BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
SB 950 (Nielsen)
Version: March 31, 2016
Hearing Date: April 19, 2016
Fiscal: Yes
Urgency: No
TMW
SUBJECT
Excluded employees: arbitration
DESCRIPTION
This bill would enact the Excluded Employee Arbitration Act to
permit an employee organization that represents an excluded
employee who has filed a grievance with the Department of Human
Resources to request arbitration of the grievance. This bill
would require the designation of at least 20 arbitrators to a
standing panel, as specified. This bill would require the
arbitrator to issue a decision for each grievance hearing during
the arbitration and require that decision to be based solely on
the written record in the grievance, the grievance response, and
the oral presentations made at the arbitration. This bill would
make the arbitrator's decision legally binding and require the
losing party to bear the costs of arbitration.
BACKGROUND
SB 511 (Ayala, Chapter 1522, Statutes of 1990) enacted the
Excluded Employees Bill of Rights (EEBR), which permits, among
other things, excluded employee organizations to represent their
excluded members in employment relations, including grievances,
with the State. The EEBR defines excluded employees as all
managerial employees, confidential employees, supervisory
employees, and specified employees of the Department of
Personnel Administration, the Department of Finance, the
Controller's office, the Legislative Counsel Bureau, the Bureau
of State Audits, the Public Employment Relations Board, the
Department of Industrial Relations, and the State Athletic
Commission.
If an excluded employee has a grievance against his or her
employer, the California Codes of Regulation establish levels of
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administrative review of the grievance before the excluded
employee would file a civil action to litigate the matter.
Several pieces of legislation have attempted to provide
mediation or arbitration of the grievance prior to the filing of
a civil action.
First, AB 2802 (Strom-Martin, 2002) would have established
arbitration procedures for supervisory employees of the
Department of Corrections and the Department of the Youth
Authority; that bill was held under submission in the Assembly
Appropriations Committee. An identical bill, AB 1258 (Matthews,
2003), died at the Assembly Desk without committee referral.
AB 1584 (Evans, 2006) and AB 526 (Evans, 2007) would have
established the Excluded Employees Mediation Act with procedures
similar to those in this bill. Both of those bills were held on
suspense in the Senate Appropriations Committee.
This bill would enact the Excluded Employee Arbitration Act and
establish procedures for the selection of an arbitrator in
grievance actions of excluded employees represented by an
excluded employee organization. This bill would make the
arbitrator's decision legally binding and require the losing
party to bear the costs of the arbitration.
This bill was heard by the Senate Public Employment and
Retirement Committee on April 11, and passed out on a vote of
5-0.
CHANGES TO EXISTING LAW
Existing law establishes the Bill of Rights for State Excluded
Employees, which generally provides rights for excluded
employees in grievances against state employers. (Gov. Code
Sec. 3525.)
Existing law provides the following definitions:
"employee" means a civil service employee of the State of
California, which includes those state agencies, boards, and
commissions as may be designated by law that employ civil
service employees, except the University of California,
Hastings College of the Law, and the California State
University;
"excluded employee" means all managerial employees, as
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defined, all confidential employees, as defined, and all
supervisory employees, as defined, and all civil service
employees of the Department of Human Resources, professional
employees of the Department of Finance engaged in technical or
analytical state budget preparation other than the auditing
staff, professional employees in the Personnel/Payroll
Services Division of the Controller's office engaged in
technical or analytical duties in support of the state's
personnel and payroll systems other than the training staff,
employees of the Legislative Counsel Bureau, employees of the
Bureau of State Audits, employees of the Public Employment
Relations Board, conciliators employed by the California State
Mediation and Conciliation Service, employees of the office of
the State Chief Information Officer, except as provided, and
intermittent athletic inspectors who are employees of the
State Athletic Commission;
"supervisory employee organization" means an organization that
represents members who are supervisory employees, as defined;
"excluded employee organization" means an organization that
includes excluded employees of the state, as defined, and that
has as one of its primary purposes representing its members in
employer-employee relations; and
"state employer" or "employer," for purposes of meeting and
conferring on matters relating to supervisory
employer-employee relations, means the Governor or his or her
designated representatives. (Gov. Code Sec. 3527.)
Existing law provides excluded employee organizations the right
to represent their excluded members in their employment
relations, including grievances, with the State of California.
(Gov. Code Sec. 3530.)
Existing law provides that the scope of representation for
supervisory employees includes all matters relating to
employment conditions and supervisory employer-employee
relations including wages, hours, and other terms and conditions
of employment. (Gov. Code Sec. 3532.)
This bill would enact the Excluded Employee Arbitration Act and
authorize an employee organization representing an employee who
has filed a grievance with the Department of Human Resources
(department) to request arbitration of the grievance if all of
the following conditions are met:
the grievance alleges a violation of Title 2 of the California
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Code of Regulations;
the grievance has not been resolved to the employee
organization's satisfaction after either of the following, as
applicable, pursuant to regulations of the department
governing grievances for excluded employees: (1) the fourth
level of review; or (2) in cases where there is no fourth
level of review, the third level of review; and
the employee organization requests arbitration in writing,
submitted to the department, within 21 days of a decision
rendered in either of the following, as applicable: (1) the
fourth level of review; or (2) in cases where there is no
fourth level of review, the third level of review.
This bill would provide the following definitions:
"excluded employee" means an excluded employee of the state,
as defined;
"employee organization" means any organization that represents
excluded employees of the State of California;
"employer" means the State of California; and
"arbitration" means the binding ruling that resolves an
excluded employee grievance at the fifth level of the excluded
employee grievance process.
This bill would require, after a request for arbitration is
made, the department and the employee organization to designate
a standing panel of at least 20 arbitrators to be available for
arbitration.
This bill would provide that if there are fewer than three
arbitrators available, then the employee organization or the
employer may obtain the names of an additional five arbitrators
from the California State Mediation and Conciliation Service
within the Department of Industrial Relations.
This bill would authorize the employee organization and the
employer to consecutively strike any arbitrator from the
standing panel until the name of one arbitrator is agreed upon,
or, if no agreement is made, the last remaining person on the
panel shall be designated the arbitrator.
This bill would require the name of the chosen or the sole
remaining arbitrator to be submitted in writing to the
department.
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This bill would provide that if the employee organization does
not submit its choice of an arbitrator within 45 days after
requesting arbitration, the request for arbitration would be
considered withdrawn.
This bill would require the arbitrator to issue a decision for
each grievance heard during the arbitration and require the
decision to be based solely on the written record in the
grievance, the grievance response, and the oral presentations
made at the arbitration.
This bill would make the arbitrator's decision legally binding.
This bill would require the arbitrator to issue a written
decision within 45 days of the conclusion of the hearing.
This bill would require the arbitrator to order the
nonprevailing party to pay the cost of the arbitration.
This bill would codify the intent of the Legislature that: (1)
state excluded employees shall have the right to arbitration as
a fifth step to the excluded employee grievance procedure; (2)
the present grievance procedure leaves too many grievances
unresolved; and (3) this lack of resolution has caused more
cases to be filed in California's courts, which should have been
resolved at a lower level.
COMMENT
1. Stated need for the bill
The author writes:
In the early [1990s], when the Excluded Employee Bill of
Rights was adopted in California government codes, there was a
section outlining arbitration rights. This section was taken
out because it was worded in such a way that it appeared that
there was an unreasonable cost factor.
Currently, the excluded employee grievance system has proved
to be less than effective to the excluded employees and is
functioning at an unenforceable level. Of all the grievances
filed, 99 [percent] are denied.
Consequently, the excluded employee organizations have been
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going to Superior Court or the State Personnel Board. This is
very costly for both the state and the employee organizations
and takes years to resolve.
This means that a simple low-cost or no-cost grievance can and
has cost the state thousands.
2. Arbitration of excluded employee grievances
Existing law authorizes excluded employee organizations to
represent excluded employees in employment relations, including
grievances, with the State. (Gov. Code Sec. 3530.) This bill
would authorize an excluded employee organization to request
arbitration of an excluded employee's grievance.
The California Code of Regulations, Title 2, Section 599.859(d)
provides a standard grievance procedure which requires each
party involved to attempt to resolve the grievance promptly and
within the time limits contained in the grievance procedure,
unless the parties mutually consent to extend a time limit. The
grievance procedure is required to be completed in as few levels
of review as possible but no more than four levels, as follows:
Informal Discussion. The excluded employee or the
excluded employee's representative shall discuss the
grievance with the excluded employee's immediate
supervisor. If the grievance is not settled within five
work days, a written grievance may be filed.
Formal Grievance - Level 1. A formal grievance may
be filed no later than 10 work days after the event or
circumstances occasioning the grievance. The first
level of review shall respond to the grievance in
writing within 10 work days after the receipt of the
formal grievance.
Formal Grievance - Level 2. The grievant may appeal
the decision of the first level within 10 work days
after receipt of the response. Within 15 work days
after receipt of the appealed grievance, the person
designated by the appointing power as the second level
of review shall respond in writing to the grievance.
Formal Grievance - Level 3. The grievant may appeal
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the decision of the second level within 10 work days
after receipt of the response to the appointing power or
his/her designee. Within 15 work days after receipt of
the appeal, the appointing power or his/her designee
shall respond in writing to the grievance.
Formal Grievance - Level 4. The grievant may appeal
the decision of the third level within 10 work days
after receipt of the response to the Director,
Department of Personnel Administration or his/her
designee. Within 20 work days the Director, or his/her
designee shall respond in writing to the grievance.
(Cal. Code Regs., tit. 2, Sec. 599.859(d)(2)-(6).)
The author states that since 1992, the California Correctional
Supervisors Organization (CCSO), sponsor, has yet to see a
granted grievance from the California Department of Human
Resources (CalHR), which reviews grievances alleging state
employer violations of the law. The author states that CalHR
has no oversite requiring state employers to respond favorably
to an excluded employee grievance, even when a clear California
Code of Regulations or California Government Code violation
occurs.
The author notes that CCSO has a joint legal case pending
against CalHR for "Walk Time," which has been active for six
years and is pending in the Court of Appeal. According to the
author, the rank and file state employees were granted "walk
time" pay and received a salary increase to compensate the rank
and file time spent walking to and from their area of work.
However, supervisors, who are also required to walk the same
distance, were not granted "walk time" pay. The author argues
that had excluded employees been able to take this matter to
arbitration, this matter would have saved hundreds of thousands
of taxpayer dollars.
Proponents argue that this bill "will assure that there is a
viable system for resolving grievances for excluded employees by
providing for binding arbitration of those grievances.
Currently, the excluded employee grievance system is virtually
illusory, with the overwhelming majority being automatically
denied. Those denials have proven to be a false economy,
however, since excluded employee organizations have been going
to Superior Court or the State Personnel Board. This is very
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costly for the state and the employee organizations and takes
years to resolve. . . . This [bill] will assure that grievances
are resolved in a timely and cost-effective fashion."
This bill would provide a fifth step, arbitration, to the
excluded employee grievance procedure and permit an excluded
employee organization to request arbitration on behalf of an
excluded employee who has filed a grievance with CalHR. The
bill requires a designated standing panel of 20 arbitrators to
be designated by the CalHR and the employee organization. The
bill also provides that if there are fewer than three
arbitrators available, then the employee organization or the
employer may obtain the names of an additional five arbitrators
from the State Mediation and Conciliation Service in the
Department of Industrial Relations. The arbitrator's selection,
duties, and responsibilities are also prescribed in the bill.
3. Arbitrator's binding decision
As noted in the Background, this bill is similar to AB 1584 and
AB 526, which provided procedures for mediation of an excluded
employee's grievances. Those bills would have made the
mediator's decision a legal opinion with no precedential value.
This bill, on the other hand, would make the arbitrator's
decision legally binding.
Notably, if the arbitration process described in the bill is
truly voluntary, then the excluded employee organization and the
employer could decide prior to the arbitration whether or not
the arbitrator's decision would be binding. On the other hand,
prescribing the legal authority of the arbitrator's decisions
potentially makes the arbitration procedure less attractive to
the excluded employee, who may instead believe that filing a
civil action is the only way to receive a fair and impartial
review of the grievances. The Committee may wish to consider
amending the bill to allow the employee organization and
employer to mutually agree on whether the arbitrator's decision
will be binding, rather than statutorily requiring the decision
to be binding.
4. Costs of arbitration
This bill would require the arbitrator to order the
nonprevailing party to pay the cost of the arbitration. All of
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the prior bills that would have established either mediation or
arbitration procedures for excluded employee grievances also
provided for costs of mediation; however, all of those bills
would have required both the employer and the employee
organization to have equally shared the costs of the mediator or
arbitrator.
The author argues that arbitration is more cost-effective than
going to trial. Furthermore, the author argues that "utilizing
the model in which the non-prevailing party is responsible for
the cost of the arbitration differentiates this bill from the
Evans bill [, AB 1584,] and greatly reduces the cost to the
state."
Fee-shifting statutes are enacted when society considers a
statutory or constitutional right important enough to justify
fee shifting. The general rule governing dispute resolution
costs in the United States is that each party must bear the cost
of his or her own costs, regardless of who prevails in
litigation. By prescribing that the losing party in the
arbitration would be responsible for the costs of arbitration,
the bill potentially dissuades excluded employees and their
representing organizations from opting to arbitrate the
grievance before considering whether to litigate the matter in
civil court. As for the benefit to the State, the cost savings
to the State arguably would come in the form of resolution of
the grievance at the fifth level created by the bill rather than
costs spent defending against the grievance in civil court.
Notably, many collective bargaining agreements between state
employers and civil service unions provide that the cost of
arbitration shall be shared equally between the parties.
Further, those agreements may contain a provision authorizing
the union to charge the employee for reasonable costs of union
representation in grievance, arbitration, or administrative
hearings. Similarly, excluded employee organizations may
require, as part of membership in the organization, the excluded
employee to pay the costs of representation by the organization.
Although this bill provides for arbitration between the
excluded employee organization and the employer, the employee
may be individually liable for the costs of the entire
arbitration should the organization's representation prove
unsuccessful. For this reason, the Committee may wish to
consider amending the bill to make the costs of arbitration
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borne in equal shares by the employer and the employer
organization, which would still allow the employer organization
to pass the costs on to the employee, but in a much smaller
amount than would be required under the current language.
Alternatively, the bill could be amended to prohibit the
excluded employee organization from passing the costs of the
arbitration on to the excluded employee.
Support : Association for Los Angeles Deputy Sheriffs;
California Association of Code Enforcement Officers; California
College and University Police Chiefs Association; California
Narcotic Officers Association; Civil Justice Association of
California; Los Angeles County Professional Peace Officers
Association; Los Angeles Police Protective League; Riverside
Sheriffs Association
Opposition : None Known
HISTORY
Source : California Correctional Supervisors Organization
Related Pending Legislation : AB 1983 (Lackey, 2016) would
require, by January 1, 2018, each state entity that employs
excluded supervisory employees, other than peace officers, as
specified, who are required to work shifts at a workplace that
operates with two or more shifts per day to develop policies
that provide preference for supervisors based upon
classification seniority as it pertains to shift assignments,
vacations, and overtime. AB 1983 would also require management
of the state entity to develop and maintain these policies by
meeting with supervisory employee organizations. AB 1983 is
currently in the Assembly Appropriations Committee.
Prior Legislation :
AB 526 (Evans, 2007) See Background; Comments 3, 4.
AB 1584 (Evans, 2006) See Background; Comments 3, 4.
AB 1258 (Matthews, 2003) See Background; Comment 4.
AB 2802 (Strom-Martin, 2002) See Background; Comment 4.
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SB 511 (Ayala, Chapter 1522, Statutes of 1990) See Background.
Prior Vote : Senate Committee on Public Employment and
Retirement (Ayes 5, Noes 0)
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