Florida’s collective bargaining law calls for a modified meet-and-confer process. If bargaining fails to produce an agreement, the parties proceed to a hearing before a special magistrate, who makes recommendations as to each open issue in bargaining. If both parties do not accept the magistrate’s recommendations, or if an agreement is not otherwise reached, the employer is allowed to unilaterally implement its last, best offer.
Rank-and-file officers in the Miami, Florida Police Department are represented by Lodge 20 of the Fraternal Order of Police. The City and Lodge 20 were parties to a collective bargaining agreement covering the period of October 1, 2007, through September 30, 2010.
On July 28, 2010, the City declared a “financial urgency,” citing a provision of the Florida Statutes. The City notified Lodge 20 that it intended to implement changes regarding wages, pension benefits, and other economic terms of employment. Following negotiations concerning the financial urgency, the City informed the Public Employees Relations Commission that a dispute remained between the parties.
On August 31, 2010, the City’s legislative body voted to unilaterally alter the terms of the CBA in order to address the financial urgency. The changes adopted by the City included a tiered reduction of wages, elimination of education pay supplements, conversion of supplemental pay, a freeze in step and longevity pay, modification of the normal retirement date, modification of the pension benefit formula, a cap on the average final compensation for pension benefit calculations, alteration of the normal retirement form, and modification of average final compensation.
Lodge 20 then filed an unfair labor practice charge with PERC, arguing that the City improperly changed the CBA before completing the impasse resolution process provided for in Florida’s collective bargaining law. The City responded that under Florida’s financial urgency law, it was not required to complete the impasse resolution process when it faced dire financial circumstances.
During the PERC process, the City presented evidence that its budget was approximately $500 million and that it faced a deficit of approximately $140 million for the 2010/2011 fiscal year; that the City had already implemented hiring freezes, completed all previously contemplated layoffs, ceased procurement, and instituted elimination of jobs as employees left; that labor costs comprised 80% of the City’s expenses; that, if additional action was not taken to reduce expenditures, the City’s labor costs would exceed its available funds, which would leave the City unable to pay for utilities, gas, and other necessities and render it unable to provide essential services to its residents; and that the City’s unemployment rate was 13.5% and property values were in decline, with 49% of homes in the City having negative equity.
In response, Lodge 20 suggested raising the millage tax rate, installing red light cameras, imposing non-union employee layoffs and furloughs, freezing the current cost of living adjustment, and changing the pension funding methodology.
PERC found that Florida law did not require the City to proceed through the impasse resolution process before implementing changes to the CBA. While PERC did find that the statute required “impact bargaining,” which allows the employer to make the changes after providing notice and a reasonable opportunity to bargain, Lodge 20 still challenged PERC’s decision on appeal.
The Florida Supreme Court overturned PERC’s decision, and held that the City was required to complete the bargaining process before imposing any changes. The Court began with the observation that under Florida law, a “financial urgency” justifying modification of a CBA is “a dire financial condition requiring immediate attention and demanding prompt and decisive action, but not necessarily a financial emergency or bankruptcy. While a local government may be able to show that its financial condition requires immediate attention and demands prompt and decisive action, this may not necessarily require modification of the agreement. The mere fact that it is politically more expedient to eliminate all or part of the contracted funds is not in itself a compelling reason.
“Thus, the local government must demonstrate that the only way of addressing its dire financial condition is through modification of the CBA. To do this, the local government must demonstrate that the funds are available from no other reasonable source. This satisfies the second requirement of strict scrutiny, that the law be narrowly tailored to achieve a compelling state interest.
“We have long recognized the right to bargain collectively and the right to contract free of impairment. Here, the impasse resolution process in the statute begins with the appointment of a special magistrate who is charged with conducting a hearing and making a recommendation to the local government’s legislative body as to the resolution of any disputed issues. The legislative body is not required to accept the special magistrate’s recommendations and, thus, the end result of the impasse resolution process may be the local government unilaterally imposing changes to the agreement.
“Under the concept of impact bargaining, if the modification of a subject classified as a management right would have an effect on the employees’ terms and conditions of employment, then the public employer is required to give those employees’ bargaining agent an opportunity to bargain the impact of that modification. Therefore, the statute permits the unilateral implementation of changes to the CBA only after parties have completed the impasse resolution proceedings and failed to ratify the agreement. If the Legislature had intended the changes to take effect earlier or under any other circumstances, it would have stated as much.
“This is especially true considering that the changes here are unlike the changes that are usually the result of impact bargaining. As noted by Lodge 20, impact bargaining results from management making decisions outside of the scope of an agreement which affect the agreement in some way. Bargaining under the financial urgency statute, on the other hand, seeks to alter the terms of the agreement itself. Impact bargaining requires a threshold determination as to whether the employer’s decision affects employees’ wages, hours, or working conditions. Bargaining under financial urgency inherently seeks to change wages, hours, or working conditions. Moreover, altering the agreement effectively alters the status quo between the parties that will remain in place until they are changed through bargaining.”
Headley v. City of Miami, 2017 WL 819740 (Fla. 2017).