Kitsap County, Decision 10836 (PECB, 2010)
STATE OF WASHINGTON
BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION
KITSAP COUNTY SHERIFF’S OFFICE LIEUTENANT’S ASSOCIATION,
DECISION 10836 - PECB
FINDINGS OF FACT,
Lowenberg, Lopez & Hansen, P.S., by Stephen M. Hansen, Attorney at Law, for the union.
Russell D. Hauge, Kitsap County Prosecuting Attorney, by Deborah A. Boe, Attorney at Law, for the employer.
On December 11, 2009, the Kitsap County Sheriff’s Office Lieutenant’s Association (union) filed an unfair labor practice complaint against Kitsap County (employer). The complaint alleged that the employer refused to bargain by making a unilateral change in health insurance premiums. A preliminary ruling was issued on December 17, 2009, finding a cause of action. The employer filed a timely answer, and Examiner Lisa A. Hartrich conducted a hearing on April 6, 2010. The parties submitted post-hearing briefs to complete the record.
Did the employer make a unilateral change in medical premium contributions and refuse to bargain in violation of RCW 41.56.140(4) and (1)?
Based on the arguments and evidence presented by the parties, the Examiner rules that the employer violated RCW 41.56.140(4) and (1) by unilaterally changing the status quo in health insurance premiums.
APPLICABLE LEGAL STANDARDS
Duty to Bargain
Under the Public Employees’ Collective Bargaining Act, a public employer has a duty to bargain with the exclusive bargaining representative of its employees. An employer that fails or refuses to bargain in good faith over a mandatory subject of bargaining commits an unfair labor practice. RCW 41.56.140.
Wages, hours and working conditions of bargaining unit employees are characterized as mandatory subjects of bargaining. Federal Way School District, Decision 232-A (EDUC, 1977), citing NLRB v. Wooster Division of Borg-Warner, 356 U.S. 342 (1958). The Commission has long held that medical benefits are mandatory subjects of bargaining. Spokane County, Decision 2167-A (PECB, 1985); City of Mukilteo, Decision 9452-A (PECB, 2008).
The employer is prohibited from making changes to mandatory subjects of bargaining until it has satisfied its collective bargaining obligations. As outlined in Val Vue Sewer District, Decision 8963 (PECB, 2004), a complainant alleging a unilateral change must establish the following:
1. The existence of a relevant status quo or past practice.
2. That the relevant status quo or past practice was a mandatory subject of bargaining.
3. That notice and an opportunity to bargain the proposed change was not given, or that notice was given but an opportunity to bargain was not afforded and/or the change was a fait accompli.
4. That there was an actual change to the status quo or past practice.
After a collective bargaining agreement expires, an employer must maintain the existing terms and conditions of employment while it negotiates a new agreement with the union. An employer that alters a term or condition of employment during this period without first satisfying its bargaining obligation violates the statute. City of Mukilteo, Decision 9452-A. For non-commissioned employees, RCW 41.56.123 provides that all terms and conditions in a collective bargaining agreement must remain in effect until the parties settle a new contract, not to exceed one year from the date the contract expired, unless the parties agree otherwise. City of Anacortes, Decision 9004-A (PECB, 2007). For uniformed personnel, terms and conditions concerning mandatory subjects of bargaining must remain in effect until agreement is reached either mutually or through interest arbitration. RCW 41.56.470.
An employer contemplating a change to a mandatory subject of bargaining must give adequate notice to the union prior to making a decision in order to allow for a reasonable opportunity to bargain. If the employer acts without providing notice sufficiently in advance, the union is excused from demanding to bargain over the issue, because the action was presented as a fait accompli. Lake Washington Technical College, Decision 4721-A (PECB, 1995); City of Edmonds, Decision 8798-A (PECB, 2005). In order to determine whether a fait accompli occurred, the Commission looks at the circumstances as a whole, and whether the opportunity for meaningful bargaining existed. Clover Park Technical College, Decision 8534-A (PECB, 2004).
Notice and Opportunity to Bargain
Even if an employer gives the union sufficient notice and opportunity to bargain over the subject of the proposed change, it still is not entitled to implement its proposal unilaterally, absent an overall impasse in bargaining. Skagit County, Decision 8746-A (PECB, 2006). The only exceptions to this rule are when a union engages in tactics designed to delay bargaining and when economic exigencies compel prompt action. Maple Grove Health Care Center, 330 NLRB 775, 779 (2000). For employees eligible for interest arbitration, the employer cannot implement its proposal at impasse, but rather must obtain an award through interest arbitration. City of Seattle, Decision 1667-A (PECB, 1984); King County, Decision 10547-A (PECB, 2010).
The union is the exclusive bargaining representative for a bargaining unit of two corrections officers and five commissioned lieutenants. The union and the employer were parties to a collective bargaining agreement dated January 1, 2007 through December 31, 2009. The agreement included provisions related to health and welfare benefits. For 2007, the employer agreed to pay a fixed contribution to medical insurance premiums, and the employees paid any remaining amount over and above the employer’s fixed contribution. For 2008, the employer agreed to pay the first 10 percent increase over the amount it paid in 2007, and the employees were to pay the remaining share. In addition, the parties agreed to participate in a joint Medical Benefits Committee to “make every effort to devise plan changes that will keep rate increases below 10% for 2008.”
The Medical Benefits Committee (MBC) is a labor-management group that meets annually to discuss medical benefits. Both represented and unrepresented employees, including the lieutenant’s union, participate in the process. As part of that process, the MBC recommended changes to medical benefits for 2008. Those changes were incorporated into the 2007-2009 agreement by amendment, signed by the union and employer in October 2007. Similarly, the committee’s recommendations for changes in benefits for 2009 were incorporated into the 2007-2009 agreement by amendment, signed by the union and employer in October 2008.
Both amendments set forth the choice of medical plans offered to employees for each year, and listed fixed monthly contribution amounts for both the employer and employee. For example, the 2009 employer contribution for an employee with no dependents under a Group Health plan was $404.10, and the employee contribution was $0.14. The 2009 employer contribution for an employee and family under Premera Blue Cross was $1,160.92, and the employee contribution was $46.40.
In April 2009, the MBC began meeting to develop its recommendations for 2010. The employer reported that the projected cost increase for 2010 medical coverage was 18.3 percent above the cost in 2009. The employer also stated that it could only pick up five percent of that projected increase in 2010. Over the next several months, the MBC met and worked to reduce the increase from 18.3 percent to 11.8 percent. This was achieved, at least in part, by increasing various copayments and deductibles.
On October 2, 2009, the MBC presented its recommendations for the 2010 medical benefits package. On the same day, the non-interest arbitration groups approved the recommendation. The four interest arbitration bargaining units, including the lieutenant’s union, did not approve the recommendation at that time.
In the meantime, the union and employer were negotiating a successor agreement for 2010. Bargaining meetings commenced in July 2009, and continued into 2010. At the time of the hearing in this matter, impasse had not been declared by either party.
One negotiation session occurred on October 13, 2009. Labor Relations Manager, Fernando Conill, testified that at that point, there were two outstanding issues left on the table: a holiday premium proposal the lieutenants had put forth, and the medical benefits proposed by the employer (as per the recommendation of the MBC). Following that meeting, Lieutenant Earl Smith, a representative on the union’s bargaining team, sent an e-mail to Conill. The October 16, 2009 e-mail stated, “[W]e [the union] are under the impression that the county needs to have a decision on whether to accept or reject the Medical Benefits Recommendation for 2010 by Monday October 26th.” On October 19, Conill extended that deadline to November 2.
On October 26, the parties met again. Prior to that meeting, Conill sent an e-mail to the union explaining the employer’s position that it would have to “implement the status quo 2009 medical benefits with the 2010 status quo rates, effective January 1, 2010, for those unions that do not choose the 2010 Medical Benefits (and rates) as proposed and attached.” (emphasis in original.)
The parties met yet again on October 29. Conill sent an e-mail to the union on November 9, once again reiterating the employer’s position on medical benefits. Attached was a “what if” proposal, which included language on holiday premiums. The union responded the same day, indicating it had not changed its position on holiday premiums, and requested further meetings. The union also stated that it required a “complete package” in order to resolve the contract, and objected to the employer increasing the medical premiums in 2010 if an agreement still had not been reached on all matters.
On November 12, Conill responded to the union’s e-mail, once again extending the deadline for a decision on medical benefits to November 30. Conill stated that, given the union’s rejection of the county’s last “what if” proposal, and the employer’s imminent need to enroll employees in a medical plan, the employer had to provide benefits enrollment forms to the union’s membership. Conill explained, “Short of a Contract Amendment for 2010 health benefits and rates (since we obviously won’t have an entire contract settled by 12/31/09), the Lts. Union members will have to pick up the entire cost difference for increase in the status quo benefits cost, between the 2009 benefits rates and the 2010 benefits rates . . . which is an average of 18% increase in medical.”
The parties met on November 17. On November 18, the union responded in writing to the employer’s position on holiday premiums, stating that it was not acceptable. The letter did not mention any specific objection to the medical benefits proposal, except to mention that the union’s proposal to increase holiday pay would not nearly offset the increase in medical premiums they would incur. Conill e-mailed the union on November 19, once again restating the employer’s need to enroll union members in the 2009 status quo benefits if no agreement could be reached on the 2010 health benefits.
The parties met again on November 23, but with no apparent resolution. The new payroll deductions were withdrawn from the December paychecks, at an increased rate over the 2009 amount. The parties met again on December 10, and this complaint was filed on December 11.
The union argues that the employer unilaterally altered the status quo when it increased the health care premium rates for 2010 medical benefits, beginning with the December 2009 payroll deduction. It contends that the status quo is the employees’ “capped” contribution amount, as determined in the 2009 agreement. It also argues that the employer presented the union with a fait accompli.
The employer argues that it maintained the status quo for medical benefits by providing the exact same benefits and employer premium contribution in 2010 as it did in 2009. Additionally, the employer contends that the union chose to tie the medical benefit plan issue to the holiday premium issue, because the union would not agree to the 2010 benefit package until the employer agreed to changes in the holiday premium language.
This case presents yet another twist in the expanding line of Commission decisions related to the inevitable increases in health care costs each year, and the attempt to define the parameters of the legal status quo in light of these increases.
The facts of this case are unique and distinguishable from previous decisions otherwise on point. For example, in City of Anacortes, Decision 9004-A, the employer agreed to pay 100 percent of health insurance premiums. When the contract expired, the employer began deducting excess premium amounts from employee paychecks, because the employer claimed it was only obligated to pay the actual dollar amount it had previously paid for premiums. The Commission found that the employer disrupted the status quo by not funding health benefits at 100 percent, as required by the contract. (See also Val Vue Sewer District, Decision 8963.)
In Snohomish County, Decision 9834-B (PECB, 2008), the Commission held that, where an employer’s medical contribution is “capped” at a specific amount in the contract, that term is part of the status quo, and cannot be disturbed. Therefore, employees were bound to cover any remaining premium costs until the parties reached a successor agreement.
In City of Tukwila, Decision 9691-A (PECB, 2008), the employer agreed to pay the full medical premium. However, the contract placed a percentage cap on the employer’s obligation to pay in the event the premiums increased over twelve percent in Year 1, eleven percent in Year 2, and ten percent in Year 3. The contract also gave either party the right to reopen the agreement in order to negotiate changes in the event that the premiums exceeded these percentages. The Commission agreed with the employer that the language placed a cap on the employer’s contribution to premiums for each year of the contract. However, because the agreement included the ability to reopen negotiations, and the union made a demand to bargain, the employer was required to bargain with the union before charging employees the excess premium amounts.
In City of Mukilteo, Decision 9452-A, the employer’s insurance contribution increases were capped by maximum percentage increases, similar to the language in City of Tukwila (above). However, the contract also specifically provided “[a]ny increases that exceed those amounts . . . shall be paid by the employee via payroll deduction.” The Commission held that the employer’s contribution was a fixed amount, and the employees were thus obligated to pay any additional amounts to maintain the status quo.
In the present case, the contract contains fixed contribution amounts for both the employer and employee. This presents a conundrum. If both parties continue to pay the fixed amounts set forth in the contract until a new agreement is ratified, who will pay the excess premium costs for maintaining the necessary status quo health benefits?
The National Labor Relations Board, in Maple Grove Health Care Center, 330 NLRB 775 (2000), described the impossibility of the instant case:
[I]f the employer’s practice was to pay a specified amount for each employee’s health insurance, and for the employees to pay the rest, the employer could lawfully require the employees to bear the entire weight of the premium increase. On the other hand, if an employer’s practice was for employees to pay a set amount of the premium and the employer to pay the rest, the employer could not lawfully impose any part of the increase on the employees without first bargaining to agreement or impasse with the union. (emphasis in original.) 330 NLRB at 780.
Element 1: What is the Status Quo?
Determining the status quo in this case poses a unique problem, because both sides cannot continue to pay the same “cap” on their respective health care premiums, as enumerated in and required by the collective bargaining agreement. If it were the case where only the employer’s contribution was specified in the agreement, the employee would be responsible for any increase, and that would be considered the “status quo.” On the other hand, if just the employee’s contribution was specified, the employer would be responsible for any increase in order to maintain the status quo. However, both situations cannot coexist, because the premium will ultimately increase, and someone will have to bear the cost.
In the case where the parties have agreed that an employer pays a set percentage (e.g. 80 percent) and the employee pays a set percentage (e.g. 20 percent), when the premium inevitably increases, maintaining the status quo means both parties will see increases in the amounts they will be responsible for paying until a new agreement is reached. However, in this case, the parties did not agree to pay a specific percentage amount. Rather, they each agreed to pay a specific dollar amount.
Here, the employer passed on the entire increase in premiums to the employee. This caused a significant change in the amounts deducted from each employee’s paycheck. For example, an employee paying for family coverage under the 2009 Premera Blue Cross paid $46.40 in 2009. In 2010, the employee’s contribution was projected to jump to $278.11 for the same coverage. That amounts to nearly a 600 percent increase for the employee, while the employer realized no increase at all. That hardly describes a situation that could be characterized as “status quo.”
The Examiner concludes that the status quo in this case is akin to those situations in which set percentages have been specified for both the employer and employee. Even though the parties did not agree to pay a specific percentage amount, it is still possible to calculate what percentage each side was paying. Under these circumstances, the status quo can be determined by calculating the percentage of the premium the employer was paying in 2009, and the percentage the employee was paying in 2009. Those percentages can then be applied to the 2010 rates in order to determine the status quo.
Element 2: Mandatory Subject of Bargaining
The parties do not dispute that medical premiums are mandatory subjects of bargaining.
Element 3: Notice and Opportunity to Bargain
The record shows that the employer notified the union several times of its intent to maintain its version of the status quo, and the union and employer met on several occasions to bargain, prior to implementation. There is no evidence to show that the union objected to the content of the health plan changes recommended by the MBC, nor did it present any alternative proposals. The union only objected to the employer’s interpretation of “status quo” as it related to which party would pay the excess premiums if no agreement was reached by the time its members had to be enrolled in a health plan. The Examiner does not find that the employer presented the union with a fait accompli.
Element 4: Change to the Relevant Status Quo
The employer did maintain the status quo in the level of benefits provided to the employees, and probably at some inconvenience since most of its employees are now enrolled in the modified plan with new rates (as recommended by the MBC) for 2010. The employer also provided the union with plenty of notice and opportunity to bargain. However, the parties agreed that they did not reach impasse, and the parties did not advance the issue to interest arbitration. Therefore, the employer was not entitled to implement a change in the status quo.
The Examiner finds that: (1) the status quo for health insurance premiums involved a shared employer/employee split in responsibility for payment of the premiums; (2) health insurance premiums are mandatory subjects of bargaining; and (3) the employer provided notice and an opportunity to bargain the proposed change in health insurance premiums. Nevertheless, the employer implemented a unilateral change to the status quo before the parties reached impasse and advanced to interest arbitration.
After calculating the relative percentages paid by the employer and employees, based on the 2009 actual amounts paid, the Examiner finds that the employees’ percentage share varies depending on what type of plan they were enrolled in. That range falls between a fraction of a percentage to nearly four percent of the total premium. For example, an employee with no dependents paid 0.13% of the total Premera premium ($.58/$431.20), and an employee with covered dependents (children and spouse) paid 3.84% of the total Premera premium ($46.40/$1207.32). Because there is no consistent percentage across the board, the employer will calculate the percentage each individual employee paid in 2009, and apply that percentage to the 2010 rates. The employer will refund each employee the amount he or she paid above that percentage, beginning with the first withdrawal from their December 2009 paycheck. Interest will be applied, as provided under WAC 391-45-410.
FINDINGS OF FACT
1. Kitsap County is a public employer within the meaning of RCW 41.56.030(1).
2. Kitsap County Sheriff’s Office Lieutenant’s Association is a bargaining representative within the meaning of RCW 41.56.030(3), and is the exclusive bargaining representative for a bargaining unit of two corrections officers and five commissioned lieutenants.
3. The union and employer were parties to a collective bargaining agreement dated January 1, 2007, through December 31, 2009.
4. An amendment to the collective bargaining agreement, signed by the union and employer in October 2008, set forth the choice of medical plans offered to employees for 2009, and listed fixed monthly contribution amounts for both the employer and employee.
5. The fixed monthly contribution amounts for both the employer and employee established the relevant status quo.
6. Health insurance premiums are mandatory subjects of bargaining.
7. The Medical Benefits Committee (MBC) is a labor-management group that meets to develop recommendations for changes in health benefits from year to year. The lieutenant’s union has a representative on the committee. The MBC began meeting in April 2009 to develop its recommendations for 2010.
8. The union and employer began meeting to negotiate a successor collective bargaining agreement in July 2009.
9. The MBC presented its recommendations for 2010 medical benefits on October 2, 2009. The lieutenant’s union did not approve the recommendation at that time.
10. The employer notified the union that rates for maintaining the same 2009 medical benefits in 2010 were expected to increase. The employer notified the union that the employees would be responsible for paying the entire increase if a successor agreement was not reached by the end of 2009.
11. The employer and union continued to negotiate, but did not reach agreement on a new contract before the employer had to make arrangements to continue 2010 health coverage for employees. However, the parties did not reach impasse.
12. The employer began withdrawing the increased rates from the employees’ December 2009 paychecks.
CONCLUSIONS OF LAW
1. The Public Employment Relations Commission has jurisdiction in this matter pursuant to RCW 41.56 and WAC 391-45.
2. By unilaterally changing the status quo in health insurance premiums before reaching impasse and obtaining an interest arbitration award, as described in Findings of Fact 11 and 12, the employer committed an unfair labor practice under RCW 41.56.140(4) and (1).
Kitsap County, its officers and agents, shall immediately take the following actions to remedy its unfair labor practices:
1. CEASE AND DESIST from:
a. Deducting the entire increase for the 2010 health insurance premiums from employee paychecks.
b. In any other manner interfering with, restraining or coercing its employees in the exercise of their collective bargaining rights under by the laws of the state of Washington.
2. TAKE THE FOLLOWING AFFIRMATIVE ACTION to effectuate the purposes and policies of Chapter 41.56 RCW:
a. Restore the status quo
ante by reinstating the wages, hours and working conditions which existed for
the employees in the affected bargaining unit prior to the unilateral change in
health insurance premiums found unlawful in this order.
b. Calculate the relative percentages paid by each individual employee for health insurance premiums in 2009, and refund each employee the amount he or she paid above that percentage for insurance in 2010, beginning with the first withdrawal from the December 2009 paycheck. Interest will be applied.
c. Give notice to and, upon request, negotiate in good faith to agreement or receipt of an interest arbitration award with the Kitsap County Sheriff’s Office Lieutenant’s Association, before making changes in health insurance premiums for bargaining unit employees.
d. Post copies of the notice provided by the Compliance Officer of the Public Employment Relations Commission in conspicuous places on the employer’s premises where notices to all bargaining unit members are usually posted. These notices shall be duly signed by an authorized representative of the respondent, and shall remain posted for 60 consecutive days from the date of initial posting. The respondent shall take reasonable steps to ensure that such notices are not removed, altered, defaced, or covered by other material.
e. Read the notice provided by the Compliance Officer into the record at a regular public meeting of the Board of County Commissioners of Kitsap County, and permanently append a copy of the notice to the official minutes of the meeting where the notice is read as required by this paragraph.
h. Notify the complainant, in writing, within 20 days following the date of this order, as to what steps have been taken to comply with this order, and at the same time provide the complainant with a signed copy of the notice provided by the Compliance Officer.
i. Notify the Compliance Officer of the Public Employment Relations Commission, in writing, within 20 days following the date of this order, as to what steps have been taken to comply with this order, and at the same time provide the Compliance Officer with a signed copy of the notice he provides.
ISSUED at Olympia, Washington, this 24th day of August, 2010.
PUBLIC EMPLOYMENT RELATIONS COMMISSION
LISA A. HARTRICH, Examiner
This order will be the final order of the
agency unless a notice of appeal is filed
with the Commission under WAC 391-45-350.
THE WASHINGTON PUBLIC EMPLOYMENT RELATIONS COMMISSION CONDUCTED A LEGAL PROCEEDING IN WHICH ALL PARTIES HAD THE OPPORTUNITY TO PRESENT EVIDENCE AND ARGUMENT. THE COMMISSION RULED THAT KITSAP COUNTY COMMITTED UNFAIR LABOR PRACTICES IN VIOLATION OF STATE COLLECTIVE BARGAINING LAWS, AND ORDERED US TO POST THIS NOTICE TO EMPLOYEES:
WE UNLAWFULLY changed the health insurance premiums for employees of the Kitsap County Sheriff’s Office Lieutenant’s Association.
TO REMEDY OUR UNFAIR LABOR PRACTICES:
WE WILL calculate the relative percentages paid for health insurance premiums by the employer and employee, based on the 2009 amounts paid. We will apply those percentages to the 2010 rates, and refund the amount paid above that percentage to each employee, with interest.
WE WILL give notice to and, upon request, negotiate in good faith to agreement or receipt of an interest arbitration award with the Kitsap County Sheriff’s Office Lieutenant’s Association, before making changes in health insurance premiums for bargaining unit employees
WE WILL NOT, in any other manner, interfere with, restrain, or coerce our employees in the exercise of their collective bargaining rights under the laws of the State of Washington.
DO NOT POST OR PUBLICLY READ THIS NOTICE.
AN OFFICIAL NOTICE FOR POSTING AND READING
WILL BE PROVIDED BY THE COMPLIANCE OFFICER.
The full decision is published on PERC’s website, www.perc.wa.gov.
 The International Union of Police Associations (IUPA), Local 7408 filed the complaint on behalf of the Kitsap County Sheriff’s Office Lieutenant’s Association.
 The contract states that the union’s representative on the MBC will not be required to cast a vote. If the union’s representative does vote for the recommendation, it will become a tentative agreement, subject to final ratification by the bargaining unit membership.
 The new 2010 rates began to be withdrawn from the December 2009 payroll checks.
 However, the employer made no formal complaint that the union was bargaining in bad faith.
 Although the Commission’s decision in City of Mukilteo was appealed, the Court of Appeals of the State of Washington upheld and deferred to the Commission’s decision as it related to establishing the status quo.