Articles and Newsletters

Client Alert from the Labor and Employment Group - March 2011

Summary of Changes to the
Collective Bargaining Process for Public Employers

By Eric J. Johnson

In a whirlwind of events on March 2, 2011, the Ohio Senate passed Senate Bill 5 ("SB5"), which would drastically alter the landscape of public employment in Ohio. SB5 has achieved continuous national attention for the historic reform that it would cause in the collective bargaining rights of Ohio's safety forces, teachers and other state employees. If SB5 eventually becomes law, the legislation would present the most sweeping revisions to Ohio collective bargaining law since 1981, when legislation providing for the collective bargaining rights of public employees was passed.

Ohio Senators voted 17-16 to pass SB5, which incorporated a number of amendments made to the initial SB5 text proposed by Republican Senator Shannon Jones on February 1. (We summarized the initial proposals in a prior client alert.) As passed, in addition to the well-publicized revisions to collective bargaining, SB5 also makes adjustments in public employees' compensation, layoff procedures, leave policies, pensions and other terms and conditions of employment. A bullet-point summary of the highlights (below) identifies a number of significant issues addressed in the bill.

SB5 will now move on to the Ohio House, in which Republicans outnumber Democrats 59-40. If SB5 passes the House, it will be presented to Governor John Kasich, who has been an adamant and outspoken supporter of the legislation. The process could be completed within a matter of a few weeks.

Summary of Changes to the Collective Bargaining Process
for Public Employers

• Radical reduction in subjects of bargaining.
• Health Care Benefits. Employers cannot pay more than 85% of the total cost of employee health care benefits. Employees must pay at least 15% of cost. The only issue subject to bargaining is the total amount of the premium.
• Pension payments. Public employer cannot agree to pay any portion of employee's contribution to a pension plan.
• Privatization/Subcontracting. CBAs cannot contain a provision:
• Prohibiting privatization or subcontracting to another public employer;
• Requiring retention of existing employees if their work is privatized or subcontracted;
• Requiring payment of any additional compensation upon layoff due to privatization except for accumulated time or leave credits.
• Existing provisions in contracts. The continuation, modification or deletion of an existing provision of a CBA is not a mandatory subject of bargaining.
• Manning. The number of employees required to be on duty is not subject to bargaining.
• Overtime. No contract can contain a provision that permits an overtime payment that exceeds overtime required under the FLSA.
• Mandatory caps on vacation and sick leave:
• Vacation capped at 7.7 hours per bi-weekly pay period after 19 years of service;
• Sick leave accrual capped at 10 days a year; and,
• Sick leave payments upon retirement cannot exceed 1000 hours or 50% of total accumulated sick leave.
• Layoffs. A public employer cannot agree to a provision that requires it to lay off based only upon seniority.
• Mandatory caps for DROP Program participants. DROP Program participants are only entitled to accrued leave based upon their rate of pay at the time that they entered the DROP program. In addition, no contract can contain a provision providing employees participating in the DROP program with:
• annual vacation leave exceeding 5 weeks;
• carryover vacation leave exceeding 3 years.
• Expansion of Management Rights. Unless specifically limited by express written provision in a contract, the public employer has the management right to:
• Hire, discharge, transfer, suspend and discipline employees;
• Determine the number of employees and the necessary qualifications of employees;
• Determine the starting time, quitting time and hours worked of employees;
• Make and enforce work rules and regulations;
• Determine basis for selection, retention and promotion of employees;
• Transfer or subcontract work;
• Terminate all or any part of the work or the facilities and consolidate or merge facilities with another public employer.
• Changes in Collective Bargaining Process.
• No Binding Arbitration. Accelerated dispute resolution process culminates in legislative body holding a public hearing after release of fact-finder's report, where public employer and union explain their positions and legislative body then votes to accept either the last best offer of the public employer or the last best offer of the union.
• No consideration of future tax increases. For purposes of determining the ability of the public employer to pay for any proposed contract terms, only the current financial status of the public employer is relevant, not any potential future tax increases or the ability to sell assets.
• Public Disclosure. Prior to any mediation, fact-finding or other formal settlement procedure, the last offer of each party is to be made public on the web site of the public employer.
• Fact-Finder's Report. Fact-Finder's Report must include explanation as to how each of the following factored into the panel's findings of fact and recommendations:
• Primary consideration must be interests and welfare of the public and ability of public employer to finance any proposals;
• Past contracts;
• Comparison of wages of public and private employees doing similar work;
• Compensation paid to non-union employees of public employer;
• Effect of recommendations on employer-wide collective bargaining and potential increases in cost (i.e., pattern bargaining).
• Blanket prohibition of strikes for all public employees.
• If employees unlawfully strike, the public employer has the right to:
• Permanently replace the strikers;
• Conduct an internal investigation, subject to hearing, and deduct employee compensation at twice employee's daily rate of pay if it is determined that an employee participated in unlawful strike.
• A court may:
• Fine employees up to $1,000 for violating court injunction;
• Imprison employees up to 30 days;
• Punish contempt at court's discretion.
• No deduction of wages, penalties or fines may be waived by a public employer as part of the settlement of an unlawful strike.
• SERB must order suspension of dues or fees to a union for the greater of 2 days or two times the duration of an illegal strike, if SERB determines that Union/employees engaged in illegal strike.
• Elimination of "Supervisor" Exception for Police and Fire. Current law provides that no person shall be deemed supervisor except chief or those authorized to perform chief's duties in the chief's absence. The new bill eliminates this exception. Thus, the normal definition of "supervisor" applies to police and fire. In addition, the bill expressly provides that a bargaining unit in a fire department cannot contain both rank and file employees and employees ranked lieutenant or above. Lieutenants must be removed from such units after existing contracts expire or three years after the effective date of the bill.
• Fiscal Watch and Fiscal Emergency. An existing contract may be terminated by any public employer declared to be in a state of fiscal emergency. Any public employer declared in a state of fiscal watch has the right to suspend wage increases in an existing contract.
• SERB Procedures. SERB will no longer conduct investigations into unfair labor practice charges. All such charges will go directly to hearing.
• New Unfair Labor Practices.
• A union commits an unfair labor practice if it attempts to communicate or deal directly with elected or appointed officials (who are not serving as negotiators) regarding matters subject to negotiations.
• Expressing views, arguments or opinions shall not constitute an unfair labor practice unless the expression contains a threat of reprisal or force or promise of benefit.
• No Conflicts of Interest. A public official shall not participate in collective bargaining if an immediate family member (spouse or dependent child) has a direct interest in the outcome.
• Public Disclosure of Employee Compensation. A public employer must post on its website a report that lists:
• Each provision in CBA that affects "compensation" for public employees;
•  "Compensation" includes:
• Allowances for food, drink, clothing stipends, dry cleaning;
• Payments for length of service;
• Insurance, including health insurance;
• Anything of value (i.e., sick leave banks, premium pay, etc.).

Effective Date. Collective bargaining changes apply to a contract entered into on or after effective date of this section and to versions of current contracts in effect that result from extension, modification or renewal (i.e., reopeners). However, if a referendum petition challenging the bill is filed within 90 days after the Governor signs the bill, then the bill will not go into effect until after the public votes on the referendum in November, 2011.