STATE OF MAINE MAINE LABOR RELATIONS BOARD
Case Nos. 03-13 and 04-03
Issued: April 21, 2004
_____________________________
)
AFSCME COUNCIL 93, )
)
Complainant, )
)
v. )
)
STATE OF MAINE, DEPARTMENT )
OF ADMINISTRATIVE AND )
FINANCIAL SERVICES, )
)
Respondent. )
_____________________________) DECISION AND ORDER
)
AFSCME COUNCIL 93, )
)
Complainant, )
)
v. )
)
GOVERNOR JOHN ELIAS BALDACCI )
AND THE STATE OF MAINE, )
)
Respondents. )
_____________________________)
This matter comes before the Maine Labor Relations Board by
way of two prohibited practice complaints filed by AFSCME Council
93 against the State of Maine. AFSCME is the certified
bargaining agent for the Institutional Services unit. The first
complaint, filed on March 27, 2003, (Case No. 03-13), alleges
that the State of Maine failed to negotiate in good faith,
thereby violating 26 M.R.S.A. 979-C(1)(E) and (A). At issue is
the State's action in proposing legislation and in taking the
position at the bargaining table to freeze all merit increases,
including the advancement to a new pay step created in the
collective bargaining agreement then in effect with AFSCME.
The second prohibited practice complaint, filed on July 7, 2003,
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(Case No. 04-03), alleges essentially the same actions as the
basis for a bad faith bargaining charge and also alleges further
actions taken by the State regarding the continuation of certain
benefits post expiration that AFSCME asserts are evidence of
continued bad faith bargaining.
In our Interim Order dated September 29, 2003, we rejected
the State's Motion to Dismiss the second complaint (No. 04-03)
and granted AFSCME's request to consolidate the two cases. For
reasons fully described in our Interim Order, we ordered that the
consolidated matter be adjudicated based on the No. 03-13
complaint (with exhibits) and response, the State's written
argument in No. 03-13, and evidence to be presented at the
hearing on three specific paragraphs of complaint No. 04-03.
Those three matters were the background on how step 7 came into
existence, evidence of the State's termination of the 2002-2003
collective bargaining agreement, and evidence of the State's
position on continuing certain benefits after the expiration of
the collective bargaining agreement.
The evidentiary hearing was held on January 7, 2004. Chair
Pamela Chute presided over the hearing, with Employer Represent-
ative Karl Dornish, and Employee Representative Carol Gilmore.
Mr. Stephen Sunenblick represented AFSCME, and Ms. Joyce Oreskovich
represented the State. The parties were given full opportunity
to examine and cross-examine witnesses, and to introduce docu-
mentary evidence consistent with the subject-matter restrictions
set forth in the Interim Order. Briefs were filed by both
parties, the last of which was received on February 24, 2004.
The Board deliberated this matter on March 18, 2004.
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JURISDICTION
AFSCME is the bargaining agent within the meaning of 26
M.R.S.A. 979-H(2) for a bargaining unit of state employees. The
State is the public employer as defined in 26 M.R.S.A. 979-A(5).
The jurisdiction of the Maine Labor Relations Board to hear this
case and render a decision lies in 26 M.R.S.A. 979-H.
FINDINGS OF FACT
Upon review of the entire record, the Board makes the
following findings:
I. Background on How Step 7 Came into Existence
1. In February of 2001, AFSCME and the State began negotiations
for a successor contract to the collective bargaining
agreement set to expire on June 30, 2001. Edward Willey was
the chief negotiator for AFSCME. Kenneth Walo, the Director
of the Bureau of Employee Relations, represented the State.
Tom Whitney, the International Representative for AFSCME,
attended some of the negotiating sessions.
2. Two tentative agreements were reached prior to the June 2001
expiration date, but both failed to be ratified by AFSCME
members. The parties continued negotiating. Sometime after
the two tentative agreements had been rejected by the AFSCME
members, Mr. Walo informed AFSCME that the State had reached
the limit of what it could do in terms of general salary
increases and other types of benefit increases having a
cost, and that the only viable approach was to look at
market pay.
3. The State conducted a market pay analysis throughout State
government during 2001 in various forms. Viewing the market
in this manner was new to negotiations. Although the State
had always looked to what other employers paid, the State
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never focused on comparability in terms of the State's job
classifications versus the same classifications at other
employers in Maine. For the five MSEA units (representing
most State employees), the wage study group worked with a
consultant to look at pay and benefits in the state labor
market. The parties agreed to address positions that were
not within a specified percentage of the market level. As a
result, upward adjustments were made for a number of
classifications by reallocating them to higher pay grades.
This was referred to as a market pay adjustment. With the
Maine State Troopers Association and the MSEA Law Enforce-
ment Unit, the State ended up providing what was called an
"availability stipend." It was a market pay adjustment of a
certain amount per hour for availability, because unlike
most law enforcement people in Maine, the State's law
enforcement personnel were required to be available over a
24-hour period.
4. In late August, 2001, AFSCME and the State agreed to share
the costs of hiring the same consultants that had been used
for compiling market data for the other State employee
groups. The joint Wage Study Committee decided to look at
data from New Hampshire and Vermont as well, because there
was very little data within Maine to analyze, given the
nature of the positions in the Institutional Services unit
as mental health workers and corrections officers.
5. The consultants looked at wages for 15 aggregated job titles
by minimum, maximum and average wage and benchmarked the
average wage for 5-year employees in the three states.
6. The final draft of the consultants' report was dated
September 25, 2001. The consultants concluded that there
was not a great difference in salaries and benefits for the
AFSCME positions versus other employers. For long-term
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employees, however, the consultants identified a significant
difference. Employees in these positions reached the
maximum of their pay grade and were at a dead end after just
five years of service. In contrast, the wage scales in New
Hampshire and Vermont and some places within Maine had more
steps for the long-term employee.
7. The minutes of the meetings of the Wage Study Committee and
the negotiation sessions indicate that both sides considered
an additional step to be an appropriate response to the
findings of the wage study. The parties differed on the
number, size and timing of the steps. The parties continued
to negotiate with the assistance of a mediator.
8. In late October, the parties were on the verge of an
agreement that included an additional step in the pay scale
with the increase payable on the anniversary date after the
satisfactory completion of two years of service at step 6.
Members of the AFSCME team were concerned that some members
would not get the step 7 increase before the expiration of
the contract because their anniversary dates fell after June
30th. They were worried that step increases would not be
awarded after that date if no contract was in place.
9. The AFSCME team asked Mr. Walo (through the mediator) to
provide a written assurance that the step increases would
continue after the expiration of the contract. Mr. Walo
explained to the mediator that he could not commit to an
agreement on increases after the expiration of the contract.
He explained that the practice had been to continue paying
step increases during productive negotiations and that the
State had never frozen merit increases.
10. Mr. Walo also spoke on the phone with Mr. Whitney and
explained that he could not make the assurance AFSCME wanted
because he could not bind another legislative body with such
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a guarantee. He said even if the agreement itself went
beyond the two-year biennium, the subsequent Legislature
would have to fund the third year. Mr. Walo explained that
once the tentative agreement was ratified and the cost items
approved by the Legislature, the added step would become
part of the overall wage plan. The funding for step
increases after the expiration of the contract would be
submitted as part of the "current services" budget. As
such, it would not be considered or treated as a new
expense, like a final tentative agreement, but would simply
be treated as on-going expenses in the personal services
line of the budget.
11. Mr. Whitney reported back to the AFSCME team that he felt he
had an assurance that legislation would be submitted to pay
for merit increases beyond the expiration of the agreement.
The AFSCME team approved the tentative agreement and it was
ultimately ratified by the membership.
12. During this same time period, the State's Human Resources
Department was looking at various job classifications from a
different perspective. In 2000 and 2001 there had been a
number of reclassifications of Corrections staff, moving
them to higher pay grades. In 2001, the State agreed with
AFSCME to take a look at the mental health field as well and
ultimately ended up doing some reallocations of those jobs
by agreement.[fn]1 The agreement on these reallocations
was initially made in the summer of 2001, but was not
finally signed off on until the contract was ratified.
13. Merit increases must be provided in accordance with the
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1 A reclassification looks at whether changes in the duties or
responsibilities of a job justify a change in pay grade. A
reallocation looks at pay equity, that is, whether the pay is
equitable relative to other positions in state government.
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civil service law which states that increases are not auto-
matic but must be based on satisfactory job performance.
14. Janet Waldron, Commissioner of Administrative and Financial
Services, testified before the Legislature's appropriations
committee on January 9, 2002, regarding the funding of the
AFSCME contract. Her testimony and the legislation refer to
the additional step as a market pay adjustment.
II. The 2003 Negotiations: The Agreed-Upon Record for 03-13.
15. Edward Willey has been the State of Maine Coordinator for
AFSCME Council 93 since January of 2000. In that capacity,
Mr. Willey is the Chief Negotiator for the bargaining unit
representing certain institutional services employees of the
State of Maine. Tom Whitney is the AFSCME International
Representative who participated in many of the negotiating
sessions.
16. The collective bargaining agreement entered into by the
parties on February 1, 2002, was set to expire on June 30,
2003. The process of negotiating a successor contract began
on February 13, 2003, at which time the parties agreed upon
ground rules and discussed general matters.
17. AFSCME's minutes of the February 13, 2003, session indicate
that Ken Walo, the Director of the Bureau of Employee
Relations, described the status of the budget as "not
pretty." Mr. Walo stated that the projected budget was 1.1
billion short and that Governor Baldacci did not propose a
tax increase. The Governor proposed to freeze merit
increases and have no furlough days. Mr. Walo stated that
the merit freeze alone would save 6 million dollars. The
AFSCME minutes note:
Ken stated that if there were a way to find
other savings than the merit freezes, they would
truly like to discuss any avenue. There is
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definitely a problem with the budget. Hopefully we can
be creative. There was much discussion on the merit
increase freeze which does include the new Step 7
created at the last negotiation session and in the
contract [that] expires 6/30/03. Members who have an
anniversary date after 7/1/03 will not receive their
merit/step but members who have an anniversary date
between 1/1/03 and 6/30/03 will receive their
merit/step.
Tom Whitney stated that if the message is
carried back to the members that the nego-
tiated Step 7 may not happen after 7/1/03,
the members are going to be extremely upset.
Ken stated that the legislature has the
right to freeze money and as of 7/1/03 there
will hopefully be a new contract. We have
the ability to find money some place else.
Tom asked for clarification of the merit
increase savings. Ken stated that the
savings would be $6 million for all state
employees.
18. Negotiations proceeded as scheduled on February 19, March
10, March 11 and March 17, 2003.
19. At the February 19, 2003, negotiating session, Mr. Walo gave
Mr. Willey a copy of the merit increase freeze language in
Section D-22 of the Governor's budget (LD 1319) and a copy
of the revised language that was being proposed as an
amendment. AFSCME's minutes describe Mr. Walo's explanation
of the provision:
. . . The first paragraph prohibits merit
increases and the second paragraph states that if
money can be found elsewhere, they could be
funded. The savings of the freezes is 1.7 in
2003/2004 and 4.4 in 2004/2005. The freeze is on
all funds. . .
AFSCME's minutes also note that Mr. Willey stated that they
were upset that the step 7 negotiated in the last contract
was not going to be funded and that the step 7 was the only
reason AFSCME members ratified that contract. Mr. Willey
then provided a verbal review of the Union's position on
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various articles of the contract under consideration.
20. The provisions establishing a step 7 that had been
negotiated in the 2002-2003 collective bargaining agreement
were contained in Article 10 of that agreement. Sections
10(F) and (G) provide:
F. Effective January 1, 2003, a new step
shall be added at the end of each salary
grade that shall be three percent (3%)
greater than the current highest step.
Effective January 1, 2003, an employee who
has been at Step six (6) of his/her current
pay range for at least two (2) years shall be
advanced to Step seven (7) on his/her next
scheduled anniversary date, pursuant to
Section G of this Article. Thereafter, an
employee shall advance to Step seven (7) on
his/her next scheduled anniversary date after
completion of two (2) years of satisfactory
service at Step six (6) of his/her current
pay range.
G. Employees shall be advanced to the next
higher step on the salary schedule upon
satisfactory completion of each year of
service.
21. At the March 10, 2003, negotiating session, Mr. Walo gave
more information on the status of the budget. AFSCME's
minutes report:
Ken stated that the budget for 2003 through
June 14 is 23 million in the hole. The state is
in the hole 24 million for year 2004 and an
additional 24 million for year 2005. . . . The
Governor had to change his proposed package for
2003, 2004 and 2005. It is worse than the last
time we negotiated. The budget deficit impacts
all bargaining units. All agencies have been flat
lined with their 2003 budget which means in
2003/2004, 2004/2005 they will have the same money
to spend that they did in 2002/2003.
Negotiations continued on various proposals during the March
10 session. The merit freeze issue came up again, as
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reported in AFSCME's minutes:
Tom [Whitney] asked a question to Ken regarding
the amendment to the Governor's budget regarding
the merit freeze. Ken stated that it is in the
budget. 6.1 million dollar savings in the general
fund. Tom stated that it is very troubling that
we negotiated a Step 7 and bargaining integrity is
in question. We need to find a way to fund the
last negotiated contract. We need to live up to
that commitment. We struggled to put a contract
together last time and now the state not honoring
its commitment.
Ken stated that there is a change piece in new
language in D22 of the amendment that was added
last minute. It gives us language to negotiate
with agencies and unions to find money elsewhere
to fund the merit increases.
Ken further stated that we couldn't bind future
legislative bodies. We can only fund for a period
of time - contract expiration. Tom further stated
that we need to live up to the commitment. Ken
stated that you have the right to voice your
opinion to the legislature.
22. At the March 11, 2003, negotiating session, discussions
continued on various contract proposals made by AFSCME.
Mr. Walo provided Mr. Willey with proposed language to
insert as a new paragraph to Article 10(G) of the collective
bargaining agreement.[fn]2 That proposal stated:
The State and Council #93 AFSCME acknowledge
that LD ___ containing Section D22, which
forbids the awarding of merit increases
during the period from July 1, 2003 to June
30, 2005, is currently pending before the
Legislature. The parties recognize that
Article 10 Compensation Section F and G shall
only be effective during the period July 1,
2003 to June 30, 2005 if LD ___ Section D22
is not enacted. Should LD ___ Section D22 be
enacted into law, the parties recognize that
Article 10 Compensation Section F and G
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2 The 03-13 complaint indicates this happened on March 10th, but
the minutes say it happened on the 11th. The date is not relevant.
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shall only be effective for the period from July 1,
2003 to June 30, 2005 if the State and Council #93
AFSCME reach an agreement to achieve the same amount of
Personal Services savings as specified in LD ___
Section D22 in some other manner.
The AFSCME minutes indicate that Mr. Walo stated that
the budget bill de-appropriates the merit money but
also includes the ability to find the money in other
personal services savings. The AFSCME minutes go on to
state:
. . . Tom Whitney stated that you could have
negotiated with us to take merits away. Ken
responded that yes, this is mandatory subject of
bargaining. D22 allows us to find money elsewhere
if we can find the funds.
Tom stated that we want to put everything out
there. . . . We need to understand your position.
Ken stated that the state's position has been very
clear. There is no money in the budget for
bargaining. . .
. . .
Tom stated that we represent workers who
deserve salaries and you say we can't pay them
because of the budget deficit. This team needs to
go down to the appropriations committee and
testify that D22 is not a good idea. Ken stated
that he has to have knowledge that he can fund
what is being proposed. . . Ken stated that our
job is to bargain in good faith and fund the
agreement.
23. At the March 17, 2003, negotiating session, Mr. Walo
presented a rough estimate of the costs of the proposals
made by AFSCME and reiterated that there were no funds
available to address the Union's issues. Mr. Willey stated
AFSCME's position that anyone who became eligible for step 7
on Jan. 1, 2003, should receive it. The AFSCME minutes
reflect extensive discussions about the parties respective
views on the appropriateness and legality of the merit
freeze. The issue was not resolved.
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III. Evidence of State's Termination of Contract
24. Section D-22 was enacted and signed into law as part of the
budget bill on March 27, 2003, with an effective date of
July 1, 2003. PL 2003, c. 20. As enacted, it froze merit
increases for all state employees, regardless of funding
source, for both years of the biennium. On June 12, 2003,
the enacted provision was amended in a supplemental budget
bill so that merit increases were frozen only for the fiscal
year 2003-2004. PL 2003, c. 451, Pt. M, 1. The final
provision that went into effect on July 1, 2003 reads:
Sec. D-22. Merit increases. Notwithstanding
the Maine Revised Statutes, Title 26, section
979-D and any other provision of law, any
merit increase, regardless of funding source,
scheduled to be awarded between July 1, 2003
and June 30, 2004 to any person employed by
the Executive Branch, departments of the
constitutional officers and the Department of
Audit may not be awarded, authorized or
implemented. These savings may be replaced by
other Personal Services savings by agreement
of the State and the bargaining agents
representing state employees.
25. Mr. Walo hand delivered the following letter to Jim Beaulieu
at AFSCME's office in Augusta on June 18, 2003.
Re: Termination of Agreement between the State of
Maine and American Federation of State, County,
and Municipal Employees, Council 93, Institutional
Services Unit
Dear Ed and Jim:
I am writing this letter because we have not yet
been able to reach an agreement for a new
contract, and the current contract is nearing its
end date. Pursuant to Article 57 of the current
AFSCME Council 93 contract, "Term of Agreement
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Termination", this letter is to give you notice that
the State of Maine will be terminating the 2002-2003
Agreement between AFSCME Council 93 and the State of
Maine, effective June 30, 2003. Pursuant to law,
static status quo will then apply.
Under the SELRA, 26 MRSA 979-R, contractual
provisions regarding arbitration of disciplinary
action continue after the contract terminates
until the time we do agree to a new contract.
I hope that we will be able to agree to a new
contract in the near future.
26. Article 57 of the collective bargaining agreement provides:
Term of Agreement
Termination
Term of Agreement
This Agreement shall be effective from
February 1, 2002 through June 30, 2003, unless
otherwise specifically provided herein.
Termination
Unless otherwise specifically provided for
herein, this Agreement shall apply to those
employees in the bargaining unit on the date of
the signing of this Agreement and shall be
effective as of February 1, 2002 and shall remain
in full force and effect until the 30th day of
June 2003. It shall be automatically renewed from
year to year thereafter unless either party shall
notify the other in writing at least one hundred
twenty (120) days prior to the anniversary date
that it desires to modify this Agreement. In the
event that such notice is given, negotiations
shall begin not later than ninety (90) days prior
to the anniversary date; this Agreement shall
remain in full force and be effective during the
period of negotiations or until notice of
termination of this Agreement is provided to the
other party in the manner set forth in the
following paragraph.
In the event that either party desires to
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terminate this Agreement, written notice must be
given to the other party not less than ten (10)
days prior to the desired termination date which
shall not be before the anniversary date set forth
in the preceding paragraph.
In witness whereof, the parties hereto have
set their hands this 1st day of February, 2002.
27. The State terminated the contract because of concerns that
the State would be faced with impairment of contract claims
if the contract continued to be effective past June 30,
2003. If the contract had been in effect on July 1, 2003,
when the law freezing merit increases went into effect, the
State felt that an argument could be made that the law was
an unconstitutional impairment of an existing contract.
28. Since the Maine Law Court issued its decision in the COLT
case,[fn]3 the State has taken the position that it is not
required to continue to pay merit increases after the
expiration of a contract. The State's practice has been to
obtain the bargaining agent's agreement to allow the State
to continue paying merit increases after the expiration of
the contract as long as negotiations are productive and the
parties have not reached impasse. Mr. Willey and Mr. Walo
signed such an agreement in 2001 when the negotiation for a
new agreement continued after the expiration of the old
contract.
IV. Evidence of the State's position on continuing certain
benefits after the expiration of the collective bargaining
agreement.
29. At the time Mr. Walo's letter of termination was presented,
the AFSCME Reprentative Jim Beaulieu had a number of
questions about which benefits would be continued. Mr. Walo
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3 Board of Trustees of the Univ. of Maine System v. Associated
COLT Staff, 659 A.2d 842 (1995).
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sent a follow-up letter on June 20, 2003, providing
greater detail on this matter. The letter stated:
I met with you Wednesday June 18, 2003, and gave
you a letter indicating that the state was
terminating the AFSCME contract on June 30, 2003.
I explained to you at that time that it was
necessary for the state to terminate the contract
on June 30 because the legislature previously took
action to freeze merit increases, and that
legislation is effective July 1. The State was
concerned that if the AFSCME contract continued
into July 1, there could be legal implications for
the State, as the legislature's action could be
argued to constitute an impairment of the AFSCME
contract.
This action taken by the state is not intended to
result in any employee in the AFSCME bargaining
unit losing benefits. The State remains committed
to continuing employees' benefits, other than
merit increases, since they are now prescribed and
controlled by law, under the June 2002-June 2003
collective bargaining agreement, including, for
example, sick leave, holidays, vacation accrual
and leave, seniority rights, hiring practices,
longevity bonuses, educational leave, call-in pay,
etc.
I have offered to meet with you to explain any
concerns you may have and to discuss this action.
We are presently scheduled to meet on June 27, and
as I mentioned to you on June 18, I would be happy
to discuss this further with you and your
negotiating team at that time. I am also willing
to meet with you any time before that date to
discuss this issue.
30. Mr. Walo testified that he wanted to help Mr. Beaulieau be
able to address the concerns of AFSCME members regarding
which benefits would continue. He felt that putting it in a
letter form would give Mr. Beaulieu something concrete to be
able to show the members.
31. On June 27, 2003, Mr. Walo sent another letter to
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Mr. Beaulieu with a subject heading line of "Processing of
Grievances Post-Expiration of Contract." The letter and the
enclosure stated:
Let this serve as a follow-up to my June 20,
2003 letter to you regarding the continuation
of rights and benefits for employees after
the June 30, 2003 contract expiration date.
In the absence of a contract governing our
relations as of July 1, 2003, as it relates to
those employee rights and benefits outlined in my
June 20th letter, the State must also make a
determination of how to handle the issue of the
processing of grievances post-expiration of the
2002-2003 contract. By statute, the grievance
arbitration provisions of the expired contract
pertaining to disciplinary action remain in
effect. However, in the interests of maintaining
harmonious relations, we are offering to continue
to process non-disciplinary grievances as well
through arbitration.
Because the issue of merit increases is now
prescribed and controlled by law, this offer does
not extend to the processing and consideration of
any grievance that involves or implicates merit
increase steps under Article 10, Compensation,
Section F and G of the 2002-2003 collective
bargaining agreement, reflecting the period from
July 1, 2003 through June 30, 2004.
Therefore, we have drafted the enclosed agreement
for your consideration.
MEMORANDUM OF AGREEMENT
The State of Maine and the American Federation of
State, County, and Municipal Employees, Council 93
hereby agree as follows for employees in the
Institutional Services bargaining unit:
1. Until such time as a successor collective
bargaining agreement goes into effect for the
Institutional Services bargaining unit, the
State agrees to continue the processing of
grievances through arbitration, with the
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exception of any grievance that involves or
implicates merit increase steps under Article
10, Compensation, Section F and G of the
2002-2003 collective bargaining agreement,
reflecting the period from July 1, 2003
through June 30, 2004.
2. This agreement is intended to further
harmonious relationship between the parties
during contract negotiations. It is not
intended, nor shall it be construed, to
establish precedent or to be an admission by
either party as to the legal obligation of
either party in the absence of such
agreement.
32. No one representing AFSCME ever signed the Memorandum of
Agreement that was enclosed with the June 27, 2003, letter.
33. Ultimately, after consulting with the Governor's staff,
Mr. Walo decided that it was in the best interests of
harmonious relationships to continue to allow all
grievances, not just disciplinary grievances, to go to
arbitration. An exception was made for grievances related
to merit increases, as merit increases would be prescribed
and controlled by public law as of July 1, 2003.
DISCUSSION
AFSCME argues that the express terms of the collective
bargaining agreement remove the case from the reach of the Law
Court's decision in COLT and require the State to continue
payment of step increases beyond the expiration of the agreement.
Furthermore, AFSCME contends that the express language of the
collective bargaining agreement obligated the State to continue
paying step increases and to seek funding for this purposes, and
that the State's action in proposing and advocating for the merit
freeze therefore demonstrates failure to negotiate in good faith.
AFSCME also claims that the State attempted to negotiate a waiver
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of the union's right to grieve the non-payment of steps after
July 1, 2003, thereby breaching its duty to bargain in good faith
in violation of 979-C(1)(E) and, derivatively, 979-C(1)(A).
[fn]4
It is well established that the duty to bargain includes a
prohibition against making unilateral changes in a mandatory
subject of bargaining, as a unilateral change is essentially a
refusal to bargain. See, e.g., Teamsters v. Town of Jay, No.
80-02 at 3 (Dec. 26, 1980) (citing NLRB v. Katz, 369 U.S. 736,
743 (1962)), and Lane v. Board of Directors of MSAD No. 8, 447
A.2d 806, 809-10 (Me. 1982). In cases involving allegations of
unilateral changes after the expiration of an agreement, the
terms of the expired agreement are evidence of the status quo
that must be maintained. See, e.g., MSEA v. School Committee of
City of Lewiston, No. 90-12 (Aug. 21, 1990) at 16.
The Maine Law Court squarely addressed the question of the
continuation of step increases after the expiration of a
collective bargaining agreement in Board of Trustees of the
University of Maine System v. Associated COLT Staff, 659 A.2d 842
(1995). In that case, the union had argued that the University
breached its duty to bargain when it unilaterally discontinued
paying the annual step increases in the wage provision of the
expired collective bargaining agreement. The question presented
in COLT was whether the status quo to be maintained was the
specific wages being paid at the expiration of the contract (the
"static status quo") or the wage plan in effect at the expiration
(the "dynamic status quo").
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4 Section 979-C(1)(E) prohibits the employer from "refusing to
bargain collectively with the bargaining agent of its employees" and
979-C-(1)(A) prohibits "interfering with, restraining or coercing
employees in the exercise of rights guaranteed" by SELRA.
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In COLT, the parties had negotiated a contract which
provided for step increases to be paid on each of the three
specified anniversary dates of the agreement. On each of those
dates, employees would advance to the next step and receive the
corresponding increase in wages. After the expiration of the
agreement, the University continued the same wage scales, but
discontinued the payment of annual step increases. The MLRB held
that the discontinuance of the step increases after expiration of
the contract was a unilateral change that violated the
University's duty to bargain pursuant to 26 M.R.S.A. 1027(1)(A)
and (E). The Board applied what it called the "dynamic status
quo rule" that froze the system of step increases rather than
freezing the wage itself. The Law Court reversed.
In overruling the Board, the Law Court stated unequivocally
that the Board's decision was in "contravention of the statutory
language and the legislative history of Maine's public employment
labor relations law." Id. at 845. The statutory language and
legislative history that the Law court cited in the COLT case are
just as applicable to SELRA and the other collective bargaining
laws enforced by this Board as they were to the University of
Maine System Labor Relations Act.
The Law Court pointed out that the same section that imposes
the duty to bargain also says "except that by such obligation
neither party shall be compelled to agree to a proposal or be
required to make a concession." 26 M.R.S.A. 1026(1)(C). The
Law Court noted the considerable impact an increase in wages can
have on the University's budget and cited a prior case decided
under the Municipal Public Employees Labor Relations Law holding
that the MLRB has no authority to impose duty to pay wage
increases not agreed to by the employer. Id. citing Caribou Sch.
Dep't v. Caribou Teachers Ass'n, 402 A.2d 1279, 1285-86 (Me.
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1979). The Court also cited the legislative history of the
Municipal Public Employees Labor Relations Law when noting that
"the Legislature determined it important to protect public
employers from forced concessions." Id. at 845, n. 5. The
language of SELRA on this point is identical to that found in
both the Municipal Law and the University System Act. Compare 26
M.R.S.A. 979-D (1)(E)(1), with 965(1)(C) and 1026(1)(C).
The Law Court also considered the exclusion of financial
matters from binding arbitration in observing that "the
Legislature was careful to protect the public fisc from wage
increases that were neither bargained for nor approved by the
public employer." Id. The Law Court cited the legislative
history showing the frequent but unsuccessful attempts to give
arbitrators binding authority over financial issues as an
indication that the static status quo is consistent with
legislative intent. Id. at 846 n. 6. All of the policies cited
by the Law Court in COLT apply with equal force under SELRA.
There is simply no basis for ignoring the sweeping language the
Law Court used to describe its holding: "The static status quo
rule is consistent with the Legislature's clearly expressed
intent to protect municipal and state agency budgets from
increases in wages imposed without agreement by the governing
body." Id. at 845-46 (emphasis added.)
In the present case, AFSCME claims that the express language
of the collective bargaining agreement in question removes it
from the reach of COLT because it represents an express agreement
to continue the payment of step increases after the expiration of
the collective bargaining agreement. See Easton Teachers Assoc.
v. Easton School Committee, No. 79-14 (March 13, 1979)(Wage
escalator provisions do not continue after expiration unless the
collective bargaining agreement provides otherwise). AFSCME's
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argument starts with the proposition that the phrase "unless
otherwise specifically provided herein" found in Article 57 of
the collective bargaining agreement, which details the duration
and termination of the agreement, allows for continuation of
certain terms in the contract. Article 57 states, in relevant
part:
Term of Agreement
This Agreement shall be effective from February 1,
2002 through June 30, 2003, unless otherwise
specifically provided herein.
Termination
Unless otherwise specifically provided for herein,
this Agreement shall apply to those employees in the
bargaining unit on the date of the signing of this
Agreement and shall be effective as of February 1, 2002
and shall remain in full force and effect until the 30th
day of June 2003. . . . (emphasis added)
From that starting point, AFSCME claims that Article 10(F)
and (G) serve to "otherwise specifically provide for" the
continuation of step increases beyond the 30th day of June, 2003.
With respect to 10(F), AFSCME argues that the second sentence of
the paragraph expressly vests employees with the right to receive
the step after two years service at step 6. It states:
. . . Effective January 1, 2003, an employee who has
been at Step six (6) of his/her current pay range for
at least two (2) years shall be advanced to Step seven
(7) on his/her next scheduled anniversary date,
pursuant to Section G of this Article.
Similarly, AFSCME contends that 10(G) includes an express
agreement to remove step increases from the effect of the
termination date (i.e., otherwise specifically provided for
herein) by the use of the language: "Employees shall be advanced
to the next higher step on the salary schedule upon satisfactory
completion of each year of service."
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There are a number of problems with the union's argument.
First, it requires the conclusion that the language of 10(F) and
(G) constitute an express exception to the contract's termination
date as provided for in Article 57 (i.e. "Otherwise specifically
provided for"). There is no evidence in the record, including
AFSCME's own minutes of the negotiating sessions, that the
parties intended the wording of 10(F) and (G) to be a specific
exception to the effect of the contract termination. Second, it
requires that the Board conclude that a combined reading of these
provisions is an express enough agreement on continuing the
payment of step increases to overcome the holding of COLT. Given
the sweeping language of COLT, we do not think it is credible
that the parties would voluntarily use such imprecise language
and roundabout reasoning to make such a significant exception.
Finally, such an interpretation is directly contrary to all the
evidence in the record of the parties' understanding of the legal
situation on continuing step increases once the collective
bargaining agreement expired. There is no evidence to support
the conclusion that the parties intended this language to create
a contractual obligation to continue paying step increases after
the termination of the collective bargaining agreement.
For the foregoing reasons, we conclude that the 2002-2003
collective bargaining agreement does not require the continued
payment of step increases beyond the June 30, 2003 expiration.
We further conclude that the Law Court's holding that the status
quo rule does not require the continued payment of step increases
after the expiration of the agreement applies with equal force
under the provisions of SELRA. Thus, there is no basis for
concluding that the failure to award merit increases after the
expiration of the 2002-2003 agreement was an unlawful unilateral
change in violation of 979-D-(1)(E).
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AFSCME also contends that by proposing and advocating for
statutory language to freeze merit increases, the State engaged
in bad faith bargaining in violation of 979-D(1)(E). There
appear to be two separate arguments for this proposition: First
is the contention that during the negotiations leading to the
creation of the new step 7, the State's negotiator assured
AFSCME's negotiating team that funding for continued payment of
step increases after the expiration of the contract would be
routine or, as AFSCME put it, "pro forma." AFSCME contends that
the State's subsequent position proposing a budget that froze all
merit increases was therefore bad faith bargaining. The second
argument is based on what AFSCME considers the express language
of the collective bargaining agreement obligating the State to
continue paying step increases and to seek funding for that
purpose.
There is no dispute that Mr. Walo told the AFSCME negotiat-
ing team in October of 2001 that funding for continuation of the
step increases would be included in the personal services line of
the "current services" budget for the next biennium. As such,
the funds would be viewed as an on-going expense rather than as a
new cost item. It is also clear that neither party anticipated
the budgetary problems that led to the proposal to freeze all
merit increases in 2003. At the time the agreement was
negotiated, AFSCME asked for written assurance that the steps
would be funded for the next biennium; the State's representative
made it very clear that he did not have the authority to bind the
next legislature. In spite of this unequivocal denial of
AFSCME's request, the Union argues that the failure to seek
funding for the step increases was itself bad-faith bargaining.
AFSCME's position on this issue is indistinguishable from a
position contending that an attempt by an employer to negotiate a
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concession from the union constitutes bad faith bargaining.
This is simply not the case. There is nothing in SELRA that
states this or even suggests the employer is precluded from
negotiating reductions in benefits. See Bridgton Federation of
Public Employees v. Hamill, No. 81-54, at 7 (Mar. 3, 1982)
(benefits may be reduced or eliminated as a result of collective
bargaining). In the present case, the State's budgetary woes
resulted in the budget proposal and the corresponding bargaining
proposal to freeze merit increases unless the parties could
negotiate alternative personal services savings. An attempt by
an employer to negotiate a concession would be considered bad
faith bargaining only if, in the totality of the circumstances,
the Board was convinced that the employer lacked the desire or
intent to reach an agreement or was trying to subvert the
bargaining process. This is the basic analysis used for a charge
of failure to negotiate in good faith: examining all of the
conduct and deciding whether the charged party demonstrates "a
present intention to find a basis for agreement." Waterville
Teachers Ass'n v. Waterville Board of Education, No. 82-11, at 4
(Feb. 4, 1982).[fn]5 There is no evidence here, nor does AFSCME even
____________________
5 The test which we apply in evaluating alleged violations of
the duty to bargain in good faith has been outlined as follows:
A bad faith bargaining charge requires that we examine the
totality of the charged party's conduct and decide whether
the party's actions during negotiations indicate "a present
intention to find a basis for agreement." NLRB v. Montgom-
ery Ward & Co., 133 F.2d 676, 686 (9th Cir. 1943); see also
Caribou Schoo1 Department v. Caribou Teachers Association,
402 A.2d 1279, 1282-1283 (Me. 1979). Among the factors
which we typically look to in making our determination are
whether the charged party met and negotiated with the other
party at reasonable times, observed the ground-rules,
offered counterproposals, made compromises, accepted the
other party's positions, put tentative agreements in
writing, and participated in the dispute resolution
procedures. See, e.g., Fox Island Teachers Association v.
MSAD #8 Board of Directors, MLRB No. 81-28 (April 22, 1981);
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argue, that the State was attempting to avoid making an agreement
by proposing a merit freeze.
AFSCME also argues that it was bad faith for the State to
propose legislation to preclude it from paying for the benefits
that AFSCME contends the State had an existing contractual
obligation to continue. There appear to be two bases for this
argument. The first is that Article 10, by its terms, requires
the continuation of all step increases and that the first clause
of Article 10 required the State to seek funding for the
continued step increases.[fn]6 There is no question that the
agreement was funded through June 30, 2003, and we have already
held that there was no contractual obligation to continue the
steps after that date. There is no need, therefore, to consider
this argument further.
The second assertion AFSCME makes is that the merit freeze
did not apply to the step 7 increases because it was a market
wage adjustment that was an express part of the consideration for
the acceptance of the agreement. It is true that the step 7 was
a market pay adjustment: it was an adjustment made in response
to the market pay study. The new step was designed to address
the problem identified by the study. The express language of the
____________________
Sanford Highway Unit v. Town of Sanford, MLRB No. 79-50
(April 5, 1979). When a party's conduct evinces a sincere
desire to reach an agreement, the party has not bargained in
bad faith in violation of 26 M.R.S.A. Sec. 964(1)(E) unless
its conduct fails to meet the minimum statutory obligations
or constitutes an outright refusal to bargain.
Kittery Employees Assoc. v. Strahl, No. 86-23, at 10-11 (Jan. 27,
1987), quoting Waterville Teachers Assoc. v. Waterville Board of
Education, No. 82-11, at 4 (Feb. 4, 1982).
6 Article 10 begins, "The State shall prepare, secure
introduction of and recommend passage by the Legislature of
appropriate legislation in order to provide the benefits described in
this Article."
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agreement in 10(F) and (G), however, provided that the movement
along the expanded pay scale would be subject to satisfactory
performance. This express language was consistent with the merit
principles contained in the civil service laws[fn]7 and in
SELRA.[fn]8
AFSCME raises a concern that permitting the State to
advocate for legislation to freeze merit increases is contrary to
the Board's prior holdings that an employer's negotiating team
has an obligation to recommend passage and funding of tentative
agreements. See, e.g., Teamsters Local No. 48 v. City of
Westbrook, 89-05 at 10 (Oct. 25, 1988), and Union River Valley
Teachers Ass'n v. Trenton School Committee, Nos. 80-28 and 80-32,
at 4 (May 30, 1980). Again, this concern is misplaced because
the State was not advocating a position that was inconsistent
with a tentative agreement, nor was the position taken by the
State inconsistent with its duty to bargain. Our holding here
that the State has not engaged in a failure to bargain in good
faith does not weaken our prior holdings regarding a bargaining
team's obligation to present the final tentative agreements to
the principal party for ratification.
AFSCME also claims that the State attempted to negotiate a
waiver of the union's right to grieve the non-payment of steps
after July 1, 2003, in exchange for the continuation of other
____________________
7 5 M.R.S.A. 7065, sub- 3 provides: "Salary increases based on
merit. Salary advancements within an established range shall not be
automatic, but shall be dependent upon specific recommendation of the
appointing officer and approval of the commissioner. The recommend-
ation shall be based upon standards of performance as indicated by
merit ratings or other pertinent data. No advancements in salary may
be made until the employee has completed the probationary period."
8 979-D(1)(E)(2) provides that the duty to bargain "shall not be
construed to be in derogation of or contravene the spirit and intent
of the merit system principles and personnel laws."
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benefits and grievance arbitration, an action AFSCME argues is
bad faith bargaining. We reject this argument because it
mischaracterizes both the law and the facts.
The duty to maintain the status quo while negotiating a
successor agreement includes the duty to continue the grievance
procedure. See Teamsters Union Local No. 48 v. Boothbay/Boothbay
Harbor Community School Dist., No. 86-02, at 11 (March 18, 1986),
citing Sanford Fire Fighters Ass'n v. Sanford Fire Commission,
No. 79-62, at 10 (Dec. 5, 1979) and Easton Teachers Ass'n v.
Easton School Committee, No. 79-14, at 5 (March 13, 1979). This
duty does not, however, create a requirement to submit a
grievance to arbitration even if there was an obligation to do so
when the collective bargaining agreement was in effect. In a
case arising under SELRA, the Law Court held that because the
Uniform Arbitration Act requires a written arbitration agreement,
a court has no authority to compel arbitration after the parties'
collective bargaining agreement expires. MSEA v. BOER, 652 A.2d
655 (Me. 1995), citing 14 M.R.S.A. 5927-5928 (1980). In another
case arising under the Municipal Law involving an attempt to
compel arbitration, the Law Court held:
As a matter of law, no obligation exists to
arbitrate a grievance that arises after the expiration
of a collective bargaining agreement unless that
grievance involves rights that vested or accrued, or
facts or occurrences that arose while the collective
bargaining agreement was in effect. Lane v. Bd. of
Directors of Maine Sch. Admin. Dist. No. 8, 447 A.2d
806 (Me. 1982). Here we are dealing with neither
vested rights nor an occurrence during the term of the
collective bargaining agreement. While an agreement is
in effect, the terms and conditions therein are
enforceable as a matter of contract and may be subject
to arbitration. Once the agreement expires, however,
the parties lose their contractual rights and are left
with only the statutory duty to bargain in good faith.
Lane, 447 A.2d 810. This duty requires the parties to
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maintain the status quo until either a new contract is
ratified, or the negotiations reach a bona fide
impasse. The remedy for a breach of the duty is a
prohibited practice complaint before the Board, rather
than grievance arbitration under the expired contract.
Id. at 809-810.
Teamsters Local 340 v. Portland Water District, 651 A.2d 339,
341-2 (Me. 1994). The holding of these two cases is clear: the
duty to bargain does not create a duty to arbitrate grievances
after the expiration of the collective bargaining agreement.
In the present case, the collective bargaining agreement
would have remained in effect following June 30, 2003, had the
State not exercised its right to terminate the contract in
accordance with Article 57 of the agreement. The Union does not
question the State's right to terminate the contract. The Union
contends that "the State may not seek to negotiate this
termination by seeking a waiver of legitimate contract rights as
a condition to the continuation of benefits that it must, as a
matter of law, continue." AFSCME Brief at 11. The Union's
argument mischaracterizes what happened. There was no attempt to
negotiate the termination of the contract. Mr. Walo's letter of
June 18, 2003, clearly states that the State was terminating the
contract in accordance with its right to do so set forth in
Article 57 of the agreement. There was no effort to negotiate
anything in exchange. Mr. Walo's follow-up letter of June 20,
2003, reaffirms this.
The proposed agreement regarding the continuation of the
arbitration provisions was presented 7 days later, on June 27,
2003. It had nothing to do with the termination of the contract,
nor did it attempt to "continue the contract beyond its
expiration." The proposal concerned the continuation of the
grievance arbitration provision that was in the expired collect-
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ive bargaining agreement. It offered to continue processing
grievances through arbitration in exchange for the Union agreeing
that it would not consider the State's action as precedent or an
admission "as to the legal obligation of either party in the
absence of such agreement." The offer did not extend to the
issue of merit increases because, as Mr. Walo noted in the
letter, that matter was "prescribed and controlled by law."
SELRA prohibits the State from bargaining over matters
"prescribed or controlled by public law." Bureau of Employee
Relations v. AFSCME, 614 A.2d 74, 76 (Me. 1992); 26 M.R.S.A.
979-D(1)(E)(1). SELRA is unique among the labor relations laws
enforced by this Board because it defines various topics as
mandatory subjects of bargaining "to the extent they are not
prescribed or controlled by public law . . ." Thus, the
enactment of the freeze on merit increases for FY 2003-2004 had
the effect of removing that subject from the scope of bargaining,
other than the bargaining specifically provided for in section D-
22 itself.
To summarize, a general statement of the law is that
grievance arbitration provisions do not survive the expiration of
a collective bargaining agreement. With respect to disciplinary
grievances, SELRA specifically provides that the arbitration
provisions continue to be in effect.[fn]9 The enactment of
section
D-22 removed the 2003-2004 merit increases as a subject of
bargaining. Consequently, the State was precluded from
bargaining or going to arbitration on that issue. The proposed
agreement was an offer by the State to continue arbitration to
____________________
9 26 M.R.S.A. 979-R provides "If a contract between a public
employer and a bargaining agent expires prior to the parties'
agreement on a new contract, the grievance arbitration provisions of
the expired contract pertaining to disciplinary action remain in
effect until the parties execute a new contract."
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the extent permitted by law. In light of these facts and the
legal obligations of the parties, there is no basis for claiming
that the State violated its duty to bargain by proposing an
agreement regarding the continued submission of grievances to
arbitration.
In summary, we conclude that the State did not engage in a
prohibited practice by failing to bargain in good faith in
violation of 979-C(1)(E). There is therefore no basis for finding a
derivative violation of 979-C(1)(A).
ORDER
On the basis of the foregoing facts and discussion and
pursuant to the powers granted to the Maine Labor Relations Board
by the provisions of 26 M.R.S.A. 979-H, it is hereby ORDERED
that AFSCME's complaint number 03-13 and number 04-03 are both
DISMISSED.
Dated at Augusta, Maine, this 21st day of April, 2004.
MAINE LABOR RELATIONS BOARD
The parties are advised
of their right pursuant
to 26 M.R.S.A. 979-H(7) /s/_________________________
(Supp. 2003) to seek review Pamela D. Chute
of this decision and order Chair
by the Superior Court by
filing a complaint, in
accordance with Rule 80C /s/_______________________
of the Maine Rules of Civil Karl Dornish, Jr.
Procedure, within 15 days Employer Representative
of the date of the issuance
of this decision.
/s/_________________________
Carol B. Gilmore
Employee Representative
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