PERB: Minimum Job Requirements Not Within Scope of Bargaining

City of Alhambra (2010) PERB Decision No. 2139-M (Issued on 10/26/10)

Facts

The City of Alhambra (City) operates under a merit system that requires competitive employment examinations. The City’s municipal code requires that any classification plan be adopted by the City Council. Under the City’s local employer-employee relations rules, the City retains the right to “establish and determine job classifications.”

In 2005, the City proposed and the City Council approved changes to the class specification for Fire Captain. Previously, the job classification for Fire Captain required both an Alhambra Fire Department Fire Engineer certification and Driver 1A and 1B certification for current fire engineers employed by the City. The change in 2005 made the requirement an Alhambra Fire Department Fire Engineer certification or Driver 1A and 1B certification for current fire engineers employed by the City. The City's goal was to expand the pool of potential applicants for Fire Captain.

The City did not notify the union of the proposed changes or seek to negotiate them. Instead, the City believed that pursuant to its local rules, it retained the management right to make changes to job classifications. The ALJ found that the change to the Fire Captain job classification involved a matter within the scope of bargaining. Because the City did not give the union notice of the change and an opportunity to bargain, the ALJ found that the City committed an unlawful unilateral change.

On exceptions filed by both parties, the Board reversed. The issue before the Board was whether the change fell within the scope of bargaining. In deciding this issue, the Board relied upon the three-part test set forth in Claremont Police Officers Assn. v. City of Claremont (2006) 39 Cal.4th 623 (“Claremont”). Under Claremont, the first inquiry is whether the management action has a significant and adverse effect on the wages, hours, or working conditions of the bargaining-unit employees. If so, the second inquiry is whether the significant and adverse effect arises from the implementation of a fundamental managerial or policy decision. If not, then the meet-and-confer requirement applies. However, if both the first two factors are present, the third inquiry is whether the employer’s need for unencumbered decisionmaking in managing its operations is outweighed by the benefit to employer-employee relations of bargaining about the action in question.

Significant and Adverse Effect

Addressing the first inquiry, the Board held that the change did not adversely impact wages or hours. The Board noted that the City’s change actually expanded the pool of potential applicants. In reaching this holding, the Board distinguished several prior precedential decisions finding changes to job classifications within scope. The Board held that those prior decisions must be read in light of Claremont. Under Claremont, the Board held that changes to the minimum qualifications for a job may be within the scope of bargaining if the change has a significant adverse impact. Here, the Board found that it did not.

Fundamental Managerial or Policy Decision

Even though it answered the first question in the negative, the Board considered the other two factors. The Board held that the “establishment of minimum [job] qualifications” was a fundamental managerial or policy decision under the MMBA. In reaching this decision, the Board drew a distinction between “promotional procedures, which are bargainable, and job qualifications, which are not.” The Board also considered that the position of Fire Captain affects the health and safety services provided by the City to the public.

Balancing Test

Finally, the Board held that even if the first two factors were present, it would find that the employer’s need for unencumbered decision making in this situation outweighs the benefit of bargaining over the decision. Specifically, the Board held that:

“This standard is not met in this case, as there is no evidence that bargaining over the expansion of the candidate pool for fire captains would outweigh the City’s need to determine the qualifications necessary to provide public fire protection services to its citizens. Accordingly, the charge and complaint must be dismissed.”

Comments

1. Prior to this decision, if you had asked me whether changing the minimum qualifications of an existing job classification in a bargaining unit was within the scope of bargaining, I would have answered yes (with rare exceptions; e.g. state mandated licensing requirements, etc.) Certainly, I would have advised notifying the union of any changes in case there were any negotiable effects. So at first blush, this decision seems to be a significant departure from existing PERB precedent. While the Board went to great lengths to argue that there was no precedent on the specific subject of “minimum qualifications” versus promotional procedures, the rationale underlying PERB’s existing decisions certainly pointed towards a change in minimum qualifications being negotiable. So I do believe this decision represents a departure; if not in actual precedential authority, then certainly in direction by the Board
2. That said, when you read the decision carefully it’s potentially much more narrow than at first blush. First, on its face it only applies to minimum qualifications versus promotional procedures. Obviously, there is a gray area between these two subjects and what happens in that gray area will have to be litigated in the future.
3. However, even though the holding is narrow, I believe this decision does represent a significant change in Board “direction”. The way the Board analyzed the second and third factors can be applied to many other areas that many people currently consider within the scope of bargaining. For example, grounds for discipline, including certain work rules, and other aspects of the disciplinary process would arguably satisfy the second and third Claremont factors under the Board’s analysis. In contrast, this decision suggests that the disciplinary process itself would be within the scope of bargaining.
4. While this decision may represent a change in Board “direction,” how long it will last remains to be seen. This decision was issued only a week before the November election. There are currently three Board members and one Board member’s term expires at the end of 2010. Therefore Governor Brown can appoint three Board members—a majority—immediately upon taking office.  So while this decision may represent a change in direction, employers would be wise to consider that it's coming at the end of an administration and that another "change" could be on its way. 

Plan to Attend CPER Seminar on MMBA Local Rules

Do your local rules address unit modification petitions and other second generation representation issues?  Do they still require a majority of the unit vote for an amendment of certification?  Does amendment of outdated rules seem daunting because so many parties will bargain  over any changes?  Then you should make plans to attend, "Your Local Rules – Is It Time for a Makeover?" sponsored by the California Public Employee Relations Program (CPER).

The seminar is being held on December 3, 2010 in Oakland, California.  (Click here for the brochure).  Registration is only $90 ($110 if requesting MCLE credit).  It should be a great program so sign up early!

PERB: Unfair Practice Charge Does Not Block Election Certification

Salinas Valley Memorial Healthcare System (2010) PERB Decision No. A387-M (Issued on 10/25/10)

This case arose from a decertification election at the Salinas Valley Memorial Healthcare System (SVMHS). The National Union of Healthcare Workers (NUHW) sought to decertify SEIU-United Healthcare Workers West Local 2005 as the exclusive representative and to establish itself as the new exclusive representative. NUHW won the election. SEIU then filed objections to the result of the decertification election. The objections alleged that the SVMHS interfered with employees’ free choice in the election by: (1) changing its access rules for non-employee SEIU representatives; (2) allowing a management employee’s photograph to be used on a flyer supporting the NUHW; and (3) discriminating against, retaliating against, and/or interfering with the rights of several employees who supported SEIU. SEIU also filed an unfair practice charge against SVMHS based on the same allegations. The Regional Director held that SEIU failed to establish that SVMHS’s conduct interfered with employees’ free choice and therefore dismissed SEIU's objections. The Board affirmed.

In its appeal, SEIU argued that its objections to the election should not have been dismissed—and the election should not have been certified—until its unfair practice charge based on the same facts was decided. The Board has never addressed this issue before; namely, whether findings and conclusions in an election objection decision have any preclusive effect on identical allegations raised in an unfair practice charge. Citing NLRB precedent, PERB held that findings and conclusions in an election objection decision do not have preclusive effect in a related unfair practice charge.  PERB emphasized that there are “significant differences between representation and unfair practice proceedings … PERB may refuse to set aside an election even when the employer's conduct constituted an unfair practice if the conduct did not actually affect, or have a natural or probable effect on, employee free choice ... On the other hand, the employer's conduct need not constitute an unfair practice for PERB to set aside an election.”

Here, PERB noted that the Regional Director did not address whether SVMHS' alleged conduct constituted an unfair practice under applicable PERB standards. Rather, the Regional Director only determined that none of the alleged conduct actually influenced, or had the potential to influence, employee free choice in the decertification election. Therefore, PERB held that ruling on SEIU’s objections would not affect the subsequent unfair practice charge.

Comments:

1. PERB’s approach in separating the representation issues from the unfair practice issues makes sense and is practical. PERB has always prioritized representational issues, as it should. Delaying the certification of an election while an unfair practice charge is pending doesn’t make sense if the conduct has already been determined not to have influenced the election.
2. Here, SEIU filed its unfair practice charge two (2) days before the ballots were counted. It is important to note that SEIU apparently did not request that its unfair practice charge be considered a “blocking charge” and that the election be stayed.  Like the NLRB, PERB does allow for “blocking charges” prior to an election. A party must ask that an unfair practice charge be treated as a blocking charge and the Regional Director makes a decision on whether the stay the election.  The test is whether the conduct "will so effect the election process as to prevent the employees from freely selecting their representatives." See Jefferson School District (1979) PERB Decision No. Ad-66.

Court of Appeal Denies CNA's Challenge to Strike Award

California Nurses Association v. Public Employment Relations Board of the State of California (Court of Appeal Case No. A127766)

On October 7, 2010, the First District Court of Appeal summarily denied a challenge by the California Nurses Association (CNA) to PERB’s decision in California Nurses Association (2010) PERB Decision No. 2094-H. In the underlying decision, PERB held that CNA improperly threatened to engage in a pre-impasse, one-day strike against the University of California (University). (Click here for my blog post on that decision.) As a result of CNA’s actions, PERB held that the University was entitled to monetary damages against CNA for the costs it occurred to prepare for the threatened strike.

Although CNA's challenge was summarily denied, the issue is significant enough that CNA will likely file a petition before the California Supreme Court.  So stay tuned ...

California Supreme Court: Past State Employee Furloughs Legal

Professional Engineers in California Govt. v. Schwarzenegger (Supreme Court Case No. S183411)

The Supreme Court issued its decision today on the legality of the state employee furloughs imposed by the Governor. If you haven’t been following this issue, here’s a brief summary of the facts. On December 1, 2008, the Governor declared a fiscal emergency and called the Legislature into special session to address a projected $40 billion deficit by the end of fiscal year 2009-2010. On December 19, 2008, the Governor issued an executive order imposing 2-day per month furloughs on state employees. Several employee unions sued the Governor challenging his authority to unilaterally impose furloughs. In mid-February 2009, the Legislature passed and the Governor signed the revised Budget Act of 2008, which included the savings attributable to the 2-day per month furlough program.

Supreme Court’s Decision

In an 81-page decision authored by Chief Justice Ron George, the Supreme Court concluded that the Governor did not have unilateral authority to impose furloughs on state employees, but that the furloughs were nevertheless legal because they were “ratified” by the Legislature via the revised Budget Act of 2008. In its analysis, the Court considered two broad questions: 1) On December 19, 2008, did the Governor possess authority to impose unilaterally a mandatory two-day-a-month unpaid furlough for state employees by issuing an executive order? 2) Did the Legislature’s enactment in February 2009 of the revised 2008 Budget Act and the initial 2009 Budget Act affect the validity of the Governor’s executive order or the remedy that the employee organizations may be entitled to obtain in the present proceeding?

Issue 1: Did Governor Possess Authority to Unilateral to Impose Furloughs?

Court’s Answer: No.

The Court quickly rejected the Governor’s contention that he possessed inherent authority to impose furloughs on state employees as a function of his constitutional powers. The Court affirmed that under the state constitution, “it is the Legislature, rather than the Governor, that generally possess the ultimate authority to establish or revise the terms and conditions of state employment through legislative enactments.” The Court also rejected the Governor’s argument that the Legislature had delegated to the Governor the power to impose furloughs through specific statutory provisions—specifically, Government Code sections 19851, 19849, and 3516.5.  The Court held that section 19851 was not relevant to furloughs as imposed and that 19849 did not confer any substantive authority to the Governor. Similarly, the Court held that section 3516.5 of the Dills Act did not give the Governor authority to impose furloughs; it merely provided a method to avoid the collective bargaining process.

 In conclusion, the Court held that:

“[W]ith regard to represented employees we are of the view that clearly, unless the Governor or the DPA had been granted the authority unilaterally to impose a mandatory unpaid furlough on affected represented employees by the terms of an applicable MOU, the Governor and the DPA lacked authority unilaterally to institute such a furlough through the December 19, 2008, executive order with respect to those employees.”

“Accordingly, unless the MOU’s specifically authorized the mandatory unpaid furlough imposed by the executive order, it would appear that at that time the executive order was not valid.”

Issue 2: Did the Legislature “Ratify” the Furloughs in the revised Budget Act of 2008

Court’s Answer: Yes.

After concluding that the Governor did not have the authority to unilaterally impose furloughs in December 2008, the Court examined the language of the revised Budget Act of 2008. Section 3.90 of the Budget Act of 2008 provided:

“Sec. 3.90. (a) Notwithstanding any other provision of this act, each item of appropriation in this act, with the exception of those items for the California State University, the University of California, Hastings College of the Law, the Legislature (including the Legislative Counsel Bureau), and the judicial branch, shall be reduced, as appropriate, to reflect a reduction in employee compensation achieved through the collective bargaining process for represented employees or through existing administration authority and a proportionate reduction for nonrepresented employees (utilizing existing authority of the administration to adjust compensation for nonrepresented employees) in the total amount of $385,762,000 from General Fund items and $285,196,000 from items relating to the other funds. It is the intent of the Legislature that General Fund savings of $1,024,326,000 and other fund savings of $688,375,000 in the 2009-10 fiscal year shall be achieved in the same manner described above. The Director of Finance shall allocate the necessary reduction to each item of appropriation to accomplish the employee compensation reductions required by this section.”

In examining the impact of this language, the Court found that the amount of reduction in employee compensation clearly included the savings from 2-day per month furloughs. The Court then cited several budget documents that referenced the continuing furloughs imposed on state employees. Based on these facts, the Court concluded that:

"[I]n view of the exigent circumstances facing the Legislature, it intended to permit the then-existing furlough program to be used as an alternative to other means that might be agreed upon through the collective bargaining process, without regard to whether the appellate courts ultimately determined that the Governor or the DPA possessed the authority to impose an unpaid furlough program unilaterally.”

“Accordingly, we conclude that the phrase “existing administration authority” — as used in section 36 of Senate Bill 3X 2 — was intended to encompass the then-existing furlough program. By enacting this provision, the Legislature, through the exercise of its own legislative prerogative, authorized the substantial reduction in the appropriations for employee compensation, mandated in the revised budget legislation, to be achieved through the two-day-a-month furlough plan.”

Thus, even though the Governor lacked the authority to impose furloughs initially, the Court concluded that the Legislature approved the furloughs when it enacted the revised Budget Act of 2008.

Comments

1. As expected, the decision was authored by Chief Justice Ron George. There was a concurrence by Justice Corrigan regarding a technical issue on the “single-subject” rule but she ultimately joined in the majority’s conclusion that the Legislature ratified the furloughs in the revised Budget Act of 2008. Notably, the decision was issued less than a month after oral arguments; an indication, I believe, of the importance of this decision.
2. The majority decision was 81 pages long and Justice Corrigan’s concurrence another 3 pages. I thought the court’s discussion of the Governor’s powers under the constitution and various statutes was extremely thorough. Indeed, the Court spent the first 67 pages of the decision explaining why the Governor does not have the unilaterally authority to furlough state employees. In contrast, the portion of the decision analyzing the language of the revised Budget Act of 2008 only took 13 pages. I believe that’s due largely to the lack of much evidence as to the Legislature’s intent in enacting section 3.90. Further, I don’t believe either of the parties imagined that the case would turn on the language of section 3.90.
3. What is the effect of this decision? Because the 2-day per month furloughs were ratified by the Legislature, they were legal. So state employees will not be getting any back-pay for those furlough days.
4. What about the 3rd furlough day? On July 1, 2009, the Governor issued another executive order imposing a 3rd furlough day on state employees. The Court’s decision did not rule on the validity of this 3rd furlough day. However, the decision noted that on July 24, 2009, the Legislature passed the revised Budget Act of 2009 which contained the same “existing administration authority” language as section 3.90 of the revised Budget Act of 2008. Therefore, even though this decision did not directly rule on the legality of the 3rd furlough day, it’s clear that the 3rd furlough day was also ratified by the Legislature and thus will be found legal.
5. What about the current furloughs? On July 28, 2010, the Governor issued yet another executive order. This order reinstituted 3-day per months furloughs for fiscal year 2009-2010. The Court’s decision expressly does not address the legality of the current furloughs. However, unlike the furloughs in fiscal year 2008-09 and 2009-10, the current furloughs have not been ratified by the Legislature. Thus, I have to assume that the current furloughs will be found to be illegal unless ratified by the Legislature. Whether the Legislature will do so in the Budget Act of 2010 remains to be seen.
6. What didn’t the court address? Although the Court addressed several key issues related to the Governor’s authority, it expressly declined to address others. These include:

• Whether Government Code section 19581 might allow the Governor to impose furloughs at selected agencies for selected employees based on specific needs. The Court concluded only that section 19581 did not authorize “across-the-board” furloughs.
• Whether section 3516.5 of the Dills Act—which provides an emergency exception to the collective bargaining requirement—applies to “fiscal” emergencies, as opposed to only natural disasters such as an earthquake or flood.
• Whether the Governor has the authority to impose furloughs or simlar measures on nonrepresented employees (although the Court strongly suggested that there would be similar limitations with respect to nonrepresented employees).

Supreme Court: State Furloughs Legal

Professional Engineers in California Govt. v. Schwarzenegger (Supreme Court Case No. S183411)

The Supreme Court ruled today that the furloughs ordered by the Governor are legal. The Court's conclusion was:

Although, for the reasons discussed above, we disagree with much of the trial court‟s reasoning, in light of the legislative measures enacted after the trial court‟s ruling we conclude that plaintiffs are not entitled to the relief sought in this litigation. Accordingly, the judgment rendered by the trial court, denying the relief sought in these mandate proceedings, is affirmed.

I'll have more once I've had a chance to thoroughly read the decision.

Governor Vetoes Pay Reform Bills

As I posted earlier (link), only 2 of the 6 bills that comprised the Legislature’s response to the City of Bell salary scandal passed the Legislature. Those two bills were AB 194 and AB 827. On September 30, the Governor vetoed both bills with the following veto messages:

AB 194 Veto Message:

To the Members of the California State Assembly:

I am returning Assembly Bill 194 without my signature.  The bill limits the salary that retirement benefits are based on for individuals, prospectively after January 1, 2011, to 125% of the Governor’s salary, as specified.  The current compensation limit imposed by the federal government to determine public employee retirement benefits is $245,000. Currently, this bill would cap the compensation counted towards retirement at $217,483. While this two tiered cap that would be created by this bill would make a very small dent in the pension problem California faces, it cannot be considered real pension reform. I am still hopeful that the Legislature will pass an acceptable bill that addresses the real cost issues that have driven up the liability in public pension systems.

For these reasons, I am unable to sign this bill.

Sincerely,

Arnold Schwarzenegger

AB 827 Veto Message:

To the Members of the California State Assembly:

I am returning Assembly Bill 827 without my signature.  The scandal with the City of Bell was a disgraceful use of public funds. I share the public outrage expressed over the abuses attributed to the City of Bell’s management of employee contracts. Assembly Bill 827 presents good public policy in that it provides transparency with regards to some municipal personnel contracts, but it should be applied to all public employees, including labor union members and state employees. I encourage the Legislature to enact thoughtful and meaningful solutions rather than a rushed proposal that is severely limited in its application.

For this reason I cannot sign this bill.

Sincerely,

Arnold Schwarzenegger