Betrayal: The Attack on public employee collective bargaining rights in California

BETRAYAL: THE ATTACK ON PUBLIC EMPLOYEE COLLECTIVE BARGAINING RIGHTS IN CALIFORNIA



By David E. Mastagni



While most labor leaders in the United States have focused their attention on the highly publicized, mid-western assault on public employee unions, a more subversive, dangerous assault is being waged in virtual obscurity in California.  Anti-labor officials in the mid-western states have overtly attempted to repeal and limit public employee collective bargaining rights, leading the battle against workers out in the open. Yet, in California, many local elected officials claim to support collective bargaining rights while working quietly behind the scenes to undermine these rights.  In presentation materials for the Internal City Managers’ Association, a prominent City Manager who claims to be a labor friendly Democrat advocated that “This financial crisis provides the political coverage to address sacred cows” and “Being tough on labor is now politically correct.” California union-endorsed politicians are hiding behind antiunion groups and law firms to roll back public employee collective bargaining rights through aggressive legal theories.  The four most frequent methods of attack are: (1) bypassing bargaining through the ballot initiative process; (2) cutting retiree medical coverage and/or pension benefits for retirees; (3) declaring a fiscal emergency in order to violate the collective bargaining agreements; and (4) using bankruptcy to discharge collective bargaining obligations and impose draconian cuts in compensation and benefits.  In California, formerly supportive officials seek curtailment of bargaining rights through the camouflage of the courts, not the legislative process.



Bypassing Negotiations through the Ballot Box



Increasingly, our politicians attempt to avoid bargaining by submitting reductions in compensation and changes to the bargaining process directly to the voters.   In an employer-oriented publication, one prominent attorney for public employers recently commented, “more and more cities and counties are turning to their charters to limit or reduce benefits or compensation.”  At the state and local level, ballot initiatives are being pushed to limit pensions and mandate greater employee contributions.  In charter jurisdictions, the politicians and their statewide management groups are asking voters to repeal interest arbitration, thereby easing their ability to impose reductions in pay and benefits.  Their attorneys are seeking to overturn People ex rel. Seal Beach and longstanding precedent requiring negotiation over ballot measures affecting matters within the scope of representation. 



Voter initiatives seeking to side step the requirements of public sector labor law have brought together strange bedfellows. For example, Jeff Adachi, the San Francisco public defender, brought a measure which would have increased contributions toward pension and health-care costs.  He teamed up with corporations and wealthy republicans who provided over a million dollars in financial support. Mr. Adachi, a self-identified liberal, justifies his attacks on working people by constructing a false dichotomy, an either/or scenario, in which the public sector can either pay its employees the wages and benefits for which they worked, or provide social benefits and programs to other groups but not both. Mr. Adachi’s dichotomy balances public budgets on the backs of middle-class workers while providing absolutely no assurances the “savings” achieved will not be misspent. 



Retiree Medical/Pension Issues



Unconscionably, public employers throughout our state are attempting to balance their budgets on the back of retirees with fixed incomes and limited medical coverage.  Ambitious public officials consider retirees an easy target because they are no longer represented.   Many public agencies have dramatically reduced or eliminated retiree medical coverage, justifying their actions by manipulating their accounting methods, and by publicizing misleading unfunded liabilities.  For example, Sonoma County refused to bargain and unilaterally reduced retiree medical from 85% employer funded coverage to a mere $500 per month in employer funded coverage. Sonoma County officials and their contract attorneys touted this taking in a class titled, “Sonoma County's Success Story: A Template For Negotiating And Implementing Systemic Changes To Relieve OPEB Liability.” Ironically, our office has obtained an initial ruling the reduction constituted an unfair labor practice because it affects existing employees, i.e. future retirees.



Public employers are also seeking to eliminate or reduce defined benefit pensions. The newest legal challenges seek to reverse the California Supreme Court ruling in Kern v. City of Long Beach (1947) holding the right to a public pension vested upon performance of substantial work.  First, they challenge the vested benefits by arguing only pensions earned up to date of change are vested but future accruals can be reduced for current employees. Second, they argue collective bargaining agreements or imposed terms of employment can reduce benefits regardless of whether they are vested.  These legal assaults are working their way through the California and Federal courts.



Declaring a Fiscal Emergency to Impair Contract Terms



Employing a popular new means of extracting reductions from closed contracts, some councils and boards are declaring a fiscal emergency and exploiting the alleged “emergency” to impair the collective bargaining agreement.  This scheme is being promoted as a means of obtaining relief from contractual obligations without the inconvenience and cost of bankruptcy.  The employers assert a declaration of an emergency is a legislative act not subject to judicial review.  If upheld by the courts, this ploy will render public employee contracts terminable at the will of the governing body.  Cities such as Stockton, San Jose and Los Angeles are cavalierly employing this tactic and have been emboldened by a recent City of Los Angeles (2011) decision holding that unions can’t grieve contract violations predicated on an emergency declaration.  



The potential for abuse is obvious, as elected official will have no motivation to engage in the give and take of negotiations as they can unilaterally impose any “structural changes” they desire.  In Stockton, our office is litigating the constitutionality of the City’s breach of the labor contracts under the Contract Clause of the U.S. and California Constitutions.  The government cannot impair contracts unless: (1) an actual emergency is justified by significant and legitimate public purposes; (2) the impairment is reasonable and necessary; and (3) the impairment is temporary and impaired rights are not lost.  Public employee collective bargaining rights depend on the enforcement of the contract clause.



Chapter 9 Bankruptcy



In order to gain leverage to force unilateral concessions, public employers are increasingly threatening to file bankruptcy if the unions successfully overturn their fiscal emergency claims and impairment of contract in the courts.  In what amounts to extortion at the bargaining table, public officials and their contract attorneys openly warn they will file for Chapter 9 bankruptcy and scapegoat the unions if their demands are not met.  Despite the disastrous results visited upon the City of Vallejo when it declared bankruptcy, some employers and management attorneys are promoting a bankruptcy agenda, stating public entities can discharge their labor obligations on an expedited basis through Chapter 9 proceedings.  These same attorneys are paid over $900 per hour with our tax dollars to bankrupt our local governments and then move on to teaching classes and publishing propaganda on abusing bankruptcy proceedings to avoid labor obligations. 



Conclusion



Like the Wall Street executives paying themselves lavish bonuses from bailout monies, these anti-union officials and department heads provide themselves excessive compensation and benefit packages, lavish raises, and hire outside labor and bankruptcy attorneys at exorbitant rates ranging from $350 to $925 an hour.  These politicians add these inflated legal costs on top of the concessions already demanded of the unions.  In many jurisdictions, public officials do not seek concessions in good faith. Instead, they push a personal marketing agenda, enhancing their prominence and opportunities for speaking engagements by promoting novel methods to break public employee unions and impose concessions.  These efforts are intended to balance city and county budgets at the expense of middle class Americans while concealing their mismanagement and misplaced priorities.    



To survive this economic crisis, the labor movement must present a unified front and push back against the employer-sponsored attacks on basic democratic rights. First and foremost, we must defeat these legal attacks on our collective bargaining rights in the courts. Politicians must also be held accountable for their actions. Politicians seeking private-sector union endorsements and financial contributions cannot be permitted to simultaneously engage in aggressive union-busting in the public sector, hiring anti-union law firms to promote controversial legal theories to roll back collective bargaining rights for them. The labor movement must work collectively to enact legislation to strengthen collective bargaining. For instance, Senate Bill 931 would prohibit public agencies from using public funds to pay outside consultants or legal advisors to bust unions. Assembly Bill 646 would limit employers’ pre-determined strategies to impose on unions by requiring neutral mediation and fact-finding at impasse.  Legislation is needed to limit the ability of public employers to declare bankruptcy without proper oversight.  This is the moment we must fight the hardest to preserve collective bargaining for public employees in California.

David E. Mastagni is a partner in the Labor Department at the firm of Mastagni, Holstedt, Amick, Miller & Johnsen.