Employer’s Implementation of PEPRA 2012 Breaches MOU
January 20, 2014 by Teague Paterson
Beeson, Tayer and Bodine (BT&B) law firm has been a defender of union and employee rights for over 75 years. This recent grievance by Local 101 of the American Federation of State, County and Municipal Employees (AFSCME) was settled by an arbitrator in favor of the Union. In September 2012 Governor Brown signed the Public Employees Pension Reform Act of 2012. This hastily-drafted legislation, with an effective date of January 1, 2013, provided, among other things, for the adoption of a 2%-at-62/2.5%-at-67 pension plan for miscellaneous employees hired after its effective date (the law mandates a different benefit for safety employees). In enacting this requirement, it appears the drafters did not consider the fact that many public employers are bound by memoranda of understanding (“MOUs”) that set forth the benefits to be provided employees during the term of the agreement. Such was the case with AFSCME Local 101 and the Santa Clara Valley Water District (“District”), which took the position that it must implement PEPRA, including a PEPRA-compliant tier for new hires that provided benefits lesser than those contained in the parties’ MOU which was not set to expire for another two years.
The Union grieved the District’s mid-contract adoption of a new tier, and in December arbitrator Barry Winograd issued a decision sustaining the grievance and finding that the District’s unilateral implementation of PEPRA “violated public sector labor law in California.” The arbitrator concluded PEPRA did not justify the District’s action because PEPRA “is silent as to its impact on pension formulas under existing labor agreements” and, because it is silent on the subject, it “does not constitute a supersession provision excluding the PEPRA from restrictions generally applicable to MOUs in California public employment.” On that basis the Arbitrator ordered the District to return AFSCME members hired since PEPRA’s effective date into the pension tier originally provided under the parties’ MOU and otherwise make them whole.
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