Appeal of State

• Court: New Hampshire Supreme Court
• Writing for the Court: JOHNSON
• Citation: Appeal of State, 647 A.2d 1302, 138 N.H. 716 (N.H. 1994)
• Decision Date: 27 July 1994
• Docket Number: No. 93-001,93-001
• Parties: , 148 L.R.R.M. (BNA) 2423 Appeal of the STATE of New Hampshire (New Hampshire Public Employee Labor Relations Board).

Page 1302

647 A.2d 1302

138 N.H. 716, 148 L.R.R.M. (BNA) 2423

Appeal of the STATE of New Hampshire (New Hampshire Public Employee Labor Relations Board).

No. 93-001.

Supreme Court of New Hampshire.

July 27, 1994.

Rehearing Denied Oct. 21, 1994.

Jeffrey R. Howard, Atty. Gen. (Douglas N. Jones, Asst. Atty. Gen., on the brief and orally), for State.

Michael C. Reynolds, Concord, by brief and orally, for State Employees' Ass'n of New Hampshire, Inc., S.E.I.U., Local 1984.

JOHNSON, Justice.

The State appeals a ruling of the public employee labor relations board (PELRB) that the State committed an unfair labor practice by refusing to negotiate with the State Employees' Association of New Hampshire, Inc., S.E.I.U., Local 1984 (SEA) over certain contract proposals. See RSA 273-A:5, I(e) (1987). The issue to be resolved is whether the subjects of these proposals fall within the "managerial policy" or "merit system" exceptions to the State's duty to bargain with the SEA over terms and conditions of employment. See RSA 273-A:1, XI, :3, I, :3, III, :9, I (1987). We affirm in part and reverse in part.

In October 1991, the SEA presented collective bargaining proposals to the State relating to employee discipline, layoff, recall, promotions, and transfers. The State refused to negotiate the proposals, and the SEA filed an unfair labor practice complaint with the PELRB. The PELRB ruled that the discipline, layoff, and recall proposals were mandatory subjects of bargaining, finding that they did not fall within the managerial policy or merit system exceptions. With regard to the promotions and transfers proposals, however, the PELRB ruled that some provisions were subject to mandatory bargaining while others were not.

In its appeal from the PELRB's decision, the State relies primarily on the managerial policy exception to its statutory duty to bargain with the SEA over terms and conditions of employment. The managerial policy exception is contained in the definition of "terms and conditions of employment" in RSA 273-A:1, XI.

" 'Terms and conditions of employment' means wages, hours and other conditions of employment other than managerial policy within the exclusive prerogative of the public employer, or confided exclusively to the public employer by statute or regulations adopted pursuant to statute. The phrase 'managerial policy within the exclusive prerogative of the public employer' shall be construed to include but shall not be limited to the functions, programs and methods of the public employer, including the use of technology, the public employer's organizational structure, and the selection, direction and number of its personnel, so as to continue public control of governmental functions."

The merit system exception is contained in RSA 273-A:3, III.

"Matters regarding the policies and practice of any merit system established by statute, charter or ordinance relating to recruitment, examination, appointment and advancement under conditions of political neutrality and based upon principles of merit and competence shall not be subjects of bargaining under the provisions of this chapter. Nothing herein shall be construed to diminish the authority of the state personnel commission or any board or agency established by statute, charter or ordinance to conduct and grade merit examinations from which appointments or promotions may be made."

Our review standard is governed by RSA 541:13 (1974), which states:

"[T]he burden of proof shall be upon the party seeking to set aside any order or decision of the commission to show that the same is clearly unreasonable or unlawful, and all findings of the commission upon all questions of fact properly before it shall be deemed to be prima facie lawful and reasonable; and the order or decision appealed from shall not be set aside or vacated except for errors of law, unless the court is satisfied, by a clear preponderance of the evidence before it, that such order is unjust or unreasonable."

(Emphasis added.) This statute allows this court to review agency decisions for errors of law. Cf. Appeal of Richards, 134 N.H. 148, 158, 590 A.2d 586, 592 (1991) (reviewing decision of public utilities commission). Since the enactment of RSA chapter 273-A in 1975, however, we have greatly deferred to the PELRB's expertise in making both findings of fact and rulings of law. See, e.g., Appeal of Bow School District, 134 N.H. 64, 67, 588 A.2d 366, 368-69 (1991) (deferring to "the PELRB's ... reasonable interpretation" of statute). We have often stated that "the legislature has vested the PELRB with authority initially to define the terms of the collective bargaining statute and with the discretion to interpret 'managerial policy within the exclusive prerogative of the public employer.' " Appeal of State Employees' Ass'n, 120 N.H. 690, 694, 422 A.2d 1301, 1304 (1980). Unusual as it has been, this court's deference to a lower tribunal on statutory interpretation was, for a time, justified by the experimental atmosphere surrounding the act's passage. Almost twenty years later, however, this court's decisional experience with RSA chapter 273-A no longer makes this kind of deference necessary or desirable. We therefore abandon our policy of deferring to the PELRB on issues of law and adopt a strict adherence to the standard of review set forth in RSA 541:13.

With this fresh, but familiar, standard in mind, we address the State's argument that this court's decision in State Employees' Association v. New Hampshire Public Employee Labor Relations Board, 118 N.H. 885, 889, 397 A.2d 1035, 1038 (1978) (hereinafter SEA v. PELRB ), requires a holding in its favor. In SEA v. PELRB, this court considered contract proposals similar to those at issue here and held them exempted from the State's obligation to bargain the terms and conditions of employment by the managerial policy exception. SEA v. PELRB, 118 N.H. at 890, 397 A.2d at 1038. The court made this decision without explaining how the managerial policy exception applied to the particular proposals. Since SEA v. PELRB, this court has occasionally interpreted the managerial policy exception but has left its parameters and application largely unexplored. This case presents an opportunity to delineate these parameters and thereby clarify the application of the exception. We accordingly review our relevant precedents, synthesize a guiding standard, and apply it to the SEA provisions at issue. We overrule SEA v. PELRB to the extent that it is inconsistent with this opinion.

Our cases interpreting the managerial policy exception in different contexts illustrate the variety of interests of public employers and employees that affect the application of the exception. In SEA v. PELRB, we held that the managerial policy exception should be interpreted broadly, but "[o]nly that part of the subject which deals with managerial policy within the sole prerogative of the employer, or managerial policy which by statute or regulation is confided to the sole prerogative of the employer is excluded from negotiation." SEA v. PELRB, 118 N.H. at 890, 397 A.2d at 1038. Later, when reviewing a decision by the PELRB that an indefinite suspension of a public employee was unfair and therefore constituted an unfair labor practice, we noted that the legislative history of RSA chapter 273-A "reveals an intent to minimize the impact of public sector collective bargaining on the public employer's managerial prerogatives." Bouchard v. City of Rochester, 119 N.H. 799, 802, 409 A.2d 772, 774 (1979). In another case, while recognizing the managerial prerogative of the public employer to control its organizational structure and permitting the university system to unilaterally reorganize the administration at one college, we cautioned that "managerial prerogative cannot be used as a pretext to hide violations of [the unfair labor practices statute]." Appeal of Keene State College Educ. Ass'n, 120 N.H. 32, 38, 411 A.2d 156, 161 (1980). In State Employees' Association, 120 N.H. 690, 422 A.2d 1301, we reviewed the PELRB's decision that the SEA's proposal to equalize particular faculty salaries was excluded from mandatory bargaining by the managerial policy exception, and we credited the significant interests of both parties in the proposal, ruling that the PELRB had "appropriately reconciled the competing interests of the parties." Id. at 695, 422 A.2d at 1304.

In Appeal of Watson, 122 N.H. 664, 667, 448 A.2d 417, 419 (1982), we interpreted the managerial policy exception to apply to broad policy matters and determined that a disputed termination clause was "more akin to a 'term' or 'condition' of employment than to a managerial policy." Id. In Appeal of International Association of Firefighters, 123 N.H. 404, 408, 462 A.2d 98, 101 (1983), we held that the number of firefighters in a platoon was excluded from the public employer's obligation to negotiate by the managerial policy exception because "the number of personnel of a public employer falls within the exclusive prerogative of the employer," and therefore, the city properly refused to bargain the issue as it was "only a permissive subject of negotiation." We have also recognized that when there are no statutory or constitutional prohibitions against an agreement to submit disputes over appointments and terminations of employees to a grievance process, the public employer may negotiate and agree to such proposals although the negotiation is not mandatory. Appeal of Town of Pelham, 124 N.H. 131, 137, 469 A.2d 1295, 1298 (1983). In Appeal of Berlin Education Association, NHEA/NEA, 125 N.H. 779, 485 A.2d 1038 (1984), we distinguished the obligation to negotiate wages for extracurricular duties, a mandatory subject of bargaining, from an issue that would "affect the board's authority to decide whether to offer extracurricular programs or to consider the number of such programs," which would be excluded as matters involving...