PUBLIC UTILITY DISTRICTS ‑- LABOR UNIONS ‑- POWER TO CONTRACT ‑- RETROACTIVE PAYMENTS

PUBLIC UTILITY DISTRICTS ‑- LABOR UNIONS ‑- POWER TO CONTRACT ‑- RETROACTIVE PAYMENTS

P.U.D. Commissioners may approve deferred pay to the anniversary date of a contract (March 1, 1953) for electrical workers who were previously covered by the union contract, although the contract is not signed until six weeks after that date.

P.U.D. may approve the deferred pay to the anniversary date of the agreement for office workers not previously covered by the union contract, if said workers were, in fact, the negotiating and contracting party, not bound under a previous separate contract.

The existence of a strike in the present situation does not alter the conclusions above.

                                                                  - - - - - - - - - - - - -

                                                                    July 15, 1953

Honorable Cliff Yelle
State Auditor
Legislative Building
Olympia, Washington                                                                                                                Cite as:  AGO 53-55 No. 93

Attention:  Mr. A. E. Hankins
            Chief Examiner

Dear Sir:

            This is in answer to your letter of June 23, 1953, requesting our opinion upon certain questions relating to a labor agreement between a public utility district and the International Brotherhood of Electrical Workers' Union.

            You state that a labor agreement which, among other things, established a wage scale for the electrical workers expired March 1, 1953, having been in effect for a period of one year.  The new year's contract from March 1, 1953 to March 1, 1954, which contained a salary increase and included office workers not heretofore included in the agreement, was not signed by the utility on the expiration  [[Orig. Op. Page 2]] date of the old agreement.  On April 21st and 22nd of 1953, the union called a strike, whereupon the utility commissioners agreed to include the office workers and to grant the salary increase for both electrical workers and office employees.

            The questions submitted for our interpretation concerning the salary increase are:

            (1) May the P.U.D. Commissioners approve retroactive pay to the anniversary of the original contract agreement (March 1, 1953) for the electrical workers who were previously covered by the union contract?

            (2) May the P.U.D. Commissioners approve retroactive pay to the anniversary date of the agreement (March 1, 1953) for the office workers who were not previously covered by the union contract?

            (3) Would the conclusion be different if the facts were altered to the extent that there was no strike, but rather, an agreement was not reached and signed until April, 1953?

            Our conclusions may be summarized as follows:

            In our opinion, the answer to your first question is yes.  If the office workers, not previously covered by the union contract, were a contracting and negotiating party for the new contract, and not bound under a previous, and distinctly separate, contract, the deferred payments may be approved by the commissioners.  The answer to your third question is no.

                                                                     ANALYSIS

            The right of a political subdivision to contract with a labor union has been recognized by the Washington Supreme Court in Christie v. Port of Olympia, 27 Wn. (2d) 534.  A public utility district is a municipal corporation (RCW 54.04.020).

            The powers granted to a public utility district of the State of Washington are found in chapter 54.16 RCW, a pertinent portion of which reads as follows:

             [[Orig. Op. Page 3]]

            "* * *

            "It [P.U.D.] may make contracts, employ engineers, attorneys, and other technical or professional assistance; * * * and do all other things necessary to carry out the provisions of this title."  (RCW 54.16.090).

            The purpose of the act establishing public utility districts is found in the Laws of 1931, chapter 1, section 1, which reads as follows:

            "The purpose of this act is to authorize the establishment of public utility districts to conserve the water and power resources of the State of Washington for the benefit of the people thereof, and to supply public utility service, including water and electricity for all uses."

            Section 11 provides that the rule of strict construction shall have no application to this act, but that the same shall be liberally construed in order to carry out the purposes and objects for which the act is intended.  In addition, this section provides that, when this act comes in conflict with any provision, limitation or restriction in any other law, this act shall govern and control.

            A municipal corporation is limited in its powers to those granted in express words, or to those necessarily or fairly implied in, or incident to the powers expressly granted, and also to those essential to the declared objects and purposes of the corporation.  1 Dillon, Municipal Corporations (4th ed.), § 89.

            As our court said inChristie v. Port of Olympia, cited supra, at page 548:

            "* * * We are dealing with a very general grant of powers to a municipal corporation, but one that is not created to govern in any such sense as in the case of a county or a city, but only to engage in purely proprietary undertakings in direct competition with private corporations or individuals engaged in the same business.  * * *"

             [[Orig. Op. Page 4]]

            It is obvious that a P.U.D. has the authority to employ electricians.  Without such employees, a P.U.D. cannot perform the very functions which it was created to perform.  The power to employ includes the power to contract, and as a corollary, the district necessarily has the implied power to make such contracts relating to wages, hours, vacations, etc., as are customarily offered to electricians by its competitors in the same business.

            InMartin v. Campanaro, 156 F. (2d) 127, cited by our court in Christie v. Port of Olympia, supra, the Circuit Court of Appeals said:

            "When an agreement expires by its terms, if, without more, the parties continue to perform as theretofore, an implication arises that they have mutually assented to a new contract containing the same provisions as the old.  Ordinarily, the existence of such a new contract is determined by the 'objective' test, i.e., whether a reasonable man would think the parties intended to make such a new binding agreement‑-whether they acted as if they so intended."

            In light of the unsuccessful negotiations and strike, we think that a "reasonable man" would not believe that, when these electrical employees continued to work while their representatives made efforts to procure revised contract terms, they were agreeing to work, in the interval, at the old rates.

            InChristie v. Port of Olympia, supra, our court held that there was no merit to the contention that payments such as are herein contemplated were either gifts in violation of Art. VIII, sec. 7, of the state constitution or "extra compensation" in violation of Art. II, sec. 25 of the constitution.  The circumstance that payment to these electrical workers continued to be made and accepted at the old rates does not indicate an agreement to work at the old rates during the intervening period, but only that it was continued as a working arrangement pending the termination of the wage negotiations.  Payments were merely deferred.  Metropolitan Life Insurance Company v. Durkin, 94 N.Y.S. (2d) 865;Christie v. Port of Olympia, supra;Martin v. Campanaro, 156 F. (2d) 127, cert. den., 329 U.S. 759;Evadan Realty Corporation v. Patterson, 78 N.Y.S. (2d) 114.  See alsoMatter of Mahon v. Board of Education of City of New York, 63 N.E. 1107, 1108, to the effect that to create extra or additional compensation, there must be a predetermined amount fixed by contract or by law.  Metropolitan Life Insurance Company v. Durkin, 91 N.Y.S. (2d) 26, 35.

             [[Orig. Op. Page 5]]

            In light of the foregoing authorities, it is our opinion that the P.U.D. Commissioners may approve the deferred pay to the anniversary date of agreement (March 1, 1953) for the electrical workers who were previously covered by the union contract.

            In response to your second question, concerning the office workers who were not previously covered by the union contract, we advise that if they were a contracting and negotiating party, not bound under a previous and separate contract, the deferred payments may be approved by the commissioners.

            "Extra" compensation differs in no recognizable aspect from "additional compensation."  Either phrase conveys the idea of an "increase" over a previously agreed or established amount.  Matter of Mahon v. Board of Education of City of New York, supra; Metropolitan Life Insurance Company v. Durkin, supra.  The constitutional prohibition of Art. II, sec. 25, is aimed at a retroactive application of the increases of salaries.  Increases imply an existing valid lesser obligation.  Evadan Realty Corporation v. Patterson, supra.

            Your letter does not indicate whether the office workers continued to work under an existing valid lesser obligation or whether they became, as of March 1, 1953, a negotiating party in the contemplated new contract.  Therefore, in response to your second question, we are unable to be categorical in our answer, but merely point out certain criteria for your assistance.  If the office workers previously agreed to accept a fixed per diem for their services when they entered upon their duties, the additional compensation claimed after the work was done would be an afterthought.  SeeState ex rel. Eshelman v. Cheetham, 21 Wash. 437.  If, however, it was agreed that after March 1, 1953, the money paid the workers from day to day or week to week was not to be considered full compensation, they are entitled to their full compensation at this time under the contract.

            In response to your third inquiry, it is our opinion that in this particular situation, if the facts were so altered that there had been no strike, but an agreement was not reached and signed until April 1953, our conclusion would not be different.

            Teller's treatise on Labor Disputes and Collective Bargaining, Volume 1, section 53, page 139, indicates that public utilities are not immune from peaceful and otherwise lawful strikes, picketing and boycotting as is shown from the  [[Orig. Op. Page 6]] implications ofPuget Sound Traction Company v. Whitley, 243 Fed. 945, and the express holding ofKinloch Telephone Company v. Local Union, 265 Fed. 312.  He states that:

            "* * * It is undoubtedly true that public utilities, involving as they do services indispensable to the well ordered life of the community, require a different treatment in connection with labor controversies.  On the other hand, blanket illegality of all labor activities in connection with public utilities ignores the fact that workingmen employed by public utilities may have complaints as real as those possessed by workingmen employed in private industry.  * * * In Public Service Commission v. International Railroad Co., [120 N.E. 727] the right of a Public Service Commission to order the reinstatement of strikers with back pay was assumed but mandamus in enforcement of the order was refused because it appeared that the utility did not have and could not borrow the money necessary to comply with the order."

            In conclusion, it is our opinion that the P.U.D. commissioners may approve the deferred payment to the anniversary date of the agreement for the electrical workers who were previously covered by the union contract; that the P.U.D. commissioners may approve the retroactive pay for the office workers not previously covered under the union contract if these workers were, in fact, a contracting and negotiating party, not bound under a previous separate contract.  Under the particular set of facts stated in your request, the existence of the strike does not alter our conclusions.

Very truly yours,

DON EASTVOLD
Attorney General

PHYLLIS DOLVIN
Assistant Attorney General