Law Offices of Louis Spitters

California's public employees threaten suit over new pension law

In September, California Governor Jerry Brown signed a new law aimed at curbing pension spikes. Now public employee retirement systems are taking measures to comply with that law but many public employees are not happy.

Some employees have vowed to sue over the changes, arguing that they were promised they could "cash out" unused holiday or vacation time for a boost in their pensions. They are claiming that to change this would be a violation of their constitutional contract rights.

The implications could be significant for employees who are affected. For example, a union-represented employee in management with 30 years of service could boost his or her monthly pension payments by up to 24 percent by retiring this year. If he or she waits until January, the same employee would be limited to a spike of four percent.

It stands to reason that if employees had known their unused time would not in fact go toward pension payments they may have chosen to take it differently. Perhaps some employees chose to forego valuable time with their family in order to ensure their financial future. However, those difficult decisions could have been for naught.

At issue is pending lawsuit will be what is considered "salary" for the purpose of calculating pensions. For decades, pension systems have been adding payments for unused leave time, but the new law may change that, depending on how courts rule in any coming litigation.

You may have worked hard your entire life, and you are entitled to the benefits and wages that you were promised. If you are involved in a dispute with your employee surrounding pension plans or wage and hour issues, consider working with an experienced employment law attorney. They can help you ensure that your employee rights are protected while pursuing any appropriate claims for damages.

Source: The Modesto Bee, "Lawsuit certain over California law that curbs pension spikes," Daniel Borenstein, Nov. 6, 2012

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