New England Biz Law Update
By Christina Pazzanese and Thomas E. Egan
The parties to a municipal collective bargaining agreement could not include an “evergreen” clause purporting to continue the terms of the CBA during the period of negotiations for a successor agreement, the Massachusetts Supreme Judicial Court has ruled in a split decision.
One of the parties, the Boston Housing Authority, argued that the CBA expired under G.L.c. 150E, §7(a), despite the presence of the evergreen clause.
A majority of the SJC agreed.
“The purported policy benefits of an evergreen clause cannot trump the intent of the Legislature, as unambiguously expressed in [G.L.c. 150E,] §7(a), to limit the term of a CBA to no more than three years,” Justice Francis X. Spina wrote for the majority.
“To the extent that the Commonwealth Employment Relations Board (former Labor Relations Commission) has determined that an evergreen clause may extend the term of a CBA beyond three years, that determination is inconsistent with §7(a) and, therefore, not controlling,” Spina added.
In a dissent joined by Justice Roderick L. Ireland, Justice Margot G. Botsford accused the majority of turning its back on a reasonable interpretation that the Employment Relations Board has followed for decades, finding consistency between an evergreen clause and the provisions of §7(a).
“[P]ublic sector employers and unions, including the parties to the present case, have long relied on that interpretation,” Botsford said. “The court also, in my view, ignores ‘the unique nature of the employer-employee relationship in the public sector,’ … and the special public policy considerations that animate it.”
The 30-page decision is Boston Housing Authority v. National Conference of Firemen and Oilers, Local 3.
Additional labor unrest
Labor and employment lawyers say the decision abruptly ends what has been a long-standing and accepted practice in Massachusetts during contract talks between unions and public employers.
Ira Sills of Segal Roitman in Boston represented the defendant union in the case. He called the decision “radical” in that it overturns a basic principle of labor law and upends what was a “highly stabilizing force” for both sides in collective bargaining at the local and state level.
“Everyone took it as the law because it was uncontroversial and because it tracked the federal model,” Sills said.
Greenberg Traurig attorney Terence P. McCourt, co-chairman of the Boston Bar Association’s Labor and Employment Law Section, said the ruling was a surprise. Lawyers have used evergreen clauses for more than three decades in the public sector with the backing of the Employment Relations Board, he said.
“It’s a dramatic change to the landscape,” McCourt said.
With negotiations between municipalities and unions often taking years to complete, the clause has been a useful tool to maintain the status quo while both sides hammer out a new collective bargaining agreement.
“I think what will happen now is that the parties will have to enter into an interim agreement between contracts,” McCourt said, noting that will add another step to the negotiation process at what is often the most contentious time.
“It could have the effect of creating additional labor unrest,” he said.
Boston attorney John M. Becker of Sandulli Grace said the decision is unfortunate because it creates new uncertainty and “changes the playing field for both sides.”
The evergreen clause “was good for labor peace and labor peace is good for everybody,” said Becker, who filed an amicus brief in the case. Becker’s firm represents a number of large public unions including the Boston Police Patrolmen’s Association and the Massachusetts Teachers Association.
But Kay H. Hodge of Stoneman, Chandler & Miller in Boston, who represented the plaintiff, said any “sky is falling” talk is “somewhat overblown.”
“The only reason it became an issue in this case is because the parties tried to reach an agreement for two years” over the employment of “obsolete employees,” but were at a stalemate, she said. Under significant budget pressures, the BHA could not afford to continue paying the workers, but could not fire them either because of the old contract’s minimum manning requirements.
As a public policy matter, Hodge said she believes the law specifically defines the three-year term in order to ward off the potential for never-ending contracts that rarely get re-opened or scrutinized.
“I think it’s good for the public because it avoids long-term obligations and doesn’t allow one administration to bind successive administrations,” she said.
Becker said his firm has received many calls from union clients asking what it all means and where they go from here, which his firm is in the process of evaluating.
“There are a lot of unions out there that have expired contracts, and all are vulnerable to whatever the implications of this decision are,” Becker said, adding that unions operating under an evergreen clause will be subject to the ruling once that document expires.
Becker said though it is still unclear how things will play out, the easiest fix would be to add language to Chapter 150E, §7(a), permitting such clauses. A more immediate strategy for lawyers may be to draft a bare-bones one-year contract with almost no provisions, similar to an interim agreement that serves as a stop-gap measure until a formal CBA is worked out, he said.
Firemen fired
The agreement at issue in the case was between the BHA and a union (Local 3) representing firemen and stationary engineers responsible for maintaining high-pressure heating systems at BHA properties. As the systems were phased out, the number of firemen employed by the BHA declined commensurately, and their primary duties were to observe and report on the condition of the newer heating systems, rather than to operate or maintain them.
The most recent CBA between the union and the BHA included an evergreen clause, which stated that during any period of negotiations between the parties, the terms of the prior agreement would remain in full force and effect until a new agreement was signed.
In May 2003, the parties executed a memorandum of agreement (MOA), which carried forward many of the provisions of the CBA and added “Attachment A” — a provision that required the BHA to maintain “a staffing level of sixteen positions … for the term of the present collective bargaining agreement (April 1, 2001-March 31, 2004).”
With negotiations over a new agreement ongoing, the BHA, anticipating a budget deficit, laid off all 16 firemen on April 30, 2006. The union sought relief by means of arbitration.
The arbitrator found that although the fixed term of the MOA was from April 1, 2001, to March 31, 2004, the contract was to “remain in full force and effect” during “any period of negotiations” for a new agreement, and that long after March 31, 2004, the BHA continued to act as if the MOA were in force.
Concluding that the BHA violated the terms of the MOA when it laid off the firemen, the arbitrator ordered them reinstated.
A Superior Court judge eventually confirmed the arbitration award.
Clear statutory authority
The majority recognized that an evergreen clause is designed to maintain the status quo in labor relations and provide for a continuing code of conduct while parties negotiate a new bargaining agreement.
“However, the effect of an evergreen clause is to preserve and maintain all of the provisions of a CBA, thereby extending its duration beyond three years, which is prohibited by G.L.c. 150E, §7(a),” Spina said.
“In light of our conclusion that the evergreen clause was invalid because it violated the clear mandate of G.L.c. 150E, §7(a), the provisions of the parties’ bargaining agreement did not remain in full force and effect until such time as a new agreement was signed,” Spina wrote.
“It follows that the grievance and arbitration provision lapsed when the MOA expired,” he said. “The arbitrator, therefore, exceeded his authority in ordering the BHA to reinstate the firemen because he had no jurisdiction to arbitrate Local 3’s grievance in the first instance.”
