New School Funding Scheme Does Not Eliminate Immunity From Federal Damage Claims

August 2017
Number 46

Changes to California’s school funding scheme did not eliminate local school district and county office of education immunity from federal claims for damages, the Ninth Circuit Court of Appeals has ruled.

In Sato v. Orange County Department of Education (9th Cir. 2017) ___ F.3d ___, the Ninth Circuit affirmed that California school districts and county offices of education retain their absolute defense to claims for damages in federal court due to sovereign immunity under the United States Constitution’s Eleventh Amendment, regardless of changes to California’s school funding scheme resulting from Assembly Bill (AB) 97’s creation of the Local Control Funding Formula (LCFF).

The Eleventh Amendment

The Eleventh Amendment bars federal lawsuits for damages against California and “arms of the state.” While the Eleventh Amendment “sovereign immunity” defense does not extend to counties and municipal corporations, it does extend to California community college districts, school districts, and county offices of education.

Background

Michael Sato was a systems database architect for the Orange County Department of Education (OCDE). After OCDE fired Sato within weeks of starting his job, he filed a federal lawsuit alleging breach of contract, wrongful termination and various federal constitutional claims. The district court granted OCDE’s motion to dismiss Sato’s constitutional claims for damages based on its sovereign immunity under the Eleventh Amendment. Sato subsequently dismissed his state law breach of contract claim voluntarily and appealed the dismissal of his federal claims to the Ninth Circuit, which affirmed the district court’s ruling and held that AB 97 did not abrogate sovereign immunity for school districts and county offices of education as previously established inBelanger v. Madera Unified School District (9th Cir. 1992) 963 F.2d 248 and Eaglesmith v. Ward (9th Cir. 1996) 73 F.3d 857.

The central question before the Ninth Circuit in Sato was whether, after AB 97’s establishment of the LCFF, school districts and county offices of education retained their status as “arms of the state” entitled to Eleventh Amendment immunity. In concluding that such entities, including OCDE, remain arms of the state, the court analyzed five factors:

  • Whether a money judgment would be satisfied out of state funds;
  • Whether the entity performs central governmental functions;
  • Whether the entity may sue or be sued;
  • Whether the entity has the power to take property in its own name or only the name of the state; and
  • The corporate status of the entity.

Since state and local revenue for schools remain commingled in a single fund under state control, even under the new funding system, the court determined that any use of commingled funds to satisfy a judgment necessarily amounts to the use of state funds. The court also held that OCDE performs central government functions, relying on prior case law that says that California law treats public schooling as a statewide or central government function. The court held that the first and second factor weighed in favor of Eleventh Amendment immunity and that AB 97 did not impact the analysis of the remaining three factors.

Applying the five-factor test, the Ninth Circuit upheld the trial court’s decision and found that AB 97, which significantly reformed the financing and governance of California public schools, did not change the fact that school districts and county offices of education remain entitled to sovereign immunity under the Eleventh Amendment, thus barring claims for damages against them in federal court-whether based upon state or federal law.

Takeaways

Sato presented a novel argument: that the passage of AB 97, which reformed public education financing and decentralized education governance, abrogated previous Ninth Circuit decisions supporting that school districts and county offices of education are entitled to state sovereign immunity. However, the court held in Sato that school districts and county offices of education remain arms of the state and cannot be sued for damages in federal court.

The Eleventh Amendment defense for California’s community college districts also remains undisturbed by the Sato opinion.

Lozano Smith represented the Madera Unified School District in theBelanger case, which first established Eleventh Amendment immunity for California school districts facing damage claims in federal court.

For more information on the Sato decision or on school district and county office of education immunity from federal damage claims, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Sloan R. Simmons

Partner

Lauren A. Lymen

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Employers Must Provide Information on Rights of Domestic Violence, Sexual Assault and Stalking Victims

July 2017
Number 39

California employers with 25 or more employees must now inform their employees in writing about the legal rights of domestic violence, sexual assault and stalking victims. Employers, including public agencies, must provide this information using the form prepared by the California Labor Commissioner or in a notice that is substantially similar to the Labor Commissioner’s form in content and clarity. The form must be provided to new employees upon hire and to other employees upon request.

California law permits victims of domestic violence, sexual assault and stalking to take time off from work to seek court intervention to help ensure the health, safety or welfare of themselves or their children. Victims may also take time off to seek medical attention, to obtain psychological counseling and other support services or to participate in safety planning.

Victims must give employers reasonable advance notice of their intention to take time off, unless providing advance notice is not feasible. If a victim takes an unscheduled absence, his or her employer must not take any action if the victim, within a reasonable time, provides proof that the absence was covered under the law. Victims may also request reasonable safety accommodations at work, which employers must provide. Employers may not retaliate or discriminate against a victim for taking time off or requesting reasonable accommodations.

Assembly Bill (AB) 2337, which became effective January 1, 2017, introduced a new requirement that employers with 25 or more employees inform employees of these rights. Employers were excused from compliance with this requirement until the Labor Commissioner prepared an information form and posted it on its website. The Labor Commissioner recently published the form, entitled “Rights of Victims of Domestic Violence, Sexual Assault and Stalking,” which is available here (English) and here(Spanish).

Violations of the laws governing victims’ leave and accommodations can result in civil liability and, in some cases, criminal liability. If you have any questions regarding victims’ leave and accommodations or other employment-related matters, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Steven A. Nunes

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

New Law Requires Union Access to Employee Orientation Sessions

June 2017
Number 34

Governor Jerry Brown has signed legislation that requires public agency employers to give union representatives access to new employees during orientation sessions. The bill, which went into effect immediately after Brown signed it on June 27, is part of Assembly Bill (AB) 119, a budget trailer bill.

The bill is a product of the efforts by unions representing public employees to mitigate the impact of an anticipated United States Supreme Court decision that could make union dues in public agencies voluntary. Under current law, public agency employees who opt out of participating in their union may be required to pay fees to cover union services including collective bargaining.

AB 119 requires public agency employers to grant union representatives access to new employee orientations, which are defined as onboarding processes conducted in person, online or by other means in which new employees are advised of their employment status, rights, benefits, duties and responsibilities. The structure, time and manner of access is subject to negotiations. This new law also requires that negotiations must be conducted during the period between the effective date of the bill and the expiration of a union’s existing contract.

Public agency employers must give their unions at least 10 days’ notice of a new employee orientation session, unless the employer and the bargaining unit reach an alternate agreement or in specific cases where an urgent, unforeseeable need prevents it. It also requires public agency employers to provide the names, job and contact information for new employees to unions within 30 days of hire or by the first pay period of the month following a hire, even if the employee previously worked for the district. Public agencies must provide the same information about all bargaining unit members every 120 days, though public agency employers and unions may negotiate the provision of more detailed lists or different time intervals for providing the information regarding new employees or bargaining unit members.

If a public agency and a union are unable to reach an agreement on the structure, time and manner of access, the dispute is subject to compulsory interest arbitration which means that that arbitrator has the authority to dedicate the terms of the agreement. Alleged violations of the new law may be addressed by the Public Employment Relations Board (PERB).

The budget trailer bill is less prescriptive than last year’s Assembly Bill (AB) 2835, which would have required public agency employers to hold in-person new employee orientations every four months during work hours, and also to allow unions to conduct 30-minute presentations during the first half of these orientations. That bill would also have required public agency employers to provide contact and job description information about bargaining unit members to unions every 90 days.

AB 119 gives public agency employers the opportunity to work with their labor partners to negotiate terms for access to employee orientations that are workable for the employer and meaningful to the union. There are a variety of options for implementing the requirements of this legislation, including airing a videotaped presentation from the union during employee orientations or allowing for an in-person presentation by a union representative. Public agency employers are encouraged to review existing collective bargaining agreements to determine if existing language conflicts with AB 119 and negotiate any necessary change, or develop, through negotiations, language to implement the terms of AB 119.

Lozano Smith has been tracking this legislation and court cases on union dues closely and is ready to assist public agencies with the implementation of these new mandates. A Frequently Asked Questions document that offers more details on the bill is available below. For more information on these new mandates, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

FREQUENTLY ASKED QUESTIONS

Q: What does this bill require public agencies to do?
A: Assembly Bill (AB) 119 requires public agencies to provide unions with access to new employee orientation sessions. It also requires public agencies to provide unions with names and contact information of new employees in bargaining unit positions.
Q: What was the reason for this bill?
A: Unions representing public employees sought this legislation because there is at least one case pending before the United States Supreme Court that could result in the Court ruling that union dues are voluntary, which could greatly reduce revenues for public employee unions. Currently, public employees who opt out of union membership are often required to pay service fees to cover the cost of negotiations and other union-provided services.
Q: When does the bill go into effect?
A: The bill went into effect immediately after the Governor signed it on June 26, 2017.
Q: Does the bill require public agencies to conduct face-to-face orientations?
A: No. Orientations may be conducted in person, online or by other means.
Q: Does the bill spell out when and how access must be provided?
A: No. The structure, time and manner of access are all subject to negotiations. However, the bill does, in the absence of an alternate agreement, require public agency employers to give unions at least 10 days’ notice before holding an employee orientation, except in specific instances where there is “an urgent need critical to the employer’s operations that was not reasonably foreseeable.”
Q: When should negotiations over access take place?
A: Negotiations must take place between the effective date of the bill and the expiration of a union’s contract.
Q: What happens if we can’t reach an agreement with the union on the structure, time and manner of access?
A: If any dispute that occurs during negotiations over access is not resolved within 45 days after the first meeting of the parties or 60 days after the initial request to negotiate, either side may make a demand for compulsory “interest arbitration.”
Q: What is “interest arbitration?”
A: “Interest arbitration” is one in which the arbitrator has the authority to determine the terms that will resolve the dispute, i.e. dictate the terms of the resolution to the parties.
Q: Couldn’t unions demand to bargain their role in employee orientations prior to AB 119?
A: Yes, unions could bargain their role in employee orientations prior to AB 119 taking the position that such participation was necessary in order to fulfill their representational rights under the EERA and because it impacted terms and conditions of employment.
Q: My agency hires new employees continuously, which will make it difficult to provide the notice and access the bill requires. How can I comply?
A: The bill permits public agencies and unions to reach an agreement that differs from the requirements of the new law. For example, public agencies could seek to negotiate an arrangement with their labor unions to provide access via a video aired at all in-person orientations or provided along with other orientation materials if orientations are conducted online.
Q: What information does the bill require public agencies to provide to unions?
A: Public agencies must provide the union a new employee’s name; job title; department; work location; work, home and personal cell phone numbers; personal email addresses on file with the agency; and home address, within 30 days of hire or by the first pay period of the month following the hire, even if the employee previously worked for the district. The bill also requires public agencies to provide the same information about all bargaining unit members every 120 days, though public agency employers can negotiate agreements with their unions to provide more detailed lists of information or different intervals for providing information about new employees and bargaining unit members. Public agency administrators may wish to work with their human resources departments to find out whether the generation of these lists can be automated to save time and ensure consistent compliance.
Q: What if an employee doesn’t want to stay to hear from the union?
A: The law only requires public agency employers to provide unions with access to new employees and to information on new employees and bargaining unit members. It does not require that an employee stay to hear from the union. This would be the employee’s choice.
Q: What happens if the union believes the public agency is violating the law?
A: Disputes may be submitted to the Public Employment Relations Board (PERB).

Written by:

Louis T. Lozano

Partner

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

DFEH Releases Guidelines on Anti-Harassment Policies, Training and Notice Regulations

June 2017
Number 33

The Department of Fair Employment and Housing (DFEH) recently released a Workplace Harassment Guide that includes recommended practices to enable employers to comply with California Fair Employment and Housing Act (FEHA) regulations aimed at preventing, investigating and addressing workplace harassment. DFEH also issued guidance and a poster related to identifying and addressing sexual harassment in the workplace.

Effective April 1, 2016, California employers became subject to new regulations under FEHA which prohibit workplace discrimination and harassment. The new anti-harassment regulations require employers to adopt and distribute written policies on unlawful harassment, including how complaints of prohibited conduct should be filed. The new regulations also require employers to provide trainings on prohibited harassment, discrimination, and abusive conduct. (For more details regarding these FEHA regulations, see 2016 Client News Brief No. 30.)

DFEH’s Workplace Harassment Guide provides valuable guidance on what employers can do to ensure an effective anti-harassment program and provides recommended practices for conducting workplace investigations. The guide’s recommendations include:

  • If an employer receives a report of harassment, including an anonymous complaint, the employer should give the complaint “top priority” and determine if the complaint may be resolved informally or if a formal investigation is necessary.
  • Investigations should be fair and should include:
    • A thorough interview with the complainant, preferably in person;
    • An opportunity for the accused to respond and tell his/her side of the story;
    • Interviews of relevant witnesses and a review of relevant documents; and
    • A conclusion based on the information collected, reviewed and analyzed.
  • Employers can only promise limited confidentiality of the complaint, in part because the identity of the complainant can often be determined based on the allegations. Also, it is rarely appropriate for an employer to fail to investigate a complaint because an employee asks their employer to keep the complaint confidential.
  • Whether employers may direct employees to not discuss a pending investigation is a complicated issue. Employers should consult with legal counsel prior to giving such a directive. (For the Public Employment Relations Board’s determination on “no contact” admonitions, see 2015 Client News Brief No. 3.)
  • Investigations should be started and conducted promptly. Further, investigations should be fair, thorough, and conducted by a neutral investigator. Employers should also consider whether the investigator will be publicly perceived as unbiased.
  • An investigator can reach a reasonable conclusion in a “he said/she said” situation based on an assessment of witness credibility.
  • Investigators should document witness interviews, steps taken in the investigation and findings made.
  • Investigators should make findings of fact (not legal conclusions) based on a “preponderance of the evidence” standard. “Preponderance of the evidence” means that it is more likely than not that the alleged conduct occurred.
  • Misconduct should be addressed through remedial measures. Remedial measures recommended by DFEH include training, verbal counseling and discipline.
  • Retaliation can occur at any time, and complainants and witnesses must be protected from retaliation.

In addition to DFEH’s guidance, school and community college districts should be mindful of their own policies and procedures for conducting investigations, which may include specific timelines and investigation procedures, as well as applicable collective bargaining agreements.

Lozano Smith has a team of attorneys experienced in conducting investigations of complaints, including employee and student complaints alleging discrimination and harassment. For more information, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Stephanie M. White

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

High Court Declines to Review Ruling on Cash in Lieu Payments

June 2017
Number 28

The United States Supreme Court has denied review of a Ninth Circuit Court of Appeals ruling that cash payments made to employees in lieu of benefits must be included as pay when calculating their overtime pay rate under the Fair Labor Standards Act (FLSA). On May 15, 2017, the Court denied the City of San Gabriel’s petition for review of Flores v. City of San Gabriel (2016) 824 F.3d 890 (Flores), allowing the decision to remain legal precedent.

Flores provides narrow interpretations of exemptions to the FLSA when calculating an employee’s “regular rate of pay” and a broad definition of what constitutes an employer’s “willful” violation of the FLSA. This ruling also highlights the importance of employers carefully reviewing all payments made to employees to determine if the payments must be included in calculations of the employee’s regular rate of pay for purposes of overtime.

In Flores, a group of police officers sued the City of San Gabriel (the City) for overtime pay they said they were owed under the FLSA. The City had a flexible benefit plan which allowed employees to forego medical benefits if they had alternative coverage. Employees who made this election received the unused portion of their benefit allotment as a cash payment added to their regular paycheck. The police officers argued that the City should have included these payments when calculating their overtime pay rate. The officers also argued that the City’s violation of the FLSA was “willful” and thus triggered an extension of the two-year limit on back pay that could be recovered.

Under the FLSA, an employer must pay its employees overtime compensation of one and one-half times the “regular rate of pay” for any hours worked in excess of 40 hours in a seven-day work week. An employee’s “regular rate of pay” must include all remuneration for employment paid to, or on behalf of, the employee, unless the payment is excluded as set forth in the FLSA. The FLSA allows employees to sue for unpaid wages owed to them within a two-year statute of limitations for claims unless an employer’s violation of the law was “willful,” in which case the statute of limitations is extended to three years.

The Ninth Circuit held that the City’s cash-in-lieu of benefits payment may not be excluded as exemptions to the FLSA and therefore must be included in the calculations of the plaintiffs’ “regular rate of pay,” rejecting the City’s argument that the cash-in-lieu benefits were exempt because the payments were not tied to hours worked or amount of services provided by the plaintiffs. The court reasoned that the City’s interpretation contradicted a regulation implementing the FLSA which provides that a payment may not be excluded from regular rate of pay if it is generally understood as compensation for work, even though the payment is not directly tied to specific hours worked by an employee. The court further determined that the FLSA exemption did not apply because the unused benefits were paid directly to the employees and not a “trustee or third person.”

The court also deemed the City’s violation of the FLSA “willful,” saying that the City did not put forth any evidence of any actions it took to determine whether its treatment of cash-in-lieu of benefits payments complied with the FLSA, despite full awareness of its obligation to do so. (For more details on the decision, see 2016 Client News Brief No. 47.)

The court’s narrow interpretation of the FLSA exceptions for calculating “regular rate of pay” could have a significant impact on the way agencies pay employees and provide benefits. This interpretation of the FLSA means that employers must be cautious when offering cash-in-lieu of benefits payment programs to employees because of the consequences such offers may have on overtime payment calculations.

The broad interpretation of what constitutes an employer’s “willful” violation of the FLSA requires employers to be proactive when even the slightest possibility of violating the FLSA arises. The ruling emphasizes the importance of conducting and documenting regular review of payments made to employees and a determination of whether they must be included in the employee’s regular rate of pay for purposes of overtime. Determining whether a specific payment fits into one of these statutory exclusions and is therefore properly excluded from the regular rate of pay involves a highly fact-specific analysis. To that end, case law, regulations and the Department of Labor provide extensive guidance regarding how specific forms of common arrangements are treated under these exclusions, and legal counsel should be consulted as needed during an analysis of whether a particular payment should be included in the regular rate of pay.

For more information on the Flores case or FLSA claims in general, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Jayme A. Duque

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Proposed Amendments to CalSTRS Creditable Compensation Regulations Have LCAP Implications

May 2017
Number 26

Proposed amendments to the California State Teachers’ Retirement System (CalSTRS) creditable compensation regulations would allow employers to establish a class of employees based upon employment in a program established under a Local Control and Accountability Plan (LCAP). The proposed amendments modify the CalSTRS creditable compensation regulations that came into effect on January 1, 2015.

CalSTRS member benefits are based in part on the “creditable compensation” paid during a defined period of months during a member’s career. Creditable compensation consists of “base salary” and certain types of “remuneration
in addition to salary” paid in cash to the employee by a CalSTRS employer to all persons in the same “class of employees” for performing creditable service in that position. A class of employees is typically established in
one of two ways: (1) the CalSTRS members are employed to perform similar duties; or (2) the CalSTRS members are employed in the same type of program. (Ed. Code, § 22112.5; Cal. Code Regs., tit. 5, § 27300.) Currently, the regulations define a “program” as any educational program established pursuant to state or federal law. (Cal. Code Regs., tit. 5, § 27300, subd. (a)(2)(A).)

The proposed amendments expand the regulatory definition of a “program” to include a local educational program established under an LCAP. This change is significant because employees in different programs can be in different
classes even if they perform similar duties. If employees in an LCAP program are treated as a separate class, they could have a longer work day, a different work year, and potentially a separate salary schedule that recognizes additional hours or days worked with a higher base salary.

Creating a separate salary schedule for employees in an LCAP program could eliminate the need to compensate those employees for extra work in the program through a stipend. This could also make clear that the additional days or hours are part of the base work year for the separate class and therefore all related earnings would be creditable to the defined benefit plan. As currently structured, many stipend payments ultimately end up credited to the member’s defined benefit supplement account because the additional service for which the stipend is paid is considered “service in excess of a year.”

If the CalSTRS Teachers’ Retirement Board adopts the proposed amendments, employers that wish to place CalSTRS members employed in LCAP programs in separate classes and utilize separate salary schedules will need to consider legal implications such as members’ collective bargaining rights and uniform salary schedule requirements. The public comment period for the proposed amendments ended on April 25, 2017. The board may review the proposed amendments for adoption as early as June 2017. For a copy of the modified text of the proposed regulations, click here.

For a copy of Lozano Smith’s co-authored article with ACSA explaining the 2015 creditable compensation regulations in greater detail, click here.

Lozano Smith continuously tracks the CalSTRS regulatory process and precedential CalSTRS decisions. If you have any questions about the new CalSTRS creditable compensation regulations or how retirement law governs public schools and their employees, please contact the authors of this Client News Brief or an attorney at one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Steven A. Nunes

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Meet-and-Confer Requirement Does Not Apply to Pension Reform Measure Placed on Ballot through Voter Initiative Process

April 2017
Number 20

In Boling v. Public Employment Relations Board (Apr. 11, 2017, D069626) ___ Cal.App.4th ___ (Boling), the Fourth District Court of Appeal invalidated a decision by the Public Employment Relations Board (PERB) holding that a city council violated the Meyers-Milias-Brown Act (MMBA) by placing a voter initiative to amend the city’s charter on the ballot without first meeting and conferring with the unions representing affected city employees. In doing so, the court rejected PERB’s reasoning that the mayor’s public support of the initiative effectively transformed it from a voter initiative to a city council-sponsored ballot proposal subject to meet-and-confer requirements.

This case addresses a longstanding issue. In a 1984 case, People ex rel. Seal Beach Police Officers Assn. v City of Seal Beach, the California Supreme Court concluded that a charter amendment proposed by a governing body is subject to the MMBA’s requirements, but cautioned that the case did “not involve the question whether the meet-and-confer requirement was intended to apply to charter amendments proposed by initiative.” Three decades after Seal Beach, a California appellate court has addressed that question for the first time.

The Boling case traces back to a City of San Diego decision on an issue that rarely evades controversy: public employee pension plans. In 2010, the city’s mayor and a city councilmember separately announced plans to replace the city’s existing defined benefit pension plans with 401(k)-style defined contribution plans for new hires. Ultimately, supporters of the mayor’s proposal and of the city councilmember’s competing proposal joined forces to produce an initiative to adopt a charter amendment mandating changes to pension plans for new hires.

The California Constitution provides two options for proposing an amendment to a city charter: an initiative qualified for the ballot through signed voter petitions, or a ballot measure sponsored by the governing body of the city. Rather than pursuing a ballot measure sponsored by the San Diego City Council (City Council), which the mayor believed the City Council would not place on the ballot “under any circumstances,” he launched a citizens’ initiative for his pension reform proposal. The parties to the case never disputed the fact that the mayor and his staff assisted in drafting the proposal and in campaigning for the citizens’ initiative.

In the summer of 2011, proponents of the proposal circulated a voter petition to place the initiative on the ballot. Meanwhile, a municipal employees’ union wrote to the mayor and asserted that the MMBA required the city to meet and confer over the initiative before it could be placed on the ballot. The city disagreed and refused to do so. In November 2011, the county’s registrar of voters reviewed and certified the petition. Subsequently, the City Council passed a resolution of its intention to put the measure on the ballot.

In January 2012, the union filed an unfair practice charge. Other unions followed suit. Later that month, the City Council enacted an ordinance placing the initiative on the June 2012 ballot. Shortly thereafter, PERB issued a complaint against the city and ordered an expedited administrative hearing. PERB also filed a superior court action seeking a preliminary injunction to bar the city from putting the initiative on the ballot. The trial court denied PERB’s request for an injunction and the voters overwhelmingly approved the initiative in June 2012.

However, the proceedings before PERB continued and the case went to a hearing in July 2012. At the conclusion of the PERB hearing, the administrative law judge (ALJ) issued a proposed decision determining that the mayor, acting under the color of his elected office and with support of councilmembers and the city attorney, violated the MMBA by denying the unions the opportunity to meet and confer over the mayor’s decision to launch and pursue the initiative. The ALJ further determined that since the mayor was an agent of the city, and because the city ratified the mayor’s policy decision, the obligation to meet and confer extended to the city. PERB agreed and issued a decision consistent with the ALJ’s proposed decision.

The city and the initiative’s proponents filed separate petitions for writs of extraordinary relief with the Fourth District Court of Appeal challenging PERB’s decision, which the Court of Appeal consolidated for purposes of its decision.

The Court of Appeal disagreed with PERB’s conclusions and determined that the MMBA’s meet-and-confer requirement does not apply when a proposed charter amendment is placed on the ballot by citizen proponents through the initiative process. Instead, only a governing body-sponsored proposal willtrigger the meet-and-confer requirement.

Central to the court’s analysis was the principle that procedural requirements that govern city council action generally do not apply to citizen-sponsored initiatives. Unlike a charter amendment proposed by a city council, a voter-initiated charter amendment proposal must be placed on the ballot; the city council has no discretion to decide otherwise. (Elec. Code, § 9255.) In contrast, a city council’s vote to adopt a ballot proposal for submission to its voters is discretionary and is thus subject to certain procedural constraints, including the requirement to negotiate. Moreover, the court reasoned, the MMBA’s meet-and-confer provisions expressly refer to “governing body” proposals, which a voter initiative is not.

The court further determined that PERB erred when it applied legal theories regarding principal-agent relationships to transform the initiative from a citizen-sponsored initiative into a governing body-sponsored ballot proposal, even given the mayor’s role in developing and supporting the initiative. This was in part because under the express language of the city’s charter, the mayor had no authority to place a City Council-sponsored ballot proposal on the ballot without City Council approval, and there were no indicators that he obtained such approval. The court also rejected PERB’s arguments under the theories of apparent authority, respondeat superior, and ratification as legally erroneous.

This case resolves a major question regarding the balance of power between voter-driven initiatives and union collective bargaining rights, with the court deciding the issue in favor of the electoral process.

For more information on the Boling decision or a local government agency’s collective bargaining duties, please contact the authors of this Client News Brief or an attorney at one of ournine offices located statewide. You can also visit our website, follow us on Facebook or Twitter or download our Client News Brief App.

Written by:

Steven A. Nunes

Associate

©2017 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.