State Court Furlough Ruling: Judge Says "Labor Parity" Is Not Rational

SEIU Local 1000 v. Arnold Schwarzenegger (Alameda County Superior Court Case No. RG09456750) (The decision can be found on the Sacramento Bee’s website here.)

By now everyone has heard that an Alameda superior court judge has held that the Governor’s imposition of furloughs on state employees was improper. For me, the most interesting part of the decision was the judge’s holding that the state’s “labor parity” argument was not rational. Basically, there are some employees in the state whose salaries are funded from special pots of money such that furloughs do not create savings that the state can spend elsewhere. These employees were still subjected to furloughs on the ground that all employees should help bear the burden of the financial pain. The court said that requiring all employees to “suffer equally” without regard to actual savings to the General Fund was “not rationally related to any governmental purpose.”

Comments

I believe the judge got it wrong. Many public agencies throughout the state have imposed furloughs, including furloughs of employees paid from special funds. Although furloughing these employees does not create spendable savings, there are solid reasons to do so anyway from a human resources and organizational behavior standpoint.

Specifically, not having specially funded employees share the pain creates a financial incentive for employees in general fund areas to move special funds areas. I don’t know of any public agency that has a different pay scale depending on the funding source for salaries. An Office Assistant in a general fund area makes the same as an Office Assistant in a special fund area in every agency that I am aware of. Allowing special fund employees to avoid furloughs means they get paid more, and therefore everyone will want to move into a specially funded position. That creates a human resources issue for the employer. Does the employer allow that movement? How does the employer address the recruitment problem in general fund areas? Should general fund employees then be paid more to account for the possibility of furloughs? But that opens the door to differing pay scales based on how an employee’s salary is funded. Does that make sense from a human resources perspective? From an organizational behavior standpoint? In my mind no, especially if the furloughs are intended to be short-term.

I’m not saying that furloughing specially funded employees always makes sense. It may not in certain situations. All I’m saying is that there are solid, rational reasons why an employer might want to subject specially funded employees to furloughs even if it doesn’t create “savings” that can be spent elsewhere. Simply put, there are competing public policy arguments for both sides. In my humble opinion, the balancing of those competing arguments should be done by the public agency’s governing body, not by the courts. So I respectfully disagree with Judge Roesch’s holding that there is no “rational” reason to furlough employees paid with special funds.