Utah’s Supreme Court Upholds Sick Leave Take-Back

Utah’s high court upheld a decision by lawmakers to roll back state employee retirement benefits, and took offense at what it called threats of retaliation if the decision didn’t go legislators’ way.

In a 5-0 decision, the Utah Supreme Court said the Legislature was entitled to curb the ability of state employees to convert accumulated sick leave at retirement into medical and life insurance benefits. The court rejected a lawsuit filed by the Utah Public Employees Association.

Writing for the court, Associate Chief Justice Michael J. Wilkins said the state lets employees roll over and accumulate sick leave as a job incentive, but that workers can’t claim a constitutional right to convert that into retirement benefits.

In the 39-page decision, the court denounced reported threats by legislators to withhold judicial salary increases “in an effort to force this court to act more quickly or to reach a certain result.”

Likewise, the court said, one of the state’s court filings suggested judges would find their own retirement benefits cut in the event of an unfavorable ruling.

The justices reminded legislators that the judiciary is a separate branch of government and that any effort to sway the high court was “disrespectful of our function.”

Rep. Dave Clark, R-Santa Clara, was the sponsor of HB 213.

“I have not had any contact with, and I would be surprised if anybody had contact with the Supreme Court on this particular case,” Clark said in a meeting with reporters late Thursday. “I’m not sure there have been any legislators that have been twisting arms.”

Clark said the court’s ruling proves lawmakers met three goals of the legislation: making the change fair, equitable and defensible.

Senate President John L. Valentine, R-Orem, didn’t respond to the court’s criticism when he praised it Thursday for expediting a ruling.

“It affects compensation, it affects whether or not we have to set aside a particular amount of dollars to fund this particular benefit,” Valentine said. “This was not an easy decision for the court but it was an even harder decision for us.”

At issue was a practice that allowed state workers to claim a month’s medical and life insurance coverage at retirement for every eight hours of unused sick time.

The Legislature acted last year to curb costs that have nearly doubled over the past five years as more state employees convert thousands of hours of sick leave to support them through retirement.

The change took effect Jan. 1, when workers could bank only 75 percent of their accumulated sick leave at retirement for medical and life insurance premiums, with the remaining 25 percent going to their 401(k) accounts.

More significant was a change that values workers’ sick hours differently depending on their rate of pay, said Audry Wood, executive director of the Utah Public Employees Association.

She said that leaves lower-paid state employees less able to pay for full insurance benefits after retirement and before they reach 65, when Medicare takes over. It means more workers will have to work longer before taking retirement, while others are leaving quickly to claim the full benefits, she said.

“We made it to the Supreme Court, they heard our case and they made their decision. I respect that decision,” Wood said. “Obviously we felt we had a strong case and we’re disappointed, but we understand this decision is final.”

Also suing were four state workers and a retiree who logged a combined 8,000 hours of unused sick leave. They said the Legislature’s changes were an unconstitutional taking of something due them at retirement.

“We disagree,” Wilkins said in a decision joined by four other justices. “Instead, we find the statutory language ambiguous as to when an employee’s right to redeem the unused sick leave for medical and life insurance vests.”

The court was uncertain if the benefit could be claimed upon retirement, or when a state employee reaches his or her service or age minimum but decides to continue working.

The Utah Supreme Court said it was lifting an injunction against the change in 30 days, giving workers that much time to decide whether to retire under the old program.

Clark has acknowledged that the net effect of the change may be that many state employees take early retirement in order to retain the benefit. More than 850 workers retired last year, while only 364 did so in 2004.

“I am really concerned that this has had any negative impact on the hard working employees of the state of Utah,” Clark said.

But the fiscal reality of funding the benefit made it the only right decision, he said. An actuarial report indicated the state would need $46.8 million annually for 25 years to fund the program.

“It is evermore the right thing to do,” he said.