Hale v. Cal. Pub. Employees' Ret. System ( 2022 )

Filed 8/29/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
KENNETH HALE et al.,
Petitioners and Appellants,
A161758
v.
CALIFORNIA PUBLIC (City & County of San Francisco
EMPLOYEES’ RETIREMENT Super. Ct. No. CPF18516340)
SYSTEM,
Defendant and Respondent.
After Kenneth Hale and Robert Wolf retired from public service, they
sought to have California Public Employees’ Retirement System (CalPERS)
include in their pension calculations “cash-outs” they received for accrued
holiday leave credits. CalPERS declined to do so, and the trial court upheld
its decision. Hale and Lavonne Wolf (the heir of Robert Wolf, who is now
deceased) have appealed the judgment. We reverse.
FACTUAL AND PROCEDURAL BACKGROUND
Hale and Wolf were both firefighters with California’s Department of
Forestry and Fire Protection (Cal Fire), and for the last ten years of their
careers both served as executive officers for Cal Fire Local 2881 (Local 2881
or the union). The union is the exclusive bargaining representative for
firefighters, fire captains, and other fire control employees of Cal Fire in
State Bargaining Unit 8. Agreements between Bargaining Unit 8 and the
State of California and Cal Fire (the Agreements) allowed the president of
1
the union and one other designee (the latter usually the rank and file
representative; collectively, the union officers), to be released from their
normal work duties in order to conduct union business full-time. The
Agreements specified the release “shall result in no loss of compensation
(salary or benefits).”
In lieu of normal holidays (New Year’s Day, Thanksgiving, etc.),
members of Local 2881 receive floating holidays with pay, accrued on the day
of the pre-existing holiday. The holiday credits may be used at another time;
for instance, a firefighter who normally works on Thursdays would not have
Thanksgiving off without making special arrangements, but would on
Thanksgiving accrue a floating holiday. As a general matter, the Agreements
allow employees to “cash out” up to four holidays per year only if funds are
available, and they may not carry over more than six holidays from one
calendar year to the next. However, for the union officers the Agreements
provide that once a year, Cal Fire will buy down their leave credits to either
“the normal carry-over maximum” or the amount the person had when
entering office, whichever is higher. These mandatory buy downs, or cash-
outs, are at the heart of the dispute before us.
Wolf became a firefighter in 1978. He was elected president of Local
2881 in 2002 and held that position until his retirement in 2012. Hale began
working for Cal Fire in 1968. In 2004 he was elected the union’s state rank
and file director and held that position until he retired in 2013.
During that time, Hale and Wolf were on full-time leave from their
firefighting positions, but they remained Cal Fire employees and their pay
was determined by their rank in Cal Fire. Both of them were promoted to the
rank of battalion chief during their tenure as union officers.
2
Firefighters at Cal Fire normally work a 72-hour workweek, in the
form of three consecutive 24-hour shifts. While they were union officers, Hale
and Wolf still reported three 24-hour days, for a 72-hour week, in the same
way active firefighters reported their time, but, as we shall explain, this did
not reflect their actual or intended work schedule.
Hale testified that his responsibilities included negotiating the union
contracts and handling violations of the contracts, adverse actions against
employees, and accident investigations. He was not permitted to work on
fires. Cal Fire’s union office is open from 8:00 in the morning until 4:30 in
the afternoon. Hale was generally in the office from 9:00 in the morning until
6:30 or 7:00 in the evening on weekdays, but he would speak with members of
the bargaining unit seven days a week and on occasion he would go to the
office on weekends. He was expected to work every day while he was a union
officer, and his holidays, such as Christmas and the Fourth of July, were
sometimes interrupted, as was a trip to Hawaii with his wife. He recalled
one Thanksgiving when his family had a large gathering at their home, and
he had to spend eight hours on the telephone in response to an incident at the
site of a fire. He would receive work-related phone calls on weekends “with
some regularity” and sometimes in the middle of the night, and he was
expected to answer the phone.
Hale did not take any holidays off during his tenure as a union officer,
and no one at Cal Fire expressed any concern that he was not using any of
his holiday credits. He was told the position meant he was on duty 365 days
a year, 24 hours a day. If he had turned off his phone and taken a holiday, he
testified, he would have been fired. While he was a union officer, Cal Fire
“cashed out” Hale’s holiday leave credits by issuing a check to reflect the
amount of his accrued leave. He would have preferred not to have the leave
3
cashed out, but he was told he had no option. When he retired in 2013, all of
his remaining holiday credits were cashed out.
Wolf testified that, as president of the union, he acted effectively as the
chief executive officer, meeting with the district vice presidents regularly;
making sure the union operations complied with applicable laws, procedures,
and policies; sitting on the board of directors of the California Professional
Firefighters; supervising the 237 elected union officials in the state;
managing day-to-day-operations; maintaining the union’s political operation;
interacting with Cal Fire management; and managing the training program
for union officers. Although he reported a standard workweek of three 24-
hour shifts, in fact he worked far more than that. He worked in the office five
days a week, and he did not take regular days off. There was never a day
that he did not receive telephone calls, and he routinely was on his cell phone
five hours a day. He did not think he had the option to turn his phone off.
Wolf did not take a holiday during the ten years he was the union
president. No one ever questioned why he had not taken holidays. Cal Fire
cashed out Wolf’s unused holiday leave credits, whether he wanted that or
not.
During years Wolf and Hale were union officers, Cal Fire (although
somewhat inconsistently) bought down their holiday leave credits, Wolf’s to
the amount he brought into office and Hale’s to six holidays, the normal
carry-over maximum. The cash-outs were not reported to CalPERS as
income to be included in pension calculations, and the union officers did not
make any contributions from those amounts.
After Hale and Wolf retired, the union asked CalPERS to include the
amounts they received in the cash-outs when calculating their final
compensation, part of the formula on which pension benefits are based.
4
CalPERS concluded the buy downs were not “compensation earnable”
as defined by the Public Employees’ Retirement Law. (Gov. Code, § 20000 et
seq. (PERL); see §§ 20630, subd. (b), 20636.) 1 The union officers appealed
this determination.
The matter proceeded to an administrative hearing. Ultimately, after
proceedings we need not detail here, an administrative law judge (ALJ)
issued a proposed decision concluding the cash-outs were not “compensation
earnable” and therefore should not be included in Hale and Wolf’s final
compensation for purposes of calculating their monthly retirement
allowances. CalPERS’s board adopted the ALJ’s proposed decision as its final
decision.
Hale and Wolf then filed a petition for writ of administrative
mandamus. (Code Civ. Proc., § 1094.5.) The trial court denied the petition,
and Hale and Wolf have appealed.
DISCUSSION
I. Standard of Review
Where, as here, an administrative mandamus action affects a vested,
fundamental right to receive a pension benefit in an amount specified by law,
the trial court exercises independent judgment when reviewing the evidence
admitted at the administrative hearing to determine whether it supports
CalPERS’s findings regarding the amount of pension benefits. (Molina v.
Board of Administration, etc. (2011) 200 Cal.App.4th 53, 60–61 (Molina).)
On appeal, we review the trial court’s factual findings for substantial
evidence, viewing the facts in the light most favorable to the prevailing party.
(Molina, supra, 200 Cal.App.4th at p. 61.) Questions of law are subject to de
novo review on appeal, bearing in mind that “where our review requires that
1 All undesignated statutory references are to the Government Code.
5
we interpret the PERL or a PERS regulation, the court accords great weight
to PERS[’s] interpretation.” (Prentice v. Board of Administration (2007) 157
Cal.App.4th 983, 989 (Prentice).) In carrying out this review, we construe
ambiguous or uncertain provisions of the PERL liberally in favor of the
pensioner. (City of Fremont v. Board of Administration (1989) 214
Cal.App.3d 1026, 1033.)
II. Statutory and Regulatory Background
The PERL establishes CalPERS, a prefunded, defined benefit pension
plan for state employees and employees of participating local public agencies.
(Oden v. Board of Administration (1994) 23 Cal.App.4th 194, 198.) An
employee’s pension is determined by a formula that takes into account the
employee’s age at retirement, number of years of service, and final
compensation. (Ibid.) CalPERS is funded by employer and employee
contributions that are calculated as a percentage of the employee’s
compensation. (Ibid.)
“ ‘Under the PERL, the determination of what benefits and items of pay
constitute “compensation” is crucial to the computation of an employee’s
ultimate pension benefits. The pension is calculated to equal a certain
fraction of the employee’s “final compensation” which is multiplied by a
fraction based on age and length of service. [Citations.] “Final
compensation” is the “highest average annual compensation earnable by a
member during [a specified] period.” ’ ” (Prentice, supra, 157 Cal.App.4th at
p. 989; accord, Molina, supra, 200 Cal.App.4th at p. 64; see § 20630,
subd. (b).)
The statutory scheme defines a number of the terms pertinent to this
dispute. “ ‘Compensation earnable’ ” means “the payrate and special
compensation of the member . . .” (§ 20636, subd. (a).) “ ‘Payrate’ ” is “the
6
normal monthly rate of pay or base pay of the member paid in cash . . . for
services rendered on a full-time basis during normal working hours, pursuant
to publicly available pay schedules.” (§ 20636, subd. (b)(1).) And “ ‘[s]pecial
compensation’ ” includes “payment received for special skills, knowledge,
abilities, work assignment, workdays or hours, or other work conditions.”
(§ 20636, subd. (c)(1).) However, it is limited to amounts received by
“similarly situated members of a group or class of employment.” (§ 20636,
subd. (c)(2).) 2
The statute provides a separate definition of special compensation for
“state members,” which it is undisputed Hale and Wolf were. For them,
special compensation specifically includes, inter alia, “[c]ompensation for
performing normally required duties, such as holiday pay, bonuses (for duties
performed on regular work shift), educational incentive pay, maintenance
and noncash payments, out-of-class pay, marksmanship pay, hazard pay,
motorcycle pay, paramedic pay, emergency medical technician pay, Peace
Officer Standards and Training (POST) certificate pay, and split shift
differential.” (§ 20636, subd. (g)(3)(B).) Excluded from the scope of
“ ‘[p]ayrate’ ” and “ ‘[s]pecial compensation’ ” for state members are
“[c]ompensation for additional services outside regular duties, such as
standby pay . . . and bonuses for duties performed after the member’s regular
work shift.” (§ 20636, subd. (g)(4)(I).)
2Subdivision (c)(2) of section 20636 (somewhat ungrammatically)
provides: “Special compensation shall be limited to that which is received by
a member pursuant to a labor policy or agreement or as otherwise required
by state or federal law, to similarly situated members of a group or class of
employment that is in addition to payrate. If an individual is not part of a
group or class, special compensation shall be limited to that which the board
determines is received by similarly situated members in the closest related
group or class that is in addition to payrate, subject to [specified limitations].”
7
A “ ‘group or class of employment’ ” is defined as “a number of
employees considered together because they share similarities in job duties,
work location, collective bargaining unit, or other logical work-related
grouping. A single employee is not a group or class.” (§ 20636, subd. (e)(1).)
It has been held that an employee may not be a member of more than one
group or class. (Prentice, supra, 157 Cal.App.4th at p. 993.)
The statutory scheme directs the board of CalPERS to promulgate
regulations delineating more specifically and exclusively what constitutes
“ ‘special compensation.’ ” (§ 20636, subd. (c)(6).) Pursuant to this
authorization, CalPERS promulgated Section 571 of Title 2 of the California
Code of Regulations (rule 571). (DiCarlo v. County of Monterey (2017) 12
Cal.App.5th 468, 481–482 (DiCarlo).) Subdivision (a) of rule 571 contains a
list that “exclusively identifies and defines special compensation items for
members employed by contracting agency and school employers that must be
reported to CalPERS if they are contained in a written labor policy or
agreement.” (Italics added.) The list includes “Holiday Pay,” defined as
“[a]dditional compensation for employees who are normally required to work
on an approved holiday because they work in positions that require scheduled
staffing without regard to holidays. If these employees are paid over and
above their normal monthly rate of pay for approved holidays, the additional
compensation is holiday pay and reportable to PERS.” (Rule 571,
subd. (a)(5).) Subdivision (b) contains standards for evaluating special
compensation under subdivision (a); 3 subdivision (c) provides that only items
3 Specifically, subdivision (b) of rule 571 recites that CalPERS’s board
has determined that the items of special compensation listed in subdivision
(a) are contained in a written labor policy or agreement provided certain
requirements are met; are available to all member in the group or class; are
part of normally required duties; are performed during normal hours of
8
listed in subdivision (a) have been affirmatively determined to be special
compensation and that they are subject to review for conformity with
subdivision (b)’s standards; and subdivision (d) provides that if an item of
special compensation is not listed in subdivision (a) or is out of compliance
with subdivision (b)’s standards, it may not be used to calculate final
compensation. The parties disagree as to whether rule 571 applies to the
union officers, who are state members rather than members employed by a
contracting agency or school.
III. ALJ and Trial Court Decisions
The ALJ declined to include the holiday pay in Hale and Wolf’s final
compensation, citing first a requirement that, to be special compensation, the
holiday leave credit cash-outs must have been available to all members of
their group or class of employment. (See § 20636, subds. (c)(2), (e)(1).) This
requirement, the ALJ concluded, was not satisfied. The number of cash-outs
Hale and Wolf received was not available to other members of their
bargaining unit, who may cash out only four holidays a year and only if funds
are available for the cash-out, which they appear not to have been. 4 Hale and
Wolf sought to be treated as a separate class or group, but the ALJ rejected
their effort: “Although [Hale and Wolf] both worked as union officers at the
same office location in Sacramento, and though they were not eligible for
certain types of compensation available to other members of Bargaining Unit
employment; are paid periodically as earned; are historically consistent with
prior payments for the job classification; are not paid exclusively in the final
compensation period; are not final settlement pay; and do not create an
unfunded liability above PERS’s actuarial assumptions.
4 At an administrative hearing, CalPERS’s counsel told the board that
these four days of cash-outs would have been “pensionable” if the rest of the
firefighters had been allowed to take them, but that Cal Fire never allowed
anyone else to cash out their holiday pay.
9
8, such as overtime pay, they had much in common with other members.
They retained the rights and promotional opportunities of other members of
Bargaining Unit 8. [They] were paid and promoted during their time as
union officeholders consistent with their classification with Cal Fire. The fact
that [they] worked in the same union offices in Sacramento exclusively on
union matters, and that they worked roughly similar hours without eligibility
for overtime pay, does not establish that [they] were a group or class of two,
or that they left their classification as firefighters when they became union
officers.”
The trial court accepted this reasoning, noting that Wolf and Hale’s
duties as union officers differed from each other, “Mr. Wolf engag[ing] in
executive functions while Mr. Hale’s work was more ‘hands on’ ”; that both
were members of Bargaining Unit 8 and were compensated based on their
ranks as battalion chiefs; and that the Agreements guaranteed “ ‘no loss of
compensation (salary o[r] benefits)’ ” during their full-time release as union
officers. The court concluded that grouping them “according to their rank
and bargaining unit/compensation makes eminent sense and the Court
cannot conclude that [CalPERS] acted arbitrarily.”
The ALJ also rejected Hale and Wolf’s argument that the holiday cash-
outs were special compensation under rule 571, which includes among items
of special compensation holiday pay, defined as “[a]dditional compensation
for employees who are normally required to work on an approved holiday
because they work in positions that require scheduled staffing without regard
to holidays.” (Rule 571, subd. (a)(5).) According to the ALJ, Hale and Wolf
had “established they were required to work on holidays in order to respond
to the needs of union members,” but not that this was required because of the
need for scheduled staffing on holidays. That is, according to the ALJ, Hale
10
and Wolf “handled issues during holidays as needed, as the issues arose,
without regard to scheduling.”
The trial court accepted this reasoning as well, concluding the record
supported a determination that the union officers did not work in positions
that required scheduled staffing for purposes of rule 571. The court also
upheld the finding that their holiday work is best characterized as
unpensionable standby pay within the meaning of section 20636,
subdivision (g)(4)(I), noting that the union offices were closed on weekends
and holidays; that Hale had testified that if he were unavailable when a
union member called, the member would have to wait; that they worked
about half the weekends and holidays; and that Hale went on vacation to
Hawaii and once planned a large Thanksgiving dinner, belying the claim that
Hale and Wolf were required to work on a holiday with scheduled staffing.
These factors suggested, according to the court, that they were instead
working “ ‘on-call’ or ‘stand-by.’ ”
As an alternative basis for its decision, the trial court ruled the cash-
outs were not special compensation for purposes of rule 571 because they
were not reported to CalPERS as required by that rule. (Rule 571, subd. (a).)
IV. Analysis
1. Pay for Required Duties
The first question we consider is whether rule 571 applies to this
dispute at all. It appears that all parties assumed its applicability both
during the administrative proceedings and in the trial court. On appeal,
Hale and Wolf raise a new argument: that rule 571 does not govern this case
because by its terms it applies only to members employed by contracting
agency and school employers, not to those employed by the State. Because
this is a pure question of law and there is no material dispute about the facts,
11
we may consider this question now. (See Henderson v. Pacific Gas & Electric
Co. (2010) 187 Cal.App.4th 215, 225–226; Howard S. Wright Construction Co.
v. BBIC Investors, LLC (2006) 136 Cal.App.4th 228, 242, fn. 13.)
Rule 571’s definition of special compensation items is expressly limited
to “members employed by contracting agency and school employers,” rather
than to state employees. (Rule 571, subd. (a).) Subdivision (b) of the rule,
setting forth standards for evaluating items of special compensation, and all
the remaining subdivisions of Rule 571 refer back to subdivision (a). (Id.
subds. (b), (c), & (d).)
The rulemaking history set forth in DiCarlo sheds light on the reasons
local agencies and schools in particular are subject to these precisely
delineated standards. Rule 571 was implemented in response to concerns
about local agencies engaging in “pension spiking” by adding to the items
reported as special compensation. (DiCarlo, supra, 12 Cal.App.5th at p. 486;
accord, Tanner v. Public Employees’ Retirement System (2016) 248
Cal.App.4th 743, 756 [predecessor to § 20636 enacted as part of bill to
address local contracting agencies’ recently uncovered practice of
intentionally inflating employees’ final compensation].) The DiCarlo court
explained that the history of rule 571 “demonstrates that it was
implemented” to “ ‘allow local agency and school district employers to report
only those items of special compensation that are delineated in regulations
adopted by the Board [of Administration]. [¶] Proposed Section 571 would
provide an all-inclusive list of special compensation items that must be
reported for local agency and school district employees, if authorized by
written labor policy or agreement. Section 571 would set forth the standards
followed by the Board in determining whether or not items of special
compensation qualified for inclusion in the list.’ ” (DiCarlo, at p. 486.)
12
The structure of section 20636 likewise suggests that state workers on
the one hand, and local agency and school district workers on the other hand,
may be subject to different standards for purposes of measuring special
compensation. The directive that CalPERS promulgate rule 571 is found in
subdivision (c), which defines the compensation of members in general, but
another portion of the statute, subdivision (g), provides that
“[n]otwithstanding subdivision (c), ‘special compensation’ for state members”
includes, inter alia, “[c]ompensation for performing normally required duties,
such as holiday pay.” (§ 20636, subd. (g)(3) & (g)(3)(B), italics added.)
This authority leads us to conclude rule 571 does not control whether
Hale and Wolf’s holiday cash-outs were special compensation. To the extent
the administrative and trial court decisions rest on a finding that Hale and
Wolf did not work in positions that required scheduled staffing without
regard for holidays for purposes of rule 571’s definition of holiday pay, they
are thus on shaky ground. That is particularly so because the ALJ
specifically found that Hale and Wolf’s positions did require them to work on
holidays; the reason the ALJ concluded the holiday pay was not special
compensation was that the need for holiday work did not arise from the need
for scheduled staffing—a requirement found only in rule 571. Without
engaging in lengthy analysis, the trial court found no abuse of discretion in
this conclusion.
Without rule 571’s limitations, it is difficult to square this conclusion
with subdivision (g) of section 20636, which defines key terms as applied to
state members only. For those members, “ ‘special compensation’ ” includes
“[c]ompensation for performing normally required duties, such as holiday pay
. . . .” (§ 20636, subd. (g)(3)(B), italics added.) The record fully supports the
finding that responding to the needs of union members whenever calls came
13
in—on holidays or otherwise—was one of Hale and Wolf’s normally required
duties. Thus, payments the two men received to cash out their holiday leave
credits was compensation for performing their normal duties and met the
statutory definition of “ ‘special compensation’ for state members.” (§ 20636,
subd. (g)(3).)
At oral argument, CalPERS suggested that, even if section 571 is not
directly applicable, we should be guided by its definition of “holiday pay” in
considering the meaning of that term for state members. But the precise
issue before us is not whether the cash-outs are “holiday pay” under any
given definition; it is whether they are “special compensation.” As to state
workers, the Legislature has determined that one form of special
compensation is “[c]ompensation for performing normally required duties,”
with holiday pay as one example. (§ 20636, subd. (g)(3)(B).) Our decision
rests on the fact that Hale and Wolf’s work on holidays was a part of their
normally required duties, not on any particular definition of “holiday pay.”
Disputing this result, CalPERS relies on City of Pleasanton v. Board of
Administration (2012) 211 Cal.App.4th 522 (City of Pleasanton) to argue the
union officers were at best “ ‘on-call’ ” or “ ‘on stand-by’ ” during holidays and
weekends, but that case is readily distinguishable. The question there was
whether a portion of the compensation of a division chief in a city fire
department—something called “ ‘standby pay’ ” in his labor agreement—
should be considered special compensation for purposes of his CalPERS
retirement allowance. (City of Pleasanton, at p. 526.) The division chief
worked a standard 40-hour workweek, Monday through Friday, and was off
work on the city’s regular holidays, but he was assigned to a back-up
schedule requiring him to be available to report for emergencies, as
necessary, during certain times. (Id. at pp. 526–527.) The fire department’s
14
compensation plan granted division chiefs with a standby schedule an
additional 7.5 percent of their salary in “ ‘Standby Pay.’ ” (Id. at p. 527.) In
administrative proceedings, CalPERS concluded the standby pay did not
constitute special compensation because it was paid for services rendered
outside the employee’s normal working hours, and it could not be construed
as holiday pay, training premium pay, or shift differential pay. (Id. at
p. 529.)
The trial court granted the employee’s petition for writ of mandate, and
the Court of Appeal reversed. (City of Pleasanton, supra, 211 Cal.App.4th at
pp. 525, 530–531.) In so doing, it pointed to the evidence that the 7.5 percent
pay increment was intended to compensate division chiefs for assigned duties
in excess of their normal 40-hour workweek, at times the employee testified
he was “ ‘pretty much on call.’ ” (Id. at pp. 537–538.) The appellate court
rejected the employee’s contention that the times he was required to be
available as a backup division chief were part of his “ ‘normal working
hours,’ ” because unless called in, the employee could be at home every
evening during the week and all day on weekends and holidays, and the
record did not disclose how frequently or infrequently he had to work during
those times. (Id. at p. 538.) In the court’s view, the 7.5 percent pay
increment was better characterized as compensation for being available to
work on a standby basis outside his normal working hours, rather than
compensation for working during normal working hours. (Id. at p. 539.) The
court also went on to conclude the compensation did not qualify as holiday
pay for purposes of rule 571, explaining that although the employee might
occasionally have to work on a holiday if he was on backup and was called in
to relieve someone else, he was not “ ‘normally required to work’ on holidays.”
(City of Pleasanton, at p. 540.)
15
The situation here is fundamentally different from that in City of
Pleasanton. Hale and Wolf were required to work on holidays, and there is
ample evidence that they were routinely required to carry out their duties as
union officers regardless of the day of the week or whether it was a holiday.
They did not, unlike the petitioners in City of Pleasanton, work a standard
40-hour per week schedule. (Compare City of Pleasanton, supra, 211
Cal.App.4th at p. 538.) The trial court expressed skepticism that neither
employee was able to take a holiday off during their ten years as union
officers, but there is no indication Cal Fire ever questioned Hale or Wolf’s
accounting of their work time. Ironically, part of the evidence CalPERS uses
in an attempt to show they were able to take holidays off is the example that
Hale had to spend much of a Thanksgiving Day, when he had hoped to enjoy
a gathering at his home, on the telephone dealing with an emergency. At
most, that example cuts both ways, and it does not show the officers could
regularly take holidays free of work obligations. In any event, City of
Pleasanton involved the employee of a local agency, rather than a state
member, so the stricter standard of Rule 571 governed in that case. (Id. at
p. 525.)
2. Available to All Members
As a separate basis for rejecting Hale and Wolf’s claim that the holiday
cash-outs were special compensation, the ALJ explained that the cash-outs
were not available to all members of their group or class of employment:
although Hale and Wolf worked as union officers in the same office in
Sacramento and were not eligible for certain types of compensation available
to other members of Bargaining Unit 8, they had other things in common
with members of their unit. For instance, they retained the same rights and
promotional opportunities as other members of the bargaining unit, and they
16
were paid and promoted consistent with their classification with Cal Fire.
Rejecting Hale and Wolf’s attempt to characterize themselves as their own
group or class of two, the ALJ explained that they did not lose their
characterization as firefighters when they became union officers and that an
employee may be a member of only one group or class. (See Prentice, supra,
157 Cal.App.4th at p. 993.) The trial court did not fault this analysis,
concluding it made “eminent sense” to decline to treat Hale and Wolf as a
class of two.
We do not dispute the characterization of Hale and Wolf’s “group or
class” as Bargaining Unit 8, but we are not persuaded that ends the inquiry.
One of the limitations on special compensation is that it be received by
“similarly situated members of a group or class of employment.” (§ 20636,
subd. (c)(2), italics added.) The ALJ and the trial court effectively wrote the
italicized words out of the statute, concluding qualifying special
compensation must be available to “all members of their group or class of
employment.” 5 But if there is one thing this record makes clear, it is that
Hale and Wolf’s situation was different from that of other members of
Bargaining Unit 8. They were the only two firefighters serving as union
officers at the time; they worked in a different location from other members;
they were not allowed to carry out firefighting duties; they were not eligible
for overtime; and their work schedule differed from other members of the
unit. Their different situation was recognized in the Agreements, which
treated their holiday pay cash-outs and carry-over differently than that of
other members of the bargaining unit.
5 That may be in part because rule 571, which we have concluded does
not apply to state members, lacks the “similarly situated” language in its
recitation of what qualifies as special compensation. (Compare § 20636,
subd. (c)(2) with Rule 571, subd. (b)(2).)
17
As Hale and Wolf point out, the record shows that the holiday cash-outs
are not the only item of special compensation that is not available to all
members of the bargaining unit at any given time, but only to those whose
job duties require it. For instance, for state members, one item of special
compensation for performing normally required duties is hazard pay
(§ 20636, subd. (g)(3)(B)), but under the Agreements a “HAZMAT” incentive
is available only to Unit 8 members assigned to a HAZMAT response unit on
a full-time basis, or other employees at the discretion of the Unit Chief. And
under the Agreements, paramedics in certain job classifications are entitled
to an annual “pay differential” not available to those who do not serve in
those paramedic classifications, a differential that is treated as compensation
for purposes of retirement contributions. We are not persuaded that the
union officers’ holiday cash-outs must be available to all members of Unit 8,
regardless of the duties of their particular assignment—put another way,
regardless of whether they are similarly situated—to be considered special
compensation for purposes of section 20636.
We are mindful of the general rule that we accord great weight to
CalPERS’s interpretation of the PERL and its own regulations, unless clearly
erroneous. (Prentice, supra, 157 Cal.App.4th at p. 989.) But we may not
abdicate our duty to apply our independent judgment to legal issues. (See
Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 8.)
We accord greater weight to a consistent interpretation, particularly if long-
standing, and we do not defer to one that is “ ‘vacillating.’ ” (Id. at p. 13.)
The parties draw our attention to no consistent or long-standing
determination by CalPERS either that state members are subject to the
limitations of rule 571 or that, independent of rule 571, holiday cash-outs in
the circumstances before us are not properly included in pension calculations.
18
Indeed, a recent nonprecedential decision by CalPERS, concluding in a
different factual context that rule 571 does not apply to state members,
suggests the opposite. 6 Thus, the general rule of deference does not assist
CalPERS in this case.
The facts before us are largely undisputed. On this record, we conclude
as a matter of law that Hale and Wolf’s holiday cash-outs were special
compensation and must be included in calculating their pensions. 7
DISPOSITION
The judgment is reversed. The trial court is directed to issue a new
order granting Hale and Wolf’s petition for writ of administrative mandamus.
Appellants shall recover their costs on appeal.
TUCHER, P.J.
WE CONCUR:
FUJISAKI, J.
PETROU, J.
Hale et al. v. California Public Employees’ Retirement System (A161758)
We grant the request of Hale and Wolf for judicial notice of this
6
decision, In the Matter of the Appeal Regarding the Final Compensation
Calculation of Thomas Blanco and Department of Corrections and
Rehabilitation, Respondents, Agency Case No. 2020-1209, OAH Case
No. 2021030825, April 25, 2022. Although the decision is of limited value,
both because it is not precedential and because it was not before the trial
court—and it is not necessary to our decision—it indicates CalPERS has
taken inconsistent positions on whether state members are subject to rule
571.
We do not address whether Hale and Wolf’s pension contributions
7
must be adjusted retroactively. CalPERS makes no claim on appeal that Cal
Fire’s failure to report Hale and Wolf’s holiday cash-outs in a timely manner
provides an independent basis to exclude these amounts from their pension
calculations.
19
Trial Court: City and County of San Francisco Superior Court
Trial Judge: Hon. Ethan P. Schulman
Counsel: Messing Adam & Jasmine, Gary M. Messing, Gregg
McLean Adam and Lian Balciunas Cockrell for
Petitioners and Appellants
Matthew G. Jacobs, General Counsel, California Public
Employees’ Retirement System, Elizabeth Yelland
Assistant Chief Counsel, California Public Employees’
Retirement System, and John Shipley Senior Attorney,
California Public Employees’ Retirement System for
Defendant and Respondent
20