The Budget and Budget Repair Bills

July 5th, 2011

Act 10, commonly referred to as the Budget Repair Bill, finally became effective on June 29, 2011. Combined with certain provisions of Act 32, the state Budget Bill, it is truly a new day for public sector labor relations in Wisconsin.

While it is impossible to address all of the issues raised by the legislation in this short report, we wanted to provide you with an overview of some of the more significant issues, including changes made in the Budget Bill (“BB”) to the Budget Repair Bill (“BRB”).

Overview

The legislation requires most public employees to pay a portion of their pension contributions and to contribute to their health insurance premiums. It also limits collective bargaining rights for most public employees to wages, the increase of which may not exceed a cap based on the Consumer Price Index, unless approved by referendum. The legislation also mandates annual union representation elections, and prohibits employers from collecting union dues.

Exempted Employees

Under the BRB, represented public safety employees are excluded from most of the BRB’s provisions. The BB expanded this exemption to include law enforcement or firefighting managerial employees – for example police and fire Chiefs – and transit employees. Employees currently party to a collective bargaining agreement are also exempt, until that agreement expires.

Pension Contributions

The BRB requires most public employees to contribute 50% of the required WRS pension payment. For most employees, this will be 5.8% of salary in 2011. The BB included a provision which allows this payment to be made on a pre-tax basis. Additionally, the exemption from this provision for police and fire employees now only applies to current employees – the BB provides that municipal employers are prohibited from paying the employee-required contributions if the public safety employee first becomes a WRS participate on or after the effective date of the BB. While we believe that the employee payments must start to be made as of the beginning of the first pay period after the effective date of the BB, we are still waiting for confirmation from the State on this issue.

Health Insurance Contributions

Under the BRB, local governments participating in the Public Employers Group Health Insurance plan are prohibited from paying more than 88% of the lowest cost health insurance plan. Employers can require employees to pay more than 12%, if they choose to do so. For local governments, this provision is not effective until January 1, 2012. While retaining the public safety employee exemption and expanding it to include managerial employees, the BB makes the “design and selection of health care coverage plans” a prohibited subject of bargaining for public safety employees.

Civil Service System Requirement

The legislation requires local governments that do not already have a civil service system in place to establish a “grievance system.” The system must address employee terminations, discipline, and workplace safety. The system must also contain some minimum due process requirements. The system must be put in place by the end of October of 2011. This issue requires immediate attention.

Workplace Policies

For most employers, the terms and conditions of employment for most employees have been dictated by the collective bargaining agreement. Additionally, most work rules and policies for non-represented employees have come to mirror those in the collective bargaining agreements. Because the terms of collective bargaining agreements will no longer cover such issues as overtime, holiday and vacation accrual, sick leave, and other matters, it is imperative that all employers immediately begin to review their existing work rules and policies to review what is in place, what needs to be amended, and what needs to be created.

Representation Elections

The BRB called for annual representation elections, and these elections could begin as early as October of 2011. Most public employers have never been through a representation election, and are not familiar with what can or can’t be said during an election or the myriad other “dos and don’ts” which come with the process. Keep your eye out for news about a special presentation which will be put on in the near future by Stafford lawyers on this subject.

Conclusions 

While much work will be required to implement these and other changes resulting from the BRB and BB, employers need to address certain matters now. In addition to issues related to the pension contribution, annual representation election, and withholding of union dues, employers should look at the civil service system requirement immediately. They should also do a thorough review of all work rules, policies, and procedures. The attorneys at Stafford look forward to working with you all on these matters.

Filed Under: Employment and Labor Law

Note: The SR Short Report is published by Stafford Rosenbaum. The SR Short Report is provided for informational purpose only and should not be construed as legal advice or an opinion on specific situations. The legal issues raised by a particular situation may differ from those addressed in the publication. We encourage you to contact one of the Stafford Rosenbaum attorneys before making a legal decision.