Pennsylvania’s lower-level appellate court has upheld a Philadelphia Common Pleas

Court ruling denying a motion by the city’s white-collar workers’ union that sought to vacate an arbitrator’s award relating to an issue of pay increases.

The American Federation of State, County and Municipal Employees District Council 47 was appealing a trial court order that refused the union’s motion to vacate the arbitrator’s award, which determined that pay increases are not part of the status quo, and therefore the City of Philadelphia did not violate its collective bargaining agreement with the union when it did not provide the pay increases.

AFSCME asked a city judge to vacate the arbitrator’s award on the basis that it failed to meet the essence test, but the trial court disagreed.

The case dates back to 2009, when the cash-strapped city, in an effort to relieve its budget deficit, began negotiating for a new agreement with AFSCME.

During the negotiations, the city proposed a freeze in step payments and elimination of longevity payments to AFSCME employees.

AFSCME subsequently rejected the proposals, and the two sides failed to reach an agreement upon the expiration of the collective bargaining agreement covering 2008 and 2009.

It was at this point that the city sent out a memo to all municipal employees, indicating that there would be a temporary suspension of earned pay step increases and longevity payments.

AFSCME filed a grievance with the city in early July 2009, alleging that the elimination of longevity payments and step increases violated the expired collective bargaining agreement.

During the subsequent arbitration hearings, an arbitrator had to determine whether the grievance was arbitrable and whether the city violated the bargaining agreement by eliminating the step increases and longevity payments.

The city had argued that the grievance was not arbitrable as it was an allegation of an unfair labor practice, a complaint in the exclusive jurisdiction of the Pennsylvania Labor Relations Board.

The city had also asserted that it was not required to award pay step increases and longevity payments when the parties are in a state of status quo.

AFSCME, however, argued that because the regulations are incorporated into the bargaining agreement, the city is required to pay the salary increases in order to remain compliant with the regulations.

The arbitrator ended up determining that the grievance was arbitrable and that the city didn’t violate the bargaining agreement.

Specifically, the arbitrator determined that nothing in the Public Employee Relations Act, rulings of the Labor Relations Board or court cases prohibits an arbitrator from determining whether an employer violated the status quo upon the expiration of a collective bargaining agreement.

The arbitrator had ruled that the parties were in a state of status quo since no contract extension had been awarded following its expiration in July 2009, and that pay increases are not part of the status quo and are essential to collective bargaining, based on established precedent.

AFSCME filed its motion to vacate the arbitrator’s award in February 2011, alleging that the award failed to meet the essence test.

The trial court dismissed the motion to vacate. On appeal, AFSCME argued that the award failed to meet the essence test because a freeze on pay step increases and longevity payments are not rationally derived from the collective bargaining agreement.

A three-judge Commonwealth Court panel affirmed the trial court’s decision, stating in a July 5 memorandum that pay increases are not part of the status quo as they are mandatory subjects of bargaining.

The appellate panel also agreed with the trial court’s conclusion that the arbitrator’s decision was rationally derived from the collective bargaining agreement.

“Because the CBA is silent as to status quo, the Arbitrator and trial court turned to state law and concluded that pay increases are not part of the status quo as increases are mandatory subjects of bargaining,” the ruling states. “Further, the fact that the CBA controls in the event of a conflict leads to the rational conclusion that the pay increases are not part of the CBA because those payments are not provided for in the CBA, but are provided for only in the Regulations.

“Because it was not irrational for the Arbitrator to conclude that pay increases were not part of the status quo following the expiration of the 2008-2009 CBA, the Arbitrator’s award was rationally derived from the 2008-2009 CBA.”

The opinion was written by Commonwealth Court Judge P. Kevin Brobson and joined by Judge Robert Simpson and Senior Judge Rochelle S. Friedman.

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