All About Side-letters

Palomar Community College District (2011) PERB Decision No. 2213-E
(Issued on 10/27/11)

What is a side-letter and when does it expire? Those were the key issues in this case involving an alleged unilateral change. Basically, the employer issued a letter of reprimand based on a 2005 side-letter, which did not contain an expiration clause. The
parties subsequently reached agreement on a MOU in 2006. That MOU, however, did not contain a zipper clause or any other provision addressing the existence of the 2005 side-letter. So did the 2005 side-letter expire upon agreement of the 2006 MOU? In other words, did the 2006 MOU automatically supersede existing side-letters, including the 2005 side-letter?

In reaching its decision the Board discussed two prior cases: Lodi Unfied School District (200 1) PERB Decision No. 1452 (Lodi) and City of Riverside (2009) PERB Decision No. 2027-M (Riverside). The Board noted that in Lodi, the underlying ALJ’s proposed decision contained the statement that:

A side letter is an agreement of the parties that occurs during a CBA term. It usually modifies or interprets an existing CBA provision and remains in effect until that particular CBA term ends. When that CBA term expires, the side letter expires unless, by its own terms, it continues.

However, the Board noted that a related portion of the ALJ’s proposed decision was not adopted, and in light of that, the Board held that, “we do not find the ALJ’s statement regarding the duration of side letters to be dispositive in this case.”

Next, the Board noted that in Riverside, the MOU contained a
provision stating:

This Memorandum of Understanding will supercede all Side Letters. Both parties recognize that this excludes grievance resolutions documents.

Based on this provision, the Board interpreted Riverside to hold that absent a provision in an MOU or an agreement between the parties, the side-letter did not automatically expire upon the ratification of a subsequently negotiated MOU. Harmonizing these two cases, the Board issued the following guidance on side-letters:

[W]e find a side letter is an agreement between an employer and union that typically: (1) modifies, clarifies or interprets an existing provision in an MOU; or (2) addresses issues of interest to the parties that are not otherwise covered by the MOU. At its most basic, a side letter is a contract between the parties. As such, the duration of such an agreement is dictated by the provisions of the side letter itself (either express or implied) or by the subsequent conduct of the parties. (See Riverside,) Consequently, absent a provision in an MOU, an agreement between the parties or other evidence demonstrating the parties intended it to expire, a side letter does not automatically expire upon the ratification of a subsequently negotiated MOU.

Comments:

The holding in this case may seem obvious to many practitioners. However, it’s nice to
have a decision that succinctly sets forth this rule.