The Budget Repair Bill

March 10th, 2011

Following yesterday’s dramatic developments in the State Senate, the Legislature appears poised to pass Special Session SB 11/AB 11, commonly referred to as the Budget Repair Bill. As you are all undoubtedly aware, the legislation dramatically impacts public sector labor relations in Wisconsin.

While it is impossible to respond to all of the issues raised by the legislation in this short report, we wanted to take some time to address some of the immediate issues, and to give you some advice on what steps you need to be taking now to prepare for the impact of the legislation.

OVERVIEW

The legislation requires most public employees to make contributions to their pension contributions and health insurance premiums. It also makes various changes to limit collective bargaining for most public employees to only the issue of wages, the increase of which could not exceed a cap based on the Consumer Price Index unless approved by referendum. Unions will also be required to take annual votes to maintain certification, and employers would be prohibited from collecting union dues.

EXEMPTED EMPLOYEES

Generally speaking, represented public safety employees are excluded from the legislation’s provisions. While there has been some debate on this issue, we agree with the majority opinion that non-represented, supervisory public safety employees, such as police chiefs, are not exempt. Employees currently a party to a collective bargaining agreement are also exempt, until that agreement expires

PENSION CONTRIBUTIONS

The legislation does not discuss the pension contribution in terms of the “employee” or “employer” portion of the payment but, rather, requires most public employees to contribute 50% of the annual pension payment. For most employees, this will be 5.8% of salary in 2011. The pension rules are effective beginning on the first day of the first pay period after March 13, 2011, although this may be impacted by the bill’s effective date (see below).

HEALTH INSURANCE CONTRIBUTIONS

Local governments participating in the Public Employers Group Health Insurance plan would be prohibited from paying more than 88% of the lowest cost plan. Also, 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.

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 no later than the first day of the fourth month beginning after the effective date of the legislation.
This issue requires immediate attention. All government employers should review their ordinances to see if they have a civil service procedure currently in place and, if so, if it should be amended in any way. If they don’t have one currently, they will need to create one relatively quickly.

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.

EFFECTIVE DATE OF THE LEGISLATION

The legislation’s effective date is the day after publication. The Secretary of State has up to 10 days to publish a bill after it is signed by the Governor, meaning the effective date of the legislation could be anywhere from the day after to almost two weeks after it is signed by the Governor. During this period, you can expect unions without a current bargaining agreement to seek to reach an agreement. The ultimate effective date could also impact the timing of the pension contributions as well as when the re-certification election must take place, so stay tuned.

CONCLUSIONS AND STEPS TO BE TAKEN NOW

The Budget Repair Bill constitutes a seismic shift in public sector labor law in Wisconsin. While much work will be required to implement the changes, 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.

If you would like additional information regarding the Budget Repair Bill and its impact, please contact Drew Cochraneor your Stafford Rosenbaum attorney.

Filed Under: Government 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.