By: Daniel J. Leffler
With regard to collective bargaining, historically in the public sector, employees could expect general wage increases in the 3-4% range for each year. A review of the SERB Wage Settlement Report indicates that statewide wages increased an average of 2.94% from 2000-2008. The average Consumer Price Index (CPI-U) or annual inflation rate during that period was 2.82% according to the Bureau of Labor Statistics. As a former firefighter in 2001, our local saw wage increases in the 4-5% range following 9-11. Many groups probably saw increases greater than 3% during that period with an average wage increase of 3.7% in 2001 according to SERB. The CPI rose 3.73% in 2001. It is, at least anecdotally, fair to say that wage increases were directly related to inflation in order for employees to maintain the value of their purchasing Dollar. For healthcare, the percentage of employees actually contributing toward healthcare premiums was about 50% and, of those contributing, employee contribution rates were well under $100/month. Ancillary Benefits, such as longevity, bonus pays, holiday pay, and vacation accrual were fairly stable and one could expect to seek increases in benefits each year.
Then the economic issues in 2009 came, followed by Governor Kasich’s attack on public sector bargaining through SB5. At least for public safety forces, which were once thought of as recession and layoff proof, a hard reality started to hit. Although SB5 was defeated at the state level, what we started to see was local governments taking the same approach; i.e.: reducing or eliminating ancillary benefits, demands that employees pay 15% of their healthcare cost, minimal wage increases, wage freezes or worse wage reductions and layoffs.
There is a lingering impression by employees that a 3% wage increase is still the norm and that once the local and federal economies started to emerge from the economic issues of 2009, there should be some form of catch-up (not the sauce). Many times bargaining groups say that since they took wage freezes for three years, they now should get a 9% increase in year 1 of the CBA to make up for lost time. However, according to SERB data, statewide wages increased by an average of 1.28% from 2009-2012 and it appears likely that the average for 2013 will be approximately 1.5%. From 2009-2013, the CPI rose an average of 1.73%. If we follow the same logic as the wage increases for the early 2000s, the actual wage increases since 2009 compared to the CPI are only about one-half of one percent behind the CPI benchmark. Therefore, it does not appear that significant wage increases are likely in order to “catch-up” for previous freezes.
Further compounding the issue is the significant increase in healthcare premiums. According to the 2013 SERB Report on the Cost of Health Insurance, healthcare premiums have increased by 115% since 2000. As a result, employers have been attempting to shift more of the burden of healthcare to employees. In 2013, nearly 90% of employees contributed toward the cost of healthcare premiums with a statewide average contribution rate of 12%. The evidence suggests that neutrals have been buying into the employer demands.
Obviously, every jurisdiction has its own particular facts and circumstances. However, as the local advocate, the bargaining committee needs to be aware of the practical difficulties in obtaining wage and benefit packages similar to those prior to 2009. In addition to local factors and financial considerations, generally speaking, the trend continues that neutrals (fact-finders and conciliators) are more conservative than in the past.
So reality is not matching the members’ expectation and trying to educate employees is a difficult task, particularly where conciliation is an all-or-nothing outcome. Conciliation entails a decision between two specific and often widely diverse proposals and neutrals select the most financially reasonable position. Although the members expect and deserve 3-4% wage increases and that their cost of healthcare will remain consistent, that is not the present reality regardless of a jurisdiction’s financial ability. When engaged in fact-finding or conciliation, the bargaining committee must fashion a final position that is reasonable and often far less than the members’ expectations. As a consequence, members may be frustrated and perhaps angry when the outcome of negotiations do not meet these expectations.
The key for a local advocate is to first understand these constraints and second to educate members related to bargaining in the present reality. While comparables between the local jurisdiction and surrounding employees performing similar work are vital in the dispute settlement process, they can also be useful in managing the membership’s expectations prior to the bargaining process. Information is essential in keeping the members’ expectations well grounded and consistent with reality.
Last Updated (Saturday, 07 June 2014 13:42)
In Part I, I discussed the historical background of Collective Bargaining Agreements (CBA) and the evaluation of grievances. The single most important question is “What does the CBA say about the subject?” Part II will discuss the development of the arbitration process. Through time the arbitration process and arbitrators have developed generally accepted standards and factors in deciding cases. However, those topics will be discussed in future Articles.
A grievance, at its basic legal core, is a breach of contract. Just as private parties who contract for goods or services can file a civil lawsuit for a party’s alleged failure to uphold the contractual bargain (a breach), the Union “litigates” the alleged breach of the CBA by the Employer to a neutral arbitrator. Although, in theory, an Employer could also file a grievance under the CBA, typically Employers maintain the power to take corrective action and force the Union to seek arbitration. CBA based claims provide remedies that include, among others, asking the employer to stop a certain practice, requesting a few hundred Dollars for a missed overtime or seeking the reinstatement of a wrongfully terminated employee. Most CBA-based claims have potential remedies far less than the cost of retaining an attorney and initiating civil litigation. The two forums in which litigation occurs are vastly different though.
Civil lawsuits by nature are complicated, lengthy and governed by procedural and evidentiary rules. Even in the relatively simplest of cases, parties in a civil case often spend months or years arguing about a procedural technicality or what one party is required to disclose to the other party. Depending on the complexity of the case, discovery deadlines may be set years out from the date the case is filed. Parties file procedural motions and wait for the court to rule on motions, sometimes taking months or years also. Parties are sometimes permitted to file an appeal of a procedural ruling, further delaying the process. This is all before even setting the case for trial to address the “merits” of the claim and final judgment. Civil litigation also favors wealthier clients who can afford the time and expense of the process particularly for claims that can range from hundreds of thousands to multi-millions of Dollars.
Parties to a contractual arbitration provision waive their right to a civil trial and to appeal the decision of the arbitrator on substantive grounds (on the merits). “Arbitration is widely recognized as a more informal and less highly structured forum for dispute resolution than civil litigation.*** Arbitration is subject to the discretion of the arbitrator with respect to how the process is controlled and the liberties to be accorded advocates and witnesses.” Wolf, Steven, The Arbitration Process and Arbitrability, 1-5 Labor And Employment Arbitration §5.01, (2013). While the parties can agree to procedural rules within the CBA, most disputes are governed by the Code of Professional Responsibility for Arbitrators and Procedural Rules of the Federal Mediation and Conciliation Service (FMCS) or the American Arbitration Association (AAA). Per Rule 27 of The AAA Labor Arbitration Rules, “The parties may offer such evidence as is relevant and material to the dispute, and shall produce such evidence as the arbitrator may deem necessary to an understanding and determination of the dispute.*** The arbitrator shall determine the admissibility, the relevance, and materiality of the evidence offered and may exclude evidence deemed by the arbitrator to be cumulative or irrelevant and conformity to legal rules of evidence shall not be necessary.
Arbitration has existed since the Greek and Roman empires. See Elkouri and Elkouri, How Arbitration Works, 5th Ed. 1997, p. 2. “The modern development of international arbitration can be traced to the Jay Treaty (1794) between Great Britain and the United States, which established three arbitral commissions to settle questions and claims arising out of the American Revolution. In the 19th century, many agreements were concluded by which ad hoc arbitration tribunals were established to deal with specific cases or to handle a great number of claims. Most significant was the Alabama Claims arbitration under the Treaty of Washington (1871), by which the United States and Great Britain agreed to settle claims arising from the failure of Great Britain to maintain its neutrality during the American Civil War.” Domke, Martin, Encyclopaedia Brittanica, (2013). Arbitration was further expanded by The Federal Arbitration Act of 1925 which enforced contractually based arbitration provisions and required the parties, under certain circumstances, to submit to arbitration rather than civil litigation. Modern Labor/Management arbitration has generally expanded with the expansion of collective bargaining and is currently used by all the major professional athletic groups.
Employees and management may be distrustful or skeptical about the usefulness of arbitration. Employees who are subject to a grievance and arbitration provision often ask why their claims must go to arbitration and not to civil court or falsely believe that even if they lose at arbitration, they can submit the matter to a Court. The simple answer is that parties have agreed to arbitration in the CBA and are contractually bound by the process. However, both parties must understand the more complex development of arbitration. Arbitration is a method of peacefully and economically settling labor disputes without resort to strikes, lockouts or costly civil litigation. The parties obtain a final award often within months of the dispute which can reduce strife within the workforce. The process provides employees who seek non-economic or very low value claims an opportunity to argue their case without the expense of civil litigation and the necessity to jump through complex procedural hoops. Finally, the process itself serves to educate the employer about problems within the organization and provides labor a forum to address their concerns.
 Future articles will discuss the interpretation of CBA language.
Last Updated (Saturday, 14 December 2013 16:54)
Generally speaking, Collective Bargaining Agreements (CBA) define a grievance as a misinterpretation or misapplication of the specific terms of the CBA. Although through time, the arbitration process and arbitrators have developed a broader range of potential claims under the CBA, such as past practice and reliance on external laws, those topics are not covered by this Article. Grievances are not complaints about a supervisor or a negative action taken by the employer that affects the employee. Often times, employees are confused about why no grievance was filed or a grievance, if filed, was not advanced to arbitration. The reasons are numerous and vary from case to case, but this article in intended to give employees some historical background about the grievance process and hopefully give some insight as to how cases are evaluated.
Prior to collective bargaining, the private sector workplace was governed by the at-will doctrine. Essentially, employees worked “at the will of the employer” so long as the employer’s actions didn’t violate a law or weren’t taken for discriminatory purposes. Under the master-servant relationship, the employer had every right to determine the employees wage, terms of employment, work schedule, and ultimately whether to terminate the employee for any or no reason. When the parties to a CBA talk about “management rights,” those rights include every possible action that the employer could historically and legally take. From a historical perspective, the Federal labor laws in the early twentieth century, such as the Railway Labor Act (1926), the Davis-Bacon Act (1931), the Wagner Act (1935) and the Fair Labor Standards Act (FLSA) (1938), began to limit the employer’s ability to act in certain ways. Although the FLSA set a minimum wage and a maximum hours limit before the employer had to pay an overtime rate, there were little restrictions on the employer’s actions. In fact, until the 1930s, employers could require employees to enter into a yellow-dog contract. A yellow-dog contract (a yellow-dog clause of a contract, or an ironclad oath) was an agreement between an employer and an employee in which the employee agreed, as a condition of employment, not to be a member of a labor union. In the United States, these contracts were widely used by employers to prevent the formation of unions
While collective bargaining agreements have existed since the 19th century, disputes often ended in violent and deadly battles. The Homestead Strike was an industrial lockout and strike which began on June 30, 1892, at the Homestead Steel Works in the Pittsburgh area town of Homestead, Pennsylvania, between the Amalgamated Association of Iron and Steel Workers and the Carnegie Steel Company. The strike resulted in 3 management agents and 7 workers being killed. None of the management agents were even charged with crimes while all the employees were charged with crimes, resulting in one employee being convicted. With the expansion of Federal labor laws in the 1930s, the grievance and arbitration process was a means to peacefully resolve differences.
“Since the 1960s, the tremendous growth of employee organization and collective bargaining in the public sector has been accompanied by the rapidly expanding use of arbitration for public employee disputes. This development has been particularly important because federal and state employees continue to be restricted by the traditional prohibition against strikes by public employees. Neutral dispute settlement machinery is essential in the public sector if organizational and bargaining rights are to have any real substance.” Elkouri and Elkouri, How Arbitration Works, 5th Ed., p. 14.
With the advent of formal collective bargaining in Ohio in 1984, public employees could negotiate and implement the terms and conditions of their employment and some designated classifications were prohibited from striking to resolve the negotiation process. The negotiated terms and conditions of employment contained in the CBA are a direct limit on and exception to the traditional management rights. In addition to defining wages and benefits, the “Just Cause” standard is one of the most important, and often taken for granted, aspects of the CBA. Under a CBA, management retains the right to take all lawful action, except where the CBA specifically requires or prohibits management action.
Two of the more common examples include scheduling and disciplinary action. In the absence of language in the CBA related to work schedules, in general, the employer is permitted to schedule employees or modify an employee’s schedule as they deem fit. In the case of an employer modifying an employee’s schedule with little or no notice, while objectionable to the employee and the Union, the action may not be grievable as a violation of the CBA. Conversely, under the just cause provision related to discipline, the employer is now prohibited from disciplining an employee for no reason. The Employer is required to prove a justifiable reason for discipline and that the level of discipline is appropriate for the alleged conduct.
So in evaluating whether a grievance exists or determining the merits of a grievance, the single most important question is “What does the CBA say about the subject?” If the subject of the grievance is contained in the CBA, a grievance exists if management misapplies the provision. If the subject is not covered in the CBA, a grievance will likely not exist.
 Future articles will discuss the interpretation of CBA language and the arbitration process.
 The Railway Labor Act required employers to bargain collectively and prohibited discrimination against unions. It applied originally to interstate railroads and their related undertakings.
 Congress passed the Davis-Bacon Act, requiring that contracts for construction entered into by the Federal Government specify the minimum wages to be paid to persons employed under those contracts.
 The NLRA was applicable to all firms and employees in activities affecting interstate commerce with the exception of agricultural laborers, government employees, and those persons subject to the Railway Labor Act. It guaranteed covered workers the right to organize and join labor movements, to choose representatives and bargain collectively, and to strike.
Employers were forbidden by the Act from engaging in any of the five categories of unfair labor practices. Violation of this prohibition could result in the filing of a complaint with the NLRB by a union or employees. After investigation, the NLRB could order the cessation of such practices, reinstatement of a person fired for union activities, the provision of back pay, restoration of seniority, benefits, etc. An NLRB order issued in response to an unfair labor practice complaint was made enforceable by the Federal courts.
The NLRA included no provisions defining or prohibiting as unfair any labor practices by unions. The Act served to spur growth of U.S. unionism -- from 3,584,000 union members in 1935 to 10,201,000 by 1941, the eve of World War II. The 1941 figure represented more than 25 percent of the nonagricultural workforce in the U.S. Congressional Digest, June-July, 1993.
 Known as the wage-hour law, this 1938 Act established minimum wages and maximum hours for all workers engaged in covered "interstate commerce."
Last Updated (Thursday, 13 June 2013 19:54)
Generally, the two most important items that our members negotiate are wages and health insurance. Wages are fairly self-explanatory. Health Insurance is one of the most complicated subjects of bargaining for members and something the effective negotiator must understand. A $500 increase in your deductible, assuming wages remain frozen, could equate to more than a 1% loss of income. In addition, for 2012, only 11.8% of family medical premiums were paid 100% by the employer . As a result, almost all employees pay for health insurance in one form or another.
A second aspect to consider before beginning negotiations is whether your unit is user-based or fairly healthy. This is important to consider because if the vast majority of your members are “users” of the plan, an increase in deductibles or co-pays will have a greater impact on your members as compared to a fixed monthly contribution. If your unit is fairly healthy and uses only preventative care, your members will pay a premium for services that few members use.
Finally, most neutrals will not “carve-out” a particular group of employees compared to all the other bargaining units in the jurisdiction. If your fire department has settled their contract including healthcare, chances are you will get the same plan. So, if possible, get on the same page.
SERB publishes on their website the Annual Report on the Cost of Health Insurance in Ohio’s Public Sector. The SERB report details, among other statistical data, the average cost of healthcare for employers and the average employee contribution toward the premium. In 2012, the statewide average monthly premium for medical and prescription coverage is $506 for single coverage and $1,339 for family coverage . The employer’s average increase in health insurance between January 1, 2011 and January 1, 2012 was 6.8% for single coverage and 7.0% for family coverage . When employees pay a portion of the medical premium, the average employee monthly contribution is $63 for single and $173 for family coverage . This data is important to understand how your unit compares to the statewide average; however, it does not provide a basis on which to determine whether your employer is offering a fair deal.
This article will discuss the four main points to consider when looking at health insurance. You should be aware that health insurance premiums as quoted by the various insurance companies (“insurers”) are comprised of hundreds of different variables, including specific coverages, limits, exclusions, and your particular jurisdiction’s claims. Most of these items are out of your control, unless your unit is part of a health insurance committee (“HIC”) that is permitted to investigate and make recommendations related to these items. If you are part of a HIC, you should ask to discuss the specific plan designs with the insurer’s representative, not just your jurisdiction’s human resources representative. Simple changes to a plan design could result in a reduction in employer premiums and, in the end, the employees’ contribution.
The four main items to compare when looking at a plan design and the employer’s offer are premiums, deductibles, co-insurance and co-pays.
Premiums are, of course, the amount the employer pays to obtain coverage. This may include prescription, dental, and vision costs, if your employer offers these coverages or these costs may be separately calculated. The question usually arises whether the employee contribution should be a fixed dollar amount or a percentage of the employer’s premium. The answer depends on each particular circumstance.
A deductible is the amount of money each covered member must pay first before the insurance begins. Usually the deductible is expressed in terms of per person and an aggregate. (A $1000/$2000 deductible requires that each covered person must pay the first $1,000 or once the total amount paid for the family in the aggregate reaches $2,000 the insurance begins). Some employers have gone to a high deductible health plan (HDHP) with the option of a Health Savings Account (HSA). An HDHP usually has a single deductible of $2,500 or $3,000 and a family deductible of $5,000 or $6,000. The cost of the up-front deductible may be offset if the employer offers to deposit some or all of the amount into the members HSA. The benefit to the employer is substantial savings on the premium which allows for extra funds available to be deposited directly to the employees account.
Statistically, 85-90% of all covered persons on health insurance use less than $5,000 in claims per year. Potentially the insurance company may not pay any claims on the HDHP. The benefit to the employee is, if the employee does not use the plan, the money deposited stays in the employee account to be used at any time in the future for medical care. The risk to the employee, especially where the employer does not cover the full cost of the deductible, is if the member uses the full $5,000, that medical bill must be paid first by the member. Expressed in terms of a monthly cost this equals $416.66 per month; far in excess of the statewide average. For the most part, employees should not be responsible for a high deductible and also pay a premium contribution.
Next is co-insurance. If your co-insurance is 100% coverage, then you owe nothing after the deductible is met. If your coinsurance benefit on your policy is 80/20, then you will be responsible for 20% of the balance of the bill after meeting the deductible and the insurance company will pick up 80%. (Assume a $100,000 medical bill with a $5,000 deductible). If your co-insurance responsibility is not capped, you would owe 20% of $95,000 or $19,000. However, most policies have what is called a “maximum out of pocket” or coinsurance cap. If your coinsurance limit (including deductible) is $10,000, then you are only responsible for the $5,000 deductible and an additional $5,000 in co-insurance, not the whole $19,000. The insurer will cover the difference. Therefore, your true out of pocket “maximum” on your policy is the deductible plus your coinsurance up to the stated “maximum out-of-pocket .” It does not make as much difference as you may think when choosing between a 70/30 coinsurance plan versus an 80/20 coinsurance plan so long as you have a reasonable cap. Without a cap, the 80/20 plan would be considerably better.
Finally, you should compare co-pays. A co-pay is the amount that you owe the doctor for each visit, generally excluding preventative care. You may have to pay a $10 co-pay each time you visit a doctor, $50 to visit an urgent care or $100 to visit the ER. A large family with multiple doctor visits would expend more for co-pays. However, by raising the co-pay you may be able to save on the premium.
In examining your contract, the employee premium contribution is not the only subject to bargain over, all these items can be negotiated. These four aspects must all be evaluated to determine what is best for your unit and when combined what is most cost effective for the employees.