Retroactive Pay Increases (K-12)

We have been asked whether governing boards need to take action to declare salaries “indefinite” in order to be able to give retroactive salary increases in the subsequent year. For the reasons explained below, our position is that school districts do not need to declare salaries indefinite because the Education Code allows retroactive pay increases for represented and unrepresented certificated and classified employees.

LEGAL UPDATE

July 8, 2016

To:  Superintendents, Member School Districts (K-12)

From: Mia N. Robertshaw, Assistant General Counsel and Robert J. Henry, Of Counsel

Subject:  Retroactive Pay Increases

Memo No. 20-2016

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We have been asked whether governing boards need to take action to declare salaries “indefinite” in order to be able to give retroactive salary increases in the subsequent year.  For the reasons explained below, our position is that school districts do not need to declare salaries indefinite because the Education Code allows retroactive pay increases for represented and unrepresented certificated and classified employees. 

1. Constitutional Prohibition and Exceptions

Two provisions of the California Constitution prohibit local government and public agencies from granting additional compensation to public employees after a contract is entered into and performed in whole or in part, or after service has been rendered.[1]  As a general rule, this would prohibit retroactive pay increases for public employees.  However, there are exceptions to this general rule.

Courts and the California Attorney General have determined that retroactive payments are constitutional where the adjusted salary rates are “retroactive to a date when the salary rates were indefinite and subject to future determination.”  (Goleta Educators Assn. v. Dall’armi, 68 Cal.App.3d 830 (1977) (citations omitted).)  The Attorney General has reasoned that “if the amount of compensation remains uncertain, whether by contract or by law, a subsequent determination or adjustment would not constitute extra compensation.”  (73 Ops.Cal.Atty.Gen. 296 (1990) (emphasis in original).)  Accordingly, the constitutional prohibition against extra compensation does not apply when, by law or contract, salary rates for public employees are not fixed and further adjustments are contemplated.  (Id.)

2. Education Code Allows Retroactive Pay Increases

Education Code section 45032 provides that school district governing boards may increase salaries of certificated employees “at any time during any school year,” with such increases “to be effective on any date ordered by the governing board.”  Education Code section 45162(b) similarly provides that boards may increase the salaries of classified employees “at any time during the school year,” with such increases to be “effective on any date ordered by the governing board.” 

The Attorney General’s Office analyzed the issue of retroactive payments for certificated employees under Section 45032 (then Section 13510).  (53 Ops.Cal.Atty.Gen. 16 (1970).)  The Attorney General’s Office concluded that Section 45032 authorizes a school board to grant salary increases to certificated employees after a contract for a fixed amount has been entered into and partially performed.  (Id.; 73 Ops.Cal.Atty.Gen., supra.)  The Attorney General’s Office determined that because Section 45032 (then 13510) allows salary increases for certificated employees “at any time,” certificated employees’ contracts are contracts for the payment of an indefinite amount.  Specifically:

Thus, in order for a school board to grant salary increases to its certificated employees during the school year, it will no longer be necessary for each board to individually adopt rules and regulations or incorporate within the employment contracts specific provisions retaining the right to increase the salaries during the school year.  That right has been granted by statute.  After the effective date of the 1969 amendment to section [45032], the contracts of employment, although stated to be in terms of a specific and fixed amount, will nevertheless be, in effect, contracts for the payment of an indefinite amount, namely, an amount that may be increased over and above that specified in the contract should the school board determine to increase that amount during the term of the contract. We are of the opinion that the provisions of section 13510, as amended, do not violate the provisions of Article IV, section 17 of the California Constitution. The amendment does no more than give to all school districts the authority previously left to individual school districts that, pursuant to the prior provisions of section [45032], had retained the right to increase salaries during the school year by the adoption of appropriate rules and regulations or appropriate provisions in their employment contracts with certificated employees.

(53 Ops.Cal.Atty.Gen., supra (emphasis added).) 

The same reasoning would apply to retroactive increases for classified employees under Education Code section 45162(b). 

3. Conclusion

Accordingly, there is no need for boards to take action to make school district employees’ salaries indefinite – they are made indefinite by law.  Retroactive pay increases are permissible for unrepresented and represented certificated and classified employees.

Please contact our office with questions regarding this Legal Update or any other legal matter.

The information in this Legal Update is provided as a summary of law and is not intended as legal advice.  Application of the law may vary depending on the particular facts and circumstances at issue.  We, therefore, recommend that you consult legal counsel to advise you on how the law applies to your specific situation.

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