Sauk County v. Wisconsin Employment Relations Commission , 165 Wis. 2d 406 ( 1991 )

LOUIS J. CECI, J.

This case is before the court on petition for review of a decision of the court of appeals, Sauk County v. WERC, 158 Wis. 2d 35, 461 N.W.2d 788 (Ct. App. 1990). The majority of the court of appeals (Sundby, J., dissenting) reversed the order entered by the circuit court for Sauk county, Howard W. Latton, Reserve Circuit Judge. The circuit court's order reversed a Wisconsin Employment Relations Commission (WERC) decision which found that Sauk County (the county) had violated sec. 111.70(3) (a) 7, Stats.,¹ by refusing to retroactively deduct fair-share fees and union dues to cover the period of time between the expiration of one employment contract and the ratification of a successor contract.

Three issues are presented on review. The first issue is whether an "arbitration decision," as that phrase is used in sec. 111.70(3)(a)7, Stats., encompasses all items that are incorporated into a resultant written collective bargaining agreement, even those not in dispute before the arbitrator. We hold that it does.

The second issue is whether fair-share fees and union dues are economic items that should be given retroactive effect. We hold that they are.

The third issue is whether the county's refusal to retroactively deduct fair-share fees and union dues in this case amounts to a failure to implement an arbitration decision, in violation of sec. 111.70(3)(a)7, Stats. We hold that it does. We therefore affirm the decision of the court of appeals.

The facts of this case are not in dispute. AFSCME, Local Union No. 3148, AFL-CIO (the union), is certified as the exclusive bargaining representative of all employees at Sauk County Health Care Center. The union and the county were parties to a labor contract covering calendar years 1983-84. Prior to the expiration of the 1983-84 contract, negotiations began for an agreement to cover 1985. During negotiations, neither party proposed any changes to the 1983-84 contract provision which required fair-share fees and union dues to be deducted once each month from paychecks. The county ceased deducting fair-share fees and union dues from paychecks when the 1983-84 contract expired.

The parties entered into interest arbitration pursuant to sec. 111.70(4)(cm)6, Stats., after negotiations stalled. Each party submitted its final offer to the arbitrator. The arbitrator issued his decision in October, 1985. He chose the union's final offer, which contained’ the following clause: "IX. All provisions of the Labor Agreement of 1983-84 except as modified above." The union's offer also indicated that its wage proposal was to be retroactive to January 1, 1985. Neither party's offer contained any specific language regarding the retroactivity of the fair-share fees and union dues. The arbitrator's decision directed that "the Union's final offer ... be incorporated into an agreement containing the other items to which the parties have agreed."

The resultant 1985 contract contained a fair-share provision which was identical to the fair-share provision in the 1983-84 contract. The provision required that fair-share fees and union dues be deducted "once each month." The 1985 contract's duration clause stated that the contract "shall be effective as of the first day of January, 1985, and shall remain in full force and effect throughout the 31st day of December, 1985 . . .." The 1985 contract also contained a grievance arbitration procedure whereby the parties agreed to submit to arbitration "any dispute concerning the interpretation or application of a provision of this contract. . .."

After the county refused to retroactively deduct fair-share fees and union dues for the period of time between the expiration of the 1983-84 contract and the ratification of the 1985 contract, the union filed a prohibited practice complaint with the WERC. The complaint alleged violations of secs. 111.70(3)(a)l-4 and 7, Stats. The WERC hearing examiner determined that the county had violated sec. 111.70(3)(a)7, Stats., by refusing to retroactively deduct fair-share fees and union dues.

The hearing examiner decided that even though fair-share fees and union dues were not in dispute before the arbitrator, the arbitration decision nonetheless included those items. The examiner also determined that a fair-share/voluntary dues provision is most likely to be considered an economic item capable of being applied retroactively and should have been retroactively applied here. After noting that the issues posed by this case had not been "addressed before this by the Commission," the examiner decided that a sec. 111.70(3)(a)7 violation could be found where "the alleged violation arises in the context of implementing the new agreement pursuant to the award, as opposed to after the implementation of the award, and the issue goes to whether a provision of the agreement is to be given retroactive effect under the award . . The examiner concluded that the county's refusal to retroactively deduct the fair-share fees and union dues amounted to a failure to implement the arbitration decision and therefore was a violation of sec. 111.70(3)(a)7, Stats.

The WERC issued an order confirming the examiner's decision, and the county then instituted proceedings in Sauk county circuit court for review of that order. The circuit court determined that the county had not violated sec. 111.70(3)(a)7 and reversed the commission's order. The court of appeals reversed the circuit court and found that the county had violated sec. 111.70(3)(a)7. We granted the county's petition for review and affirm the court of appeals.

The issues presented by this case are questions of law. When reviewing questions of law, we are not bound by an administrative agency's conclusions. Local No. 695 v. LIRC, 154 Wis. 2d 75, 82, 452 N.W.2d 368 (1990). This court has in the past generally applied three levels of deference to conclusions of law and statutory interpretations in agency decisions. The first and highest amount of deference given to agency interpretations is the "great weight" standard. Under this standard, it is "only when the interpretation by the administrative agency is an irrational one that a reviewing court does not defer to it." Beloit Education Ass'n v. WERC, 73 Wis. 2d 43, 67, 242 N.W.2d 231 (1976) (footnote omitted). The "great weight" standard is "the general rule in this state." Id. We have described the proper use of the "great weight" standard as follows:

[I]f the administrative agency's experience, technical competence, and specialized knowledge aid the agency in its interpretation and application of the statute, the agency's conclusions are entitled to deference by the court. Where a legal question is intertwined with factual determinations or with value or policy determinations or where the agency's interpretation and application of the law is of long standing, a court should defer to the agency which has primary responsibility for determination of fact and policy.

West Bend Education Ass'n v. WERC, 121 Wis. 2d 1, 12, 357 N.W.2d 534 (1984) (footnote omitted).

The second level of review is a mid-level standard, referred to as either the "due weight" or "great bearing" standard. We use this standard if the agency decision is "very nearly" one of first impression. Beloit Education Ass'n, 73 Wis. 2d at 67-68.

The lowest level standard of review we use in reviewing agency decisions is the "de novo" standard, in which no weight at all is given to the agency interpretation. Local No. 695, 154 Wis. 2d at 84.

In Local No. 695, we reversed a labor and industry review commission determination that dues refunds to union stewards constituted "wages" for purposes of unemployment compensation. In deciding the case, the commission "neither relied on, nor referred to, any precedents or any prior decision in its own proceedings." Id. at 81. The case was clearly one of first impression for the commission. It was also clear from the lack of precedent that the commission had no special expertise or experience in determining whether the refunds in question constituted wages. Id. at 84. A de novo standard of review was therefore necessarily used. Id.

Against this background, we have determined that this case involves two standards of review. The first issue, whether an arbitration decision encompasses those items not in dispute, and the third issue, whether the county's actions constitute a violation of sec. 111.70(3)(a)7, Stats., are questions of first impression before the WERC. Although we normally accord an agency's interpretation of a statute great weight, we cannot do so here because this is a case of first impression, and there is no precedent for the WERC's decision. Therefore, the standard of review on these two issues must necessarily be de novo. Local No. 695, 154 Wis. 2d at 84.

The second issue, whether fair-share fees and union dues are economic items which should be given retroactive application, is the type of issue with which the WERC has expertise. As we have stated before, "[R]etroactivity is a way of life in labor negotiations." Berns v. WERC, 99 Wis. 2d 252, 266, 299 N.W.2d 248 (1980). The WERC has had significant experience in dealing with the recurring problem of retroactivity and in interpreting contracts in light of parties' past practices. The WERC's retroactive application of fair-share fees and union dues is also a policy decision. We reaffirm that it is proper and consistent with long-standing public policy that those who receive the benefit of union representation pay for their fair share of the costs of that representation. The WERC's determination of which aspects of the contract are economic items given retroactive application is therefore accorded great weight. We will defer to the WERC's conclusion if it is rational. Beloit Education Ass'n, 73 Wis. 2d at 67.

The first issue requires us to determine the scope of "arbitration decision," as used in sec. 111.70(3)(a)7, Stats. The county contends that the retroactivity of the fair-share fees and union dues was not part of the arbitration decision because retroactivity was not a disputed item before the arbitrator. The union responds that an arbitration decision, as that term is used in sec. 111.70(3)(a)7, includes all items, whether disputed or stipulated, that are incorporated into a resultant collective bargaining agreement. The WERC found that although retroactivity of fair-share fees and union dues were not disputed issues before the arbitrator, they were included in the resultant arbitration decision. We review this issue de novo and grant the WERC's decision no deference. However, we agree with the union and the WERC decision. To hold otherwise would be to disregard the language, legislative history, and purpose of the statute.

There may be some language found in sec. 111.70(4)(cm)6.d, Stats., that appears to support the county's position. That statute states in relevant part that "[t]he arbitrator shall adopt . . . the final offer of one of the parties on all disputed issues . . ., which decision shall be . . . incorporated into a written collective bargaining agreement." However, the previous sentence of that same section requires the arbitrator to consider each party's "complete offer on all matters to be covered by the proposed agreement" (emphasis added). This emphasized language supports the union's position.

The legislative council notes which accompanied ch. 178, Wis. Laws of 1978, in which sec. 111.70(3)(a)7, Stats., had its origin, state:

In making his or her arbitration decision, the 'mediator-arbitrator,' acting as arbitrator, shall adopt the 'entire package' final offer of one of the parties, including any previously agreed to modifications thereof. Such decision shall be final and binding on both parties and shall be incorporated into a written collective bargaining agreement.

Wis. Stat. Ann. sec. 111.70, Legislative Council Notes, sec. 111(g) (West 1988). The "entire package final offer" of a party is not just that party's position on the disputed issues; it is that party's position on all issues, whether stipulated or disputed. When the statute is read together with the legislative council notes, we are led to the conclusion that an arbitration decision encompasses all matters, whether disputed or not. This result makes sense, as the statutes direct the arbitrator to give weight to the stipulations of the parties before choosing, one party's final offer on the disputed issues. See sec. 111.70(4)(cm)7.b, Stats.

In addition, the purpose behind arbitration is to produce an entire agreement when the parties themselves are unable to. It is sensible that the arbitrator's . decision, which becomes the resultant written collective bargaining agreement, necessarily encompasses all items, including those which are undisputed.

We therefore hold that an arbitration decision, as that term is used in sec. 111.70(3)(a)7, Stats., encompasses all items that are incorporated into a resultant written collective bargaining agreement, even those not in dispute before the arbitrator.

The second issue concerns the retroactive application of fair-share fees and union dues. The WERC found that fair-share fees and union dues were economic items easily capable of retroactive application. We grant the WERC's decision great weight, and, because we find it rational, we affirm the decision.

Labor contracts are often back-dated for the purpose of retroactive application of economic items such as wage increases. Indeed, as we noted above, "retroactivity is a way of life in labor negotiations." Berns, 99 Wis. 2d at 266.

A typical economic item in a bargaining agreement is wages, while a typical noneconomic item would be a standard of cause for discharge. We find that fair-share fees and union dues are almost purely economic items similar to wages and are not a condition of employment. The WERC's determination that fair-share fees and union dues are economic items is, therefore, rational, and we defer to it.

In addition, the language of the agreement does not contradict a finding that the fees and dues were to be applied retroactively. The agreement's duration clause stated that it was to take effect "as of the first day of January, 1985, and shall remain in full force and effect through the 31st day of December, 1985 . . The agreement also contained a provision which required the county to deduct fair-share fees and union dues "once each month." This language supports our finding that the WERC's decision was rational.

The county contends that our decision in Berns, 99 Wis. 2d 252, requires that the parties bargain for and reach an agreement on retroactivity of fair-share fees before they may be deducted retroactively. We do not agree. The issue in Berns was whether or not a fair-share provision in a collective bargaining agreement may be applied retroactively. Id. at 254. Nothing in the language of Berns mandates that the parties to a fair-share provision specifically bargain for the retroactivity of the provision before it may be applied retroactively.

In fact, our language in Berns supports the WERC's finding of retroactivity. In particular, when we addressed the policy behind fair-share fees, we stated:

The availability of the fair-share device as protection against 'freeloaders' who benefit from the efforts of the bargaining representative but who, being nonunion members, do not pay regular union dues is important in light of the duty imposed by statute upon the certified majority representative to bargain collectively on behalf of all unit members.

Id. at 264. We reaffirm this holding and state that this policy applies with equal force today. Because all the members in the bargaining unit here were represented by the union during the entire term of the contract, it is rational to require that all members of the unit pay for the representation during the entire term.

The WERC's decision on the retroactivity of fair-share fees and union dues was rational. Therefore, we defer to it and hold that fair-share fees and union dues are economic items that should be given retroactive effect.

The third issue is whether the county's actions in this case amount to a failure to implement an arbitration decision, in violation of sec. 111.70(3)(a)7, Stats. The WERC held that the county's actions amounted to a refusal to implement an arbitration decision. We review this issue de novo and grant no deference to the WERC.

The collective bargaining agreement in this case contained a broad grievance arbitration provision which stated that "any dispute concerning the interpretation or application of. . . this contract. . . shall be handled [by arbitration].¹' The county argues that this dispute is over the interpretation of the contract and should therefore be before an arbitrator. The county also argues that if we find a refusal to implement an arbitration decision in this case, any dispute involving a violation of any part of an agreement reached through arbitration could be viewed as a failure to implement an arbitration decision. We do not agree.

An obvious situation which could give rise to a charge that an employer has failed to implement an arbitration decision under sec. 111.70(3)(a)7 would be where an employer has refused to incorporate specific items included in an arbitrator's award, such as a wage increase. Where an arbitration decision provides that a contract is to be retroactive, it would also be a failure to implement the decision if an employer refused to give the pay increase retroactively. In like manner, it is a failure to implement an arbitration decision if an employer refuses to retroactively implement economic items which were intended to be retroactive.

The county's failure to implement the arbitration award in this case arose out of its refusal to retroactively implement an economic item in the arbitration decision. The arbitration decision called for the resultant agreement to be retroactive. Although this dispute arose out of a difference in opinion as to the interpretation of the retroactivity of certain terms of a contract, that does not negate the fact that the county's actions literally resulted in a failure to implement the arbitration decision.

We hold that under sec. 111.70(3)(a)7, Stats., failure to implement an arbitration decision arises when an employer (a) fails to incorporate specific terms of an arbitrator's award into a resultant collective bargaining agreement or (b) fails to give retroactive effect to economic items in a retroactive contract. We do not hold that any violation of a term of a collective bargaining agreement will give rise to a sec. 111.70(3)(a)7 violation. Disputes over construction of terms of an arbitration decision or resultant collective bargaining agreement after implementation of the agreement are proper subjects for arbitration. However, if the dispute relates to the retroactive effect of economic items in the arbitration decision and leads to a failure to implement the arbitration decision, the dispute may properly be the subject of a sec. 111.70(3)(a)7 prohibited practice complaint.

By the Court. — The decision of the court of appeals is affirmed.

1 Section 111.70(3)(a)7, Stats., provides:

111.70 Municipal employment. . ..

(3) Prohibited practices and their prevention, (a) It is a prohibited practice for a municipal employer individually or in concert with others:

7. To refuse or otherwise fail to implement an arbitration decision lawfully made under sub. (4)(cm).

1 Paul B. Hewitt, The Scope of Judicial Review of Administrative Agency Decisions in Wisconsin, 1973 Wis. L. Rev. 554, 575, quoted in West Bend Education Ass'n v. WERC, 121 Wis. 2d 1, 12-13 n.13, 357 N.W.2d 534 (1984).