TIMELINE

.I’iAClit.l ii’ 1* Ipg*i Pensionable Earnings or Not?

May 1994

Mar2006 I lAug2006

Sep 2012

Dec 2012

Mar 2013

IRS Determines the Courts /

County may not issue

Reporters both a 1099 and

W-2 for tax reporting

purposes. 1099’s had been

issued for "offsite"

Transcription Service Fees.

Must all be treated as

Wages.

r]

Ventura Decision

County begins

withholding for

retirement for CT

Fees

S CT Fees Again

Pensionable

WEII’413ER0, ROGER & ROSENFELD It a

1001 Marina Village Parkway, Suite 200 .JACOS A AW A LUETTO

Alameda, CA 94501 RUSSELL ryMMEc SEDORIXW

TELEPHONE (510)337-1001 DANIEL t S JOUSNE KMIE

BROWR

FAX (510) 337-1023 PATRICM. GATEt OICSEMS ROBERTA 0 PERKiNS. Of C,w,u& NftL FEECEL. Of Co&mW flEA It GAU.EGOS. Cl OsoKid

� Nie BthI*Sd In � In

��.ffiflthit.dlnNw,E’ Aloe dnted In l[iniif

’..R M, SATISS I.. lie Voit

March 13, 2013

Board of Retirement Fresno County Employees’ Retirement Association 1111 H Street Fresno, CA 93721

Re: FCERA - Court CT Fees

Dear Board of Retirement:

As you may know, the Service Employees International Union, Local 521 ("SEIU") represents Court Reporters employed by the County of Fresno Superior Court ("Court"). The SEIU is in receipt of Retirement Administrator Phil Kapler’s letter to the SEW dated February 27, 2013. The SEIU submits this letter to register its strenuous opposition to any proposal or resolution that designates "CT fees" as a pay item that does not qualify as "pensionable compensation" or "compensation earnable" under Government Code sections 7522.34 and 31461. The Public Employees’ Pension Reform Act of 2013 ("PEPRA") does not require the Board of Retirement ("Board") of the Fresno County Employees’ Retirement Association ("FCERA") to exclude "CT fees" from the list of pensionable pay items. Indeed, Government Code section 70046.2 requires that FCERA treat "CT fees" as "pensionable compensation" and "compensation earnable." Moreover, if the Board were to take such action, the Board would violate the constitutional rights of SEIU-represented Court Reporters by impairing those court employees’ vested rights in their pension benefits.

Based on Mr. Kapler’s February 27, 2013 letter, it is our understanding that the Board intends to consider whether "CT fees" should be characterized as "pensionable compensation" or "compensation earnable" under Government Code sections 7522.34 and 31461. "CT fees," by way of background, are "all per diem and transcription fees paid by the county or court to [an] official court reporter. . - ." (Govt. Code § 70046.2.) On December 6, 2006, the Board adopted a resolution ("Earn Code Resolutioxf’)1 that designated "Court Transcript Fees and per diems paid to Court Reporters" as "[e]lements to be [i]ncluded in ’[cjompensation [e]arnable." Per the Earn Code

This resolution is referred to on the Board’s website as the "Earn Code Resolution." (http://www2 .co.fresno.ca.us/9200/Special%2OAnnouncement%2oEarn%2oCode%20 1 20606.htm)

LOS ANGELES OFFICE SACRAMENTO OFFICE HONOLULU OFFICE 800 Wilshire Boulevard. Suite 1320 428 J Street Suite 520 Union Plaza

Los Mgeles, CA 00017-2607 Saaa,mnto, CA 95814-2341 1136 Union Malt, Suite 402 TEL 213.380.2344 F4X213.4435098 TEL 916.443.6600 FAX916442.0244 Honokilu, HI 968134500

TEL 808.528 8880 FAX 808.528 8881

Board of Retirement March 13, 2013 Page 2

Resolution, the Board also adopted a list of "pensionable earn codes." 2 Included on that list of pensionable earn codes is the pay item described as "Court Transcriber Pay." The "earn code" for "Court Transcriber Pay" is "CT." "Court Transcriber Pay" are the "CT fees" at issue before the Board. Up until today, FCERA has treated the "Cr’ earn code as a pensionable pay item, in accordance with Government Code section 70046.2 and the Earn Code Resolution.

"CT fees" are "pensionable compensation" and "compensation earnable" under Government Code sections 7522.34 and 31461. respectively.

The relevant provisions of PEPRA are codified in Government Code sections 7522.34 and 31461, which define "pensionable compensation" and "compensation eamable" for new and current members, respectively. Government Code section 7522.34(a) states that "’[p]ensionable compensation’ of a new member of any public retirement system means the normal monthly rate of pay or base pay of the member paid in cash to similarly situated members of the same group or class of employment for services rendered on a full-time basis during normal working hours, pursuant to publicly available pay schedules." Government Code section 31461(b)(3) provides that "[p]ayments for additional services rendered outside of normal working hours, whether paid in a lump sum or otherwise" are not "compensation earnable." It is anticipated that sections 7522.34(a) and 31461(b)(3) will be cited as authority for excluding "CT fees" from FCERA’s list of earn codes.

"CT fees" are "pensionable compensation" and "compensation earnable." SEIU-represented Court Reporters’ preparation of transcripts at the direction of the Court are not "additional services" within the meaning of section 31461(b)(3). Indeed, preparation of transcripts at the direction of the Court is a fundamental job duty of the Court Reporter classification and is in fact mandated by various provisions of the Government Code. In addition, the time during which Court Reporters prepare transcripts at the Court’s direction does not fall outside of Court Reporters’ "normal working hours." It is common practice for Court Reporters to prepare transcripts during Court hours. Court Reporters also prepare Court-ordered transcripts at their residences after Court hours; Reporters do not receive overtime pay for this work. Court Reporters’ "normal working hours" necessarily includes the hours that Reporters prepare Court-ordered transcripts. And it is "normal" for Court Reporters to work beyond Court hours in order to prepare transcripts.

Moreover, PEPRA does not override Government Code section 70046.2, which unequivocally provides that "all per diem and transcription fees paid by the county or court to [a] regular official court reporter" must factor into the calculation of pension benefits for Court Reporters. If the Legislature had intended to override Government Code section 70046.2, then the Legislature would have amended section 70046.2 when it passed PEPRA. As you know, the Legislature did not amend section 70046.2. The only conclusion we can thaw from this fact is that PEPRA does not supersede Government Code section 70046.2. In accordance with the clear statutory mandate of Government Code section 70046.2, the Board must continue to treat "CT fees" as "pensionable compensation" and "compensation earnable."

2 This list is available on the Board’s website at the following web address: http://www2.co.fresno.ca.us/9200/Special%20Announcement%2oEarn%2OCode%20 l20606.htrn.

Board of Retirement March 13, 2013 Page 3

Removing "CT fees" from FCERA’s earn codes list is unconstitutional as applied to Court Reporters who are "current members."

SEW-represented Court Reporters have a vested, constitutionally protected right to receive the pension benefits promised to them in the Earn Code Resolution and the list of earn codes maintained by FCERA since at least 2006. Since the Board passed the Earn Code Resolution in 2006, SEIU-represented Court Reporters have relied on FCERA’s promise that "CT fees" are pensionable in planning their retirements. In fact, SEIU-represented Court Reporters have made direct contributions to the FCERA retirement system in order to fund the pension benefit�including "CT fees"�promised to them. If the Board were to exclude "CT fees" from the list of earn codes, the Board would effectively steal the contributions SEIU-represented Court Reporters have made for "CT fees" since 2006 towards the pension system.

It is FCERA’s duty to calculate the pensions of SEIU-represented Court Reporters in the manner promised to them through the Earn Code Resolution and FCERA’s list of earn codes. As you know, FCERA owes a fiduciary duty to its members. Further, assuming for the sake of argument only that AB 197 is ambiguous, "[a]y ambiguity or uncertainty in the meaning of pension legislation must be resolved in favor of the pensioner, but such construction must be consistent with the clear language and purpose of the statute." (Ventura County Deputy Sheriffs’ Assoc. v. Ventura County Employees’ Retirement Association (1997) 16 Cal.4th 483, 490.)

A resolution that excludes "CT fees" from the calculation of SEIU-represented Court Reporters’ pension benefits would violate these members’ constitutionally protected vested rights in their pension benefits. Please note that four lawsuits are currently pending in jurisdictions where the retirement system implemented AB 197 in a manner that impaired vested rights: Contra Costa County Employees’ Retirement Association litigation (Case No. MSNI2-1 870); Alameda County Employees’ Retirement Association litigation (Case No. RG1 2658890); Mann County Employees’ Retirement Association litigation (Case No. CIV 1300318); and Merced County Employees’ Retirement Association litigation (Case No. CV 003073). Surely this Board does not want to venture down that same path.

For these reasons, the SEIU respectfully requests that the Board reject any resolution that would exclude "CT fees" from "compensation earnable." Furthermore, the SEW insists that the Board provide sufficient notice before it considers whether any of the other earn codes are "pensionable compensation" or "compensation earnable." The Board should be aware that SEIU-represented employees also have constitutionally protected vested rights in having their pension benefits calculated based on FCERA’ s other earn codes, many of which were part of the Ventura settlement agreement.

Sincerely,

Sean 1). Grahamt i

SDG:sm opeiu 3 afl-cio(l) 11707940

March 5, 2013

FCERA Court CT Fees 1111 H Street Fresno, CA 93721

RECEIVED MR 1 3 2013

0f9PO County Emp10Ye

R em it Association

Members of the Board

I have been a Court Reporter for Fresno Superior Court since 1981. I am dismayed that the Board members of FCERA have once again found reason to question the legitimacy of CT Fees pensionability. It is yet another attempt by FCERA to find ways to cover for the economy’s impact on the Fresno County employee’s retirement fund’s performance at the expense and hann to Court Reporters. PEPRA has set forth new requirements for employees hired after January 1, 2013. It applies to new members to the Fresno County Employees Retirement plan exclusively! That is the legislative intent and it is clearly stated in GC 7522.02 (b). Now FCERA intends to scrutinize the wording "normal working hours" used in GC 7522.34 and somehow apply its undefined meaning to Court Reporters hired prior to January 1, 2013 as a reason to make CT Fees unpensionable. GC 7522.34 states:

"(a) "Pensionable compensation" of a new member of any public retirement system means the normal monthly rate of pay or base pay of the member paid in cash to similarly situated members of the same group or class of employment for services rendered on a full-time basis during normal working hours, pursuant to publicly available pay schedules."

Your intent to hold an open meeting to allow oral presentations or have discussion with affected employees on March 20, 2013 commencing at 8:30 a.m. is unfair and unacceptable! Court Reporters are in court working, thus you are selectively excluding them from an opportunity to appear and speak to you on this critical matter. Court Reporters cannot get time off work to attend. Fresno County Court allows only three Court Reporters to be off work for vacation purposes. To allow reasonable opportunity for attendance by all Court Reporters, you must schedule your board meeting after 5:30 p.m. Monday through Friday or on the weekend, Per Government Code 54954.3, "Every agenda for regular meetings shall provide an opportunity for members of the public to directly address the legislative body." Per Government Code 54953.7, FCERA may allow greater access to its regular meeting than prescribed by the minimal standards. Failure to allow the affected members of FCERA to address the board members on this important matter would subject FCERA to having any actions taken at the meeting overturned later on.

For Fresno County Court Reporters, Court Transcriber Pay (CT Fees) is currently Pensionable. This was a previous matter which underwent considerable review and investigation by FCERA. The fact that CT Fees are pensionable is because FCERA has determined that it is legally required. Any action by FCERA to interpret the meaning of "normal working hours as a means to change this would lack legal foundation or precedent, nor reflect the legislative intent of PEPRA.

On 5/27/1994, the IRS responded by letter to Gary W. Peterson, Auditor-Controller County of Fresno regarding Court Reporter transcript fees.

The IRS had determined that; "an employer-employee relationship has existed since January 1, 1994. Effective from that date, the firm (County) has begun deducting and paying all required employment taxes; hence, there is no need to make a determination as to an already agreed to ’employee classification."

The IRS has further determined that; "the workers (Court Reporters) are county employees, and that payments made to the workers are deemed to be wages for services performed for his employer, including cash value of all remunerations (including benefits) paid in any medium. The name by which the remuneration for services is designated is immaterial. Salaries, fees, bonuses, commissions, pensions, retirement pay, vacation allowances, and dismissal payments are wages paid as compensation for services performed by an employee for his or her employer. Compensation paid to the workers from the "Appellant Trust Fund" for transcription services constitute wages subject to Federal Income Tax withholding, Federal Insurance Contributions Act tax and Federal Unemployment Tax Act."

Furthermore, Government Code 70046.2 states the legislative intent on transcription fees. Specifically, the code states:

(a) In Fresno county, the compensation of each regular official court reporter shall be determined through the collective bargaining process.

(b) For the purposes of retirement, the compensation of each regular official court reporter shall be deemed to be the total of all per diem and transcription fees paid by the county or court to that regular official court reporter for all reporting services, plus his or her salary.

FCERA, on 12/6/2006, amended and ratified compensation earnable of items of compensation to include Court Transcript Fees and per diems paid to Court Reporters to the extent earned (pro rated on a daily basis over the period of time between the date of the order and date of filing of the completed transcript) and received prior to separation."

Multiple past challenges and legal examinations of CT Fees has resulted in the correct and lawful assignment that CT Fees are pensionable. With the advent of AB 179 and the new Government Code California Public Employees Pension Reform Act of 2013, FCERA has put the Fresno County Court Reporters on notice that it is examining language within the new code that may or may not affect the pensionability of CT Fees.

The relevant sections of PEPRA’s new government code are:

CC 7522.34 (a) "Pensionable compensation" of a new member of any public retirement system means the normal monthly rate of pay or base pay of the member paid in cash to similarly situated members of the same group or class of employment for services rendered on a full-time basis during normal working hours, pursuant to publicly available pay schedules.

(c) "Pensionable compensation" does not include the following: (I) Any compensation determined by the board to have been paid to increase a member’s retirement benefit under that system.

There is no definition of "normal working hours" contained within Division 7 Miscellaneous, Chapter 21 Public Pension and Retirement Plans of the California Government Code. Thus, FCERA is attempting to make its own determination of what "normal working hours" means as it relates to transcription fees (CT fees) paid to court reporters.

In the absence of any specific definition within Government Code 7522 and relevant to the California Public Employees’ Pension Reform Act of 2013, the first interpretation of "normal working hours" should be taken as the literal meaning of the words. The word "normal" is defined by the Merriam Webster dictionary as meaning: not deviating from a norm, rule, or principle; conforming to a type, standard, or regular pattern; occurring naturally. In this case, the literal definition taken from a dictionary of the word "normal" and the meaning of the words "normal working hours" provides insufficient clarity as to what "normal working hours" should mean. Normal working hours can vary significantly for County employees depending on their employer, job classification and work duties. For most Fresno Superior Court employees, the hours of normal work are defined by specified days of the week and start time and end time, typically Monday through Friday from 8:00 to 5:00, yet for other County employees, the hours of normal work may include working on weekends and at nighttime. Thus "normal working hours" is very subjective; therefore, an examination of each specific job classification and assignment becomes necessary in order to determine what is considered "normal" working hours necessary to perform the work required by the employer.

Most Court employees perform their required work tasks during authorized hours set by the employer. At the conclusion of an employee’s normal work hours, having dutifully performed their work tasks, the employee is dismissed from work and has no further obligation to perform work for the Courts. If the extent of the work is such that the

required work cannot be accomplished within the employees normal work hours, then the employer may authorize additional time (overtime) for which the employee receives additional compensation. Compensation for additional work beyond the established work hours to be at the office is set through the bargaining process and/or by lawful requirements and is compensable earned as defined by FCERA’s Amended Classification of Earn Codes to be Included in Compensation Earnable.

Normal work hours, for Court Reporters, are unlike the vast majority of court employees. Prior to 2012, Court Reporters worked "at the pleasure of the judge" and the employer did not set specific start and end of work shift time. This employment requirement "at the pleasure of the judge" was specifically stated in the Court’s hiring memo to all new hired Court Reporter employees. This meant that the normal work hours for Court Reporters was not specified by the Fresno Courts, and rather is left unspecified and flexible so that judges may begin and end trial proceedings as they deem necessary. Indeed, if a judge started trial session at 8:30 a.m, and did not end session until 8 p.m., the Court Reporter was obligated to work the same. Historically, Court Reporters were not paid overtime and no specific normal work hours were ever set by the Fresno County Superior Court. This has been the case for 30+ years of my tenure with the Fresno courts.

The job of a Court Reporter is two-fold. The Court Reporter must be present in court, as required by Government Code, to report oral proceedings. Additionally, the Court Reporter is responsible to produce certified transcripts of the trial proceedings. Transcript preparation historically, since the beginning of Court Reporting, has been accomplished by working both during the time that the Reporter is present at their courthouse office while not engaged in reporting in trial, and additionally as needed while at home after court hours. Undeniably, there is insufficient time for the majority of Reporters to complete transcripts solely while at their courthouse office. The preparation of court transcripts is a requirement of the employer and as set statutorily in Government Code. The Court Reporter has no say as to what judge they are assigned, what trial they will report, what trial proceedings will require transcript preparation, nor when they will receive a Court order to prepare a transcript. Additionally, once a Court Reporter has received notice from the Court that a transcript is ordered, the Court Reporter must deliver the transcript within the allowable time set forth by Government Code. Allowable time for transcript preparation is set in Government Code and is related to a defendant’s constitutional right to a speedy trial and appeal. Some examples of the time allowed for transcript preparation are:

Criminal Preliminary Hearing 10 days Criminal Trial Appeal 20 days with up to two 30-day extensions

[Death Penalty Transcripts are required daily

Normal work hours for Court Reporters is best defined as: The work hours required to be present at their courthouse office as required by the employer AND any additional work hours necessary to prepare court ordered transcripts.

Fresno County Courts have now set a specified time for Court Reporters to report to their Courthouse office and the time at which their work shift ends. This recent change by the Fresno Courts was a result of Fresno Courts determination that Court Reporters are employees. Thus, for the purposes of operational needs and for overtime, start and end of work shift times are set. However, for the purposes of court-ordered transcripts, normal work horns still includes the additional work hours necessary to prepare court-ordered transcripts. Those work hours are highly variable. The additional work hours necessary to prepare court-ordered transcripts cannot be related to any norm or formula because the time it takes to complete a transcript is directly related to the Court Reporter’s individual skill and experience. The only requirement is that the transcript must be prepared within the prescribed number of days set by Government Code. For instance, the time allowed to prepare a transcript for a criminal trial appeal is 20 days. The trial may have been three days long or it may have been three months long, but only 20 days is allowed for preparing the transcript. The Court Reporter may request up to two 30-day extensions, but there is no certainty that the extensions will be granted, they are customarily granted for lengthy trials.

Court Reporting has been a long-standing profession that is highly regulated by government codes. Fresno Court Reporters have no say as to their work hours nor the allowable time for preparation of transcripts, yet they have 100% responsibility to be in court as set by their employer and 100% responsibility to deliver transcripts within the allowable time limit. They accomplish their work responsibilities both at their office for which they are compensated by salaried pay, and they prepare transcripts as necessary by working both at their office when not in court and when at home on their own time. Their work effort, expense and time, is compensated by transcript pay that is earned compensable along with their salary pay,

Court Reporters and the Courts have a unique employee-employer work relationship that is unlike any other government or court employee profession. There have been past concerns that Court Reporters pay for transcripts is a method of compensation which spikes their retirement benefits. Court Reporter’s pay for transcripts is not spiking. Pay for transcripts is entirely governed by when the Superior Court, Appellate Court or the Supreme Court has ordered the transcript and set the transcript due date. Payment for transcripts is governed by the Penal Code and the Court Reporter has no ability whatsoever to cause spiking.

Per Government Code 54954. 1, "Any person may request that a copy of the agenda, or a copy of all the documents constituting the agenda packet, of any meeting of a legislative body be mailed to that person." Please mail me no later than three days prior to the scheduled meeting, all same documents that will be available to the FCERA Board members relevant to CT Fees and FCERAs compensable earnable resolution.

Mail to: Doreen Perkins 9804 N Heather Drive Fresno, CA 93720

Thank you for your consideration. I may be contacted by phone at (559) 457-1643.

Sincerely,

Cb 00-ur~ Doreen L. Perkins. CSR Fresno County Superior Court 1100 Van Ness Avenue, Dept #50 Fresno, CA 93724-0002 CortReptrlaol.com