California Public Agency Labor and Employment Blog - Useful Information for Navigating Legal Challenges

Californians will remember the special election called by former Governor Schwarzenegger in 2005 on eight ballot propositions he endorsed.  The initiative measures covered diverse issues including teacher tenure, abortions, government finance and legislative redistricting. One proposition dealt with public employee union dues and would have prohibited unions from using dues for political contributions without obtaining annual employee consent. Another would have allowed the Governor to act unilaterally in some situations to reduce public employee compensation. The Governor’s efforts to enact these measures failed as all eight propositions were defeated.

SEIU Local 1000, which represented almost 100,000 State employees, adopted a 25% temporary dues increase to raise money to wage a campaign against the Governor’s propositions.  A group of employees who paid only “agency fees,” having opted out from being union members and paying full dues, brought suit against Local 1000 asserting that the Union had violated the Meyers Milias Brown Act which imposes requirements on unions in dealing with bargaining unit members who pay the service fees. In Knox v. SEIU Local 1000, the U.S. Supreme Court held that the Union had acted unlawfully in adopting this dues increase for use in this political campaign.

MMBA, at Government Code section 3502.5, allows adoption of an “agency shop” arrangement whereby all members of a represented bargaining unit must join the Union and pay dues as a condition of continued public employment.  There are two exceptions to the mandatory membership requirement.  One exception is for those with religious objections to joining a union or providing a union with financial support.  The other exception, which was the subject of this case, allows those employees who object to providing financial support to a union’s political activities, to pay only an “agency fee” as opposed to full union dues.  The agency fee is intended to cover only the union’s costs of providing representational services to the employees so that non-members do not get a “free ride” from a union who represents them in their relationships with their employers. 

In this case, Local 1000 not only adopted the 25% dues increase but also attempted to impose the increase on the agency fee payers as well as on its regular full dues paying members.  The plaintiffs objected, not wanting any of their money to be used by the Union to fight the Governor’s propositions.  The plaintiffs contended that the Union should have given the normal annual notice and given the agency shop payers the opportunity to advise the Union that they did not want any of their money used for this political war chest.  The Union opposed these assertions, and took the position that the objectors could file for a refund. 

The Supreme Court invalidated the Union’s action, agreeing with the plaintiffs that Local 1000 could not lawfully impose this dues increase without going through the normal notice procedure dictated by MMBA. The Court held that the Union was in essence compelling employees against their will to fund political activities with which they did not necessarily agree. Further, the Court noted, one of the ballot initiatives, the one prohibiting union political contributions, would actually have strengthened the rights of agency fee payers.

The Court also rejected the Union’s contention that allowing nonmembers to opt out and seek refunds was an adequate safeguard. Rather, the Court held, the Union was required to give notice in advance of adopting the dues increase and exempt agency fee payers from making the payment unless they affirmatively opted in. The Court majority held that the Union should have sent out a new notice and allowed nonmembers the opportunity to opt in to paying the temporary increase rather than requiring them to opt out.

At the end of the day, and specifically the day of the 2005 special election, every one of these controversial ballot propositions went down to defeat. So, although Local 1000 may have lost this battle before the Supreme Court, it clearly won the war with the Governor.

This guest post was authored by Alison Neufeld

The City of San Diego has been ordered to delay implementation of the pension reform initiative that was approved by an overwhelming majority of voters at the election on June 5, 2012.  In our previous blog dated June 12, 2012, we described how Proposition B – also known as the Comprehensive Pension Reform Initiative (CPRI) – modifies employee pension benefits under the San Diego City Charter. 

This week, San Diego Superior Court Judge Luis Vargas issued a temporary restraining order (TRO) prohibiting the City from taking action to implement the CPRI.  Judge Vargas was following the directive handed down by the Court of Appeal in a published decision on June 19, 2012. 

This controversial case has been closely watched as charter cities throughout California struggle to address budget gaps due in large part to pension obligations.  The drama began on September 30, 2011, when three citizens submitted a petition to place the CPRI on the ballot for the June 5, 2012, election.  On January 30, 2012, the City Council adopted an ordinance to place the CPRI on the voter ballot for the election on June 5, 2012.

Members of the San Diego Municipal Employees Association (MEA) claimed that the voter initiative was a “sham” because City officials had allegedly co-authored, promoted and funded the initiative.  MEA filed an unfair practice charge and requested that PERB seek an injunction order preventing the City from placing the CPRI on the ballot.  PERB issued an unfair practice complaint and, on February 14, 2012, filed an application for a TRO.

On February 21, 2012, PERB sought a temporary restraining order (TRO) from the San Diego Superior Court.  The Superior Court denied PERB’s request a week later.  Within days, PERB ordered that a hearing be held on the UPC.  The hearing was scheduled to begin on April 2, 2012.

The City filed motions in the Superior Court seeking to stay the PERB hearing.  The City argued that PERB’s application for injunctive relief demonstrated that it had already decided the City had violated the MMBA, and that PERB lacked jurisdiction to resolve issues involving a voter initiative.  PERB and MEA claimed that PERB has exclusive initial jurisdiction over an unfair practice charge, and that the request for a temporary injunction was necessary to preserve the status quo pending the administrative proceedings.

On March 27, 2012, Judge Luis Vargas ruled in favor of the City and stayed the PERB proceeding.  MEA challenged the order in the Court of Appeal. 

At the election on June 5, 2012, the CPRI was approved by a two-thirds majority.

On June 19, 2012, the Court of Appeal issued its decision holding that PERB has the exclusive initial jurisdiction to determine whether the City violated the MMBA by placing the CPRI on the ballot before meeting and conferring with MEA.  The Court rejected the City's argument that PERB's action in seeking injunctive relief demonstrated that it would be futile for the City to appear before PERB.  The Court also rejected the argument that PERB lacks the authority to hear the matter, since the MEA claimed that the City had actually been behind the voter initiative.  In addition the Court found that  participating in the PERB administrative process would not have interfered with the City’s ability to present the CPRI to the voters, because the trial court had rejected PERB’s motion for a preliminary injunction.  (San Diego Municipal Employees Assn. v. Superior Court, 206 Cal.App.4th 1447, --- Cal.Rptr.3d ----, 2012 WL 2308142, Cal.App. 4 Dist., 2012.)

On July 10, 2012, the San Diego Superior Court issued a temporary restraining order but “purposefully taper[ed] the TRO to be effective until July 27, 2012.” Judge Vargas’ Order reads, in part:

“Preservation of the status quo pending negotiations contemplated by the language of Proposition B requires a temporary delay in implementing the CPRI. The Court underscores that the voters of the City of San Diego have overwhelmingly approved the local ballot measure CPRI, and only grants this application amid assurances by both the City and PERB to timely meet and confer regarding priority implementation of time sensitive issues of the CPRI. Both parties represent the imposition of the TRO will not halt meet and confer efforts.”

The Order also states that the July 27 deadline will allow the parties to continue meet and confer efforts, and to attend the PERB hearing on the CPRI.  In any event, the CPRI cannot take effect until the election results are filed by the Secretary of State’s Office. This should occur in late July or early August.

San Diego is not alone.  On June 11, 2012, the California Attorney General gave the Bakersfield Police Officers Association leave to bring a quo warranto action against the  City of Bakersfield to determine whether the City met its meet and confer obligations before placing an initiative measure on the November 2010 ballot that resulted in the enactment of ordinances that set a new and different pension benefit calculation formula and contribution level for City public safety officers hired on or after January 1, 2011, and provided that the new benefit formula and contribution level may be amended or repealed only by a vote of the electorate.  The Attorney General is also considering a similar request for leave to sue by the San Jose Police Officers over its initiative measure modifying pension rights and benefits.

This guest post was authored by Melanie L. Chaney.

Since the California Supreme Court issued its ruling at the end of last month upholding the 2011 statute (AB 1X 26) that eliminated redevelopment agencies (RDAs) throughout the State as of February 1, 2012, we have received many questions about the impact this law will have on public agencies. One hot topic is how public agencies, who are already facing financial difficulties, should deal with potential layoffs resulting from the elimination of RDAs.

While AB 1X 26 is quite lengthy, there is very little in it that addresses what an agency should do with RDA employees.  The law only eliminates RDAs; it does not serve to separate RDA employees automatically.  In today’s tough economic times, many agencies cannot afford to keep all, or even some, of the RDA employees and must now consider layoffs.  Below is a general overview for handling the layoff process. 

If layoffs are being considered, agencies need to review and comply with any procedures relating to layoffs contained in memoranda of understanding (MOUs), personnel rules and other policies. This includes compliance with any timelines associated with the layoff process.  Agencies should pay specific attention to:

• any “no layoff” provisions in current MOUs;
• written agency procedures establishing the manner in which employees may be selected for layoff and any exceptions to the established order of layoff;
• provisions regarding seniority or bumping rights (general law cities may be required to “observe the seniority rule” in implementing a layoff for economic reasons [Government Code section 45100]);
• provisions regarding rights to transfer to vacant positions; and
• provisions regarding reemployment lists or recall from layoff, including restoration of seniority and benefits.

In addition, an agency that does not already have a comprehensive layoff provision in its MOU may have to meet and confer with employee organizations regarding the impacts of any layoffs. Agencies should also think about how news about the layoffs should be communicated to employees. 

Absent specificity in an agency's layoff policy, we recommend the following process for initiating layoffs.

• Consider giving a courtesy notice to the affected labor representatives that a layoff resolution is coming forward for approval. 
• Have the governing body pass the necessary resolution approving the layoff plan with its anticipated effective date.  If the agency does not already have a comprehensive layoff provision in its contract, the resolution should specify that implementation of the layoff plan is subject to meet and confer to the extent required by law.
• Give formal notice to the affected labor representatives. If there isn't already a comprehensive layoff provision in the MOU, give reasonable advance notice before the implementation of the layoffs so that the applicable exclusive representative(s) can request bargaining over any impacts of the decision to lay off.  Potential impacts may include such issues as timing and order of layoffs, displacement rights, reemployment rights, severance pay, and continuance of health insurance benefits. 
• Send individual notices to the affected employees in accordance with the agency’s layoff policy. 
• Meet and confer over impacts prior to effective date, if requested by exclusive representative(s).  Although the duty to negotiate generally requires employers to continue negotiations until agreement or impasse is reached, under these circumstances employers may be able to implement portions of the layoff (while continuing negotiations on other aspects) before the process is completed.  Contact your legal counsel for further guidance on this subject. 

There are many more issues raised by the law that are too complicated to address here. For example, in many agencies, RDA employees were considered city or county employees, so there may be obligations on the city or county regardless of whether it chooses to become a successor agency to the RDA.  LCW plans to provide a more comprehensive analysis of the effects of AB 1X 26 in a separate article.  In the meantime, if you have questions, please contact our Los Angeles, San Francisco, Fresno, or San Diego office. 

This guest post was authored by Bruce A. Barsook

Yesterday (December 8), the Public Employment Relations Board (PERB) adopted proposed emergency regulations to implement AB 646 (Chapter 680, Statutes of 2011), the recently enacted legislation requiring factfinding in bargaining disputes under the MMBA.  The emergency rulemaking package now will be submitted to the Office of Administrative Law (OAL) for its review and approval.

AB 646 imposes mandatory factfinding upon the request of an employee organization when a bargaining impasse is reached.

Prior to the December 8 meeting, PERB invited interested parties to submit proposed regulations and other commentary regarding the implementation of the statute.  LCW and other interested parties, including management and labor firms and organizations, submitted proposed regulatory language, as well as comments.  A copy of LCW's proposed regulations and commentary is posted on the PERB website and here.

The proposed emergency regulations provide that if the parties mediate and such mediation does not resolve the negotiations impasse, a factfinding request may be filed not sooner than 30 days but not more than 45 days, following the appointment of the mediator.  Obtaining an outer time limit was an important goal for public sector management, as we argued that an unreasonable delay in the process would frustrate the purposes of the MMBA and be inconsistent with timely resolution of bargaining disputes.

An unresolved question in the new statute is whether an employee organization may demand factfinding (and thereby delay a unilateral imposition of terms and conditions of employment by the local agency) in the absence of the parties using mediation.  At the December 8 hearing there was some uncertainty as to how PERB (or the courts) would handle such a situation.  The issue may have to be resolved through litigation (or "clean-up" legislation).  Notwithstanding the uncertainty in the law, PERB adopted a proposed regulation related to this issue.  The proposed regulation provides that if the parties do not use mediation, the request for factfinding must occur within 30 days following the declaration of impasse.  Although those who believe the statute does not require factfinding in the absence of mediation will not be pleased with such a regulation, all parties will find some benefit from the addition of clarity as to whether there is a time period for submission of factfinding requests.

PERB has indicated that it intends to submit its proposed rules to OAL on December 19, 2011.  Once the proposed emergency rules are filed with OAL there will be a five day comment period.  If OAL accepts the emergency rulemaking package it will be filed with the Secretary of State at which time the regulations will become effective. 

Further information can be obtained from the PERB website, and of course, we will keep you posted.  In the meantime, if you have any questions please contact one of our labor relations attorneys at any of our four offices.

The National Labor Relations Board (“NLRB”) is the federal counterpart of the Public Employees Relation Board (“PERB”). The NLRB is the body that oversees the administration of federal labor law, and PERB is the body that oversees the administration of California labor law.

Recently, the NLRB prosecuted a complaint brought by its Connecticut regional office regarding Dawnmarie Souza, an emergency medical technician, who was fired by American Medical Response after she criticized her boss on her personal Facebook page. After conducting an investigation into the termination of Souza, the NLRB issued a complaint. The thrust of the NLRB complaint was that the termination was in violation of federal labor law, that the company’s internet usage policy was “overly broad” because it prohibited employees from posting disparaging remarks about the employer and its supervisors, and that enforcement of the policy interfered with employees’ rights to engage in protected activity. 

Section 7 of the National Labor Relations Act (“NLRA”) restricts employers’ attempts to interfere with employees’ efforts to work together to improve the terms or conditions of their workplace. The NLRB has long held that Section 7 was violated if an employer’s conduct would “reasonably tend to chill employees” in exercising their NLRB rights and that’s what prompted the complaint. It is noteworthy that California’s Meyers-Milias-Brown Act (“MMBA”) has a similar provision that restricts employers from interfering with employees’ rights to improve the conditions or terms of employment, so this NLRB case is relevant to public agency employers as well. 

The NLRB’s investigation determined that the Facebook postings constituted “protected concerted activity” and that the employer’s internet usage policy was overly restrictive because it prevented employees from making any negative remarks when discussing supervisors or the company. The matter was set for hearing earlier this year, but the issues were settled before the hearing. The employer agreed to revise its internet usage policy to ensure that it did not restrict employees’ rights to communicate freely about working conditions. Further, the employer agreed to not fire employees for engaging in such activity.

Although it is settled under California labor law that employees have the right to engage in discussions about their wages, hours, and working conditions, this federal NLRA case signals to both union employers that this right goes beyond the actual workplace and extends to employees’ personal Facebook pages. Further, this case serves as a cautionary tale to California public employers of a growing trend to protect employees’ use of the internet as a forum to engage in protected speech activity, even where the speech is less than respectful. 

The lesson here is that public agencies should remain sensitive to employees’ right to communicate with one another regarding their wages, hours and working conditions, and their ability to even do this on the internet with the protection of the law. Employers will also want to consider this case when drafting internet usage policies, so as to ensure that such policies cannot be construed as interfering with protected employee rights.

Governor Jerry Brown began his term as California’s Governor this January announcing ambitious plans to restructure state and local finances.  His proposals have set off a fire storm of controversy.  At this point, he has yet to announce any plans to propose new legislation dealing with employment and labor relations issues.  However, his appointment of long term advisor Marty Morgenstern and attorney Ronald Yank to high ranking positions suggests an ambitious agenda may be on the way.

If the past is prologue, then the next few years may be a wild ride for California employers.  With Brown’s resounding victory and the Democrats holding 60% and 65% majorities in the State Senate and Assembly respectively, California employers in both the public and private sectors may have cause to hold tightly to their seats as we careen at high speed into this new decade.

Is the past prologue?  If so, get ready!  When Jerry Brown was first elected Governor in 1974, the Legislature passed and he signed a number of bills which permanently changed the labor relations landscape in California.  Three major statutes were passed governing employment relations in public employment, creating the Public Employment Relations Board (PERB) and establishing collective bargaining rights for state, public university and public school (K-14) employees.  A major private sector bill created the Agriculture Labor Relations Act which for the first time gave collective bargaining rights to farm workers.

When Gray Davis was Governor (1999-2003) the labor relations agenda was even heavier.  Davis signed bills which reinstated the eight hour day in private employment for overtime purposes, significantly increased the minimum wage, created paid family leave, strengthened prevailing wage laws, added the California worker notification law (California WARN) when mass layoffs and plant closures occur, and revised the California law applicable to city, county and special district employees (the Meyers-Milias-Brown Act) to place these agencies under PERB’s jurisdiction and to require employer recognition of labor unions based solely on petitions without the need for elections.  The Davis’ Administration also approved increased retirement benefits under the Public Employment Retirement System (PERS) and twice enacted statutes allowing for binding interest arbitration in police and fire labor negotiations.  (Both of these enactments were later declared unconstitutional.)

Will Jerry Brown II bring a similar legislative agenda as he did before and as occurred under Davis?  Only time will tell.

As a matter of full disclosure, it must be noted that Republican governors have not rebuked every legislative advance for employees.  It was Ronald Reagan who signed the Meyers-Milias-Brown Act in 1969, giving local government employees collective bargaining rights for the first time in California.  Nonetheless, it is clear that the labor agenda has fared much better under Democratic Governors than it has under a Republican.  The history of the next four years remains to be written.