Supreme Court to Decide Challenge to CTA's Fair Share Fees

On June 30, 2015, the United States Supreme Court agreed to hear a constitutional challenge to the California Teachers Association's ability to collect fair share fees from non-members who benefit from CTA contracts.

Fair share fees, also called agency fees, are fees paid by employees who benefit from a union contract, but opt out of full membership.  Many unions, particularly in public safety, have voluntary membership rates above 99%.  But other unions have lower voluntary member rates for a variety of reasons and rely on fair share fees to finance contract negotiations and other core union activities.

Courts have long considered fair share fees constitutional in the public sector since the Supreme Court's 1977 decision Abood v. Detroit Bd. Of Ed., 431 U.S.209, 232.  But courts require unions who collect them to divide their core labor activities from other other activities and assess a fair share fee that only covers the cost of core activities.  In California, these rules are part of PERB's regulations. They require unions to give non-members written notice about agency fees and, depending on their size, prepare audited financial statements.  In this way, the courts balance the rights of non-members with the needs of the unions that provide critical services.

But the Supreme Court indicated recently it may change that balance and let non-members free ride on union benefits.  Last year, in Harris v. Quinn, the Supreme Court held the First Amendment prohibited fair share fees from some types of organized workers.  In the opinion, the Court disparaged fair share fees and invited another challenge.  But that case involved home health care workers who did not have a traditional union-member relationship and did not apply to other types of employees.  Now, the Court will hear a direct challenge to fair share fee requirements under California's regulatory scheme in its October term.

PERB Clarifies Jurisdiction Over "Mixed Unit" Associations with Peace Officer and Non-Peace Officer Members

In County of Santa Clara (2015) PERB Decision 2431-M, the Public Employment Relations Board  found PERB has jurisdiction over charges brought by labor associations representing mixed units.

This case involved the Santa Clara County Correctional Peace Officers Association, which represents one bargaining unit, the Correctional Employees Unit.  That unit is composed of peace officers under Penal Code section 830.1(c) and non-peace officer correctional officers.  This type of unit is sometimes called a "mixed unit."

There has been a dispute about whether PERB has jurisdiction over charges brought by or against labor associations representing peace officers, but also other employee classifications. The reason there is a dispute is that Government Code section 3511, part of the MMBA, exempts "persons who are peace officers" from the 2001 changes to the MMBA that gave PERB jurisdiction over the Act. Some parties claimed this meant PERB does not have jurisdiction over claims brought by labor associations representing mixed units, since those units contain peace officers.  The Board heard oral argument on this issue two years ago, but that case settled before the Board issued a decision.

Since this case also involved a mixed unit, the Board clarified its jurisdiction over these units.  The Board wrote "we make explicit PERB's authority to hear charges, such as the present one, that are brought by employee organizations, including employee organizations representing or seeking to represent units including persons who are peace officers."

The Board explained, "MMBA section 3511 precludes jurisdiction only with respect to charges brought by peace officers, not employee organizations."  The Board found support for this distinction in the MMBA's own definition of person which refers to a natural person, distinguishing it from an entity, such as a labor association.  Likewise, the Board noted the Legislature gave it jurisdiction over factfinding requests without a restriction on mixed units.

Mastagni Holstedt senior associate Jeffrey R. A. Edwards represented the Santa Clara County Correctional Peace Officers Association in the matter.

PERB Tackles Vested Rights Issues in Finding Unions Refused to Bargain Over Employee Pension Contributions

On June 3, 2015 in County of San Luis Obispo (2015) PERB Decision No. 2427-M, PERB held two unions unlawfully refused to bargain over employee pension contributions. In reaching this decision, PERB ruled San Luis Obispo's independent retirement system did not provide employees with vested rights for employee contributions. This case demonstrates PERB's willingness to decide vested rights issues, potentially providing labor organizations with an alternative forum to litigate such issues.

The County of San Luis Obispo maintains the San Luis Obispo Pension Trust ("Trust") as its own independent retirement system. The County requested to bargain with two unions over a proposed increase in employee contributions to the retirement system. The unions argued, among other things, that the employee contributions constituted vested contractual rights and the unions could not lawfully bargain over such vested rights. During this time, the unions were litigating cases in superior court over similar issues. If the unions agreed to bargain over employee contribution rates, they risked weakening their position in the pending superior court litigation.

The outcome of the case hinged on whether the Trust provided vested rights regarding certain employee contribution rates. If PERB determined the pension benefits were vested at the current employee contribution rates, the unions would have been within their rights to refuse to bargain over proposed increased contributions for the same fixed level of pension benefit. However, PERB held the current employee contribution rates were not vested and immutable under the Trust's governing documents. PERB determined the Trust's language did not show a clear intent to create vested rights in particular contribution rates or benefits. Since the employee contributions were negotiable, PERB ruled the unions unlawfully refused to bargain over the County's proposed changes to the contribution rates.

This case demonstrates PERB's willingness to decide vested rights issues in determining whether a refusal to negotiate pension benefits constitutes an unfair labor practice. Although the County prevailed under the circumstances in County of San Luis Obispo, this case could benefit labor organizations in the future by providing an administrative forum with labor expertise to determine vested rights issues. This decision also shows the danger for labor organizations and employers to refuse to negotiate over proposals where bargaining obligations are unclear.

Stress Caused by a Supervisor is Not a Disability

The California Court of Appeal recently reaffirmed that stress caused by a supervisor is not a disability under the Fair Employment and Housing Act ("FEHA"). To prove a violation of FEHA a plaintiff must demonstrate some other source of the stress to demonstrate a disability.

In Higgins-Williams v. Sutter Medical Foundation, the Plaintiff alleged her employer violated FEHA. FEHA requires that employers meet with employees who have disabilities and find a reasonable accommodation for those employees. Failure to engage in this interactive process constitutes a violation of the statute.

The plaintiff alleged she suffered from debilitating stress due to her interactions at work with human resources and her manager. Her physician diagnosed her as having adjustment disorder with anxiety. Her physician cited her supervisors as the cause of her mental issues. The plaintiff took an extended medical leave to address her stress. Her physician recommended she be assigned to different supervisors. Sutter, her employer, did not provide the plaintiff with new supervisors. After months of negotiations, terminated the plaintiff's employment. The plaintiff sued, alleging Sutter failed to meet with her in good faith and accommodate her disability in violation of FEHA.

The California Court of Appeal for the Third District decided stress caused by a supervisor is not a disability under FEHA. To establish a case of mental disability discrimination under FEHA, a plaintiff must show three elements. First, that she suffers from a mental disability. Second, that she is qualified to do the job with or without reasonable accommodation. Third, that the employer took an adverse employment action against her because of the disability.

Here, the court upheld a prior decision ruling the inability to work under a particular supervisor because of anxiety and stress related to the supervisor's standard oversight of the employee's job performance is not a disability under FEHA. The only cause of the plaintiff's stress in this case was her supervisors. Thus, she was not disabled under FEHA. Without a disability there is no need to accommodate the employee and the employer incurs no liability under FEHA.

Chuck Reed Tries New Tactic in Pension Assault

Chuck Reed announced a new strategy to attack pensions in California today.  The text of new proposal has several features designed to take away employees retirement benefits.

It would abolish pensions for employees hired after January 1, 2019 and replace them with a "defined-contribution" system unless changes to benefits are approved in an election.  In a defined-contribution system, employees have to pay in a fixed amount with no guarantee of what their retirement income would be.  As a result, this approach shifts the risk and could result in thousands of public employees unable to retire.

The proposal is not limited to retirement benefits.  It provides, "Voters have the right to use the power of initiative or referendum... to determine the amount of and manner in which compensation and retirement benefits are provided to employees of a government employer."  As a result, the measure could be read to allow voter initiatives to eliminate or change MOUs, severely limiting collective bargaining in California.

The proposal also seeks to prevent the Public Employment Relations Board from hearing unfair practice cases involving ballot measures to strip employees of bargained-for compensation.