• Impact of the Dane County Circuit Court Decision Regarding Acts 10 and 32
  • September 26, 2012
  • Law Firm: Boardman Clark LLP - Madison Office
  • As you are likely aware, in a written state court decision issued September 14, 2012, Dane County Circuit Court Judge Juan Colas found some (but not all) provisions of 2011 Wisconsin Acts 10 and 32 (the Acts) unconstitutional.  This Legal Update provides analysis on the impact of this decision on collective bargaining for school districts.

    A.        Summary of Decision

    Interestingly, the plaintiffs in the Dane County Circuit Court case (primarily Madison Teachers, Inc. or MTI) did not seek to overturn all of the provisions in the Acts which impact collective bargaining for school districts.  Instead, MTI only sought a ruling that certain provisions were unconstitutional.  The following relevant provisions were found to be unconstitutional:

    • Wis. Stat. § 111.70(1)(f) (which prohibits “fair share” dues provisions except for public safety bargaining units);

    • Wis. Stat. § 111.70(3g) (which prohibits voluntary dues deductions);

    • Wis. Stat. § 111.70(4)(d)3 (which requires annual certification elections);

    • Wis. Stat. § 111.70(4)(mb) (which prohibits bargaining on anything other than base wage rates); and,

    • Wis. Stat. § 118.245 (which requires a school district to seek a referendum if it seeks to provide an increase in total base wages greater than CPI)

    Based on his conclusion that these provisions were unconstitutional, Judge Colas declared those particular provisions void and without effect.

    B.        Response From The Attorney General

    Attorney General J. B. Van Hollen has issued a press release indicating that he believes that the Acts are constitutional in all respects and will be appealing this decision.  He has also filed a motion to stay the court’s order pending appeal in order to allow the law to continue in effect while the appeals courts address the legal issues.  The ruling on this motion to stay will have significant impact on how matters proceed in the short-term.  If the requested stay is granted, the decision will have no immediate impact, because its implementation will be delayed pending a decision from the appeals courts.  There may also be some attempt by the parties to bypass the Wisconsin Court of Appeals and move the appeal directly to the Wisconsin Supreme Court.

    C.        Other Relevant Pending Decisions / Rule Drafting

    In a related case, oral argument will be held within a week in the United States Court of Appeals for the Seventh Circuit with respect to the United States District Court for the Western District of Wisconsin case in which Judge Conley upheld the constitutionality of the Acts with the exception of the dues deduction and annual certification elections provisions. Both sides appealed that decision and all aspects of Judge Conley’s decision are before the Seventh Circuit Court of Appeals. A question may arise if the Seventh Circuit Court of Appeals affirms Judge Conley’s decision finding the Acts constitutional and whether that decision has a preclusive effect with respect to the Dane County Circuit Court decision and subsequent appeals.

    It is also worth noting that the Wisconsin Employment Relations Commission is currently reviewing a variety of options in response to the fact that the emergency base wage administrative rules (chs. ERC 90 and 100) expired on September 15, 2012.  The Commission may continue the permanent rule-making process or promulgate new emergency rules.  Of course, the Dane County Circuit Court decision will factor into the Commission’s decision.  

    D.        Provisions Unaffected By The Decision

    The decision’s greatest potential impact relates to Judge Colas’ conclusion that the prohibition on bargaining any subject other than base wage rates (Wis. Stat. § 111.70(4)(mb)) is unconstitutional.  What is significant related to this finding, however, are those provisions of the Acts which are not affected, including:

    • The definition of “collective bargaining” found in Wis. Stat. § 111.70(a) remains unchanged.  As modified by the Acts, the definition mandates school districts to bargain only “wages” and eliminated that duty as to “hours and conditions of employment.”

    • The provision limiting collective bargaining agreements to a duration of one year is still in place.

    • The changes in the resolution procedures upon bargaining impasse made by the Acts (i.e., the elimination of binding interest arbitration) are still in place.  Upon impasse in negotiations under the Acts, a school district can implement its final proposal.  Interest arbitration is not available.

    • The mandate to adopt a grievance system still exists, but there is no obligation to negotiate grievance or arbitration clauses.

    • The changes to the teacher nonrenewal statute remain unchanged.

    • The prohibition affecting annualized payrolls (absent individual employee request for same) is unaffected.

    • The prohibition regarding school districts paying the employee share of WRS on behalf of employees who are not in bargaining units.

    • The prohibition of school districts paying more than 88% of the premium for health insurance under the state health insurance plan for employees who are not in bargaining units.

    Thus, although the decision results in certain provisions of the Acts being declared void, there are many other provisions that remain in place and, therefore,  must be considered in any analysis.

    E.        School Districts Should Consider Their Situation

    Considering the above, school districts will need to consider their particular situation with each bargaining unit in the district and proceed with some caution.

    • Some districts may still have collective bargaining agreements that will expire in June 2013 that were negotiated before the implementation of the Acts.  These school districts may be considering formulating an employee handbook for the 2013-2014 school year.

    • Other school districts may have had collective bargaining agreements expire in June 2011 and have already negotiated a 2011-2012 collective bargaining agreement.  These school districts may also have an employee handbook in place and have already negotiated (or are currently negotiating) a 2012-2013 collective bargaining agreement.

    • Other school districts may have had collective bargaining agreements that expire in June 2012 and have adopted employee handbooks.  These school districts may have already negotiated (or are in the process of negotiating) a collective bargaining agreement for the 2012-2013 school year.

    Each school district may be in a different situation, so careful individual analysis must be given to each case.

    F.        Overall Impact of the Decision

    Based on the above, there are likely some reasonable conclusions and approaches for school districts to take, again depending on their situation.

    1.         There Is Some Uncertainty As To Whom The Decision Applies.

    Considering that the decision was issued by a Dane County Circuit Court judge, there may be some question as to whether this decision applies to parties in jurisdictions outside of Dane County.  Further, the lawsuit only names Governor Walker and the three members of the Wisconsin Employment Relations Commission as parties.  As a result, it is unclear as to whether the decision applies to parties outside of the litigation.

    2.         Certain Provisions Remain Unchanged.

    In light of the provisions that remain unchanged above, it is likely that these provisions will remain in place and not be affected by any subsequent appeal at the state level (although the Seventh Circuit Court of Appeals case may affect certain provisions).  School districts should (1) continue to require employees (including administrators) to pay the employee’s share of the WRS contribution; (2) recognize that collective bargaining agreements will be one-year in duration and will not be subject to any binding interest arbitration; and (3) that employees under the state health insurance plan must continue to make contributions to their health insurance premium.

    3.         Temporarily Declining To Bargain Is Likely Not A Prohibited Practice.

    Even without a stay, a school district would likely be able to respond to a request for bargaining by temporarily declining that request pending a decision on appeal based upon a recent ruling by the Wisconsin Employment Relations Commission. IBEW Local 695 v. Public Utility Commission of the City of Richland Center  Case 71, No. 70666, MP-4655 Decision No 33281-B (June 13, 2012).  The case involved the Utilities’ stance not to bargain with the IBEW during the time between passage of Act 10 and the Wisconsin Supreme Court’s decision overruling another Dane County Circuit Court decision which held such passage violated Wisconsin’s Open Meetings Law.  During this time, the circuit court imposed a stay on the implementation of Act 10.  The WERC ruled that:

    Under the unique circumstances here, we believe a temporary suspension of negotiations to allow for the resolution of significant matters of law with a direct impact on the bargaining process does not constitute an unlawful refusal to bargain.

    A similar response from the school district in response to any request to bargain during the time Judge Colas’ decision is on appeal likely falls within the same scope, thereby permitting a school district to temporarily refuse to meet pending appeal without committing a prohibited labor practice.

    4.         Any Duty To Bargain May Be Limited.

    Judge Colas found that the prohibition on bargaining any subject other than base wage rates was unconstitutional.  Therefore, unions may likely request immediate bargaining under the Acts without the unconstitutional provisions.  However, as noted above, if a stay is granted, such request to bargain may be premature, considering Judge Colas’ decision may be overturned on appeal.

    Further, even if a stay is not granted, it is important to note that the definition of “collective bargaining” under the law still mandates school districts to bargain only “wages” and eliminated that duty as to “hours and conditions of employment.”  Therefore, it is likely that a school district only has a mandatory duty to bargain “wages” and a permissive ability to bargain “hours and conditions of employment.”  While the Legislature may have intended “wages” to be defined and interpreted differently under the Acts, historically, the Wisconsin Employment Relations Commission has interpreted “wages” to include any “economic benefit flowing from the employment relationship.”  Under this interpretation, insurance and other fringe benefits may be considered mandatory subjects of bargaining.

    Depending upon the interpretation of “wages” under the Acts, the employee share of WRS contributions may be a mandatory subject of bargaining as may the percentage of premium contribution paid by a school district for an employee’s health insurance under the state health insurance plan.  However, because any school district obligation to pay these benefits is specifically linked to collective bargaining agreements, any employees who are not in a bargaining unit covered by such a collective bargaining agreement are not eligible for school district paid WRS employee contributions or employer paid premiums for the state health insurance plan of less than twelve percent.

    A school district can decide whether it will bargain any provision which relates to a subject other than “wages.”  Permissive subjects likely include at least such subjects as “just cause,” assignments/transfers, hiring/layoff, and grievance/arbitration provisions.  Thus, even if Judge Colas’ decision stands, it appears that the ability of school districts to effectively dictate the terms of collective bargaining agreements beyond “wages” is unchanged.

    5.         Effect on Collective Bargaining Agreements and Handbooks.

    In light of the Dane County Circuit Court decision, a union may argue that any collective bargaining agreement negotiated under the rules established by the Acts is void and that school districts have a duty to bargain under the Acts absent the unconstitutional provisions. Further, a question may exist as to whether any employee handbooks, or portions of them, will be subject to a union prohibited labor practice charge alleging unilateral implementation with respect to mandatory subjects of bargaining.  If the decision is stayed pending appeal, such assertions likely do not need to be addressed at this time.  Further, if the decision is overturned, such assertions will likely not have merit.  If the decision remains in place, such assertions will likely be addressed in light of the remaining provisions that were not ruled unconstitutional.

    6.         There Is Some Uncertainty As To Whether The Decision Will Be Applied Retroactively.

    Finally, Judge Colas ruled that the provisions identified above were null and void.  However, it is not clear from his decision as to whether the provisions identified were null and void since the time of their enactment or since the date of the decision.  We are currently reviewing this issue.

    G.        Conclusion.

    The decision from the Dane County Circuit Court is certainly significant.  However, it remains to be seen whether it will have any significant impact, in light of the fact that a stay may be sought and the decision overturned.  However, during this interim, there will be some uncertainty related to whether any action taken during this time contrary to the decision will be challenged if Judge Colas’ decision is upheld.  We will continue to monitor the situation and update you as appropriate, but the best general advice at this time is to simply await the outcomes of the motion(s) to stay Judge Colas’ decision so that any courses of action are taken within the appropriate legal context.