Budget Repair Bill Proposes Significant Changes to Municipal Collective Bargaining Laws
2011-02/15 Dean R. Dietrich                                                             Printer Friendly PDF Version

Governor Walker has proposed many changes to the Municipal Employment Relations Act (Section 111.70, Wis. Stats.) as part of the Budget Repair Bill to be considered by the Legislature this week.

In the Repair Bill, a number of changes are proposed to state and municipal employee collective bargaining laws. While the exact changes are subject to review by the Legislature, it appears that the following changes will occur:

• Local government payment of the employee portion of the Wisconsin Retirement System (WRS) contribution will be prohibited unless included in an existing Labor Agreement. This change would not eliminate the local government obligation to pay the employee contribution under an existing Labor Agreement until the Agreement has expired;
• The employee contribution to the WRS will be increased to 5.8% of salary/ wages as of date of adoption of the Legislation. Employers may be obligated to pay this higher amount under the language in an existing Labor Agreement.
• A study will be conducted of the structure, benefits, and vesting periods for all WRS pensions. Some of the pension “multipliers” will be changed.
• State employees will be required to pay at least 12.6% of the annual health insurance premium cost, and local government employers participating in the Public Employers Group Health Insurance Program (the “State Plan”) will be required to pay no more than 88% of the lowest cost plan premium;
• Changes are proposed to the State Plan health insurance plan, including new wellness incentives, health risk assessments, and other reforms;
• Collective bargaining for local government employees (except for firefighter unions, police unions, and deputy sheriff associations, now called public safety employees) will be limited to only negotiating on base wage rates. Other wage adjustments such as experience steps for payments based upon length of service would not be subject to collective bargaining.
• Labor agreements with local government employers (except for public safety employees) would be limited to only one year in duration, and all wages would be frozen at the expiration of a labor agreement until a new labor agreement is negotiated.
• A local government entity is prohibited from bargaining with a bargaining unit representing general
  municipal employees with respect to any “factor or condition of employment except wages, which includes
  only total base wages and excludes any other compensation ….” The legislative language provides that
  a prohibited subject would include “overtime, premium pay, merit pay, performance pay, supplemental
  compensation, pay schedules and automatic pay progressions.”
• Any proposal to increase wages higher than the percentage of the consumer price index change that occurred 180 days before the expiration of the Labor Agreement would also be considered a prohibited subject of bargaining. It is also a prohibited subject of bargaining to make any adjustment to existing wages more than the decreases in the consumer price index.
• Employers would be prohibited from deducting union dues from an employee’s payroll check, and fair share
  language would be considered a prohibited subject of bargaining.
• All public sector unions would be required to have a vote each year to maintain their certification as a union
  representing public sector employees.
• Wage increases higher than the change in the consumer price index would be allowed only if approved by the electorate through a referendum.

Questions Regarding Next Steps Under Proposed Legislation

A number of clients have contacted us regarding Next Steps in light of this proposed legislation. Here are some
common questions and answers:

What do we do if we have an existing labor agreement?

At this time, there appears to be nothing to do if you have an existing Labor Agreement. The language in the
proposed legislation makes it clear that the revisions to the Collective Bargaining Law only become effective at the
expiration of an existing Labor Agreement. Local governments will continue to pay the retirement contribution on
behalf of their employees if that is stated in the Labor Agreement, unless there is a specific provision that makes
contract language unenforceable if it runs contrary to state law. Unfortunately, the legislation acknowledges the
existence of language in a Labor Agreement when addressing the pension contribution. It will be difficult to argue
that the local government should stop contributing to the WRS on behalf of the employee if there is an existing
Labor Agreement that requires such contributions.

What should we do if we are considering ratification of a tentative agreement that will extend the labor
agreement for 2011 and 2012?

This is the most difficult decision for the local government board to make. If you do not accept the tentative
agreement, it is highly likely that the bargaining with that union will be subject to the new bargaining law. On the
other hand, if the settlement is in the best interests of the local government unit, it may be appropriate to accept the Tentative Agreement and have a new Labor Agreement for a period of time before the bargaining law changes take place for a future Labor Agreement. It may be beneficial to accept a Tentative Agreement and not be one of the first local governments to be impacted by the new legislation in whatever final form it takes.

We have not been bargaining over a 2011 labor agreement. What should we do at this time?

It is possible that the local union will come and try to quickly settle the current negotiations. Whether you want to
try to settle quickly will depend upon the proposal brought forward by the union. See answer to question above.

If you are not in the negotiation process, it is best to wait and see what happens with the Legislature considering
this bill over the next several weeks. If the bill passes as proposed, the local government unit should notify the
union that it is going to operate under the new bargaining law, which means the only issue that will be negotiated
is wages. Everything else would be eliminated from the Labor Agreement and handled as if the employees were
nonrepresented employees of the local government unit. This places great emphasis on the personnel policies or
Employee Handbook that the local government unit may have for its nonrepresented employees. Union employees, in all respect except wages, would be treated like nonrepresented employees and subject to the provisions of the Employee Handbook. The local government unit would not be able, however, to pay the employee share of contribution to the WRS regardless of what is stated in the Employee Handbook.

Does this mean that interest arbitration no longer exists?

Under the bill as currently proposed, interest arbitration would only apply to bargaining units that have public
safety employees (police, fire, deputy sheriff). Interest arbitration does not apply for “general municipal”
employees. Further, it is a prohibited subject of bargaining for a local government unit to offer a wage increase
(or wage decrease) more than the change in the consumer price index. Exactly how the consumer price index will
be calculated is still to be determined, but the current consumer price index is approximately 1.2%. Thus, a local
government unit could negotiate a wage increase less than the amount of the consumer price index increase, but it is not clear whether a dispute over wages would proceed to interest arbitration or whether the local government unit could simply implement a wage adjustment equaling the consumer price index change or less. All other items would be handled by the Employee Handbook or personnel policies adopted by the local government unit.

All of these changes are subject to further review by the Legislature. It is anticipated that this review will take place quickly since the Budget Repair Bill addresses the current deficit in the State Budget. Ruder Ware will keep you advised regarding new developments on the Municipal Collective Bargaining Law.

© 2011 Ruder Ware, L.L.S.C. Accurate reproduction with acknowledgment granted. All rights reserved.
This document provides information of a general nature regarding legislative or other legal developments. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations, or issues, and additional facts and information or future developments may affect the subjects addressed.