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RETROACTIVE PAY INCREASES
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RETROACTIVE PAY INCREASES
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Last modified
1/3/2012 1:31:43 PM
Creation date
7/20/2010 11:34:23 AM
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Legal Opinions
Description
RETROACTIVE PAY INCREASES
Date
2/22/1972
Agency
Planning & Building
Notes
OPINION 72-1
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wisdom has been challenged. <br />~ .., <br />in this instance, the City of Santa Ana, by its prior <br />practice and its express declarations bound itself to a~certain . <br />definite contractural relationship with its employees, and were <br />it not for the suddenly announced Executive Decision freezing . <br />wages, there is little doubt that the City would have, through <br />Council action, ratified the actions of its chief administrator, <br />• as it later did when phase 2 was announced. .~ <br />The opinion letter by the Chief of the Determination Group <br />. of the. Internal Revenue Service opined that in certain circumstances <br />employers must pay the retroactive increase regardless of the amount <br />~,- ~ of it. They said that the raises were mandatory where the employer <br />had among other things, made appropriations or otherwise raised <br />funds to cover pay hikes. The contingency fund reserve in the <br />Santa Ana budget probably falls within. the purview of this definition. <br />The City has historically employed the contingency fund to cover <br />pay increases which they contemplated would be granted. <br />~ ~ A more fundamental question must be answered before the <br />• $mbiguities of the IRS opinion need be resolved; namely what juris- <br />diction does the IRV have to compel action of any sort by the City <br />of Santa Ana? The IRS was authorized~to enforce the freeze provisions <br />of phase 1, and the restrictive provisions of phase 2. However, we <br />believe that their opinion is probably advisory only, and not to be <br />considered a mandate. <br />The opinion expressed in the IRS letter above referred to, is <br />correct. The coaapulsion upon the City to pay the retroactive <br />~~ increase depends not upon the IRS opinion, but on its correct state- <br />ment of the law. <br />Increasingly the United States Supreme Court and Supreme Courts <br />of the various states have applied a very pragmatic test, and that <br />is, is the position of the party whose action is being questioned <br />consistent with "fair play." This office feels that if the City <br />,~ - were not to pay the increases retroactively, it would be receiving <br />a windfall of 2-1,/2 months labor. at a rate leas than it had agreed <br />2 <br />
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