Tuesday, December 30, 2008

When a Change Is Not a Unilateral Change

Service Employees International Union, Local 1000, CSEA (2008) PERB Decision No. 1997-S (Issued on 12/22/08)

In July 2005, certified nurse assistants at the Chula Vista Veterans Home engaged in a “sick-out.” The Memorandum of Understanding (MOU) between the State of California (State) and the Service Employees International Union (SEIU)—which represented the nurse assistants—contained a no-strike clause. Soon after the sick-out, the State filed an unfair practice charge alleging that SEIU committed an unlawful unilateral change by condoning the sick-out in violation of the MOU.

The key issue at hearing was whether there actually was a concerted “sick-out,” and if so, whether SEIU organized and/or condoned it. Applying NLRB precedent, the Board affirmed the Administrative Law Judge’s finding that SEIU arguably “condoned” the sick-out by failing to take affirmative steps to end it. The Board expressly found that SEIU’s act of merely informing employees that a sick-out violated the MOU was insufficient. The Board also noted that, “SEIU took no subsequent actions to publicly disavow or censure the actions of the [nurse assistants] who participated in the sick-out.” The Board held, however, that the mere violation of the MOU is not always an unlawful unilateral change. In order for there to be an unlawful unilateral change, the change must have a “generalized impact or continuing effect” on the terms and conditions of employment.

In considering whether SEIU’s breach of the MOU had a generalized effect, the Board cited several cases where one-time breaches of a contract were found not to constitute an unlawful unilateral change. The Board noted that under existing precedent, “a breach of contract amounts to a unilateral change where the party in breach asserts that the contract authorizes its conduct” or where the breach represents a “change in policy that is generally applicable to future situations.”

Applying those standards, the Board found that the State had not established that SEIU’s actions had a generalized effect. Specifically, the Board found that there was no evidence that SEIU asserted that the sick-out was legally permissible and no evidence that SEIU intended to breach the MOU in the future. Accordingly, the Board dismissed the unfair practice charge.


The majority opinion drew a rare dissent. The dissent argued that there was indeed a generalized effect resulting from SEIU’s actions. Namely, the sick-out negatively affected the remaining nurse assistants and patients at the hospital. The dissent also found nothing in the record to suggest that SEIU would refrain from repeating its actions (or inaction) in the future. Given these facts, the dissent would have found that SEIU committed an unfair practice by condoning the sick-out in violation of the MOU.


I have several comments on this decision.

1. I like the fact that both the majority and dissenting opinion focused on whether the violation of the MOU had a “generalized effect” on the terms and conditions of employment. I had argued in my post on County of Sacramento (PERB Dec. No. 1943-M) (County of Sacramento) that the Board failed to properly consider this critical factor in finding that the employer in that case committed an unfair practice. Indeed, I think this decision highlights why I feel the Board reached the wrong result in County of Sacramento.

Recall that in County of Sacramento, the employer actually rescinded the unilateral change before it was scheduled to take effect. Even though the County rescinded the change—thereby restoring the statue quo ante—the Board held that those actions alone did not cure the unlawful unilateral change because it did not correct the “destabilizing and disorienting impact on employer-employee affairs.” Compare that with this decision. Here, SEIU did not cure its violation or take any action to rescind its actions. Thus, SEIU’s conduct here arguably had more of a destabilizing effect on employer-employee relations than the actions of the employer in County of Sacramento. Yet the Board found no generalized effect in this case. In my opinion, these two decisions are inconsistent.

2. Although I think the Board reached the wrong result in County of Sacramento, I also think the majority ended up with the wrong result in this case. Some may argue that I am being inconsistent myself. Perhaps I am, but here is how I look at it. As I argued in my post on County of Sacramento, I believe that PERB precedent supports the concept of a safe harbor in unilateral change situations. Specifically, a party that has committed a unilateral change should be allowed some opportunity to avoid liability for an unfair practice by rescinding its action and restoring the status quo ante. In my opinion that’s what the employer did in County of Sacramento and what SEIU failed to do here. Had SEIU taken some action to censure its employees or somehow disavow the sick-out, I would agree with the majority that there is no generalized effect. This is because where the party taking the unilateral change has rescinded its action and taken steps to make whole the aggrieved party, the “destabilizing effect” of the original unilateral change is eliminated, or at least greatly mitigated. Here, SEIU took no action to correct its behavior and to make whole the employer. Accordingly, I believe the Board should have found an unfair practice.

3. Although I think the Board reached the wrong result, this decision is actually good for employers. The reality is that the vast majority of unilateral change charges are filed against employers, not against unions. Using the analysis in this case, employers can argue that a one-time contract breach has no generalized effect without some showing that the employer intends to breach the contract again in the future. Since that’s a difficult burden to meet, this case arguably makes it harder for unions to establish unilateral change cases. This assumes, of course, that PERB strictly follows the holding in this case in the future (see last point, below).

4. As mentioned above, unions are seldom accused of unlawful unilateral changes. This is because unions normally do not have the power to effectuate a unilateral change in the terms and conditions of employment. Indeed, one of the first (if not the first) case finding that a union committed an unlawful unilateral change was only issued four years ago. (State of California (Department of personnel Administration) (2004) PERB Decision No. 1601-S.) Since that time, everyone has assumed that the elements for a unilateral change are the same whether the charge is against an employer or union.

If I were a union advocate, however, I would argue that the standards shouldn’t be the same. I would argue that since unions have a very limited ability to unilaterally change the terms and conditions of employment, a unilateral change by a union has less of a destabilizing effect on future employer-employee relations than one by an employer. (Naturally, there are many arguments to the contrary; but I’m pretending to be a union advocate here…) I wouldn’t be surprised at all if in the future unions made this argument in order to distinguish this case.

Monday, December 29, 2008

Don’t Get Burned by the “Cat’s Paw” Doctrine

City of Modesto (2008) PERB Decision No. 1994-M (Issued on 12/19/08) and Regents of the University of California (Los Angeles) (2008) PERB Decision No. 1995-H (Issued on 12/19/08)

Last week PERB issued two decisions involving allegations of retaliation against employees for protected union activity. In both City of Modesto and Regents of the University of California, the Board applied the existing retaliation standard to dismiss the unfair practice charges. What is worth noting, however, is that both decisions discussed an important legal concept that many employers still don’t fully understand: “subordinate bias liability” or what employment lawyers commonly refer to as the “cat’s paw” liability.

To understand the issue, consider this example. Supervisor A dislikes an employee because she is a union job steward. Based on this anti-union animus, Supervisor A recommends that the employee be disciplined for poor job performance. Supervisor B is not aware that the employee is a job steward and harbors no anti-union animus. Supervisor B reviews the proposed discipline, and seeing nothing out of the ordinary, approves it. Is the employer liable for unlawful retaliation?

I believe that under PERB precedent, the answer is yes. Even though the ultimate decision-maker, Supervisor B, had no knowledge of the employee’s protected activity and harbored no anti-union animus, PERB has held that the unlawful animus of Supervisor A can be imputed to Supervisor B. In these situations, PERRB has held that unlawful animus may be imputed to high management officials where, even innocently, they rely on inaccurate and biased information of lower level management officials. (See State of California (Department of Corrections) (2001) PERB Decision No. 1435-S; State of California (Department of Parks and Recreation) (1983) PERB Decision No. 328-S.) PERB refers to this doctrine as “subordinate bias liability.” It is also commonly referred to as the "cat’s paw" doctrine by the courts.

Real life situations are seldom as clear-cut as the hypothetical above. In many cases, even where lower-level supervisors are motivated by anti-union animus, the ultimate decision-maker will rely on other “non-tainted” factors and/or will have conducted an independent investigation. In those situations, what is the standard for imputing the animus of lower-level supervisors? The answer is not that clear.

In employment discrimination cases, the courts have been struggling with the cat’s paw doctrine for years. There is currently a split of authority among the federal circuits as to how to apply the doctrine. In Poland v. Chertoff (9th Cir. 2007) 494 F.3d 1174, the Ninth Circuit recognized this split and discussed three possible standards for imputing liability in these situations. The Poland court rejected a simple “but for” causation test because it would create expansive liability for employers. Similarly, the court rejected a standard that would impose liability only where the ultimate decision-maker “rubber stamps” the tainted decision. Instead, the court tried to take a middle ground approach:

“We hold that if a subordinate, in response to a plaintiff's protected activity, sets in motion a proceeding by an independent decisionmaker that leads to an adverse employment action, the subordinate's bias is imputed to the employer if the plaintiff can prove that the allegedly independent adverse employment decision was not actually independent because the biased subordinate influenced or was involved in the decision or decisionmaking process. This standard is consistent with what we have suggested in previous Title VII retaliation cases . . . and with the law in a majority of the circuits. . .”

Neither City of Modesto nor Regents of the University of California discuss the exact standard that PERB will apply to impute unlawful animus to the ultimate decision-maker. Both cases merely affirm that PERB may impute such animus. In the Regents case, PERB did decline to follow NLRB precedent in this area and instead stated that, “one individuals’ experience will not be imputed to another unless it is warranted under the circumstances.” However, PERB has never thoroughly addressed those “circumstances.”


I believe that if ever confronted with the issue, PERB will follow the holding of Poland, since it is consistent with the majority of the federal circuits and also California law. (See Reeves v. Safeway Stores (2004) 121 Cal.App.4th 95.) If so, it is vital for an employer to remember that it can avoid having the unlawful animus of a lower-level supervisor imputed to the ultimate decision-maker if it takes steps to neutralize the taint, for example, by conducting an independent investigation. There are also other ways an employer can neutralize or isolate any unlawful animus. The key, however, is recognizing the situation and taking pro-active steps.

P.S. The phrase “cat’s paw” refers to someone who is unwittingly used by another. It comes from La Fontaine's Fable "The Monkey and the Cat," in which a monkey convinces an unwitting cat to pull chestnuts from a hot fire. As the cat scoops the chestnuts from the fire one by one burning his paw in the process, the monkey eagerly gobbles them up, leaving none for the cat.

Tuesday, December 23, 2008

State Employee Furloughs Challenged

The Professional Engineers in California Government (State Bargaining Unit 9) and the California Association of Professional Scientists (State Bargaining Unit 10) have jointly filed a petition for writ of mandate in Sacramento Superior Court (Case No. 2008-80000126) challenging the Governor’s authority to unilaterally impose furloughs on state employees upon a declaration of an emergency. At the same time, the Service Employees International Union Local 1000 (SEIU) has filed an unfair practice charge with PERB challenging the same action by the Governor.

The unions are challenging the Governor’s executive order S-16-08 issued on December 19, 2008. The executive order declared a state of fiscal emergency based on the state’s finances. In response to the fiscal emergency, the Governor ordered the state to begin the process of furloughing employees, including represented employees, two days a month. According to the executive order, the Governor has authority to impose furloughs in emergency situations pursuant to Government Code section 3516.5. That section states:

"3516.5. Except in cases of emergency as provided in this section, the employer shall give reasonable written notice to each recognized employee organization affected by any law, rule, resolution, or regulation directly relating to matters within the scope of representation proposed to be adopted by the employer, and shall give such recognized employee organizations the opportunity to meet and confer with the administrative officials or their delegated representatives as may be properly designated by law.

In cases of emergency when the employer determines that a law, rule, resolution, or regulation must be adopted immediately without prior notice or meeting with a recognized employee organization, the administrative officials or their delegated representatives as may be properly designated by law shall provide such notice and opportunity to meet and confer in good faith at the earliest practical time following the adoption of such law, rule, resolution, or regulation."

According to an article in the LA Times, a spokesperson for the Governor’s Department of Personnel Administration stated that section 3516.5 provided, “extra authority to alter working conditions during emergencies.” It’s certainly true that section 3516.5 provides for a unilateral change in working conditions when there is an “emergency.” However, no case has ever considered what constitutes an “emergency” under section 3516.5. It's also unclear whether PERB would interpret section 3516.5 as any different from existing PERB precedent.

Over the years, PERB has developed a body of law dealing with bargaining obligations during “emergency” situations. Under PERB precedent, an employer raising a business necessity defense must demonstrate that the necessity is the unavoidable result of a sudden change in circumstances beyond the employer's control in order to justify unilateral action. The timing of the emergency must preclude the opportunity for negotiation, and there must be no alternative course of action available to the employer.” (See Lucia Mar Unified School District (2001) PERB Decision No. 1440, Calexico Unified School District (1983) PERB Decision No. 357, Compton Community College District (1989) PERB Decision No. 720.)

The standard is obviously a difficult one to meet, and few employers have been able to avoid bargaining by asserting an “emergency.” However, the situation here appears to be truly unique. Given the news reports, it seems undisputed that the State is on the verge of a fiscal catastrophe. As long as the state offers to bargain in good faith with the unions on the effects of the furlough proposal, I would be surprised if PERB or the courts are going to second guess the Governor on what constitutes an “emergency.”