contents Features 5 Further Storm Warnings in the Territory of Retiree Health Care Benefits Richard Whitmore and Cepideh Roufougar 15 Truth & Consequences: The Practical and Legal Impact of a Good Investigation Rebecca Speer Headliners 21 Supreme Court Upholds Limits on Agency Fee Spending Carol Vendrillo, CPER Editor Recent Developments Local Government 24 Action to Compel Arbitration Is Within PERB’s Exclusive Jurisdiction 27 Sheriffs Association Wins Attorney’s Fees in Bill of Rights Case 29 No Appealable Demotion for Reduction of Employee Work Responsibilities 32 Supreme Court Depublishes Sacramento POA Decision 33 Pitchess Motion Denied in Search and Seizure Case 35 Civil Service Commission Had Authority to Hear Appeal contents Recent Developments continued Public Schools 37 Four-Year Evidence Bar Not Absolute in Proceeding to Dismiss Teacher Accused of Sexual Misconduct 39 Legislature Puts Self-Representation Back Into EERA 41 West Contra Costa Teachers Vote to Strike 41 Oakland Inches Back Toward Local Control Higher Education 43 CSU Academic Student Employees Battle for Fee Waivers 45 Scrutiny of U.C. Retirement System Continues 47 U.C. Increases Wages for Custodians and Other Low-Paid Employees State Employment 50 Arbitrator Cannot Reform Contract That Has Been Approved by Legislature 53 State Forced to Raise Pay in Mental Hospitals 55 First Steps Taken to Modernize State Civil Service Hiring 58 Elected and Appointed Officials’ Salaries Jump contents Recent Developments continued Discrimination 61 Supreme Court Interprets Time Limit Narrowly in Pay Discrimination Case 67 Employee Should Have Been Notified of Right to CFRA Leave 69 Disabled Employee Must Make Specific Request for Accommodation 70 Equitable Tolling Applicable to Time Limit for FEHA Claims 72 State Senate Passes Bill to Ban ‘Family Status’ Discrimination General 73 Employee’s Reports of Physical Threats State Public Policy for Wrongful Discharge Claim 76 Wrongfully Terminated Disabled Employee Not Entitled to Backpay Public Sector Arbitration 79 Grievant Reinstated After Termination for Sexual Harassment 80 Law Firm’s Mandatory Arbitration Clause Found Unconscionable Departments 4 Letter From the Editor 85 Public Sector Arbitration Log 94 Public Employment Relations Board Cases 109 PERB Activity Reports 4 C P E R J O U R N A L No. 185 letter from the editor CPER Readers: During the summer, the “feeling” around the university and at CPER undergoes a transformation. The majority of students have packed up their belongings and headed home, camp counselors can be seen herding their young charges wearing Cal Berkeley T-shirts along Telegraph Av- enue, and there suddenly are a welcomed surplus of parking spaces. Main- taining our focus during this time is always a bit of a challenge. But, once again, we’ve put together an August issue that reports on many exciting developments. Starting with the Supreme Court’s decision in Ledbetter, Justice Alito stands firm on the statute of limitations’ application in pay discrimination cases. The State Supreme Court also took an unexpected move and depublished the Court of Appeal decision in the Sacramento POA case, which found retiree hiring beyond scope under the MMBA. Teachers are primed to walk out in the fall in the West Contra Costa School District, and CSU tutors might hit the bricks over fee remissions. PERB’s exclusive jurisdiction was established by the Court of Appeal in a case bearing on the San Francisco charter’s interest arbitration process. And, an arbitration decision was vacated by the appellate court for clash- ing with provisions of the Dills Act. With retiree health care costs making national news, we’ve included a follow-up article that offers additional insights into this matter of criti- cal concern. And, don’t miss the valuable review of workplace investiga- tions that outlines several important pointers. I hope this piques your interest and encourages you to take us along as you enjoy the summer. Just remember to wear your sunscreen. Sincerely, Carol Vendrillo CPER Editor August 2007 c p e r j o u r n a l 5 Further Storm Warnings in the Territory of Retiree Health Care Benefits Richard Whitmore and Cepideh Roufougar As reported in the last issue of CPER, the “storm” over post-retirement health care benefits is not going to abate anytime soon. As costs continue to rise and retirees live longer, public agency employers and employees are faced with a financial burden that few predicted and even fewer are currently able to meet. Changes in governmental accounting principles — namely the Governmental Accounting Standards Board’s GASB 45 — have brought the issue and the costs associated with providing retiree health care benefits to the forefront. Richard Whitmore is a In “Weathering the Gathering Storm Over Post-Retirement Health Care Benefits —Vested or Not,” Jeff Sloan, Genevieve Ng, and Merlyn Goeschl did a named partner in the labor and thorough job of discussing GASB 45 and the perils of the “pay as you go” approach, employment law firm of Liebert particularly in the context of the County Employees Retirement Law (CERL) and Cassidy Whimore. Cepideh the Meyers-Milias-Brown Act. This article continues the discussion to focus on Roufougar is an associate with public employers that are covered by the Public Employees’ Medical and Hospital the firm. LCW represents public Care Act (PEMHCA). A solution to the retiree health care debacle may prove even harder to find under the PEMHCA’s more rigid statutory scheme. agency management throughout California. The authors would What Are Retiree Health Care Benefits? like to thank LCW partner Steve Berliner for his assistance with Pensions are the most widely known post-employment benefit provided by this article. employers. Retiree health care benefits are the most common form of other post- employment benefits (OPEBs) provided by employers. Retiree health care benefits are generally established through a promise by an employer to provide an employee with a certain level of continued benefits upon retirement. Employees work for an employer for a number of years with the expectation that the employer will fulfill this promise of providing continued benefits. 6 C P E R J O U R N A L No. 185 For many public employers, the promise of retiree health required to measure and report those costs associated with care benefits is found in collective bargaining agreements, providing retiree health care benefits, and any other OPEB. personnel policies, or resolutions or ordinances passed by Application of this new reporting requirement is being the agency’s governing body. The details of this promise, phased in, based on the total annual revenues of a including the manner in which it is made and the exact governmental agency.3 The stated purpose of this reporting language used to convey the benefit, all affect the employer’s requirement is to: obligation toward its employees. For those public employers who are covered by the Public Employees’ Medical and ...improve[ ] the relevance and usefulness of financial Hospital Care Act (PEMHCA),1 the promise of retiree health reporting by (a) requiring the systemic, accrual-basis care benefits is found, not only in the documents described measurement and recognition of OPEB cost (expense) over a period that approximates employees’ years of above, but also in the statutory provisions of the PEMHCA.2 service and (b) providing information about actuarial liabilities associated with OPEB and whether and to Why Are Retiree Health Care Benefits a Hot Topic? what extent progress is being made in funding the plan.4 In California, the cost of public pension benefits are funded traditionally through a combination of employer and GASB 45 requires only the reporting of unfunded OPEB employee contributions that are made liabilities. It does not require that on a regular basis during the term of an employers immediately begin funding individual’s employment. These regular those liabilities. However, as a result of contributions then are invested until the GASB 45 reporting requirements, such time as distributions occur in the Individual agencies many public agencies have to examine form of pension payments. This method that have not the true costs of retiree health care of funding pension benefits is benefits, including the costs of commonly described as “pre-funding.” pre-funded may be continuing to provide benefits to future Pre-funded contribution amounts are retirees. As the number of retirees determined by an actuarial analysis of looking at liabilities grows each year, almost all public the financial status of the pension plan. employers can expect eventually to be In sharp contrast, most retiree in the tens of millions paying more for health care benefits for health care benefits have not been pre- their retirees than for their current funded. Instead, many public employers and hundreds of employees. fund these retiree health care benefits To highlight the cost of providing on a “pay-as-you-go” basis. In other millions of dollars. retiree health care benefits, on May 7, words, employers fund retiree health 2007, the State of California reported care benefits only in those years in that for the 2007-08 fiscal year, the state which the benefits actually are being alone will spend approximately $1.4 provided to a retiree. Thus, unlike traditional pension plans, billion to provide those benefits to retired state employees and neither the employer nor the employee contributes money their dependents. In addition, the state reported an unfunded to pre-fund retiree health care benefits before those benefits liability of approximately $48 billion for future retiree health are provided. care benefits.5 While the financial liabilities faced by New governmental accounting standards have focused individual local agencies are not as great as the liabilities attention on the issue of retiree health care benefits. Under faced by the state, individual agencies that have not pre-funded Statement Number 45, issued by the Governmental may be looking at liabilities totaling in the tens of millions Accounting Standards Board, public employers now are and hundreds of millions of dollars.