Prof. Engineers in Cal. Government v. Brown CA1/3

Filed 2/18/15 Prof. Engineers in Cal. Government v. Brown CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

PROFESSIONAL ENGINEERS IN

CALIFORNIA GOVERNMENT et al.,

A141028

Plaintiffs and Appellants,

v.

(Alameda County

Super. Ct. No. RG13673444)

EDMUND G. BROWN, as the Governor

etc., et al.,

Defendants and Respondents.

Professional Engineers in California Government (PECG), the exclusive

bargaining representative for some 10,000 state engineers and related professionals in

state Bargaining Unit 9, appeals the denial of its petition for a writ of mandate

challenging the imposition of one-day-per-month furloughs on its members during the

2012-2013 fiscal year. PECG contends that these legislatively authorized furloughs

contravene the terms of the 2011-2013 memorandum of understanding (MOU) previously

entered with the state and approved by the Legislature, thus unconstitutionally impairing

the terms of a binding labor contract. As the trial court held, however, the terms of the

MOU did not preclude imposition of the furloughs, the furloughs and consequent salary

reductions were in full compliance with California law, and there was no impairment of

contractual rights. We shall therefore affirm denial of the writ.

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Background

Although the parties’ briefing recounts the history of the public employee

furloughs and furlough litigation that arose out of California’s recent fiscal crisis,

beginning with two-days-per-month furloughs imposed for the period from February 1,

2009, through June 30, 2010, the issue in this case can be stated and analyzed quite

simply, without belaboring the history of these events. In March 2011, PECG and the

Department of Personnel Administration, now the California Department of Human

Resources, agreed to the terms of a Unit 9 MOU for the period April 1, 2011, through

July 1, 2013. The agreement was subsequently ratified by the members of PECG,

approved by the Legislature in Senate Bill No. 151 (Stats. 2011, ch. 25), and signed into

law by the Governor on May 16, 2011. Article 5.14 of the MOU provides for a “Personal

Leave Program 2011” as follows: “Effective with the pay period following agreement

and then continued for 12 months, full time bargaining unit employees shall be subject to

a personal leave program (PLP 2011) eight (8) hours per month in the manner outlined

below: [¶] 1. Effective with the pay period following agreement each full time

employee’s monthly pay shall be reduced by 4.62%. However, salary rates and salary

ranges shall remain unchanged. PLP 2011 shall end after 12 pay periods.” The PLP was

thus in effect from June 2011 through May 2012. Article 26, subdivision (A) of the MOU

provides: “Due to the savings achieved through this contract, the State shall not

implement a new furlough program during the months employees participate in the

Personal Leave (PLP) 2011.”

Unlike the majority of the state’s 21 bargaining units, PECG was unable to reach

agreement with the Department of Human Resources to an extension of the personal

leave program and consequent reduction in employee compensation beyond May 2012.

Following an impasse in negotiations, the Legislature enacted and the Governor signed

Assembly Bill No. 1497, which amended section 3.90 of the Budget Act of 20121 to read

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The Budget Act of 2012 was embodied in Assembly Bill No. 1464 (Stats. 2012, ch. 21),

but the relevant provisions of that act were superseded by the provisions of Assembly Bill

1497. (Stats. 2012, ch. 29, § 69.) Contrary to PECG’s assertion , the constitutional

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as follows: “(a) Notwithstanding any other provision of law, each item of appropriation,

with [certain] exception[s] . . . , shall be reduced, as appropriate, to reflect reductions in

employee compensation in the total amounts of $401,716,000 from General Fund items

and $437,413,000 from items relating to other funds. These reductions shall be achieved

through any combination of the following: (1) memoranda of understanding reached

pursuant to Section 3517.5 of the Government Code, (2) furloughs, and (3) other

reductions for nonrepresented employees achieved with existing administration and

statutory authority. [¶] The Director of Finance shall allocate the necessary reductions to

each item of appropriation (Budget Act and non-Budget Act) to accomplish the employee

compensation reductions required by this section.” (Stats. 2012, ch. 29, § 69.) At the

same time, the Legislature also enacted, and the Governor signed, Senate Bill 1006,

which modified Government Code section 19849 to read: “Notwithstanding any other

law, the department shall adopt a plan for the period from July 1, 2012, to June 30, 2013,

inclusive, by which all state employees not subject to the Personal Leave Program 2012

(PLP 2012 Program), as described in subdivision (c) of Section 19851, shall be

furloughed for one workday per calendar month. The department shall further adopt rules

for the implementation, administration, and enforcement of this furlough plan. . . . .”

(Stats. 2012, ch. 32, § 20.)

On July 5, 2012, the Department of Human Resources issued a memorandum

implementing the furlough program for members of Unit 9, requiring furloughs one

workday per month for 12 months and reducing base salaries during that period by 4.62

percent. In March 2013, PECG filed its petition seeking cancellation of the furlough

program, alleging that the legislation “purporting to authorize furloughs constitute[s] an

impairment of contract in violation of the Federal and State Constitutions.” Following

briefing and argument, the trial court issued a thorough opinion, holding that “as a matter

of contract interpretation . . . the MOU does not preclude imposition of a furlough in the

contracts clause did not preclude amendment of the budget act to provide for furloughs

following passage of Assembly Bill No. 1464. (See Professional Engineers v.

Schwarzenegger (2010) 50 Cal.4th 989, 1005, 1043.)

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MOU’s second year. The MOU does not contain any provision or clause that required the

State to employ PECG’s members a certain number of days per year or month or that

precluded the State from imposing a furlough program or otherwise limiting the hours of

work for PECG members. In the absence of a contract term precluding a furlough, the

Legislature has the ability to impose an employee furlough. (Professional Engineers [v.

Schwarzenegger, supra], 50 Cal.4th at [p.] 1048.)” This timely appeal from the ensuing

adverse judgment followed.

Discussion

PECG’s entire argument rests on the premise that the 2011-2013 MOU contains

the implicit agreement that no furloughs would be imposed for the length of the

agreement. As the trial court held, this contention cannot be upheld as a simple matter of

contract interpretation. The MOU adopted a one year “personal leave program,”

producing the same financial result as monthly furloughs, and provided that while that

program was in effect there would be no additional furloughs. This commitment was

observed. However, the MOU said nothing about the possibility of imposing furloughs

when the personal leave program expired. In agreeing that “the state shall not implement

a new furlough program during the months employees participate” in the personal leave

program, the obvious inference is that there was no such commitment beyond the

expiration of that program. The inference is strengthened by the parties’ certain

awareness of the decision of the California Supreme Court only months before holding

that the Legislature retains “ultimate control (through the budget process) over

expenditures of state funds required by the provisions of an MOU.” (Professional

Engineers v. Schwarzenegger, supra, 50 Cal.4th at p. 1043.) PECG argues that imposing

the furloughs, with the consequent reduction in compensation and hours worked, was

inconsistent with the salary range and work-week schedules incorporated in the MOU.

However, as the trial court correctly held, those schedules “do not address the issue of

furloughs.” (See id. at pp. 1026-1029, 1037.)

Moreover, were there any doubt about the meaning of these provisions in the

MOU, there is another fundamental reason for which the agreement cannot be understood

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to have committed the state to refrain from imposing furloughs after May 2012. As

Professional Engineers reaffirmed, financial commitments, such as the payment of

salaries, contained in an MOU are subject to approval by the Legislature. Government

Code section 3517.6, subdivision (b) provides explicitly, “If any provision of the

memorandum of understanding requires the expenditure of funds, those provisions of the

memorandum of understanding may not become effective unless approved by the

Legislature in the annual Budget Act.” Mirroring this statutory provision, section 3 of

Senate Bill No. 151, by which the Legislature approved the Unit 9 MOU, provides

explicitly: “The provisions of the memoranda of understanding approved by Section 2 of

this act that are to take effect on or after April 1, 2011, and that require the expenditure of

funds, shall not take effect unless funds for these provisions are specifically appropriated

by the Legislature. If funds for these provisions are not specifically appropriated by the

Legislature, the state employer and the affected employee organization shall meet and

confer to renegotiate the affected provisions.” (Italics added.) Since the Legislature did

not appropriate funds to compensate employees during the furlough periods, the MOU

did not require any such compensation and the imposition of the furloughs was not

inconsistent with the terms of the MOU. (See also, e.g., White v. Davis (2003) 30 Cal.4th

528, 572-573.)

Disposition

The judgment is affirmed.

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_________________________

Pollak, J.

We concur:

_________________________

McGuiness, P. J.

_________________________

Jenkins, J.

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