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Recently, the Pennsylvania Labor Relations Board (PLRB) issued a Final Order indicating that members of a volunteer fire company which provided coverage to a local borough were actually Borough employees.   In doing so, both the hearing examiner who issued the Proposed Decision and Order and the Board determined that it did not matter that the firefighters were “appointed” and not “hired” by the borough, and further opined that the relationship of providing services for wages was an element of an employer-employee relationship.

The fire department was a non-profit corporation, with its building and most of its equipment and apparatus owned by the Borough.  In 1999, the Borough’s council adopted an ordinance establishing a fire department and officer ranks, providing for vehicles and equipment, and reserving the right for council to establish binding rules, regulations and Standard Operating Procedures (SOPs).  The ordinance further indicated that the Borough Council would appoint the officers, require the officers to take the same oath that was required for Borough officials, and allowed the Fire Chief (an employee of the Borough) to issue orders and an SOP manual.

In its review, the Board found that the Borough’s 2012 and 2013 budgets contained a number of line items for the Fire Department (and later included a fire services tax), and further noted that when an expense was incurred, it was paid directly by the Borough.  Significantly, volunteers were paid an hourly rate by the Borough, which had the power to set and approve the hourly rates plus incentives for further training.  The Board further noted that the Secretary of the Borough ran the day-to-day operations of the department (including scheduling), that the Borough had to authorize any overtime, and that the firefighters submitted time cards and received W-2s from the Borough.  Additionally, personnel matters, including disciplinary action, were handled by the Fire Chief.  Challenged disciplinary matters could be taken to the Borough Manager.

FIREFIGHTER HELMET-BlankBased upon the above information, the hearing examiner determined that the officers were actually employees and not volunteers.  The Borough did not challenge the findings that it controlled the wages, hours, or working conditions of the firefighters- all considered to be evidence of an employer-employee relationship- but did file exceptions on the basis of the hearing examiner’s finding regarding discipline.  Upon review, the Board found that because the Fire Chief, as an employee of the Borough, acted in the interest of his employer, the Borough “exercised control over disciplinary matters.”  The Borough made several other arguments, including that the hearing examiner’s findings would mean that the Borough was in violation of civil service and veterans preference laws.  However, the Board ultimately found no error in the examiner’s ruling and made the order final.

The order has been appealed to the Commonwealth Court, with support from both the Pennsylvania State Association of Township Supervisors and the Pennsylvania State Association of Boroughs.  If the Court agrees with the PLRB, this will have a huge impact on municipalities which rely on the services of volunteer fire companies but may not have the financial ability to absorb these volunteers and the costs that come along with them being declared employees of the municipalities.  This is definitely one to watch.

Yeah, I know, crazy right? Here is the story. Apparently the Union did not think so. When the American Federation of State, County and Municipal Employees ("Union") and the City of Philadelphia ("City") could not reach terms on a new collective bargaining agreement, they submitted the dispute to binding interest arbitration.

The Union was seeking, among other things, 8 percent annual wage increases! The City countered that it simply did not have the money to fund the Union’s demands. The Union argued that the City’s financial health was irrelevant. Huh? How can you pay for something if you don’t have any money?

The Union’s argument was essentially – cut programs, raise taxes, lay off other workers we don’t care; how you pay for our 8 percent annual pay increases is your problem not ours! Insane, right?

Thankfully, the arbitration panel rejected the Union’s argument and determined that it was appropriate to consider the City’s ability to pay. However, the Union was undeterred. The Union petitioned the court to vacate the arbitration decision, arguing that the panel should not have considered the financial health of the City when rejecting their hefty wage increases. Thankfully, the court disagreed.

The court concluded that the Union’s arguments lacked merit, and that it was appropriate for the arbitration panel to consider ability to pay when making decisions regarding wages and other compensation related items.

Thankfully, the arbitration panel and the court brought some sanity to what seemed like an insane dispute. Ability to pay is obviously highly relevant to consideration of pay and benefit demands. Public employers are facing increasing budget constraints these days and are often on the brink of distressed status. When evaluating union demands, public employers must consider their ability to pay and when appropriate explain to the union early and often that the budget simply cannot tolerate increased expenses. Where appropriate, lay the foundation for demonstrating the financial inability to meet the union’s demands.

This post was contributed by Gina E. McAndrew, an Associate in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Scranton, Pennsylvania.

While the labor and employment law world is abuzz after the decisions in Burwell v. Hobby Lobby and Harris v. Quinn (cases this Blog will cover in the coming days), the United States Supreme Court also issued a decision further clarifying protected speech under the First Amendment. In Lane v. Franks, et al., the Court analyzed whether a public employee, testifying under subpoena, was entitled to First Amendment protection when his testimony was outside of the scope of his job duties.

The employee, Edward Lane, was hired by Central Alabama Community College as Director of Community Intensive Training for Youth ("CITY"), a statewide program in Alabama for underprivileged youth. Shortly after his employment began he conducted an audit of CITY’s expenses. The audit led to the termination of an Alabama State Representative, who was on CITY’s payroll. Following the termination decision, Lane provided testimony against the Representative in support of an FBI investigation of the Representative. Shortly after his testimony, twenty-nine CITY employees were laid off, including Mr. Lane. While twenty-seven of these terminations were rescinded, Mr. Lane’s was not.

Lane filed suit, claiming he was terminated in retaliation for providing testimony against the Representative. The District Court found that his testimony was not protected by the First Amendment. The District Court stated that public employees speaking pursuant to official job duties were "not speaking as citizens for First Amendment purposes." The District Court opined that Lane learned of the information included in his testimony while an employee of CITY, so his "speech [could] still be considered as part of his official job duties." Lane appealed, first to the 11th Circuit Court of Appeals and then to the United States Supreme Court.

In overturning the lower courts’ decisions, the Supreme Court restated the special test applied to public employees for First Amendment protection purposes. The first part of this analysis examines whether the speech in question was made pursuant to official duties or as a citizen and whether the employee was speaking on a matter of public concern. If the employee is speaking as a citizen and on a matter of public concern, the second part of the test is whether the public employer has "adequate justification for treating the employee differently from any other member of the general public."

The Court noted that "[t]ruthful testimony under oath by a public employee outside the scope of his ordinary job duties is speech as a citizen for First Amendment purposes," even when that speech "relates to his public employment or concerns information learned during that employment." The Court noted that such testimony is a "quintessential example of speech as a citizen," as it comes with the obligation to tell the truth. This obligation is separate and distinct from any obligations a public employee may have to his employer.

The Court opined that the essential question is whether the relevant speech is "ordinarily within the scope of an employee’s duties" and "not whether it merely concerns those duties." In its analysis, the Court found that such public employee speech holds special value because of how public employees gain knowledge, and is "necessary to prosecute corruption by public officials." The Court ultimately found Lane’s sworn testimony, pursuant to a subpoena, to be speech as a citizen and on a matter of public concern. In applying the second step of the analysis, the Court found that the employer had no legitimate interest in treating Lane differently from any other member of the public, finding that his testimony did not involve any false statements or disclose any privileged or confidential information.

The Court’s decision provides useful guidance to public employers in the area of First Amendment protection for public employees. However, future decisions will likely shed light onto when speech is "ordinarily within the scope of an employee’s duties" sufficient to warrant First Amendment protection. Many employees, especially public employees, provide testimony on a regular basis pursuant to official job duties. Accordingly, while Lane is helpful, First Amendment issues must still be evaluated on a case-by-case basis.

This post was contributed by Gina E. McAndrew, a new associate in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Scranton, Pennsylvania.

In a case which will interest public and private sector employers alike, American Federation of State, County and Municipal Employees, District Council 87 v. Pa. Labor Relations Bd., the Pennsylvania Supreme Court is poised to address important issues regarding the subcontracting of public sector bargaining unit work to private sector contractors.

The work in question is the work of the Luzerne/Schuylkill Workforce Investment Board ("WIB"), which was created under federal and state law to "increase local employment through the provision of educational training and services, which are paid for by federal funds." Previously, these duties were performed by the Luzerne County Workforce Investment Development Agency ("County Agency"), but the WIB decided to issue a Request for Proposals to explore whether a subcontractor should be hired to perform the services. The County Agency employees were represented by AFSCME (the "Union"), and the Union demanded to negotiate with the County regarding the potential subcontracting. The County did not respond to these demands and the WIB proceeded to issue the RFP.

The RFP indicated that the decision was subject to approval by both Luzerne and Schuylkill Counties’ Commissioners; however, the Commissioners did not act on recommendations forwarded by the WIB. The County Agency bid on these services, but was not recommended for or awarded either contract. The WIB proceeded to award contracts to bidders and enter into contracts with third-party contractors. Thereafter, the Union filed an unfair labor practice charge against Luzerne County for unilaterally subcontracting without bargaining.

A hearing examiner issued a Proposed Decision and Order, finding that the WIB was controlled by the County, and thus the County had committed an unfair labor practice. The hearing examiner determined that the chief elected officials directed the WIB to seek bids, the RFPs indicated the Commissioners had to approve the contracts, and that the WIB was required to act with the agreement of these officials on certain matters. However, the Pennsylvania Labor Relations Board reversed that decision, finding that the County did not control the WIB, as it was the WIB’s decision to subcontract, issue the RFPs, review bids, choose successful bidder(s) and enter into the contracts. As such, the Board found the County did not commit an unfair labor practice when a third party (WIB) made the decision to subcontract.

The Union appealed to the Commonwealth Court. In upholding the Board’s decision, the Court found no error in the Board’s factual conclusions that WIB independently decided to subcontract. The Court also noted that the County Agency attempted to retain its contracts by submitting a bid, as it had done at least once previously, and that the disbursement of funds was at the direction of the WIB. The Court held that although the chief elected official partners with the WIB to create a local plan and approves the budget, this does not mean that the local official controls the WIB. The Court concluded that WIB was "an independent third party not subject to the collective bargaining agreement" and its actions were "not attributable to the County."

However, the Court’s ruling was not unanimous. In his dissent, Judge Pellegrini, joined by Judge McGinley, opined that the Board erred in finding the County had not committed an unfair labor practice, as the County failed to negotiate to a bona fide impasse before subcontracting.  Judge Pellegrini disagreed with the majority’s ruling, reasoning that the WIB was part of County government, as its purpose was to "advise and assist" County officials and had no authority to enter into a contract authorizing the disbursement of funds; the County had control over the WIB based upon the facts of record, including that the RFPs indicated that decisions were subject to the Commissioners’ approval; and the WIB did not have a "separate legal status."

The Pennsylvania Supreme Court has agreed to hear this issue on appeal. The decision will likely have significant implications for public sector employers, and their various related and affiliated entities, as well as private sector organizations seeking to do business with these entities. Stay tuned for future updates on this important topic.

This post was contributed by Adam R. Long, Esq., a Member in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Harrisburg, Pennsylvania.

Most HR professionals in the private sector are aware of the risks presented by non-compliance with the overtime and minimum wage requirements of the federal Fair Labor Standards Act ("FLSA") and its state law companion, the Pennsylvania Minimum Wage Act ("PMWA"). Since 1974, the FLSA’s requirements have applied to virtually all state and local government employees and most federal employees, too.

A recent decision in the case of Morrow v. County of Montgomery illustrates this point. In Morrow, a class of correctional officers at the Montgomery County Correctional Facility filed a class action lawsuit against the County in the United States District Court for the Eastern District of Pennsylvania, alleging that they were not compensated for time spent working before and after their scheduled shifts. The plaintiffs in Morrow sought damages under both the FLSA and PMWA. On January 31, 2014, the Court issued a decision that (1) dismissed the plaintiffs’ PMWA claims, but (2) granted the plaintiffs’ motion to conditionally certify a collective action based on their claims under the FLSA. After noting that no court has directly ruled on the applicability of the PMWA to government entities, the Court concluded that government entities were not covered by the PMWA and dismissed the plaintiffs’ state law claims. However, the Court also held that plaintiffs met their initial burden of showing that the proposed class members were similarly situated and conditionally certified the class for purposes of an FLSA collective action. Thus, the class-based FLSA claims for unpaid overtime will move forward.

The Court’s holding in Morrow that the PMWA does not apply to government entities is certainly useful for public sector employers. That said, the remainder of the decision confirmed that, with a few limited exceptions, the FLSA applies to government entities in the same manner that it applies to private sector employers. Public sector employers face the same risks and threats of class-based litigation under the FLSA that have vexed the private sector for years. As such, it is important for all employers, public and private alike, to work to ensure compliance with the FLSA.
 

It seems like we have been spending a lot of time discussing successful appeals of arbitration decisions lately, which is been a good thing for Pennsylvania employers. Recently, we reported on two cases in which an employer successfully appealed a negative arbitration decision. Historically, such successful appeals have been difficult. However, the current trend continued when a decision from the Commonwealth Court of Pennsylvania, sitting en banc (as full court rather than simply a three judge panel), rounded out the trifecta.

In Pa. Dept. of Corr. v Pa. State Corr. Officers’ Assoc. (pdf), the court was asked to analyze whether a grievance arbitrator’s decision reinstating corrections officers accused of inmate abuse was rationally derived from the collective bargaining agreement, and of so, whether the award violated a well-defined public policy. You may recall from our prior posts that these questions call for the application of the "essence test" and the limited public policy exception to that test.

Let’s take a step back.  The grievants had been suspended pending investigation of corroborated allegations of inmate abuse, and the union filed grievances challenging the suspensions. The first issue before the arbitrator was whether the grievances were timely filed. The parties’ agreement required that grievances be filed within 15 days of the alleged "occurrence" giving rise to the dispute. The arbitrator found that the grievances were in fact timely filed, even though they were filed well beyond 15 days after the implementation of the suspensions. The arbitrator reached this conclusion by finding that the suspensions constituted continuing violations of the agreement. The arbitrator held that, as a result, the grievances were timely filed even if back pay would be limited to the date the grievances were filed. Basically, the arbitrator held that each day of suspension gives rise to a new occurrence, triggering a new 15 day period.

What did the court have to say?  The court disagreed and succinctly concluded that the arbitrator’s decision, which did not cite to any provision of the agreement, lacked foundation in and failed to logically flow from the agreement. Put simply, the arbitration decision failed the essence test. The court did not reach the issue of whether the decision would violate a public policy.

So what?  For those of us with responsibilities for responding to grievances, this decision is significant. The court seems to have thrown out the continuing violation theory, a theory that unions often rely on when grievances are untimely filed, but there is some ongoing impact on the grievant.  Because most agreements prohibit an arbitrator from adding language to the agreement, as the agreement did here, without a specific provision providing for its use, employers should strongly consider taking the position that the continuing violation theory is dead.

The Supreme Court of Pennsylvania recently confirmed that sexual harassment is against public policy. Seems like a no brainer, right? The court seemed to agree, stating that the decision in Phila. Housing Authority v. AFSCME, District Council 33, Local 934 [WARNING EXPLICIT] (pdf) was not "a difficult case." So, why did it take over a decade to reach this conclusion?

Let’s look at what happened.  The union representing an employee of the Philadelphia Housing Authority filed a grievance challenging the employee’s termination for sexual harassment. An arbitrator reinstated the employee, with back pay, despite finding that the employee was not credible and had refused to take responsibility for his "lewd, lascivious and extraordinary perverse" physical and verbal harassment of a coworker. After the decision was appealed and wound its way to the court (for the second time), the court held that it was against public policy for an arbitrator to reinstate an employee who was terminated by a public employer for engaging in physical and verbal harassment. Although the arbitrator’s award was entitled to deference under the essence test, the award essentially amounted to a reward for the employee’s borderline criminal behavior and was contrary to the clear public policy prohibiting sexual harassment in the workplace.

You may recall from our prior posts that the essence test is an extremely deferential standard of review by which courts review the decisions of arbitrators. Under that test, if an arbitrator’s decision is grounded in the collective bargaining agreement, and is rationally derived from that agreement, then the court will not disturb the arbitrator’s findings. In the majority of cases, the courts simply defer to the decision of the arbitrator.  So what happened here? 

Continue Reading Appealling An Arbitration Decision – A Success Story Part II

A recent Third Circuit Court of Appeals decision has made clear that supervisors in public agencies may be subject to individual liability under the Family and Medical Leave Act (FMLA). The court previously has held that public employers, private employers, and supervisors in the private sector may be liable for FMLA violations. Now, for the first time, in Haybarger v. Lawrence County Adult Probation and Parole, the court has extended FMLA liability to supervisors in the public sector.

The facts in Haybarger may seem eerily familiar to many of you. A public-sector employee took FMLA-covered absences for a number of different health issues. The supervisor, who served as the Director of the Probation and Parole Office, believed that the employee was under performing and that her attendance problems contributed to her poor performance. The supervisor wrote in the employee’s performance evaluations that she needed to improve her overall health and cut down on the days that she missed due to illness (red flag!). The supervisor also formally disciplined the employee, placing her on probation for six months, which required weekly formal progress assessments and monthly meetings. While it is unclear who specifically made the ultimate decision to terminate the employee, she was terminated when her performance did not improve.

Not surprisingly, following her termination the employee brought suit raising a number of claims against the County, the Probation and Parole Office, and the supervisor. After many of the claims were dismissed, and a few were settled, all that remained for the court to decide was the FMLA claim against the supervisor. The supervisor argued that he was not liable under the FMLA.

Continue Reading Public Sector Supervisors Can Be Personally Liable for Violations of the FMLA

This post was contributed by Tony D. Dick Esq., an Associate in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group in Columbus, Ohio.

Many watched intently in early February as the political theater unfolded in Madison, Wisconsin when Republican Governor Scott Walker proposed legislation to limit the collective bargaining rights of most state government employees. In a matter of days, the Capitol would be swarming with protesters and demonstrators on both sides of the issue. What followed was weeks of sit-ins in the Capitol, a mass walkout by all 14 Democratic State Senators to block a vote on the proposed law, the unprecedented recall elections of 6 Republican and 3 Democratic state lawmakers and a bitterly fought campaign to unseat an incumbent State Supreme Court Justice widely viewed as a pro-Walker.

Those in favor of public sector reform argue that collective bargaining limits are necessary to deal with steep budget shortfalls. Projections from Governor Walker’s office estimate that the state will save approximately $30 million this year as a direct result of the new law. On the other side, pro-union allies contend that moves like the one in Wisconsin are nothing more than a political power grab designed to bust up unions and cripple their longstanding support of Democratic candidates. Observers on both sides generally agree though that the movement to reform public sector collective bargaining rights has invigorated the debate on the role of unions in today’s uncertain economic climate.
 

Continue Reading The State of State Unions: A Year in Review

This post was contributed by James Welch, a Summer Associate with McNees Wallace and Nurick LLC. Mr. Welch will begin his third year of law school at William & Mary School of Law in the fall, and he expects to earn his J.D. in May 2012.

In Borough of Duryea v. Guarnieri, 113 S.Ct. 2488 (2011) (PDF), the United States Supreme Court clarified that, although the Petition Clause of the First Amendment of the United States Constitution provides public employees separate and distinct protections, those protections are essentially the same as those afforded by the Free Speech Clause of the First Amendment.  This is good news for public sector employers, who already face a slew of additional concerns in the area of employee discipline. 

The Petition Clause has been trendy for public employees lately, but its contours have been somewhat unclear.  Generally, the Petition Clause protects the rights of individuals to petition the government to seek redress of grievances.  The courts have held that this provision protects public employees who file grievances against their employers.  In other words, public employers are prohibited from retaliating against an employee who has filed a grievance or other complaint. 

However, like other protections afforded to employees, there are limits to the protections afforded by the Petition Clause.  The issue in Guarnieri was, what types of grievances/complaints are protected? 

Continue Reading United States Supreme Court Clarifies Public Employee Petition Clause Protections