Kitsap County, Decision 11610-A (PECB, 2013)
STATE OF WASHINGTON
BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION
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KITSAP COUNTY SHERIFF’S SUPPORT GUILD,
Complainant,
vs.
KITSAP COUNTY,
Respondent.
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CASE 25229-U-12-6460
DECISION 11610-A - PECB
DECISION OF COMMISSION
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Cline & Associates, by Christopher J. Casillas, Attorney at Law, for the union.
Russell D. Hauge, Prosecuting Attorney, by Jacquelyn M. Aufderheide, Chief Civil Deputy Prosecuting Attorney, for the employer.
On October 18, 2012, the Kitsap County Sheriff’s Support Guild (union) filed an unfair labor practice complaint alleging that Kitsap County (employer) committed multiple unfair labor practices. The Unfair Labor Practice Manager reviewed the complaint pursuant to WAC 391-45-110 and issued a deficiency notice. On November 26, 2012, the union filed an amended complaint. The Unfair Labor Practice Manager reviewed the complaint and found that some of the allegations stated causes of actions and dismissed other allegations.[1] On January 17, 2013, the union appealed.
RELEVANT FACTS
The collective bargaining agreement contained a memorandum of understanding (MOU) identifying Group Health and Premera Blue Cross as the insurance carriers, identified the plans to be offered, and identified the employer and employee premiums for 2010.
During a June 28, 2012 meeting of the labor-management Medical Benefits Committee, the employer announced it planned to self-insure in 2013. At the first bargaining session in September 2012, the employer notified the union that the employer would self-insure in 2013.
The union demanded to bargain the decision and effects of the employer’s decision to self-insure. The employer informed the union that the employer would increase the monthly insurance premium. The employer stated it would increase rates and would bargain with the union only over how the employer and the employees would share the 2013 rate increase. Additionally, if the parties did not reach an agreement by the end of the year, the employees would pay the entire increase in the 2013 rate over the 2012 rate.
The union alleged that the employer did not provide an opportunity to bargain the decision to change from fully-funded insurance to self-funded insurance. At the time the union filed its amended complaint (November 26, 2012), the employer refused to bargain the decision to move to self insurance, the rate to be charged under self insurance, and the plan benefits. At the time the union filed its complaint, the employer had not changed to be self-insured nor made any of the changes the union alleged in its complaints.
Preliminary Ruling
The Unfair Labor Practice Manager issued a preliminary ruling finding a cause of action for employer refusal to bargain by breach of its good faith bargaining obligations concerning negotiations over employee health insurance contributions, plan benefits, and the inclusion of health insurance as part of general contract negotiations.
No cause of action was found for the employer refusing to bargain the decision to self-insure. No cause of action was found for employer refusal to bargain or for refusal to bargain by unilateral changes regarding the initial setting of employee contribution rates and related business decisions, the employer’s use or intended use of reserve insurance funds, and the changes to employee premium costs and plan benefits.
ISSUES
Does the complaint state a cause of action for unilateral change by the employer’s decision to self-insure?
Does the complaint state a cause of action for unilateral changes to employee contribution rates, changes to employee premiums and plan benefits, and the intended use of reserve funds?
APPLICABLE LEGAL PRINCIPLES
In unfair labor practice proceedings, the ultimate burdens of pleading, prosecution, and proof lie with the complainant. State – Office of the Governor, Decision 10948-A (PSRA, 2011), citing City of Seattle, Decision 8313-B (PECB, 2004). The party filing a complaint must include a clear and concise statement of the facts constituting the alleged unfair labor practice, including the time, place, date, and participants in all occurrences. WAC 391-45-050(2). A properly filed unfair labor practice complaint will be reviewed under WAC 391-45-110 to determine whether the facts, as alleged, state a cause of action. The Commission shall not process any complaint alleging events occurring more than six months before the filing of the complaint. RCW 41.56.160(1).
When a complaint is reviewed under WAC 391-45-110, all alleged facts are assumed to be true and provable. Whatcom County, Decision 8246-A (PECB, 2004). Despite this assumption, vague or nonspecific factual allegations will be insufficient to establish a cause of action at the preliminary ruling phase. Speculation alone is insufficient to establish a cause of action. State – Office of the Governor, Decision 10948-A.
Duty to Bargain
Under the Public Employees’ Collective Bargaining Act, Chapter 41.56 RCW, a public employer has a duty to bargain with the exclusive bargaining representative of its employees. RCW 41.56.030(4). The determination as to when the duty to bargain exists is a mixed question of law and fact for the Commission to decide. WAC 391-45-550. An employer commits an unfair labor practice when it refuses to engage in collective bargaining. RCW 41.56.140.
The Commission applies a balancing test on a case-by-case basis to determine whether an issue is a mandatory subject of bargaining. In deciding whether a duty to bargain exists, there are two principal considerations: (1) the extent to which managerial action impacts the wages, hours, or working conditions of employees, and (2) the extent to which the subject lies “at the core of entrepreneurial control” or is a management prerogative. Fire Fighters, Local Union 1052 v. Public Empl’t Relations Commission, 113 Wn.2d 197, 203 (1989) (City of Richland). The inquiry focuses on which characteristic predominates. Id. The Supreme Court in City of Richland held that “the scope of mandatory bargaining is limited to matters of direct concern to employees” and that “managerial decisions that only remotely affect ‘personnel matters’ and decisions that are predominately ‘managerial prerogatives,’ are classified as non-mandatory subjects.” Id. at 200.
“[P]ersonnel matters, including wages, hours and working conditions” of bargaining unit employees are characterized as mandatory subjects of bargaining. City of Richland, 113 Wn.2d at 200 (1989); Federal Way School District, Decision 232-A (EDUC, 1997), citing NLRB v. Borg-Warner Corp., 356 U.S. 342 (1958). Permissive subjects of bargaining are management and union prerogatives, along with the procedures for bargaining mandatory subjects, over which parties may negotiate. Pasco Police Association v. City of Pasco, 132 Wn.2d 450, 460 (1997).
The bargaining obligation applies to a decision on a mandatory subject of bargaining and the effects of that decision, but only applies to the effects of a managerial decision on a permissive subject of bargaining. Central Washington University, Decision 10413-A (PSRA, 2013), citing Skagit County, Decision 6348 (PECB, 1998); City of Kelso (Kelso I), Decision 2120-A (PECB, 1985)(the decision to contract out bargaining unit work and the effects of the decision on the employees are mandatory subjects of bargaining); City of Kelso (Kelso II), Decision 2633-A (PECB, 1988)(the decision to merge operations with another employer is an entrepreneurial decision that is a permissive subject of bargaining and only the effects of the decision on wages, hours, and working conditions are mandatory subjects of bargaining). For example, while an employer has no duty to bargain concerning a decision to reduce its budget, the effects of such decision could be mandatory subjects of bargaining. See Wenatchee School District, Decision 3240-A (PECB, 1990).
The duty to bargain includes a duty to give notice and to provide an opportunity for bargaining prior to changes in wages, hours, or working conditions. City of Seattle, Decision 5391-C (PECB, 1997). An employer considering changes affecting a mandatory subject of bargaining must give notice to the exclusive bargaining representative of its employees prior to making that decision. Lake Washington Technical College, Decision 4712-A (PECB, 1995). To be timely, notice must be given sufficiently in advance of the actual implementation of a change to allow a reasonable opportunity for bargaining between the parties. Washington Public Power Supply System, Decision 6058-A (PECB, 1998). Formal notice is not required; however, in the absence of formal notice, it must be shown that the union had actual, timely knowledge of the contemplated change. Washington Public Power Supply System, Decision 6058-A.
The Commission focuses on the circumstances as a whole and on whether an opportunity for meaningful bargaining existed. Washington Public Power Supply System, Decision 6058-A. If the employer’s action has already occurred when the employer notifies the union (a fait accompli), the notice would not be considered timely, and the union will be excused from the need to demand bargaining. Washington Public Power Supply System, Decision 6058-A. If the union is adequately notified of a contemplated change at a time when there is still an opportunity for bargaining which could influence the employer’s planned course of action, and the employer’s behavior does not seem inconsistent with a willingness to bargain, if requested, then a fait accompli will not be found. Washington Public Power Supply System, Decision 6058-A, citing Lake Washington Technical College, Decision 4712-A.
ANALYSIS
The union argues that the Unfair Labor Practice Manager improperly dismissed the allegation that the employer unilaterally changed to self-insurance and improperly found that the facts did not demonstrate that the employer made any changes to health insurance for the bargaining unit. The union argues that the change is not analogous to a change in insurance providers, but is much broader. The union argues that employees should have input on how rates are established because their wages pay the rates. The union argues that the collective bargaining agreement identified the insurance carrier. The changes alter the benefits the employees will have and have contracted for. According to the union, the complaint alleged the employer unilaterally altered health insurance by moving from a fully-funded insurance to self-funded insurance.
The employer admits that the only change made was moving from fully-funded to self-funded insurance, which is not a mandatory subject of bargaining. The employer argues that the union failed to identify how the change impacted wages, hours, and working conditions. The employer asserts that it offered the same four medical plans and made no changes to plan specifications, co-pays, or deductibles. An employer does not violate the status quo when there has been no change in status quo or the change does not relate to a mandatory subject of bargaining. The collective bargaining agreement did not require the employer to purchase fully insured medical benefits and did not dictate how contributions are to be accounted for, deposited, or invested.
At the time the union filed its complaint, the employer had announced its intent to self-insure, refused to bargain the decision to self-insure, and refused to bargain the premium or rate that would be charged. The employer had not changed the employees’ insurance benefits. The complaints alleged that the changes would occur in the future.
A complainant’s prophecy of future events at the preliminary ruling stage of proceedings is insufficient to state a cause of action for a unilateral change. In order for a cause of action for a unilateral change to exist, there must have been a change. At the time the union filed its complaint, the employer had decided to change from fully-funded insurance to self-funded insurance and none of the other alleged changes had occurred.
Self-Insurance
Medical benefits have been found to be a mandatory subject of bargaining. Spokane County, Decision 2167-A (PECB, 1985). A change to the insurance carrier may, in some cases be a mandatory subject of bargaining. See University of Washington, Decision 10771 (PECB, 2010). When the collective bargaining agreement identifies the insurance carrier, an employer has a duty to bargain before it changes the insurance carrier. See Kitsap Transit, Decision 11098-B (PECB, 2013). If the change in insurance carriers does not result in any substantial change or loss of benefits, an employer may change insurance carriers after satisfying the duty to bargain. See City of Dayton, Decision 1990-A (PECB, 1984).
Prior Commission and Examiner decisions address changes to insurance premium rates, but do not address changes from fully-funded to self-funded insurance. In City of Seattle, Decision 651 (PECB, 1979), the employer unilaterally increased the dollar amount it contributed toward employee premiums and then unilaterally decreased the amount. The case did not address whether the employer offered fully-funded insurance or self-funded insurance.
In Bates Technical College, Decision 5140-A (PECB, 1996), the collective bargaining agreement specified that a trust would provide insurance benefits and provided details about the trust. The state enacted a law that allowed employees to obtain health insurance through the state. The parties negotiated. The employer informed the union that it had moved employees to the state plan. On review, the Commission affirmed the decision that the employer unilaterally changed health insurance when it moved employees from the plan specified in the collective bargaining agreement to another insurance carrier.
In Bastian-Blessing, Division of Golconda Corp. v. NLRB, 474 F.2d 49 (1973), the Seventh Circuit affirmed an NLRB decision that the employer unilaterally changed health insurance when it terminated the plan specified in the collective bargaining agreement and instituted self-funded insurance. The employer omitted significant employee benefits when it made the change. The Court emphasized that the conclusion in that case was not to be interpreted as a ruling that the naming of an insurance carrier was a mandatory subject of bargaining. Id. at 54.
Unlike Bastian-Blessing, there is no allegation that the employer changed insurance carriers. There is also no allegation that when the employer changed from fully-funded insurance to self-funded insurance the employer altered benefit levels. The allegation, in this case, is that the employer changed how the insurance plans offered to employees were funded.
In this case, the question remains whether the decision of how insurance benefits are funded is a mandatory or permissive subject of bargaining. The determination of whether the employer had a duty to bargain the decision to move from fully-funded insurance to self-funded insurance must be balanced against the extent to which the action impacts wages, hours, and working conditions.
On one side of the balance is how the decision to self-insure impacts employee wages, hours, and working conditions. Medical benefits are a form of wages. Employees have an interest in maintaining medical benefits. The union alleges that the change from fully-funded insurance to self-funded insurance may impact how much the employer pays for insurance. Further, that rate may increase so dramatically that employees may be unable to afford insurance. The union recognizes that insurance rates could increase, thereby causing employees to be unable to afford insurance, under a fully-funded model as well.
On the other side of the balance is whether the extent to which the decision to move from fully-funded to self-funded insurance is at the core of the employer’s entrepreneurial control or is a management prerogative. The decision to provide self-funded insurance is an entrepreneurial decision of the employer to enter the insurance business. The decision is about how the employer provides services and manages its budget.
In this case, the decision to move from fully-funded insurance to self-funded insurance is a permissive subject of bargaining that the employer did not have an obligation to bargain. The employer’s interest in controlling the scope of its services and providing self-funded insurance outweighs the employees’ interest that rates may someday increase dramatically, which is true whether the employer provides fully-funded or self-funded insurance. Additionally, the collective bargaining agreement between the parties specifies which insurance carriers, plans, and rates will be offered to employees. The method of funding those insurance plans is not addressed and is not a mandatory subject of bargaining.
There is no question that the employer is obligated to offer insurance. The employer is obligated to bargain changes to insurance consistent with the collective bargaining agreement. The employer did not eliminate insurance. The employer did not change carriers. The employer changed the funding of insurance.
The opportunity to bargain the employee contribution of rates remains. The obligation remains for the employer to bargain the impacts of its decision to move to self-funded insurance on mandatory subjects of bargaining. The employer remains obligated to bargain changes to insurance carriers, plans, and employee contributions.
Unilateral changes to rates, premiums and plan benefits, and use of reserves
The union alleged that the changes to rates, premiums and plan benefits, and the use of reserves were mandatory subjects of bargaining. At the time the union filed its complaint and amended complaint, the employer had not changed insurance rates, premiums, or plan benefits. The alleged changes were speculative and premature.
Determining the rate or premium was a managerial decision linked to the decision to provide self-funded insurance. The employees have an interest in the amount they contribute toward insurance premiums. The employer remains obligated to bargain changes to employee contributions.
Further, the use of the employer’s insurance reserves is not a mandatory subject of bargaining. Reserves and budgets are quintessential management prerogatives. The employer’s stewardship of its reserves is an essential managerial prerogative that predominates over the employees’ interest in controlling the money they contribute to the reserve. The decision about how the employer manages insurance reserve funds is a permissive subject of bargaining.
CONCLUSION
The decision to move from fully-funded to self-funded insurance was a permissive subject of bargaining. The employer did not have an obligation to bargain the decision. The complaint did not state a cause of action for refusal to bargain.
The complaint did not state a cause of action for refusal to bargain the use of reserve funds, setting premiums, or changes to employee premium costs and plan benefits. The use of premiums and reserve funds are a permissive subject of bargaining. At the time the complaint was filed, no changes to employee contributions or insurance plans had occurred.
NOW, THEREFORE, it is
ORDERED
The Order of Partial Dismissal issued by Unfair Labor Practice Manager David I. Gedrose is AFFIRMED.
ISSUED at Olympia, Washington, this 27th day of June, 2013.
PUBLIC EMPLOYMENT RELATIONS COMMISSION
MARILYN GLENN SAYAN, Chairperson
PAMELA G. BRADBURN, Commissioner
THOMAS W. McLANE, Commissioner