Part 1 The Prequel
In 1979 Middle Management Association, MMA, was a small Department of Transportation Local representing about 200 supervisors. MMA had bargained one prior contract with the State and was in the midst of bargaining for a 1979-1981 collective bargaining agreement. Bargaining had not gone well and MMA had hired a Labor Relations Attorney to help them. Having been unsuccessful in reaching a voluntary agreement with the State, MMA exercised its right to request arbitration of its contract dispute.
Arbitrator Tom Gallagher was selected to hear and decide the dispute and a hearing date was set for May 3, 1979. A couple weeks before the date of the hearing MMA’s labor relations attorney informed them that he now had a conflict of interest and that he could not represent MMA in the upcoming arbitration hearing. At that point MMA found me and I agreed to help.
I met with the MMA Bargaining Committee, which included Gene Aune, Jim Maas and Jeanne Chasteen, and others whose names I can’t now recall, to prepare the case. Although there were several unresolved issues, it was clear that the biggest issue by far was wages.
To have a chance to succeed on the wage issue, we needed to be able to argue some kind of internal or external inequity. For example, if we could show that other States or the metro counties were paying more than the State for the kind of work MMA MnDOT supervisors were being doing, we would have an “inequity” that could be presented to the Arbitrator. Though I found some evidence of this external wage shortcoming, I didn’t think I had enough evidence of to make a difference. Though we did end up arguing this point, the Arbitrator ultimately rejected this argument as unsupported by the evidence.
In preparing I also looked to see if there was evidence of an internal inequity. One way of showing an internal inequity was to find that the wage settlement offers being made to other bargaining units or to the unrepresented employees were higher than what we were being offered. But the other unions had received and were settling for the same offer being presented to MMA, so it was clear that we had no argument on this point.
As I looked and re looked at the wage issue searching for something I could use with any chance of success, one internal wage “inequity” did start rising to the surface and the more I studied and considered it, the more convinced I was that it was to be the argument we would use at the hearing. In 1979 and for years before, the State’s wage offers to its employees and the unions were consistently split so that some of the wage increases were given out as cents per hour (through the operation of a capped cost of living formula) and some wages were given out as a percentage. Thus in the high inflation period we are talking about here, 1977-1979, the bargaining contracts with other units and the unrepresented were settled giving a cost of living increase in 1979 of $.47/hour and 1980 of $.39/hour to all employees regardless of their wage rate and in 1979 a 4.5% across the board increase for employees. This method of giving out wage increases and in particular, the manner in which the cost-of-living formula was constructed had the effect of slowly compressing the wages of supervisors with the wages of those they supervised. By example, if the cost of living increase in 1979 was $.47/ hour, as it was, that would be a 4.7% increase for a supervisor making $10/hour, but for an employee under that supervisor making $7/hour, it would be a 6.7% increase. As you can imagine, even over a few years this would result in substantial convergence of the wages of the supervisor and those he or she supervised at least if you measured the differences in a percentage.
Finally, we thought we had a persuasive argument for an internal inequity.
This then became the argument that we put forward time and time again in the hearing. While it seemed the State didn’t care for our argument, at least the Arbitrator heard it. For at one point in the hearing, the Arbitrator turned to the State representative presenting their case, and asked him for his answer to my argument about compression.
Not long after the hearing was completed and the written briefs had been submitted, the decision arrived. Wow, with very little calculation from the Award, it was clear that a huge victory had been won. While in the Opinion, the Arbitrator does not explicitly say that he agreed with our argument on compression, in substance it certainly appeared he did. In his decision, he recalculated the way that the cost of living formula was to be applied and the result was to give all MNDOT supervisors not more cents per hour but 7% more than any other employee or bargaining unit got during the 1979-81 period.
On the question of wage compression, the Arbitrator wrote the following sentence for all of us to ponder:
“The inequity from compression that may result by the flat rate increases which occur through the present formula [the cost of living formula] can be adjusted upon negotiation or arbitration of the new contract beginning July 1981 in a manner similar to that used in this award.”
The direct result of the Award was that the compression of MNDOT supervisors’ wages were halted and that earlier compression was actually reversed to the tune of the extra 7% we had won in the decision. The Award also seemed to forecast that the State would need to change the way it applied the cost of living formula and, that in the future wages would be paid out as a percentage not cents per hour. Both predictions were to prove correct.
The Award certainly set off shock waves. David had slain Goliath. And David, the MnDOT supervisors, could not have been happier. Meanwhile the State would have to have wondered what they needed to do with their central wage structure in the future as the Award had left it in ashes. Certainly, if MMA was again faced in the 1981 bargaining with a wage offer that caused compression, then it would have turned to arbitration again using the Gallagher Decision as a lever and a lance. At that time, in 1979, however, all I thought about is that I had a happy client and that I was one happy attorney. Read Full Article