Labor Relations: The Meet and Confer Process

provisions. An employer is required to include cash back and “cash-in-lieu” of health insurance coverage in the calculation of the regular rate of pay for purposes of overtime compensation. 190

In addition, an employer can only pay out an incidental part of benefits in a Section 125 plan as cash in order for it to be considered a bona fide benefits plan. 191 If an employer pays more than an incidental part of its benefits as cash, the employer is required to include all amounts paid into the flexible benefits plan for employees in their regular rate of pay, not just the cash back/ cash- in-lieu payments. 192 c. Retirement Benefits Most public sector employees are covered by statutorily-established retirement systems, such as the California Public Employees’ Retirement System (CalPERS) or the County Employees Retirement Law of 1937. Generally, retirement benefit matters involving current employees are within the scope of representation, while matters affecting current retirees are permissive subjects of bargaining. i. Vesting of Retirement Benefits A public employee’s right to a pension or retirement benefits are protected by the contract clauses of the state and federal constitutions. An employee’s contractual pension expectations are measured by benefits which are in effect not only when the employee begins work, but also which are conferred during employment. In Marin Association of Public Employees v. Marin County Employees’ Retirement Association (“MCERA”) , the Court of Appeal held that MCERA’s changes to the definition of “compensation earnable” and “pensionable compensation,” used to determine an employee’s final compensation for the purpose of determining the employee’s retirement benefit, did not qualify as a substantial impairment of the plaintiffs’ contracts of employment. In addition, the Court held there was no violation of the contracts clause, the changes were reasonable, and the changes did not violate the state or federal constitution. The California Supreme Court has granted review of this decision. In determining whether an employer impermissibly modified a vested benefit, the court will interpret the language that provided the benefit. For example, in Sappington v. Orange Unified School District , the school district had been providing retirees fully paid PPO and HMO plans for twenty years. Due to increasing health insurance costs, the district decided to require a contribution for the PPO plan. However, the district continued to provide fully paid HMO benefits. The retirees filed suit, alleging that the district was obligated to continue providing fully paid PPO benefits. In support of their position, the retirees relied upon language in a district policy which stated, “The District shall underwrite the cost of the District’s Medical and Hospital Insurance Program for all employees who retire from the District provided they have been employed in the District for the equivalent of ten (10) years or longer.” In finding for the district, the court found that this language only required that the district provide some type of insurance coverage, not a specific type of coverage. The court found that the district’s actions in providing free coverage for both HMO and PPO plans did not create a contractual obligation to do so, stating, “Generous benefits that exceed what is promised in a contract are just that: generous. They reflect a magnanimous spirit, not a contractual mandate.”

Labor Relations: The Meet and Confer Process ©2019 (s) Liebert Cassidy Whitmore 32