PRESS RELEASE Date: January 7, 2020
Re: Huasha Liu, et al. v. Board of Administration, California Public Employees Retirement System, et al., Case No. 19STCP04056
ADVOCATES FILE SUIT TO STOP CALPERS’ ILLEGAL CUTS TO PUBLIC EMPLOYEES’ RETIREMENT BENEFITS
Today, lawyers representing government workers and retirees from across the state of California filed a class action lawsuit against the California Public Employee Retirement System (CalPERS). The lawsuit asks a Court to compel CalPERS to rescind illegal cuts it made to the retirement benefits of many of its retirees.
In the early 2000s, many California government agencies ended automatic cost-of-living adjustment (COLA) increases and in favor of merit pay increases. In 2006, CalPERS promised to include these merit pay increases in its calculation of an employee’s future retirement benefits, just as CalPERS had previously done for COLA increases. To fund these promised benefits, CalPERS collected additional employee and employer contributions for the merit pay as deferred compensation. However, in 2017, CalPERS summarily reversed course, refused to pay benefits for merit pay for classic CalPERS members at the top of their salary range, and confiscated the earned, deferred benefits of scores of government workers. CalPERS made this unlawful policy reversal without any due process or opportunity for public comment. To date, CalPERS has not afforded any alternative form of compensation to make up for the cuts to the retirement benefits for these workers.
The PERS statute administered by CalPERS covers incentive pay, including merit pay. CalPERS also entered into written agreements with its members and contracting employer agencies to cover that merit pay. Under the “California Rule,” a retirement program cannot confiscate vested benefits without offering alternative compensation of equal value. The class plaintiffs assert that CalPERS’s cut to retirement benefits violates the PERS statute, the Contract Clauses of the United States and California Constitutions, and the Administrative Procedure Act, and that CalPERS must pay them the retirement benefits they were promised and on which they have relied.
The class is represented by Los Angeles based firms Hadsell, Stormer, Renick and Dai, and the Law Offices of Lisa Holder. “CalPERS has gone rogue, refusing to honor its binding promise and statutory duty to pay public servants retirement benefits that they worked hard for and earned fare and square,” said attorney Holder. “These are vested benefits protected by the Constitution. We expect the Court to protect these workers and mandate CalPERS to pay them their full retirement benefits.”
Brian Olney said, “These are public servants who paid into the CalPERS system for many years and retired relying upon promises CalPERS made to them. Now CalPERS is pulling the rug out from beneath these retirees and refusing to pay them the benefits they earned. It’s outrageous.”
The lawsuit is filed in California Superior Court in Downtown Los Angeles.
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