Text Size:   A+ A- A   •   Text Only
Find     
Site Image

IA-11-95
In the Matter of Interest Arbitration Between Oregon Public Employees Union, Local 503 and State of Oregon (OSCI Security Staff). IA-11-95
 
AWARD
 
Having considered evidence submitted by the parties and all relevant statutory criteria, the arbitrator adopts the last best offer package of the Employer as the appropriate one to become a part of the collective bargaining agreement between the parties. It is so ordered and awarded.
 
Date: 3-8-96
 
Carlton J. Snow, Professor of Law
 
Work Scheduling Issue
 
1. INTRODUCTION
 
This matter came for hearing pursuant to ORS 243.742-243.756 and relevant administrative rules. The arbitrator complied with statutory requirements as well as administrative directives of OAR 115-40-015 and OAR 115-40-030 in hearing and resolving this dispute between the parties. An initial report had been issued on September 8, 1995.
 
A hearing in this matter took place on November 29, 1995 in a conference room of the Oregon State Correctional Institution located just outside of Salem, Oregon. Mr. Peter DeLuca, Administrator, represented the State of Oregon. Mr. Tim Nesbitt, Assistant Executive Director, represented Local 503 of Oregon Public Employees Union.
 
The hearing proceeded in an orderly manner. There was a full opportunity for the parties to submit evidence, to examine and cross-examine witnesses, and to argue the matter. All witnesses testified under oath as administered by the arbitrator. The arbitrator tape-recorded the proceeding as an extention of his personal notes. The advocates fully and fairly represented their respective parties.
 
There were no challenges to the substantive or procedural arbitrability of the dispute, and the parties stipulated that the matter properly had been submitted to arbitration. The parties also stipulated that the matter was proceeding on the basis of newly enacted statutes implemented on August 1, 1995 as well as administrative rules effective on December 1, 1995. The parties submitted the matter to the arbitrator on the basis of evidence presented at the hearing as well as post-hearing briefs, and the arbitrator officially closed the hearing on December 22, 1995 after receipt of the final brief in the matter. The parties authorized the arbitrator to retain jurisdiction in the matter for 60 days from the date of the report or until the Oregon Employment Relations Board issues a decision to the parties in a related unfair labor practice complaint. A persistent case of influenza and an out-of-town family emergency delayed preparation of the report.
 
II. STATUTORY FRAMEWORK
 
A new law has changed interest arbitration in the State of Oregon. Parties now use the process characterized in arbitration literature as "last best offer" arbitration. ORS 243.746(3) states:
 
Not less than fourteen calendar days prior to the date of the hearing, each party shall submit to the other party a written last best offer package an all unresolved mandatory subjects, and neither party may change the last best offer package unless pursuant to stipulation of the parties or as otherwise provided in this subsection.
 
ORS 243.746(4) states:
 
Where there is no agreement between the parties, or where there is an agreement but the parties have begun negotiations or discussions looking to a new agreement or amendment of the existing agreement, unresolved mandatory subjects submitted to the arbitrator in the parties' last best offer packages shall be decided by the arbitrator.
 
ORS 243.650(14) states:
 
'Last best offer package' means the offer exchanged by parties not less than 14 days prior to the date scheduled for an interest arbitration hearing.
 
In most of the literature, "final offer" arbitration and "last best offer" arbitration are synonymous terms- (See, e.g., Stern, Final Offer Arbitration (1975) and Feuille, Final Offer Arbitration (1975)). In the Oregon design, "final offer" is not synonymous with "last best offer." According to ORS 243.650(11),
 
'Final offer' means the proposed contract language and cost summary submitted to the mediator within seven days of the declaration of impasse.
 
In Oregon, mediators and the parties deal with final offers; but interest arbitrators focus on last best offer packages.
 
The new law also has clarified the statutory criteria to be used by interest arbitrators in making their determination. ORS 243.746(4) makes clear that:
 
Arbitrators shall base their findings and opinions on these criteria *giving first priority* to paragraph (a) of this subsection and *secondary priority* to subsections (b) to (h) as follows. (Emphasis added. (** indicates emphasis))
 
As set forth in the law, the statutory criteria are as follows:
 
(a) The interest and welfare of the public.
 
(b) The reasonable financial ability of the unit of government to meet the costs of the proposed contract giving due consideration and weight to the other services, provided by, and other priorities of, the unit of government as determined by the governing body. A reasonable operating reserve against future contingencies, which does not include funds in contemplation of settlement of the labor dispute, shall not be considered as available toward a settlement.
 
(c) The ability of the unit of government to attract and retain qualified personnel at the wage and benefit levels provided.
 
(d) The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other paid excused time, pensions, insurance, benefits, and all other direct or indirect monetary benefits received.
 
(e) Comparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities. As used in this paragraph, 'comparable' is limited to communities of the same or nearest population range within Oregon. Notwithstanding the provisions of this paragraph, the following additional definitions of 'comparable' apply in the situations described as follows:
 
(A) For any city with a population of more than 325,000, 'comparable' includes comparison to out-of-state cities of the same or similar size;
 
(B) For counties with a population of more than 400,000, 'comparable' includes comparison to out-of-state counties of the same or similar size; and
 
(C) For the State of Oregon, 'comparable' includes comparison to other states.
 
(f) The CP1-All Cities index, commonly known as the cost of living.
 
(g) The stipulations of the parties.
 
(h) Such other factors, consistent with paragraphs (a) to (g) of this subsection as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in paragraphs (a) to (g) of this subsection provide sufficient evidence for an award.
 
Based on an analysis of the statutory criteria, it is an interest arbitrator's duty to "select only one of the last best offer packages submitted by the parties . . ." and to promulgate written findings along with an opinion and order." (See, ORS 243.746(5)).
 
The intent of law makers was to reform Oregon's public sector collective bargaining law by enacting Senate Dill 750. The focus of Senator Neil Bryant was on rebalancing the bargaining system more equally between the parties. (See, Hearings on S.B. 750, June 1, 1995). A theme in the legislative initiative was that of making the collective bargaining system in Oregon more accountable to the public. There was an interest in limiting discretionary authority of interest arbitrators. (See, Hearings on S.B. 750, March 3, 1995). An overarching objective was to give the parties more incentive to reach agreement on their own initiative. Last best offer arbitration is premised on the theory that the public and bargaining unit members benefit if the parties negotiate their own agreement. The thrust of the law is to encourage negotiated settlements in the public sector while limiting discretionary authority of interest arbitrators.
 
While deciding that "the interest and welfare of the public" should be the criterion receiving first priority in the analysis of an interest arbitrator, the legislature in S.B. 750 failed to give guidance regarding the meaning of such an open-ended factor. Senator Bryant wanted the criterion, which had been a part of the earlier collective bargaining law, to be given first priority because of his belief that interest arbitrators in Oregon had not permitted the public interest to have much influence in the process of rendering an interest arbitration decision. Hence, he sought to "rebalance the system." He sought to design the system in a way that required interest arbitrators to go beyond the "myopic view" of the particular issues before an arbitrator and to consider the impact of a decision on the totality of an employer's operation. (See, S.B. 750 hearing, June It 1995).
 
Due to its scarcity, legislative history will not be especially useful in interpreting the meaning of "the interest and welfare of the public." Nor, to the extent comments were made in legislative hearings, were such general remarks made with the narrow issue in mind that must be decided by this arbitrator. This is not a case where contradictory legislative comments were made in enacting a law but, rather, a case where a paucity of legislative material surfaced to help pour content into the words of the law. As the eminent Justice Frankfurter stated many years ago, "meaning derives vitality from application." (See, Trust of Bingham v. Commissioner, 325 U.S. 365, 380 (1945)). Accordingly, the meaning to be ascribed to the statutory criterion, "the interest and welfare of the public," should be drawn from the customary meaning of words. But the particular words in this law not be rooted in the kind of empirical data which can be gathered to test the other statutory criteria.
 
It, therefore, is sensible to find meaning for this first statutory criterion in its interpretation under the law that preceded S.B. 750. The criterion is not a new part of the law but only repositioned in an interest arbitrator's analysis. In the absence of contrary legislative intent, it is a well-established common law rule of statutory interpretation that words in a law which received judicial interpretation before enactment of the new law should be understood according to the earlier interpretation. (See, e.g., Sutherland, Statutory Construction, § 363 (2d. ed. 1904)).
 
Over a decade ago, Justice Thomas Tongue defined "public interest" in terms of paying fair and competitive wages. (See, Multnomah County Corrections Officers Association and Multnomah County, p. 35 (1986)). Arbitrator Eric Lindauer also defined "the interest and welfare of the public" in economic terms. (See, Ontario Police Union and Oregon Public Employees Union, SEIU, p. 7 (1957)). Likewise, Arbitrator Richard Stratton offered the following observation about "the interest and welfare of the public" prior to the legislature's enactment of S.B. 750:
 
The interest and welfare of the public is best served with competent, effective, and well-motivated officers operating the County detention facility. In other words, the costs should be reasonable to the taxpayer and fair to the employee. The statutory criteria attempt to make this less of a subjective determination, however, it is subject to considerable variation. (See, Multnomah County Corrections Officers Ass'n and Multnomah County, 39 1988)).
Scholars have also given an economic cast to "the interest and welfare of the public." As the eminent Arvid Anderson, past president of the National Academy of Arbitrators, stated:
 
The criterion of the interest and welfare of the public determines, in part, the priority to be given to the wages and economic benefits of public sector employees. Obviously, the decision to increase wages and improve economic benefits will affect the overall allocation of the Employer's resources. Should more money be spent to raise the salaries of the existing work force, to increase the number of workers, or for capital improvement and increased services? (See, "Interest Arbitration ," 56 Fordham L. Rev. 153, 162 (1987)).
 
An argument can also be made that the legislature intended the meaning of "the interest and welfare of the public" to include more than economic considerations. The earlier law listed as a factor to be considered by an interest arbitrator "the interest and welfare of the public and the financial ability of the unit of government to meet those costs." (See, ORS 243.746(4)(c)). Grouping "the interest and welfare of the public" with "the financial ability" of the employer suggested a close relationship between public interest and an employer's ability to pay.
 
The new law made the "interest and welfare of the public" and "financial ability" two separate and distinct criteria. While retaining essentially the same language as the earlier law, S.B. 750 unhinged the two criteria and, additionally, instructed interest arbitrators to give "the interest and welfare of the public" first priority. (See, ORS 243.746(4)(a) and (b)). Making "the reasonable financial ability of the unit of government to meet the cost" a secondary priority suggested that "the interest and welfare of the public" means considering something more than only economic matters. The dilemma, of course, is pouring content into the "something more" implicit in the reorganization of the statutory criteria. In conclusion, there is no basis in S.B. 750 nor judicial decisions nor arbitral literature for concluding that "the interest and welfare of the public" criterion provides a determinative factor standing alone for resolving a dispute pursuant to S.B. 750. It is to be given first priority in conjunction with secondary criteria.
 
One Oregon arbitrator has concluded that "giving first priority" to the "interest and welfare of the public" can be accomplished by making any interest arbitration decision consistent with dominant, well-defined public policy in Oregon. As he stated:
 
The Arbitrator is required to recognize and accept the legitimacy of public enactment on non-labor, relations issues and render an award which is consistent with such expressions of 'the public interest and welfare.' But the Arbitrator is also charged with preserving the integrity of the interest arbitration process itself; for this process is one more way in which Oregon has chosen to operationalize 'the public interest and welfare.' (See, Association of Oregon Corrections Employees and State of Oregon, 13-14 (1996)).
 
While "the interest and welfare of the public" criterion has been given first priority in this case, it has not provided a determinative means of resolving the dispute; and other statutory criteria have been evaluated in reaching a decision. In the abstract, it is impossible to find meaning in the phrase "the interest and welfare of the public." The meaning of this criterion must be found as it is applied within the context of other criteria and the facts of a given case. Thu level of abstraction in language of the first criterion is quite different from other statutory factors.
 
Empirical data can be used to test the financial ability of an employer to meet the costs of a proposed contract. Charts and graphs can be used to show concretely an employer's ability to attract and retain qualified personnel. Overall compensation can be measured with reasonable precision, as can the CPI-All Cities Index. The process is customarily awash in comparative data. But the "interest and welfare of the public" is a distinctly different factor that is set apart by its being rooted in ideals and not rooted in objectively measurable data. It is not a "stand alone" criterion.
 
III. POSITION OF THE PARTIES
 
A. The Union
 
This is a dispute about the post bidding system used by the parties. The Union argues that the current post bidding system works well and serves goals of the institution as well as members of the bargaining unit. The Union believes that post bidding boosts morale of employes and enables them to move from position to position every six months. This permits employees to become familiar with all job positions, according to the Union.
 
The Union argues that the interest and welfare of the public are served best by the current system and not by the Employer's proposal. The Union points to an increase in the number of inmates at Oregon State Correctional Institution at the same time the facility has been able to maintain the higher inmate to staff ratio as well as a low turnover rate among employees. It is the belief of the Union these facts support a conclusion that the post bidding system produces an effective system of supervision and should not be modified in the way proposed by management.
 
B. The Employer
 
The Employer argues that the current system of bidding job posts based on seniority is not the most effective system. According to management, a better system would be one according to which the Employer assigns workers to job posts and employes bid only for shifts and days off. It is the belief of the Employer that its proposal best represents the interest and welfare of the public.
 
The Employer contends that the correctional system in Oregon has changed considerably since the 1970s, when the parties first initiated post bidding. The jobs allegedly have become more complex and skilled. The current system allows employes to bid for positions based only on seniority, and management contends that this does not produce an efficient result. The Employer maintains that, because of the seniority impediment, it cannot always assign employes to appropriate positions where they are needed or where they are most skilled and qualified. It is the position of the Employer that management reasonably should be allowed to assign the best qualified employe to a specific position rather than being hamstrung by an anachronistic requirement that is no longer responsive to modern conditions.
 
IV. ANALYSIS
 
A. Context of the Dispute
 
The interest arbitration proceeding in this case involves only strike-prohibited security staff members at Oregon State Correctional Institution. The parties have engaged in interest arbitration several times in the past. On September 8, 1995, this arbitrator continued the work of prior interest arbitrators.
 
The parties specifically excluded the dispute in this case from the proceedings which culminated in a decision on September 8, 1995. There was an intense effort by the parties to reach a negotiated settlement on this issue. Unfortunately, the parties have been unable to reach agreement regarding how employes should be assigned to posts at Oregon State Correctional Institution. Although the Employer argued that the dispute involved a permissive subject of bargaining and that management is not required to submit the matter to interest arbitration, both parties stipulated that the arbitrator should rule on the merits of the case and that the procedural issue would be addressed in due time by the Oregon Employment Relations Board. Based on the agreement of the parties, the arbitrator proceeded as though the issue is arbitrable.
 
B. Background of Post Bidding
 
The current system of post bidding provides for management to post most locations and shifts. Individuals bid for most posts every six months based on seniority. Although management is permitted to designate rotation for a period of time shorter or longer than six months, most are for a period of six months.
 
There have been occasions in the past when transfers became necessary due to absences, and the parties made clear that the Employer usually asked an employe to move to a different location. Employes usually cooperated with management. Several, however, maintained that they had a right under the parties' collective bargaining agreement to retain their assigned posts. Messrs. Hatter, Kegley, and Long maintained such a stance. On the other hand, Messrs. Cooper and Roy believed that management had a right to ask them to change posts but could identify no language in the parties' collective bargaining agreement that created such a right. They testified that such reassignment usually lasted only a day at a time. Nor could Mr. Hunt or Ms. Palmateer pinpoint language in the parties' agreement which authorized the Employer to assign employes to posts based on needs of the Institution.
 
Clear and convincing evidence from the parties established that management usually asked an employe if he or she was willing to take a different assignment. If an employe was not willing, management paid the individual or someone else overtime in order to staff a particular post. The evidence was clear that most assignments are made on the basis of seniority and that the current system is not cost-effective.
 
Ms. Palmateer, Security Manager at OSCI, testified without rebuttal that, approximately once every two weeks, a situation arose where movement of one or more employes became necessary in order effectively to meet needs of the institution. There was also unrebutted testimony from Mr. Pattison that the current system has caused problems in training employes. First, employes have bid for jobs for which they were not qualified, and management has had to train them in order to maintain a safe environment. Second, there was unrebutted testimony that new employes had not been trained to perform jobs management needed to fill. It was the belief of Ms. Palmateer and Mr. Pattison that, if the Employer enjoyed the flexibility to assign employes as necessary, problems with sick leave, training, and overtime would be substantially reduced.
 
There was also considerable discussion regarding "inside" and "outside" jobs. Positions which have little or no contact with inmates were characterized as "outside" jobs. Jobs in housing units produce constant contact with inmates and were described as "inside" jobs. There was unrebutted testimony that more senior employes bid for specific "outside" jobs and leave less qualified employes to fill "inside" jobs. The result is that less senior and usually less qualified correctional officers have substantially more interaction with inmates. There was unrebutted testimony that the current system has inhibited management from rectifying the problem.
 
It is also helpful to place the dispute between the parties within the context of other collective bargaining agreements. The parties have used what generally is described as a "straight seniority" clause. Under such a clause, employment decisions must be made simply in accordance with accumulated seniority. The Union has proposed the continuation of a if "straight seniority" clause. As the union proposed in its last best offer package,
 
When two (2) more Correctional Corporals or Sergeants have equal seniority, total length of service in the Institution shall be used to determine the bidding order.
 
"Straight seniority" provisions are unusual in collective bargaining agreements. Most collective bargaining agreements use what is described as a "relative ability" seniority clause or a "sufficient ability" contractual provision. According to Professor Hill of Iowa University,
 
'Straight' seniority provisions are rarely found in collective bargaining agreements. Instead, most contracts provide for a combined consideration of seniority and ability in promotion or demotion decisions. Where unmodified provisions exist, managerial discretion is limited (at least in theory) to selecting the most senior employee without regard to qualifications. (See, Management Rights, 353 (1986)).
 
C. Impasse of Statutory Criteria
 
The Employer sought to change the current post bidding system to one of shift bidding only. Management also added a shift differential for some positions. The Union altered past language but conceded that, as to post bidding, its proposal retained the current practice. In its proposal, the Union defined "shift" to include location; while the Employer defined shift" as hours and days off only.
 
The law is clear that an interest arbitrator must give "first priority" to "the interest and welfare of the public" in interest arbitration decisions. The Employer was persuasive in its contention that the number of inmates in Oregon institutions will continue to increase. There also is a desire of citizens to require inmates to work. Such changes in state correctional procedures will affect duties of correctional officers in numerous ways.
 
There was testimony from Mr. Chandler, Assistant Director for Institutions, that the mission of the Department of Corrections in Oregon is changing from a "warehousing" orientation to a more intense focus on rehabilitation. The new focus will require correctional officers to assume different duties. Ballot initiatives have also created a need for more flexibility in assigning duties. Likewise, societal changes are having an impact on duties of correctional officers. For example, more violent "gang" members are now being incarcerated.
 
It is recognized that consistency in working with inmates will enhance security, but that does not necessarily support a conclusion that it is in the interest of the public to maintain the current bidding system. There also will he some impact on the morale of employes if the current system is replaced by job assignments. It, however, would not necessarily be a return to the "old boy network" which allegedly existed before the parties established the post bidding system.
 
It is significant that all employes who testified at the hearing favored retaining the current post bidding system. Messrs. Haisman, Kegley, Roy, Hatter, Cloper, and Ogden all testified in favor of the current system. A number of employes maintained that six months is just about the right amount of time to maintain consistency with inmates. Mr. Halsman was especially persuasive in his testimony regarding the impact on family life of being able to make plans and commitments a reasonable amount of time in advance of events. On the other hand, the Employer's proposal will permit shifts and days off to be subject to bidding on the basis of seniority.
 
Retention of shifts and days off on the basis of seniority will enable employes to know which shifts they will work and which days off will occur each week. Mr. Arnenakis, Superintendent, as well as Ms. Palmateer, Security Manager, expressed their commitment to the concept of consistency espoused by employes. Mr. Arnenakis testified that it was his intent to continue "doing business as usual" and to use managerial movement of employes only as dictated by clear-cut operational needs of the facility. What management sought was the flexibility to move an employe to a different position because the individual was better qualified for it. Messrs. Halsman and Ogden stated that there should be no negative impact on employe morale as long as substantial movements did not take place. The Employer was persuasive in its contention that it merely seeks authority to move employes in response to substantial needs of the organization so that goals of the institution can be better served. This objective, of course, inures to the welfare of the public.
 
An interest arbitrator is also statutorily mandated to consider the reasonable financial impact of a proposal. The Employer has included a five percent differential to insure that management will be able to underwrite any additional cost imposed by the change. As a proposal of the Employer, there is a presumption that the unit of government has the financial ability to meet relevant costs.
 
A third factor, "the ability of the unit of government to attract and retain qualified personnel," is also of limited relevance in this proceeding. The Union argued that the Employer's proposal will undermine what has been a historically low employe "turnover" rate at the institution. There was speculation that adoption of the Employer's proposal would have a negative impact on management's ability to retain qualified personnel. There were no empirical data, however, establishing a causal connection. Nor did any evidence show that any potential slight increase in the "turnover" rate outweighed the strong public interest to be advanced by the Employer's proposal.
 
The fourth and fifth factors dealing with overall compensation and comparative data involving compensation are not directly relevant to the dispute before the arbitrator. The Union did submit some evidence regarding post bidding systems in other facilities. Testimony from Mr. McKenna suggested that Idaho and Washington have some form of post bidding and that California and Nevada do not. To the extent that evidence submitted by the Union under this statutory criterion was relevant, it proved to be inconclusive.
 
The sixth factor is the criterion known as "cost-of-living." There was no showing that it is relevant in this dispute. Accordingly, the arbitrator did not assess the dispute in terms of this factor.
 
Nor did the seventh statutory criterion, namely, stipulations of the parties, have an impact in this case. The new law continued the "catch-all" factor, but legislators made clear that an interest arbitrator "shall not use such other factors" if the initial seven factors "provide sufficient evidence for an award." In that connection, the Union submitted evidence covering other correctional institutions in Oregon. Since the evidence, however, showed that Oregon State Penitentiary and other prisons only have shift bidding and EOSCI used a modified version of post bidding that allows the Employer to move employes from locations or shifts for valid causes, the evidence failed to be determinative. In any event, there was no basis for concluding that the initial statutory factors failed to provide sufficient evidence for an award. The Employer was persuasive in its presentation regarding what is in the best interest of the public, and it is clear that the "straight seniority" provision sought by the Union is outside the mainstream of collective bargaining agreements. (See, e.g., Taylor, "Seniority Concepts," Proceedings of the National Academy of Arbitrators, 127).
 
Seniority is an enormously important concept and benefits both parties as well as the public. There is a linkage between job skills and seniority, and it constitutes a legitimate form of job protection. But this is not a case where seniority is being used to affect the economic security of employes as much as it is a struggle over job control. There must be a balance between management and labor when using seniority as a basis for allocating employment opportunity, and more senior workers are logically entitled to greater security. It, however, is not reasonable to promote the use of seniority as a method of aborting contact with inmates when such a scheduling system denies the Employer use of its most skilled employes in its most sensitive job assignments. While seniority should translate into job security, the evidence failed to show that it should also translate into preference for job choice without regard to ability to perform and without regard for crucial needs of the operation.
 
AWARD
 
Having considered evidence submitted by the parties and all relevant statutory criteria, the arbitrator adopts the last best offer package of the Employer as the appropriate one to become a part of the collective bargaining agreement between the parties. It is so ordered and awarded.
 
Respectfully submitted,
 
Carlton J. Snow, Professor of Law
 
Date: 3-8-96
 
For the Union: Mr. Tim Nesbitt
 
For the Employer: Mr. Peter DeLuca