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Saturday, February 26, 2011

SB 5; Let's Make Sure We Get it Right

The below memorandum of concerns on SB 5 was forwarded from State Senator Tim Grendell to OH Senate President Tom Niehaus, State Senator Shannon Jones (SB 5 Sponsor) & State Senator Kevin Bacon (Chairman - Insurance, Commerce & Labor Committee & SB 5 Co-Sponsor).

In offering his opinion, State Senator Grendell brings up some very good points that clearly must be addressed. 

While fully supporting the concept of a much needed reform on Collective Bargaining Agreements (CBA's) to get OH back on sound fiscal footing and reflective of the feedback from our members, CTPP's position from the day SB 5 was introduced has beeen --CBA's should not be removed but completely reformed, Safety Forces should be exempted, safe guards must be installed on the merit pay provisions, worker rights are respected and above all SB 5 MUST be in accordance with the OH Constitution.  

We would ask the OH Senate members to review and debate the following concerns as outlined by State Senator Tim Grendell and supported by several other GOP State Senate members. The last thing we want to do is pass a Bill to find out what is in it.  For the future of Ohio -- it is important we get this right.

From State Senator Tim Grendell --
This memorandum reflects my initial primary concerns with SB5 as currently drafted. I fully appreciate the complexity of this bill and the time and effort expended by its sponsor. This memo is by no means an exhaustive discussion as to the constitutional and legal issues raised by SB 5, which are many.

           Abolishment of Collective Bargaining Rights
What does it mean to “abolish” collective bargaining for public employees? What method of addressing the interaction between public employees and management will replace collective bargaining? In my experience, civil service is not a functional alternative and will cost both the employee and the taxpayer’s substantial legal expenses. Does a public employer have to bargain with each employee? Can groups of public employees ban together to negotiate employment terms? Will the loss of collective bargaining grievance procedures lead to substantial individual lawsuits?

Under current Ohio law, an “at will” employee can pursue a wrongful employment termination lawsuit if the suit is based on a public policy basis (e.g. age discrimination, sex discrimination, race discrimination, whistle blower). Greeley v. Miami Valley Mnt. Contractors, Inc., 49 Ohio st.3d 228 (1990).

The Ohio Supreme Court has ruled that union workers covered under a collective bargaining agreement cannot pursue a wrongful termination lawsuit based on public policy because those union workers have recourse through the collective bargaining agreement’s grievance procedures. Haynes v. Zoological Society of Cincinnati, 73 Ohio St. 3d 254 (1995). If eliminating collective bargaining opens the door to wrongful termination/public policy lawsuits by public employees, the cost of that litigation, even if successful for government-management, could become more expensive than the purported savings from abolishing collective bargaining.

Under civil service, an aggrieved classified public employee my appeal a layoff or displacement to the state personnel board of reviews and then to the Common Pleas Court. R.C. Sec. 124.328; Collyer v. Darling (6th Cir. 1966), 90 F.3d 211. This is a far more cumbersome and costly way to resolve such disputes. Moreover, the Ohio Supreme Court ruled that union collective bargaining – not civil service status, precludes Greeley wrongful discharge public policy lawsuits. See Haynes, supra.

If the state is going to rely on civil service to fill the collective bargaining gap, the Legislature will need to rewrite Ohio’s Civil Service Law, R.C. Chapter 124. I have discussed this with far more knowledgeable folks in DAS, and they agree with this assessment. Additionally, a home rule municipality’s civil service rules prevail over state statute. See, e.g., Fenton v. Enahore (1987), 31 Ohio st. 3d 69. Relying on civil service will result in a patchwork of requirements.

Based on my 30+ years of legal experience, it is my opinion that SB 5, in its current form, will lead to costly litigation and labor strife. It will lead to impasse rather than less costly dispute resolutions. Contract settlements will be less likely and strikes (unless statutorily prohibited) will be more prevalent than under current collective bargaining procedures. It is extremely difficult to see how the taxpayers will benefit from the ultimate impacts of SB5 as written.

Simply put, collective bargaining has some benefits, particularly in the lawsuit avoidance, grievance process. I support reforming collective bargaining, not its elimination. If it is eliminated, something will fill the gap and I suspect that something will be litigation, blue flu, and (unless prohibited) more public employee strikes.

 At a minimum, SB5 must permit and provide for (if not require) a collective bargaining grievance dispute resolution process to avoid Greeley lawsuits.

Unconstitutional Contract Interference
While SB5 appears to say that it does not interfere with existing contracts, other provisions in the bill raise constitutional contract interference concerns.

As I read SB5, it provides that laws pertaining to the provision of health care benefits to pubic employees prevail over conflicting collective bargaining agreements. The bill also invalidates any agreement that purports to require the public employees join any exclusive representative. (lines 10848-10850) (“Any agreement that purports to require that employees join any exclusive representative is void and unenforceable”)

“The bill permits termination of a collective bargaining agreement when, per the Auditor, a public employer is in a state of emergency. There may be some SERB opinion support for this provision.” There are other provisions that invite constitutional inquiry or concern.

I have two constitutional based concerns:

First, some of these provisions appear to violate the constitutional prohibition against contract interference and most certainly will invite litigation. Second, even if one justifies such interferences on the statutory nature of pubic employment, the precedent that the Legislature can reach in and terminate, interfere with, or negate contractual terms because of economic exigencies opens a Pandora’s Box that could serve as a terrible precedent for a future liberal administration seeking to extend this power to other private contractual business relationships or public contracts for private services or materials. The Tea Party and Liberty Council members should be very careful on this issue.

Elimination of Binding Arbitration
SB5 essentially eliminates binding arbitration and replaces it with the possibility of a perpetual contract or management mandates. If either party does not accept the SERB panel’s recommendation, the parties must execute a collective bargaining agreement with the same terms as in effect prior to the appointment of the fact-finding panel, unless the public employer implements the panel’s recommended options (in whole or part) while negotiations continue. If SB5 eliminates collective bargaining, how can it force employees to execute a collective bargaining agreement? If the expiring agreement is better than the panel’s recommendations, why would the benefitting side accept the panel’s recommendations – ever? What happens if the parties do not reach an agreement – does the last year of the previous agreement continue for one year or indefinitely?

We certainly can tighten up the binding arbitration provisions, such as:
(1)   Enact a statutory cap such as in New Jersey (based on public revenues and current economy).
(2)   Submit the binding arbitration report to the Common Pleas Court for plenary, de novo review, using the court’s equitable powers.
(3)   To address Governor Kasich’s concern, require that all arbitration or panel members be Ohio Citizens (although I think this is already the case).
(4)   Tighten the SERB process.

Right to Strike
A good argument can be made that public employees should not be allowed to strike. However, eliminating the right to strike for all public employees would require a functional and mutually fair binding arbitration process.

Teacher Tenure/Continuing Contracts
While concerns about teacher tenure (continuing contracts in Ohio) should be addressed, total elimination will undermine the ability to attract good teachers to Ohio. If you are a hard working teacher who could get longer employment protection in Pennsylvania or Kentucky, why would you settle for a year to year job in Ohio? Moreover, terminated teachers will claim that they were the victims of arbitrary, capricious, or discriminatory actions -- end result -- more lawsuits. We should change the law to require that teachers retain their tenure through their satisfactory performance on a regular basis. This can be accomplished by giving school management the right and authority to conduct annual performance evaluations of teachers. If a teacher is placed on a “Needs Improvement Status,” the teacher goes on the top of the RIF list and, if the teacher’s performance remains substandard, the teacher can be terminated for poor performance, despite longevity.

The total elimination of the “seniority” employment protection factor also exposes hard working, long term public employees (who have no social security or 401K benefits) to premature termination preventing them from earning their full public pension benefits. If these “good” older public employees are terminated early and cannot find reasonable employment elsewhere, will they further burden state support programs? Will they file age discrimination based lawsuits? Some seniority based protection should be provided for long term hard working public employees, who deserve it.

Health Care Benefits
Even Wisconsin is only requiring 12.6% contribution by public employees. Where did 20% come from? While I see no legal impediment to the healthcare provisions in SB5, we could save more taxpayers’ dollars by removing healthcare from public collective bargaining and requiring all public schools to participate in a statewide health insurance pool. This should save taxpayers millions of dollars. Moreover, the management and union healthcare plans must be commensurate.

Eliminating Higher Education Collective Bargaining
I still do not understand how this will affect state university and college professors/teachers. Will they negotiate their employment terms individually? Will this make tenure an individual threshold? Will the best and the brightest professors/teachers find states with collective bargaining at their level more attractive than Ohio? The UC Professors’ testimony certainly raises concerns about discouraging the best and brightest to teach at Ohio’s universities and colleges.

Police/Fire/Highway Patrol
Even Wisconsin understands the wisdom of exempting police, fire, and state highway patrol from collective bargaining elimination. This is especially true if police/fire still are prohibited from striking. Police, fire, and the highway patrol should either be exempted out of SB5, or the bill should include some fair and functional binding arbitration provision. Sergeants (perhaps lieutenants and captains in local police departments) should not be included as supervisors because they do not have the appropriate level of power and responsibilities. Police and fire must be allowed to bargain staffing levels and equipment issues when safety-related. To not do so, places Ohio’s safety focus at risk of injury or worse.


There are numerous provisions in SB5 dealing with the bargaining process that need to be reconsidered. These include, but are not limited to:

·        Public employer refusal to talk provision
·        Deletion of language that prohibits pension pick up procedures in collective bargaining agreements. (what about previously negotiated arrangements?) Pension pickup saves money.
·        Under the National Labor Relations Act, permanent replacement workers can be hired for an economic strike, but not for an unfair labor practice strike. SB 5 fails to make this distinction.

Saving Money – State Budget Shortfall

The assertion that SB5 is the answer to the state’s current purported 8.5 billion dollar plus state budget shortfall is misleading and perplexing. The current state collective bargaining agreement runs through FY 2012. Since SB5 would extend the State’s FY 2012 terms for at least another year, if the parties do not reach a new agreement, the current  agreement  could cover both years of the FY 2012 – FY 2013 budget. Many existing police, fire, and teacher collective bargaining agreements have 1 or 2 years remaining. How can SB5 reduce the economic costs of these existing contracts without totally vitiating the Constitutional prohibition against contract interference? Since SB5 does not apply to local governments (excluding police/fire), how will it help local governments offset their expected local government fund losses? Is there a fiscal analysis that supports the “savings” argument?

This memo is by no means an exhaustive constitutional or legal analysis of SB5; that would take days or perhaps weeks. I recommend that the Senate obtain such an exhaustive legal review before acting on such an overwhelming change in Ohio’s public labor law.

I also note that we, as a caucus, never discussed abolishing collective bargaining at our mini-retreat in December, 2010, or retreat in January, 2011. Rather, we talked about collective bargaining “reform,” without discussing any details. SB5 goes far beyond “reform.” At a minimum, we should discuss each of the broad sweeping changes proposed in SB5 in Caucus before moving forward on SB5.

I am having amendments drafted to address my concerns based on SB 5 as currently in committee.

I will continue to support defensible collective bargaining “reform.”

I will continue to review SB5 and provide further comments as appropriate. 

Thank you for your consideration.

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