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The Ohio Patrolmen's Benevolent Association (O.P.B.A)

Moving Past The Past Practice Misconception

Over the years I have noticed many misconceptions that OPBA members possess in the area of labor law.  Those misconceptions range from “the law provides us with guaranteed breaks” to “HIPPA prevents my employer from inquiring about my illness” to “we’ve always done it that way so it’s a past practice.”    
Each of these misconceptions has a basis for belief but none are actually true.  In this article I examine and discuss the real law and meaning of the popular term “past practice”.

Past practice is a term of art that arises when a party to a collective bargaining agreement attempts to enforce a “practice” regarding a matter that is not included in the written contract.  It is also asserted in order to assist in the actual interpretation of a confusing written term of a contract.  And finally, past practice is sometimes cited to support a claim that a “clear” term of the written contract has been “amended” by mutual agreement as evidenced by the parties’ past practice.

Evidence Required To Establish A Past Practice

Most arbitrators have recognized that for a past practice to be established that certain elements must be proven  in regard to the practice.  The practice must be unequivocal; clearly understood and acted upon; and readily ascertainable over a reasonable period of time as a fixed, and established practice accepted by both parties.

A couple of understandable ways that arbitrators have defined a past practice are: “a pattern of conduct which appears with such frequency that the parties understand that it is the accepted way of doing something”; “a practice exists when a certain result has been utilized in repetitive and identical circumstances”; “a practice is established if, when one circumstance occurs, it is consistently treated in a certain way”. To constitute a past practice, the occurrence need not be daily or weekly, or even yearly, but when it happens, a given response to that occurrence must always follow.

Past Practice When The Contract Is Silent

In cases where the labor contract is completely silent with respect to a given activity, the presence of a well-established practice may constitute an “implied” term of the contract.  In law, an implied term of a contract is as enforceable as a written term.
In labor law, though, the enforcement of an implied term often depends on whether the term involves methods of operation and/or direction of the workforce or whether it involves a benefit of personal value to the employees.  Generally, past practices involving a benefit are permitted to become an implied term while practices involving the exercise of management rights are not.

As we all know, arbitrators have permitted wide authority in management to control methods of operation and to direct the work force, including the right without penalty to make changes if the changes do not violate some right of the employees granted elsewhere by the written contract.  As such, arbitration case law contains many examples of a past practice not becoming an implied term sufficient enough to prevent management from: changing work schedules or reassigning work or determining the number of workers or eliminating a job and/osr adding or eliminating job duties within reasonable limits.  The rationale behind these cases is that if management really intended to concede its management rights, then it would do so expressly in writing, and not implicitly.

An illustration of this outcome would be a situation where management has retained its  right to schedule and pursuant to that right management has utilized fixed shifts for several years.  Despite this history the parties have not referenced such a practice anywhere in their labor contract.  When the employer suddenly decides to implement rotating shifts instead, most employees think that the long standing  past practice of utilizing fixed shifts will prevail.  Uh, no; the contract is silent and the implied term we think exists will not be enforced because a management right relating to running the operation is involved.

In contrast to the freedom management is afforded regarding its basic functions, arbitrators often rule that past practice matters involving “a benefit of peculiar personal value to the employees” can be implied enough to become enforceable.  Because these matters generally do not involve management rights and because a long standing but unwritten benefit is at stake, arbitrators have found the provision of the benefit to be implied. 

Arbitrators reason that an employer would not ever provide something of value to its employees, regularly and routinely, unless it intended to do so.  Wash-up periods, lunch period arrangements, paid work breaks, free coffee or free meals, payment of employee’s salary during workers’ compensation waiting period, release time for collective bargaining, allowances and maternity leaves of absence are all examples of a “benefit of a peculiar value” that arbitrators have permitted to become implied terms of a contract.

A great example of a past practice becoming an implied term of the contract involves the giving/taking of a promotional test in 24/7 operation like a police department.  In this instance there will always be candidates taking the exam while they are on duty and other candidates taking the exam while they are on their off time.  Yet rarely is there a contract term that addresses this activity.

In most cases involving this activity the parties have, knowingly or not, developed a past practice of releasing working candidates from duty and/or compensating off duty candidates for attending.  Even though this may happen once every three (3) years, it happens the same way each time. Should the employer ever decide to terminate such a practice and refuse to pay those taking the test while off duty, it will probably be on the losing end of an implied term past practice case.

Past Practice Used To Interpret A Contract Term

The most common use of a past practice is for the interpretation of ambiguous or unclear contract language.  This makes sense because unclear language can best be defined or explained by the parties’ “intent” in agreeing to and constructing the contract’s language. And a party’s intent is most often and best defined in its actions.  Those actions are demonstrated and measured through the “practice and custom of the parties” in relation to the unclear term.  Thus the parties’ past practice often provides the real meaning to an unclear contract term.

The general attitude of arbitrators is that they give great weight to a past practice when interpreting unclear language.  They routinely rule that where a practice has established a meaning for language in a contract, the language will be “presumed” to have the meaning given it by that practice.
A past practice used to interpret an ambiguous term does not have to be so “frequent and regular and repetitious.”  For purposes of interpreting ambiguous language, relatively few past instances have been required to establish a binding practice.  This is especially so when the incidents giving rise to the issue rarely occur.  So long as the parties’ practice is consistent upon each infrequent occurrence, it still rates as sufficient to define the ambiguous term.

Past Practice Used To Permit Variances From Clear Contract Language

While past practice is frequently used to establish the intent of contract language that is subject to different interpretations, it rarely can be used to alter the meaning of a clear and unambiguous term.  In almost every instance the clear language is enforced.  This is so even where an arbitrator overwhelmingly believes that, on the basis of fairness, the past practice should have prevailed.

Here are some illustrative arbitration holdings standing for the principle that clear language always trumps a past practice:  “Where a conflict exists between the clear and unambiguous language of the contract and a long standing past practice, the Arbitrator is required to follow the language of the contract”; “While the Arbitrator recognizes that it is difficult to accept the overturn of a fifteen (15) year past practice, the Arbitrator is required to do so in light of the clear and certain language”;  “Past practice” is a useful means of ascertaining intention in case of ambiguity or indefiniteness, but no matter how well established a practice may be, it is unavailing to modify a clear promise.” 

A good example of this principle involves the specific time limits set forth in a grievance procedure that also includes a provision requiring the parties to “strictly adhere” to such time limits.  Even though the parties may have established a past practice of routinely ignoring and/or relaxing those specified time limits, should one or the other insist that one acted untimely, that insistence will prevail.  This is because of the contract’s clear language requiring strict compliance.

Any past practice that the parties have mutually followed or that have been enforced by an arbitrator can ultimately be broken and discontinued.  This can only occur, though, upon the expiration of the contract, during the collective bargaining process.  At the table the party who wants to terminate the practice simply declares that the practice will no longer be recognized, thus allowing or forcing the other party to regain (or not) the practice through the bargaining process.
As the foregoing indicates, what OPBA members often think of as a past practice is probably still a past practice.  It is wrong, however, to think that every past practice can be made to be binding as if it was a written contract term.  For further guidance and explanation of the law of past practice, consult your OPBA Representative.    

 

Ohio Police and Fire Pension Fund

In the next month or two (depending on when you receive this article) will determine the direction of our pension fund.  Although strong we are in need of changes.  Recently we have seen the Senate pass bill 340 through swiftly expecting the House to follow.  Since that time we have seen the same dog and pony show the legislature continuously portrays while delaying the vote on important legislature.  Regardless of how we feel about the bill knowing nothing is perfect, reform is needed.  All believe and have relayed how certain parts of the bill are unfair but are willing to accept most of it; knowing that something needs to be done.
There have been some unique features implemented into SB 340 but most items included come from the initial proposals from 2011 recommendations of OP&F Board of Trustees.  One item added to the bill will give the board more authority to implement changes without legislative approval for items such as age of retirement and employee contributions.  It is important to remember that the board did not ask for this implementation and that whatever the sentiment is; the legislature is on the track to “pass the buck” and decision onto the fund.  In our best analysis they do not want to be responsible for decisions regarding our fund in the future. 

While all of these items will create change we are still attempting to implement items administratively to do our best to preserve the best we can for our fund.  We are studying the implementation of W2 reporting and calculating system as opposed to the current system we use.  This system would potentially include items that are now not currently added into our pensionable wages.  It is currently used by the Ohio Public Employees Retirement System and appears favorable for the members.  We are working constantly to improve the administrative rules for off-duty non-catastrophic disability awards.  These “off-duty” awards represent over 20% of all disability awards by the fund.  We have had other discussions about potential member favorable changes and keep in mind always that we would consider restoring benefits should economic conditions change.
I promise to keep the membership informed and offer your voice to our board should you have a concerns, questions or comments.  Although we do not know if the bill will pass or when it will be voted on; we do know that your fund will remain strong and we will do all we can to preserve it for yourself and future retirees.  I appreciate your support and please direct any questions or comments you have to me via email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .  Take care and be safe.

Scott Huff
Trustee for the Ohio Police & Fire Pension Fund

 

Sept. 2012

Summer has passed and our 2 family days with the Cleveland Indians and Columbus Clippers were well attended. The latter, however, was on the eve of the funeral for Deputy from Delaware County Sheriff Department Detective Dan Otto who died in a tragic accident while in California. Our thoughts and prayers go out to his family, friends and department for their loss. Our Annual Golf Outing was held on July 18, 2012 at Mallard Creek and it was also well attended and a success. This outing is the only formal fundraiser for the Police Benevolent Fund to date.


The attention now turns to the pension reform bills that are proposed in Columbus and the elections this November. Justice Douglas, the CPPA and it representatives and I met with the Speaker of the House prior to the release of the pension reform study. The message that Justice Douglas and I left with the Speaker was that the legislature needs to act on the proposed changes immediately.  These changes have been almost 3 years in the making and further delay to will affect the viability and solvency of the pension systems. The OPBA expressed our reservations with the granting of authority to the pension board to make changes to the systems without legislative interaction. The links to the respective bills S.B. 340, OP & F, and S.B. 343, PERS, can be found on our website by clicking on Senate Bill Analysis for the respective bills. Testimony should have been heard by the House in August with an eventual vote hopefully before the November elections. The report on the 30 year plans for the pension systems may be viewed on the Ohio Retirement Study Council web site at http://orsc.org check under the reports section: thirty year funding plan. If you go to the Ohio Legislature website, http://www.legislature.state.oh.us/, you can check for updates on the status of these bills.

Health care is a concern as our members approach retirement and are in retirement. We have met with the Executive Director to voice concerns for OPERS proposed changes but to also educate me on the plan. Unfortunately, our health care benefits are not guaranteed in our public pension systems by statute. As stakeholders, members should voice their concerns and objections to their respective systems as well as any objections that may come from the OPBA. I have directed the members of the Executive Board that are in OPERS-LE to monitor and advise me of relevant information since I have never been a member of that system. The lack of any guarantees for health care is the reason that I have written two articles on post retirement health care plans to be negotiated into contracts. In my former department, Solon PD, we had negotiated that provision into our contract in 2005.


The National Association of Police Organizations held its Annual Convention the last week of July. Invitations had been extended to both Presidential campaigns. Vice President Joseph R. Biden Jr. addressed the convention; however, there was no response from the presumed Republican Presidential candidate, Governor Romney, or any representative from the Republican Party. The endorsement was unanimous for President Obama. I realize that personally there may be reservations with this but Governor Romney has stated he favors defined contribution pensions over our defined benefit programs. Governor Romney also stated his unwillingness to support expansion of collective bargaining rights. Executive Secretary Tom Austin has a separate article with the endorsements to date of candidates from Ohio. Justice Terrence O’Donnell, Justice Robert R.Cupp and Justice Yvette McGee Brown who appear on the front cover were endorsed by the OPBA for the Ohio Supreme Court.

Other speakers at the convention included Director Bernard Melekian of COPS U.S. Department of Justice who spoke on the COPS program and from the U.S. Department of Justice; Thomas Abt, Chief of Staff; Office of Justice Programs spoke on the Public Safety Officers Benefit Act, PSOB. There was a pledge by Mr. Abt to reduce the delays in the granting of benefits to the families requesting them. NAPO has worked with member organizations to assist them in receiving the benefits for families from their organizations in obtaining benefits that may be delayed from PSOB.  NAPO has argued that benefits from PSOB should not be tied to officers wearing their bulletproof vests if purchased through the assistance of the federal government.  There is more information in the articles from the NAPO July Washington Report on PSOB and COPS funding.



The next General Membership meeting in October will be held in the Toledo area.  The remaining Board of Directors meeting in November and General Membership meeting in December will be in North Royalton. The movement of the General Membership meetings will continue to rotate throughout the State of Ohio to afford our departments throughout the state a chance to attend meetings.


 

Saving for College? Does a Roth IRA or 529 plan fit the bill?

Saving for College? Does a Roth IRA or 529 plan fit the bill?
A Roth IRA can be used as a retirement planning tool and an education funding tool.

Parents who want to save money for their own retirement and save money for their children's college expenses have many complicated and competing choices.  One of the most basic, but most important, decisions is where to invest the money.  For example, parents who want to protect their savings from taxes can choose among 529 college savings accounts and Roth IRAs.  Both types of accounts require investors to contribute after-tax money.  However, many people do not realize that both 529 plans AND Roth IRAs allow tax-free withdrawals of contributions for children's college expenses.  But there are many key differences, including state tax liabilities, limits on who can use them, financial aid ramifications, and investing options.

Contributions to both Roth IRAs and 529 Plans are not deductible for Federal Income Taxes, but 529 contributions may be partially deductible at the State level. Contributions to an Ohio 529 plan of up to $2,000 per beneficiary per year (any filing status) are deductible in computing Ohio taxable income, with an unlimited carry-forward of excess contributions.  The withdrawals of the contributions from both accounts are tax free.  The earnings or profits spent on college tuition come out of the 529 plan tax free; in the Roth IRA, if you are under 59½ and haven't waited five years since contributing, the earnings may be taxable.  If thinking about using the funds for education expenses other than college, i.e.,  private high school, the 529 plan might not be the best bet.

Another nuance between the two plans involves your ability to contribute to each plan.  The 529 plan has very high annual contribution rates and contributions are not limited by your income level.  Contributions to a Roth IRA are limited by your income to the point where those with higher incomes may even be phased out and unable to make any contributions.  The annual Roth IRA contribution rate for 2012 for those less than age 50 is $5,000 per parent.  Those age 50 and over are eligible for an additional $1,000 per year contribution.   A definite benefit for police officers is that contributions to a Roth IRA are not offset by any deferrals to your 457(b) deferred compensation plan.  If you fall within the income guidelines, you can contribute to both. 

When applying for financial aid, the treatment of both accounts when calculating the Expected Family Contribution (EFC) is treated entirely different.  A Roth IRA does not enter into the calculation of the EFC; a 529 does. Effective with the 2009-10 academic year, the value of all 529 college savings plans, prepaid tuition plans and Coverdell education savings accounts owned by a parent or by the parent’s dependent children must be reported as a parent asset on the FAFSA.  For this reason, many consider a Roth IRA to be the better planning tool when trying to maximize financial aid.  Parental assets are assessed at a maximum 5.64% rate in determining the student's Expected Family Contribution (EFC).

The surprise for many parents is the potential financial-aid penalty of using a Roth IRA: The entire IRA distribution, taxable or not, must be included in base-year income on the student's federal financial-aid application for the following year.  This can reduce the amount of future need-based financial aid. Qualified distributions from a 529 do not count as income or a resource for future calculations.

When we have a client open a 529 plan, we always suggest they let other family members know that at gift giving time other family members can contribute to the college funding of the intended beneficiary. That is definitely one drawback with using a Roth IRA for education funding; others are less likely to contribute to your Roth IRA.

Before deciding between using a Roth IRA or a 529 Plan as a college funding tool, you want to understand all of the details: how you put money in, how you take money out, and how the ins and outs are treated for tax and financial aid calculations.  If you have questions on whether a Roth IRA or a 529 plan is best for you, give Lineweaver Financial Group a call 216.520.1711, and we’d be happy to provide complimentary advice based on your situation. 

Lineweaver Financial Group
9035 Sweet Valley Drive
Valley View, OH 44125
216.520.1711
www.lineweaver.net
Securities offered through Sigma Financial Corporation. Member FINRA/SIPC