In public-sector labor law, change is the one certainty



by Cynthia Price
Legal News

A nearly-standing-room-only crowd came to hear attorneys for those on both sides of the bargaining table talk about recent changes to state law at the Grand Rapids Bar Association (GRBA) Labor and Employment Section meeting last Tuesday.

Dozens of section members gathered  to hear Barbara Ruga of Clark Hill, who represents employers, particularly school districts, and Fillipe Iorio  of Kalniz Iorio & Feldstein, an attorney for labor unions.

The section chair, Marlo Smith of M D Smith law Office in Kalamazoo, opened the meeting, followed by remarks from section secretary Krista Abbott, who used to work with Iorio. Jeff Gray of Varnum is the section vice-chair.

The high attendance to some degree may have reflected the uncertainty labor and employment attorneys are feeling about what the boundaries are, and what they will be in the rapidly-changing atmosphere of the future.

Ruga and Iorio took turns speaking about new legislation passed by the State of Michigan, including the Emergency Manager Act PA 4; the wage and benefit freeze at contract expiration statute, PA 54; the Best Practices Revenue Criteria Act; and Senate Bill 7 concerning health care plan coverage.

Both were passionate advocates for their clients’ points of view, but both were able to present information about the new legislation even-handedly.

Though Ruga emphasized that the “stick” these acts represent brought labor interests to the table much more eager to secure a contract — she had hammered out an unprecedented number of contracts in the spring of this year — she said that even she was “starting to be a little sympathetic to what the unions are up against.” Many section members, aware of her reputation as a tough negotiator, laughed.

Iorio, whose law firm advertises that it was founded in 1991 with “a commitment to make the expertise of a full-service law firm available to the families of working men and women,” focused on how broad the powers granted to Emergency Managers are. Benton Harbor’s Emergency Financial Manager (EFM) Joseph Harris “fired” the entire city council, and there is nothing in PA 4 precluding that action. Calling this “quite shocking,” Iorio went on to say that the constitutionality of the act is being challenged, both in a proposed referendum for the November ballot and in the courts. “You’re seeing a coalition of many different groups, public sector labor organizations, other unions, citizen groups, I think because of the broad authority it gives to the EFM. It really grants the manager autocratic, dictator-like authority in almost all aspects of running a local municipality.”

Ruga added that there are at least three lawsuits pending, challenging provisions of the statute.

All of this leaves almost everyone in the mix with uncertainty.

Ruga noted that what spurred the passage of PA 4 is that school districts and municipalities are not “living within their means,” and she feels even now that continues to be the case.

Both attorneys talked at length about the provisions of PA 62, the Best  Practices Revenue Criteria, aimed specifically at school districts. In order to receive $100 per student in extra funding, districts must meet four out of five criteria, spelled out in guidance from the Department of Education issued June 30. They are: 1. Charge employees at least 10% of the health care premium; 2.  Hold policy on medical benefit plans (if directly employed by district); 3. Develop and implement a Service Consolidation Plan; 4. Obtain competitive bids on non-instructional services; 5. Provide a dashboard or report card with specific indicators. To help school districts comply with criterion 2, the health and employee benefits organization associated with the Michigan Education Association, MESSA, changed its policy so districts may be policyholders.

The presenters both stated that Senate Bill 7, unsigned at the date of the section meeting, is full of provisions that need clarification, not least of which is its effective date. The bill puts a hard cap or an 80/20 mandate on benefits plans “effective on the beginning of the ‘plan coverage year’” — terminology which is confusing.

They warned that there may be many additional significant changes in the legislative pipeline.