Comprehensive ‘Status Quo’ Opinion From Florida Court

The collective bargaining agreements between the City of Gainesville, Florida and the labor unions representing police, fire, and other employees do not discuss health insurance benefits for retirees. Until 1995, the City paid 100% of retirees’ health insurance premiums for individual coverage including all premium increases occurring after retirement. In 1995, the City reduced the percentage, but continued to pay a fixed percentage of retirees’ insurance premiums, including the same fixed percentage of premium increases occurring after retirement.

The 1995 ordinance remained unchanged until 2008, when the City adopted a new ordinance, again changing its method of contributing to retirees’ health benefits, this time by underwriting health insurance premiums up to a set dollar amount rather than paying a percentage of the premiums. The 2008 change shifted to retirees the full amount of any increase in premiums occurring in retirement.

The four impacted labor unions filed unfair labor practice charges against the City, alleging that the City refused to bargain over the change. A hearing officer for Florida’s Public Employment Relations Board sided with the unions, but PERC itself found for the employer, setting up an appeal to the Florida Court of Appeals.

The Court reversed PERC’s decision and ordered the City to bargain over the changed contribution scheme. The Court started with the proposition that “job-related benefits, although not catalogued in an existing bargaining agreement, may nevertheless constitute terms and conditions of employment which are not subject to change by the employer unilaterally. It is settled law that a public employer’s unilateral alteration of the status quo of a mandatory subject of bargaining, i.e., wages, hours, and terms and conditions of employment of its employees, is a per se violation of the collective bargaining law absent a clear and unmistakable waiver. The same policy considerations underlying the prohibition of unilateral changes during negotiations are equally applicable to unilateral changes in subjects not covered by an existing agreement. Terms and conditions not discussed by the parties in negotiations nevertheless continue to be terms and conditions of employment and an employer must negotiate with the certified bargaining agent prior to changing them.

The obligation to bargain extends to all terms and conditions of employment. To conclude that terms and conditions of employment upon which the parties fail to reach agreement lose their status as such and somehow become management prerogatives leads to an absurd and fruitless result.”

The Court then turned its attention to the question as to precisely what the past practice was with respect to retiree health insurance. The Court started with a definition: “To constitute an established practice, it must be demonstrated that the practice was unequivocal, that it existed substantially unvaried for a significant period of time, and that the bargaining unit employees could reasonably have expected the practice to continue unchanged. The hearing officer found as a fact that the unions’ members reasonably expected the City’s contributions to the health insurance premiums that they would pay when they retired would continue, based in no small part on the length of time that the formula for the City’s contributions had already remained in place. This finding of fact has ample support in the evidence, and should not have been overturned.”

The Court next addressed whether the past practice was sufficiently lengthy to qualify for protection: “PERC has in the past found that practices lasting much shorter periods of time gave public employees sufficient reason to expect the practice to persist. For example, in one case, PERC found that the City committed an unfair labor practice when it unilaterally reduced its contribution to a pension plan. PERC found that employees could reasonably have expected the practice to remain unchanged where the City’s rate of contribution to the plan had lasted from 1981 to 1985, or, as PERC said, ‘remained substantially unvaried for an extended period of time.’ There the contribution rates and ratios remained unchanged for a period of four years, while the period here lasted 13 years. PERC has, indeed, held that such a past practice can develop over the course of only two years.”

The City argued that the unions had waived the right to bargain over changes in retiree health insurance, citing the management rights and “zipper” clauses in its collective bargaining agreement. The Court found otherwise, holding that “to infer a waiver from a provision that is ostensibly and preeminently a zipper clause, the operative language must not only contain a significant quantum of specificity as to the subject matter of the purported waiver, which we do not encounter here, but it must also include wording that expressly delineates a yielding of the right to negotiate with respect to changes in the subject terms or conditions of employment. The fact that the contracts provide that the City shall possess sole discretion and control over conditions of employment not covered by the collective bargaining agreement does not persuade us that the unions thereby explicitly waived their right to bargain over changes in the rates of contribution.

“The key is the parties’ reasonable expectation that a past practice will continue. The past practice in the present case was substantially unvaried for more than a decade. The hearing officer understandably found that the parties expected it to continue. PERC erred in overturning the hearing officer’s recommendation to treat the City’s unilateral change of this established past practice as an unfair labor practice.”

Communications Workers of America, AFL-CIO, CLC v. City of Gainesville, 2011 WL 1744371 (Fla. App. 1 Dist. 2011).