Mandatory, Permissive, And McClatchy Proposals

Los Angeles Unified School District (2013) PERB Decision No. 2326-E (Issued on 9/20/13)

It’s taken me a while to find time to write about this case which was issued back in September. It’s definitely worth reading. In fact, I would suggest that this case is a must read. Be warned, it’s long and dense. But it really gives a great summary of many fundamental labor law concepts and provides a taste of how this Board views collective bargaining.

Abbreviated Facts

During bargaining the school district made a proposal that would give it the discretion to reduce the hours worked in a day and the total hours worked in a the year for individual employees. The union had agreed to the proposal in the past but didn’t want to agree to it again. During bargaining the union told the district it didn’t want to negotiate over the proposal and warned the district that insisting to impasse on the proposal would be an unfair practice. The district held firm to its position and maintained the proposal to impasse.

Board Decision

The ALJ ruled that the district did not commit an unfair practice by insisting to impasse on a proposal by which it sought to retain unfettered discretion over a mandatory subject of bargaining. The Board agreed on that point. However, the Board held that although the district could insist to impasse on the proposal, it could not implement the proposal at impasse.

The Board based its ruling on the NLRB decision in McClatchy Newspaper (1996) 321 NLRB 1386. In McClatchy, the NLRB held that certain proposals are so inherently destructive of the collective bargaining process that the employer is not privileged to implement them upon impasse. These types of proposals—I’m call them McClatchy proposals—are neither permissive nor mandatory in the traditional sense. They are not permissive because they involve a mandatory subject of bargaining and the employer can rightfully insist to impasse on them. However, they are not mandatory in the traditional sense because the employer cannot implement upon impasse. After a long analysis of the McClatchy case and its progeny, the Board summarized its holding as follows:

In sum, under the McClatchy line of cases, there is a narrow, and well-defined, exception to the post-impasse implementation rule. The exception applies where implementation of a particular proposal would be inherently destructive of the principles of collective bargaining.

The post-McClatchy decisions demonstrate a number of points. First, the McClatchy exception is a well-established doctrine that has been applied and affirmed over time. Second, the McClatchy exception has been applied outside the context of merit pay proposals. Last, the common denominator amongst the proposals that have been found subject to the McClatchy post-impasse implementation exception is that they attempt to give the employer unconstrained authority to make unlimited and recurring decisions regarding mandatory subjects of bargaining, which is precisely the problem with the District’s proposal in the instant case.

The Board went on the emphasize that:

Nothing in our decision precludes an employer from attempting to negotiate to agreement on retaining discretion over wage increases. And, absent success in achieving such agreement, nothing in our decision precludes an employer from making merit wage determinations if definable objective procedures and criteria have been negotiated to agreement or to impasse.

Comments:

The district has appealed this decision to the court of appeal, so it’s not final yet.
Is this a shocking decision? Not really. The McClatchy doctrine has been around for a long time. While some non-precedential PERB decisions have referenced McClatchy in the past, it has never been explicitly adopted in a precedential Board decision. Now it has.
To some extent, even I—as an unabashed management advocate—have to admit that there has to be some limitation on these types of proposals. For example, suppose I make a proposal to the union that on January 1^st of every year, the employer can set each employee’s salary at whatever level the employer deems appropriate. Obviously, such a proposal would essentially eviscerate collective bargaining over wages. So that’s where McClatchy comes into play.
The key impact of this case is not the holding itself, but how it will be applied by PERB. Under McClatchy, proposals that give the employer “unfettered discretion” cannot be implemented. But proposals with objective procedures and criteria can be implemented. But the line between these two concepts is not always clear. So using my example above, suppose I make a proposal that on January 1^st of every year, the employer can increase or decrease each employee’s salary by 5% depending on the employee’s performance review? Is that objective enough? Or is that still too much discretion? That’s going to be the issue going forward.
Interestingly, the Board held that this decision will be applied prospectively only. The decision states that, “Prospective application under the unique facts and procedural posture of this case ensures no undue prejudice to the parties from lack of notice of the Board’s reasoning.”