Court Clarifies Meaning of Retroactive Reinstatement

MICHAEL A. MORGUESS
Writs & Appeals Attorney
Law Office of Michael A. Morguess

What does the phrase “reinstate as of the effective date of termination” mean to you? This was the order in a recent disciplinary case where a terminated officer prevailed before a local personnel commission. It means what you would probably think it does, but the order says nothing about back pay, nothing about retroactive benefits and nothing specific about things like seniority, step increases or retirement contributions. So when a city didn’t want to pay nearly five years’ worth of back pay and benefits, plus interest, the order — comprehensive in its simplicity — just became the next battleground for this persistently stubborn employer.

In February 2003, Shaun Sundahl was hired as a police officer for the City of Calexico. In 2007, he was promoted to sergeant, and in 2009, the City terminated him from employment. Sundahl appealed his termination to the Calexico Personnel Commission. On August 22, 2011, the commission issued its decision and ordered Sundahl retroactively “reinstated as of the effective date of his termination,” but demoted him back to officer. The “effective date of his termination” was November 17, 2009.

The City decided to ride out litigation and, instead of reinstating Sundahl, petitioned for judicial review of the decision via writ of administrative mandate. The superior court sided with the City and ordered Sundahl terminated, and with PORAC LDF’s assistance, Sundahl took back the win when the court of appeal restored the original commission decision reinstating him. (See PORAC Law Enforcement News, February 2014.)
Eventually, the City did reinstate Sundahl. However, instead of reinstating him retroactively “as of the effective date of his termination,” the City treated him as a new hire effective March 2014, when it actually reinstated him. At first, it appeared that the parties might work out the back pay, benefits, seniority and other issues as a matter of routine. After Sundahl was returned to work, the City even requested evidence of Sundahl’s earnings while he was unemployed as an offset to any back-pay liability, and that information was duly provided.

Then things grew eerily silent. All the while, Sundahl continued to show up to work every day and faithfully carry out his duties. But it was clear that the City was not going to voluntarily comply with the commission’s order, and with LDF’s support, the Law Office of Michael A. Morguess, which handled the earlier appellate matter, filed a petition for writ of mandate to compel the City to comply with the plain import of the commission decision, restore to Sundahl his back pay and benefits with interest, and restore his seniority by reinstating him as of November 17, 2009 — the effective date of his termination.

Common sense seems to dictate that an order that one be “reinstated as of the effective date of termination” means that one be retroactively reinstated to the date of termination, with back pay and benefits through to actual reinstatement. This is the only way it can be given effect, and comports with the remedial purpose and make-whole remedy of restoring an employee to the position that he or she would have been in but for the employer’s wrongful conduct. Yet, after the petition was filed, the City hired new counsel and things just got worse. Out of the blue, the City took the position that since the commission’s decision was silent on the issue of back pay and benefits, Sundahl was entitled to none — he was just entitled to reinstatement whenever the City got around to reinstating him. The longer it took to do that, the better it was for the City.

The City cited a number of court and arbitration decisions that either expressly awarded reinstatement “without back pay” or were completely silent as to a reinstatement date. But none of the cases concerned the phrase “reinstated as of the effective date of termination” or retroactive reinstatement. Sundahl argued that the commission’s decision could only be understood to retroactively reinstate him back to the date of his termination — as if he had not been terminated at all. There is no other way to interpret the phrase “as of the effective date of his termination.” Sundahl’s interpretation was also supported by cases interpreting County Retirement Law under California Government Code Section 31725. That section provides that if an employee who has been terminated from employment because of physical incapacity is later found not to be disabled by the retirement board, a county is obligated, following a determination of no disability, to grant the employee retroactive reinstatement. Similar to the language in the Personnel Commission’s decision, the operative language of Section 31725 provides that under such circumstances, “the employer shall reinstate the member to his employment effective as of the day following the effective date of the dismissal.”
In construing this language — which also contains no express provision for back pay or benefits — courts have awarded employees back pay and benefits during the period of time when the employee was not employed until they are reinstated, with offsets (Leili v. County of Los Angeles [1983] 148 Cal. App. 3d 985, 986, 989). This interpretation has been consistently applied to also include uninterrupted “seniority status and the benefits derived” from that as well (Phillips v. County of Fresno [1990] 225 Cal. App. 3d 1240, 1248, 1255-1256). Under the City’s spin, the phrase “as of the effective date of termination” has no meaning and actually provides an incentive to delay reinstatement.

The Superior Court for the County of Imperial granted Sundahl’s petition. The court issued a judgment ordering the City to “fully and retroactively reinstate” Sundahl to the position of senior police officer “effective November 17, 2009, and reflect his original hire date of February 2003 as his hire date,” and to provide “full seniority, and back pay and benefits, from November 18, 2009, to present, including interest at the legal rate, and appropriate incremental increases in classification, salary, range and step, lost vacation, sick leave, holiday pay,” the value of lost health insurance benefits, “restoration of retirement benefits and contributions to his retirement fund to make him whole for that time period, and all seniority.” In the words of the trial judge, the order to reinstate Sundahl “as of the effective date of his termination” meant that the City was required to treat him as if “none of this ever happened” and there had been “no break” in employment. Retroactive reinstatement provides an incentive to reinstate the employee sooner rather than later.

There are some lessons here: This should have been a relatively straightforward case, and because the City wanted to be difficult, it continued to allow considerable interest to accrue at taxpayer expense on a substantial back-pay liability. And although the commission’s decision impliedly included back pay and benefits, the commission easily could have expressly included those terms in the award. Therefore, although there are certainly situations where strategy may dictate otherwise, you should consider seeking clarification of potentially ambiguous awards at the time when they are issued in order to avoid the expense and delay created by the City here. Officer Sundahl and the Law Office of Michael A. Morguess are grateful for LDF’s continued support in taking on the City at every turn in this matter.

About the Author

Attorney Michael A. Morguess specializes in writs of administrative and ordinary mandamus, and appeals. He is certified by the California State Bar as an Appellate Specialist.