Negotiating Changes To Employee/Employer Share Of Pensions

City of Pinole (2012) PERB Decision No. 2288-M (Issued on 10/15/12)

This case involves one of the hottest issues in public sector collective bargaining: employers trying to get employees to pay more towards their pensions. Here, the city was part of the CalPERS system. Under the city’s pension plan applicable to firefighters, the employee share is 9% while the employer must cover the rest of the cost, which was about 21%. Under the prior memorandum of understanding (MOU), the city paid the full employee’s share (9%) while the employees paid part (~4%) of the employer’s share.

During negotiations, the city proposed that the firefighters begin paying their full 9% employee share. There was no proposal to change the 4% employer’s share being paid by employees. The parties reached impasse and the city imposed its last, best, final offer (LBFO) which included requiring employees to begin paying the 9% employee share. At the same time, employees would continue paying about 4% of the employer’s share.

The union filed an unfair practice charge alleging that the city unlawfully forced employees to pay a total of 13% towards their pensions when the pension plan only required employees to pay 9%. According to the union, the imposition of the LBFO constituted a waiver of statutory rights that cannot be imposed upon impasse.

The Board agent dismissed this portion of the charge. The Board, however, reversed. The Board held that:

“Assuming, as we must, that the facts alleged in the charge are true, and after examining the pension statutes, we conclude that [the union] has articulated a viable legal theory that would support its claim that employees cannot be forced to pay more than 9 percent of their salary as pension contributions.”

The Board emphasized that at this stage of the proceedings it was not rendering an interpretation of the relevant statutory sections of the Government Code. Instead, the Board said that it was the burden of the parties to “fully make their case with evidence of legislative history, practices throughout the state and other means to support their respective positions concerning the ultimate issue in this case whether the pension statutes prohibit the employer from unilaterally imposing a proposal that causes employees to pay more than 9 percent of their salary in total pension contributions.”

Comments:

This is going to be an interesting case. Earlier this year PERB issued another case which touched on the issue of negotiating pension changes. (See City of Glendale (2012) PERB Dec. No. 2251-M.) (See my blog post on Glendale here.) Glendale involved an attempt by the employer to require employees to begin paying part of the employer’s share of pension costs. There, both parties assumed that the employer’s proposal was a permissive subject of bargaining. It is well-settled that a party cannot insist to impasse on a permissive subject of bargaining.
This situation is different. Here, the city was not proposing to make employees pay a portion of the employer’s share. That was already happening. The city just wanted to make the employees pay their own share of the pension costs. That is a mandatory subject of bargaining, in my opinion. However, once employees begin paying their own share, can the employer force employees to continue paying a portion of the employer’s share? Certainly the employees can voluntarily agree to that. However, there are differences of opinion—as demonstrated by this decision—on whether employees can be forced to pay a portion of the employer’s share when they are already paying the full employee’s share. It will be interesting to see how this case ends up.