|Statutory and Practical Considerations Related to Retroactivity For New Contracts|
STATUTORY AND PRACTICAL CONSIDERATIONS - RELATED TO RETROACTIVITY FOR NEW CONTRACTS
By: Max Rieker
Of the hundreds of collective bargaining agreements that the OPBA negotiates and administers, nearly all of them are governed by the Ohio Collective Bargaining Act. When these labor contracts are periodically negotiated, nearly all of our contracts are also subject to the statutory “conciliator” (i.e., binding arbitration) process contained in the Act. There are a small minority of OPBA bargaining units that are “strike units” because they do not fall within the specifications for conciliation set forth in R.C. 4117.14(D)(1), which lists the groups which are subject to conciliation. However, the vast majority of OPBA units have the ability to have the terms of their contract ultimately determined by a conciliator.
FACTFINDING AND CONCILIATION STATISTICS
To give a flavor of how unique this conciliation process is, I draw your attention to the State Employment Relations Board’s 2015 and 2016 Annual Reports. According to SERB, there are 3,343 current public sector labor contracts in Ohio covering over 300,000 workers. In 2016, only 84 bargaining units went to factfinding. This represents 2.5% of the public sector bargaining units in the state. Half of those were police units. The rest were teachers, firefighters, service workers, prison guards, state employees, clerical employees, etc. combined.
Of the 3,343 total bargaining units, there is a shockingly low number of conciliations. There were a total of 52 conciliators appointed in 2014; 56 appointed in 2015; and only 35 in 2016. Again, the majority of each of those are in law enforcement bargaining units. As you can plainly see, the OPBA is at the forefront of contract arbitration in Ohio.
CONSIDERATIONS DURING BARGAINING
In every contract negotiation season, the OPBA’s attorneys find ourselves explaining how retroactive pay works in relation to the Collective Bargaining Act framework and the conciliation process. If a new (successor) contract is not reached prior to the expiration of the prior (incumbent) contract, then the idea of whether or not pay raises will be retroactive is often at issue.
The legislature placed a provision in the Act which rather frustrates what one would logically consider the normal course of a negotiation. Specifically, R.C. 4117.14 (G)(11) states,
“Increases in rates of compensation and other matters with cost implications awarded by the conciliator may be effective only at the start of the fiscal year next commencing after the date of the final offer settlement award; provided that if a new fiscal year has commenced since the issuance of the board order to submit to a final offer settlement procedure, the awarded increases may be retroactive to the commencement of the new fiscal year. The parties may, at any time, amend or modify a conciliator’s award or order by mutual agreement.”
So what on earth does this mean? In practical terms and based on SERB’s interpretation of the statute, it means that a conciliator cannot order pay raises or make changes to items related to money in the year in which he or she is appointed.
STRATEGIES FOR DEALING WITH THIS ISSUE
This is why the union sometimes seeks to: (1) pressure an employer into waiving R.C. 4117.14 (G)(11) in writing, as the parties are permitted to do; (2) rush through a factfinding hearing in November or December of a given year so that SERB could appoint the conciliator on or before December 31 of that year; or (3) tailor their conciliation position in order to effectively do an end-around the statute. Each of these three concepts will be taken in turn.
First, public employers are often not in a position to bargain prior to the end of a year. Perhaps a general election has swept incumbents out of office and the new office holders, who would actually have authority to bargain, would not be sworn in until the following January. As a practical matter, sometimes it is in both parties’ best interest to hold off until a change in administration. Or, sometimes financial conditions for the following year are uncertain and time is needed for both parties to correctly assess a general fund’s position. In these and other logical circumstances, the parties may opt to voluntarily waive the code section which would purportedly block retroactive pay being awarded by a conciliator.
Second, there are circumstances where a party (i.e., a public employer) is being unreasonable. The employer refuses to sign a “(G)(11) waiver” and the parties are forced to artificially jam through a factfinding hearing at the end of the year. Sometimes the union knows, even before a factfinding hearing begins, that it will have to quickly engineer a membership vote to reject the factfinder’s report just so a conciliator appointment prior to the end of the year is guaranteed.
Finally, and most importantly, many union side attorneys find that there is too much worry and emphasis on whether or not the conciliator is statutorily prohibited from ordering retroactive pay in a given year. The reason for this is because if a conciliator is motivated to agree with the union’s overall position on compensation, he has a way to make the union’s membership whole and place that unit in nearly the exact same financial place that it was if he were able to award retroactive pay increases. For instance, a factfinder recommends a 3% pay increase for 2017, a 3% pay increase for 2018, and a 3% pay increase for 2019. The conciliator is not appointed until April of 2017. On paper, it appears that the 2017 wage increase is lost. However, a knowledgeable and experienced union attorney can craft a proposal and a corresponding argument to the conciliator that permits the equivalent of the 3% for 2017 to be awarded on January 1 of 2018. This could be done as a lump sum dollar amount which could be rolled into base wage as a “pay equity adjustment” or some other corresponding increase that leaves the union membership in effectively the same position.
None of these three bargaining and practical strategies is necessarily wrong, or necessarily preferred for that matter. Rather, each negotiation is it’s own animal and must be treated as such based on the facts at hand and the conditions known to the parties. It is only through many years of practical experience as a negotiating team member or as the attorney who leads that negotiating team that one knows how to properly address this issue for a given contract.
 Revised Code Chapter 4117.
 Many states do not refer to the ultimate decider of a contract as a “conciliator,” but rather, call that person what he or she actually is – the “arbitrator” of the contract.