To Defer or Not To Defer, That is the Question

On March 2, 2021, the California Public Employment Relations Board (“PERB”) issued a decision in County of Santa Clara (2021) PERB Order No. Ad-485-M.  This Santa Clara decision clarified existing precedent regarding when pre-arbitration deferral is appropriate in the public sector.

“Pre-arbitration deferral” is a legal doctrine based on the idea that an administrative agency, such as PERB or the National Labor Relations Board (“NLRB”), should not decide disputes that are better resolved using the grievance-arbitration procedure in the parties’ labor contract.  Employers sometimes exploit the doctrine to try to force PERB or the NLRB to kick over to an arbitrator the unfair labor practice allegations that the union would rather have PERB or the NLRB decide.  It is now clear from this decision that, in the public sector in California, the union has control over where its unfair practice claims will be decided (i.e., PERB or an arbitrator).

PERB, like the NLRB, applies a three-part test when considering whether or not to defer unfair practice allegations to arbitration.  First, PERB determines if the dispute arises within a stable collective bargaining relationship.  Second, PERB ascertains if the employer is willing to waive contract-based procedural defenses (such as untimeliness of the grievance) and is willing to arbitrate the dispute.  Third, PERB decides if the parties contract and its meaning lie at the center of the dispute.

The Santa Clara decision clarifies that the third-prong of this test is met if the alleged unfair practice is prohibited by the parties’ contract and if the resolution of the contractual issue resolves the merits of the unfair practice allegation.  When determining if deferral is appropriate, PERB will apply a rigorous analysis to determine whether “the contract and its meaning lie at the center of the dispute.”

PERB also stated that as a general policy, PERB will not defer a charge to arbitration “unless the entire matter is appropriate for deferral.”  Therefore, if the charge includes two or more independent allegations, if one of the allegations is not deferrable, PERB will not defer any allegations that are “closely related” to it.  Accordingly, when the union wants to oppose an employer’s request for deferral, it should look closely at the applicable agreement to determine if the contract and its meaning actually “lie at the center of the dispute” and if the entire matter is appropriate for deferral or not.

The Santa Clara decision further clarified that if the arbitrator does not apply the statutory standard when resolving the contractual dispute, the union can ask PERB to find the arbitration award repugnant and resume processing the charge.

If a charge is deferred to arbitration (either because PERB ruled that it should be deferred or because the union agreed to that), the union should insist that the arbitrator decide both the statuary and contractual issues.  For example, insist that the arbitrator decide two issues: 1) whether the contract was violated, and 2) whether the collective bargaining statute (such as the MMBA) was violated.

If you have questions, please contact the labor counsel you work with most closely.

By Katharine R. McDonagh | April 6, 2021

Legal Developments