Retirees Sue Washington State for Benefits

SEATTLE (CN) - Washington state retroactively - and unconstitutionally - eliminated pension benefits for retired public employees who return to full-time work in higher education, a class action claims in state court.

Lead plaintiff Laurie Levy claims the Legislature in 2011 changed longstanding pension rules without due process and in violation of the Washington Constitution, which prohibits passage of any law "impairing the obligations of contracts."

Levy sued the state and the Washington Department of Retirement Systems, in King County Court. She wants the law - Engrossed Substitute House Bill 1981, or ESHB 1981 - enjoined as unconstitutional

"Under Washington law prior to January 1, 2012, State employees who retired with a PERS [Public Employees Retirement System] pension were entitled to receive their full benefit even if they returned to work, provided that the employer was a 'higher education employer' and the individual elected to become covered under that employer's retirement plan," according to the complaint.

But in 2011, the Legislature revoked the higher education exemption, through ESHB 1981.

"Effective January 1, 2012, in ESHB 1981, the Legislature changed the PERS pension benefit such that individuals who retired with a PERS pension would lose their pension benefits after working more than 867 hours for a higher education employer. As a result, plaintiff Levy and other PERS retirees were forced to either (1) work 867 hours or less to preserve their pension benefits or (2) lose vested pension benefits. Plaintiff Levy continued to work, and has lost thousands of dollars in pension benefits as a result of the repeal of the higher education exception," the lawsuit states.

Levy retired from the University of Washington in 2002, then returned to work full time at the university, with her retirement benefits. But when ESHB 1981 took effect, the state began withholding her pension, costing her "thousands of dollars in pension benefits."

She claims the state cannot retroactively eliminate a vested benefit.

For the class, she claims that ESHB 1981 is an unconstitutional impairment of contracts, violates due process, is an unconstitutional taking and a breach of contract.

She seeks declaratory judgment, an injunction and damages for all PERS members who had retirement benefits withheld.

She is represented by Richard Spoonemore and Eleanor Hamburger with Sirianni Youtz Spoonemore Hamburger.

Retirees Sue Washington State for Benefits

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