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California Court of Appeals Affirms LACERA’s Authority to Establish Employment and Wage Classifications and Overturns County Board’s Rejection

California Court of Appeals Affirms LACERA’s Authority to Establish Employment and Wage Classifications and Overturns County Board’s Rejection

Los Angeles County Employees Retirement AssociationLos Angeles County Employees Retirement Association

Los Angeles County Employees Retirement Association

LOS ANGELES, June 25, 2024 (GLOBE NEWSWIRE) — In a landmark 79-page decision, California’s Second District Court of Appeal affirmed that the Los Angeles County Employees Retirement Association (LACERA) has the authority under the California Constitution and state statutes to establish job classifications and set wages for its employees. The ruling further clarifies that the Los Angeles County Board of Supervisors (BOS) must accept and incorporate these classifications and salaries into the County’s employment classifications and salary ordinance without modification.

In 2016 and 2017, LACERA conducted comprehensive personnel reviews, identifying the need for several new positions and salary adjustments to meet its strategic priorities and maintain its fiduciary duties to its members and beneficiaries. In 2018, the BOS ignored 15 years of its own precedent of implementing such changes without hesitation and instead refused to adopt the necessary changes to the wage ordinance. The BOS cited a decades-old case from a different Appellate District, claiming it gave them the authority to block LACERA’s proposed new classifications and salaries.

LACERA made several attempts to negotiate with the County to resolve the dispute, but these efforts were ultimately unsuccessful. In 2021, LACERA filed an injunction, ordering the BOS to comply with the law and adopt the proposed wage ordinance. The trial court was required to follow the decades-old case and ruled in favor of the County, but LACERA appealed the decision, resulting in the 2nd District’s recent favorable ruling.

The Second District Court of Appeals’ detailed opinion is a comprehensive review of the California Constitution, state statutes, and relevant ballot initiatives related to the 1937 Act, which governs LACERA and nineteen other California counties. The Court relied on Proposition 162, which passed in 1992 and explicitly conferred fiduciary responsibility on retirement boards for both the investment of funds and the administration of the system. The court affirmed that the proposal gave retirement boards like LACERA full authority to adopt job classifications and set employee salaries. The Court noted that meeting these responsibilities would be challenging if retirement boards lacked control over all system expenditures, including employee classifications and salaries.

The Court emphasized that allowing a board of supervisors, which may have different responsibilities, priorities, and agendas, to veto employment classifications and compensation established by a retirement board would undermine the board’s ability to fulfill its duties under Proposition 162. Such veto power would also erode the fiduciary relationship between the retirement board and the participants and beneficiaries of the system.

The Second District Court concluded that the Los Angeles County Board of Supervisors has a “ministerial duty” to include positions adopted by LACERA Boards in civil service classifications and to incorporate the salaries of retirement system employees into the County wage ordinance or resolution as adopted by the LACERA Councils.

“This ruling is a significant victory for LACERA, as it reinforces its autonomy and authority to manage its personnel and financial responsibilities effectively, ensuring that it can fulfill its fiduciary duties to its members and beneficiaries,” said Santos Kreimann, director LACERA executive.

The case is Los Angeles County Employees Retirement Association v. County of Los Angeles. Case number 21STCP03475. To view a copy of the ruling, click here.

About LACERA
LACERA is a public retirement plan created and operating under the County Employees Retirement Act of 1937 (CERL) and is subject to the California Constitution, CERL, and the Public Employees Pension Reform Act of 2013 (PEPRA) . Two councils govern LACERA. Both boards are made up of elected and appointed members and one ex officio member. The Retirement Board is responsible for the overall management of the retirement system and the Retiree Health Benefits Program administered by LACERA. The Investment Board is responsible for establishing LACERA’s investment policies, strategies and objectives, as well as exercising authority and control over the fund’s investment management and actuarial matters related to the determination of contributions and the estimation of the liabilities of the fund. background.

Media contact: Eric W. Rose, [email protected]