Utah Public Employees Ass'n v. State
| Decision Date | 16 February 2006 |
| Docket Number | No. 20051121.,20051121. |
| Citation | 131 P.3d 208,2006 UT 9 |
| Parties | UTAH PUBLIC EMPLOYEES ASSOCIATION and Roes 1 through 5, Plaintiffs and Petitioners, v. STATE of Utah, Defendant and Respondent. |
| Court | Utah Supreme Court |
Benson L. Hathaway, Alexander Dushku, Matthew K. Richards, Stephen W. Geary, Salt Lake City, for plaintiffs.
Clark Waddoups, Heidi E. Leithead, David C. Reymann, Cheylynn Hayman, Salt Lake City, for defendant.
Petition for Emergency Relief
¶ 1 In its 2005 session, the Utah Legislature passed House Bill 213 (H.B.213), known as the "Unused Sick Leave at Retirement Amendments." Although the Legislature set the bill's effective date as January 1, 2006, we, at the request of Petitioners, postponed the effective date of the amendments to allow review of the constitutional issues presented in this case. The Utah Public Employees Association (UPEA) and Roes 1 through 5 have asked us, on expedited review, to consider whether the provisions of H.B. 213 result in an unconstitutional taking of state employees' vested property rights. We conclude that they do not.
¶ 2 For more than 25 years, the State has permitted its agencies to adopt an incentive program intended to both reduce the misuse of sick leave and to induce persons to work for the State in spite of generally better private-sector wages and benefits. This program originated in 1979 and has been subject to periodic legislative change since its inception. The program is currently titled the "Unused Sick Leave Retirement Option Program" (the Program), and is found in Utah Code section 67-19-14.2. Plaintiffs contend that the 2005 amendments to the Program contained in H.B. 213, effect an unconstitutional taking of employees' unused sick leave benefits by retroactively devaluing already vested rights. The State counters that no rights vest until the date of actual retirement, and therefore the employees lack a constitutionally protected property interest in those unused sick leave hours.
¶ 3 Our extensive research led to the discovery that by statute, the Legislature has occasionally changed the menu of benefits that could be acquired upon retirement in exchange for accrued and unused sick leave over the past 25 years, and that the Legislature has imposed varied restrictions on how those hours may be redeemed. We requested additional briefing on this statutory history because in their original briefs on appeal, both parties misstated the statutory history.
¶ 4 The most cursory reading of the statutory history discloses that since 1979 the Legislature has empowered state agencies to permit their respective employees to participate in some form of unused sick leave trade-in program. At its inception, the program permitted employees to "at the time of retirement" convert unused sick leave hours "into paid-up health and medical insurance."1 Under this iteration of the statute, an employee could convert 100% of accrued sick leave hours into post-retirement health and medical insurance.2
¶ 5 Beginning in 1983, however, the Legislature changed the language of the statute to require employees to accept a cash pay-out for 25% of the accrued sick leave and medical and life insurance for the remaining 75%.3 This distinction between the sanctioned use of the 25% versus the 75% remained in effect until 1998 when the Legislature changed the statutory scheme again to permit an employee to apply 25% to either a cash-payout or a 401(k) contribution.4 Then in 2004, legislative modifications again allowed, but did not require, use of the entire 100% for medical and life insurance benefits.5
¶ 6 Due to the perceived desirability of the offered incentives, most state agencies have chosen to extend the offer to their employees, and many state employees have accordingly reserved unused sick leave for the purposes permitted by the Program. Participating State employees accrue sick leave hours at the rate of four hours per two-week pay period, and many have reserved, or "banked," a significant number of unused sick leave hours. As the Program has been administered, upon retirement, employees have been allowed to redeem these banked hours for prepaid medical and life insurance coverage or for other forms of cash-payouts. Generally, the Program has permitted employees to exchange eight unused sick leave hours for one full month's coverage of health insurance.6 Additional statutory provisions permit employees to apply the remaining unused sick leave hours to medical and life insurance coverage for spouses and other dependents once the employee reaches the age of Medicare eligibility.7
¶ 7 Our own research has also led to the discovery that there have been widespread inconsistencies between the uses of unused sick leave hour redemption permitted by the statute and those allowed by state personnel regulations.8 In many instances, the regulations and practices appear to have permitted use of 100% of unused sick leave hours to be traded for medical and life insurance prior to 2004, although this practice was clearly unsupported by the statutory language between 1983 and 2004. In fact, legislative debate regarding the 2004 statutory amendment was represented by the bill's sponsors as intended to bring the statute into accord with the widespread practice of allowing retiring employees to apply all unused sick leave toward paid-up medical and life insurance at the rate of eight hours to one month of insurance.9
¶ 8 Beginning in 2003, the Legislature expressed increasing concern with escalating health insurance costs facing the State under the Program. In a short span of five years, the costs to the State for already retired employees nearly doubled. Moreover, the State anticipated an additional increase in the next ten years of more than 300%. The Legislature responded to these concerns by modifying the Program in 2005 with H.B. 213. In essence, this modification returns to the 1983-2004 statutory scheme, although not the actual practice, which allowed only 75% of the unused sick leave to be redeemed for medical and life insurance. Under H.B. 213, the statutory scheme again limits the use of the other 25%: banked sick leave falls into one of two new programs, depending upon when the employee banked the sick leave hours.
¶ 9 "Program I" applies to all sick leave accrued prior to January 1, 2006, and implements a gradual, five-year phase-out of the guaranteed continuing medical and life insurance benefits (and the corresponding 480-hour automatic reduction of unused sick leave) that had been guaranteed under the original Program. Program I also eliminates the original Program's provision permitting employees to cash-out up to 25% of their unused sick leave and instead mandates that 25% be contributed to the employee's 401(k). Plaintiffs challenge the constitutionality of the Program I modifications as substantially reducing the value of what they believe to be a vested right to use all 100% of banked sick leave in exchange for post-retirement medical and life insurance at the rate of eight hours of leave to one month of insurance coverage.
¶ 10 "Program II", on the other hand, applies to all unused sick leave hours accrued after January 1, 2006. There is no dispute between the parties that the State may implement program changes with prospective effects. We find nothing erroneous in that agreement, and as a result, we need not address the provisions of H.B. 213 that apply to Program II.
¶ 11 Plaintiffs Roes 1 through 5 have cumulatively banked more than 8,000 hours of unused sick leave prior to January 1, 2006.10 In banking this many hours of sick leave, Roe Plaintiffs took personal leave days rather than sick leave and often worked when ill. Roes 1 through 5 testified that they had been told that if they did not retire by December 16, 2005, they would not be able to utilize all of their banked sick leave hours to acquire medical and life insurance as they could have under the 2004 statutory scheme. Roes 1, 2, 4, and 5 are currently employed with the State; Roe 3 retired on August 1, 2005. The parties agree that a number of state employees retired prior to December 16, 2005, to preserve the greater benefit allowed under the 2004 language of the statute.
¶ 12 Acting in its role as the labor association representing the interests of current and former public employees on matters pertaining to public employment, UPEA commenced this suit along with Roes 1 through 5. The record reflects the extensive communication between UPEA and its members after the proposal of H.B. 213 and demonstrates that UPEA adequately represents the interests of its members in this case.
¶ 13 Plaintiffs UPEA and Roes 1 through 5 filed their complaint on June 29, 2005, in the district court and subsequently moved for a preliminary injunction to stay the effective date of H.B. 213 pending resolution of their constitutional challenge. The State opposed the injunction and moved for a dismissal based on the allegations of the pleadings. After briefing, the district court held evidentiary hearings on November 7, 9, 16, and 18, 2005. On December 8, 2005, the district court denied Plaintiffs' motions for a preliminary injunction and granted the State's motion for a judgment in its favor on the pleadings.
¶ 14 Plaintiffs petitioned this court on December 13, 2005, for an emergency stay on the effective date of the statutory changes to allow an appeal of the district court's decision. Absent such an emergency stay, the window of opportunity for employees otherwise in a position to realize the greater benefit of exchanging 100% rather than 75% of their unused sick leave for paid insurance upon retirement would have expired within three days of the matter reaching us. We granted the emergency stay on December 14,...
To continue reading
Request your trial
-
State v. Beaver
...language, I would instead "apply the test dictated by the nature of the challenge." Robinson, 10 P.3d at 459; see also Utah Pub. Emps. Ass'n, 131 P.3d at 214 ("The Morales Court also suggested, referencing scholarly articles on the matter, that in state law cases in state courts, a more app......
-
Nw. Landowners Ass'n v. State
...442. However, since Salerno , other courts have declined to apply that standard to facial challenges. Utah Pub. Emps. Ass'n v. State , 2006 UT 9, ¶¶ 20–25, 131 P.3d 208 (rejecting application of Salerno in a facial takings challenge and collecting supporting cases). The Supreme Court has al......
-
Pearson v. South Jordan City
...subject to change as thought best by the people, acting through their legislative representatives.” 4 Utah Pub. Emps. Ass'n v. State, 2006 UT 9, ¶ 27, 131 P.3d 208. Therefore, we cannot conclude that it should have been obvious to the trial court that an employee's rights cannot expand as a......
-
Nw. Landowners Ass'n v. State
...Salerno, other courts have declined to apply that standard to facial challenges. Utah Pub. Emps. Ass'n v. State, 2006 UT 9, ¶¶ 20-25, 131 P.3d 208 (rejecting application of Salerno in a facial takings challenge and collecting supporting cases). The Supreme Court has also declined to apply S......