Detroit Pub. Sch. v. Connecticut

• Decision Date: 25 November 2014
• Docket Number: 317050.,Docket Nos. 317007
• Parties: DETROIT PUBLIC SCHOOLS v. CONN.
• Court: Court of Appeal of Michigan — District of US

308 Mich.App. 234

863 N.W.2d 373

DETROIT PUBLIC SCHOOLS

v.CONN.

Docket Nos. 317007

317050.

Court of Appeals of Michigan.

Submitted Oct. 14, 2014, at Detroit.

Decided Nov. 25, 2014, at 9:10 a.m. Leave to appeal sought.

Miller, Canfield, Paddock and Stone, PLC (by Leonard D. Givens, Charles T. Oxender, and Brian M. Schwartz ), for the Detroit Public Schools.

Scheff, Washington & Driver, PC (by George B. Washington ), for Stephen Conn, Christal Bonner, Enid Childers, and Regina Dixon.

Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Matthew Schneider, Chief Legal Counsel, and Thomas D. Warren and Emily A. McDonough, Assistant Attorneys General, for the Department of Licensing and Regulatory Affairs.

Before: BOONSTRA, P.J., and MARKEY and KIRSTEN FRANK KELLY, JJ.

Opinion

PER CURIAM.

Detroit Public Schools (DPS) (Docket No. 317007) and the Department of Licensing and Regulatory Affairs, Wage and Hour Division (the wage & hour division or agency) (Docket No. 317050) appeal separately by leave granted the Wayne Circuit Court order of June 12, 2013, affirming the July 13, 2012 decision of the hearings officer, Tyra Wright. The hearings officers ruled that a deduction from or reduction of appellee-teachers' pay, which was authorized by a collective-bargaining agreement (CBA) between the DPS and the Detroit Federation of Teachers (DFT), violated several provisions of 1978 PA 390, the payment of wages and fringe benefits act (PWFBA or the act), MCL 408.471 et seq. This Court subsequently consolidated the two appeals for the efficient administration of the appellate process. Detroit Pub. Sch. v. Conn., unpublished order of the Court of Appeals, entered February 12, 2014 (Docket Nos. 317007 and 317050).

For the reasons discussed in this opinion, we find no merit to appellants' arguments that the hearings officer lacked jurisdiction to consider the complaints of appellee-teachers (hereafter “appellees”) of violations of the PWFBA. But we also conclude that the hearings officer and the circuit court erred in their interpretation of the PWFBA and by finding that its provisions were violated. These conclusions render moot the other issues raised in these appeals; therefore, we reverse the circuit court's order affirming the July 13, 2012 decision of the hearings officer, vacate that decision, and remand this matter to the hearings officer for entry of an order or orders dismissing appellees' complaints.

I. SUMMARY OF FACTS AND PROCEEDINGS

Appellees are teachers and members of the DFT employed by the DPS. The DPS and the DFT entered into a CBA on December 18, 2009, that contains a provision known as the Termination Incentive Plan (TIP), which provided, in part:

Beginning January 12, 2010 and ending with the fourth ... pay of the 2011–2012 school year (for a total of 40 payments), all salaried members of the bargaining unit (except assistant attendance officers, accompanists and members who work less than .50 FTE) shall have $250 per pay deducted from their pay and deposited into a [TIP] account....

Bargaining unit members who retire or resign from the District following ratification of the 2009–2012 Agreement shall receive a Termination of Service Bonus of [$1000] for each year of service with the District up to ten ... years of service, with a cap of $10,000. Bargaining unit members on layoff status shall not be entitled to this Bonus until such time as they are removed from the layoff list.... However, no member's Termination of Service Bonus shall exceed the amount he/she contributed to his/her TIP account....

Members may elect to have their Termination of Service Bonus paid as a lump sum, deposited into an annuity, or deposited into a Tax Deferred Plan (TDP). [Underlining and paragraph headings omitted.]

Appellees¹ initiated this action by filing complaints with the wage & hour division. They asserted that the TIP provision violates the PWFBA. The wage & hour division rejected the complaints on the basis of § 7(1) of the act, MCL 408.477(1), which states, in part:

Except for those deductions required or expressly permitted by law or by a collective bargaining agreement, an employer shall not deduct from the wages of an employee, directly or indirectly, any amount ... without the full, free, and written consent of the employee, obtained without intimidation or fear of discharge for refusal to permit the deduction. [Emphasis added.]

The agency reasoned that a CBA between the DPS and the DFT authorized the TIP deductions; therefore, they were within the exception of § 7(1). The appellees also asserted claims in the administrative proceedings that the CBA was improperly adopted, but the agency ruled that it lacked authority to address such allegations.

Appellees appealed the wage & hour division's rejection of their claims, and the appeal proceeded to a hearing before the hearings officer. Appellees argued that the TIP provision violated § 7(2) of the act, MCL 408.477(2), which provides, in pertinent part:

Except as provided in this subsection and subsection (4), a deduction for the benefit of the employer requires written consent from the employee for each wage payment subject to the deduction, and the cumulative amount of the deductions shall not reduce the gross wages paid to a rate less than minimum rate as defined in the minimum wage law....

The DPS asserted that deductions for any purpose are permitted when authorized by a CBA and that DFT members are deemed to have consented to the terms of a CBA. Appellees disagreed, arguing that deductions under the CBA exception of § 7(1) must be for dues and other union fees.

On April 22, 2011, the hearings officer issued her decision, which agreed with appellees' arguments that the TIP deductions were being made for the DPS' benefit and violated § 7(2) of the act because appellees had not given written consent for the deductions. She concluded:

DPS is withholding a portion of [appellees'] wages resulting in [appellees] failing to receive a portion of their wages in a timely manner. The $250 deduction from each paycheck is being withheld until some future time—weeks, months or years—depending on when a teacher retires or resigns; never, in those cases where a teacher is terminated. In short, there is no approval under the statute of an I.O.U. or option to not pay full wages to an employee who has worked his or her full schedule.

... I find [appellees] met the burden of proving that the Wage & Hour Division should not have dismissed their claims on the grounds the deductions were allowed by a collective bargaining agreement. Furthermore, I find that the employer violated Sections 2(3), 6(1), 7(2) and 8(1) of Act 390.

The other sections of the act the hearings officer referred to are, respectively, § 2(3), MCL 408.472(3) (requiring regular weekly or biweekly payment of wages); § 6(1), MCL 408.476(1) (specifying that the methods of paying wages are restricted to United States currency, electronic deposit at a financial institution, and debit cards meeting certain criteria); and § 8(1), MCL 408.478(1) (prohibiting an employer from demanding a fee, gift, tip, gratuity, or other remuneration as a condition of employment or continued employment). She did not explain how these other provisions of the act applied apart from her determination that the CBA exception of § 7(1) did not apply and that the TIP provision violated § 7(2) of the act. On the basis of this reasoning, the hearings officer reversed the wage & hour division's dismissal of appellee's complaints and ordered the DPS to pay each appellee the amount deducted from their wages under the TIP program.

The DPS moved for a rehearing and to stay the enforcement of the April 22, 2011 decision, submitting “new evidence” in the form of a February 2010 letter of agreement between it and the DFT that clarified the intent of the parties regarding the TIP provision in the CBA. The letter of understanding modified the wording of the TIP from saying “shall have $250 per pay deducted from their pay” to saying “shall have their pay reduced by $250 per pay.” In essence, the revised language relabeled the $250 deduction per pay period to constitute a $250 reduction of pay per pay period. The hearings officer ruled that the new evidence did not justify granting a rehearing and denied the DPS' motions. The DPS then filed its appeal of the hearings officer's final decision in the Wayne Circuit Court. The circuit court remanded the matter to the administrative agency for reconsideration of the letter of agreement.

The hearings officer rejected the DPS' arguments that the letter of agreement established that the TIP provision provided for a reduction in wages rather than a deduction from wages and that respondents' challenge to the TIP presented a claim of an unfair labor practice that was within the exclusive jurisdiction of the Michigan Employment Relations Commission (MERC). The hearings officer concluded that the letter of agreement had not changed the substance of the TIP provision. The hearings officer also concluded that the argument that appellees' complaint was really an unfair labor practice charge within the jurisdiction of MERC was “nonsensical.”

On appeal again in the circuit court, the DPS argued that the CBA authorizes the TIP; therefore, it was valid under § 7(1) of the PWFBA. It also argued that appellees have, in essence, asserted an unfair labor practice claim within the exclusive jurisdiction of MERC under the public employment relations act (PERA), MCL 423.201 et seq.

In a June 12, 2013 opinion and order, the circuit court agreed with the hearings officer's conclusion that the TIP provision violates the PWFBA. The court affirmed the hearings officer's decisions and entered a judgment against appellants. As noted, the DPS (Docket No. 317007) and the wage & hour division (Docket No. 317050) appeal by leave granted the circuit court's opinion and order. Appellants argue that because the TIP provision was part of a CBA, the hearings officer...