The Lost Fringe Benefit

foreign vice president of the American Arbitration Association we are about to show you the first of two films dealing with dispute resolution in public employment this film shows how agreements is resolved in arbitration the companion film called the impasse shows how the same problem might have been settled in mediation at the termination of a contract in this film we deal with a Union's grievance that the city had discontinued a supper money allowance during the life of the contract in violation of the collective bargaining agreement and without negotiating the matter with the Union to some it may seem a small matter that city employees in one Department get a few dollars in supper money now and then but to a union that has only recently won bargaining rights the important principle of perpetuating informal benefits of the past may be critical after introductions Milton Friedman the arbitrator opens the hearing prior to the hearing the association gave me the Union's demand for arbitration and the city's answer here is the statement of the grievance signed by E Robert Creer president of the local union the city stopped paying the supper money allowance and violation of the contract and without prior negotiation with the Union we ask as a remedy that the allowance be restored and paid retroactive to last January 1st a city's answer to the Union's demand for arbitration was signed by Marshall lippman the City attorney I'll read only the essential paragraph the Union's complaint that the city has wrongfully discontinued the supper money allowance for employees in the public works department is not arbitrable because the collective bargaining agreement upon which this claim is allegedly based does not deal with supper money in any way although we could seek a stay of the arbitration in court we are willing to dispute arbitrability before the arbitrator we do so with the expectation of if the arbitrator is persuaded that the grievance is not arbitrable he will dismiss it for lack of jurisdiction without regard to how he would have ruled on the merits if it had been a proper subject for arbitration all right let's begin as the union is the moving party here I suggest we begin with you first Mr Krieger would you like to make an opening statement yes sir I would like to make a brief opening statement I have witnesses here who will prove five things first the union is recognized as the exclusive bargaining agent for all clerical and manual workers and for certain classification of professional employees and the city's Department of Public Works second contract covers wages and working conditions as well as other matters third the employees in this department have for many years been receiving two dollars in supper money every time they worked at least one hour of overtime fourth without warning or notice of any kind supper money was improperly discontinued beginning in January of this year and the city notified us supper money the supper money practice was to be discontinued permanently finally this was done as I say without the knowledge or the participation of the Union it was therefore a violation of the contractual obligation to bargain with the Union on matters of wages and working conditions we asked for reinstatement of the supper money practice and for payment of all such money due since last January thank you Mr lippman do you want to make an opening statement at this time yes I would Mr Krieger's five-point statement omits the most important facts the supper allowance was first established somewhere around 1960 long before the union came on the scene it was not negotiated and you can look high and low in the Union contract and you won't find a word about it we're now in our second Union contract the first was negotiated in 1971 for two years and the present was signed in 1973. and is still in effect in neither of these documents is there any reference to supper money moreover our present contract contains a clause stating that its Provisions represent the complete agreement and understanding of the parties this applies to issues discussed during negotiations as well as to the thousands of issues that might have been discussed but were not all of this proves two things first the city has the right to discontinue the allowance and second and this is the most important point the Union's claim is not even arbitrable it should be dismissed by you not simply because it is unjustified but because the arbitration Clause does not give you authority to add to the contract as we stated in our answer to the Union's demand for arbitration we could have gone to court to stop this arbitration but we decided it would be better for our Labor Relations to let the arbitrator rule on the threshold question Mr arbitrator we are asking for a ruling that the Union's claim goes beyond the scope of the Union contract and that it is therefore not subject to arbitration Mr Krieger in your opening statement you addressed yourself to the merits of the case but you didn't deal with whether I have the authority to rule on the merits would you like to comment on the arbitrability question that Mr lippman raised yes the union is the exclusive bargaining agent for employees on matters of wages and working conditions that is spelled out in the contract as you will see by reading the recognition clause now working conditions consist of many things some items like wages and hours are so important that they're spelled out exactly other aspects of the employment relationship are not spelled out but they all come under the heading of working conditions I'll argue the merits later but I insist that if you agree that supper money is part of this whole bundle of working conditions you have to agree that you have the jurisdiction and authority to rule on the merits of the case I'd like to see the arbitration Clause again it was quoted in the demand for arbitration any dispute claim or grievance arising out of or relating to the interpretation or application of this agreement shall be submitted to arbitration under the voluntary labor arbitration rules of the American Arbitration Association you'll notice Mr arbitrator that the Clause specifically states that only matters of interpretation or application may be arbitrated and that the arbitrator may not change the contract in the guise of interpreting it now wait a minute you can argue that if you want to but don't put forward an argument and try to pass it off as a statement of fact show me where the arbitration Clause says anything about doing one thing and the guise of something else all right I don't think it's necessary to carry on this argument right now I want to read your whole contract before I make my decision incidentally do you have a copy of the contract that you can put into evidence this is it is it all right if I regard this as a joint exhibit yeah well I understand that the first problem is to decide whether this is the kind of dispute which the union and the city have agreed would be subject to arbitration but I'm going to need to know more about this dispute than I do right now before I could decide on arbitrability I suggest therefore that you proceed with presentation of the case on the merits and I'll decide later we would prefer to stop right now and proceed only if you decide the grievance is arbitrable why waste time we're here we've already begun the argument on the merits I say let's go ahead may I point out that this is not a case where delay makes any difference if we end up having to pay supper money we'll pay it it doesn't matter whether the decision is made this week or next month your point Mr lippman is well taken that no great harm would be done by delaying a decision somewhat on the other hand the facts on the merits may be helpful in evaluating operability but more important is the likelihood that we can finish both at one session rather than require another day of hearing if the issue is held arbitrable it might be different of course if additional days of hearings were needed on the merits since that doesn't appear to be so it's most expedient and economical to conclude today my ruling therefore is that we go ahead with the merits and I will decide on the merits only if I find the issue to be arbitable I don't agree of course but I'll abide by your ruling only may I point out again so there'll be no misunderstanding that an arbitrability issue really involves a substantial question of interpretation of our arbitration Clause I understand in other words we don't want an arbitrator deciding the case is arbitrable merely because after hearing the case on the merits he knows he's going to decide against the union and dismiss the grievance anyway I object to all this badgering and instructions to the arbitrator driver Trader you made a ruling that you're going to hear the merits now and I suggest that we proceed I have made my ruling and I'm sure Mr lippen was not trying to Badger me but you're correct I made my ruling and now let's go ahead call your first witness Mr Krieger I'd like to call Eileen Casey the witnesses sworn and the direct examination begins Eileen Casey is shop steward in the public works department she testifies that she is one of the few employees who are in the same department when the supper money practice began in the 1960s no Union represented employees at that time she recalls that employees were complaining about the city not paying time and a half for overtime and giving employees compensatory time off instead this sometimes costs them out-of-pocket money for meals so that they ended up with less after having worked overtime she explains that the city was reluctant at the time to discontinue the compensatory time off policy and the two dollar supper money Arrangement was put into effect instead the examination of the witness by the union attorneys continued was there any other reason for the supper money Arrangement at that time well of course we didn't have a union then and I was just a new Clerk but I do remember that the talk was that this was one way for the city to give us more money without having to give an across the board increase to all other city employees and all the Departments in other words right from the start supper money was a form of wages now just a minute that's not a proper question you're asking for a conclusion I think the objection is valid why don't you leave that to your final summation have any more questions of Miss Casey no that's all I have you're one of the old-timers in the department aren't you yes I have about 20 years of seniority and you've seen many changes haven't you yes I sure have and among the changes you've seen has been the payment of time and a half for overtime instead of compensatory time off isn't that right yes when did the city begin paying for overtime in the public works department well I don't remember exactly but I think it was about 10 years ago it was before the union was recognized isn't that so yes so the reason for supper money in the first place the possibility that an employee might suffer a cash loss for working overtime no longer existed that's not a question that's an argument a witness has already testified they began paying time and a half or overtime and that's enough all right I'll withdraw the question by the way was there any change with respect to supper money after the city began paying time and a half for overtime no we continued to get it until 10 isn't it true that there were fewer and fewer occasions of overtime after the compensatory time off plan was replaced by the premium pay plan oh I suppose so you suppose so as a matter of fact don't you know that overtime has become a very infrequent occurrence and that the two dollar Supple money benefits stopped being an important part of income long before the union was recognized anytime we worked all the time it was important I'll admit back in the old days the supervisors would give us a couple of overtime assignments a month this would give us a few extra dollars and the privilege of coming in late a few times it's not as unimportant as you say I myself worked overtime four times last month I said this could cost us a hundred dollars a year and if it's so unimportant why did you cut it out thank you that's all any more witnesses Mr Krieger I call Addis Taylor International representative of the Union Mr Taylor do you recall any comment by a representative of the city on supper money during negotiations well there was only one that I recall we were talking about wages and the union brought in figures to show that some classifications of employees in nearby cities got higher rates than we do here Mr Cohen there spoke up and said that we get supper money and they don't get that benefit in other cities we kicked it around for a while bringing up one point in another and finally the wage matter was settled and nothing more was said about the supper money that's right we assumed that it was going to continue as it had for years before we were recognized and after your witness Mr Lipman Mr Taylor you played a leading part in negotiating the two contracts the union has negotiated with the city is that right well we had a negotiating team but I was the chief negotiator and in the course of your negotiations you've put forward many demands some of which were accepted in whole or in part and others of which would drop is that correct correct and among all these scores of Demands did you ever demand that supper money be included in the contract there wasn't no need to I didn't ask for the reason you didn't ask for the inclusion of such a clause I asked for a statement of fact did you or did you not ever formulate a demand for a clause with respect to supper money I did not now Mr Taylor I show you a copy of the contract you negotiated and I ask you to read article 17. the provisions of this agreement constitute the complete understanding of the parties on all matters subject to bargaining do you remember negotiating that Clause well in a way yes I remember that this is one of the water play Clauses that go into all the union contracts if I'm not mistaken it was Mr Cohen who wanted it in we didn't object because as I say it's one of those routine Provisions that don't mean anything one way or the other on the contrary it means a great deal but I'll get into that later I just want it on the record that the union has agreed to this Clause that it's a part of the contract I have no further questions do you have any other Witnesses Mr Krieger oh sir that's our case I want to summarize later though certainly the city's witness is Nathan Cohen director of personnel Mr Cohn is a career employee of the city he holds a degree in accounting and was formally in the accounting department in that capacity he began specializing in payroll matters he explains under direct examination that in preparing the budget for the public works department he routinely included supper money based on a previous year's experience but that it was cut out of the budget by the director of the budget so as far as you're concerned the Supple money was to be continued did you learn why the item was cut yes you know when the city was expecting more money as a result of a bond issue that was going to be floated and then last election day the voters voted down that by a bond issue and as a result we had to make economies at that point the budget director worked at the budget without some of money and we're stuck with it I was told to advise all the employees that supplement money wouldn't be paid any longer I see thank you now Mr Khan you seem to have placed the responsibility for the decision to discontinue supper money on the budget director didn't you have anything to do with it well I included the allowance but it was cut out you had no notice that it was to be cut didn't the budget director consult you well to some extent what do you mean well he said that we had to cut expenses wherever possible some of the items were mandatory in the contract wages holidays for instance couldn't be cooked but supper money wasn't included in the contract and that was one of the items that I thought could be spared that's what this grievance is all about you acted on the assumption that just because something wasn't mentioned in the contract you could ignore it even though it was expected by the employees in the department for over 10 years wasn't in the contract now Mr Khan you already explained something about your background in accounting and I'd like to clarify one point did you ever take any formal training in industrial relations now I'm going to object to that we're not concerned with Mr cohn's qualifications any more than we were with whether Mr Taylor was the best choice of negotiator for the union the city takes responsibility for Mr Cohen's actions and that's all we need to know never mind I'll withdraw the question that's all any more witnesses no that's all there are no more witnesses that means the parties have put before the arbitrator all the facts and documents they intend to present the time for new facts is over and the time for argument has begun the arbitrator calls for summations the union officer is speaking a monetary benefit which has been in effect for over 10 years is part of the contract just as surely as if it were contained in a written provision moreover as we have shown from the very beginning supper money served a dual purpose to compensate employees for the inconvenience of working late and to give them an indirect wage increase that a former city administrator chose to hand out wage raises in this indirect way rather than directly should not be held against the public works department employees the city really believes that supper money is no longer Justified the remedy lies in negotiation not in unilateral action it's significant that not one word was mentioned by City negotiators to put us on notice that the change was contemplated Mr Cohen and the director of the budget apparently conspired to remove this item from the budget without letting the union know we don't question the need for economies the bond issue was disapproved and something's got to give but no items subject to bargaining can be eliminated without our consent over a two-year contract the supper money allowance might mean thousands of dollars in income to our city employees and we don't intend to give it up and now the City attorney summarizes as we have shown the collective bargaining agreement is completely silent on the question of supper money more than that it contains a clause which clearly is intended to exclude from the city's obligations all the possibly thousands of trifling fringe benefits and local practices that might have developed in one department or another in the past in the days before we bargain collectively I refer to article 17 which says in effect that our obligations are limited by the specific terms of the agreement yet the union is asking you to rule precisely as you would if the contract contained the Clause calling for supper money that would make a mockery of the whole process of collective bargaining to be sure collective bargaining with city employees is not an old tradition but it is being conducted by experienced and sophisticated people they are presumed to know what they are agreeing to and if any subject is not dealt with in negotiations it is a subject about which the city has not been restricted we continued supper money not as a matter of contractual obligation but as an extra contractual benefit as long as we could when the budget had to be cut we applied the scalpel in an area where there were no contractual restrictions in doing so we acted reasonably working conditions are no longer what they were when the practice was instituted all employees get paid in cash for overtime and they suffer no inconvenience by working extra hours the reason for supper money has disappeared and under urgent necessity so did this benefit well I have the facts and the documents that I've heard the arguments it appears to me that this case is in on both operability and the merits is that all I'm going to collect the record stand I'll go along with that in that event I declare the hearing closed American Arbitration Association rules give me 30 days in which to deliver the award if I think this dispute was not within the scope of your arbitration Clause I will dismiss the grievance on the ground that it is not arbitrable on the other hand if I decide that the grievance is covered by the arbitration Clause I will rule on the merits I want to thank both of you gentlemen and your Witnesses for the clear concise and courteous presentation the facts are in and the arguments have all been heard occasionally the parties may wish to have post hearing briefs in which event the hearing remains open until the briefs are received but in this case there was no need you heard the arbitrator explain that if he thinks the dispute was not within the scope of the arbitration Clause he will dismiss the grievance on the ground that it was not arbitrable he finds that the grievance was within the scope of the arbitration Clause he will rule on the merits how would you decide