SJC’s Boston Housing Authority Decision Invalidates Contractual “Evergreen Clauses”

The Massachusetts Supreme Judicial Court today issued a significant decision impacting public sector collective bargaining in Massachusetts.  The court struck down the validity of contract extension provisions that appear in most of our clients’ collective bargaining agreements.  These provisions are called “evergreen clauses.”  In Boston Housing Authority v. Nat’l Conf. of Firemen and Oilers, Local 3, SJC-10569 (Oct. 22, 2010) (slip opinion), the Court held that these mutually bargained-for clauses, requiring contract provisions to remain in force until the parties reach agreement on a new contract, violate Massachusetts General Laws c. 150E § 7(a), which states “[a]ny collective bargaining agreement reached between the employer and the exclusive representative shall not exceed a term of three years.”  M.G.L. c. 150E § 7(a) (West, 2010).  Because evergreen clauses effectively extend the terms of a contract beyond the three-year limit set out by the Legislature, this legislative mandate trumps the parties’ agreements.

This decision is a significant change in the law governing public sector unions.  For thirty years, evergreen clauses have been approved by the Division of Labor Relations despite the language of section 7(a) of G.L. c. 150E.  By invalidating them today, the SJC has handed public sector labor unions a major challenge and have altered the playing field.

There is no question that today’s SJC decision makes it harder for public sector unions to represent their members in collective bargaining.  However, the decision will also cause consternation in the employer community, as everyone works to determine its exact contours.  While the SJC struck down evergreen clauses, it also noted that the clauses are firmly in the public’s interest, not just the interest of unions.  “We recognize 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.”  The court further noted that evergreen clauses “foster labor peace.”  Thus, the elimination of the availability of evergreen clauses upends BOTH sides of the labor relations table.

Due to the significant departure from established precedent presented by this case, we will take the time necessary to digest its full impact and devise strategies to deal with its implications.  For our police and fire clients, the binding arbitration provisions of the Joint Labor Management Committee statute potentially provide some safe harbor from the most draconian implications of the decision.  For now, we encourage all public sector unions to work together to find solutions to this problem. We will continue to update you on developments and reflections on how to minimize the negative impact of this decision.

6 thoughts on “SJC’s Boston Housing Authority Decision Invalidates Contractual “Evergreen Clauses””

  1. Can this be taken further? It is clear to me that the dissenting opinion has more legal standing than the decision. Section 9 is of great importance. As is the fact that Local 3 gave notice to negotiate a successor agreement prior to the expiration of the MOA.

  2. Thanks for the comment George. If by “taken further,” you mean “legislative fix,” than yes, the labor community fully intends to argue to the legislature the need to “fix” this holding via legislation.

    There are no further legal “appeals” to be pursued. The SJC is the highest court in the land when it comes to interpreting and applying Massachusetts law and the Massachusetts Constitution. An appeal to the US Supreme Court would be possible only in cases implicating federal law, or the United States Constitution. Since this case does not have federal implications, the SJC is the final authority on the issue.

  3. Several points:
    Could the language of the DLR 7(a) be interpreted as being an “initial” or “maximum” for a CBA to be negotiated between the parties, meaning SHALL NOT EXCEED is just the beginning to end date and an evergreen clause just allows the CBA to continue until a successor CBA?(for instance the intent of the DLR language is parties will not SIGN an agreement for over 3 years, not that it is not VALID after 3 years)
    Also, does not a CBA provision that provides a greater benefit trump other applicable state laws (ie..111f injury leave benefits)?
    And is this issue as simple as just adding to the DLR language “unless the parties have a negotiated evergreen in their CBA?” Thanks Bryan

  4. Richie:

    While your interpretations of Chapter 150E are certainly plausible, that’s not what the SJC said. Unless and until the law can be changed, contracts can’t exceed three years. For statutes listed in Chapter 150E, Section 7 (d), such as Chapter 41, Sec. 111F (police/fire injured on duty leave), what’s in a collective bargaining agreement supersedes the statute. If the agreement expires, the practice remains in effect.

    We at Sandulli Grace are working with our clients, in conjunction with other union lawyers and their clients, on legislation to correct what we believe to be an ill-considered decision by the SJC.

    This reminds me of a meeting many years ago between the union lawyers and Judge Kass, then at the Appeals Court. We, the union lawyers, were complaining about how the Appeals Court, at the time, was issuing decisions that seemed not to comprehend the field of labor law. Judge Kass told a story of how, when he first came on the bench, he was writing up a decision in a trusts and estates case, an area where he had never practiced. The proposed decision circulated through all of the Appeals Court judges. The comment from Judge Dreben, whose practice had been in the area of trusts and estates, was to the effect of, “Excellently researched and well thought out opinion. The only problem is: it’s wrong.”

    Alan Shapiro

  5. I work at the Cambridge Health Alliance Public Safety Dept, Teamsters Local 122 and we are currently without a contract. Our dept is staffed by approximately 45 officers covering 2 of 3 hospitals that are part of the Alliance. The 3rd hospital is staffed by a private security company, our dept director and asst. director are also employed by this private company. We have filed for arbitration on several issues recently and today our union was notified by the Alliance that they will not go to arbitration due to the fact we are not under contract. Could the Alliance decide to not bargain with the union, let us go from employment and bring in the private security co. to staff what the union staffs now? I understand fire and police unions are working the State House to pass Legistation to fix this but in the meantime can management due what they please?

    1. Jim:

      Refusing to arbitrate and replacing the workforce are two different things entirely. In short, when a contract expires and, after expiration, an employer violation triggers a union grievance – this is about the only time an employer can refuse to arbitrate. But even under this scenario an employer could be compelled to arbitrate if the breach involved rights that had accrued prior to expiration. A seniority issue could be an example of this situation.

      In order to replace its present workforce with outside contracted employees, the employer would need to have made that part of its bargaining agenda, bargained the issue and all others to impasse, go through all the dispute resolution procedures required under state law (mediation, fact-finding, etc.), and only then could it implement its last best offer. And even then, if you are a public employee, other legalities, such as the “Pacheco Law,” could still get in their way.

      So don’t get too frustrated, keep fighting!

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