SACRAMENTO (Legal Newsline) - The California Supreme Court on Monday unanimously upheld Gov. Arnold Schwarzenegger's furlough plan for state employees and ruled state workers were not entitled to back pay.

The Court, in its 86-page opinion, said the governor had the legal authority to order that 200,000 workers take three days off each month without pay.

Facing a $40 billion budget deficit, Schwarzenegger had issued an executive order on Dec. 19, 2008, instructing the state's Department of Personnel Administration to implement his plan to furlough workers two days a month. The number of days was bumped up to three in 2009 as revenues continued to drop.

The furloughs -- the latest of which were renewed in August -- reduced employee earnings by about 10 percent and are estimated to save the State $80 million a month.

The Professional Engineers in California Government, a state attorneys' group, and the Service Employees International Union Local 1000 filed a lawsuit in response, claiming the furloughs were unconstitutional. An Alameda County Superior Court judge upheld their claims in March.

If the Court had agreed with the judge, workers could have received more than $1 billion in back wages.

But the state's high court, in an opinion filed on Monday, rejected the judge's ruling. Instead, it found that lawmakers had endorsed the governor's order by adopting state employee pay reductions attributable to the furlough program in its 2008 Revised Budget Act.

According to the Court, Schwarzenegger did not have unilateral authority to impose furloughs but that the Legislature tacitly agreed to them by passing budget bills that assumed furlough savings.

The Court said the phrase "existing administrative authority" in the 2009 revised budget gave Schwarzenegger the power to reduce state workers' pay.

"That phrase, in the context in which the revised budget act was adopted and in light of the provision's legislative history, reasonably included the furlough program that was then in existence and that had been authorized by the current gubernatorial administration," said Chief Justice Ron George, who authored the Court's opinion.

"Accordingly, we conclude that the 2009 budget legislation validated the Governor's program here at issue, and reject plaintiffs' challenge to the program."

Schwarzenegger issued a statement in response to the Court's ruling:

"As Governor, I have had to make very difficult decisions in response to the world-wide economic collapse, including furloughs for state workers and line-item vetoes to balance our budget," he said.

"These decisions were absolutely necessary to keep our state functioning. (Monday's) ruling upholds the state's actions to protect taxpayers and ensure we live within our means, just like every California family and business must do."

From Legal Newsline: Reach Jessica Karmasek by e-mail at

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