The State of Minnesota recognizes that vital services are provided to the public by specific governmental employee groups, and therefore prohibits them from going out on strike.  These employees are considered “essential” and include firefighters, peace officers, public safety dispatchers, correctional facilities guards, confidential, and supervisory employees.  Instead of the right to strike, essential employees are afforded the opportunity to proceed to mediation and interest arbitration to resolve contract disputes over terms and conditions of employment.

Most arbitrators agree interest arbitration is supposed to reflect what the parties would have negotiated, had they been able to reach an agreement on the disputed contract terms.

Factors an interest arbitrator looks at include:

1)      What is the internal pattern? – What did other employees in the workplace receive in wages and benefits?  If all the other employees received a 2% wage increase, and this group is asking for a 4% wage increase, the group asking for 4% will have to justify why they are entitled to a higher wage increase than their fellow employees.

2)      What do external comparisons show? – I’ve blogged in the past about creating a good comparable group.  An arbitrator may look at what are other essential employees in the area received in wages and benefits.  For example, is this group of essential employees far under paid compared with other essential employees in the area, or are they average or over paid in comparison?

3)      What is the Employer’s ability to pay? – Is the Employer able to pay the increase in wages or benefits?  Public employers have an obligation to be fiscally responsible with public funds.  If a public employer can establish an inability to pay an increase in wages or benefits, it might be persuasive for an arbitrator.

4)      Is there a compelling need for a change? – If either party is interested in making a change to a benefit or to contract language, it is necessary to convince the arbitrator there is a compelling reason for the change.  Another argument is to show the arbitrator that an appropriate quid pro quo was offered at bargaining, in exchange for the requested change.

Keeping the factors an arbitrator considers in mind during negotiations and mediation, may help parties reach a contract settlement and perhaps even avoid the need for interest arbitration.

The New Year is upon us which means many public sector collective bargaining agreements have expired.  Perhaps your City or County was fortunate enough to start negotiations prior to the expiration of the collective bargaining agreement, and maybe even reached a settlement.  If not, here are a few tips to help you begin to prepare for negotiations.

First, consider your budget and then look back at any problems that arose under the collective bargaining agreement.  These could be grievances that were filed or any type of problem that may have developed.  Evaluate these issues and how they were resolved to determine whether or not you need to propose changes to the collective bargaining agreement.

Second, create a comparable group.  You may not need the comparable data at the first negotiation session, but this will definitely be helpful down the road, especially if you get to the point of mediation or interest arbitration.

The following should be considered when compiling a comparable group:

1) Start by checking if a comparable group was ever used in prior negotiations or interest arbitrations.  If so, determine if there is any reason to change the previously established comparable group.

2) If there is no comparable group, start by looking at cities or counties of like size and tax capacity.  When I create a comparable group, I make sure to keep true to the region of the state, for example, I compare northern Minnesota cities to other northern Minnesota cities.  I don’t compare small out-state cities to small metro area cities.

3) It is also important to compare like job positions, supervisors should be compared to supervisors etc…

4) Always compare cities to cities and counties to counties, apples to apples.  Do not mix cities and counties as they have substantially different tax bases.

Finally, look at your past practices.  Are there any past practices the Employer is interested in ending, if so, this is the time to put the Union on notice about it.

Keeping these suggestions in mind will help you successfully prepare for negotiations.  For more helpful information look back at my previous blogs about documenting collective bargaining negotiations and handling different negotiation styles at the bargaining table.  

This is the time of year when our public sector clients begin negotiations over labor agreements set to expire December 31. In fact, this week I had my first negotiation session with Teamsters Union Local # 346.

Bargaining is a process and depending on the number of issues or the significance of the issues, it may take awhile. A valuable step in the collective bargaining process is to track all the proposals exchanged between the parties. Personally, I like to color-code and summarize the status of proposals in a chart format. I like to use color to distinguish between Union proposals and the Employer proposals. By doing this, I can determine at a quick glance if an issue has been tentatively agreed to, withdrawn by either side, or is still on the table. I know some people don’t care to color-code. Everyone needs to find whatever is easiest for them to keep track of the proposals. I prepare the chart and use it strictly for myself and the negotiation committee. I do not provide it to the Union. The chart is a good overview of the status of negotiations, but the proposals I make are separate.

It is also vital to take detailed and thorough notes during negotiations. This way if there is any confusion later you have something to look back on, and not just rely on memories. I prefer to present any substantial proposals or counter-proposals in writing, so there is no confusion. I have a mini-laptop I bring with to negotiation sessions, so I can update any proposals and have then printed out before presenting them to the Union.

Negotiation notes can be introduced as evidence in a subsequent grievance arbitration over disputed contract language, to help establish the intent of the parties.In 2009, Arbitrator Fogelberg sustained a contract interpretation grievance based on his review of the Union and Employer’s negotiation notes, and testimony of the parties about the negotiation process. Make sure you can substantiate the bargaining history by keeping good negotiation notes.

Only three months are left in 2013, and now, is the time for employers who have collective bargaining agreements expiring December 31, to start negotiations for new labor contracts.

There are many different styles of negotiators. Knowing your own negotiation style and the style of the negotiator across the table can help create more productive negotiations and a better collective bargaining agreement.

In my years negotiating labor agreements, first for a union and now strictly on behalf of management, I have come to recognize some common characters.  First, there is “Don Demanding.” He uses a hard approach in negotiations and can best be described as aggressive and unwilling to make concessions. He holds to his positions, and overall is more interested in “winning” than reaching an agreement. When dealing with “Don Demanding” the other side can often be left feeling victimized and upset. When I encounter a “Don Demanding” negotiator, I make sure I am well prepared. I will advise my client that minor issues may not be worthwhile to present during negotiations, because “Don Demanding” will likely give on a minor issue and except you to give in a larger issue in return. “Don Demanding” wants something in return for everything.

Next is “Amy Accommodator.” She is the opposite of “Don Demanding.” “Amy Accommodator” thinks the way to make people happy is to give them what they want. “Amy Accommodator” thinks if she agrees to “Don Demanding’s” requests she will create goodwill. In actuality, her negotiation tactics make her appear weak to “Don Demanding” and only encourages him to request more. There are times when it makes sense to be “Amy Accommodator,” such as when you are in a weak position. It can be your best option to give in gracefully. However, don’t give everything away too early in negotiations, or you may be left in a poor position with little to offer during the rest of negotiations. When I negotiate with an “Amy Accommodator,” I bring forward all the housekeeping issues and minor changes I want to make to the labor agreement. “Amy Accommodator” is likely to agree to these changes without expecting anything in return.

Another is “Carl Compromise.” “Carl Compromise” likes to meet in the middle to reach agreement. While this approach can reduce strain on the parties’ relationship, it can leave money or benefits on the table. Compromising prevents the parties from being creative and thinking outside the box. Don’t compromise on things you absolutely must have. When dealing with a “Carl Compromise,” I make sure I hold firm to the important issues, and have reasons and research to back up my positions. Not every issue can be resolved by meeting in the middle.

As you begin negotiations, educate yourself about the issues that are on the table, as well as the negotiator you are dealing with. Doing so can result in smoother, faster, more efficient negotiations.

The hint of fall is in the air and many public employers are getting started with union negotiations over collective bargaining agreements set to expire at the end of the year. The goal of each side is always to get the best agreement possible.

Here are some tips on what Employers can you do to be more efficient at the bargaining table:

  • Review the current collective bargaining agreement and see if there are any errors, typos, or language that needs to be updated.
  • Review grievances which occurred during the term of the agreement to see if anything needs to be incorporated into the collective bargaining agreement.
  • Do your “homework.” By being prepared to explain the reasons for Management’s proposals and not just saying “no” to a Union’s proposal you are bolstering your position. If you don’t supply a reason, the Union membership is free to “make up” the reason it thinks you are proposing something.
  • If there are advantages to Management’s proposals share them with the Union and provide documentation if possible. This will help the Union give your proposal more serious consideration.
  • Finally, if negotiations are stalled, bring in a mediator to assist. Sometimes a fresh perspective can go a long way, and help move the process forward.

These simple reminders can help you be more productive and efficient, and maybe you will end up with the best agreement ever!
 

The unsettled labor dispute between American Crystal Sugar and about 1,300 workers is now ten months old. The parties reportedly continue to remain far apart, and can’t seem to reach an agreement on a new labor contract. During the last ten months, workers have been locked out, and in many cases collecting unemployment benefits. The last negotiation session fell apart, and no new meetings are scheduled.

The new element looming over the workers is that unemployment benefits will end next month, at least for the Minnesota workers. This fact seems to have caused some movement on the part of the union. A vote has been called by the workers for June 23, on the same proposal they overwhelmingly rejected last year. The employer appears not to have blinked in the battle, using replacement workers to process the sugar beets and get the sugar to the grocery shelves.

Given today’s fragile U.S. economy, the European financial crisis, and the predicted student loan bubble looming ahead, settling the labor contract should be a priority for the union. The markets are simply too unstable to hold out for a lot of language changes and additional compensation. Now is the time to revisit the employer’s 14% percent pay increase over five years and get the deal done.

I said in my last blog about the labor dispute, the union needed a reality check. Collective bargaining has changed. The world economy is now a real issue in local negotiations. Asking for more, more, more works only in the good times. Hunkering down and waiting out the storm should be the new union mantra today.
 

Factory workers were locked out Monday from entering seven American Crystal Sugar plants located in Minnesota, North Dakota, and Iowa, after rejecting a contract proposal offering a 17% wage increase over five years. The processing plants have brought in replacement workers, and the employees are flocking to file for unemployment benefits.

Rejecting a 17% wage increase over five years is outrageous and offensive in our present sluggish economy. Most factory workers are happy to just have a job and a paycheck. The Union responded to the press,“These negotiations are not and never have been about pay…” and instead offered increases in health insurance and concerns about job security as the reasons for rejecting the Company’s contract offer.

In response to the Union’s concerns, management explained, “Health care costs would go up an average of about $1,000.00 per employee, which is significantly less than their pay increase,” and indicated the Company had proposed language concerning job security. The Company proposal specified prior to any lay-offs, the Company would have to meet certain stipulations before being able to hire non-union workers.

The major disconnect here may very well be the fact the parties last contract negotiations were in 2004, when they agreed to a 7 year labor agreement that raised salaries by 2% and locked in health insurance rates for 7 years. The world has changed profoundly in the last 7 years, our economy has tanked, health care costs have sky-rocketed, and the unemployment rate is hovering close to double digits. The Union representing workers of American Crystal Sugar seems to have been trapped in a time warp. It is hard to have any sympathy for workers who reject a sweet 17% wage increase over 5 years, and opt for unemployment benefits instead. A reality check is in order.
 

The Minnesota legislature has provided certain retiree health insurance benefits to public employees through state statute. For example, former public employees and their dependents must be allowed to continue to participate indefinitely in the employer-sponsored insurance group that the employee participated in immediately before retirement. Additionally, until the former public employee reaches age 65, they must be permitted to be pooled in the same group as active employees for purposes of establishing premiums for health insurance. Finally, public employers and employee unions may negotiate over employer contributions to retiree health insurance premiums. It is safe to say these statutorily created benefits are unique to the public sector, and not typically available in the private sector.

In today’s economy, health insurance costs are crippling the budgets of public employers. Limited to income from property tax revenues, levy referendums, and in some cases local government aid, public employers are struggling to control mounting costs of employee health insurance. My law partner blogged about a recent arbitration case she presented where retiree health insurance was the central issue in dispute. In that case, the arbitrator put a sunset on retiree health insurance, persuaded by the mounting unfunded liability facing the city.

The issue of retiree health insurance benefits is now going up on appeal to the Minnesota Supreme Court. This class action lawsuit, filed by 800 retired Duluth, Minnesota city employees, challenges the changes the City made to health benefits provided to retirees at the time of their retirement. The City had been faced with overseeing about 100 different health plans for former employees, who had retired over the years. The City streamlined the system, taking the position the labor contracts required the employer to provide the same coverage to retirees as it does to current employees, not the coverage the retirees had when they retired. Over the span of 30 years, Duluth Mayor Don Ness estimated the changes would save the city approximately $205 million dollars.

District Court Judge Sandvik ruled in favor of the City of Duluth in October 2009, which was upheld by the Court of Appeals in 2010. The Supreme Court accepted review and oral arguments are scheduled for May 2, 2011. I will of course keep my eyes on the case and update you with the results.  This is going to be an important decision for public employers.

 

I have to commend the unions on their campaign to get their message out in Madison, Wisconsin. The media has been lapping up the union’s propaganda for days, with very little input or rebuttle from management. So much for balanced reporting! Instead, all of the focus has been on the circus at the State Capitol, not the scope of the financial crisis; on the chants and placards of the crowds, instead of the actual legislative proposals offered by Governor Walker.

I previously represented union members, and now only represent management. I know both sides of the table, and have seen the best and the worst of both labor and management. After years of working in public sector labor relations, I have concluded unions don’t usually ask, “How can I help you?” More often they ask, “How can I benefit?” This leads to workplaces that breed mediocrity and reject innovation and flexibility, where change is feared and rejected at all costs.

I agree with Dr. John Sullivan, former consultant to public-sector unions, and now a college professor of management at San Francisco State University. He outlined 18 reasons why public-sector managers resist union actions, all of which seem to apply to the events in Madison. He states, “You seldom hear the word innovation in the context of government, in part because rigid work rules make it nearly impossible.” Fear serves to keep unions rigidly stuck in the past, holding on for dear life to the good old days. Case in point: our unionized school districts who have avoided change in our classrooms at the expense of the quality of our education system. There is a huge price for maintaining the status quo. It is called obsolescence. If the unions hold to their current position, they will lose their value and credibility. If management remains silent throughout the present media barrage in Madison, the full-story will not get out, and there is little chance of a creative resolution.

New ideas and change should not be a source for fear and timidity by either labor or management. New ideas and change should be viewed as progress. Creative problem-solving beats arguing over why public employers are facing financial crisis, or finger-pointing at each other. The sooner both sides can accept the fact this is a new day and a new economy, the sooner they can get down to jointly solving the financial crisis, and create a new form of constructive, realistic labor relations.

This is not the time for business as usual, this is the time to get on with business in a new way!