California Supreme Court ruled Thursday that county employees are not allowed to pad their future pensions by cashing in years of vacation or sick pay or working longer hours before their retirement.

The practice is known as "pension spiking," which can lead to a bigger retirement income than the normal pay of a California public employee. But the court ruling helps governments contain the spiraling pension obligations.

That means California local governments can crackdown on 'pension spiking' by public workers.

The decision, written by Chief Justice Tani Cantil-Sakauye said the state law was done in what the court said was a process of closing the loopholes in the current law and stopping further abuse of the pension system, Los Angeles Times reported.

California Rule

The court did not discuss the bigger issue: if governments can take no notice of the "California Rule," a series of court rulings that hold that pensions can't be changed once promised, Associated Press noted.

California Rule makes sure public workers are given pensions that were in place the day they were hired. But the court ruled that pensions were contracts.

The court said the ruling would stop pension plans from keeping the current loopholes for current employees and giving new pension benefits to new workers that could only further the needless rewards given by these loopholes.

Unions and employee groups challenged the spike ban. They said that it was not in line with the California Rule. Pensions can be moved upward for public workers, but never downward.

Law firm partner Steven Berliner said the rule is still upheld. "The court's basically sticking with the current landscape," he said.

He said there is a difference between cutting benefits because local governments are going bankrupt and closing a loophole.

Cutting benefit, for him, means the California Rule was put aside. "I don't think that would hold up under this ruling," he said.

Pension payments for public workers are based on the worker's highest year of earnings. Before the 2013 law, some county workers were able to make their pensions grow higher by the end of their careers.

Curbs Benefit, Preserves Rule

Some business groups have asked the court to use the pension spiking case to change the California Rule to affect public workers across the state. But the court said no.

They said they don't have a legal reason to evaluate the rule again.

David Mastagni, who represented some workers in the case, said he was disappointed in the decision but glad the rule is still protecting the rule that safeguards public pensions.

While the Thursday court decision can be seen as a "chipping away" of the rule, he said, he thinks that the court will limit rollbacks of pension benefits that will address the abuses or loopholes that they saw.

The court ruling affects 20 counties that manage the pension plans under the law. Both the city and county of Los Angeles each have a different pension system.

Last year, the state's high court also ruled that the government can also lower pension benefits without going against the California Rule, said a report from CBS San Francisco.

It also ruled at the high court that buying more retirement service is not one of the "core pension rights" of workers in the state. 

The court upheld the state's 2012 repeal of an "air time" benefit that let state workers buy credits towards retirement service.

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