California Supreme Court upholds unpaid furloughs for more than 200,000 state workers

The California Supreme Court on Monday unanimously upheld unpaid furloughs for more than 200,000 state employees during the last fiscal year but ruled that a governor lacks unilateral authority to reduce work weeks and pay for state workers.

Although the ruling spares the state from having to reimburse workers for reduced pay during the first year of furloughs, it requires future governors to have the consent of the unions or the Legislature before forcing mandatory unpaid days off.

Both Gov. Arnold Schwarzenegger and labor unions declared a degree of victory in the decision.

Schwarzenegger hailed the ruling in a statement because it “upholds the state’s actions to protect taxpayers and ensure we live within our means.”

Anne Giese, a union attorney who argued the case before the high court, said she was heartened the court limited the governor’s powers going forward.

“In all my years, I’ve never gotten a loss that felt so good,” said Giese, who represents the state’s largest public employee union, Service Employees International Local 1000, which counts nearly 100,000 members. “The governor does not have the authority that he thought he had.”

In recent months, Schwarzenegger has successfully used the threat of furloughs as a bargaining chip in labor negotiations. Six labor units earlier this year agreed to curb new worker pensions, partly in exchange for immunity from furloughs. The governor has now lost that point of leverage.

Monday’s decision was the first by the state high court to address disputes between the governor and state workers over orders that cut the pay of state employees. More than 30 lawsuits have been filed challenging the unpaid furloughs, and lower court rulings have been mixed.

Lawyers for state employees argued that only the Legislature could cut employee pay, while the governor insisted he had unilateral authority in such cases.

In the decision written by Chief Justice Ronald M. George, the court said the furlough order implemented in 2009 was valid because legislators subsequently approved a budget measure that reflected the governor’s order.

The legislative action “validated the Governor’s furlough program here at issue,” the court said.

Senate President Pro Tem Darrell Steinberg (D-Sacramento) said he was “disappointed with the decision” and its reasoning.

“It was a very bad situation and we had no other choice,” Steinberg said of the 2009 budget that counted the financial savings from the furloughs. “It was certainly not our intention to ratify the legality of unilateral furloughs.”

By ruling that the governor lacks unilateral authority to furlough, the court also placed in doubt three-day-a-month furloughs in effect since August. With California dragging into the fiscal year without a spending plan, Schwarzenegger declared a state of emergency in late July and imposed the forced days off.

Those furloughs are illegal, but the Legislature could approve them retroactively to make them valid, said an attorney for state workers.

“Right now they are illegal,” said Gerald A. James, who argued the case for California’s professional engineers. “The Legislature needs to pass a state budget, and it will be interesting to see what they do.”

Another issue in the pending state spending plan — already the tardiest in modern state history – is finding budget savings in the prison system. The correctional guards union, which represents more than 35,000 workers, is operating without a contract and is the only labor union that has refused to collectively bargain with the Schwarzenegger administration.

Steinberg said Monday the court decision Monday “would help determine what language is necessary” in the budget to achieve a 10% reduction in employee compensation, whether by approval of furloughs or other means.

“We’ll be talking about that over the next 24 hours,” he said.

In another decision, the court also ruled unanimously that Schwarzenegger acted legally when he vetoed nearly $500 million in spending last year for social service programs. Democratic legislators had challenged those vetoes.

maura.dolan@latimes.com

shane.goldmacher@latimes.com