The city changed pensions legally - but skipping one step still cost it
A California appeals court upheld an order forcing Los Angeles to pay workers for pension losses after changing benefits without bargaining over the effects.
The Second District Court of Appeal affirmed the order on July 30, 2026, and certified it for publication on August 28. It sided with a coalition of city employee unions in a fight that turned not on whether Los Angeles could change the benefit, but on what it owed workers for skipping a step.
The dispute traces to a decades-old arrangement that let employees moving between the city and its Department of Water and Power carry pension service credits between the two retirement systems. More credited years meant a larger pension. In 2013 the city passed an ordinance suspending that arrangement, effective January 1, 2014. After the change, one retirement system stopped counting prior service earned under the other when calculating benefits.
The city never disputed that it had to bargain over the effects of ending the arrangement. It conceded that duty arose by November 7, 2013. What it fought was the fix.
The city's Employee Relations Board had ordered it to meet and confer with the coalition and to make affected employees whole for losses - reduced pensions or other benefits - dating to January 1, 2014. That obligation runs until the parties reach agreement or impasse, or the coalition stops bargaining in good faith.
Los Angeles argued the board could only order it to stop the violation going forward, not order back pay. The court rejected that. It held the board could order make-whole relief to remedy a failure to bargain, and that the remedy was neither vague, overbroad, nor a violation of separation of powers.
The city stipulated that a Senior Clerk Typist who spent 15 years in each system would receive $16,195.16 less annually under the ordinance than under the old arrangement.
The decision turned on a distinction the court drew sharply: a lawful decision does not remove the duty to bargain over its effects. An employer may lawfully decide to lay off staff or change benefits, the court said, but must still bargain over timing and other effects before acting.
The court also affirmed an attorney fee award to the coalition and granted it fees for the appeal.
