Michigan is undergoing major changes in public sector labor law

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Until recently the collective bargaining process in the public sector was rarely discussed. Now it is a national topic of great interest as states like Wisconsin, Ohio and Michigan make sweeping changes to their labor laws.

In the private sector (i.e. GM, Ford, etc.) the employer and union bargaining is governed by the National Labor Relations Act. Here in Michigan we have an act that is very similar to the NLRA, yet it is for public employees and it is called the Public Employment Relations Act. Unlike the private sector, however, all strikes are illegal under PERA.

Typically, the bargaining process in the public sector goes like this: The parties (public employer and union) bargain over items like wages, health insurance and pension. If they cannot settle their contract, they ask for a mediator to assist them with settlement. If the mediator is unsuccessful — which is not uncommon — the parties may put their case before an arbitrator or fact finder.

If police and fire employees cannot settle a collective bargaining agreement with their employer, they have the right to go before a neutral arbitrator to settle the matter. This is called Act 312 arbitration. The neutral arbitrator listens to both sides’ arguments and demands at a hearing. The arbitrator then writes a binding collective bargaining agreement for the parties.

Non-police or fire employees may use a process called fact finding. Fact finding is very similar to Act 312; however, the decision of the fact finder is non-binding on the parties. The fact finder’s written award is simply a recommendation. The parties are not bound by the award. Yet the award is a public document that often sees the light of day on websites, in newspapers and on radio talk shows. As a consequence, the award can have a strong impact on the negotiations in regard to public opinion.

In 2011, collective bargaining changed forever in Michigan with the passage of Public Act No. 4. This law is commonly called the “Local Government and School District Fiscal Accountability Act” or simply “PA 4.” The law provides that the governor may appoint an emergency manager whose primary purpose is to balance the budget of a financially troubled public entity.

This law has garnered a lot of continuing national attention, mostly because the law provides that if a city or a school district is in financial exigency, the collective bargaining agreement between the employer and union may be voided by an emergency manager. This is quite a game changer in Michigan because prior to the passage of this act, it was nearly impossible to change a CBA. A public sector CBA was a legally binding agreement until the date of its termination.

The new act has a procedure that needs to be followed before an emergency manager is named. First, the governor appoints a review team. If the team determines a financial emergency exists, the governor then declares the local unit of government or school district under “receivership.” At that point, an emergency manager takes over.

The powers of the emergency manager are broad and numerous. In regard to public employees, the emergency manager can terminate or modify a CBA, terminate employees, reduce wages and eliminate benefits.

Many public sector employees believe PA 4 is a direct assault on their unions. Some private sector employees have responded that this is simply the same thing that happened to them a few years ago and that “hard times dictate hard measures.” Regardless of who is correct, one truth has emerged: the public is now paying attention to public sector labor law.

Alexandra Schmid is a special programs coordinator and adjunct professor and Maris Stella Swift is professor of employment and labor law at GVSU.

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