By Christopher Casillas and Jordan L. Jones
In Port of Anacortes, PERC Examiner Page Garcia dismissed an unfair labor practice (ULP) complaint filed against the Port of Anacortes for unilaterally changing the health insurance benefits of Union members. Examiner Garcia found that although the Port of Anacortes had “failed to maintain the status quo by changing the health insurance benefits offered to bargaining unit employees” and had “presented the change in health insurance benefits as a fait accompli”, the Employer “met its burden of proof to support its defense of business necessity.”
In this case, five full-time employees in the facilities and maintenance services were certified as a bargaining unit by PERC on December 3, 2013, with negotiations over their first CBA to take place in April of 2014. The International Longshore and Warehouse Union, Local 25, was selected to be the exclusive bargaining representative.
On February 28, 2014, the Port of Anacortes e-mailed the Union advising them that “the current Regence plan “will no longer be available due to federal regulations. In an effort to maintain the status quo, our Broker has found a nearly identical plan with Regence.” In addition, the Port of Anacortes offered to meet briefly with the Union to “come to understanding on these changes” with open enrollment beginning in March and the changes finalizing on April 1, 2014.
The Union argued that “medical benefits are a mandatory subject of bargaining and that the [E]mployer did not provide the [U]nion with an opportunity for input or bargaining over the selection of the replacement plan.” In addition, the Union asserted that the Port of Anacortes had “presented the change in benefits as a fait accompli.”
The Port of Anacortes agreed with the Union that “health care benefits are mandatory subjects of bargaining and that there is a general prohibition on unilaterally changing mandatory subjects of bargaining.” However, the Port of Anacortes argued that “it had both a legal and business necessity to make the change” which relieved the Employer of its bargaining obligations. The Port of Anacortes pointed to changes in federal health care law, namely the Patient Protection and Affordable Care Act (ACA), which forced the current Regence plan to be discontinued.
Examiner Garcia stated that “[w]here a new bargaining unit is concerned, the relevant status quo is determined as of the date of the filing of the [U]nion’s petition for representation.” The Union filed its representation petition on October 7, 2013, and so Examiner Garcia found that “the health care benefits offered at the time was the 2013-2014 Regence plan . . .” which the Employer sought to change.
Examiner Garcia found that although the Employer had “met the notice requirement for the mandatory subject of health insurance benefits when it sent a February 28, 2014 email [to the Union]”, the changes were “presented to the [U]nion . . . as an irrevocable decision, or fait accompli.” Nonetheless, PERC dismissed the ULP complaint because the Employer presented a valid business necessity affirmative defense.
Examiner Garcia stated that:
Necessity, either business or legal, is an affirmative defense which the respondent bears the burden of establishing. A respondent claiming a defense of legal necessity to a unilateral change must prove that: (1) a legal necessity existed; (2) the respondent provided adequate notice of the proposed change; and (3) bargaining over the effects of the change did, in fact, occur or the complainant waived bargaining over the effects of the change.
The Port of Anacortes provided testimony that the 2013-2014 Regence plan could not be continued due to changes in federal health care law resulting from the passage of the ACA. Examiner Garcia stated that the Union “did not refute the [E]mployer’s repeated citation to the ACA, nor did it supply any evidence to the contrary. Both the [U]nion’s and [E]mployer’s testimony supported that the health insurance benefits plan in effect . . . could not be continued.” Examiner Garcia also noted that Port of Anacortes had provided notice to the Union over a month before the changes were to take effect and had “reflected a willingness to meet and bargain the effects of the changes” through correspondence.
PERC dismissed the ULP complaint filed against the Port of Anacortes for unilaterally changing the health insurance benefits of Union members because the Employer met its burden of proof in regards to its business necessity affirmative defense.
Editor’s Note: Although the end result in this case may be warranted, it will likely only add to some of the confusion around the business/legal necessity defense. What is perhaps not well-developed or misleading with this decision is the idea that the business necessity defense somehow discharges, in full, the collective bargaining responsibilities an employer if it can somehow articulate a legal reason to make a change to a wage, hour, or working condition. Such an impression is a misstatement of the full scope of this defense.
The business necessity defense is more aptly understood as a modification to an employer’s normal bargaining obligation in order to confront a compelling business or legal reason that requires a somewhat immediate change, in which case the employer is relieved of their normal bargaining obligations and can unilaterally act on a limited basis. However, there is still an obligation to engage in as much good faith bargaining as the conditions permit, especially when the need for the change is not absolutely immediate, and at all times there is still an obligation to bargain over the effects of any required change.
The Examiner concluded that the union never requested effects bargaining, but clearly some request was made because the parties did meet prior to the change, and there was some evidence that proposals were exchanged in an effort to at least address the associated effects. Yet, no agreement was apparently ever reached, which is presumably why the ULP charge was filed. So, it is unclear from the write up of this decision how the employer satisfied its obligations under this defense if no agreement was ever reached, since the union had clearly made some type of request that resulted in at least one meeting and an exchange of proposals. If there was a refusal to bargain the effects of the decision then the elements of the defense cannot be satisfied.
If anything, while apparently not raised in this case, there is an argument that the union waived its rights through inaction by not forcefully asserting its bargaining rights here and following through on those demands. It is critical in situations like this that your union immediately file a demand letter with the employer, and in the case of insurance your union should itself immediately investigate alternative plans. While the union in this case apparently conceded this point, it is quite probable that, upon further research, a more comparable plan could have been located than the one advanced by the employer. Additionally, based on the decision, it appears the union failed to press its demand and offer concerning the effects of the change.
