Unilateral Implementation Can Be Unconstitutional Even Though Allowed Under Bargaining Law

California’s public safety collective bargaining laws allow an employer to unilaterally implement its last best offer at the conclusion of the bargaining process. A case involving the City of Los Angeles and the Los Angeles Police Protective League put an unusual twist on the unilateral implementation process.

The LAPD Manual describes how qualified officers can obtain advanced pay grade and bonus positions, which involve additional compensation above the lowest pay grade for each civil service classification because of the additional duties and/or risks associated with each position. In September 2008, the City notified the League of a proposal to change the process for reassignment and/or deselection from advanced pay grade and bonus positions. The relevant sections then provided that an officer must have clearly demonstrated his or her failure or inability to satisfactorily perform the duties of the position before being reassigned to a lower pay grade or deselected from a bonus position.

Between October 2008 and February 2009, League and Department representatives met and negotiated issues concerning the proposed changes. The parties were unable to reach any agreement and proceeded to non-binding factfinding. A factfinder sided with the League, finding that the proposed standard of review for the commanding officer’s decision was ambiguous; the proposal eliminated a “cause” standard, which represented a fundamental balance of protection for the employee and leeway for the employer; and there was no reasoned basis for distinguishing between the protections afforded to advanced pay grade and bonus positions on the one hand, and regular promotions on the other.

The Department rejected the factfinder’s report and implemented the proposed changes. The League challenged the implementation on two grounds. The League first argued that the implementation violated California’s collective bargaining laws that, the League contended, only allowed the governing body of the City (the City Council) to implement changes in mandatory subjects of bargaining. The League also argued that the implementation violated the constitutional rights of its members.

The California Court of Appeals sided with the City on whether it had the right to implement the changes under California’s bargaining laws. The Court found that the bargaining statute was “unambiguous. It expressly allows a ‘public agency’ to ‘implement its last, best, and final offer’ following the exhaustion of applicable impasse procedures. The statute contains no mention of any requirement that a public agency’s unilateral implementation of its last, best and final offer must be conducted through its governing body. To impose such a requirement would run afoul of the principle of statutory construction that every word excluded from a statute must be presumed to have been excluded for a purpose.”

The City’s victory was short lived as the Court sided with the League on whether the change in work rules violated the constitutional due process rights of its members. Citing one of its prior opinions, the Court found that “a reduction in pay grade or reassignment from a bonus position constitutes a property interest subject to due process protections. In our view, the Department’s Manual does more than create an entitlement to an administrative appeal process. By providing that an officer may suffer a reduction in pay grade for certain specified reasons and under limited certain conditions, the Manual implicitly restricts the Department’s authority to initiate a reduction in pay grade to the specified reasons. The limitations the Manual imposes on the Department’s ability to act give rise to a property interest subject to due process protections.” The Court also found that the City’s actions amounted to an unconstitutional “impairment of contract.” Under the United States Constitution, as well as almost every state constitution, there is a clause prohibiting impairment of contracts. Pursuant to these clauses, a public employer’s ability to modify its own contracts with other parties, or contracts between other parties, is limited. With respect to public employment contracts, the Court noted “California cases clearly establish that although the conditions of public employment generally are established by statute rather than by the terms of an ordinary contract, once a public employee has accepted employment and performed work for a public employer, the employee obtains certain rights arising from the legislative provisions that establish the terms of the employment relationship – rights that are protected by the contract clause of the state Constitution from elimination or repudiation by the state.

“Having concluded that officers possessed a property interest in the Manual’s standard for removal from advanced pay and bonus positions, we turn to the question of the impairment of contract. There can be no question that the elimination of a ‘for cause’ standard is a substantial impairment. Moreover, the League offered evidence in the form of declarations from several officers who averred that they accepted their advanced pay grade positions with the understanding that they would be subject to the good cause standard set forth in the Manual and that they would be entitled to the security of remaining in that assignment according to that standard.

“On the other hand, the City offered no evidence of a significant public purpose for the implementation sufficient to render it constitutional. A substantial impairment may be constitutional if it is reasonable and necessary to serve an important public purpose. Both the California and United States Supreme Courts have identified factors which may warrant legislative impairment of vested contract rights on the grounds of necessity: (1) The enactment serves to protect basic interests of society, (2) there is an emergency justification for the enactment, (3) the enactment is appropriate for the emergency, and (4) the enactment is designed as a temporary measure, during which time the vested contract rights are not lost but merely deferred for a brief period, interest running during the temporary deferment. There was no showing – either below or on appeal – that the implementation protected any basic societal interest, that it was necessitated by any emergency, that it was appropriate to resolve any emergency, or that it was designed to be temporary. Because the implementation constituted a substantial impairment to the employment rights provided by the Manual, and the City offered no significant and legitimate purpose for the measure, we conclude the trial court properly determined that the implementation was an unconstitutional impairment of contract.”

Los Angeles Police Protective League v. City of Los Angeles, 2013 WL 2099749 (Cal. App. 2013).