Justices Take Up Catholic Case; Calif. Workers Lose Pay Appeal : Employees Sought Interest Payment on Delayed Raise

The Supreme Court today refused to hear an appeal by public employees in California seeking interest payments on salary increases temporarily withheld unlawfully.

The justices, over one dissenting vote, let stand a ruling that the state may not be forced to pay interest to the affected workers.

A lawsuit seeking to force the state to pay the interest was filed by groups representing police officers in Fresno and Oakland and deputy sheriffs in San Mateo County.

They said denying the interest payments was a form of unconstitutional seizure of their property without just compensation.

Justice Byron R. White voted to hear arguments in the case, but four votes are needed to grant such review.

Traced to Prop. 13

The dispute stems from the passage in 1978 of California’s Proposition 13, which limited the revenue local governments may raise through property taxes.

The state Legislature then passed a law to distribute surplus money in the California treasury to local governments to assure they would maintain essential services.

But the law required that local governments grant cost-of-living salary raises to their employees that were no larger than increases given state workers.

The California Supreme Court threw out the law, ruling it violated the local workers’ contractual rights. The state court ordered that the employees receive their agreed-to salary hikes, but denied interest payments based on the temporarily withheld increases.

Raise Withheld a Year

The pay hikes had been withheld for nearly a year for many employees.

A state appeals court ruled against the law enforcement officers in March.

It said that when the state violates a contractual right the only judicial remedy is to restore the contract--in this case giving the employees their full salary increases. But the appeals court said additional money damages may not be assessed against the state.

“To conclude otherwise would lead to the serious impediment, if not prevention, of a broad spectrum of legislative action,” the appeals court said. “We cannot impose liability on the state for fulfilling its basic task of governing.”

In the appeal acted on today, the public employees relied on a Supreme Court ruling earlier this year in which the justices said landowners may be compensated for the temporary “taking” of their property by government regulations.