"Exigent Circumstances" Justify City's Modification to Existing Union Contract

By Nelson Cary and Lauren Frame

Relying on decade-old precedent, the Ohio State Employment Relations Board (“SERB” or “Board”) issued a decision on April 28 that is very much a reflection of current economic times. In a 2-1 decision, SERB held that because the City of Toledo faced “exigent circumstances,” the City did not commit an unfair labor practice when it made changes to an existing bargaining agreement without negotiating with the union. SERB v. City of Toledo, SERB 2011-001 (4-28-2011) (pdf).

The City of Toledo modified its existing agreement with the Toledo Police Command Officers’ Association (“Union”) by unilaterally increasing Union members’ healthcare premiums and rescinding the City’s 10% payment into the Union’s pension fund. The City argued that the existence of exigent circumstances necessitated the changes and, therefore, the City’s unilateral implementation without bargaining or reaching agreement with the Union did not constitute an unfair labor practice. 

Generally, decisions involving mandatory subjects of bargaining (e.g., wages, hours, and terms and conditions of employment), must be bargained before implementation, except where “emergency situations,” render prior bargaining impossible. In re Toledo City School Dist. Bd. of Ed., SERB 2001-005 (9-20-2001) (“Toledo Schools”). “[E]xigent circumstances that were unforeseen at the time of negotiations” constitute “emergency situations” within the meaning of Toledo Schools. Id. at 3-29. Thus, the question for the Board was whether the City needed to act immediately due to exigent circumstances, unforeseen at the time of negotiations.

Following an assessment of the City’s dire economic situation and noting the “predicament” the City faced, including a 24% funding deficit unforeseen at the time negotiations began and a budget that must be balanced, the Board concluded that this “certainly fits the description of exigent circumstances.” City of Toledo, SERB 2011 at 11. Accordingly, SERB concluded that the City did not commit an unfair labor practice.

To those labor professions who have followed the discussion related to Ohio Senate Bill 5, the law that reforms Ohio’s public employee collective bargaining rules, SERB’s decision, which hinges on the determination of “exigent circumstances,” may sound familiar. Indeed, Senate Bill 5 contains provisions which effectively permit an employer in a state of “fiscal emergency,” as determined by the auditor of the state, to terminate, negotiate, or modify an existing collective bargaining agreement, including modification of the agreement to suspend established salary or benefit increases, or both. Perhaps SERB v. City of Toledo is an indication that even without Senate Bill 5, public employers in dire economic situations may find some relief from stringent collective bargaining agreements via the SERB’s interpretation of “exigent circumstances," assuming that the case is not overturned on appeal or reversed by a future Board with different members.

UPDATE: House Committee Votes to Amend Senate Bill 5

Today, the Ohio House Commerce and Labor Committee considered amendments to Senate Bill 5.  According to a report in The Columbus Dispatch, some of the changes considered include:

  • Giving public employees the right to refuse to pay "fair share" fees to unions.
  • Making some changes to impasse resolution mechanisms, primarily by providing an option of a public referendum on a union contract that could not be paid for without a tax increase.
  • Clarifying that safety forces can bargain for equipment.
  • Permitting public employees to speak to public officials during contract negotiations.

This afternoon, the House committee voted 9-6 in favor of the legislation.  The bill will move next to the House. 

Opponents of the legislation have not offered any amendments to it, maintaining that the legislation is so bad that nothing can fix it.  Rather, opponents seem focused on a ballot initiative, perhaps as early as November 2011. 

Meanwhile, pollsters have been active, asking Ohioians about their views on the proposed legislation.  The results are not favorable for supporters of Senate Bill 5.

UPDATE: Senate Bill 5 Clears Ohio Senate

Senate Bill 5, the legislation that would substantially reform the public employee collective bargaining system in Ohio, has passed the Ohio Senate.  It now moves on to the Ohio House of Representatives for consideration.

The bill that passed in the Senate was significantly different from the bill originally introduced by its sponsor, Senator Shannon Jones (R).  Among other changes, the amended bill that passed:

  • Restores collective bargaining rights for public employees of the state, state-supported colleges and universities, and any agency, commission, authority, or board of the state.
  • Restores Ohio's Office of Collective Bargaining.
  • Limits the ability of public employers to agree to any contract that requires public employees to pay less than 15% (rather than 20% as in the bill as introduced) of the cost of health insurance.
  • Changes the definition of "supervisor" as it relates to faculty members at a state college or university.
  • Alters, from the bill as introduced and from current law, the procedures that come into play upon an impasse in negotiations.
  • Prohibits strikes for all public employees, not just certain groups of public employees, as was the case under both current law and the bill as introduced.
  • Expands the list of a public employer's management rights to include (among other things) the right to transfer or subcontract work.
  • Requires a public employer to deduct union dues and fees, but only so long as the union has filed and maintained a report detailing its expenditures, and also imposes a suspension of dues payments as a penalty for a union that engages in a prohibited strike or similar conduct.
  • Prohibits an hourly overtime premium rate that exceeds the rate required by the FLSA.
  • Imposes limits on paid vacation, holidays, and personal days.

These are just a few examples of the changes contained in the bill, which passed by a slim 17-16 margin.  According to press reports, the Ohio House plans an aggressive hearing schedule and ultimately a vote in the next few weeks.  Governor Kasich applauded (pdf) the Senate's action in passing the the bill.  For their part, opponents are talking about a possible ballot referendum on the bill, taking their case directly to the voters.

UPDATE: Public Sector Bargaining Rights Battle Rages

The headline on our last post certainly seems apt now.  A battle truly has erupted -- and not just here in Ohio -- over the issue of public sector employee collective bargaining rights.  Wisconsin also confronts the issue; coverage of that dispute is easy enough to come by, but here is a recent example.  Michigan, however, appears set to stay out of the fray.  The issue has even garnered President Obama's attention.

Here in Ohio, the hearings on Senator Jones' bill continue, as do the mass crowds at the Statehouse.  Supporters and opponents of the bill have testified.  Supporters tell the Senate committee, among other things, that the bill provides needed flexibility in the management of their workforces, helps address looming budget problems, and addresses imbalances of power between unions and the public employers.  Opponents of the bill tell the committee, among other things, that the law isn't needed and that concessions have already been made.

While the back and forth is certainly an interesting case study in politics, the labor professional will want to remain focused on what is actually in the bill.  And so far, that hasn't changed.  Despite invitations to unions during the hearings to provide suggested changes to the bill, no amendments have yet been proposed. 

For an excellent summary of the content of the bill, check out the bill analysis (pdf) prepared by the Ohio Legislative Services Commission.  The Commission is a non-partisan state agency that is part of the General Assembly.  As the legislative process continues, monitoring what is actually in the bill will help the labor professional plan for future developments.

The Battle Over Public Sector Collective Bargaining Begins

On February 9, 2011, Senator Shannon Jones (R - Springboro) introduced Senate Bill 5.  It contains significant changes to Ohio's State Employment Relations Act, the law that governs public employee labor/management relations.  Labor unions decried the proposal, and hundreds of union members appeared at the initial hearing of the bill.

The law amends several provisions of the Ohio Revised Code and runs for 475 pages.  As it pertains to the State Employment Relations Act, however, Senate Bill 5 (pdf) would:

  • Prohibit a state institution of higher education, the state itself, and any agency, authority, commission, or board of the state from collectively bargaining with its employees.
  • Alter the procedures applicable once the parties reach an impasse in their negotiations.
  • Change the definition of "supervisor" as it applies to police officers.
  • Limit bargaining on health care benefits to just the question of how much the public employee must pay for employer-provided coverage, and prohibiting any agreement that would permit the public employee to pay less than 20% of that cost.
  • Prevent public school districts from agreeing in a labor contract to a laundry list of proposals, including those that would require minimum staffing, maximum number of students per class, or limit the ability to transfer staff between buildings.
  • Take away the authority of a public school district to negotiate over salaries or health insurance benefits.
  • Direct public employers not to agree to a provision that would require the public employer to consider only length of service in any reduction-in-force.
  • Abolish Ohio's Office of Collective Bargaining.

Governor Kasich  who has previously signaled his support for reform of Ohio's public employee union system, voiced his support for the bill.  Interestingly, however, it appears that the Governor may also have his own ideas on public sector labor law reform.  These go well beyond what Senate Bill 5 proposes.  The Columbus Dispatch reports that the Governor is considering legislation that would outlaw strikes for all public employees, not just for certain groups of public employees, as is the case in the proposed Senate bill.

If Senate Bill 5 passes in its current form, the implications for public sector labor relations will be substantial.  Indeed, the list above contains only some highlights, it is not even a comprehensive catalogue of all the changes proposed.  The public sector labor professional will need to monitor the legislative process closely, and may want to consider the impact of these changes on any unionized component of their workforce.

Change on the Way for Ohio Public Employers?

In a press conference yesterday afternoon, Governor-Elect John Kasich discussed Ohio's public sector bargaining process.  The comments suggest that change may be on the horizon when it comes to binding interest arbitration for certain public employees.

Ohio law presently limits the right of certain employees to strike.  These employees typically hold safety sensitive positions, like police officers and fire fighters.  To settle disputed bargaining issues in these units, the law establishes a procedure that requires an arbitrator to hear disputed issues, and then pick the union's proposal or the public employer's proposal.  This process is referred to as interest arbitration or conciliation.

At the press conference, the following exchange took place, according to video on The Columbus Dispatch's website:

Q:  Now that you have Republicans in the House and a big Republican majority in the Senate, do you have any plans to try to scale back the power of labor unions?

A:  . . . I'm not going to get into trying to pick on anybody right now.  In terms of what I am concerned about is I'm concerned about the impact of binding arbitration on our cities.  You have a situation where an outside person comes in, they mandate settlement on a community, the community has no say, and then that arbiter leaves.  That's a flawed system.  We intend to take a look at that because that binding arbitration is really hurting cities. . . .  This is a very big problem and that's one thing that we are going to look at in terms of labor. . . .

With only two days having passed since the election, it is obviously too early to predict what the newly elected governor or his team may have in mind.  If existing law were to change, however, and depending on how the law changed, the implications for public employers could be substantial and multi-faceted.  It is certainly an issue that labor professionals in the public sector will want to monitor closely over the coming months.