Opinion ID: 1796635
Heading Depth: 2
Heading Rank: 2

Heading: The Nature of Public Employment

Text: As stated previously, the members of the Shelby County Retirement and Pension System are not subject to any special constitutional provisions regulating compensation of public officers. Some of them hold offices by popular election. Others are appointed by the County Court. Most are employed on a day-to-day, week-to-week or other periodic basis, subject to termination or removal for cause. As to those who may not be covered by civil service or some other employee protection plan, employment, as a matter of common law, is terminable at will. Shelby County has a civil service system, but its terms and provisions have not been cited to us; apparently its provisions are not pertinent to the issues involved in this case. Except as affected by a tenure or civil service system, a public employee ordinarily is not deemed to have a contract of employment within the meaning of the impairment of contracts provisions of the state and federal constitutions. This proposition was stated early in the history of this state in the case of Haynes v. State, 22 Tenn. 480 (1842). There the Court considered the question: ... whether the compensation of officers of the government may be changed, modified, and reduced by the Legislature, during the time for which such officers may have been appointed. And there can be no doubt but that such power exists, except in particular cases, where by the constitution it is expressly prohibited. 22 Tenn. at 481-82. The Court further stated: The law fixing the compensation to be allowed for the discharge of the duties of an office does not constitute a contract with the officer who may be appointed, within the meaning of the Constitution of the United States. He takes the office with the liberty to relinquish it at any time he thinks proper, and with the understanding that his compensation is subject to legislative control. If this were not so, all those provisions in the Constitution which prohibit the leglislature from reducing the salaries of certain officers are unnecessary. But the introduction of such provisions in the Constitution shows the sense of that instrument as to those offices in relation to which no such provision exists. 22 Tenn. at 482. As a general proposition, therefore, the salaries and compensation of public employees may be raised or lowered by the employer during their period of service, insofar as constitutional prohibitions are concerned. Except as previously noted, even those holding elected or appointive offices for a definite term have no fixed rate of compensation or guaranteed salary which is beyond modification by appropriate action of the public employer. They cannot be said to have contracts similar to those of judges involved in the Miles case. The Court of Appeals emphasized that contracts made by governmental bodies are as binding as those made by private persons, and of this there can be no doubt. See City of Chattanooga v. Tennessee Electric Power Co., 172 Tenn. 524, 112 S.W.2d 385 (1938). Employees of public bodies, however, ordinarily are not hired by formal contracts, and compensation for them, even including officials with a definite term, is ordinarily subject to increase or diminution. Of course, direct compensation and pension benefits are not necessarily controlled by identical principles. At some point after an employee has performed services or has paid into a pension and retirement plan, he acquires fixed and immutable rights in the system. Such rights are subject to the terms and conditions of the pension plan, however, and no contractual rights, other than those conferred by the plan, exist simply by reason of employment. For example, in the case of Williams v. City of Knoxville, 220 Tenn. 257, 416 S.W.2d 758 (1967), an employee had voluntarily paid portions of his salary into a pension fund. He later resigned and sought to recover his contributions despite the fact that the governing statute, a portion of the city charter, provided that contributions of members who resigned or were discharged should revert to the pension fund. The employee contended that when he elected to participate in the fund he entered into a contractual relationship with the employer and that he was legally entitled to a return of his contributions. This Court held otherwise, pointing out that the fund in question there, like the one involved in this case, provided disability and death benefits as well as a retirement pension and that it was not strictly a deferred compensation plan. While the plan involved in this litigation provides for a return of contributions, such a provision is not required by the governing statute, by the common law of the state or by the employer-employee relationship.