FINAL PAPER FOR MASTER OF LABOR RELATIONS CERTIFICATE BY RUBEN ORTEGON A CASE STUDY IN THE RALPH C. DILLS ACT THE CONTINUING OBLIGATION TO NEGOTIATE

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1 FINAL PAPER FOR MASTER OF LABOR RELATIONS CERTIFICATE BY RUBEN ORTEGON A CASE STUDY IN THE RALPH C. DILLS ACT THE CONTINUING OBLIGATION TO NEGOTIATE AND ADMINISTER THE CONTRACT AFTER CONTRACTS EXPIRE

2 When the Ralph C. Dills Act (Dills Act) and other public sector labor laws were in their infancy during the 60 s and 70 s, budget surpluses and full employment were the economic norm. The 1980 s and 90 s, however, have ushered in layoffs and budget deficits which have contributed to the contentious employer-employee relationships due to staff and benefit cut-backs. During these difficult times public sector managers not only had to look at creative ways to continue to provide public services; but, they also had to be able to walk the mine field of labor laws when the labor contracts expired. Despite economic difficulties, the state employer is required by the Dills Act to continue to negotiate in good faith with the exclusive employee representative, administer the terms and conditions of the contract, and while doing so, avoid unfair labor practice charges. California public sector labor laws, born in the 1960 s with the George Brown Act, were created out of a legislative effort to promote harmonious state employer-employee relations. When contracts for state employees, represented by 21 bargaining units, expired during 1992 negotiations between the various unions and the Governor s representative, negotiations entered a level of contention which focused upon the three areas previously mentioned, i.e., requirement to negotiate in good faith, administering the terms and conditions of the expired contract, and unfair labor practice charges. Contracts for state employees include a supersession clause. i This clause specifically lists numerous statutes in the Government Code addressing economic benefits which are superseded by language in the memorandum of understanding (MOU) should a conflict exist. The Government Codes refer to such economic benefits as uniform allowance use of sick leave for family illness, vacation accrual, non-industrial disability benefits, and overtime for employees not covered by the Fair Labor Standards Act overtime requirements. ii To make changes to these areas within the scope of representation mandates the parties meet and confer in good faith bargaining. iii Therefore, when the contracts are in effect, employee wages, hours and other terms of employment are controlled by the MOU. However, when contract negotiations reached impasse after the MOU s expired in 1988 and again in 1992, the Department of Personnel Administration (DPA) declared the supersession clause invalid and unilaterally imposed changes as part of its last, best and final offer. Naturally, this brought up unfair labor charges for, among other things, failure to meet and confer in good faith and denying the employee organizations, rights guaranteed to them by the Dills Act. iv However, the DPA was relying on the language of the Dills Act which states:... the provisions of the Government Code shall prevail until those affected sections of the memorandum of understanding are renegotiated to resolve the inconsistency. If any provisions of the memorandum of understanding requires the expenditure of funds, those provisions of the memorandum of understanding shall not become

3 effective unless approved by the Legislature in the annual Budget Act. If any provision of the memorandum of understanding requires legislative action to permit its implementation by amendment of any section not cited above, those provisions of the memorandum of understanding shall not become effective unless approved by the Legislature. v This move created a dilemma for employer-employee relations. The Public Employment Relations Board (PERB), created by the enactment of the Educational Employee Relations Act to administer and enforce the provisions of the Dills Act and other public sector laws, was called upon through an unfair labor practice charge to address this issue. The question was a basic one. Was the states action a violation of the Dills Act by failing to negotiate these changes? The first issue is whether the actions denied the employee organizations their right to negotiate changes which fall under the scope of bargaining. Government Code Section 3516 seems to answer that as it states, terms and conditions include health and welfare benefits, vehicle and transportation expenses, work hours, transfer and reassignment policies and organizational security issues. vi The PERB reinforced that by its 1983 interpretation of the unfair labor practice charge against the California Department of Transportation. The PERB said subjects within the scope of negotiation are any subjects which... involve the employment relationship and are of such concern to both management and employee that conflict is likely to occur and... the mediatory influence of collective negotiation is an appropriate means of resolving the conflict. vii However, is the Governor bound by the rules of the Dills Act? Can he order benefit levels reduced to the lower levels of the government code to satisfy budgetary needs; while circumventing the Dills Act? The response came in PERB s answer to unfair labor practice charges. The first, filed in 1988 by a coalition of employee organizations found that The Governor had no duty to bargain before submitting the budget to the legislature that contained specified amount of pay and benefit increases. viii In another unfair labor charge of failure of duty to bargain filed in 1994, PERB found The state did not violate its duty to negotiate in good faith under the Dills act by submitting to and bargaining with the Legislature over a budget covering terms and conditions of employment prior to negotiating over those terms with the unions. ix Questions still remained over the ability of the state to impose its last, best, final offer after contract negotiation reached impasse. In a Sacramento Superior Court suit filed by the DPA, the court prevented the DPA from implementing its best, final offer after exhaustion of impasse if it would change terms or conditions vested in the supersession clause of the act. But, DPA was permitted to set new contribution formulae for health

4 benefits accordance with good faith bargaining obligation or implement other terms not listed in the supersession clause. x So these series of decisions reinforced the language in the Dills Act to require employer-employees to meet and confer in good faith even after the expiration of the contract. But what about administering the terms and conditions of the contract? When the MOU is in force and a dispute arises, the general approach to settle such disputes is the grievance process; and then arbitration if needed. However, the overriding scenario here is that the contract has expired. Does the grievance process continue? Can disputes be taken to arbitration? Grievances and grievance procedures are a creation of individual contracts and are not specifically addressed in the Dills Act. Nonetheless, the Dills Act does give a basic right to employee organizations to represent its members in their employment relationship with the state. xi Since the terms and conditions of the contract are also protected until a successor agreement is reached or the employee organization is voted out by its members, disputes over interpretation and administration of the contract will arise. Therefore, both management and labor have a vested interest in continuing some form of dispute resolution. When contract negotiations are continuing, neither side wants to have an arbitration decision arise which would adversely impact their position during negotiations. The point of contract negotiations, after all, is to come to some sort of agreement. However, the question of whether contract disputes can be taken to arbitration is not settled and not a simple issue. The first thing to keep in mind is that grievances procedures are mechanisms used to help keep harmonious employer-employee relations, especially during the life of the contract. When disputes arise, most contracts enumerate specific steps used to resolve the dispute. However, contract language varies and the authority of one party or the other to take a dispute to arbitration also varies. Although PERB does not have jurisdiction over contract language (that is deferred to an arbitrator) PERB retains jurisdiction over actions which may arise from a grievance and by their nature be considered an unfair labor practice. xii Therefore, in that capacity PERB has provided rulings affecting contract administration which impact those employers under California s various public sector labor laws. When the PERB is unable to use California s public sector labor laws to formulate a response to questions such as the issue of grievance arbitration, it must rely on federal decisions created by the National Labor Relations Board (NLRB) or on Supreme Court decisions. The Supreme Court in the 1977 Nolde Brothers case held that there is a presumption in favor of arbitrability, even in a grievance arising after a labor agreement expires. Provided, of course, the grievance is based upon a provision in the expired contract. xiii More recently, in a 1991 decision, Litton Financial Printing Division, the Court held that a grievance arises under an expired contract only if (1.) it involves circumstances that arose before expiration of the agreement; (2.) the action taken after expiration of the agreement infringes on a right that accrued or vested under the

5 agreement; or, (3.) under normal principles of contract interpretation, the disputed right goes beyond the remainder of the agreement. xiv The court went on to say, that under key principles of ordinary contract law when the contract lapses and the parties continue to act as if they were performing under the original agreement, the terms of the agreement survive unless either party indicates otherwise. xv The PERB utilized those premises in their 1992 ruling Johnson v. State of California, Department of Youth Authority. xvi So does the Ralph C. Dills Act remain intact given the nature of events which have taken place between state employees and the Governor s representative? That is a question for another paper. But the questions about employers responsibilities after contract expiration are more clear now. The employer is required to meet and confer with the exclusive employee organization over issues related to the scope of representation during the life of the contract and after its expiration. To fail to do so, public managers risk the likelihood of unfair labor practice charges for the specific violations of the Dills Act. Perhaps more importantly, they also face the likelihood of creating greater disharmonious employeremployee relations if they fail to fairly administer the terms and conditions of the contract. Ruben J. Ortegon Labor Relations Analyst California Department of Corrections 1515 S Street, Room 407-S Sacramento, Ca (916)

6 i Government Code ii Ibid iii Government Code iv Government Code 3519(c). v Government Code vi Government Code vii CSEA v. State of California, Department of Transportation, PERB 1983 No.361-S, 60. viii California State Employee Association, SEIU, Local 1000 v. State of California DPA (1988) No. 706-S, 79X. ix Association of California State Attorneys and Administrative Law Judges, Professional Engineers in California Government v. State of California (1994) No S, 110. x Department of Personnel Administration v. Sacramento Superior Court; Greene, et al. (1992) 5 Cal.App.4th, 155, 94. xi Government Code xii Government Code xiii Nolde Brothers, Inc. v. Local No. 358, Bakery and Confectionery Workers Union (1977) 430 U.S. 243, rehearing denied 430 U.S xiv Litton Financial Printing Division v. National Labor Relations Board (1991) 501 U.S xv Ibid. xvi Johnson v. State of California Department of Youth Authority (1992) No. 962-S, 98.