SAGINAW (MI) FIREFIGHTERS

LOCAL 102

Presenting an Effective Act 312 Case

By Ron R. Helveston, Legal Counsel

MPFFU Magazine, Spring 1999

The goal of collective bargaining is to reach a mutually satisfactory contract. An Act 312 arbitration award is necessary only in the relatively small number of cases in which the parties cannot reach agreement. However, because Act 312 arbitration is the possible final step in all negotiations, preparation for the Act 312process should begin early in negotiations. A union which discovers, on the eve of arbitration, that its “must have” proposals are indefensible under the criteria in Act 312 receives a very unwelcome surprise. Conversely, a union which is well-prepared for the Act 312 process, and can demonstrate to the employer its likelihood of succeeding in arbitration, can often reach settlement before arbitration begins.

Preparing For Negotiations Is Preparing For Act 312

First, the union must select a bargaining team, headed by a chief negotiator who is familiar with the bargaining unit, the employer and the negotiation process. The chief negotiator should act as spokesperson for the team. It is helpful if the bar-gaining team contains members who have participated in prior negotiations. Many issues have a history which the current bargaining team should know. Also, experience with the other side’s negotiating style or preferences may assist in forming negotiating strategy, and avoiding misunderstandings.

The union should conduct a thorough review of the current agreement, including both economic and non-economic is-sues which might be presented in negotiations. Many unions find it helpful to send a questionnaire to all bargaining unit members, inviting them to list in order of importance the issues they wish to resolve. The negotiating team can develop a master list of the most important issues from these questionnaires to guide it in bargaining. The union should also review the grievances filed during the term of the previous contract to discover problems which might be solved through negotiations. Once the union has examined its contract, surveyed the membership and reviewed its grievances, it is in a position to draft its contract demands.

It is critical for the negotiators to keep in mind that an issue may not be presented to Act 312 arbitration unless it has been raised in negotiations, and after timely statutory notices. As a result, potential Act312 issues should be presented early in the negotiation process to assure that they are not overlooked in the event that negotiations stall early.

Identification Of Issues

There should be agreement between the parties as to whether tentative agreements reached during negotiations will remain even without a complete settlement of the contract or whether the tentative agreements are contingent upon successful ne-gotiations for a complete agreement. It is often advantageous for both parties if all tentative agreements are carried forward, as this decreases the number of issues to be heard by the arbitration panel.

Presentation Of The Case—Comparables

Act 312 requires that the arbitration panel base its award upon the eight so-called “Section 9” factors. In practice, the most important and complex of these factors is usually “comparability”—“the wages, hours and conditions of employment of other employees performing similar services…[i]n public employment incomparable communities.”

Once the parties have agreed to a list of comparable communities, or exchanged proposed lists of comparable communities, they should prepare exhibits on the issues before the arbitration panel. Manyof these exhibits will compare the arbitrating union’s wages, hours and condi-tions of employment to those of“comparable” employees. To preparethese exhibits, the union will need copiesof collective bargaining agreements fromthese comparable communities. In manyinstances, wages and benefits of a compa-rable community’s employees can be determined from the collective bargaining agreements alone. However, some benefits may be subject to unwritten practices, and other benefits (e.g., insurance and pensions) may be described in documents other than the collective bargaining agreement. Thus, the union should always double-check its exhibits with union officers in comparable communities to en-sure accuracy.

Ability To Pay

Another factor in Act 312 which receives some attention is “[t]he interests and welfare of the public and the financial ability of the unit of government to meet those costs.” Almost every government employer argues this factor, sometimes called “ability to pay,” as part of its case.

      In addressing this argument, the union must make clear that “ability to pay” is only one of the Section 9 factors, and is granted no special weight in comparison to the other factors. Indeed, it shares single factor with the “interests and welfare of the public.” The union should also note that governments have an obligation to provide basic services to their citizens. In providing those services, governments must pay market prices for goods and ser-vices—for water, electricity, cars and trucks, concrete, etc. The government must likewise pay the market price—as determined by comparable communities—for its employees’ labor.

      To prepare for an ability to pay argument, the union must first understand that the budget is simply a projection, prediction, or “guesstimate” of how the government proposes to spend the money it expects to receive. Another financial document, the audit, is the explanation of what money was actually received, anyhow it was actually spent. The union will often find it beneficial to have an outside expert, such as an accountant who has performed audits for government units; examine the budgets and audits of a government unit for the five years prior to the arbitration. Such a comparison between how the government predicts it will spend money and how it actually spent its money will often reveal accounting practices that undermine the employer’s claims. For example, many governments as a matter of course under-estimate revenues and over-estimate expenditures, such that their budgets warn of insolvency, but their subsequent audits reveal surpluses. A government may consistently over-budget certain departments or ac-counts. Also, a government may fund ac-counts for specific purposes (e.g., major construction projects) which have not been carried out for many years. Proof of any of these, or other accounting practices, will cast doubt on a government’s predictions of financial difficulty.

      Government officials are also inclined to flaunt their successful financial stewardship during elections, only to turn theirpockets out in negotiations. Union shouldkeep a file of campaign literature, coun-cil minutes or tapes of council meetings, and newspaper interviews to provide thearbitrator with a view of the government’sfinances not colored by arbitration. Similarly, official bond prospectuses and otherfinancial documents often present a morereliable summary of municipal finances.

Evidence On All Other Section 9 Factors

The arbitration panel will hear and consider evidence on all of the other Section9 factors as well. This evidence will bepresented to the panel largely as docu-mentary exhibits or as testimony. Exhibits are usually presented by a witness.Most often that witness is the individualwho has first-hand knowledge of the factscontained in the exhibit, or who has pre-pared the exhibit from other, recognizedsources of information. In addition, oraltestimony should be provided to educatethe panel about the background of the department, the bargaining unit and the circumstances which necessitate the change presented by a proposal. The union should usually rely upon its own members to sup-ply this testimony.

Last Best Offers

At the conclusion of proofs, the partieswill present “last best offers” to the panelon each arbitrated issue. Where the paneldetermines that an issue is “economic,”the panel must choose one or the other“last best offer”—there can be no com-promise. Thus, parties must be careful todraft last best offers on economic issueswhich are defensible in light of the proofspresented. Where the panel determinesthat an issue is non-economic, the panelhas the discretion to grant an award different from either party’s last best offer. The parties’ panel delegates can be valuable in assisting the arbitrator to craft a compromise award on non-economic issues.