DEPUTY SHERIFFS’ ASSOCIATION OF SAN DIEGO COUNTY, Plaintiff and Appellant, v. COUNTY OF SAN DIEGO et al., Defendants and Respondents.
No. D065364
Fourth Dist., Div. One.
Jan. 22, 2015.
233 Cal. App. 4th 573
Silver, Hadden, Silver, Wexler & Levine, Stephen H. Silver and Brian P. Ross for Plaintiff and Appellant.
Thomas E. Montgomery, County Counsel, and Timothy M. Barry, Deputy County Counsel, for Defendant and Respondent County of San Diego.
Kamala D. Harris, Attorney General, Douglas J. Woods, Assistant Attorney General, Mark R. Beckington and Anthony P. O‘Brien, Deputy Attorneys General, for Defendant and Respondent State of California.
Crowell & Moring and Steven P. Rice for Defendant and Respondent San Diego County Employees’ Retirement Association.
McCONNELL, P. J.--
INTRODUCTION
In this appeal, we consider whether the state Constitution‘s prohibition against the impairment of contracts precludes the application of the defined benefit formulas and employee contribution provisions of the California Public Employees’ Pension Reform Act of 2013 (Act) (
DISCUSSION
I
Application of Act‘s Defined Benefit Formula Provisions
A
Background
The county and the Deputy Sheriffs’ Association of San Diego County (association) were parties to collective bargaining agreements covering two groups of employees, the deputy sheriffs’ unit and the safety management unit, through June 26, 2014 (agreements). The agreements required the county to provide covered employees hired “after a date determined by the Board of Supervisors” with defined pension benefits based on a 3 percent at age 55 (3 percent at 55) formula.2
The Act became effective January 1, 2013 (
B
Analysis
The association contends the application of the 2.7 percent at 57 formula to new members who were hired and became covered by the agreements on or after January 1, 2013, but before the agreements’ expiration date of June 26, 2014, violates the state Constitution‘s contract clause. We review this contention de novo. (California Assn. of Professional Scientists v. Schwarzenegger (2006) 137 Cal.App.4th 371, 382 (Professional Scientists).)
Generally, the terms and conditions of public employment are not protected by the contract clause because they are controlled by statute or ordinance, not by contract. (Olson v. Cory (1980) 27 Cal.3d 532, 537-538; Professional Scientists, supra, 137 Cal.App.4th at p. 375.) Nonetheless, “once a public employee has accepted employment and performed work for a public employer, the employee obtains certain rights arising from the legislative provisions that establish the terms of the employment relationship--rights that are protected by the contract clause of the state Constitution from elimination or repudiation by the state.”
The association properly recognizes the new safety members covered by the agreements did not have a vested right to the application of the negotiated 3 percent at 55 formula because they had not performed any services for the county before the Act‘s effective date. Generally, ” ‘[t]he contractual basis of a pension right is the exchange of an employee‘s services for the pension right offered by the statute’ and thus ” ‘[f]uture employees do not have a vested right in any particular pension plan.’ ” ” (Professional Scientists, supra, 137 Cal.App.4th at p. 383, quoting Claypool v. Wilson (1992) 4 Cal.App.4th 646, 662; accord, City of San Diego v. Haas (2012) 207 Cal.App.4th 472, 490.)
Instead, the association contends the new safety members covered by the agreements had a constitutionally protected right to the application of the 3 percent at 55 formula because the agreements predated the Act, they were binding, and they required the use of the 3 percent at 55 formula until they expired. (
The association‘s reliance on Sonoma County Organization of Public Employees v. County of Sonoma (1979) 23 Cal.3d 296 (Sonoma County) to support its position is misplaced. The Sonoma County case involved the impairment of negotiated wage increases for existing employees. (Id., at pp. 304-305.) The case did not address the impairment of negotiated pension benefits for prospective employees. ” ‘A decision is authority only for the point actually passed on by the court and directly involved in the case.’ ” (Doe v. California Dept. of Justice (2009) 173 Cal.App.4th 1095, 1107.)
We are also not persuaded by the language in the Professional Scientists case stating: “When a collective bargaining agreement purports to secure pension rights for future employees, it may well be that the federal and state contract clauses protect the rights of future employees as much as the rights of existing employees.” (Professional Scientists, supra, 137 Cal.App.4th at p. 383.) After making the statement, the Professional Scientists court expressly declined to analyze it further and resolved the case on another ground. (Ibid.) “Incidental statements of conclusions not necessary to the decision are not to be regarded as authority.” (Simmons v. Superior Court (1959) 52 Cal.2d 373, 378; accord, In re John B. (1989) 215 Cal.App.3d 477, 481.)
To the extent Professional Scientists provides any applicable guidance, the case is unhelpful to the association. The case affirms an employee‘s contractual pension expectations are determined by the pension benefits in effect when employment commences. ” ‘By entering public service an employee obtains a vested contractual right to earn a pension on terms substantially equivalent to those then offered by the employer.’ ” (Professional Scientists, supra, 137 Cal.App.4th at p. 383, quoting Carman v. Alvord (1982) 31 Cal.3d 318, 325.)
More importantly, the case holds where, as here, a collective bargaining agreement incorporates statutorily available retirement plan options and the Legislature has not restricted itself from later changing the options, then subsequent changes applicable only to prospective employees do not violate the contract clause. (Professional Scientists, supra, 137 Cal.App.4th at pp. 383, 385-386.) The holding is consistent with the long-standing recognition “not only is the existing law read into contracts in order to fix their obligations, but the reservation of the essential attributes of continuing
II
Application of Act‘s Employee Contribution Requirements
A
Background
For covered employees hired after January 1 and before July 1, 2013, the agreements required the county to pay 6 percent of the employees’ required retirement contribution, which averaged 11.19 percent of pensionable income. For covered employees hired on or after July 1, 2013, the agreements required the county to pay 3 percent of the employees’ required retirement contribution during the employees first five years of continuous service and 6 percent thereafter. Conversely, the Act generally requires new members to pay at least 50 percent of the defined benefit plan‘s normal cost, which is 12.58 percent of pensionable income for safety members covered by the 2.7 percent at 57 formula, and employers are not permitted to pay any of this amount.6 (
B
Analysis
The association contends application of section 7522.30‘s employee contribution requirements to new members covered by the agreements resulted in a constitutionally prohibited impairment of the county‘s obligations
As relevant here,
DISPOSITION
The judgment is reversed as to the superior court‘s determination the conflicting employee contribution provisions of
Huffman, J., and McDonald, J., concurred.
Appellant‘s petition for review by the Supreme Court was denied April 1, 2015, S224690.
Notes
” ‘New member’ means any of the following: [[] (1) An individual who becomes a member of any public retirement system for the first time on or after January 1, 2013, and who was not a member of any other public retirement system prior to that date. [[] (2) An individual who becomes a member of a public retirement system for the first time on or after January 1, 2013, and who was a member of another public retirement system prior to that date, but who was not subject to reciprocity under subdivision (c) of Section 7522.02. [[] (3) An individual who was an active member in a retirement system and who, after a break in service of more than six months, returned to active membership in that system with a new employer.” (