Second Legal Challenge to PEPRA (AB 197) Results in Stay of Implementation
Organized Labor scored a second victory in the push back against the overreaching Assembly Bill 197 (“AB 197”), which would alter the calculation of pension benefits for current employees starting January 1, 2013.
On December 12, 2012, the Alameda County Superior Court granted a temporary “stay order” which prohibits the Alameda County Employees' Retirement Association (“ACERA”) from implementing AB 197 (Government Code section 31461). AB 197, which is an element of the California Public Employees' Pension Reform Act (“PEPRA”), proposes to redefine the calculation for current employees' pension benefits. Specifically, AB 197 would exclude from the pension benefit calculation any form of compensation that was paid to enhance a retirement association member's retirement benefit. ACERA interpreted AB 197 to exclude a wide variety of “pay codes” from the pension benefit calculation, such as standby and call-back pay. Exclusion of these pay codes from the pension benefit calculation would, of course, result in a reduction in members’ pension benefits.
The Alameda County Deputy Sheriffs' Association initiated the litigation. Several other unions, including the Service Employees International Union, Local 1021 and Teamsters Local Union No. 856, have already intervened in the litigation and have filed their own complaints against ACERA. The basic theory of the unions' lawsuits is that AB 197 is unconstitutional because it impairs the vested rights of employees in their pension benefits, which have been promised to them since they accepted public employment. Although ACERA has indicated that it does not intend to defend the constitutionality of AB 197, it is expected that a State entity will intervene to defend the bill’s constitutionality.
PEPRA-related litigation will most likely spread throughout the State. If you have inquiries regarding PEPRA, please contact our office at 510.337.1001.
Author: Sean D. Graham
