By BrownWinick Employment Law Practice Group
In a series of recent negotiability dispute decisions, the Iowa Public Employment Relations Board ("PERB") has left public employers wondering whether the Board’s 2010 legislative grant of authority to interpret Iowa Code chapter 20 and demonstrated tendency to discard long-standing case precedent will continue to erode the common and ordinary meaning of a mandatory subject of bargaining within the context of Iowa Code section 20.9.
In 2010, Iowa Code Chapter 20 was amended to provide PERB with the power to “interpret, apply, and administer the provisions of [the] chapter.” Iowa Code § 20.6.
Iowa Code section 20.9 contains a limited list of subjects over which an employer and the duly certified employee organization are required to negotiate; including, wages, insurance, supplemental pay, and procedures for staff reduction. Bargaining proposals that fit within one of these enumerated categories are considered mandatory subjects of bargaining. Waterloo Educ. Ass’n v. Iowa Pub. Employment Relations Bd., 740 N.W.2d 418, 422 (2007) (citing City of Fort Dodge v. Iowa Pub. Employment Relations Bd., 275 N.W.2d 393, 395 (Iowa 1979). All other proposals, for which the employer and the employee organization may agree to negotiate, are considered permissive. Id.
The classification of a proposal as either mandatory or permissive is significant. If a proposal is considered mandatory, then the parties may utilize statutory impasse procedures when agreement is not reached. Id. (citing Decatur County v. Pub. Employment Relations Bd., 564 N.W.2d 394, 396 (Iowa 1997)). If a proposal is permissive, the employer may refuse to bargain over the matter and unilaterally implement its desired change. Id.
In Waterloo Educational Association v. Pub. Employment Relations Bd., 740 N.W.2d 418 (Iowa 2007) (Waterloo II) the Iowa Supreme Court rejected the management rights balancing test and reaffirmed the two-prong definitional test. 740 N.W.2d at 429. First, PERB must determine whether a proposal fits within the scope of a specific term listed within section 20.9. Id. In making this threshold determination, PERB must consider the “common and ordinary meaning [of section 20.9 topics] within the structural parameters imposed by section 20.9.” Id. at 430. Once a proposal has been properly classified as a mandatory subject of bargaining, PERB must then consider whether the proposal is otherwise preempted by or inconsistent with a provision of law.Id.
The Court in Waterloo II did not abandon decades of case law establishing the narrow parameters of section 20.9, nor did it expand the scope of mandatory subjects of bargaining. The Court simply reaffirmed a long-standing legal test requiring PERB to first determine whether a proposal fits within one of the enumerated categories.
In Fort Dodge Community School District, No. 8512, slip op. (PERB July 2, 2012), PERB elected to exercise its statutory authority to interpret chapter 20 and reevaluated long-standing legal precedent defining the term “supplemental pay. ” PERB held that the common and ordinary meaning of supplemental pay is “a payment of money or other thing of value that is in addition to compensation received under another section 20.9 topic and is related to the employment relationship.” Id. at 24. PERB emphasized that while supplemental pay is not limited to cash payments, “[t]here can be no question that chapter 20 deals strictly with collective bargaining in the public sector in Iowa; thus, in the context of section 20.9, any ‘supplemental pay’ proposal must be related to the employment relationship between bargaining unit members and the public employer.” Id. at 23.
Prior to Waterloo II, the Iowa Supreme Court held that “supplemental pay refers to pay for services rendered. . . it is pay based upon extra services and directly related to the time, skill, and nature of the additional services.” Fort Dodge Community School District vs. Pub. Employment Relations Bd., 319 N.W.2d 181, 184 (Iowa 1982); See. e.g., W. Hills Educ. Agency 12 & Prof’l Staff Ass’n of Area Educ. Agency 12, No. 2337, slip op.at 15 (PERB Feb. 4, 1983) (severance pay held permissive).
Notwithstanding the long-standing precedent that defined supplemental pay, PERB ruled that the Education Association’s proposals for severance pay fell within the common and ordinary meaning of supplemental pay as redefined by PERB. PERB reasoned the Education Association’s proposals, which provided for cash payments, were “related to the employment relationship in that the payment is made upon termination, is conditioned upon length of service, and is calculated based on unused, accumulated sick leave. Moreover, the proposals incentivize employees to remain in the [employer’s] employ while refraining from using their contractually agreed-to sick leave.” Fort Dodge Community School District at 24.
The Court of Appeals affirmed the District Court’s affirmation of PERB’s ruling on the grounds PERB was vested with the authority to interpret chapter 20; and that the interpretation of supplemental pay was not irrational, illogical, or wholly unjustifiable. Fort Dodge Community School District v. Pub. Employment Relations Bd., 855 N.W.2d 733 (Iowa App. 2014).
Similarly, in State of Iowa (Board of Regents) & UE Local 896/COGS, No. 100058 slip op.(PERB February 25, 2015), the Board elected to exercise its statutory authority to interpret chapter 20 and ruled that a Union proposal for reimbursement of mandatory student fees (paid by all undergraduate and graduate students enrolled at the University of Iowa) was a mandatory subject of bargaining (supplemental pay) for enrolled graduate students who also had part-time appointments to teach classes and assist with research at the University.
In reaching its decision, the Board appropriately analyzed the question of negotiability pursuant to the two prong approach inWaterloo II. The Board engaged in a definitional exercise to determine whether the proposal fit within the scope of either the mandatory topic of wages or supplemental pay. It correctly determined that the proposal to reimburse mandatory student fees was not a wage because the employer’s obligation to make the required payment was not triggered by an employee providing a service. Instead, the Board stretched precedent and ruled the payments contemplated by the proposal fit the definition of supplemental pay as redefined by the Board in Fort Dodge Community School District v. Iowa Pub. Employment Relations Bd., 855 N.W.2d 733 (Iowa App. 2014). Specifically, the Board found the Union’s proposal for student fee reimbursement was a payment related to the employment relationship and was therefore supplemental pay and mandatory. As reasoned by the Board, “They [student fee reimbursement payments] are, under a literal reading, triggered by the relationship’s very creation ? the receipt of an appointment to a bargaining unit position – and are akin to a hiring bonus.” Id. at 7.
On appeal to District Court, the employer argued PERB Board’s application of “related to employment relationship,” in the context of mandatory student fees, overextended prior precedent [supplemental pay definition], rendered other section 20.9 topics superfluous and created open scope bargaining in direct contravention of legislative intent. The employer further argued that student fees did not relate to the employment relationship whatsoever, but were related solely to their enrollment as students at the University. The District Court rejected the employer’s arguments, deferred to PERB’s statutory authority to interpret chapter 20 and affirmed PERB’s ruling as not irrational, illogical, or wholly unjustifiable. State of Iowa (Board of Regents) v. Iowa Public Employment Relations Board, No. CVCV049496 (Polk County District Court July 31, 2015).
PERB willingness to exercise its interpretative authority and reexamine decades old precedent should give public employers pause to question whether PERB’s recent decisions indicate a trend by PERB, which if unbridled, will have the effect of abolishing limited scope bargaining in Iowa.
However, all hope should not be lost. In City of Camanche and City of Camanche Police and Fire, Case No. 100058, slip op. (PERB August 5, 2015), the Board declined the Union’s invitation to exercise its statutory authority to interpret Iowa Code chapter 20 and rule that prescription and health insurance for retirees was not an illegal subject of bargaining, but mandatory under the category of insurance. Instead the Board correctly and appropriately followed long-standing case precedent and ruled the proposal was illegal. See City of Mason City v. PERB, 316 N.W. 2d 851 (Iowa 1982) (retiree health insurance proposal directly augments or supplements the benefits a public employee would receive under a retirement system under other provisions of the Code and is therefore an illegal subject of bargaining).
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