The state Supreme Court affirmed without an opinion Tuesday a lower court ruling that workers’ compensation judges have no vested rights in pay increases, and therefore no recourse to collect on a rescinded raise.
The court’s order in Pennsylvania Workers’ Compensation Judges Professional Association v. Commonwealth was a one-line per curiam ruling affirming the Commonwealth Court’s January 2012 decision in the case.
According to the opinion from the Commonwealth Court, as management-level employees, the workers’ compensation judges were not subject to collective bargaining agreements entered into by other state employees. But the judges would typically receive a "pass on" increase in which they received the same salary increase that was negotiated for in a collective bargaining agreement involving non-management-level employees.
When that "pass on" was rescinded in December 2008 by the Executive Board of the Commonwealth of Pennsylvania and the Department of Labor and Industry because of budget shortfalls, the Pennsylvania Workers’ Compensation Judges Professional Association sued the executive board, the governor and other government officials. They argued in a petition for review in the Commonwealth Court’s original jurisdiction that the rescission violated the contracts as well as the takings clauses of the state and federal constitutions.
In ruling on the executive board’s preliminary objections, the Commonwealth Court in an unsigned per curiam order found the judges had no rights to that money either under contract or under the takings clauses.
"The association cannot point to any employment contract or statute providing its members with a personal or property right in increased salaries and any claim under the takings clause of the United States or Pennsylvania constitutions must fail," the court said.
The association argued the takings clauses were violated because the rescinding of the raise was essentially the same as taking private property for public use. The Commonwealth Court said that in order for such a claim to be valid, the association would have to demonstrate a property right in future salaries.
"Under Pennsylvania law, employees are at-will and, absent a contract, may be terminated at any time for any reason or for no reason," the court said. "This general rule is not abrogated just because the employee is a governmental worker since an individual does not have a per se right in governmental employment. Rather, a governmental employee only has a personal or property right in his employment where he can establish a legitimate expectation of continued employment through either a contract or a statute."
Workers’ compensation judges have been classified as management-level employees since 1996. The Workers’ Compensation Act states that the judges are subject to employment security under the Civil Service Act, but the court said the Civil Service Act is silent on the issue of salary and doesn’t give any protection to a judge’s salary.
In addressing the judges’ claims under the contract clauses, the Commonwealth Court said it is long settled that the constitutional prohibition against impairing contracts protects the permanence of a salary and, to the contrary, doesn’t prohibit the cutting of a public officer’s salary during his or her term in office. The court said the executive board was not precluded from rescinding the pay increase.
A resolution from a state agency is not akin to a legislative action that would impact a contract, the court said. In the cases cited by the Commonwealth Court, it found all those cases reasoned resolutions related only to a specific subject and specific group of people that would last for a limited period of time were merely the way an agency conducted its affairs and were not characteristic of a law.
"The resolutions only applied to a specific subject and a specific group of employees for a distinct period of time, i.e., a 3 percent general pay increase in July 2008 and a one-step longevity increment of lump sum payment in January 2009 for management and other non-union employees, including WCJs," the court said. "Additionally, the resolutions were simply the method by which the executive board performed its statutory duty. Moreover, the actions of the executive board are consistent with the typical actions of management personnel, i.e., the setting of salaries for those under their supervision."
As part of the pass-on at issue, the judges were initially given in March 2008 a 3 percent general pay increase to take effect in July of that year and a one-step longevity increment to take effect in January 2009 that equated to a 2.25 percent pay increase.
The 3 percent pay raise went into effect in July 2008. But in December 2008, the executive board rescinded the January 2009 one-step longevity increment, citing "’fiscal challenges resulting from revenue falling significantly below budgetary projections during fiscal year 2008-09.’"
Attorney John Stember of Stember Cohn & Davidson-Welling in Pittsburgh represented the judges’ association. He said he and his clients were disappointed the court didn’t agree with their position and didn’t offer an analysis that could provide guidance in future cases. Stember said the issue was even more unique for the workers’ compensation judges because the salary freezes were said to be a result of state revenue shortfall due to less taxes coming in. But Stember said the judges are paid not out of state revenue but rather through fees assessed to employers and put in an administrative fund.
Claudia M. Tesoro of the Pennsylvania Attorney General’s Office represented the defendants and declined to comment.