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.