Supreme Court to Review State Furlough Case

California Attorneys, Administrative Law Judges and Hearing Officers in State Employment v. Schwarzenegger (2010) 182 Cal.App.4th 1424, review granted, 106 Cal.Rptr.3d 702.

The California Supreme Court has granted review in CASE v. Schwarzenegger. Pursuant to the order granting review, the issue before the Court is, “Does the Governor have the authority to furlough the state employees at issue in this case by executive order?” While this sounds like something that might have far-reaching effect throughout the state, the reality is that the decision will likely be much more limited. In CASE v. Schwarzenegger, the issue is whether the Governor’s furlough authority extends to employees of the State Compensation Insurance Fund (SCIF). Both the trial court and appellate court held that the Governor could not impose furloughs on SCIF employees because of Insurance Code section 11873, which provides:

“Notwithstanding any provision of the Government Code or any other provision of law, the positions funded by the State Compensation Insurance Fund are exempt from any hiring freezes and staff cutbacks otherwise required by law.”

If this case is decided solely based on Insurance Code section 11873—which is unique to SCIF—then it will have virtually no impact on other public employees.

However, what is interesting is the other part of the Court’s order granting review in which the Court states, “Review in this case may be undertaken in conjunction with possible consideration of similar issues in cases that are pending in the courts of appeal.”  So what does that mean?  It seems like the court is saying that it might extend the CASE v. Schwarzenegger case to include arguments raised in the state employee furlough cases pending in the lower courts.  Those cases directly raise the issue of whether the Governor has the authority to impose furloughs on state employees absent Legislative action.  Thus, CASE v. Schwarzenegger could have far-reaching implications if the Court considers those other cases.

The briefing schedule set by the Court is very quick.  The Governor’s brief is due June 9, 2010 and the union’s brief is due on June 29, 2010.  With this schedule, we could have oral argument by the Fall.

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