CA Court Strikes Down Furloughs for Insurance Fund Employees

September 2, 2009 ( - A San Francisco Superior Court judge overturned unpaid furlough days that were ordered for more than 6,000 employees of the State Compensation Insurance Fund.

The National Law Journal reports that the Service Employees International Union Local 1000, the state’s largest union of public employees, argued that insurance fund employees were exempt from furloughs under the California Insurance Code. The court agreed, pointing to a section of the code that exempts the employees from “any hiring freezes and staff cutbacks otherwise required by law.”

Because a furlough “reduces the availability of staff and constitutes a staff cutback,” it is illegal for the insurance fund workers, the court concluded, according to the National Law Journal.

The court declared the past furloughs illegal and blocked any further furloughs. The union is also seeking back pay plus interest for members who lost money as a result of the furloughs ordered by Governor Arnold Schwarzenegger.

The California Public Employees’ Retirement System (CalPERS) has also asked a state court judge to declare it exempt from state-ordered worker furloughs, saying it could lose its ability to generate benefit checks as well as to properly manage its investment portfolio. (see CalPERS Goes to Court to Escape State Worker Furloughs ).

Last week, the U.S. District Court for the District of Maryland determined that a furlough plan instituted by Prince George’s County in Maryland violated employees’ rights under the U.S. Constitution’s Contract Clause. The court agreed with several unions that the provisions of the collective bargaining agreements (CBAs) that set the wages and hours for employees preempt any contrary provision from being enacted and made the furlough plan inactive (see Court Says Furlough Violated Employees’ Rights ). 

According to the National Law Journal, in July, a state judge in Hawaii issued a similar ruling, saying a furlough violated the state constitution and criticizing officials for ordering unpaid leave without first negotiating with the unions.