The State Worker

Chronicling civil-service life for California state workers

March 20, 2010
Appellate court upholds State Fund decision

Thumbnail image for Gavel.jpgThe 1st District Court of Appeal in San Francisco has upheld a lower court decision that Gov. Arnold Schwarzenegger illegally furloughed about 500 State Compensation Insurance Fund legal professionals last year.

The appellate court said Friday in this decision that the San Francisco Superior Court correctly ruled that furloughing those employees violated state insurance code.

The decision affirms Judge Peter Busch's ruling on a lawsuit brought by California Attorneys, Administrative Law Judges and Hearing Officers in State Employment. It's the first time an appellate court has weighed in on furloughs.

Schwarzenegger also has appealed a second lower court decision that ended furloughs for about 5,000 fund employees represented by SEIU Local 1000. Friday's decision means that he'll likely lose that argument, too, since the CASE and SEIU lawsuits mirrored each other.

After the lower courts twice ruled against the furloughs several months ago, State Fund ended the policy and then issued back wages plus interest on the withheld pay to all 8,000 of its employees.

In a 3-0 decision, appellate court Justice Stuart Pollak noted that even if the furloughs were legal they wouldn't help the state's budget crisis, since the law requires that, "Profits earned by SCIF may not be retained by SCIF or the state but must be returned to 'its insureds as a dividend or credit.'"

Neither State Fund case is among the seven appellate court cases that Gov. Arnold Schwarzenegger has asked the state Supreme Court to consolidate and consider.

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


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