Whether Supplemental Retirement Benefits Or Retiree Health And Welfare Benefits For State Employees Are Mandatory, Permissive, Or Illegal Subjects For Co...

COLLECTIVE BARGAINING—BENEFITS—HEALTH INSURANCE—RETIREMENT—Whether Supplemental Retirement Benefits Or Retiree Health And Welfare Benefits For State Employees Are Mandatory, Permissive, Or Illegal Subjects For Collective Bargaining

RCW 41.80.040(5) prohibits the State, as an employer, from engaging in collective bargaining regarding supplemental retirement benefits for state employees independent of state-controlled retirement plans.  It also prohibits engaging in collective bargaining regarding retiree health and welfare benefits. 

May 28, 2014

Dear Representative Sells:

By letter previously acknowledged, you requested our opinion on two questions, which we paraphrase as follows:

1. Under RCW 41.80, are supplemental retirement benefits for state employees independent of state-controlled retirement plans a mandatory, permissive, or illegal subject for collective bargaining?

2. Under RCW 41.80, are retiree health and welfare benefits for state employees a mandatory, permissive, or illegal subject for collective bargaining?

BRIEF ANSWER

ANALYSIS

    The subjects of your two questions—bargaining for “a supplemental retirement system for state employees independent of state-controlled retirement plans” and bargaining for “retiree health and welfare benefits”—raise very similar issues, so we analyze them together.  We begin by reviewing the legal background regarding mandatory, permissive, and illegal subjects for collective bargaining.  We then describe how state law treats collective bargaining over health

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and retirement matters, construing RCW 41.80.040(5) in light of its plain language and statutory context.

A. Mandatory, Permissive, And Illegal Subjects Of Collective Bargaining

    In 2002, the Washington State Legislature passed the Personnel System Reform Act (PSRA), amending the state civil service laws and adding a new chapter to state law.  Laws of 2002, ch. 354.  The new chapter, RCW 41.80, provides for collective bargaining between the State (including most public academic institutions) and most employees covered by the state civil service law.  See generally RCW 41.80.005(1), (6), (8), (10) (defining terms).  The PSRA defines collective bargaining as “the performance of the mutual obligation of the representatives of the employer and the exclusive bargaining representative to meet at reasonable times and to bargain in good faith in an effort to reach agreement with respect to the subjects of bargaining specified under RCW 41.80.020.”  RCW 41.80.005(2).  Put another way, collective bargaining is the process for an employer and a group of employees to enter a “collective bargaining agreement” on various terms and conditions of employment.  See RCW 41.80.030 (describing contents of collective bargaining agreements).  When there is an obligation to collectively bargain about a subject or issue, the employer has a duty to meet with the employees’ exclusive bargaining representative at reasonable times to confer and negotiate about that subject in good faith.  RCW 41.80.005(2).[1]

    “There are ‘three broad categories of issues related to collective bargaining:  (1) mandatory issues, (2) permissive issues, and (3) illegal issues.’” Yakima County v. Yakima County Law Enforcement Officers’ Guild, 174 Wn.  App. 171, 181, 297 P.3d 745, review denied, 178 Wn.2d 1012, 311 P.3d 26 (2013) (quoting Patrol Lieutenants Ass’n v. Sandberg, 88 Wn. App. 652, 657, 946 P.2d 404 (1997)); see also NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 345 n.3, 78 S. Ct. 718, 2 L. Ed. 2d 823 (1958) (describing three categories); Pasco Police Officers’ Ass’n v. City of Pasco, 132 Wn.2d 450, 460, 938 P.2d 827 (1997) (same).  What category a subject falls into is initially a question of statutory interpretation.  See, e.g., Patrol Lieutenants Ass’n, 88 Wn. App. at 657.  Under most collective bargaining laws, issues regarding “wages, hours and other terms and conditions of employment are mandatory subjects over which the parties must bargain in good faith.”  Id. (internal quotation marks omitted).  There is extensive case law interpreting whether specific subjects fall within these terms.  See, e.g., Wooster Div. of Borg-Warner Corp., 356 U.S. 342; Int’l Ass’n of Fire Fighters, Local Union 1052 v. Pub. Emp’t Relations Comm’n, 113 Wn.2d 197, 200, 778 P.2d 32 (1989).  Nonmandatory or permissive subjects typically comprise those management prerogatives that do not affect wages or hours, or that are considered remote from the terms and conditions of employment.  Pasco Police Officers’ Ass’n, 132 Wn.2d at 460-61.  “The third category, illegal issues, includes matters that, because of a statutory or constitutional prohibition, the parties may

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not consider during the collective bargaining process.”  Patrol Lieutenants Ass’n, 88 Wn. App. at 657-58.

B. RCW 41.80.020 And .040

    Your questions concern the meaning of two statutes, RCW 41.80.020 and .040.   We start by reviewing the text of these two statutes.

    The first statute, RCW 41.80.020, describes several mandatory subjects for bargaining.  The mandatory subjects “include wages, hours, and other terms and conditions of employment, and the negotiation of any question arising under a collective bargaining agreement.”  RCW 41.80.020(1).  The statute goes on to describe subjects that do not fall within the mandatory category.  The employer is “not required to bargain” over several subjects, including “[h]ealth care benefits or other employee insurance benefits” and “[a]ny retirement system or retirement benefit[.]”  RCW 41.80.020(2).  In relevant part, RCW 41.80.020 provides:

(2) The employer is not required to bargain over matters pertaining to:

(a) Health care benefits or other employee insurance benefits, except as required in subsection (3) of this section;

(b) Any retirement system or retirement benefit[.]

                        . . . .

(3) Matters subject to bargaining include . . . the dollar amount expended on behalf of each employee for health care benefits. . . .

RCW 41.80.020(2), (3) (emphases added).

    The second statute, RCW 41.80.040, specifies certain “rights of management” that are illegal subjects for bargaining.  This statute first describes the rights of management generally, but then specifically provides that “retirement plans and retirement benefits” are subjects that the State “shall not bargain.”

    The employer shall not bargain over rights of management which, in addition to all powers, duties, and rights established by constitutional provision or statute, shall include but not be limited to the following:

            . . . .

(5) Retirement plans and retirement benefits.

RCW 41.80.040 (emphases added).

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C. RCW 41.80.040(5) Prohibits The State From Collectively Bargaining A Supplemental Retirement System Or Retiree Health And Welfare Benefits

    We now return to your questions, which concern two potential subjects for collective bargaining:  (1) a “supplemental retirement system for state employees independent of state-controlled retirement plans” and (2) “retiree health and welfare benefits.”  We conclude that both are illegal subjects for bargaining because they are “retirement plans and retirement benefits” as to which bargaining is prohibited by RCW 41.80.040(5). 

    Our analysis starts with the plain language rule of statutory construction.  “If the statute is unambiguous, its meaning is to be derived from the plain language of the statute alone.”  Fraternal Order of Eagles, Tenino Aerie 564 v. Grand Aerie of Fraternal Order of Eagles, 148 Wn.2d 224, 239, 59 P.3d 655 (2002).  We “presume the legislature says what it means and means what it says.”  State v. Costich, 152 Wn.2d 463, 470, 98 P.3d 795 (2004).  “Plain meaning ‘is to be discerned from the ordinary meaning of the language at issue, the context of the statute in which that provision is found, related provisions, and the statutory scheme as a whole.’”  Lake v. Woodcreek Homeowners Ass’n, 169 Wn.2d 516, 526, 229 P.3d 791, 243 P.3d 1283 (2010) (quoting State v. Engle, 166 Wn.2d 572, 578, 210 P.3d 1007 (2009)). 

    The plain language of RCW 41.80.040(5) bars collective bargaining over the two subjects raised by your questions.  First, the subject of “retiree health and welfare benefits” falls squarely within the term “retirement benefits,” which is barred by subsection .040(5).  Second, the subject of a “supplemental retirement system” also involves a type of “retirement benefit” and “retirement plan,” which are illegal subjects under subsection .040(5).  The words used in the statute squarely address the two subjects of your questions.  Cf. Black’s Law Dictionary 565 (8th ed. 2004) (defining “retirement plan” as a variety of “employee benefit plan”).[2]

    Next, we considered whether RCW 41.80.020(2) could be read to define permissive subjects for bargaining, notwithstanding the prohibition in subsection .040(5).  We reject that interpretation first based on the language of subsection .020(2).  It provides that “[t]he employer is not required to bargain over matters pertaining to . . . [h]ealth care benefits or other employee insurance benefits . . . [and a]ny retirement system or retirement benefit[.]”  RCW 41.80.020(2) (emphasis added).  These words do not purport to define permissive subjects.  Instead, the words simply clarify that “health care benefits or other employee insurance benefits” and “any retirement system or retirement benefit” are not within the scope of mandatory subjects described in the preceding paragraph, subsection .020(1).  Subsection .020(2) therefore limits the otherwise broad subjects, such as “terms and conditions of employment,” in subsection

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.020(1).  But to say that something is not a mandatory subject of bargaining is not to say that it is necessarily a permissive subject.  Therefore, we do not read subsection .020(2) as exceptions to the express prohibitions in subsection .040(5).  Instead, subsection .040(5) controls your questions by explicitly providing that “retirement plans and retirement benefits” are illegal subjects.

    On a related note, we considered how subsection .020(3) directs the State to bargain over “the dollar amount expended on behalf of each employee for health care benefits.”  Bargaining over the dollar amount per employee does not authorize bargaining over retirement benefits and, therefore, does not affect the prohibited subjects described by subsection .040(5).

    We also considered whether subsection .040(5) could be narrowly construed to concern bargaining over existing state-provided retirement plans and benefits, leaving the employer free to bargain over retiree health or welfare benefits that do not modify the existing statutory plans and benefits.  We reject this construction because subsection .040(5) does more than preserve existing statutory plans and benefits. Subsection .040 defines rights of management “in addition to all powers, duties, and rights established by constitutional provision or statute[.]”  (Emphasis added.)  Under these words, we construe the five subjects set forth as subsections within section .040 as additional to a general prohibition against bargaining over the content of statutes.  This is also confirmed by the statutory context.  Subsection .040(5) is preceded by four parallel subsections each describing illegal subjects for bargaining.[3]  Statutory interpretation must “take into consideration the meaning naturally attaching to [words] from the context, and . . . adopt the sense of the words which best harmonizes with the context.”  State v. Flores, 164 Wn.2d 1, 12, 186 P.3d 1038 (2008) (second alternation theirs) (internal quotation marks omitted).  The context confirms that subsection .040(5) is intended as a subject that cannot be bargained, not merely a prohibition against bargaining over the existing retirement statutes.  Accordingly, we cannot construe subsection .040(5) to refer to only state provided retirement plans and benefits.

    Finally, we considered whether the word “system” in subsection .020(2) created a subject for bargaining not excluded by subsection .040(5), which used the word “plan.”  See Densley v. Dep’t of Ret. Sys., 162 Wn.2d 210, 219, 173 P.3d 885 (2007) (use of two different terms in the same statute supports a presumption that the legislature intended the terms to have different meanings).  This consideration does not change our interpretation because the two words are closely related.  For example, state law defines the state retirement “plans”—Plan 1, Plan 2, and Plan 3—to mean the “public employees’ retirement system.”  See RCW 41.40.010(27) (emphasis added) (“‘Plan 1’ means the public employees’ retirement system . . .”); see also RCW 41.40.010(28) (Plan 2), .010(29) (Plan 3).  Therefore, at most, retirement plans are components of the retirement system.  That distinction has no bearing on our conclusion that

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RCW 41.80.040(5) prohibits bargaining over “[r]etirement plans and retirement benefits” and, therefore, prohibits bargaining the two subjects addressed by this opinion.

    We acknowledge that “[t]he legislature is presumed not to include unnecessary language when it enacts legislation.”  McGinnis v. State, 152 Wn.2d 639, 645, 99 P.3d 1240 (2004).  The language in subsection .020(2), however, is not rendered unnecessary by our interpretation.  As noted above, subsection .020(2) provides clarification regarding the mandatory subjects in the preceding subsection.  And, subsection .020(2) illustrates the legislative practice of using redundant or overlapping provisions to remove doubt.  See, e.g., Fort Stewart Schs. v. Fed. Labor Relations Auth., 495 U.S. 641, 646, 110 S. Ct. 2043, 109 L. Ed. 2d 659 (1990) (“technically unnecessary” examples may be included in a statute “out of an abundance of caution”).  The history of this statute suggests that it was added to remove doubts.  Originally, subsection .040(5) was not part of HB 1268.  On the final passage in the Senate, a last-minute amendment added subsection .040(5).  See Senate Journal, 57th Leg., Reg. Sess., at 899 (Mar. 8, 2002) (motion by Senators Carlson, Fraser, and Rasmussen).  This suggests that subsection .040(5) was added to accomplish the very prohibition stated by its plain language.  Cf. Lewis v. Dep’t of Licensing, 157 Wn.2d 446, 470, 139 P.3d 1078 (2006) (“court may consider sequential drafts of a bill in order to help determine the legislature’s intent”).[4]

CONCLUSION 

RCW 41.80.040(5) precludes the State as employer from collective bargaining over
“retirement plans and retirement benefits.” As a result, the State cannot
bargain over a supplemental retirement system independent of state-controlled
retirement plans, or other “retiree health and welfare benefits.”

ROBERT W. FERGUSON
    Attorney General     

JAY D. GECK
    Deputy Solicitor General 

wros
  

[1] The employer’s duty to bargain a mandatory subject is enforced through RCW 41.80.110(1)(e), which addresses unfair labor practice complaints heard by the Public Employment Relations Commission.  See RCW 41.80.120; WAC 391-45.

[2] The Public Employment Relations Commission recently addressed RCW 41.80.040, albeit while addressing different questions, and concluded that “[a]ny interpretation of RCW 41.80.040 should not ignore its specific language. . . . RCW 41.80.020 and 41.80.040, read together, are clear and unambiguous[.]”  Washington Fed’n of State Emps. v. State Attorney General, No. 21156-U-07-5399, 2010 WL 1644961, at *4 (Wash. Pub. Emp’t Relations Comm’n Apr. 16, 2010).

[3] “(1) The functions and programs of the employer, the use of technology, and the structure of the organization; (2) The employer’s budget and the size of the agency workforce, including determining the financial basis for layoffs; (3) The right to direct and supervise employees; [and] (4) The right to take whatever actions are deemed necessary to carry out the mission of the state and its agencies during emergencies[.]”

[4] The 2002 Final Legislative Report is consistent with our overall interpretation, as it provides that HB 1268 “prohibited [] bargaining over management rights, which include, but are not limited to . . . retirement plans and benefits.”  Final Legislative Report, 57th Leg., Reg. Sess., at 9 (Wash. 2002).