On August 3, 2026, the California Supreme Court issued a split 4-3 decision in Los Angeles County Employees Retirement Assn. v. County of Los Angeles, ruling that, under the general statutory framework, County retirement boards operating under the County Employees Retirement Law of 1937 (CERL) do not possess constitutional or statutory authority to make the final decisions on establishing job classifications or salary levels for county retirement system employees. The ruling reverses the holding of the Court of Appeal, which concluded that under the CERL (1) a county public employee retirement system has the authority under the California Constitution and relevant statutes to create employment classifications and set salaries for employees of the retirement system and (2) California Government Code section 31522.1 imposes a ministerial duty on a county board of supervisors to include in the county’s employment classifications and salary ordinance the classifications and salaries adopted by the board of a county public employee retirement system for employees of that system.
The California Supreme Court concluded that the narrower interpretation of Proposition 162 as to a retirement board’s authority as articulated in Westly v. Board of Administration (2003) 105 Cal.App.4th 1095 is correct and rejected the Court of Appeal’s broader interpretation of that authority. The California Supreme Court also rejected the argument that the CERL imposes a mandatory duty on counties to automatically implement retirement board decisions on employee classifications and salaries.
Background
The case stems from a lawsuit between the Los Angeles County Employees Retirement Association (LACERA) and the County of Los Angeles. LACERA set job classifications and salaries for its employees, and the County Board of Supervisors had routinely implemented those decisions for many years. However, in April 2018, the County declined to adopt certain amendments to salaries proposed by the LACERA and asserted that the County had final authority over employee compensation. The County asserted that the California Constitution, relevant statutes, and the County Charter gave the Board of Supervisors, not LACERA, authority to establish salaries for LACERA’s staff as “county employees.” The County also asserted that Proposition 162 never took “salary-setting authority . . . from the [Board of Supervisors] in the first instance.” The County adopted its own salary ordinance in 2018, which LACERA did not challenge.
In June 2021, LACERA submitted new requests for three positions and adjustments to the classifications and salary levels of eight existing positions. After the County rejected most of those requests, LACERA filed suit in October 2021 seeking a writ of mandate directing the Board of Supervisors to comply with section 31522.1 by implementing the classification and salary adjustments requested by LACERA. LACERA argued that under Proposition 162 and the CERL, retirement boards have exclusive authority to manage and administer retirement systems, which includes making compensation and staffing decisions. The trial court ruled in favor of the County and held that the County Board of Supervisors retained authority over employee classifications and salaries. LACERA appealed.
The California Court of Appeal reversed the trial court’s decision and ruled that county retirement boards have the authority to determine employee classifications and salaries for employees of the retirement system, not the County Boards of Supervisors. The Court of Appeal decision held that Proposition 162 gives retirement boards “plenary authority” over the administration of retirement systems, which the Court interpreted as conferring complete and absolute authority without oversight and control by legislative and executive authorities. The Court further found that this authority includes the power to adopt employment classifications and set employee compensation because those decisions are essential to managing the retirement system and fulfilling fiduciary duties to members.
The Court of Appeal further held that Government Code section 31522.1 imposes a ministerial duty on the Board of Supervisors to implement the retirement board’s decisions on employee classifications and compensation by including those classifications and salaries in the County’s official salary ordinance. In reaching its decision, the Court of Appeal discussed that retirement boards must act solely in the interests of the participants and their beneficiaries.
California Supreme Court Decision
By reversing the Court of Appeal decision, the Supreme Court in Los Angeles County Employees Retirement Assn. v. County of Los Angeles held that although the CERL authorizes retirement boards to “appoint,” or hire, personnel necessary to administer the retirement system, the county board of supervisors retains the final authority over setting civil service classifications and compensation because those employees remain county employees subject to county civil service rules. The Court noted that such decisions are subject to judicial review for abuse of discretion and that a retirement board may pursue a writ of mandate if a county unreasonably delays or withholds its approval of the retirement board’s recommendations.
Notably, the California Supreme Court rejected the Court of Appeal’s conclusion that “plenary authority” means that retirement boards have “complete and absolute” authority. The decision clarified that Proposition 162 grants a retirement board plenary authority over only the areas it addresses. The Court thus found that Westly correctly interpreted Proposition 162 as protecting retirement boards’ authority over the management of system assets and the delivery of benefits and services. The Court clarified and concluded that Proposition 162 does not confer new authority over the classifications or compensation of county personnel or otherwise upset settled interpretations of civil service or home rule jurisprudence.
In addition, the Court rejected the Court of Appeal’s conclusion that counties have a mandatory or ministerial duty to implement a retirement board’s decisions on personnel classification and salary. Examining the statutory text, legislative history, and subsequent county-specific legislation, the Court concluded that the Legislature intended counties to retain their longstanding classification and salary-setting authority over retirement-system personnel unless a specific statute provides otherwise. The Court was persuaded that the County’s understanding of section 31522.1 is correct because the constitutional home rule provisions (Cal. Const., art. XI, §§ 1, 4) were adopted to prevent state encroachment on counties’ core powers, including the power to determine the compensation of county employees.
The California Supreme Court’s decision in Los Angeles County Employees Retirement Assn. v. County of Los Angeles clarified that the relevant constitutional and statutory provisions create a system of cooperative responsibility between retirement boards and counties on county employees’ compensation and classifications. The Court observed that there is no indication that the Legislature or voters intended to give retirement boards the final say on these decisions.
Implications for Counties
The California Supreme Court decision clarifies that under the CERL’s generally applicable framework, retirement boards do not possess final authority to establish civil service classifications or salary levels for retirement-system personnel who are county employees under Government Code section 31522.1. County-specific statutes may provide a different allocation of authority for certain retirement systems or personnel.
Public agencies with retirement systems governed by the CERL should review their current practices to ensure they are consistent with this ruling, which recognizes that counties and retirement boards must engage in a collaborative process. In relevant part, the California Supreme Court explained:
The statutory framework makes clear that county power over retirement board staffing decisions is not unfettered. The obligation to work reasonably and collaboratively falls on both retirement boards and boards of supervisors. Such an approach allows decisionmaking informed by the retirement board’s specialized expertise and the supervisors’ obligation to operate the overall civil service system as the Constitution and applicable legislation requires.
Liebert Cassidy Whitmore is available to advise on the implications of this ruling and to review policies and practices to ensure compliance.