Labor Relations: The Meet and Confer Process

pursuing a bargaining proposal that seeks a new defined benefit formula for classic members, whether hired before or after January 1, 2013.

The PEPRA provides that benefit enhancements adopted on or after January 1, 2013, may only be applied to the employee’s future service. This requirement applies to both new and existing employees. After PEPRA, the parties may only agree to the employer “pick up” of part or all of the classic members’ contribution. Although the issue has not been fully settled, there is authority finding that this practice of paying part or all of the employee’s contribution does not become a vested right. In San Diego Police Officers’ Association v. San Diego City Employees’ Retirement System , the police officers’ association argued that the City’s practice of picking up officers’ pension contributions had become a vested contractual right that could not be taken away. In that case, a federal court found that employees do not have the same vested contractual right to their employer’s pension pickup that they have in their pension benefits. iii. Defined Contribution Plans A defined contribution plan is an employer-sponsored pension plan that defines the contributions to be made by the employee and the employer but does not define the amount of pension income to be received at retirement. These are typically savings plans that allow participants to make pre-tax contributions that accumulate tax-free. Contributions, plus any earnings, are generally not subject to state or federal taxes until withdrawn, in most cases after retirement. PEPRA limited but did not eliminate the use of defined contribution plans, such as a 401(a) or 457 plan, which often were offered by employers as an alternative in negotiations to a defined benefit plan enhancement, the cost of which may increase over time. The limitations are aimed at ensuring that public agencies do not use defined contribution plans to aggressively compensate higher waged employees with the result of discriminating against workers earning a lower wage. iv. Retiree Health Retiree health benefits are established through an employer’s promise, express or implied, by an employer to provide an employee with continued medical benefits upon retirement as deferred compensation for services performed for the employer. Such benefits are often established through an MOU. There has been some uncertainty as to whether retiree health care benefits can become a vested contractual right that cannot easily be reduced or eliminated. , although There have, however, been several State and Federal court decisions that have held that contractual vested rights, including retiree health benefits included in an MOU, are only created when the legislative body expressly intends to create such a vested right. In 2009, in San Diego Police Officers’ Association v. San Diego City Employees’ Retirement System , the Ninth Circuit Court of Appeals found that retiree health care benefits were not a vested right. The Court noted that, under the terms of the MOU, retiree health care benefits were earned on a year-to-year basis under previous MOUs that expired under their own terms, and the MOU clearly stated that its provisions would be superseded and suspended if found in violation of the law. In 2013, the

Labor Relations: The Meet and Confer Process ©2019 (s) Liebert Cassidy Whitmore 34