MARTINEZ -- Hundreds of Contra Costa County public employees who could lose retirement benefits have been granted a stay while a lawsuit challenging the anti-spiking move's constitutionality winds its way through court.
Superior Court Judge David Flinn signed the injunction Thursday sought by the Contra Costa Deputy Sheriffs Association and United Fire Fighters Association Local 1230. Other public employee unions are expected to join the lawsuit.
Without the reprieve, county, fire and local public workers who retired after Dec. 31 could have lost up to a quarter of their anticipated pension income depending on their labor contracts.
The delay means hundreds of employees who were looking at retiring early will likely hold off pending the outcome of the litigation.
The judge also agreed to postpone for 60 days the effective date of his final decision, which, if he rules against the unions, would give workers time to retire before the new rules take effect.
The lawsuit stems from a 7-2 vote in October of the Contra Costa County Employees Retirement Association to comply with new legislation. It bans starting Jan. 1, 2013, the inclusion in retirement calculations of so-called "terminal pay" -- unused vacation, holiday, administrative or sick leave -- in excess of what workers normally earn in a single year.
The retirement board already eliminated the perk for new employees hired after Jan. 1, 2011.
But unions argue the provision violates current workers' promised and vested retirement rights, a protection courts have consistently upheld in prior legal challenges.
Stripping excess terminal pay out of the equation is one of the few provisions in the pension reform bill signed into law in September that targets current employees' benefits. Most of the reductions apply only to new workers.
Several retirement board members have openly welcomed the legal challenge as the fastest path to resolution.
Brian Hast, a Contra Costa deputy district attorney elected to the association board by the retirement system's general members, has said that ignoring the new law would put members' retirement at risk if courts later uphold the legislation.
A judge is the "only one with the power to make a final and binding decision that will guarantee this vested right to our members," Hast said last month.
Contra Costa is one of three county retirement systems in California that include terminal pay in the pension formula. Alameda and Merced counties have already moved to comply with state law and eliminate it.
It permits a worker to accumulate unused vacation, holiday and sick leave, convert the value to cash at the time of retirement and boost his or her monthly pension check.
Analysts put the value of terminal pay at a range of $4 to $24 in additional income out of every $100 in final average wage, one of three factors used to calculate workers' retirement benefit amount.
The most generous amount goes to those who retire from the Contra Costa Central Sanitary District, according to the association's 2011 actuarial valuation.
But it is unclear how many of the pension system's 8,629 working members and the 2,214 people who have deferred their retirements would see pension income losses as a result of the rule change.
Not every current public employee is eligible for terminal pay.
For vested employees, the perk varies depending on labor contracts negotiated between the agency and each union. Contra Costa County, which is more than 80 percent of the retirement system's rolls, has 15 employee unions.
Other member agencies include the San Ramon, Moraga-Orinda and East Contra Costa fire districts, Central Contra Costa Sanitary District and Superior Court.