State sues Labor Department over freeze on transit grants

As expected, the state filed suit in federal court against the Department of Labor for blocking federal grants to state mass-transit agencies after unions objected to a new state law intended to slow the rising costs of public-employee pensions.

In the complaint filed Friday, the state and the Sacramento Regional Transit District contend that the Labor Department and its secretary, Thomas Perez, wrongly concluded that collective bargaining agreements cover future state employees, contrary to “binding legal precedent” holding that state law governs public employees and their pension benefits. It also argues that the feds improperly concluded that the pension reform law rolled back the collective bargaining rights of transit workers.

At issue is the Public Employees’ Pension Reform Act of 2013, a.k.a. PEPRA, which allows state and local agencies to offer less generous pensions to workers hired after the law became effective. It also allows agencies to demand higher contributions from current workers in future negotiations, while barring a number of questionable practices that have been used to inflate individual workers’ pensions.

Under a 1964 federal law, the Labor Department can hold up federal grants to mass-transit agencies if it determines that their workers’ bargaining rights over pensions and other key issues have been reduced. The state’s lawsuit contends, however, that Perez and the department are interpreting the law far too broadly.


“If allowed to stand, the practical effect of the Department’s conclusion (that PEPRA abridges collective bargaining rights and that the only valid pension changes are made at the bargaining table) would be to prevent state legislatures from amending any law that affects the employment terms of transit workers,” the lawsuit contends.

The state asks a federal judge in Sacramento to find that the department acted arbitrarily, exceeded its statutory authority and improperly prejudged the unions’ complaints about PEPRA. It also argues that withholding more than $1 billion in transit grants unless the state exempts transit workers from PEPRA amounts to coercion in violation of the federal Constitution.

The state’s goal is to obtain a declaratory judgment that PEPRA does not violate the 1964 law.



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