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This blog post was authored by Danny Yoo.

Parents of young children can relate to when a child refuses to eat something they do not like; vegetables tending often to be the culprit.  When the child refuses, the parent will ask, “Why don’t you want to eat it?”  The inevitable response is, “Because I don’t want to!”  Rather than addressing the fallacy of circular logic, many times the parent will simply tell her that just because she doesn’t want to does not mean she doesn’t have to.

In County of San Luis Obispo (2015) PERB Decision No. 2427-M (click here for decision), two unions argued that they did not have to negotiate employee pension contributions because employees had vested rights to those contributions.  The Public Employment Relations Board (PERB) disagreed and held that the unions unlawfully refused to bargain because of their incorrect belief that their employees had vested rights.

The County of San Luis Obispo maintains its own independent retirement system, the San Luis Obispo County Pension Trust (Trust).  In 2011, the County requested to bargain with the San Luis Obispo Deputy County Counsel Association and the San Luis Obispo Government Attorneys’ Union (Unions) over employee contributions to the Trust due to increased pension costs.  The Unions rejected the County’s request and asserted that this was non-negotiable because bargaining would impair vested contractual right to specific contributions.  In fact, the Unions had a pending lawsuit against the County on this very issue.  The Unions’ negotiator claimed that the County was putting them in an “impossible position” because if they agreed to bargain, they may be making an admission that could be used against them in the lawsuit.

The County filed unfair practice charges against the Unions for refusing to bargain over the employee contributions, and PERB issued complaints (the complaints were consolidated for purposes of hearing).  In their answers, the Unions each admitted to having “refused to bargain” on the grounds that negotiations would impair vested rights.  The Administrative Law Judge and PERB held the Unions to what they admitted in their answers, i.e., that they had, in fact, refused to bargain.

In its opinion, PERB addressed the “threshold question” of whether there is a vested right.  PERB analyzed the Trust’s Plan and determined that there was no vested right to a continued employee contribution rate. Specifically, PERB stated that “the governing terms of the Plan do not clearly demonstrate a legislative intent to bind the County with respect to the amounts or distribution of employee contributions towards future retirement benefits.”

There are a few takeaways from this decision:

  • Because the answer to a PERB Complaint must be verified, what an agency puts in its answer will be held against it.  If there is a PERB charge or complaint filed against your agency, seek legal counsel before responding.  Here, PERB relied heavily on the Unions’ own admissions in their answers to a PERB complaint that they “refused to bargain” with the County.
  • PERB will make a determination on whether benefits are vested.  Most often, we see this issue litigated in court, as was the case here.  In this case, however, the ALJ and PERB decided to address this “threshold question” before getting to the issue of whether the Unions refused to bargain. Employers should also be aware that there continues to be litigation concerning whether PERB has jurisdiction in the first instance to determine if there exists Constitutionally-protected vested benefits.  Therefore, this issue remains unsettled.
  • If your agency is considering negotiating retiree benefits, first determine whether those benefits are vested.  As discussed in the bullet point above, PERB presently takes the stance that it can and will make a determination on the issue.  PERB could have decided differently and bound the County to an unfavorable decision.

To learn more about vested benefits and what your agency can do about them, please sign up for the LCW webinar “Understanding ‘Vested’ Pension and Other Post-Employment Benefits” presented by Frances Rogers and Michael Youril on June 23, 2015.  Click here for more information.