs were a valid exercise of its discretion pursuant to the management rights clause of the MOU, but also refused to arbitrate the dispute.

The Union prevailed upon its petition to compel arbitration but the Court of Appeal reversed.  The Court of Appeal reasoned that if the City were compelled to arbitrate the dispute, then the salary setting and budget making discretionary powers vested in city council by the city charter would be improperly delegated to the arbitrator.

A charter city is governed according to the terms of a charter document, which vests a charter city with the authority to create and enforce its own laws.  Consequently, elected officials of a charter city have executive powers over the day to day operations of the city.  By contrast, a general law city that has not adopted a charter is organized under state, regional and federal law and has less authority over legislation, finance and other city matters.

On appeal, the California Supreme Court ruled in favor of the Union.  The Supreme Court found that arbitrating the furlough dispute would not delegate the City’s discretionary authority to the arbitrator.  The arbitrator would only determine whether mandatory furloughs violated the sections of the MOU that governed salaries and city budgets but would not make substantive decisions about those matters.

In this decision (City of LA v. Superior Court of LA), the Supreme Court has reconfirmed the binding nature of MOU’s entered into by charter governments.

Since the 1930’s, Beeson, Tayer and Bodine’s primary focus has been the representation of unions and employees in the public and private sectors. We provide legal advice on labor and employment law including collaborative labor relations.  We are available to work with unions and city and company officials to ensure employees are treated fairly. Please contact one of our California experienced labor law attorneys to discuss your circumstances should you have a labor issue related to federal or California state employment law.

The material on this website is provided by Beeson, Tayer & Bodine for informational purposes only and does not constitute legal advice. Readers should consult with their own legal counsel before acting on any of the information presented. Some of the articles are updated periodically, and are marked with the date of the last update. Again, readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.