AFSCME's Leafletting Was Not an Unfair Practice

AFSCME, Local 3299 (2010) PERB Decision No. 2105-H (Issued on 4/21/10)

Facts:

This case involved an unfair practice charge filed by the University of California (UC) against AFSCME. During bargaining, AFSCME began leafleting in front of several medical centers at various UC campuses. The expired contract between UC and AFSCME required the union to abide by specific access guidelines promulgated at each campus. Those guidelines set forth exactly where AFSCME could engage in leafleting and where it couldn’t (for example, because of patient access issues). During the leafleting at issue, it appears undisputed that AFSCME violated the access guidelines by leafleting in prohibited areas.  According to the PERB decision, UC officials asked the AFSCME members engaged in the leafleting to move, which they did.

AFSCME then went to court to seek a temporary restraining order (TRO) to enjoin UC from prohibiting the leafletting. The court granted the TRO but later denied a preliminary injunction on the ground that PERB had initial jurisdiction.

In its decision, PERB assumed that AFSCME was in violation of the contract when it engaged in leafleting in areas where the guidelines prohibited such conduct. However, because AFSCME agreed to move when confronted by UC officials, PERB held that AFSCME’s conduct was just an isolated breach of the contract, and not a repudiation of the contract that would constitute an unlawful unilateral change.

Comments:

1. First, I thought it was ironic that the union went straight to court to seek injunctive relief instead of going to PERB. As many of you know, the issue of whether PERB has exclusive jurisdiction over essential employee strikes is before the California Supreme Court in City of San Jose v. Operating Engineers Local Union No. 3 (Case No. S162647). (In fact, oral argument in San Jose occurred on May 5, 2010—but more on that tomorrow.) The unions have all lined-up solidly in favor of PERB having jurisdiction so that employers cannot go directly to court for injunctive relief.  So it’s ironic that the union here went straight to court.
2. With respect to the merits of this case, the key holding was the Board’s finding that because the union stopped the “breach” (ie stopped leafletting) when asked by UC, it was just an isolated contract violation and not a complete repudiation of the contract.  Because isolated breaches do not constitute an unlawful unilateral change, PERB affirmed the dismissal of the charge.  By itself, I don’t have a problem with this holding.
3. I’ve argued before that there should be some type of “safe harbor” provision whereby a party can correct a breach and not be guilty of an unfair practice. For example, in County of Sacramento (2008) PERB Decision No. 1943-M, the Board found a violation even though the County rescinded the change before it ever took effect. My position was that given the rescission, PERB should not have found that the County committed an unfair practice.
4. Indeed, it’s worth taking a look at what PERB said in County of Sacramento: 
   

   “The County argues that by rescinding the ordinance, there is no longer any policy change even arguably subject to meet and confer requirements, and the issue is now moot. In Amador Valley Joint Union High School District (1978) PERB Decision No. 74, however, the Board held that the later reversal or rescission of a unilateral action or subsequent negotiation on the subject of a unilateral action does not excuse a violation. [Citation.] … The fact that the County reversed its position and restored the status quo before the new policy went into effect, does not cure the unlawful unilateral change.” 

5. It’s difficult for me to square what PERB said in County of Sacramento with what happened in this case.  I believe the two cases are inconsistent.  Here, there was an undisputed breach. It was actually worse than in County of Sacramento since AFSCME actually did engage in leafleting in areas where it was prohibited. In contrast, in County of Sacramento the County rescinded the change before it ever took effect. Yet PERB found a violation in County of Sacramento but not one here.  Nevertheless, if I had to choose which holding I like better, it's the one in this case.  Even though the union prevailed in this case, in the future this will benefit employers more than unions since the vast majority of unfair practice charges alleging unlawful unilateral changes are directed against employers.
6. Lastly, in the interest of full disclosure, I must note that I currently represent the University of California in several PERB cases; although I was not involved in this one. As for the remainder of this case, I do think that there was sufficient evidence that AFSCME improperly disrupted university operations so that a complaint should have been issued. However, that was not the main focus of the Board’s decision so I didn’t delve into that aspect of the case.

AB 1744: Public Employees' Bill of Rights Act

AB 1744 (Portantino)—the “Public Employees' Bill of Rights Act”—recently passed the Assembly Committee on Public Employees, Retirement and Social Security and is now headed to Appropriations. AB 1744 is a “gut and amend” that started out as a bill on enforcing monetary judgments. As currently written, the bill sets forth a “Bill of Rights” that applies only to state civil service employees. Most of the bill just reaffirms existing law. However, there is one significant change. Currently, the statute of limitations for taking disciplinary action against a state employee is 3 years from the date of the misconduct. (Gov. Code 19635.) AB 1744 would amend the limitations period to be 1 year.

I have several major objections to this change. First, the change is purportedly modeled after the Public Safety Officers Procedural Bill of Rights (PSOBOR) (Gov. Code 3300 et. seq.) and the Firefighters Procedural Bill of Rights Act (FPBOR) (Gov. Code 3250 et. seq.) It’s true that both the PSOBOR and FPBOR have a 1-year limitations period for bringing disciplinary actions. However, those statutes differ significantly from the proposed language in AB 1744. For example, the 1-year limitations period under both the PSOBOR and FPBOR is triggered by the date of discovery of the underlying misconduct, not that date the misconduct actually occurred. In contrast, under AB 1744 the limitations period is based on when the misconduct actually occurred.  The difference is significant since misconduct is not always discovered right away, even with due diligence.  Indeed, that's the reason why the current limitations period is 3 years.  If the Legislature wants to shorten the limitations period to 1 year, it should also change the triggering event to be discovery of the misconduct, instead of when the conduct actually occurred.

Second, the current 3-year limitations period under Government Code section 19635 expressly recognizes the problem of late discovery by providing that disciplinary actions, “based on fraud, embezzlement, or the falsification of records shall be valid, if notice of the adverse action is served within three years after the discovery of the fraud, embezzlement, or falsification.” (Emphasis added.) AB 1744 completely erases this sentence from Government Code section 19635. Thus, under AB 1744, an employee can commit fraud against the state, and as long as he or she hides it for more than a year, no discipline can be brought.

Third, AB 1744 does not provide for any “tolling” of the 1-year limitations period. Generally, I do agree that 1 year from discovery should be sufficient time to investigate and bring a disciplinary action. However, there are certain situations where it may not be enough time. This primarily occurs where the misconduct has also triggered a criminal investigation. In that situation, the employer often has to wait to take any administrative action pending completion of the criminal proceedings. Both the PSOBOR and FPBOR provide that the 1-year limitations period is “tolled” in the event of any criminal proceeding. AB 1744 does not provide this same protection.

I can certainly understand an employee’s frustration with being served a notice of discipline for misconduct that occurred 3 years earlier. From a human resources perspective, discipline is most effective if given close in time to the misconduct or performance problem. So as I mentioned above, I generally don’t have a problem with a 1-year limitations period. However, I do have a problem with how AB 1744 is written since it is based on when the conduct actually occurred instead of discovery, and doesn’t provide for tolling where necessary.

AB 1744 is sponsored by various state employee unions, such as the Union of American Physicians and Dentists, Service Employees International Union Local 1000, and American Federation of State, County and Municipal Employees. As of this date, there is no recorded opposition.

AB 155 Bankruptcy Bill is Back

AB 155 has gotten a lot of press lately. The measure recently passed the Senate Local Government Committee where it had been stalled for over a year. As written, AB 155 would require a local agency to obtain permission from the California Debt and Investment Advisory Commission (CDIAC) before filing for bankruptcy. The obvious effect of AB 155 would be to make it much more difficult for local agencies, like the City of Vallejo, to declare bankruptcy. I first commented on AB 155 in April 2009 (click here for the post), when I called it an overreaction.

However, now that AB 155 has passed its first hurdle, it's worth taking a look at the merits of the bill.  Under AB 155, a public entity must demonstrate to the CDIAC several factors, including: 1) that it cannot pay its debts, 2) that it has exhausted all other options; and 3) that it has a plan for restoring itself to fiscal health. However, those are all factors that are already considered by the bankruptcy court in any bankruptcy filing.  Is there any reason to believe that the CDIAC, which has no experience dealing with Chapter 9 bankruptcies, can evaluate these factors better than a bankruptcy court? I think not.  To the contrary, because the CDIAC is comprised of 7-9 elected officials, politics will invariably come into play in any decision of the CDIAC.

That begs the question, why is AB 155 needed?  In the Senate analysis, the primary justification for AB 155 is the idea that a local bankruptcy has statewide ramifications, and thus, the state should regulate a local agency's ability to seek bankruptcy protection.  As stated in the Senate analysis, "…local and state finances are inextricably linked, the state has a direct interest in the fiscal health of its local governments. A municipal bankruptcy can have statewide repercussions, including higher borrowing costs for other local entities and the state.”  Well, that certainly seems plausible.  However, I wonder if that has been the case.  For example, has the City of Vallejo's bankruptcy filing adversely affected its neighbors?  I'm sure Vallejo's bankruptcy caused all the various bond rating agencies to take a closer look at the finances of California local agencies.  However, apart from that stricter scrutiny I'm not sure that Vallejo's bankruptcy has had the statewide ramifications prophesied by AB 155.

The reality is that AB 155 remains a special interest bill designed to help unions at the bargaining table during these tough economic times.  As I mentioned last year, the possibility of more local agencies actually filing for bankruptcy is fairly remote. However, that hasn’t stopped many local agencies from threatening to “do a Vallejo.”  And that’s really what is driving this bill.  The unions want to prevent cities and counties from using the threat of bankruptcy to leverage concessions.  While the unions' position may be understandable, it doesn't make this a good bill—which it isn't.

PERB: San Diego City Attorney Improperly Bypassed Union

City of San Diego (Office of the City Attorney) (2010) PERB Dec. No. 2103-M (Issued on 3/26/10)

Facts:

This case arises from the pension funding crisis in San Diego. Very briefly, the crisis resulted from a series of poor decisions by City officials and trustees of the San Diego City Employees’ Retirement System (SDCERS) in the 1990’s. The poor decisions included twice delaying the City’s contributions to the retirement system, increasing future benefits for City employees, and underpricing employee purchases of retirement service credits. The net effect of these decisions was to grossly underfund the retirement system. As a result of the pension funding crisis, state and federal officials initiated civil and criminal investigations into the actions of public officials and others. State and federal prosecutors ultimately filed criminal charges against some of the SDCERS trustees, including the Local 145 president.

In 2004, Michael Aguirre (Aguirre) was elected the City Attorney on a campaign promising to clean up the financial mess facing the City. As part of that vow, Aguirre took aim at the underpricing of retirement credits by SDCERS. Specifically, under the union contract with Local 145, employees were allowed to purchase up to five years of retirement service credit at cost. However, in calculating the price for service credits, SDCERS staff grossly underestimated the true cost of the credits. Aguirre estimated it was a $147 million mistake. After he took office, Aguirre filed a civil action in an attempt to reverse the effects of the underpricing of the service credits. In addition, Aguirre issued a press release which gave rise to this unfair practice charge. The press release Aguirre issued directed employees to a form on the internet that they could submit to voluntarily rescind the prior purchase of service credits. Local 145 argued, among other allegations, that Aguirre’s actions constituted “direct dealing” with employees.

Decision:

While PERB dismissed the other allegations, the Board found that Aguirre’s press release constituted an attempt to bargain directly with employees, and was thus an unfair practice. In its decision, PERB held:

“This action goes beyond correcting the price shortfall and disregards the MOU language that expressly authorizes employee purchases of service credit at a price set by the retirement system. By soliciting employees to rescind their purchase of service credits, made in accordance with the MOU, the City has gone directly to the employees to obtain their waiver of a benefit negotiated by Local 145, based on the City’s subsequent determination that the credits were underpriced to the detriment of the City. Consequently, the city attorney’s direct request to employees to rescind service credit purchases, constituted bypass of the exclusive representative in violation of the MMBA.”

Comments:

1. This decision drew a dissent from member Dowdin. It was her first dissent as a Board member and only the 3rd dissent in a decision this fiscal year. (Both the other dissents were by member Neuwald. See PERB Decision Nos. 2058 and 2094.) Dowdin argued that merely informing employees of the rescission option did not interfere with the role of the exclusive representative since Aguirre’s goal was not to change the negotiated contract, but to correct a mistake.
2. I agree. Take, for example, a situation where the contract provides employees with 10 hours of vacation a month. By mistake, an employee receives 30 hours one month. Does the employer have to bargain with the union before it can correct the mistake? I think not. (Arguably, how the time is taken back may be negotiable as an “effect” but the decision itself, in my opinion, is not). In this example, the employer is not changing the terms and conditions of employment; namely, an employee’s entitlement to 10 hours of vacation a month. The employer is merely insisting on that condition by correcting a mistake.
3. In addition, I thought the majority too easily dismissed Aguirre’s argument that he was acting in his capacity as the City Attorney as opposed to acting in the role of the employer. As an illustration, let’s say in a prosecution for workers’ compensation fraud a District Attorney’s Office seeks restitution from the defendant. Let’s say the defendant happens to be an employee of the county. Does that fact mean that the DA must bargain with the union during this criminal proceeding in order to ask for the money back? Again, I think not. In this example, the DA is acting in his official capacity as opposed to an employer for purposes of collective bargaining. Granted, the situation in this case is slightly different, since this was not a criminal proceeding and Aguirre's role as City Attorney versus employer is much more blurred.  However, I thought the argument that Aguirre was acting in his capacity to enforce city laws was persuasive. Certainly, as I read the facts, it was not Aguirre's intent to bargain with employees in order to change a contractual provision. He was merely attempting to correct a mistake; a mistake that appeared to be undisputed.
4. Given how much litigation has already occurred in San Diego on this issue, I wouldn’t be surprised if this case is appealed. So it's not over yet.

PERB Recognizes Unconstitutionality of Binding Interest Arbitration Under SB 440

County of Sonoma (2010) PERB Decision No. 2100-M (Issued 2/25/10)

(Sorry for the delay, I’ve been in trial for almost a month)

In this case, PERB recognized that it was bound by the court of appeal’s decision in County of Sonoma v. Superior Court (2009) 173 Cal.App.4th 322, review denied. In that case, the court held that SB 440, which requires public agencies to submit to binding arbitration in certain disputes with public safety unions, was unconstitutional. Accordingly, it is not an unfair practice for a public agency to refuse a request for binding arbitration under SB 440, which is codified in Code of Civil Procedure section 1299 et. seq.

PERB Recognizes "Unfair Practice Strike" Under HEERA

California Nurses Association (2010) PERB Decision No. 2094-H (Issued on 2/02/10)

These consolidated cases involved allegations of bad faith bargaining brought by the California Nurses Association (CNA) and the University of California (University) against each other. The dispute culminated in a threatened pre-impasse, one-day strike by CNA. Because pre-impasse strikes are presumptively an unfair practice under PERB precedent, CNA justified its threatened strike by characterizing it as an “unfair practice strike,” as opposed to an economic strike. The ALJ agreed, finding that the University engaged in unfair practices which “provoked” CNA’s strike threat.

On exceptions, the Board rejected the ALJ’s proposed decision. With respect to the threatened strike, the Board, relying on EERA precedent, held for the first time that strikes are not a per se violation of HEERA. The Board also refused to find strikes at health care institutions to be per se violations of HEERA; but the Board did acknowledge the need to address threats to public health and safety on a case-by-case basis. Moreover, the Board recognized that a strike provoked by an employer’s unfair practice (i.e. an “unfair practice” strike) was permissible pre-impasse. The Board held that, “To establish that a strike is an unfair practice strike, the employee organization must prove that: (1) the employer committed an unfair practice; and (2) the employer's unfair practice provoked the strike."  Here, because the Board found that the University did not engage in bad faith bargaining, it necessarily followed that CNA’s strike threat could not be justified as an “unfair practice” strike.  Accordingly, the Board dismissed CNA’s unfair practice charge.

The remainder of the Board’s decision then addressed what damages, if any, PERB could award to the University. After an extensive discussion of court cases and its statutory authority, the Board concluded that it could order damages as part of a make-whole remedy. The Board emphasized that, “our holding does not diminish the importance of seeking injunctive relief to prevent an unlawful strike from occurring nor do we hold or imply that damages are a substitute for injunctive relief. To this end, we reaffirm the Board's holding … that damages will not be awarded unless the employer first seeks "to mitigate its losses or bring about the termination of the strike by requesting that PERB seek an injunction against it." The failure to seek injunctive relief may also be a factor in determining whether the employer sought to mitigate damages arising from a strike threat or strike preparations. The Board then remanded the case to the ALJ to take evidence on any damages suffered by the University.

Comments:

1.  The major ruling in this case is the Board’s holding that it has the authority to award damages to an employer subjected to an unlawful strike (or unlawful threatened strike). The Board’s decision on this issue is well-written, especially the discussion on the differences between strikes in the public sector versus private sector. Of note is the Board’s statement that, “[F]or all practical purposes, a public employer lacks the "economic weapons" to effectively combat a pre-impasse economic strike”; which is why such strikes are presumptively unlawful under the statutes administered by PERB.

2.  However, the most interesting part of this decision for me is the Board’s recognition of an “unfair practice strike.” Admittedly, the concept of an “unfair practice” strike versus an “economic” strike has long been recognized in the private sector, and by early PERB decisions.  But the early PERB decisions never set forth a sound rationale for recognizing such strikes in the public sector and I was hoping the Board would eliminate "unfair practice" strikes as an exception to the rule against pre-impasse strikes. In my opinion, here are the reasons why:

• Allowing an “unfair practice” strikes creates a huge exception to PERB’s rule that pre-impasse strikes are presumptively an unfair practice. Indeed, given how easy it is to allege an unfair practice, this exception has the potential to swallow the rule. This problem doesn’t exist under the NLRA which doesn’t have a presumption against the use of economic weapons prior to impasse.  Because PERB departed from the NLRA on pre-impasse strikes it should do the same for "unfair practice" strikes.
• The very concept of an “unfair practice” strike goes against public policy which discourages people from taking the law into their own hands. In California, the Legislature has provided a remedy for unfair practices: it’s called PERB. Why in the world should a union (or an employer for that matter) be allowed to utilize its economic weapons to remedy a legal violation for which there is a remedy? I can’t think of any other law where someone who believes he or she has been wronged can go and inflict economic pain on the perpetrator and have that sanctioned by the judicial system.
• While I do again concede that unfair practice strikes have long been recognized in the private sector, the public sector is different. Indeed, in this decision PERB extensively discussed the differences between the public and private sectors. PERB itself noted how public employers simply do not have the same weapons as private employers to respond to unions. That’s why pre-impasse strikes are presumptively an unfair practice. How then does it make sense for PERB to recognize the concept of an “unfair practice” strike? In my humble opinion all pre-impasse strikes—whether characterized as economic or unfair practice—should be presumptively an unfair practice.  If a union believes it is the subject of an unfair practice, then it should file a charge with PERB.  If it needs urgent relief, it should seek injunctive relief.  Given these legal remedies, I see no public policy reason for allowing an "unfair practice" strike.
• Finally, it is worth noting that in this decision PERB affirmed its standard for determining provocation. Unlike the NLRB, which requires that the unfair practice be a motivating factor for the strike, PERB requires that the unfair practice be a “but for” cause of the strike. This difference in standards will hopefully at least put a partial check on “unfair practice” strikes by unions.  Nevertheless, I am hoping that the Board will re-consider this issue in the future.

Alameda Deputies Agree To Drop 3 @ 50 Pension Formula

Alameda County and its Deputy Sheriff's Association (DSA) have reached a new six-year contract. According to news reports, the DSA made significant concessions regarding wages, and medical and pension benefits. For example, the contract provides for no salary increases over the first three years, and then allows for increases to bring pay in line with other similarly sized law enforcement agencies during the final three years.

Most significant, the contract calls for new deputies to receive a 2-percent-at-50 pension instead of the current 3-percent-at-50 pension arrangement.  However, new deputies may opt for a 3-perecnt-at-55 formula which requires an additional employee contribution of 5 percent of salary annually for five years.

Comments:

The DSA’s agreement to drop 3 @ 50 for new hires may be a harbinger of things to come.  I’m sure it wasn’t an easy thing for the DSA to agree to.  For those public safety employees without the 3 @ 50 formula, getting it has been priority number one for many years.  However, it’s no secret that 3 @ 50 is hugely expensive and perhaps even “unsustainable” in the opinion of many experts.  So what’s the solution? Well, dropping 3@ 50 for new hires is certainly one solution.  Here, the contract allows employees to buy into a slightly better 3 @ 55 formula which probably made it an slightly easier sell.  With public safety accounting for 50-60% on average of a city’s or county’s budget, I expect what happened in Alameda to be repeated elsewhere throughout the state.