Friday, June 21, 2013
L.A. City Employees Have the Right to Arbitrate Furloughs—S.C.
By KENNETH OFGANG, Staff Writer
Los Angeles city employees have the right to arbitrate furloughs implemented as a budget-cutting measure, the state Supreme Court ruled yesterday.
In a 4-3 decision, justices overruled Div. Three of this district’s Court of Appeal, which held that the arbitration clauses in the employee unions’ agreements with the city violate the city charter, which gives the mayor and City Council non-delegable power to decide whether furloughs are necessary.
Justice Joyce L. Kennard authored the opinion of the court, which was joined by Chief Justice Tani Cantil-Sakauye and Justices Kathryn M. Werdegar and Goodwin Liu. Justice Carol Corrigan authored the dissent, which was joined by Justices Ming Chin and Marvin Baxter.
The high court ruling reinstates Los Angeles Superior Court Judge Gregory Alarcon order in favor of the Engineers and Architects Association, requiring arbitration of over 400 employee grievances.
The city implemented the furloughs under the mayor’s May 2009 declaration of fiscal emergency and a subsequently enacted emergency ordinance directing the mayor to implement a furlough plan. The ordinance was accompanied by findings that the city’s general fund deficit had reached $529 million and would grow to more than $1 billion by the end of the 2010-2011 fiscal year absent changes, that the city needed to cut expenses and borrow funds to avoid running out of cash, and that labor-related costs had to be reduced because they were 80 percent of the city’s expenses.
The city cited Government Code Sec. 3404.5, and the city’s own Administrative Code, both of which provide an “emergency” exception to the city’s obligation to consult with employee unions prior to adopting ordinances relating to matters within the scope of union representation.
The city began furloughing employees one day per 80-hour pay period, although benefits based on an 80-hour pay period were maintained. Employee grievances over the furloughs were denied on the ground that the emergency ordinance trumped any conflicting provision of the MOUs.
Obtain Binding Arbitration
EAA invoked the clauses of its MOUs that allow the union and its represented employees to obtain binding arbitration after all prior steps of the grievance process have been completed. It argued that the issue of whether furloughs violated the workweek and salary provisions of the MOUs would involve the “interpretation or application” of those agreements, thus rendering the issue grievable.
Kennard, writing for the high court, said the union was correct.
The city, the justice explained, contends that the furloughs were legal because the MOU allows it to unilaterally “relieve City employees from duty because of . . . lack of funds,” while the union claims that provision allows layoffs, but not furloughs. This is an interpretive dispute subject to the grievance procedure, and eventually to arbitration.
The justice went on to reject the argument that the MOU, as thus construed, interferes with the prerogatives of the mayor and council and thus violates the charter.
“By ratifying the MOUs, the City made discretionary choices in the exercise of its salary-setting and budget-making authority,” the jurist wrote. “By deciding whether the furlough program violates the terms of those MOUs, the arbitrator would not be exercising any such discretionary authority. Rather, the arbitrator’s role would be limited to interpreting the MOUs for the purpose of determining whether the furlough program violates the terms of those MOUs.”
The city, she went on to say, failed to identify any charter provision that prohibits arbitration under the circumstances.
Agreed to Furloughs
Corrigan, writing for the dissenters, agreed that the charter allowed the city to agree to arbitration of emergency furloughs. But the majority, she argued, was wrong to conclude that the city had done so.
“To the contrary, [the city and the union] agreed that the City would retain the authority to relieve employees from duty due to lack of funds, with arbitration limited to the practical consequences of that decision,” Corrigan wrote. “Only a specific contract provision could restrict the City’s exercise of its prerogative. There is no such provision. Therefore, the decision to impose furloughs was a reserved management right, beyond the scope of arbitration.”
Deputy City Attorneys Janis Levart Barquist and Jennifer Maria Handzlik argued for the city in the Supreme Court, while Gregg McLean Adam of San Francisco’s Carroll, Burdick & McDonough argued for the union.
The case is City of Los Angeles v. Superior Court (Engineers & Architects Association), 13 S.O.S. 3123.
Copyright 2013, Metropolitan News Company