Decision 2544Ea – Bellflower Unified School District

Although California public sector labor relations precedent frequently protects employee and union rights to a greater degree than does federal precedent governing private sector labor relations, we consider federal precedent for its potential persuasive value. (Operating Engineers Local Union No. 3, AFL-CIO (Wagner, et al.) (2021) PERB Decision No. 2782-M, p. 9, fn. 10.)

Although the Board reviews exceptions to a proposed decision de novo, to the extent an ALJ assesses credibility based upon observing a witness in the act of testifying, we defer to such assessments unless the record warrants overturning them. (County of Santa Clara (2019) PERB Decision No. 2629-M, pp. 8-9.) If a proposed decision adequately addressed issues raised by certain exceptions, the Board need not further analyze those exceptions. (Id. at p. 6.) The Board also need not address alleged errors that have no material impact on the outcome. (Ibid.)

Compliance proceedings should generally not lead to protracted litigation and should be commensurate to the scope of relief at issue. (Bellflower Unified School District (2021) PERB Decision No. 2796, pp. 21-22.)

Records such as Form W-2s, Form 1040s, and other wage and income records are typically sufficient evidence of employee losses, mitigation efforts, and interim earnings.

The respondent has the burden of proving its compliance with each part of the Board’s order.

Within a reasonable period post-termination, terminated employees have a duty to mitigate losses by taking steps consistent with the inclination to find new work and be self-supporting. (County of Lassen (2018) PERB Decision No. 2612-M, pp. 8-9.) A respondent that violated the law has the burden of establishing that an employee did not make a good faith effort to mitigate damages. (Id. at p. 8.) First, the respondent must show that: “(1) a number of positions were available that are substantially equivalent to the one previously held by the claimant; (2) the claimant would have qualified for one of these positions; and (3) the claimant did not apply for these positions.” (Fresno County Office of Education (1996) PERB Decision No. 1171, adopting proposed decision at p. 4.) If the respondent establishes each of these elements, the employee may still satisfy the duty to mitigate by showing other reasonable efforts via testimony or other reliable evidence of good faith job hunting efforts. (Id., adopting proposed decision at pp. 4-5.) As with other issues causing uncertainty in the amount of damages owed, PERB resolves uncertainty about mitigation against the wrongdoer. (Bellflower Unified School District (2019) PERB Order No. Ad-475, p. 10; City of Pasadena (2014) PERB Order No. Ad-406-M, p. 27.) Resolving whether an employee made reasonable efforts does not turn on any single category of potential job applications, much less any one application.

A cease-and-desist order draws its meaning from the specific violation found in the context of the entire decision. (William S. Hart Union High School District (2018) PERB Decision No. 2595, p. 13.) The cease-and-desist order disallowed renewed unilateral subcontracting without an adequate defense.

A finding by the Board that an unfair labor practice was committed is presumptive proof that at least some backpay is owed. (Bellflower Unified School District (2019) PERB Order No. Ad-475, p. 10.) Notwithstanding this presumption, in compliance proceedings the charging party bears the burden of proving damages caused by the respondent’s unfair practice(s). (Regents of the University of California (2021) PERB Decision No. 2755-H, p. 56.) The charging party, however, need not prove damages with precision. Rather, make-whole relief usually involves predictions and estimates, and thus an approximation of actual damages may be sufficient to meet the charging party’s burden. (City of Pasadena (2014) PERB Order No. Ad-406-M, p. 14 (Pasadena).) PERB resolves uncertainties as to the amount owed against the wrongdoer. (Id. at p. 27; City of Culver City (2020) PERB Decision No. 2731-M, p. 26.) Moreover, provided that an estimate has a rational basis, and is not so excessive as to be punitive, it appropriately serves both a compensatory and deterrent function. (Pasadena, supra, PERB Order No. Ad-406-M, p. 13.)

Make-whole relief should expunge the consequences of an unfair practice and restore “the economic status quo that would have obtained but for the respondent’s wrongful act.” (County of Kern and Kern County Hospital Authority (2019) PERB Decision No. 2659-M, p. 26; City of Pasadena (2014) PERB Order No. Ad-406-M, p. 13.) PERB’s task is therefore to “recreate the conditions and relationships that would have been had there been no unfair labor practice, even when doing so necessarily entails some degree of uncertainty as to the precise relationships.” (City of Pasadena, supra, p. 13.)

Improperly laid-off employees who ceased mitigation efforts did not waive reinstatement, particularly given that “back pay and reinstatement are two separate remedies.” (County of Riverside (2013) PERB Decision No. 2336-M, p. 16.)

Within a reasonable time, terminated employees have a duty to mitigate losses by taking steps consistent with the inclination to find new work and be self-supporting. (County of Lassen (2018) PERB Decision No. 2612-M, pp. 8-9.) A respondent that violated the law has the burden of establishing that an employee did not make a good faith effort to mitigate damages. (Id. at p. 8.) First, the respondent must show that: “(1) a number of positions were available that are substantially equivalent to the one previously held by the claimant; (2) the claimant would have qualified for one of these positions; and (3) the claimant did not apply for these positions.” (Fresno County Office of Education (1996) PERB Decision No. 1171, adopting proposed decision at p. 4.) If the respondent establishes each of these elements, the employee may still satisfy the duty to mitigate by showing other reasonable efforts via testimony or other reliable evidence of good faith job hunting efforts. (Id., adopting proposed decision at pp. 4-5.) Resolving whether an employee made reasonable efforts does not turn on any single category of potential job applications, much less any one application. As with other issues causing uncertainty in the amount of damages owed, PERB resolves uncertainty about mitigation against the wrongdoer. (Bellflower Unified School District (2019) PERB Order No. Ad-475, p. 10; City of Pasadena (2014) PERB Order No. Ad-406-M, p. 27.)

The duty to mitigate damages is not a difficult hurdle. (Bellflower Unified School District (2019) PERB Order No. Ad-475, p. 10.) Efforts to mitigate damages need not be successful; employees must only undertake them in good faith. (County of Lassen (2018) PERB Decision No. 2612-M, p. 9.) Employees must show an inclination to be self-supporting, but need not seek work that is more onerous than their prior employment, need not confine themselves to looking for jobs earning the same level of compensation as they had previously earned, and need not remain in the same industry. (Ibid.) Moreover, an employee who pursues an educational opportunity satisfies the duty to mitigate by combining school with job hunting or by reasonably deciding that additional education is the best path toward gainful employment. (Id. at p. 10.) Self-employment also satisfies the duty to mitigate. (County of Riverside (2013) PERB Decision No. 2336-M, adopting proposed decision at p. 19)

Applying for or receiving retirement benefits does not mean an employee has left the workforce, so long as the employee is otherwise attempting to mitigate losses and willing to return to work. An employee may experience severe economic stress after a wrongful layoff or termination and may have to tap retirement benefits to make ends meet. This does not, by itself, reflect a decision to stop working. Nonetheless, if an employee who begins drawing retirement income also stops mitigation efforts, the latter decision appropriately affects the employee’s backpay award going forward.

Unemployment benefits are not interim earnings that offset employee damages. However, receipt of such benefits is at least relevant evidence on the issue of efforts to mitigate; to receive benefits, unemployment applicants must apply for new jobs or engage in a reasonable education or training program.

PERB described the methodology for calculating various components of reinstated employees’ net losses. To estimate net lost wages (before interest), it is proper to project the annual wages an employee would have received if still working for the employer, and then to subtract wages earned from alternative jobs the employee could not have held while employed with the employer. If an employee’s offsetting wages equal or exceed the employee’s projected wages with the employer in any year, then the employee’s net lost wages for that year are zero. Excess offset income from one year neither offsets losses in a different year nor offsets benefits-related losses.

PERB described the methodology for calculating various components of reinstated employees’ net losses. If an employee must pay more for medical, dental, and/or vision insurance, then PERB will calculate the difference either on an annual basis or across any reasonable timeframe. If an employee has no access to one or more types of health insurance offered previously, or the employee declines higher cost insurance available through an interim employer or otherwise, the employee may instead seek reimbursement for out-of-pocket costs of uncovered care. At times, it is proper to use a combination of methods.

PERB described the methodology for calculating various components of reinstated employees’ net losses. Losses related to post-employment benefits, including retiree health benefit losses, defined contribution plan losses, and CalPERS defined benefit plan losses, are compensable. (Contra Costa County Fire Protection District (2019) PERB Decision No. 2632-M, p. 58; City of San Diego (2015) PERB Decision No. 2464-M, p. 45, affirmed sub nom. Boling v. Public Employment Relations Bd. (2018) 5 Cal.5th 898, 920.) Making employees whole for defined benefit losses normally requires an offending employer to remit contributions to the pension plan to ensure that the employees receive service credit for the backpay period, thereby placing them in the same situation as if the unfair practice had not occurred. (See, e.g., City of Glendale (2020) PERB Decision No. 2694-M, p. 74; Gov. Code, § 20969.3 [applicable to terminations of CalPERS participants on or after January 1, 2017]; Matter of Kareemah M. Bradford (2017) CalPERS Board Decision No. 17-01 [proper to restore service credit to CalPERS participants who were terminated prior to January 1, 2017 and then reinstated].) Any interest owed to the pension plan, on either party’s contributions, is the employer’s responsibility. (City of Glendale, supra, PERB Decision No. 2694-M, p. 74.) Such arrangements may become more complicated if an employee began withdrawing retirement benefits during the backpay period. Such an employee can choose to “unretire” (which may involve paying back distributions already received, with the goal of a more valuable retirement benefit later) or to choose an alternate means of estimating retirement benefit losses. (Id. at p. 73; Gov. Code, § 21198.)

PERB reversed ALJ’s decision to offset against four employees’ lost wages the CalPERS pension distributions they began receiving during the backpay period, as the employees had earned this deferred compensation entirely during their pre-layoff work for the employer. (See Miller v. State of California (1977) 18 Cal.3d 808, 814 [pensions “are deferred compensation earned immediately upon the performance of services”].) Pension distributions received during the backpay period offset an employee’s net backpay award only if an employee earned the pension via work during the backpay period. (United Enviro Systems, Inc. (1997) 323 NLRB 83, 84 [retirement income from an interim employer earned during the backpay period offsets losses].) In contrast, deferred compensation earned before the backpay period is not an offset against earnings lost during the backpay period. (Ibid.; Fresno County Office of Education (1996) PERB Decision No. 1171, adopting proposed decision at p. 8, fn. 9 [pension distributions, which employee earned before her layoff, did not offset lost earnings during the backpay period].)

Interim employment expenses are a type of consequential damages that are recoverable in full and do not offset interim employment earnings for purposes of calculating net backpay (overruling Otay Water District (2004) PERB Decision No. 1634-M to the extent it is inconsistent with this decision). Thus, a compliance officer should calculate interim employment expenses as a stand-alone form of consequential damages rather than as part of determining net lost pay. Under this approach, compliance officers should award interim employment expenses in full, with interest, regardless of an employee’s employment earnings.

PERB described the methodology for calculating interest payments where the backpay period spans more than one year, and the Board noted that interest may be calculated on a spreadsheet, or by use of interest calculators which are readily available on the internet.

Make-whole relief includes tax neutralization, which is make-whole relief to cover potential increased tax liability employees may incur from a lump sum backpay award that artificially moves earnings from multiple tax years into a single tax year, thereby making large parts of such income taxable at a higher rate. (County of Ventura (2021) PERB Decision No. 2758-M, p. 56, fn. 23.) In most cases, even though a charging party has not yet incurred the tax liability warranting neutralization, the charging party has the burden to estimate likely tax consequences in the compliance stage. Whether the charging party engages a professional or relies on tax software or an online tax calculator, the charging party must detail the basis for its estimate, thereby allowing the respondent a chance to contest the estimate and the compliance officer to assess what level of tax neutralization, if any, is appropriate based on a preponderance of the evidence.

In calculating backpay, it is appropriate to use reasonable approximations or averages. (San Jacinto Unified School District (1994) PERB Decision No. 1078, p. 4 & adopting proposed decision at pp. 38-39.) It is standard to incorporate wage increases into backpay calculations.

When an unlawfully laid-off employee takes on a primary replacement job but also a second job that he or she could have taken even absent the layoff, such extra wages do not normally offset lost wages. (NLRB v. Community Health Services (10th Cir. 2016) 812 F.3d 768, 777.)

Losses related to post-employment benefits, including retiree health benefit losses, defined contribution plan losses, and CalPERS defined benefit plan losses, are compensable. (Contra Costa County Fire Protection District (2019) PERB Decision No. 2632-M, p. 58; City of San Diego (2015) PERB Decision No. 2464-M, p. 45, affirmed sub nom. Boling v. Public Employment Relations Bd. (2018) 5 Cal.5th 898, 920.) Making employees whole for defined benefit losses normally requires an offending employer to remit contributions to the pension plan to ensure that the employees receive service credit for the backpay period, thereby placing them in the same situation as if the unfair practice had not occurred. (See, e.g., City of Glendale (2020) PERB Decision No. 2694-M, p. 74; Gov. Code, § 20969.3 [applicable to terminations of CalPERS participants on or after January 1, 2017]; Matter of Kareemah M. Bradford (2017) CalPERS Board Decision No. 17-01 [proper to restore service credit to CalPERS participants who were terminated prior to January 1, 2017 and then reinstated].) Any interest owed to the pension plan, on either party’s contributions, is the employer’s responsibility. (City of Glendale, supra, PERB Decision No. 2694-M, p. 74.) Such arrangements may become more complicated if an employee began withdrawing retirement benefits during the backpay period. Such an employee can choose to “unretire” (which may involve paying back distributions already received, with the goal of a more valuable retirement benefit later) or to choose an alternate means of estimating retirement benefit losses. (Id. at p. 73; Gov. Code, § 21198.)

Failing to rescind a unilateral change creates a one-sided advantage for the employer and forces the union to negotiate back to a status quo that should already be in place (County of Merced (2020) PERB Decision No. 2740-M, pp. 21-23.).

In assessing whether to award legal expenses for sanctionable litigation conduct, PERB applies a standard akin to Rule 11 of the Federal Rules of Civil Procedure. (Sacramento City Unified School District (2020) PERB Decision No. 2749, p. 11.) Separately, standard make-whole principles warrant awarding a charging party reasonable legal expenses it incurred in a separate proceeding to “remedy, lessen or stave off the impacts of the other party’s unfair practice.” (Id. at p. 11.) In that instance, the charging party need not establish the Rule 11-type factors. (Ibid.) When PERB awards legal expenses, either as make-whole relief or as a litigation sanction, a party may seek reimbursement for “virtually any item for which a law firm customarily bills a client, including, inter alia, billable professional services (meaning attorney and law clerk services and certain ‘paralegal’ services that may be performed by legal assistants with or without a paralegal license), as well as incidental costs such as filing fees, electronic research fees, or fees for service of process.” (Id. at pp. 14-15.) PERB also awards pre-judgment and post-judgment interest on legal expenses. (Id. at p. 19.)

In cases where PERB awards legal expenses, either as make-whole relief or as a litigation sanction, the appropriate method for determining professional fees is generally the lodestar method, which involves multiplying a reasonable number of hours spent on a matter by a reasonable hourly rate for private legal professionals with similar experience. (Sacramento City Unified School District (2020) PERB Decision No. 2749, pp. 15-16 (Sacramento).) Reviewing attorney time records, verified by declaration, is an accepted method for assessing the reasonableness of the number of hours spent litigating a matter. (See Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396-397.) The goal is to ensure that the award is consistent with the prevailing market rate for professionals at a private law firm with a similar degree of experience. (Sacramento, supra, PERB Decision No. 2749, p. 16.) This also provides an orderly system for resolving fee disputes that does not require protracted litigation into the appropriateness of a fee demand. (Id. at p. 20, citing Serrano v. Unruh (1982) 32 Cal.3d 621, 642.) PERB may adjust the resulting fee calculation upward or downward, thereby allowing some flexibility in assessing the market value of the legal services performed. (Id. at pp. 15-16.) It is not appropriate to reduce a lodestar award merely because some or all the legal professionals work for a nonprofit, government agency, or in-house legal department, or otherwise are paid a flat salary and do not bill clients for their time. (Id. at pp. 16-19 & fn. 10.)

Union awarded reimbursement of legal expenses it incurred in opposing employer’s frivolous reconsideration request was not entitled to an award of “fees on fees,” viz. reimbursement for time union spent on its attorney fee motion, where union had not yet had to perform work beyond drafting an initial set of declarations and supporting brief. (Sacramento City Unified School District (2020) PERB Decision No. 2749, pp. 19-20.) Additional sanctions may become appropriate if union is required to expend additional attorney time and resources to recover its attorneys’ fees awarded pursuant to Board order to prevent dissipation of value of award. (Id. at p. 19, citing Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 580.)

Board’s remedial order required the employer to compensate the union for dues it lost by virtue of employer’s unilateral subcontracting, plus 7 percent annual interest. An employer’s obligation to reimburse dues does not allow it to reduce its backpay payments to employees by an equivalent amount. (Regents of the University of California (2014) PERB Decision No. 2398-H, p. 37 [explaining that “it is not appropriate to penalize employees for the employer’s unfair practice by requiring that they remit back dues”]; see also Regents of the University of California (Berkeley) (2018) PERB Decision No. 2610-H, pp. 96-97; City of Sacramento (2013) PERB Decision No. 2351-M, pp. 49-50.) Thus, it is not incumbent upon employees to remedy the collateral injury to the exclusive representative—diminution of the bargaining unit and the corresponding diminution in both bargaining power and dues—caused by an employer’s unilateral change.

A waiver of a statutory right must be clear and unmistakable. (County of Merced (2020) PERB Decision No. 2740-M,
p. 19, citing Los Angeles Unified School District (2017) PERB Decision No. 2518, p. 39.)