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.

PERB General Counsel: Governor's Emergency Furloughs Permissible

IUOE, Unit 12 v. State of California (Department of Personnel Administration) (2009) PERB Unfair Practice Case No. LA-CE-664-S (The dismissal letter can be found on the Sacramento Bee’s website here.)

PERB’s Office of the General Counsel (OGC) has issued its first decision on the legality of the Governor’s decision to unilaterally implement furloughs of state employees.  Back in January 2009, IUOE filed an unfair practice charge alleging that the State unlawfully implemented two day per month furloughs, which the Governor later increased to three days per month.  IUOE argued that furloughs were a mandatory subject of bargaining and therefore the State could not act unilaterally.

In its decision, the OGC agreed that furloughs are generally subject to bargaining since they are in essence a reduction in hours.  However, the OGC recognized that Government Code section 3516.5 provides that in an “emergency” the State can act before it bargains with the union.  To determine what constitutes an “emergency” the OGC looked to the MMBA which contains almost identical statutory language.  (Gov. Code, §3504.5.)  Relying on Sonoma County Organization Employees v. County of Sonoma (1991) 1 Cal.App.4th 267, a court case interpreting the MMBA language, the OGC held that the burden fell upon the union to disprove the existence of an “emergency.”  More important, the OGC held that “an emergency declaration is presumed valid and a party challenging the declaration has ‘the burden of proving its invalidity.’” Here, the OGC found that the Governor’s Executive Orders contained enough facts to establish that an emergency existed and that IUOE had provided no facts showing otherwise.  Accordingly, the OGC dismissed the unfair practice charge.

Comments:

1. This case could be ground-breaking.  As it stands, both the Dills Act and the MMBA have language allowing an employer to act unilaterally in an “emergency.”  That’s really nothing new as the NLRA has long recognized that an employer can act unilaterally in an emergency.  The same doctrine has been recognized under the other acts administered by PERB, such as EERA.  The problem for employers is how “emergency” has traditionally been defined.  The unions have always argued that a true emergency does not exist unless the employer can show that it had no other choice but to take the action it did.  Here, however, the OGC did not discuss at all whether the Governor had options other than furloughs (e.g. layoffs).  Is that not a requirement of an “emergency”?  If so, that's a very favorable clarification for public employers.
2. The decision is also significant because it holds that the declaration of an emergency is “presumptively” valid.  That means the burden of proof rests on the union.  Prior cases discussing emergencies could be read to place the burden of proof on the employer to establish an emergency.  
3. This decision also does not bode well for state employees in the coming fiscal year. The unions have been publicly complaining that furloughs are bad public policy because they reduce state services to the public.  The unions have been making this argument hoping that the Governor would reduce or eliminate the furloughs.  However, state employees should recognize that the Governor could just as well impose a straight salary cut.  Under this decision, where there is a bona fide emergency, the Governor could just as well impose salary cuts as impose furloughs.  Salary cuts have the benefit of not reducing state services.  I’m not saying that salary cuts makes sense—especially in classifications where state employees are already paid less than employees in comparable jurisdictions—but it’s certainly an option the Governor must examine given the dire fiscal situation.
4. Finally, it should be noted that this case is not precedential. However, if IUOE files an appeal to the full Board of PERB, any decision rendered will be precedential. My bet is that an appeal will be filed and if the Board affirms—which it does more than 90% of the time—it will be a very favorable decision for pubic employers.

[ADDENDUM:  Got an email regarding the notion of the Governor imposing salary cuts.  My comments above are aimed at what the Governor can or can't do under the Dills Act, since that's what the case was about.  Obviously, you still have the Department of Personnel Administration v. Superior Court (1992) 5 Cal.App.4th 155, 174-175 case (which I talked about before here) which says that only the Legislature can directly change salaries.  However, there are ways to reduce compensation without violating that case and those options appear to be open to the Governor if the rationale in this decision is adopted by the Board at PERB.  (Further, in my mind it's at least conceptually possible that the Governor could circumvent the Department of Personnel Administration case and lower salaries in a true emergency, but's that for another post)  In any event, my point was that things could get a lot worse than the current furloughs - which is still true.] 

Union Didn't Misrepresent Contract to Members

Santa Ana Educators Association (2009) PERB Decision No. 2087-E (Issued on 12/30/09)

This case was brought by a couple of union members dissatisfied with a contract negotiated by their union, the Santa Ana Educators Association (SAEA).  In the contract, SAEA agreed to concessions to which the dissenting union members strongly objected.  They felt the contract was a bad deal and alleged that the SAEA violated its duty of fair representation by agreeing to it.

The fact that some union members objected to a contract is nothing new.  There are always some people who feel the union bargaining team didn’t get enough.  Here, the objecting union members went further and alleged that the union lied to its members in describing the provisions of the proposed contract.  In considering this claim, PERB set forth a test for determining when a union breaches its duty of fair representation by misrepresenting facts to secure a contract ratification.  To establish such a claim, the charging party must show that: "(1) the exclusive representative made an untrue assertion of fact (or conduct equivalent to an untrue assertion of fact); (2) the exclusive representative's assertion was made with knowledge of its falsity; (3) the exclusive representative's assertion was made to secure ratification of a contract; and (4) the fact misrepresented must have a substantial impact on the relationships of the unit members to their employer."

Here, PERB found that those elements were not established and affirmed the dismissal.

Governor Releases Budget: Salary Cuts Planned for Employees

The Governor released his proposed budget for 2010-11 today.  Of interest to a lot of people are the Governor’s proposals for employee compensation.  Under the proposed budget, the 3-day per month furloughs of state employees will end.  However, the Governor still plans to save $1.6 billion in employee compensation costs.  Here's how he plans to do it (from page 68-69 of the Governor’s budget):

Governor’s Proposed Reductions:

1. Workforce Cap — A reduction of $449.6 million achieved through a five-percent increase in salary savings. An Executive Order will require that Agency Secretaries and Department Directors immediately act to achieve the five-percent reduction by July 1, 2010. It is expected that attrition will be the primary factor in achieving the increased salary savings. The constitutional offices are not included in the workforce cap because the fiscal year 2009-2010 budget for each of those officers included a permanent reduction that achieves savings to the level of the workforce cap or a higher amount.
2. Five-Percent Salary Reduction — A reduction of $529.6 million achieved through an across-the-board reduction in salaries by five percent. 
3. Increased Employee Retirement Contribution — A reduction of $405.8 million achieved by increasing employees’ retirement contribution by 5 percent and reducing the employer contribution accordingly.
4. Lower Cost Health Care — A reduction of $152.8 million in health care costs beginning in January 2011 achieved by contracting for lower-cost health care coverage either directly from an insurer or through CalPERS.  Savings beginning in 2011-12 will pre-fund other post-employment benefit costs.
5. Pre-funding for Health and Dental Benefits for Annuitants — A decrease of $98.1 million for pre-funding other post-employment benefits.

Comments:

1. Workforce Cap:  The Governor wants a generalized 5% reduction in employee compensation from all agencies and departments.  The budget says this will be accomplished primarily through attrition.  Since it's at the agency/department level, I can't see how else it could be accomplished since agencies/departments don't have the delegated authority to negotiate salary cuts.  Therefore the only way to achieve a reduction in total compensation is to have fewer workers.  Fortunately, the state has enough turnover that a 5% reduction achieved through attrition shoudn't be a problem.
2. Five-Percent Salary Reduction:  This is going to be tough for the Governor.  Here's why.  It's true that this can be accomplished without bargaining with the unions, but only if the Legislature cooperates.  (All the Legislature has to do is put the magic words in a bill, "Notwithstanding the requirements of Goverment Code section 3512 et. seq." - which is the Dills Act.)  However, I can't see the Legislature agreeing to impose a 5% salary cut on state employees without requiring the Governor to bargain that with the unions.  But if the Governor goes to the bargaining table, here's what likely will happen.  The unions know that under the Dills Act, the Governor can't impose salary cuts on them even at impasse.  (Department of Personnel Administration v. Superior Court (1992) 5 Cal.App.4th 155, 174-175.)  So what the unions will do (and have done) is counter the Governor's salary cut proposal with a slew of "savings" proposals, none of which involve cutting state employee compensation.  Some of these proposals will have merit, but many will not, and in either event they won't equate to a 5% salary reduction.  Then when it gets close to July 1st, the Governor will ask the Legislature to impose the salary cuts but the unions will argue that the Governor has been bargaining in bad faith because he has ignored the unions' "savings" proposals.  In the end, the Governor might be forced to impose layoffs which can be done without bargaining, and which is what I think will happen (and quite frankly, layoffs may make more sense from a policy standpoint - but that's for another blog).
3. Increased Employee Retirement Contribution:  Currently, most non-safety state employees pay 5% of their salary for the Tier 1 defined benefit pension plan.  The state picks up the remainder of the cost.  The "normal" actuarial cost for non-safety pensions is approximatley 10%.  [Note: It's currently above 15% because of CalPERS recent loses]  So this basically means that most state employees will be paying the full cost of their pensions.  However, the problem here is the same as with salary cuts.  The Governor needs the cooperation of the unions or Legislature and neither is a sure thing.
4. Lower Cost Health Care:  Interesting.  You would think that if there was a lower cost health plan out there the state would already be using it.  Maybe there is.  However, my gut feeling is that the only way you're going to decrease health care costs is to provide less coverage and benefits.  Again, not easy to do without the unions or the Legislature and/or CalPERS agreeing to it.
5. Pre-funding for Health and Dental Benefits for Annuitants:  Not sure why this is here but pre-funding certainly makes sense.  It's something that local entities are trying to do, but obviously is very difficult in these economic times.
   
   

Mid-Year Review of PERB

Half of fiscal year 2009-10 is over.  As I mentioned in prior posts, this year I’ve been keeping statistics of all the Board’s decisions.  So let’s take a look at some of the key statistics through December 31, 2009.

Total Number of Board Decisions (from 7/1/09-12/31/09):
43

Decisions by Statute:
MMBA: 21
EERA: 11
Dills Act: 8
HEERA: 3

Decisions by Type:

Appeals from Dismissals:  31 (11 of which were DFR’s)

Exceptions to ALJ Decisions:  7
Approval of Settlement:  1
Administrative Appeal:  2
Reconsideration:  2

Decisions by Outcome:

Decisions affirmed:  39
Decisions overturned:  2

-  1 ALJ decision overturned (2077-M)
-  1 dismissal overturned (2079-M)
Decisions partially overturned:  2
-  Decisions 2069-H and 2070-H

Decisions by Board Member:
Dowdin:  20
Neuwald:  9
McKeag:  7
Wesley:  7
 
Other Interesting Facts:

• 42 of the 43 decisions were unanimous. Only 1 decision drew a dissent: 2058-M by Member Neuwald

Comments:

1. The main thing that stands out to me is the affirmance rate, which was above 90%.  That means a party's chances of getting a decision overturned was less than 10%.  At that's only if you count the 2 partial dismissals. 
2. Also, with only 1 case drawing a dissent, this Board has been remarkably unanimous in its decisions.
3. Finally, it's worth noting that oral argument remains the rarest of all Board actions.  The last time the Board granted oral argument was in 2004 in a case involving the right of teachers to wear union buttons at work.  (PERB Dec. No. 1727-E).  The next most recent time (as far as I know) was in 1994 when the Board granted oral argument twice, one in a case involving CSU (PERB Dec. No. 1093-H) and one involving the University of California (PERB Dec. No. 1039-H).  So only 3 times in the last 15 years and not once during the Schwarzenegger administration.  I would enjoy watching another oral argument before the Board (I saw the one in 2004) so I'm hoping the Board grants a request in the next year.

AG: Joint Labor-Management Benefits Committee Not Subject to Open Meeting Act

Attorney General’s Opinion (AG Opn. 08-806 12/31/09)

The Attorney General has issued an opinion finding that a Joint Labor-Management Benefits Committee (JLMBC) created as part of a Memorandum of Understanding between an employer and exclusive representative is not subject to the Brown Act (open meeting law).