In a surprising decision recently, the Massachusetts Supreme Judicial Court (SJC) struck down a long accepted provision of collective bargaining agreements, the so-called “evergreen clause”. The clause is inserted into collective bargaining agreements to extend the provisions of the contract past the expiration date while negotiations are ongoing. The practical effect of an evergreen clause is to provide a stable environment for negotiations.
The case, Boston Housing Authority v. National Conference of Firemen and Oilers, Local 3, revolved around the BHA’s decision to fire 16 firemen because their jobs had become obsolete with the installation of new heating systems in BHA properties.
According to the case itself, “[f]or approximately thirty-five years, Local 3 has represented a bargaining unit comprised of low pressure firemen and stationary engineers (collectively, firemen) employed by the BHA. The traditional function of these employees was to operate and maintain high pressure heating systems at BHA properties. The BHA gradually phased out these high-pressure systems and replaced them with new heating systems that did not require the use of licensed firemen for operation and maintenance. The number of firemen employed by the BHA declined commensurately. By 2000, there were no high pressure systems left, so the primary duties of the remaining firemen were to observe and report on the condition of the newer heating systems, rather than to operate or maintain them.” According to the most recent CBA, however, the BHA was required to keep 16 firefighters on as a “minimum staffing” level.
The facts of the case are as follows:
“Local 3 and the BHA had entered into numerous collective bargaining agreements (CBAs) over the years. Each of the last seven CBAs was executed well after the preceding agreement had expired according to its fixed term. In each case, terms and conditions of employment were continued pursuant to a so-called “evergreen clause” included in the former agreement, which stated that during any period of negotiations between the parties, the terms of the prior agreement would remain in full force and effect until a new agreement was signed. The most recent CBA between Local 3 and the BHA had a fixed term from April 1, 1998, through March 31, 2001, and included an evergreen clause.
“In May, 2003, the parties executed a memorandum of agreement (MOA), which carried forward many of the provisions of the 1998-2001 CBA and amended or added several others. One such addition, set forth in “Attachment A” of the MOA, was a provision that required the BHA to maintain “a staffing level of sixteen positions … for the term of the present collective bargaining agreement (April 1, 2001–March 31, 2004).” This minimum staffing provision appeared to be part of a broader compromise between Local 3 and the BHA.
“In January, 2004, before the MOA was set to expire on March 31, 2004, according to its fixed term, Local 3 notified the BHA of its intention to negotiate a new CBA. The parties met nine times over the next two years but were unable to reach an agreement. There was no evidence of any bad faith bargaining. Neither party declared an impasse. During negotiations, the BHA sought to eliminate both the minimum staffing language from “Attachment A” of the MOA and the evergreen clause set forth in the 1998-2001 CBA. Local 3 did not agree to either of these proposals.
“By January, 2006, the BHA learned that its Federal funding for FY 2007 likely would not be the full amount of its expected subsidy. Anticipating a budget deficit of at least $10.5 million, the BHA proposed eliminating all sixteen firemen, which would save the BHA approximately $1.2 million per year.
“The BHA notified Local 3 of its intention to lay off the firemen, and the parties met three times to exchange proposals on the impact of this decision. The final proposal from each side was rejected by the other side.
“On April 30, 2006, the BHA laid off all sixteen firemen, citing fiscal concerns and the lack of any need for such employees. Local 3 filed a grievance asserting that, by terminating the firemen, the BHA had violated numerous provisions of the MOA which, in Local 3’s view, was still in force. The BHA denied the grievance, and Local 3 submitted the matter to arbitration.
“Following several hearings, the arbitrator issued his award on May 12, 2008. He first determined that, contrary to the BHA’s suggestion, the duration of “Attachment A,” setting forth the minimum staffing provision, was concurrent with the other provisions of the MOA and did not expire separately on March 31, 2004.
“The arbitrator next determined that, pursuant to the unambiguous language of Paragraph 14 of the MOA the evergreen clause from the 1998-2001 CBA carried forward and was incorporated into the MOA. He stated that although the fixed term of the MOA was from April 1, 2001, to March 31, 2004, this contract, like a number of others that had preceded it, was to “remain in full force and effect” during “any period of negotiations” for a new agreement, and that long after March 31, 2004, the BHA continued to act as if the MOA was in force. Further, the arbitrator continued, the record was clear that when the BHA decided to lay off the firemen, the parties were still in negotiations.
“Given his finding that the MOA was in effect on April 30, 2006, the arbitrator next determined that the minimum staffing provision set forth in “Attachment A” was an express limitation on the BHA’s right to lay off the firemen, and that the fiscal and operational changes cited by the BHA to justify such layoffs had existed prior to the BHA’s agreeing to the minimum staffing language. As such, the arbitrator continued, the BHA violated the terms of the MOA when it laid off the firemen.
“The arbitrator pointed out that the BHA had sought no relief prior to acting unilaterally, and that if the parties had reached a good faith impasse, then the BHA could have implemented its impasse position. Finally, the arbitrator stated that neither the evergreen clause nor the minimum staffing provision appeared to be an illegal contract provision that was unenforceable, and that if the parties’ agreement was to be invalidated, then that decision should come from a court, not an arbitrator. The arbitrator ordered the BHA to reinstate the sixteen firemen with full back pay and benefits.”
“On June 4, 2008, the BHA filed in the Superior Court a complaint to vacate the arbitration award pursuant to G.L. c. 150C, § 11, on the grounds that the arbitrator exceeded his authority and ordered the BHA to engage in conduct prohibited by State law. The BHA claimed that because G.L. c. 150E, § 7 (a ), limits the term of a CBA to three years, the MOA expired by law on March 31, 2004, and, consequently, there was no agreement in force to permit the arbitration of Local 3’s grievance or to preclude the BHA’s layoff of the firemen.”
In essence, the SJC ruled that because an evergreen clause is unenforceable, the contract and all of its terms end at the conclusion of a CBA. Because the contract was not in effect, and the grievance and arbitration procedure provision in the contract had lapsed upon expiration of the contract, the arbitrator exceeded his authority in ordering the BHA to rehire the firemen.
In their discussion, the SJC stated that “[t]he unambiguous language of G.L. c. 150E, § 7 (a ), reveals a clear legislative intent to limit the term of a CBA to not more than three years. This limitation serves several important and beneficial purposes, including giving employees the opportunity to reevaluate their choice of a bargaining representative at regular intervals; compelling the parties to reassess the terms of their CBA at least once every three years; preventing public employers from unduly tying the hands of their successors in dealing with changing and challenging circumstances; and protecting the public interest in the proper management of limited public resources and the efficient provision of government services.”
Recognizing the reason for an evergreen clause, the SJC wrote, “an evergreen clause is designed to maintain the status quo in labor relations and provide for a continuing code of conduct while parties negotiate a new bargaining agreement…. However, the effect of an evergreen clause is to preserve and maintain all of the provisions of a CBA, thereby extending its duration beyond three years, which is prohibited by G.L. c. 150E, § 7 (a ).”
According to the SJC, “[t]he purported policy benefits of an evergreen clause cannot trump the intent of the Legislature, as unambiguously expressed in [G.L.c. 150E,] §7(a), to limit the term of a CBA to no more than three years. To the extent that the Commonwealth Employment Relations Board (former Labor Relations Commission) has determined that an evergreen clause may extend the term of a CBA beyond three years, that determination is inconsistent with §7(a) and, therefore, not controlling.”
The problem with the decision is that it opens the door to unrest during the most fragile times in a labor relationship, the contract negotiation period. Evergreen clauses worked to promote labor peace and stability even through the harshest of negotiations, a fact recognized by the SJC. This decision has the potential to open the door to serious problems, especially in the public sector, where management and unions can negotiate for years in between active CBA’s.
The most obvious solution to the problem is for the legislature to reword General Law 150E section 7a and expressly provide for evergreen clauses. Another solution would be for the parties to agree upon “bridging language”. This would be, in effect, a mini CBA that would perform as a stopgap and would clarify the contract provisions during negotiations. The problem with bridging language is that it would have to be negotiated and agreed upon by the bargaining parties, further extending the time between contracts.