Trial Court: Superior Court of Alameda County Trial Judge: Honorable Frank Roesch (Alameda County Super. Ct. No. RG-09-441544)
The opinion of the court was delivered by: Richman, J.
CERTIFIED FOR PUBLICATION
This petition for a writ of mandate seeks to overturn an order by the Superior Court of Alameda County that would virtually nullify the three-day-per-month furlough program as it is applied to facilities manned by employees represented by the California Correctional Peace Officers Association (CCPOA). The trial court determined that the furlough program, which was implemented in the wake of two Executive Orders by the Governor, resulted in a reduction in pay for CCPOA members that violated various state statutes, specifically Government Code section 19826, Labor Code section 223, and the state's minimum wage law. The trial court directed issuance of a writ of mandate ordering that back pay be provided to CCPOA members.
After this matter was fully briefed, but before it was argued, our Supreme Court decided Professional Engineers in California Government v. Schwarzenegger (2010) 50 Cal.4th 989 (Professional Engineers), upholding the legality of the two-days-a-month unpaid furlough time implemented following the first Executive Order. The core holding of Professional Engineers was that in enacting revisions to the 2008 Budget Act, the Legislature had in effect retroactively validated the furlough program by reducing the appropriated funds for the agencies whose employees were then being furloughed. In Service Employees Internat. Union, Local 1000 v. Brown (2011) 197 Cal.App.4th 252 (SEIU v. Brown), this court held that the reasoning of Professional Engineers was equally applicable to the third furlough day established by the second Executive Order and the Legislature's revisions to the 2009 Budget Act. We reiterate that conclusion here.
We further conclude that the reasoning of Professional Engineers and SEIU v. Brown is incompatible with two of the statutory grounds for the trial court's order. First, Professional Engineers establishes that Government Code section 19826 does not invalidate the furlough program. Although the trial court correctly determined that the furlough program resulted in a reduction of CCPOA members' pay, that reduction, accomplished by the Legislature when it revised the 2008 and 2009 Budget Acts, was within the Legislature's near-plenary authority over the compensation of state employees. Second, the Legislature's revisions to the Budget Acts also establishes no violation of Labor Code section 233--which prohibits an employer secretly "pay[ing] a lower wage while purporting to pay the wage designated by statute or contract"--because CCPOA's members were being paid according to the governing statutes, in this instance, the revisions to the Budget Acts. We also reject CCPOA's contention that the furlough program contravenes Labor Code 212, a measure essentially intended to prevent employers from giving employees paychecks that cannot be cashed.
Finally, we note that effective August 2010, the furlough program was amended so that there was no expiration date for previously accrued furlough days, which means there is no deadline by which CCPOA members must take their compensatory time off or lose it. Thus, assuming a public employee can make a minimum wage claim--an issue we do not decide--such a claim will not be justiciable until a particular CCPOA member has ceased employment. Thus, there is no present or ministerial duty that mandate can compel.
In light of these conclusions, we grant the Governor's petition and order the trial court to set aside its order mandating the relief sought by CCPOA.
On December 19, 2008, Governor Arnold Schwarzenegger issued Executive Order S-16-08. By reason of "an approximately $15 billion General Fund deficit for the 2008-09 fiscal year, which without effective action, is estimated to grow to a $42 billion General Fund budget shortfall over the next 18 months," he directed that "effective February 1, 2009 through June 30, 2010, the Department of Personnel Administration shall adopt a plan to implement a furlough . . . for two days per month" for "represented state employees," managers, and supervisors. On July 2, 2009, noting that "California's revenues . . . continue to plummet," Governor Schwarzenegger issued a second Executive Order, S-13-09, which ordered the furlough program expanded to three days per month for the period from July 1, 2009, through June 30, 2010. Each of the Executive Orders was preceded by a proclamation declaring a fiscal emergency necessitated by the dire condition of the state's finances.
Pursuant to the Executive Orders, the Department of Personnel Administration (DPA) implemented a program that impacted the members of Bargaining Unit 6, which is represented by CCPOA. Bargaining Unit 6 is composed of approximately 30,000-35,000 state civil service employees, including 2,500 supervisory sergeants and lieutenants, working at correctional facilities operated by the Department of Corrections and Rehabilitation (CDCR), the Department of Mental Health (DMH), and the "Department of Juvenile Justice" (DJJ).*fn1
In response to the Governor's Executive Orders, the DPA implemented a furlough program pursuant to which DCCR and DMH placed Bargaining Unit 6 members on what is called a "self-directed" furlough. That is, the members are encouraged to take their furlough hours off within each month; however, if they cannot, they are permitted to accumulate furlough leave credits to be used at a future date. The furlough program also requires that Bargaining Unit 6 members utilize accumulated furlough hours prior to utilizing other types of paid leave, including vacation, annual leave, personal leave, or holiday credits.
CCPOA sued the Governor, the DPA, the State Controller, and the three agencies (which for simplicity will be collectively designated as the Governor) employing members of Bargaining Unit 6. In its trial brief, CCPOA explained the features of the furlough system it was challenging:
"Under the authority of the Executive Orders, . . . CDCR, DMH, DJJ have implemented a 'furloughs' scheme . . . the gist of which is that: [¶] employees receive three 'furlough' day credits per month; [¶] employees theoretically attempt to 'self-direct' up to three furlough days per month (i.e., take days off); [¶] every employee's pay is reduced by three days per month, or approximately 13.5%; [¶] employees who can take a furlough day have a day off without pay; [¶] employees (and this is by far the majority) who cannot use three furlough days in a month must work their normal schedule, endure the pay cut, and carry over unused 'furlough credit' balances; [¶] furlough credits have no cash value, cannot be cashed-out, and will expire if unused by June 30, 2012.*fn2
"This scheme is intended to create significant salary savings for CDCR, DMH, and DJJ--however, it does so by violating two sets of laws. First, as implemented, the furlough scheme usurps the Legislature's sole authority under Government Code section 19826 and Article 3, Section 3 of the California Constitution to adjust the salaries of union-represented State employees. The 'furloughs' result in an approximate 13.5 percent reduction in salaries without a commensurate and contemporaneous reduction in hours.
"Second, because few, if any, employees are permitted to use furlough days in the month that they accrue . . . , but all employees' monthly salaries are reduced by approximately 13.5 percent, the harmed employees' only compensation for up to three days worked each month is a non-negotiable furlough credit. Put another way, defendants unilaterally stopped paying employees for three days per month, whether the employees worked those days or not.*fn3
"In this . . . proceeding, [CCPOA] asks this Court to issue a writ of mandate compelling Respondents to pay the harmed employees their full wages each month, without reduction and in negotiable form, for all time worked during the proceeding pay period, in accordance with Respondents ministerial duties under Government Code section 19826 and Labor Code sections 212, 223, and 1171 et seq."
The trial court considered a mountain of material, including much statistical evidence concerning the actual operation of the furlough program as implemented in correctional facilities and applied to members of Bargaining Unit 6. The court also heard extensive argument before filing a 10-page order granting CCPOA's petition for the writ. The court's decision rested on two grounds. The first was that the "self-directed furlough program, as implemented, constitutes a salary reduction" in that "for those pay periods in which an employee works more hours than those for which he or she is compensated at the regular rate of pay constitutes a salary reduction . . . contrary to the requirements of Government Code § 19826(b)."*fn4
The second ground concerned CCPOA's claim that the furlough program violated provisions of the Labor Code, with which the trial court largely agreed:
"Labor Code section 223 states: 'Where any statute or contract requires an employer to maintain the designated wage scale, it shall be unlawful to secretly pay a lower wage while purporting to pay the wage designated by statute or by contract.' It is unlawful for an employer subject to a wage rate set by statute or by contract to pay a lower wage. [Citations.] Here, the wage scales for employees represented by [CCPOA] were set by a memorandum of understanding with the State which, by operation of Government Code section 3517.8, remains in effect until negotiation of a new contract, or until an impasse is reached and the state employer implements a last, best and final offer approved by the Legislature. Regardless of whether the wage scale currently in effect here is considered a contract or a wage implemented by operation of statute, Labor Code section 223 is applicable.
"Labor Code section 1171 et seq., and implementing regulations, set the minimum wage for labor in California. In determining whether the obligation to pay the minimum wage has been met, the employer may not divide the total compensation paid by the hours worked in the pay period to satisfy the minimum wage with an hourly average. [Citations.] Instead, the employer must pay at least the minimum wage for hours worked. [Citation.] Here, when correctional employees are required to work the same number of hours in the pay period, but are not paid for three days' worth of time worked, they are not paid the minimum wage for those hours worked.
"Again, the Court must conclude that for any pay period in which an employee works more hours than those for which he or she is compensated at either the regularly-established rate of pay or the minimum wage, Respondents have violated the mandatory duties imposed upon them under Labor Code sections 223 and 1711 et seq., respectively.
"Respondents' argument that the State is not bound to comply with these Labor Code sections is incorrect. Labor Code section 220 specifies those sections of the Labor Code that do not apply to state employees; neither section 223 or 1171 appear on that list. . .
"The Court does not find that accrual of 'furlough credits' that cannot be cashed out violates Labor Code section 212. The Executive Orders and the DPA implementation memos reduced the wages of employees with the promise of time off at some later undetermined date. That promise, in the form of a furlough credit, does not constitute 'payment' for any work day. Thus, the Court does not find that writ relief based upon a violation of section 212 is warranted."
As directed by the court's order, a writ of mandate issued commanding the Governor to "perform all acts necessary to immediately and prospectively pay all employees in State Bargaining Unit 6, as well as correctional sergeants and lieutenants, their full salaries in cash or cash equivalent at the end of each pay period for all hours worked during each preceding pay period, without reduction, and at rates delineated for such classifications in the current State of California Civil Pay Service Scales, as set forth and required by, inter alia, Government Code sections 19824 and 19826(b) and Labor Code section 223 and 1171 et seq." The Governor then sought review.*fn5
Professional Engineers And Section 19826
The Supreme Court's opinion in Professional Engineers covers a great deal of ground, but its core holding in based on section 3.90 of the Legislature's revisions to the 2008 Budget Act. As pertinent here, that section provided:
" '(a) Notwithstanding any other provision of this act, each item of appropriation in this act, with the exception of those items for the California State University, the University of California, Hastings College of the Law, the Legislature (including the Legislative Counsel Bureau), and the judicial branch, shall be reduced, as appropriate, to reflect a reduction in employee compensation achieved through the collective bargaining process for represented employees or through existing administration authority and a proportionate reduction for nonrepresented employees (utilizing existing authority of the administration to adjust compensation for nonrepresented employees) in the total amounts of $385,762,000 from General Fund items and $285,196,000 from items relating to the other funds. It is the intent of the Legislature that General Fund savings of $1,024,326,000 and other fund savings of $688,375,000 in the 2009-10 fiscal year shall be achieved in the same manner described above. The Director of Finance shall allocate the necessary reduction to each item of appropriation to accomplish the employee compensation reductions required by this section.
" '(b) The Department of Personnel Administration shall transmit proposed memoranda of understanding to the Legislature promptly and shall include with each such transmission estimated ...