Bargaining Changes in Health Insurance Contributions.

Ever since Governor Romney proposed legislation in 2003 setting municipal employers’ health insurance premium contributions at 75% and employee contributions at 25%, cities and towns have been attempting to bargain for the reduction to 75% of any higher employer contributions. While the reduction of employer contributions is generally undesirable, the employer’s anxiety about the cost of insurance can be turned to the employees’ advantage. Employers have been induced to pay substantially more in wage increases than they have gained in premium contribution reductions. This strategy is available to unions only when employers propose a reduction in their health insurance contributions; the union cannot expect such exceptional wage increase unless the employer first seeks a reduction of health insurance contributions.

Some recent contract settlements negotiated by this office demonstrate the possibilities. In the case of the Essex Police (MassCOP Local 270) Attorney Ken Grace negotiated a 6.5% wage premium to offset a proposed reduction of the employer’s health insurance contribution from 90% to 75%. The parties assumed that their general wage increases would have been 3%, 3%, and 3% without the change in insurance contributions. In that case the contract wage increases and the insurance reductions were as follows:

General Wage Increase Town’s Insurance %
July 1, 2004 3.0% 90%
July 1, 2005 9.5% 75%
July 1, 2006 3.0% 75%

Assuming that an employee has an HMO family plan costing a typical $12,000 per year, the 15% increase in employee contributions costs 15% x $12,000 = $1,800 per year. However, the 6.5% wage increase on a typical police salary of $50,000 per year generates 6.5% x $50,000 = $3,250 per year. Not only does this wage increase far supersede the increased employee cost of the insurance contribution increase, but unlike insurance contributions, it increases the overtime rate and it increases the employee’s pension benefit. For employees on the individual insurance plan, the gain would be even greater.

One concern about agreeing to any reduction in the employer contribution in health insurance is that any compensation for the change will be swallowed up by the substantial annual increases in the premium. Assuming that premium rates will increase at an average of 10% per year, the additional cost arising from the change in rates from 90% to 75% will not overtake the $3,250 wage premium for seven years. That is, the $1,800 increased at 10% per year will not rise over $3,250 until the seventh year. During the first six years following the change, the employee is getting far ahead of the game. By the time the seventh year comes around, there may be some entirely new approaches to health care.

Another approach to bargaining a reduction in the employer’s contribution to health insurance has been to make the reduction gradual, but again with substantial wage premiums. Attorney Amy Davidson of this office bargained the following package for the Dedham Firefighters (Local 1735, I.A.F.F.):

General Wage Increase Town Insurance %
July 1, 2004 2.0% 90%
July 1, 2005 6.92% 87%
July 1, 2006 3.0% 84%
July 1, 2007 4.0% 80%

Here the union obtained a 3.92% premium in 2005 and an additional 1% in 2007 (assuming a 3% increase would have been appropriate with no change in insurance) in exchange for the gradual reduction of the town’s insurance contribution from 90% to 80%. At the end of the contract the 10% increase in employee insurance contributions will cost about $1,200 per year while the compounded 4.96% wage increase generates $2,480 per year.

One final reason to consider this approach to bargaining is that some recent interest arbitration cases from the Joint Labor Management Committee have ordered the reduction of employer contributions. Rather than letting an arbitrator determine what compensation, if any, is appropriate as a trade for such a reduction, it may be desirable to bargain the appropriate trade.

Joseph G. Sandulli

Judges agree with Sandulli Grace, PC and BPPA, that state agency may order hours of work requested by public safety unions

In a decision released October 6, 2006 in the case of Local 2071, International Association of Firefighters v. Town of Bellingham, No. 05-P-516, the Appeals Court rejected a public employer’s challenge to an arbitration award that ordered to provide firefighters with 24-hour shifts. This case involved an award by the Joint Labor Management Committee, a state agency that provides for binding arbitration of public safety collective bargaining after talks reach an impasse. The local sought 24-hour shifts, which is the customary schedule in the firefighting industry, much as “4 & 2” (four days on-duty followed by two days off-duty) is the customary schedule in the municipal police industry.

The Town opposed the schedule, claiming without support that the schedule infringed on its managerial prerogative and will lead to diminished quality of fire protective services. Despite the Town’s objections, the arbitration panel awarded the 24-hour shifts to the union, noting the prevalence of such schedules across the country and the lack of any credible proof that they lead to fatigue.

The Town appealed all the way, so far, to the Appeals Court. The Court found that hours of work are a mandatory subject of bargaining, that hours of work are not excluded from the subjects of the JLMC’s binding arbitration, and that the Town failed to show that the 24-hour shifts in any way impinged upon public safety priorities. When a public employer claims that an otherwise mandatory subject of bargaining, such as hours or wages, infringes on its policymaking functions, it must provide persuasive proof that its ability to render public safety services is imperiled. In other words, the Court affirmed that an employer seeking to escape its bargaining obligations must do more than simply wave around the phrases “managerial rights” or “public policy” as if they were a magic wand.

The Boston Police Patrolmen’s Association filed a friend-of-the-court brief in the matter. The brief was authored by its labor/employment firm, Sandulli Grace, PC.

State Rules Boston Police Department Unlawfully Underpaid Police Officers For Overtime

Overtime Caused by Understaffing Likely to Lead To Substantial Sum

The Massachusetts Labor Relations Commission (LRC) has ordered the City of Boston to pay additional wages to potentially hundreds of police officers based on the City’s unlawful failure to bargain with the Boston Police Patrolmen’s Association (BPPA).

In 2001, more than 800 Boston patrol officers, with the aid of Sandulli Grace, PC, sued the City based on the City’s unlawful refusal to calculate overtime as required by the Fair Labor Standards Act (FLSA). That case resulted in a 2004 judgment from a federal judge that the City had willfully violated the FLSA, followed by an award of almost $700,000 to the officers, in addition to attorneys fees and costs.

In July 2002, the City tried to reduce overtime payments to officers by implementing a partial exemption to the FLSA’s overtime provisions that allows a municipality to spread overtime accrual over a period of up to 28 days (the law requires a 7-day overtime period for all other situations). When the City refused to bargain with the BPPA as required by law, the BPPA (assisted by Sandulli Grace) filed an unfair labor practice charge with the LRC. This Summer, the LRC issued its decision in the case, finding that the City violated state law by not bargaining with the BPPA, and ordered the City to make all patrol officers whole for its unlawful actions.

“It’s unfortunate that the City’s failure to properly staff the department has created a situation where officers are required to work overtime. To add insult to injury, however, the City unlawfully tried to underpay officers for the very hours it was forcing them to work. We’re happy that the LRC has reaffirmed the BPPA’s right to bargain before the City cuts the wages of Boston Police Officers,” said BPPA President Thomas Nee.

The LRC rejected the City’s claim that it could not follow the FLSA and also meet its duty to bargain with the BPPA. Because this issue dramatically affects overtime earnings, the LRC further agreed with the BPPA that the City could not change such an important or mandatory subject without first bargaining.

To remedy the illegal reduction in overtime earnings, the LRC ordered the City to pay all officers the difference between the FLSA overtime they were paid using a 28-day pay period from July 2002 onward and the overtime they should have been paid using the seven-day pay period previously in effect. While the BPPA has not yet calculated damages, they may be substantial.

“The City actually defended this case by claiming that it couldn’t meet its state law obligation to bargain with the BPPA and also follow federal law. That’s like saying that you can’t walk and chew gum at the same time. We’re relieved that the LRC rejected this preposterous argument,” said Bryan Decker, a partner of Sandulli Grace which is counsel to the BPPA.

The City has appealed the Union’s victory, which remains pending at the trial court level.

State High Court to Decide If Cities and Towns Must Pay Interest When They Wrongfully Deny Section 111F benefits.

The Supreme Judicial Court has agreed to review a victory for public safety officers injured in the line of duty. Earlier this year, the state Appeals Court ruled that a public employer must pay pre- and post-judgment interest if a state court overturns the municipality’s refusal to pay injured-on-duty benefits to a police officer or firefighter. The case is Todino vs. Town of Wellfleet 05-P-613 (April 19, 2006).
A public safety officer may go to court to challenge a municipality’s decision to deny §111F benefits. IOD benefits are commonly known as §111F benefits in reference to General Laws Chapter 41, §111F. Under the Appeals Court decision, a municipality is on the hook for prejudgment and postjudgement interest if a court finds that the denial of 111F benefits is determined was wrong.
In the Todino case, a special police officer was removed from §111F and fired in December 1998. In November 2002, a court found that these actions were unlawful and entered a judgment entitling her to reinstatement and retroactive §111F benefits. The Town of Wellfleet appealed this decision – and lost in March 2005. Wellfleet finally paid the officer for lost wages ($172,000) in April 2005 without interest.
The officer then sought interest payments on the above payout. Her prejudgment interest – based on the time between the initial denial of benefits and the date of the trial court’s decision – totaled about $69,000. Meanwhile, postjudgment interest – based on the time between the trial court’s decision and the municipality’s actual payment of §111F benefits – reached nearly $61,000. Without the addition of pre-and post-judgment interest, the Court stated, “the ultimate payments to the employee would be incomplete as well as untimely and the over-all statutory scheme would be defeated.”
This decision, if upheld, presents a resounding victory for public safety officers injured in the line of duty. The possibility of interest payments should make a town think twice before denying §111F benefits. In addition, the threat of interest payments also should strengthen the bargaining power of the Union and the injured officer to resolve the case favorably short of litigation.
We can’t celebrate just yet. The SJC’s decision to review the case means that the decision could be reversed or affirmed. The case is expected to be argued in November with a decision to issue like to issue sometime in 2007.
A word of caution: the applicability of this decision to §111F arbitration cases is not automatic. Persons wrongfully denied IOD benefits may be able to seek relief from an arbitrator, instead of a judge. Many collective bargaining agreements permit §111F claims to be raised in the grievance/arbitration process. (Even if a CBA contains no express provision on IOD or §111F, unions still could challenge a denial of benefits by citing other provisions, including wages, paychecks, sick leave, etc.) Arbitration generally is less costly and time-consuming.
However, interest is not a traditional remedy in arbitration cases. As such, an arbitrator may be reluctant to deviate from the norm and order interest in a §111F case. At the same time, some arbitrators interpret a CBA more generously than §111F. For interest, the statute does not require paid leave benefits to accrue while an officer on IOD. Many arbitrators, depending on contract language or past practice, order employers to pay these benefits.
If you feel you have been wrongfully denied §111F benefits, you should consult with your union counsel in advance about your options.

Sandulli Grace, PC Wins Reinstatement For Fall River Police Officer

For the second time in a decade, the law firm of Sandulli Grace, PC has secured the reinstatement of Fall River Police Officer terminated for substance abuse. More than a decade ago, the City unilaterally implemented a drug policy, including testing, and fired a police officer for alleged violation of it. With the help of Sandulli Grace, the Union fought the City’s action before the Labor Relations Commission and an independent arbitrator. Drug testing is a mandatory subject of bargaining. Moreover, in a unionized setting any termination, even where a drug test is involved, still must satisfy requirements of just cause, including due process and progressive discipline. The Union prevailed in both settings, securing reinstatement and back wages for the terminated officer.
As a result of these victories, the parties negotiatedcomprehensive drug testing language. The language provided a number of protections to officers suspected of drug use, including an internal appeals process, the use of a certified laboratory, and other mechanisms to challenge the result.
In 2005, the City terminated a (different) police officer foralleged substance abuse. In this case, the City suspected an officer had been abusing drugs and demanded to review his medical records. When his records revealed an allegedly incriminating test result, the City fired him. After hiring Sandulli Grace to fight on his behalf, the officer’s termination was reversed by an arbitrator.
In a decision issued Spring 2006, Arb. Robert J. Canavan found that the City could not circumvent the drug testing language by just plumbing an officer’s medical files. The City, therefore, failed to produce clear and convincing evidence that the officer abused drugs.The Arbitrator ordered the City to reinstate the officer and pay lost wages, including for missed details and overtime opportunities.

Court Clarifies Limit On Earnings Of Disability Retirees

On August 16, 2006, the Massachusetts Appeals Court issued a decision that makes it harder for public employees who had to retire because of a job-related disability to earn income during retirement. In essence, the Court decided that all monies listed on a W-2 form may be considered “income” for purposes of the earnings limitation placed on disability retirees from public employment.
Massachusetts law allows public employees who are disabled because of an on-the-job injury to retire with 72% of their pay at the time of injury or average from most recent 12 months (whichever amount is greater). The 72% amount is non-taxable. (Compare this amount with the 80% taxable benefit they public employees may received if they work until regular retirement age.) Massachusetts law also limits how much money disability retirees can earn from any other employer, whether in the public or private sector. Disability retirees may receive no more than $5,000 beyond the current salary of their position. Disability payments count toward this cap, too.

The question in Gorman vs. Contributory Retirement Appeal Board was how to calculate the income that counts toward the cap. Gorman, a disability retiree, had been working at a job that required him to incur certain job-related expenses. He did not file a submit receipts for expenses so as to receive a check from his employer for these claims. Instead, Gorman received, in addition to his earnings, payments for ‘nonreimbursed expenses’ in his paychecks. The employer included these payments in his W-2 Form. When Gorman did his taxes, he listed the W-2 amount, which included the reimbursements. Hethen properly claimed these job-related expenses as deductible, which reduced his adjusted gross income to reflect his actual earnings. Here’s why the method of reimbursement payments matters to Gorman’s case: the amount of income with the reimbursements was lower than the maximum set by statute; the amount with the reimbursements was over the limit.

The Appeals Court’s decision relied upon a memo by the Public Employee Retirement Administration Commission, which oversees all public employer retirement systems in the Commonwealth. The memo (called PERAC Memo #64/1998) said that income for purposes of the statutory earnings limit included: (1) earned income, which implied some labor, manufacturing or supervision; or (2) profits from the operation of a business, regardless of how the retiree categorizes such income for income tax or other purposes.

Gorman argued that the memo didn’t apply to him Because the reimbursements for his business expenses are not earnings from labor, manufacturing or supervisionand they also are not profits from operating a business. Still, the Appeals Court agreed with the Contributory Retirement Appeal Board it may count all monies listed on a W-2 form, no matter how Gorman categorized some of the money for income tax purposes.

NOTE: The Contributory Retirement Appeal Board did agree that, if Gorman had documentation that he had incurred expenses, provided receipts to the employer and received reimbursements, those payments would not be counted as income. The bottom line of Gorman v. CRAB is that disability retirees who incur work-related expenses should submit receipts to their employers and receive a separate reimbursement check that reflects actual expenses.

— John M. Becker

Attorney Davidson to speak at New England labor conference

Sandulli Grace partner Amy Laura Davidson will speak on the issue of Romance in the Workplace at the 8th Annual Summer Labor & Employment Conference sponsored by the New England Consortium of Labor Relations Agencies in Stratton, Vermont on July 13, 2006. Also speaking on the topic of Romance in the Workplace are Arbitrator Michael C. Ryan and New York attorney Richard K. Zuckerman. “Workplace romances raise complicated issues for employees and the unions that represent them,” said Davidson. “I’m looking forward to a lively and enlightening discussion at the conference.”

The annual conference draws together union and management officials and attorneys, and a variety of private and public neutrals from all the New England states and New York to listen to speakers discuss a wide variety of topics relating to labor-management relations. Attorney John Becker, who is of counsel to Sandulli Grace, spoke on a panel at last year’s New England Consortium conference on the topic of Arbitration and Public Policy.

State Permitted to Spy On Public Employees; Bargaining Rights About Surveillance

The Supreme Judicial Court has held that the government may, in certain
circumstances, spy on public employees, without telling them, even if
the surveillance includes employees dressing and undressing. In Nelson
v. Salem State College (Docket#: SJC-09519) (April 13, 2006), the
state’s highest court ruled that an administrative employee does not
have a reasonable expectation of privacy when she changed clothes after
hours in a remote area of an empty office and when she applied suntan
lotion to her upper chest and neck. The surveillance of the college and
its supervisors in this case did not violate the federal constitution or
state law.

In this case, Gail Nelson worked at a small business development center
of Salem State College in an office that shared space with two other
college programs. A total of nine (9) people worked in the office,
while upwards of 100 people visited for regular meetings. When office
supervisors suspected that former associates were entering the building
after hours without authorization, campus police approved the
installation of hidden cameras. The cameras operated 24 hours a day.

The Court ruled that Ms. Nelson did not have a reasonable expectation
privacy even when she engaged in private activities in areas remote and
not visible to visitors and when no one else was in the building. In
essence, the Court found that the plaintiff could have "no absolute
guarantee" that she was alone, pointing to such factors as:

  • The office was open to the public throughout the day
  • Visitors were not required to check in;
  • Employees and numerous volunteers could access the office with their own keys;
  • Furthermore, Many people, including nonemployees whom the plaintiff did not know, had access to the office.
  • There was no footage of plaintiff being recorded

The Court’s ruling was highly "fact-specific," which means that it might
rule in favor of an employee under a different set of facts. In other
words, surveillance equipment in a office space, where access is highly
restricted, might produce a different analysis.

Even though the actions may not violate Constitutional law, unions may
have the ability to protect the privacy and dignity of employees. In
the private sector, the National Labor Relations Board has ruled that
surveillance, like drug-testing and other work performance issues, is a
mandatory subject of bargaining. Hidden cameras are focused primarily
on the "working environment" that employees experience on a daily basis
and are used to expose misconduct or violations of the law by employees
or others. The Board also found that bargaining about this issue did
not effect any core managerial concerns of the employer. Therefore,
unions can demand to bargain about decisions on whether to use recording
devices (hidden or not) at all, and, if so, where to use them and for
what purpose. Because unions have the right to demand bargaining on
this issue, it necessarily follows that they are entitled to receive
information about the existence and location of any recording devices in
their workplace. (there are certain restrictions that employers
lawfully may impose on this information). National Steel Corp. v. NLRB,
324 F.3d 928, 930 (7th Cir. 2003).

For unions representing Massachusetts public employees, the issue may be
more complex. To our knowledge, the Massachusetts Labor Relations
Commission has addressed the lawfulness of hidden cameras only once,
involving Duxbury School Committee in 1999. (The Commission regularly
prohibits public employers from monitoring union-related activities,
such as meetings). In Duxbury, the school installed a camera on the
timeclock to see if custodians were falsifying timesheets. The
Commission ruled that this installation, which occurred without
notifying or bargaining with the Union, did not violate the law.
"Because the use of the surveillance was limited to recording the
custodians’ departure times and was in response to a specific concern
about the accuracy of the existing method of timekeeping, we find that
the School Committee’s use of video surveillance in this case was merely
a more efficient and dependable means of enforcing existing work rules
and did not affect an underlying term."

While this case could be read to permit unlimited surveillance of public
employees without the union’s knowledge or consent, we would advocate a
narrow reading. First, the Commission, which usually takes guidance
from federal labor law, did not appear to be aware of the federal line
of cases on this issue. (The Commission quoted from an outdated federal
case on a similar issue). Even if the Commission were to reject the federal line, the Duxbury case does not deal with general surveillance of employees not connected to a specific problem.


Cops Under Attack: Who Protects The Police?

On April 3, 2006, Sandulli Grace, P.C. and the Massachusetts Coalition of Police, AFL-CIO, presented their fourth educational seminar forpolice officers in Massachusetts. It was entitled, "Cops Under Attack: Who Protects The Police?" This seminar, which took place at the Sheraton Framingham Hotel, was attended by over 125 police officers from cities and towns all over the Commonwealth.

The seminar began with a presentation on the legal rights of police officers who are targeted in internal affairs investigations, including a panel discussion with Arbitrator Allan W. Drachman, the former Chairman of the Massachusetts Labor Relations Commission, and Attorney Kenneth H. Anderson of Finneran, Bryne & Drechsler, L.L.P., a Boston law firm that specializes in providing criminal defense to police officers. After the panel discussion, Sandulli Grace’s attorneys trained the seminar attendees on how to respond to a request for an investigatory interview which may or may not involve criminal allegations. With the assistance of the attorneys, the seminar attendees then planned for and participated in a mock investigatory interview, and the attorneys gave them feedback on the strengths and weaknesses of their performances. The seminar ended with a reception.

Our next educational seminar will be held in the spring of 2007. Like this year’s seminar, it will feature a hands-on approach to learning about your legal rights, which will prepare you to respond more effectively in all situations. Please plan on joining us.

Feel free to contact us with suggestions for topics.