Appeal of Professional Firefighters of Hudson, IAFF Local 3154

Only Terms Agreed to Through Collective Bargaining -- Not Past Practices - Create Legally-Enforceable Benefits under a CBA
New Hampshire Supreme Court, No. 2013-690
Tuesday, October 28, 2014

The NH Supreme Court affirmed the decision of the PELRB, which determined that the Town of Hudson did not commit an unfair labor practice by failing to pay step increases during the status quo period.

This case arises out of the Town’s alleged violation of the CBA covering 2006 – 2009 (“2006 CBA”) between the Town and the Firefighters Union. Prior to the 2006 CBA, the Town and the Union had entered into four separate CBA’s, the first one beginning in 1991. None of the CBA’s contained evergreen clauses, which have the effect of automatically renewing the terms of the previous CBA past its expiration date. However, after the expiration of each prior CBA, but before the creation of a successor agreement, the Town gave step increases to the Union members. After the 2006 agreement expired in 2009, the Town gave the Union members step increases for 2009 through August 2011 but then refused to provide any additional step increases, even though there was sufficient money in the budget.  The Town then informed the Union that it would not pay an additional pay wages increases, including step increases.

At arbitration, the arbiter determined that although the Town was not obligated to pay step increases during the status quo period, by always doing so in the past, it had established a past practice that it was now bound to continue. Therefore, it concluded that the Town had violated the 2006 CBA. Despite the arbiter’s order, the Town refused to pay the increases, and the Union brought a complaint with the PELRB. The PELRB disagreed with the arbiter, reasoning that requiring the Town to pay step increases during the status quo period violated public policy; therefore, the Town did not commit an unfair labor practice. The Union appealed the NH Supreme Court.

The Court determined that the payment of step increases was a discretionary matter that the Town was not bound to continue. When the 2006 CBA expired, so did the benefits conferred upon the parties by that agreement. At that point, the Town was required to maintain the status quo, which meant that all terms and conditions of employment must remain the same during the negotiation process. However, while the Town was required to maintain salary levels during the status quo period, it was not required to comply with schedules of projected salary increases contained within the expired CBA, unless the CBA contained an evergreen clause. Because there was no evergreen clause here, the Town was not required to pay step increases. Any such payments were discretionary matters, not mandatory cost items under an enforceable agreement. The Court declined to adopt a rule that would allow benefits to become legally enforceable through past practice rather than through the process of collective bargaining.

In addition, the Court disagreed with the Union’s arguments that the Town was bound by the arbiter’s decision simply because it agreed to submit a stipulated issue to the arbiter and that the Town was time-barred from contesting the arbiter’s decision.