Reigniting a perpetually smoldering debate with nationwide implications, the California State Supreme Court agreed to consider whether rules cracking down on pension boosting strategies could be applied to unionized government workers. 

“A state appeals court in San Francisco ruled in a Marin County case in August that the new laws could be applied to current employees — a potentially major setback for the workers and their unions, and a victory for local governments facing mounting deficits in their pension plans,” the San Francisco Chronicle reported. “But the state’s high court voted unanimously Tuesday to put that ruling on hold while it reviews the issue for a future statewide resolution.”

“The new laws were intended to curb pension ‘spiking,’ the practice of boosting retirement benefits by increasing an employee’s pay during the final years of employment,” the paper added. “It is often done by cashing out unused vacation time, sick leave, compensation for use of one’s car and other nonmonetary benefits.” Some 2 million California public employees have retirement plans underfunded by many billions of dollars, according to the Chronicle.

Seeking momentum

As has become almost customary, labor activists and policymakers around the country have positioned themselves to act swiftly on whatever the court should decide, possibly using a ruling to press for a decisive outcome in the pension wars that have see-sawed over the course of the decade. “The ruling would apply only to California, but if the state Supreme Court decides to uphold a lower court ruling that pension benefits can be reduced in some circumstances, it would be an important signal to the many other states grappling with unsustainable pension burdens and similar rules forbidding benefit cuts,” Eric Boehm noted at Reason. “It would also signal that courts are willing to reconsider the balance between public workers and the states (and the taxpayers in those states) writing their checks.”

“According to data from Transparent California, a project of the Nevada Policy Research Group, more than 20,000 retired public workers in California pulled down more than $100,000 in retirement benefits during 2015. Meanwhile, the CalPERS pension fund is more than $139 billion in the red, an amount that would require every man, woman, and child in California to pay $11,000 if it were divided evenly.”

With over $300 billion in assets, as Andrew Andrzejewski wrote at Forbes, CalPERS has become a symbolic anchor to pension defenders and an albatross from the viewpoint of critics, “helping 1,251 local governments confer ‘highly compensated’ pensions to tens of thousands of public employees. Updated numbers displayed at OpenTheBooks.com show there is a $2.8 billion annual cost to pay out 21,862 six-figure public-sector retirees via CalPERS.”

Cautionary tales

At the same time as pension watchers have braced for the state Supreme Court’s ruling, pension hawks have urged Californians to consider cautionary tales from outside the state. “While justices will consider the case based on its legal merits, state taxpayers should hope they keep in mind what has happened in Illinois since its Supreme Court held that public employee pensions were immutable in May 2015,” the U-T San Diego Editorial Board suggested. “A state that already was in terrible shape financially now looks on the brink of disaster, unable to pay $8 billion in bills. In September, former FDIC chair William M. Isaac called for the state to declare bankruptcy.”

Even with the sense of urgency surrounding the case, observers warned that the court could take its time. “Despite the California Supreme Court’s decision to accept the Marin County pension fund case, the case may move slowly. The Supreme Court in its posting said it was waiting for another case to be resolved,” according to Pensions & Investments. “Legal observers say the state Supreme Court wants to consolidate all the outstanding cases before holding a hearing and making a final decision.”

“Sidestepping a potentially radical change for public employee unions, a deadlocked U.S. Supreme Court on Tuesday declined to topple the ability of organized labor to continue to collect dues from government workers who oppose being forced to pay fees to cover collective bargaining costs,” the San Jose Mercury News noted. “In a one-line order, the Supreme Court handed down a 4-4 ruling that effectively let stand lower court decisions backing the California Teachers Association in the closely-watched case.”

“At a time when public employee unions are under political attack in states such as Wisconsin and New Jersey, the California clash was considered a crucial showdown for organized labor and its political wallet. California teachers who support their union’s political influence have been clearly worried about the outcome in the Supreme Court, where a number of conservative justices in recent years have expressed doubt about allowing states to require fees from reluctant nonunion members.”

Political shock waves

The result drew sighs of relief from Democrats and howls from Republicans. The two parties have grown increasingly polarized around the issue of public-sector unions, which Republicans have blamed for busting state budgets and funneling cash almost exclusively to Democrats. “The case involves only public-employee unions — not private workers — but those unions are the strongest segment of an organized labor movement that is increasingly tied to the Democratic Party. At the same time, Republican governors across the nation have become embroiled in high-profile battles with the public-employee unions in their states,” the Washington Post reported.

An uncertain future

The case had become a rallying point for state Republicans in search of a bright spot this election season. “Rebecca Friedrichs, the Orange County teacher who brought Friedrichs v. California Teachers Association, received the county GOP’s Torch of Freedom award at the political group’s Lincoln Reagan Dinner at the Hilton Bayfront on Saturday,” as U-T San Diego reported.

Friedrichs, an Orange County public school teacher, “said she resigned from the California Teachers Association over differences but was still required to pay about $650 a year to cover bargaining costs,” according to Fox News. “In Abood, the court said public workers who choose not to join a union can be required to pay for bargaining costs if the fees don’t go toward political purposes.”

For their part, Democrats have claimed that anti-labor activists want nothing less than to render unions incapable of affording their basic function as collective bargainers. “Organized labor considered it the most vital Supreme Court case of the year, and one of a clutch of politically charged cases that puts the justices in the spotlight as the nation turns its attention to the elections of 2016,” the Post observed.

The split decision left labor law poised on a razor’s edge. Although the court “had raised doubts about the viability of the 1977 precedent, Abood v. Detroit Board of Education,” that authorized the “fair share fee,” “it stopped short of overturning it in two recent cases,” as Fox News noted. Now, court watchers have begun to doubt whether the justices who would alter or scrap the rule will ever be capable of cobbling together the five votes necessary to do so. President Obama, who has settled on a candidate to replace Justice Scalia, hopes to force the hand of Congressional Republicans this year and replace what had been a relatively reliable “conservative vote” on the court with a more liberal one.

“Beleaguered by fundraising doubts and attacks from organized labor, two former California officials said Monday they are backing off plans to place a measure on the November ballot intended to curb public pension benefits,” the Sacramento Bee reported. “Instead, former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio said in a joint announcement, ‘We have decided to re-file at least one of our pension reform measures later this year for the November 2018 ballot.'”

Staying solvent

The news marked a sharp reversal for critics of the state’s pension spending, which has ballooned apace with California’s freshly flush balance sheet. The price tag for guaranteed health coverage alone has put Sacramento on notice of the size and scale of the problem. “The state has promised an estimated $72 billion in health care benefits for its current and future retirees, an amount that will increase to more than $300 billion over the next three decades, according to the governor’s Department of Finance,” according to the Associated Press.

Gov. Jerry Brown has sought to bring those costs under control in a way that won’t spur a revolt within his own party or hand too much power to Republican legislators. “Brown proposes prefunding benefits similar to the way the state pays for pensions — by paying into a trust fund that accrues investment returns over time, reducing the amount of money that taxpayers must contribute in the future,” the AP noted. “In negotiations with public employee unions, he’s asking state workers to pay into a fund through a deduction on their paychecks. The state would pay an equal amount.”

A firmer approach

The Reed/DeMaio proposals would have tackled unions in a much different way.  “Reed and DeMaio had filed two proposals for the November 2016 ballot, planning to choose one,” as the AP reported separately. “One would have put employees who first join a public pension system on or after January 2019, into 401(k)-style retirement savings plans that guarantee fixed contributions from employers instead of fixed returns. The second measure would have capped how much employers could pay for new hires’ retirement benefits to a certain percentage of their salary.”

Public opinion studies produced conflicting portraits of how much support for the initiatives Reed and DeMaio could count on. “Apparently the measure to force new employees into 401(k) style ballot initiatives did not poll well (even though a 2015 poll by Reason-Rupe showed majority support for such a shift),” as Reason observed. “The measure to cap the amount employers could contribute to pensions fared better in polls, but according to Reed, they weren’t able to raise enough money to collect signatures and prep for an expensive battle with California’s public unions.”

Finding funding

That difficulty struck at the heart of the year’s complex political landscape. “The stark reality is that within the state, there are no deep pockets to finance such a campaign,” Dan Walters noted at the Bee. “However large they may be, fast-growing pension and health care liabilities don’t discomfit any major interest groups, since their greatest impacts are on local governments, especially cities, rather than on state government.” That would have likely pushed the initiative’s supporters into a scramble for cash.

The necessity to look far and wide for money fostered its own kind of political optics problem. “Any reform campaign would be dependent on money from one or more wealthy individuals, probably from out of state, and it hasn’t materialized,” as Walters observed. “Conversely, any broad retiree benefit reform effort would draw implacable, high-dollar opposition from unions.” So even if the reform effort gained an adequate sponsor, Golden State unions would be able to portray their high-dollar spending as more of an in-state groundswell than their opposition — a potentially substantial advantage in a populist election season.

Two separate policy changes fueled the about-face. At the federal level, Congress turned its back on No Child Left Behind, the Bush-era legislation that drew consistent fire from some Republicans and Democrats concerned that assessing student performance was becoming more formulaic and outcome-based than appropriate.

The new law — known as the Every Student Succeeds Act — “aims to take a more holistic approach to evaluating schools, using qualities beyond test scores,” the Los Angeles Times noted. But questions have arisen as to how much wiggle room ESSA can, or should, give state educators when it comes to assessment. “Under ESSA, states have to devise a ‘system of meaningfully differentiating’ schools by looking at academics in addition to at least one other factor, as long as the academics are given ‘much greater weight,'” reported the Times. “ESSA calls for states to intervene in the bottom 5 percent of their schools, in addition to schools where specific groups of students consistently underperform and high schools with graduation rates below 67 percent. States can determine what they do to those schools, as long as the interventions are ‘evidence-based.'”

Off the hook

In California, the changes drew initial enthusiasm. The state Board of Education has busied itself replacing its own Academic Performance Index with a new set of guidelines also designed to bring a more holistic and nuanced approach to capturing what schools do well or don’t. But the lapse in federal rigor between the weakening of No Child Left Behind and the passage of ESSA gave California officials an opportunity to loosen standards markedly — one they seized upon, to the dismay of critics. “Since 2002, No Child Left Behind tied schools’ federal grades to students’ proficiency in math and English. But now, under a waiver granted in June, California bases those grades solely on attendance, test participation and graduation rate — which itself has been inflated with the demise of the state high school exit exam,” reported the San Jose Mercury News. “Those are much easier bars to hurdle — and achieved by most California schools.”

“Without the fed’s waiver, more schools would be facing more mandates if the yardstick were still based on proficiency. On standardized tests last spring, only 44 percent of California students tested proficient in English, and 33 percent proficient in math — far short of No Child Left Behind’s unrealistic expectation of 100 percent proficiency. Even though nearly half of California public schools are still designated as Program Improvement, educators no longer see it as threatening.”

In fact, state education officials have helped along the rush toward weak and waived standards. California, wrote Michael Gerson in the Washington Post, “is so happy to be free from the tyranny of testing that it has suspended the California High School Exit Examination and ordered schools to retroactively reward diplomas to students who failed the test during the last decade.”

Brewing conflict

What’s more, the Board’s suspension of the API has triggered a crisis of regulatory interpretation around the standard’s requirement that the Board publish an annual list of the 1,000 worst-performing schools in the state. Citing the API’s suspension, state superintendent Tom Torlakson “is refusing to publish a list of the 1,000 low-achieving schools, thus blocking parents from sending their children to ones with better ratings,” as Dan Walters observed at the Sacramento Bee. Outgoing Republican state Senate leader Bob Huff, R-Diamond Bar, has challenged Torlakson’s interpretation. “He has an opinion from the Legislature’s legal counsel that Torlakson, a close ally of unions, is still obligated to calculate an API, based on available indices of achievement, such as the state’s newest academic tests, and therefore issue a list,” wrote Walters.

But the report injected a significant note of caution into the coming debate, reminding policymakers that the Golden State’s recent nightmarish fiscal straits still could return if the country’s economic health sours anew. “Although the Legislative Analyst’s Office doesn’t predict that another economic downturn is imminent, the report analyzed how easily the state budget could absorb the impact of another recession and found that the state is still vulnerable to budget deficits,” observed the San Jose Mercury News. “A sizable reserve is the key to making it through the next economic downturn with minimal disruption to public programs,” the report concluded, according to the paper.

Familiar battle lines

Neither party’s priorities — nor Gov. Jerry Brown’s — have changed since the last time budget wrangling began in earnest. In a statement, Department of Finance director Michael Cohen played down the idea that the relative windfall should open the door to big new spending initiatives. “The strong economy is good news for California, but the recession scenario outlined by the Legislative Analyst is a sobering reminder that we must continue to pursue fiscal discipline, pay down liabilities, and build up our Rainy Day Fund during these fleeting good times,” he said, according to the Sacramento Bee. Brown’s next budget proposal was due to arrive in January.

Meanwhile, Hoover Institution fellow Bill Whalen suggested that “both parties likely will go along with expanding services for the developmentally disabled and restoring payments to doctors with Medi-Cal caseloads. … Chances are that Democrats will take another run at Gov. Jerry Brown over a big-ticket prize such as universal preschool. Meanwhile, Republicans will want to cut taxes.”

Unions to the fore

As the parties drew up their battle lines, however, California’s politically active unions already pressed ahead with a strategy designed to increase taxes by bypassing Sacramento entirely. “A proposed ballot measure to continue the so-called temporary tax hike 12 years beyond its scheduled Dec. 31, 2018, cutoff was cleared by the secretary of state for signature collection,” George Skelton confirmed at the Los Angeles Times. “The initiative’s sponsors are the California Teachers Assn. and the state Services Employees International Union. The teachers union contends that $50 billion in education cuts will never be made up, that inflation-adjusted funding still is $1 billion under the 2007 level and that K-12 spending, when factoring in California’s high cost of living, ranks 42nd in the nation.”

What’s more, however, one service employees’ chapter has linked up with the California Hospital Association and the California Medical Association in a rival effort to “extend the higher income tax rates permanently,” Skelton added. “It could be a political disaster to have two competing tax hikes on the ballot. So the two sides are negotiating in an effort to create one compromise proposal.”

Taxing cigarettes

Complicating the campaign season still further, a separate effort to raise taxes by $2 per pack of cigarettes — including electronic cigarettes or vapes — has drawn the support of unions including the California State Council of Service Employees, which ponied up $2 million. Tom Steyer, the billionaire Democratic donor and former hedge fund manager, also offered $1 million of his own money, according to the Sacramento Bee. “An alliance of public health, labor and health care groups has pushed the tax increase as a tool to reduce smoking rates and to better fund Medi-Cal, California’s low-income insurance program. Revenue from the tax hike could fund higher reimbursement rates for doctors who see Medi-Cal patients,” the Bee noted.

In familiar language, critics hit back, charging that the proposed increase would actually fall most heavily on the less well-off. The pack tax “largely would fund programs for the poor; yet the poor would pay for the programs because they form the largest group of smokers,” wrote the Orange County Register’s editorial board. “It would raise up to $1.3 billion a year. But as we always warn, boosting cigarette taxes also would increase the black market, which especially afflicts the poor.”

Fighting over the spoils

With an election year on the way, Democrats jockeying for power in Sacramento have found themselves in fractious intra-party competitions. “Assembly Speaker Toni Atkins, faulted by some for not controlling her moderate faction, is being forced out of her seat by term limits but doesn’t want to retire, so she is challenging Sen. Marty Block’s bid for a second term in San Diego,” as Dan Walters observed at the Sacramento Bee. “Atkins says Block had promised to retire after one term and cede the Senate seat to her, but he denies it. The stage is thus set for what is likely to be an expensive and nasty duel between two conventionally liberal Democrats.” Another drama has centered around Raul Bocanegra’s establishment-backed effort to wrest back his seat from insurgent Patty Lopez, Walters added.

On budgeting, meanwhile, Gov. Jerry Brown’s unwillingness to capitulate to Democrats’ demands for greater largesse was thrown into a striking new light by the news that California’s balance sheet is $1 billion stronger than projected this fiscal year. “The surplus suggests Brown was indeed conservative during budget negotiations,” according to Capital Public Radio. “The governor insisted on using lower revenue estimates, while legislative Democrats had pushed for some limited additional spending.”

Republicans, whose idea of fiscal discipline tends to go well beyond Brown’s own, see Democrats’ power struggle over spending as a double-edged sword. Giving too much credit or support to Brown would weaken the already anemic state GOP, while undermining him would fuel an insurgency from the Left. But in a telling signal of how Republican officials sought to resolve the dilemma, the party has pointedly withdrawn itself from races where business-friendly or Brown-allied Democrats faced a matchup against more liberal or union-funded challengers. Speculation has built that the pattern could effectively repeat itself in the campaign to replace outgoing U.S. Sen. Barbara Boxer. Thanks to California’s new primary system, “it just may happen that no Republican survives next June’s Top Two primary, letting Harris and Sanchez split the larger Democratic vote and duke it out in the fall,” according to the Californian. “To prevent that, two of the Republicans will have to drop out long before that primary.”

Unions divided

Even without the added pressure of GOP machinations, organized labor, a powerful Democratic constituency, has found itself fractured in the Golden State. California, the state with the most lower-wage employees, has been at the forefront of activists’ successful movement to boost minimum wages in the absence of federal legislation. But now, that effort has been imperiled by its own strength.

“The SEIU mega-local UHW, based in the San Francisco Bay Area, has long been campaigning for a 2016 ballot measure for a $15 minimum and has already gathered the requisite number of signatures to get it on the ballot,” the American Prospect reported, drawing the support of Democrats like Lt. Gov Gavin Newsom and the mayors of party strongholds like Oakland and San Francisco. Yet the dominance of Democrats and labor has produced internal competition. The SEIU California State Council rolled out a measure of its own “that would also raise the minimum to $15 while expanding access to paid sick leave for home-care workers.”

“The competing measures are the latest skirmish in the running battle between the UHW leaders and the leaders of the national union, joined by other state SEIU honchos, over questions of SEIU’s strategy and structure,” the Prospect noted. “The skirmish has higher-wage advocates worried that two competing measures will diminish state voters’ considerable support (68 percent in the Field Poll) for a $15 minimum wage, so much so that both measures could go down to defeat.”

The whistleblower alleged earlier this year that the agency’s office of General Counsel made misleading and false statements to persuade agency board members to sue Gerawan Farming, a San Joaquin Valley company that employs 5,000 and is regarded as the nation’s largest peach grower. The state Agricultural Labor Relations Board has been trying for more than two years to throw out a vote by Gerawan farmworkers on whether to fire the United Farm Workers as their collective bargaining representative.

Gerawan Farming

The whistleblower said that “false statements, inaccuracies and vague information had been written into” a board document prepared by the general counsel, according to a staff memo presented to the board in May as members were considering whether to file a temporary restraining order against Gerawan.

“The ALRB employee stated that the (general counsel’s) declaration is vague and misleading and that there were statements made in the declaration that were untrue,” the memo says. “The ALRB employee stated that the Board would be making a decision on this (temporary restraining order) packet and they needed to know false statements were being made in the declaration.”

The Board says it launched an internal investigation into the allegations in August and has declined to comment. Reached via phone, former General Counsel Sylvia Torres-Guillen did not respond to questions by the deadline for this story. The whistleblower’s name is protected under state law and has not been released.

A staff shakeup commenced in the months following the complaint.

Torres-Guillen took a new job with Gov. Jerry Brown’s office. Two of the general counsel’s staff members also left the agency.

An ALRB official declined to comment on the departures.

Petition for Investigation

To prevent agency conflicts of interest regarding whistleblower complaints, the California Whistleblower Protection Act provides for the state auditor to receive complaints and conduct independent investigations. After learning of the whistleblower memo, Gerawan Farming petitioned California State Auditor Elaine Howle to investigate.

“An employee of the General Counsel’s office displayed great courage in notifying the Board about improper taxpayer-financed conduct by the General Counsel,” Gerawan attorney David A. Schwarz wrote in a June 2 letter to Howle. “We believe an independent investigation by your office is warranted.”

The State Auditor’s office said it is barred by law from confirming whether such a probe is taking place.

The tussle over the farmworkers’ vote on union representation stretches back to 2013.

Gerawan Background

The union had been a representative on paper but had failed to actually represent the Gerawan workers for more than 17 years, an appeals court found. The union “suddenly reappeared on the scene” in 2012.

The union demanded a contract requiring the workers to pay 3 percent of their pretax wages or lose their jobs. Workers pushed for a vote on whether to sever ties with the union.

“We don’t want a union,” said Silvia Lopez, a Gerawan worker who has helped organize union opposition. “We just want the ALRB to count our votes and honor whatever the results may be.”

In 2013 Board Chairman William B. Gould IV overruled his lawyers and ordered the vote to proceed in November of that year. Lawyers to the Board administered the vote and collected the ballots but refused to allow them to be counted, alleging that Gerawan committed unfair labor practices.

As of May 2014, the ballots were being held in a safe in a regional office of the ALRB, an official told ReasonTV.

The board’s administrative law judge later recommended that the Board dismiss the workers’ decertification effort. The ALRB is due to vote on whether to follow the judge’s recommendation.

Gould remained at loggerheads with Torres-Guillen, whose office filed repeated legal actions against Gerawan, losing case after case. In March, Gould and the other board members forced the general counsel to seek board approval before taking any further legal action.

Whistleblower Allegations

The whistleblower’s allegations surfaced two months later, as Torres-Guillen sought board approval to file a temporary restraining order against Gerawan to force the farm to rehire a pro-union worker.

In court documents, Gerawan said the worker had designed a provocation that would get him fired, which the Board’s general counsel and union could use as a pretext to allege unfair labor practices.

The staff memo, dated May 12, says that the whistleblower was well-placed to have access to detailed information on the alleged wrongdoing. “This employee was part of the investigative team and was present in the interview of [Gerawan] and false statements, inaccuracies and vague information had been written in the declaration . . . being filed with the Board.”

The Board approved the request for the temporary restraining order against Gerawan later that day. A state superior court judge quashed the Board’s motion on June 16.

Superior Court Judge Donald S. Black had harsh comments about the Board in his ruling, which appeared to validate the whistleblower’s allegations. In his decision, Black stated, “given the deficiencies in the investigation conducted by the ALRB, the apparent embroilment of the ALRB’s staff in the investigation and its involvement in the termination of [the worker], and the strong evidence disputing the petitioner’s [ALRB’s] claim that [the worker] was terminated for his union activities, the court concludes that the petitioner has not shown reasonable cause to believe an unfair labor practice has been committed” on Gerawan’s part.

Departures from the Board

Meanwhile, top attorneys in the Board’s General Counsel office were exiting. Torres-Guillen, who had been appointed by Gov. Brown in 2011, took a job in his office.

“I will be leaving my position as General Counsel effective July 1, 2015,” her June 13 resignation letter states.

Soon after, Torres-Guillen’s top acolytes began to leave the agency. The first to go was Salinas regional director Alegria de la Cruz, whose long affiliation with the United Farm Workers was a source of controversy. Then Silas Shawver, the Visalia regional director who had taken possession of the uncounted Gerawan worker ballots, resigned without public explanation.

As the whistleblower controversy roiled the Board offices, the Board’s executive secretary, J. Antonio Barbosa, took a leave of absence. While Barbosa remains on staff with the same title, Special Board Counsel Paul M. Starkey was named acting executive secretary. Barbosa did not respond to requests for comment.

The Board has refused to answer questions about any relationship between the whistleblower’s allegations and the departures of the general counsel and two of her most fervently pro-union deputies.

Gould and the board “will not comment on matters that are pending before the Board or may come up before the Board,” Starkey wrote in an Oct. 30 statement to the American Media Institute.

Starkey said the Board is conducting its own internal probe about the whistleblower.

“In August of this year, the Board commenced an investigation, which is pending completion,” he said. “Accordingly, the Board will not comment.”

Asked about the apparent purge in the general counsel’s office, Starkey passed the buck to Brown and claimed legal privilege. Torres-Guillen’s abrupt departure, Starkey said, “concerns matters within the purview of the Governor’s Office.”

Brown’s office did not return a call for comment. Starkey also refused to comment on the departures of de la Cruz and Shawver, saying the question “concerns personnel matters, upon which the Board does not comment.”

By law, the Board must be impartial between employers and unions in defending the rights of farmworkers.

To the largely Mexico-born workers, the Board’s silence reminds them of the system they left behind.

“In Mexico, the labor unions are part of the ruling political party, which controls the government bureaucracy,” Lopez said. “With the ALRB, it’s no different in California, where the political elites serve as the fixers for the UFW. It’s not supposed to be that way here in America.”

United Farm Workers spokeswoman Luz Peña did not respond to multiple requests for comment.

Secretive ALRB Refuses to Answer Questions

The American Media Institute emailed 11 sets of questions to Agricultural Labor Relations Board Chairman William B. Gould IV and the other board members on Oct. 29. Board Acting Executive Secretary and Special Board Counsel Paul M. Starkey replied in an email and letter on Oct. 30. What follows are the questions, and Starkey’s complete answers to each.

Question: “1. Why did the Board ignore the whistleblower and approve the general counsel’s request for a TRO [temporary restraining order against Gerawan Farming]?  2. Did the Board attempt to inform the Court that it had reason to believe that ALRB general counsel attorneys provided false information in order to secure Board approval of the TRO?”

 

Answer: “Turning to your media questions concerning ‘Whistleblower in ALRB,’ questions 1 and 2, relating to TRO litigation, are the subject of the pending case in Gerawan Farming, Inc., 2015-CE-011-VIS.”

 

Q: “3. What internal investigation did the Board conduct about the falsification of information from the General Counsel’s office to the Board?  4. What wrongdoing did the Board uncover?”

 

A: “Questions 3 and 4, relating to the Board’s investigation, also are the subject of that pending case. Further, in August of this year, the Board commenced an investigation, which is pending completion. Accordingly, the Board will not comment.”

 

Q: “5. Did Governor Brown remove Ms. Torres-Guillen as general counsel because of that wrongdoing?”

 

A: “Question 5 concerns matters within the purview of the Governor’s Office. See enclosed print out.”

 

Q: “6. Did Ms. Alegria de la Cruz and Mr. [Silas] Shawver resign because of that wrongdoing?”

 

A: “Question 6 concerns personnel matters, upon which the Board does not comment.”

 

Q: “7. Does the Board have probable cause to believe that any laws were broken? If so, which laws might have been broken? If not, why not? Has the board requested an independent outside criminal investigation to remove all doubt? If not, why not?  8. Even if no laws were broken, do you believe that Ms. Torres-Guillen, Ms. de la Cruz, and Mr. Shawver acted ethically as members of the bar?”

 

A: “Questions 7 and 8 are covered by the response to questions 3 and 4.”

 

Q: “9. Has the ALRB made any amends to Gerawan for seeking the falsely procured TRO?”

 

A: “Question 9 is covered in the response to questions 1 and 2.”

 

Q: “10. Why does the ALRB General Counsel’s office continue to employ at least one attorney with a documented record as a biased union activist, who was part of the disgraced faction that was removed over the summer?”

 

A: “Question 10 is directed to the [Board’s] General Counsel, not the Board.”

 

Q: “11. What is the Board . . . doing to investigate and punish any past or continued wrongdoing?”

 

A: “Question 11 is covered by the response to questions 3 and 4. For the reasons explained above, the Board declines comment.”

****

J Michael Waller is an investigative journalist with the American Media Institute. 

Rebecca Friedrichs

Faced with the greatest legal challenge to their core source of revenue, California unions have braced for defeat and scrambled for alternatives.

Some time after its new term begins this month, the Supreme Court will hear arguments in Friedrichs v. California Teachers Association, which challenges the union’s collection of mandatory fees from members. The case’s stakes have been raised as high as possible by plaintiffs’ supporters. “We are seeking the end of compulsory union dues across the nation,” said Terry Pell, president of the Center for Individual Rights, according to the Sacramento Bee.

“Since 1997, the Supreme Court has held that requiring non-union members to pay the cost of collective bargaining prevents ‘free riders,’ meaning workers who get the benefits of a union contract without paying for it,” as NBC News noted. “But in subsequent rulings, several of the court’s conservatives have suggested that the decision should be overruled.” Legal analysts suggested the track record implies a victory for California’s plaintiffs. Erin Murphy, a federal appeals lawyer, told NBC News she “would not feel very good about my prospects if I were the unions.”

Crisis mode

At the end of the Legislature’s final session, pro-union Democrats attempted an unusual “gut and amend” maneuver, wherein a bill’s contents are wiped out and completely replaced without revisiting the standard hearing process. The new language would have required one-on-one, union-sponsored “public employee orientation” for existing and new employees. The content of the orientation “would be the sole domain of the union and not open to negotiation,” with employees “required to attend in person during work hours. Taxpayers would pick up the tab,” the Heartland Institute added in a critical summary.

Although the effort failed, it was a notable reflection of state unions’ concern that they can’t rely on the Supreme Court to protect their current practices. “Public employee unions haven’t had mandated orientations because they don’t need them,” U-T San Diego’s Steven Greenhut observed, calling the last-minute gut and amend a “pre-emptive strike” on the court’s hearing of Friedrichs. “Newly hired workers must already pay dues to the recognized union.”

Not all union supporters have framed the impending decision as a crisis, however. “Even some pro-union voices have argued the Friedrichs case doesn’t portend the end of the world for public-sector unions, in that it might force them to become more responsive and democratic,” Greenhut suggested.

But the court’s decision is likely to hinge on more fundamental questions pertaining to the very definition of a union.

What’s a union?

One element of the problem has been that unions fear members just won’t pay dues if they can get away with it — the so-called “free rider” problem, familiar from the idea that many fewer Americans would pay taxes were they merely voluntary. “No one knows how many would, with annual dues in the CTA, for example, often topping $1,000,” according to the Los Angeles Daily News. “That makes this a life-and-death case for the unions,” which fear the political power of their main adversaries — certain large corporations and high-net-worth individuals — would go undiminished. It would be very difficult, in other words, for the court to successfully separate the question of unions’ political power from the question of their existence.

That has led analysts to focus on a second aspect of the problem of what a union really is. One Justice, Antonin Scalia, has indicated in the past that the existence of unions within the American system of law depends on their ability to generalize the burdens of keeping them running. “In a 1991 case, he wrote that because public sector unions have a legal duty to represent all employees, it’s reasonable to expect all workers to share the costs,” the Daily News noted.

For that reason, the question of what counts as political expenditures would likely come to the fore before the court. But the plaintiffs in Friedrichs have anticipated the controversy, because they see it as the foundation of their entire case. “All union fees, they argue, are in some way used for political activities and since they don’t always agree with the union’s stance, having to pay any fees is an infringement on their first amendment rights,” the Guardian reported.

Forging ahead with plans to take minimum wages to new highs, California’s San Francisco Bay Area has touched off tit-for-tat increases, deepening fears that the region’s high cost of living has become a business-killer.

A growing dilemma

“Berkeley’s City Council approved a hike in June 2014 that will lift the minimum wage to $12.53 by next year,” the Los Angeles Times noted. “In November, voters in San Francisco and Oakland overwhelmingly approved increases, with San Francisco on track to hit $15 before Seattle does. Oakland went up to $12.25 this year.” Then, last month, nearby Emeryville surpassed Berkeley and Oakland with a $14.44 wage; “Berkeley sent its labor commission back to the drawing board. The council next month is expected to take up a proposal that would add paid sick days, extend wage hikes until they hit $19 in 2020 and then add cost-of-living increases in perpetuity.”

The upshot for businesses has been mixed at best: although some employers have crafted clever strategies for adding more value for customers, others have worried the path is unsustainable. “The necessity of paying people a living wage in the Bay Area is clear, so it’s hard to argue against it, and it’s something I’m really proud to be able to try doing,” one pizzeria owner told the Times. “At the same time, I’m terrified of going out of business after 18 years.”

As big wage increases have been passed into law across California, business interests haven’t always been the only ones to pump the brakes. In Los Angeles, where the city minimum is a $15 wage, critics of the increases howled when labor advocates wound up asking for a waiver on the eve of its passage. “The exemption was left out of the law’s final version after criticism from the local chamber of commerce and business groups,” noted the Wall Street Journal. “But similar exemptions are included in at least three other Los Angeles laws, including a minimum wage for hotel workers approved last year.”

Recalibrating business

Although California has led the country in grappling with stagnant wages and rising costs of living, the turn toward higher minimum wages has touched off broad debates across the country. Hospitality businesses such as the hotel industry have faced a particular challenge as wages have climbed upward. For years, bar and restaurant groups have lobbied policymakers to think twice, warning that dramatically hiking wages would undermine their business models, which politicians and analysts have often built into their assumptions about jobs and economic health.

“The problem with the minimum-wage offensive is that it throws the accounting of the restaurant industry totally upside down,” as Harold Miller, a restaurant consultant currently serving as vice president for franchise development at Persona Pizzeria, told the Chicago Tribune.

In tech-forward areas with high costs of living and high rents, the threat to the hospitality business model has accelerated the shift toward increased automation and decreased employment rolls.

Stalling statewide

Some California employers have set out to recalibrate their work forces, hoping that a shift to more temporary workers could blunt the economic impact of wage increases. But the political impact of such a shift has also become a problem. Faced with criticism over differential treatment between contract and career employees, the University of California system offered a $15 “minimum wage” set to apply to thousands of contract workers on a private, not public, payroll.

UC unions were still left cold. “Private contract firms will still make as much as $10 an hour or more in profit off the labor of workers being denied the same wages as UC workers doing the same jobs,” wrote the president of the system’s largest employee union in the San Francisco Chronicle. “UC could choose to send a different message by supporting SB376,” she argued, “legislation that would guarantee the employees of UC contractors equal pay as career employees doing the same work.” That bill was authored this spring by state Sen. Ricardo Lara, D-Bell Gardens.

But the latest Golden State bellwether, a bill creating a statewide $13 wage introduced by state Sen. Mark Leno, D-San Francisco, could signal that the minimum wage wave may be cresting. As the Sacramento Business Journal observed, Leno’s effort “moved farther than it did last year, but the bill’s fate is far from assured.” Although Gov. Jerry Brown has “proposed to tackle income inequality this year through an earned income tax credit,” he has declined to comment on the push for a $13 wage — letting a skeptical Department of Finance speak for him.