Port Huron Educ. Ass'n, MEA/NEA v. Port Huron Area School Dist., Docket No. 96753

Citation452 Mich. 309,550 N.W.2d 228
Decision Date16 July 1996
Docket NumberNo. 10,Docket No. 96753,10
Parties, 158 L.R.R.M. (BNA) 2997, 110 Ed. Law Rep. 1230 PORT HURON EDUCATION ASSOCIATION, MEA/NEA, Charging Party-Appellee, v. PORT HURON AREA SCHOOL DISTRICT, Respondent-Appellant. Calendar
CourtSupreme Court of Michigan

Amberg, McNenly, Zuschlag, Firestone & Lee, P.C. by Joseph H. Firestone, Southfield, for the charging-party appellee.

Fletcher, DeGrow by Gary A. Fletcher and John D. Tomlinson, Port Huron, for the respondent-appellant.

BOYLE, Justice.

A primary goal of the public employees relations act 1 is to resolve labor-management strife through collective bargaining. Detroit Police Officers Ass'n v. Detroit, 428 Mich. 79, 95, 404 N.W.2d 595 (1987) (opinion of Boyle, J.). In furtherance of this goal, the PERA imposes a duty on public employers to bargain in good faith over "wages, hours, and other terms and conditions of employment...." M.C.L. § 423.215(1); M.S.A. § 17.455(15)(1). The parties do not dispute the general principle that "[a] past practice which does not derive from the parties' collective bargaining agreement may become a term or condition of employment which is binding on the parties." Amalgamated Transit Union v. Southeastern Michigan Transportation Authority, 437 Mich. 441, 454, 473 N.W.2d 249 (1991). Rather, the question presented is whether a past practice that is contrary to clear contract language can create a term or condition of employment. We hold that the unambiguous contract language controls unless the past practice is so widely acknowledged and mutually accepted that it amends the contract. The party seeking to supplant the contract language must show the parties had a meeting of the minds with respect to the new terms or conditions so that there was an agreement to modify the contract.

I.

In 1978, the Port Huron Education Association and the Port Huron Area School District negotiated and signed a collective bargaining agreement. The agreement contained a clause providing that health insurance benefits would be prorated 2 for teachers who work less than a full year. Specifically, the agreement provided:

Continued coverage shall be provided to all contracted teachers on a twelve (12) month annual basis or a prorated portion of the year for teachers who work less than a full work year. [Article VII, p Q, § 6.]

This language was placed in each succeeding agreement, including the agreement, for the 1987-88 school year--the year the current dispute arose.

The record is unclear whether there were any teachers hired for less than a full year before the 1983-84 school year. From 1983 to 1987, however, eleven teachers were hired midyear. 3 The district did not prorate insurance benefits for any of these midyear hires, but rather, paid the health insurance premiums for each of the new teachers from the date they were hired through July and August.

During the 1987-88 school year, the district hired eight new teachers after or near the end of the first semester. The unusually large number of midyear hires prompted the district to reexamine the agreement and notice the proration provision. In March, 1988, the district notified the eight new teachers by letter that, in accordance with the agreement, benefits would be prorated because they worked less than a full year and that the district would not provide health insurance benefits for the month of August. 4

In response to the district's proration notice, the association simultaneously filed a grievance 5 and a demand that the district bargain before enforcing the proration provision. The association was unsuccessful at the first two stages of the grievance process and withdrew the grievance before arbitration.

The district responded to the association's demand to bargain by noting that because the proration issue had already been negotiated and included in the collective bargaining agreement, it had no further duty to bargain. The association then filed an unfair labor practice charge, alleging that the district refused to bargain in violation of § 10(1)(e) 6 of the PERA.

The matter was heard before a hearing referee on September 29, 1988. The association alleged that "[n]otwithstanding any term of the existing and prior collective bargaining agreements between the parties," payment of full insurance benefits was an established past practice that could not be varied without bargaining.

The hearing referee recommended dismissal of the association's charge, concluding that the district did not have a duty to bargain about prorating insurance benefits because it had already done so when the agreement was negotiated. 7 The hearing referee further reasoned that the district's failure to prorate benefits before 1988 was simply a mistake or oversight, not a conscious decision by the district to amend or alter the agreement. There was no evidence the district was aware it had not followed the express language of the agreement.

The association filed exceptions to the hearing referee's decision with the MERC.

Relying on Mid-Michigan Ed. Ass'n v. St. Charles Community Schools, 150 Mich.App. 763, 389 N.W.2d 482 (1986), the MERC reversed the hearing referee's decision and stated:

Clearly, Respondent either knew or should have known that it was paying insurance benefits to its teachers without regard to hire date. Contrary to the [hearing referee], we find that the parties in this case had tacitly accepted the benefits as a term of employment. [1990 MERC Lab Op 903, 909.]

After deciding that payment of insurance benefits for the entire summer established a term of employment, the MERC concluded that the district had a duty to bargain because the proration language in the agreement was ambiguous and therefore did not amount to a waiver by the association of its right to bargain.

In the instant case we believe the parties' "proration" language is inherently ambiguous. The contract clause nowhere specifies how benefits will be "prorated." Moreover, as in Mid-Michigan, the parties here entered into a new contract with the same identical insurance language after the practice began. Because of the ambiguity of the clause and the bargaining history, the insurance clause here did not demonstrate a clear and unmistakable waiver of the right to bargain. [Id.]

The Court of Appeals affirmed the MERC's decision. 8 The district then filed an application for leave to appeal in this Court. Retaining jurisdiction, we vacated the Court of Appeals decision and remanded to the MERC for further consideration. 9 Specifically we directed the MERC to consider the effect of art VII, p H of the agreement regarding its conclusion that the proration language was ambiguous. Paragraph H states:

The figure of 185 total duty days for a school year will be the basis for computing earned leave time, salary deductions, and pro-rations of benefits for those working less than a full year, or part-time, it being understood that pro-rations for part-time will be made on less than a full-day basis.

On remand, the MERC requested and received additional briefing from the parties. After reviewing the briefs, the MERC concluded that p H, removed any ambiguity by clarifying the meaning of the proration provision:

Article VII, Section H, clearly provides that teachers hired for less than a full year will receive benefits, including health insurance, for that portion of the nonschool year (i.e. July and August) which corresponds to the proportion of the number of days worked compared to 185.... Those teachers hired prior to the beginning of the second semester, i.e. those who worked more than half of the 185 day school year, were entitled to benefits for the full summer. Those who were hired after the beginning of the first semester and who worked less than half of the 185 days were entitled to benefits for only half the nonworking summer months.

* * * * * *

[W]hen Article VII, Section Q [the proration provision] is read together with Article VII, Section H, the parties contract contains no inherent ambiguity. [1995 MERC Lab Op 42, 45.]

On September 21, 1995, we granted the district's application for leave to appeal. 10

II.

Public employers have a duty to bargain over "wages, hours, and other terms and conditions of employment...." M.C.L. § 423.215(1); M.S.A. § 17.455(15)(1). Under the PERA, an employer commits an unfair labor practice if, before bargaining, 11 it unilaterally alters or modifies a term or condition of employment, 12 unless the employer has fulfilled its statutory obligation or has been freed from it. Amalgamated, supra at 450, 473 N.W.2d 249; Ottawa Co. v. Jaklinski, 423 Mich. 1, 377 N.W.2d 668 (1985). The employer can fulfill its statutory duty by bargaining about a subject and memorializing resolution of that subject in the collective bargaining agreement. Gratiot Community Hosp. v. NLRB, 51 F.3d 1255, 1261 (C.A.6, 1995); NLRB v. United States Postal Service, 303 U.S. App DC 428, 432, 8 F.3d 832 (1993). 13

An employer may defend against a charge that it has unilaterally altered working conditions by arguing that it has fulfilled its duty to bargain or that the union has waived its right to demand bargaining. 14 The statutory duty to bargain may be fulfilled by "negotiating for a provision in the collective bargaining agreement that fixes the parties' rights and forecloses further mandatory bargaining...." Local Union No. 47, Int'l Brotherhood of Electrical Workers v. NLRB, 288 U.S. App DC 363, 368, 927 F.2d 635 (1991). In that case, the matter is "covered by" the agreement. Alternately, the employer may be freed from its duty to bargain if the union has waived its right to demand bargaining. The procedure for determining whether an employer must bargain before altering a mandatory subject of bargaining involves a two-step analysis: is the issue the "union seeks to negotiate ... 'covered by' or 'contained in' the collective bargaining...

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