Because of Wording In Contract, Merit Pay Increases Cease With Expiration Of Contract

When a collective bargaining agreement expires, the usual rule is that an employer is obligated to maintain the status quo with respect to wages, hours, and other mandatorily negotiable working conditions. A fairly extensive body of case law has established that step increases are considered to be a “wage” that must be maintained after the expiration of a collective-bargaining agreement. In other words, if the past practice is that step increases are given automatically on an employee’s anniversary date, then that past practice must be maintained even after the collective bargaining agreement expires.

The contract between the Sheriff of Orange County, Florida and the Florida Police Benevolent Association contained a clause providing that “all future wage adjustments, if any, shall be negotiated among the parties pursuant to article 33” of the contract. Article 33 discussed how negotiations for a successor agreement should be conducted.

The question before the Florida Court of Appeals was whether the “future wage adjustments” clause in the contract eliminated the employer’s obligation to negotiate over canceling step increases that would normally have occurred after the expiration of the contract. The Court found that the contract’s specific terms allowed the employer to terminate step increases. The Court ruled that “the precise wording of the agreements controls on this case. The parties were still negotiating the successor agreements and had not agreed upon any wage adjustment. Consequently, based on the clear language of the contract, the affected bargaining unit members could not objectively or reasonably expect to receive any merit pay increases after the expiration of the contracts.

“The clarity in the contractual provisions of the parties’ collective bargaining agreements distinguishes this case from our prior decisions. In one of our prior cases, the collective bargaining agreement made no mention whatsoever of the health insurance benefits in dispute, and we found that the City had engaged in unfair labor practices by refusing to bargain over changes it had made to health insurance benefits for employees upon retirement. Because the parties’ collective bargaining agreements did not address the issue, we held the labor unions were free to show that the City’s furnishing the benefits to its employees amounted to an established past practice.

“In the present case, the status quo was determined based on the explicit terms embodied in the bargaining agreements. Those terms limited the employees’ merit step pay increases, if any, following the expiration of the agreements, to those subsequently negotiated by the parties.”

Florida Police Benevolent Ass’n, Inc. v. Sheriff of Orange County, 67 So.3d 400 (Fla. App. 2011).

This article appears in the November 2011 issue.