City of Milpitas (PERB 2443M)

STATE OF CALIFORNIA
DECISION OF THE
PUBLIC EMPLOYMENT RELATIONS BOARD
MILPITAS SUPERVISORS' ASSOCIATION,
Charging Party,
V.
CITY OF MILPITAS,
Respondent.
Case No. SF-CE-958-M
PERB Decision No. 2443-M
July 29, 2015
Appearances: Clisham & Sortor by David P. Clisham, Attorney, for Milpitas Employees
Association; Renne, Sloan, Holtzman & Sakai by Charles D. Sakai and Erich W. Shiners,
Attorneys, for City of Milpitas.
Before Huguenin, Banks and Gregersen, Members.
DECISION
HUGUENIN, Member: 	This case is before the Public Employment Relations Board
(PERB or Board) on exceptions filed by the Milpitas Supervisors' Association (MSA) and a
cross exception filed by the City of Milpitas (City) to a proposed decision (attached) issued on
August 30, 2013, by an administrative law judge (ALJ) pursuant to the Meyers-Milias-Brown
Act (MMBA). 	The complaint issued by PERB 's Office of the General Counsel in Case
No. SF-CE-958-M, alleged that the City violated the duty to meet and conferin good faith by
changing unilaterally its policies reflected in the notice provision of the parties' memorandum
of understanding (MOU), as well as City Resolution 5981, Section IV, in conjunction with a
decision to contract out services.
1
A companion case, Case No. SF-CE-956-M, alleging the same essential facts was filed
contemporaneously by the Milpitas Employees Association (MEA), and was consolidated for
1 The MMBA is codified at Government Code section 3500 et seq. Unless otherwise
indicated, all statutory references herein are to the Government Code.

processing. At the consolidated hearing, the complaints in both cases were amended to allege
that the City failed to meet and confer over its decision to outsource bargaining unit work and
thereby violated the MMBA and PERB regulations.
In her consolidated proposed decision, the ALJ concluded that the City had a duty to
meet and confer, that the City failed to provide reasonable notice
of
the decision to outsource
bargaining unit work, but that both
by
agreement and
by
inaction, the Unions 	had waived the
right to meet and confer.
	On
that basis, the ALJ proposed to dismiss both cases. Both Unions
filed exceptions.
2
Subsequent to filing exceptions, MEA and the City entered a settlement agreement
under which they mutually sought to have PERB dismiss the complaint and vacate the
proposed decision in Case No. SF-CE-956-M. In City
of
Milpitas (2015) PERB Decision
No. 2412-M (Milpitas), we granted this request.
In the remaining Case No. SF-CE-958-M, the Board has reviewed the record, the ALJ's
proposed decision, MSA's exceptions, and the City's response thereto and its cross-exception.
Except for one omission,3 the
ALJ's
findings
of
fact are supported by the record, and we adopt
them as the fmdings
of
the Board itself subject to our correction
of
that omission. To the
extent they are consistent with our discussion below, we affirm the ALJ's conclusions and the
proposed remedy.
PROCEDURAL HISTORY
On April 30, 2012, MSA filed an unfair practice charge against the City. On May 23,
2012, the City filed its response. On August 3, 2012, PERB's Office
of
the General Counsel
issued a complaint. On August 28, 2012, the City filed its answer to the complaint denying the
2 We shall refer to MSA and MEA, collectively as the "Unions."
3 See discussion regarding "Waiver by Inaction," p. 22, post.
2

material allegations in the complaint and asserting several affirmative defenses. On
September 12, 2012, the parties met for an informal settlement conference, but the matter was
not resolved.
On February 11, 2013, the City filed a joint request along with the Unions that the
formal hearings separately scheduled for February 20, 2013, in Case No. SF-CE-956-M, and
February 21, 2013, in Case No. SF-CE-958-M, be consolidated for hearing. On February 20,
2013, a formal hearing was held on the consolidated cases. At hearing, the Unions moved to
amend the complaint to allege that the City breached its duty to meet and confer over the
decision to contract out bargaining unit work and withdrew allegations that the City failed to
meet and confer regarding the effects
of
that decision, including the subsequent lay-offs
of
bargaining unit members. The ALJ granted the motion to amend over the City's objection. On
August 30, 2013, the ALJ issued her proposed decision.
On October 18, 2013,the Unions filed exceptions to the ALJ's proposed decision. On
November 12, 2013, the City filed its response to the Unions' exceptions and a cross-exception
to the ALJ's conclusion that the City failed to provide reasonable notice. On December 4,
2013, the cases were placed on the Board's docket.
On February 6, 2015, pursuant to a settlement with the City, MEA requested that PERB
dismiss its complaint and vacate the proposed decision in Case No. SF-CE-956-M. We did so.
(Milpitas, supra, PERB Decision No. 2412-M.)
FACTUAL BACKGROUND
MSA is a recognized employee organization within the meaning ofMMBA
section 3501(a)(l) and PERB Regulation 32016(b). 	MSA represents certain miscellaneous
supervisorial employees working for the City, including certain parks and maintenance
4
4 PERB regulations are codified at California Code of Regulations, title 8,
section 31001 et seq.
3

employees. The City is a public agency within the meaning
ofMMBA
section 3501(c) and
PERB Regulation 32016(a). MSA and the City were parties to an MOU effective January
1,
2011 through December 31, 2012 .
. Section 5.00
of
the parties' MOU "ADVANCE NOTICE" provides:
Except in cases
of
emergency as provided in this section, the City
shall give reasonable written notice to each recognized employee
organization affected by an ordinance, rule, resolution, or
regulation directly relating to matters within the scope
of
representation including actions taken under City Rights that
affect wages, hours, and other terms and conditions
of
employment proposed to be adopted by the City and shall give
such recognized employee. organizations the opportunity to meet
and confer with City representatives.
Section 7.00
of
the parties' MOU concerns layoffs. Section 7.01.4
of
the MOU
provides:
No layoffs or new outsourcing
of
MSA positions during the term
of
this contract, except
if
the State eliminates any portion
of
RDA
impacting the City and/or the General Fund's deficit exceeds
$7 million or more in any fiscal year.5
Also
of
consequence, City Resolution 5981, which was adopted in 1991, provides for a
prevailing wage policy under contracts for designated City projects and services.
Section IV(D)
of
Resolution 5981 states:
In instances where a contracting out proposal is being considered
for work currently performed by City employees, the rate
of
pay
for contracted services must be greater or equal to the current rate
of
pay and benefits. Advance notice
of
120 days must be given to
the collective bargaining agent with a call for public hearings on
the issue. This advance notice is subject to a meet and confer
process with the City's represented employees.
5 As identified at hearing, "RDA" refers to the Redevelopment Agency.
4

On January 5, 2012, in anticipation
of
the impending dissolution
of
Redevelopment
Agencies in California, City Manager Thomas Williams (Williams) met with the Unions to
discuss the loss
of
RDA funds and its effect on the City's finances. At this meeting, Williams
disclosed that the City had made Requests for Proposals (RFPs) for park maintenance work,
street maintenance and street landscaping. The January 5, 2012, meeting was attended
by
the
presidents
of
MEA and MSA as well as other Union members.
6
On February 3, 2012, Williams sent a memorandum to the Mayor and City Council
informing them
of
the financial impact
of
the loss
of
RDA funds and making several
recommendations to reduce the City's budget deficit. Included in William's recommendation
was the reorganization
of
the City's public works department
by
eliminating supervisorial
positions, transferring supervision
of
public works to the City engineering department,.and
contracting out street, park, and tree and landscaping maintenance. (Respondent's Exh., B,
pp. 1-2.) Williams projected that these changes to public works would result in savings
of
$769,375 for the remainder
of
the 2011-2012 fiscal year 	and
an
annual savings
of
over
$2 million thereafter. (Id. at p. 2.)
7
On February 7, 2012, Williams presented his RDA report and recommendations at a
City Council meeting. Several Union members, including then MSA President Stephan Smith
(Smith), were in attendance. The City Council voted to continue Williams' recommendations
for a period not to exceed three months to allow for a forensic audit and to allow City
employees time to present alternative proposals. (Respondent's Exh., C, pp. 8-9.) The City
Redevelopment Agencies were officially dissolved on February 1, 2012. (California
Department of Finance Redevelopment Agency Dissolution Website
< 	> [as of May 21, 2015].)	http://www.dof.ca.gov/redevelopment
7 The City's 2011-2012 fiscal year ended on June 30, 2012.
5

Council also authorized the use
of
reserve funds
to
handle the immediate budget problems and
set a date
of
May 8, 2012, as the effective date to take action on Williams' proposals.
On February 8, 2012, Williams sent an e-mail regarding his budget reduction plan to
Smith and several other Union members. The e-mail stated that the City had "no choice but to
eliminate $9
.2
million from the general fund" and that he would like the Unions to provide him
with their plan for eliminating $9.2 million from the general fund. (Charging Party Exh., 3,
p. L) Williams called for a meeting the next day "so we can discuss the best way to proceed
and any infonnation you may need in the preparation
of
your budget strategy." (Ibid.)
On February 9, 2012, Williams met with at least six public works employees who had
attended the previous night's City Council meeting, including Smith, and who were invited by
Williams to a meeting regarding an alternative budget reduction plan from the Unions. At the
meeting, Williams informed the employees that the City had a $12 million structural deficit,
had lost $7 million from the dissolution
of
RDA, and needed to cut $9.2 million from the
general fund. Williams also asked the Unions for their ideas on a budget proposal. Smith
informed Williams and other attendees that the Unions had designed a Corp Yard Task Force
(CYTF) which would make recommendations to reduce the City's deficit. Smith's notes from
the meeting, as well as his testimony at hearing (Reporter's Transcript (RT) 57:21-25), indicate
that all attending agreed that the February 9, 2012, meeting was not a meet and confer session.
(Charging Party Exh., 3, p. 1.) However, Williams' testimony indicated that he did consider
the February 9, 2012, meeting a meet and confer session. (RT 87:14-16.)
On February 10, 2012, Smith requested copies ofRFPs, bid results and copies
of
all
existing maintenance contracts from Greg Annendariz (Annendariz). 	On February 16, 2012,8
8 Annendariz was identified at hearing as the City public works director at the time in
controversy. (RT 19:17-18.) Williams had told Smith at the February 9, 2012, meeting to
make information requests to Annendariz.
6

Smith asked Armendariz for the methodology the City used to determine its cost savings from
the layoffs and contracting out
of
the street, park, and tree and landscape maintenance
department work.
On March 2, 2012, City Human Resources Director, Carmen Valdez (Valdez), sent
Smith a bargaining request. Valdez's request stated:
Due to the severe economic situation facing the City, particularly
in light
of
the termination
of
all Redevelopment Agency funding,
the City requests that IAFF[ l agree to open labor negotiations.
The purpose
of
this proposal is to discuss the current MOU and
the possibility
of
making adjustments that will provide assistance
toward resolving the City's severe budget crisis while preserving
City jobs and services.
9
(Respondent Exh., F, p. 1.)
On March 5, 2012, Smith wrote to Williams via e-mail informing him that the CYTF
would soon present Williams with its list
of
recommendations to reduce the City's budget
deficit. Smith also informed Williams that the Unions' efforts had been hindered
by
difficulties in obtaining information regarding: (1) the costs
of
contracting out the Unions'
bargaining unit work; (2) official bid proposals received
by
the City for the contracting out;
and (3) the City's methodology used to determine the cost savings that Williams reported to
the City Council. Smith's e-mail also stated:
We have a reasonable basis to believe that your
recommendations, as proposed to the City Council, could result
in a fully formulated proposal to outsource multiple bargaining
unit jobs, thereby significantly altering working conditions for
numerous bargaining unit employees, including and up to
termination
of
their employment.	
We
therefore request to
bargain over any proposed change in working conditions.
9 IAFF is not identified in the record. IAFF is generally understood to mean the
International Association
of
Fire Fighters. In its unfair practice charge, MSA describes itself
as "an affiliate
of
United Public Employees
of
California/Laborers International Union
of
North America (LIUNA) 792." At hearing, Smith identified the March 2, 2012, memorandum
he received from Valdez as the City's request to reopen the MSA contract. We assume,
therefore, that IAFF is a typographical error.
7

(Charging Party's Exh.,
1,
pp. 1-2, emphasis added.) Ultimately, the parties did not meet and
confer over the contracting out
of
bargaining unit work
or
the layoffs
of
bargaining unit
members.
On April 3, 2012, the CYTF presented its recommendations to the City Council. The
recommendation did not include layoffs and claimed to save the City over $1.3 million. The
City Council moved to refer the CYTF' s recommendation to Williams and the director
of
public works for analysis and requested a response in two weeks.
On April 17, 2012, Williams presented his response to the City Council. Williams
advised the City Council that the CYTF recommendations were unacceptable, because they
were dependent on retirements which the City had no effective means to control. Williams
.determined that the CYTF recommendations would result in deferred maintenance, overtime
costs and a reduction in City services and urged the City Council to reject the CYTF
recommendations and adopt the budget plan he presented to the City Council on February 7,
2012. The City Council approved Williams' budget plan and authorized him to begin
implementing those cost reductions.
PROPOSED DECISION
The ALJ identified the issue before her as "whether the City was required to provide
120 days' notice
of
its decision to conduct layoffs and outsource bargaining unit work and
whether the 'no layoff' clause in the MOU constitutes a waiver authorizing the City to take
unilateral action after the triggering events occurred." (Proposed Dec., pp. 14-15.)
After reviewing the elements of a prima facie case for unilateral change violations
of
MMBA section 3505, the ALJ concluded that a prima facie case had been established,
including that the contracting out of the Unions' bargaining unit work was a matter within
8

scope
of
representation because the City's acknowledged motivation in contracting out that
work was its desire to save money and reduce its budget deficit.
Preliminarily, the ALJ noted that the advance notice provision
of
the parties' MOU
requires "reasonable written notice" before the City may make changes to a matter within
scope
of
representation. The Unions had taken the position that such "reasonable notice" was
the 120 days mandated
by
City Resolution 5981. The ALJ determined that on February 7,
2012, when Williams presented his budget proposal to the City Council, the Unions had actual
notice
of
the City's plan to contract out bargaining unit work, and that the City Council
adopted Williams' proposal on April 17, 2012. 	Since April 17, 2012, was fewer than 120 days
from February 7, 2012, the ALJ determined that the City had failed to give the Unions
reasonable notice
of
its plan to contract out bargaining unit work.
The ALJ next addressed the City's affirmative defense that the Unions had waived their
right to bargain over the decision to contract out bargaining unit work. After stating that "any
waiver
of
a right to bargain over a negotiable contracting out decision must be 'clear and
unmistakable'," the ALJ noted that PERB follows the California Civil Code standards for
contract interpretation. (Proposed Dec., p. 19; citing Barstow Unified School District (1996)
PERB Decision No. 1138.) Examining the language
of
Section 7.01.4
of
the parties' MOU,
the ALJ determined that:
the provision appears to contain both a limitation on a managerial
right to implement layoffs as well as a limited waiver
of
the right
to bargain over a decision to subcontract bargaining unit work.
(Proposed Dec., p. 21.)
An MSA bargaining proposal to include language explicitly giving MSA the option to
cancel previous concessions never made it into Section 7.01.4. Therefore, the ALJ rejected the
Unions' assertion that Section 7.01.4 was negotiated in exchange for previous concessions by
9

the Unions. Instead the ALJ found the City's financial data and testimony regarding the loss
of
RDA necessitated further cuts beyond the concessions previously made
by
MSA. The ALJ
concluded that Section 7.01.04 "was not
in
exchange for earlier
concessions-it
was in
contemplation
of
future cuts." (Proposed Dec., p. 21.)
The ALJ determined that in negotiating Section 7.01.4, the parties considered
alternatives to layoffs and contracting out including permanent wage decreases. The ALJ
found that the negotiations over Section 7.01.4 demonstrated that the parties understood that
the loss
of
RDA would necessitate savings that "would have to come from employees'
salaries." (Proposed Dec., p. 22.) The ALJ concluded that Section 7.01.4 constituted both a
restriction on the City's managerial right to layoff unless the City lost RDA or had a general
fund deficit
of
$7 million and a limited waiver
of
MSA's right to meet and confer over the
decision to contract out bargaining unit in the event the City lost RDA or had a general fund
deficit
of
$7 million. The ALJ concluded that the City had lost RDA and suffered a general
fund deficit
of
S7
million or more prior to January
of
2012 and therefore:
the City did not have a renewed duty to meet and confer over a
decision to outsource bargaining unit work and layoff bargaining
unit employees prior to its April 17, 2012, adoption
of
the City
Manager's recommendation.
(Ibid.)
The ALJ also considered the City's claim that the Unions waived
by
inaction their right
to bargain over the City's decision to contract out. The ALJ determined that the Unions had
failed to make a demand to meet and confer over the City's proposal to contract out bargaining
unit work after learning about the proposal at the February 7, 2012, City Council meeting. The
ALJ noted that the Unions took the position that the meetings conducted between the Unions
and the City regarding the CYTF were not meet and confer sessions and determined that the
Unions had failed to use the time between the February 7, 2012, notice of the City's proposal

to contract out bargaining unit work and the April 17, 2012, adoption
of
the proposal by the
City Council to conduct negotiations. The ALJ thus concluded that
the Unions' conduct for the six weeks following the City's
announced proposal evidences a waiver
of
any right it may have
had to demand negotiations.
(Proposed Dec., p. 24.) The ALJ then dismissed the complaint and underlying unfair practice
charge.
EXCEPTIONS, CROSS-EXCEPTION AND MOTION TO STRIKE
MSA takes twelve (12) exceptions to the ALJ's proposed decision: 	eight (8) exceptions
of
fact and four (4) exceptions oflaw. MSA's factual exceptions are presented as omissions
of
fact by the ALJ rather than erroneous findings.
Of
these factual exceptions four (4) concern
City Resolution 5981 its import and interpretation, three (3) concern the March 2, and
March 5, 2012, e-mails from Valdez and Smith, and one (1) concerns the City's evidence
of
the impact
of
the loss
of
RDA.
MSA's exceptions
of
law concern: (1) the applicability
of
City Resolution 5981 to
MOU Section 7.01.4; (2) whether the March
5,
2012, e-mail from Smith to Williams contains a
bargaining demand; (3) whether the record contains evidence
of
a general fund deficit
of
$7 million or impact on bargaining unit work from the loss
of
RDA; and (4) whether the ALJ
failed to construe MOU Section 7.01.4 as an agreement to reopen negotiations on the subject
of
contracting out and layoffs.
The City takes one (1) cross-exception regarding the ALJ's determination that it failed
to provide 120 days' notice
of
its proposal to contract out bargaining unit work. The City
otherwise urges us to affirm the proposed decision.
The City has also filed a Motion to Strike Sections II throU;gh IV of MSA' s "Brief in
Reply to City's Cross-Exception and Response" (MSA's Reply). The City maintains that
11

PERB Regulation 32310 allowed MSA only to respond to the City's cross-exception which it
did in Section V
ofMSA's
Reply. According to the City, Sections II through IV
ofMSA's
Reply thus constitute an impermissible reply
brief
"did not raise any new issues, discuss any
new case law, or formulate any new defenses," but instead merely presented additional
argument and authority for points raised
in MSA's
own exceptions. (City
of
Modesto (2008)
PERB Decision No. 1994-M; Los Angeles Unified School District/Los Angeles Community
College District (1984) PERB Decision No. 408 (Los Angeles).)
MSA urges
that
we deny the motion to strike. MSA contends that PERB
.Regulation 32310 contains no prohibition on a party correcting omissions or providing context
to the other party's exception, and that Sections II through IV
of
its reply provide foundation
for Section V
of
its reply addressing the City's cross-exception.
DISCUSSION
Standard
of
Review
The Board defers to the ALJ's findings
of
fact that incorporate credibility
determinations, but otherwise reviews an ALJ decision de novo. The Board may draw
different or even opposite inferences from the factual record than did the ALJ andmay reverse
the conclusion
of
law legal determinations
of
the ALJ. (Palo Verde Unified School District
(2013) PERB Decision No. 2337; Woodland Joint Unified School District (1990) PERB
Decision No. 808a; Santa Clara Unified School District (1979) PERB Decision No. 104.)
We first take up the City's motion to strike portions
ofMSA's
Reply to the City's cross
exception. We shall then discuss the merits, addressing MSA's exceptions and the City's
cross-exception within the following framework: 	the prima facie case, waiver by contract,
waiver by inaction and the notice requirement.
12

Motion to Strike
PERB Regulation 32310 states:
Within 20 days following the date
of
service
of
the statement
of
exceptions, any party may file with the Board itself an original
and five copies
of
a response to the statement
of
exceptions and a
supporting brief. The response shall be filed with the Board itself
in the headquarters office. The response may contain a statement
of
any exceptions the responding party wishes to take to the
recommended decision. Any such statement
of
exceptions shall·
comply in form with the requirements
of
Section 32300. A
response to such exceptions may be filed within 20 days. Such
response shall comply in form with the provisions
of
this Section.
Service and proof
of
service
of
these documents pursuant to
Section 32140 are required.
As previously noted by the Board, PERB regulations neither expressly permit nor preclude the
submission
of
reply briefs and, therefore, "it would appear that the acceptance
of
such filings is
discretionary with the Board." (Los Angeles, supra, PERB Decision No. 408, p. 4.) In
addition, in Los Angeles the Board held that:
Where the response raises new issues, discusses new case law or
fonnulates new defenses to allegations, the Board might well be
persuaded to pennit the complainant to submit a reply in order to
aid the Board in its review
of
the underlying dispute.
(Id. at p. 5.) The issue is whether the Board may only allow reply briefs under such
circumstances, as the City would have us rule, or whether the Board has greater discretionin
determining whether it will allow the filing
of
a reply brief that exceeds a clearly permissible
response to a cross-exception and also encompasses a surreply to the respondent's response.
We decline to construe Los Angeles, supra, PERB Decision No. 408 as narrowly as the
City urges. Los Angeles recognizes that PERB's regulations neither pennit nor preclude reply
briefs and the acceptance
of
such briefs is discretionary with the Board. We conclude that
Los Angeles provides illustrations, not limitations, for the Board to exercise such discretion.
We therefore deny the City's Motion to Strike Sections II through IV of MSA' s Reply.
13

However, in this instance, because Sections II through IV ofMSA's Reply contain
information that is most appropriately contained in a party's own statement ofexceptions,
and because much ofthe content ofMSA's Reply in Sections II through IV is duplicative of
the assertions raised in MSA's own statement ofexceptions, we find this material oflittle
assistance to the Board's consideration ofthe parties' underlying dispute.
10
We turn now to the merits.
The Prima Facie Case
MMBA section 3505 obliges a public agency to meet and confer in good faith with
representatives ofrecognized employee organizations concerning matters within the scope of
representation. MMBA section 3506.5(c) states that it is unlawful for a public agency to refuse
or fail to meet and confer in good faith with a recognized employee organization.
In County of Santa Clara (2013 ) PERB Decision No. 2321-M (Santa Clara), the Board
held that:
To prove up a unilateral change, the charging party must establish
that: (1) the employer took action to change policy; (2) the
change in policy concerns a matter within the scope of
representation; (3) the action was taken without giving the
exclusive representative notice or opportunity to bargain over the
change; (4) the action had a generalized effect or continuing
impact on terms and conditions ofemployment. (Walnut Valley
Unified School District (1981) PERB Decision No. 160; Grant
Joint Union High School District (1982) PERB Decision No. 196.
(Santa Clara, supra, PERB Decision No. 2321-M, p. 13; cifmgFairfield-Suisun Unified
School District (2012) PERB Decision No. 2262.) We review these elements.
10 Section II contains a review of the applicable legal principles regarding waiver of
collective bargaining rights; Section III argues that MOU Section 7 .01.4 did not contain an
explicit waiver ofCity Resolution 5981; Section IV argues that MSA made a bargaining
demand in its March 5, 2012, e-mail to Williams.
14

1. Action to Change Policy
The complaint is-sued by the Office of the General Counsel alleged that prior to
April 17, 2012, it was the City's policy to provide reasonable notice before contracting out
bargaining unit work and pursuant to City Resolution 5981, reasonable notice consisted of
120 days. On April 17, 2012, the City Council adopted Williams' recommendations regarding
layoffs of MSA bargaining unit members and the outsourcing ofMSA bargaining unit work.
The ALJ determined thatMSA had actual notice of Williams' plan to conduct layoffs and
outsource bargaining unit work at the February 7, 2012, City Council meeting. February 7, to
April 17, 2012, is approximately 70 days. Therefore, assuming April 17, 2012, is the proper
date for calculating when the City changed its policy, MSA has proved the first prong of its
prima facie case.
In its cross-exception, the City does not dispute the 120-day notice requirement.
Rather, it disputes April 17, 2012, as the date it changed its policy. The City argues that the
ALJ should have calculated the notice requirement from the date it implemented the change in
policy. According to the City, it did not contract out bargaining unit work until July 1, 2012,
which was 145 days after February 7, 2012. Thus, the City contends, it provided more notice
than was required under City Resolution 5981 and therefore did not change its policy of
providing 120 days' notice before contracting outMSA bargaining unit work.
11
A change in policy occurs on the date a firm decision is made even if the decision is not
scheduled to take effect immediately, or even if it is never implemented. ( City of Sacramento
In its exceptions, the City only refers to the contracting out ofMEA bargaining unit
work. In documents filed before the Office of the General Counsel and the ALJ, the City
contends that it did not contract out anyMSA bargaining unit work and that the supervisory
functions perfonned byMSA bargaining unit members were transferred to a different division
of the department of public works. However, this contention was not raised before the Board
either initially or afterMEA withdrew its exceptions; therefore, we have treated this matter as
one where MSA bargaining unit work may have been contracted out.
15

(2013) PERB Decision No. 2351-M; see also State of California (Department ofPersonnel
Administration) (1996) PERB Decision No. 1145-S [A unilateral change occurs when an
official action is taken, not on a subsequent date when the action becomes effective].) The
City Council's adoption of Williams' recommendation to outsource bargaining unit work
constitutes the City's firm decision to contract out. (Anaheim Union High School District
(1982) PERB Decision No. 201 [A governing board resolution affecting terms and conditions
of employment constitutes official action even though it has a deferred effective date].)
Therefore we agree with the ALJ that the City made a firm decision to change its policy on
April 17, 2012. We also conclude that the ALJ properly calculated the notice period between
the date MSA first received notice of the plan to outsource (February�' 2012) and the date the
City reached a firm decision by adopting the plan to outsource (April 17,2012). The City's
cross-exception, therefore, lacks merit.
2. On a Matter within the Scope of Representation
As noted by the ALJ, not all decisions to outsource are within scope of representation.
Although "a decision to 'subcontract"' work may constitute a managerial decision "at the core
of entrepreneurial control" and be based on factors not amenable to negotiation (Ventura
County Community College District (2003) PERB Decision No. 1547, p. 19 (Ventura); citing
Fibreboard Paper Products Corp. v. National Labor Relations Board (1964) 379 U.S. 203),
decisions to outsource which are based on labor costs, viz., "overall enterprise costs," are
within scope of representation because the union has control over some enterprise costs ("labor
costs") and may make concessions through the bargaining process that "may substantially
mitigate the concerns underlying the employer's decision, thereby convincing the employer to
rescind its decision." (Ibid. quoting Otis Elevator Company (1984) 269 NLRB 891, 901;
Building Material & Construction Teamsters' Union v. Farrell (1986) 41 Cal.3d 651,659
16

(Farrell) [permanent transfer
of
work away from a bargaining unit has a significant effect on
wages, hours, and working conditions and, therefore, is subject to the mandatory bargaining
requirements
of
the MMBA].) Thus, outsourcing decisions based on enterprise ("labor") costs
are "peculiarly suitable for resolution through the collective bargaining framework." ( Ventura,
supra, PERB Decision No. 1547, p. 19, quoting First National Maintenance Corp.
v.
National
Labor Relations Board (1981) 452 U.S. 666, 680.)
As the ALJ noted, the City acknowledged that its budget deficit was the primary
if
not
sole reason for deciding to outsource MSA bargaining unit work. The ALJ properly concluded
that the City's decision to outsource was a matter within scope
of
representation. Therefore,
MSA proved the second prong
of
its prima facie case.
3. 	Taken without Giving the Unions the Opportunity to Bargain over the Change
Whether MSA was given an opportunity to bargain is a more difficult issue. At
hearing, Williams testified that he considered the meetings.with theCYTF to be meet and
confer sessions. Smith testified not only that the Unions did not consider these meetings to be
meet and confer sessions, but that the City agreed that they were not meet and confer.
MMBA section 3505 states:
"Meet and confer in good faith" means that a public agency, or
such representatives as it may designate, and representatives
of
recognized employee organizations, shall have the mutual
obligation personally to meet and confer promptly upon request
by either party and continue for a reasonable period
of
time in
order to exchange freely information, opinions, and proposals,
and to endeavor to reach agreement on matters within the scope
of
representation prior to the adoption by the public agency
of
its
final budget for the ensuing year. The process should include
adequate time for the resolution
of
impasses where specific
procedures for such resolution are contained in local rule,
regulation, or ordinance, or when such procedures are utilized by
mutual consent.
17

There is no dispute that Williams sent an e-mail on February
8,
2012, asking the Unions to
meet with him on February 9,
2012~
to discuss alternatives to William's plan to conduct layoffs
and outsource bargaining unit work to reduce the City's general fund deficit. There is no
dispute that the Unions designed the CYTF to develop an alternative budget reduction plan.
The issue is whether the meetings between Williams and the CYTF constitute bargaining.
The hearing record does not contain sufficient details to determine that the meetings
between CYTF and Williams constituted bargaining. Neither
of
the Unions' two witnesses
participated in the CYTF and Williams provided little insight into the substance
of
the City's
meetings with the CYTF. 	It is not even clear from the record that the City and the CYTF met
at all between the February 9, 2012, meeting and the CYTF's alternate bud~et proposal on
April 3, 2012. The hearing record does indicate that MEA, at least, made a conscious effort to
avoid having union officials or bargaining team members on the CYTF to avoid giving the
impression that they were engaging in contract negotiations with the City. (RT 60:25
	61
:5.)
Smith testified that he did not consider the meetings between the City and CYTF to be meet
and confer sessions because the parties were not bargaining, the Unions were merely
presenting an alternative budget plan. (RT 20: 1-7.)
12
Moreover, as
of
February 9, 2012, MSA had not received a formal proposal from the
City regarding a change in working conditions. There is no evidence that the City scheduled
12
The City's evidence was insubstantial, limited to Williams' testimony as follows:
Q 	Did you consider that February 9th meeting to be a meet and
confer session?
A 	Yes.
(RT 87:14-16.) Although he did testify about "constant" and "frequent" discussions about
layoffs and outsourcing in "every meeting, every discussion, every informal discussion," it is
unclear whether Williams was referring to subsequent meetings with the CYTF or with other
unidentified parties. (RT 92:8-19.)
18

further meetings with the CYTF, even
if
it could be considered the representative
of
MBA and
MSA. CYTF's budget proposal was presented to the City Council, not the City's bargaining
team. Moreover, the fact that the City requested bargaining on March 2, 2012, seems to belie
the fact that bargaining was already in progress. Thus we conclude that the February 9, 2012,
meeting-and
any other meeting between CYTF and City officials to the extent there were
any-was
not a meet and confer session.
With regard to the March 2, 2012, request to reopen the MOU from Valdez and the
March 5, 2012, bargaining demand from Smith, there is no dispute that no bargaining took
place pursuant to those two communications. The record is also devoid
of
any evidence that
either party refused to bargain.
In its response to MSA's exceptions, the City contends that Smith's e-mail did not
constitute a demand to bargain, because it does not acknowledge that the City had made a
proposal on contracting out. The City contends that rather than being a demand to bargain
over an existing proposal, Smith's March 5, 2012, e-mail indicates a desire to meet and confer
over a future proposal to outsource.
We do not find the City's argument persuasive. As
of
March 5, 2012, Williams
recommendations had not been adopted by the City Council, thus they were still prospective in
nature. Moreover, the CTYF was working on an alternative to Williams' recommendation
which could have obviated the need for layoffs and contracting out. Therefore, it is reasonable
to view Williams' contracting out recommendation as not final and not yet "fully formulated."
We conclude that Smith's March 5, 2012, e-mail contains a sufficiently clear demand to
bargain over the contracting out of bargaining unit work. Moreover, since the City Council
adopted Williams' outsourcing and layoffs recommendation just six weeks after Smith's
request, and it did so before the parties had bargained or reached impasse, we conclude that the
19

City changed its policy regarding outsourcing without giving MSA the opportunity to bargain
over the change. Thus, MSA has proved the third prong
of
the unilateral charge test.
4.
	Having a Generalized Effect or Continuing Impact
The evidence shows that MSA bargaining unit members were laid
off
and/or their work
was transferred to another division within the department
of
public works or outsourced to a
third-party employer. Thus the City's change in policy had both a generalized effect and
continuing impact upon street, tree and park maintenance supervisors who were laid
off
and
their duties either outsourced to outside employers or transferred to other employees within the
department
of
public works. (Farrell, supra,
41
Cal.3d 651, 659.) Thus, MSA has proven the
fourth prong
of
the unHateral change test and demonstrated a prima facie case
of
an unlawful
unilateral change by the City.
Defenses
The City raised defenses
of
waiver by contract and waiver
by
inaction. A recognized
empl9yee organization may waive its MMBA right to meet and confer. However, waiver is
disfavored and must be clear and unmistakable. 	An employer raising a waiver defense must
establish that: (1) it provided the employee organization clear and unequivocal notice that it
would act on a matter, and (2) the employee organization clearly, unmistakably and
intentionally relinquished its right to meet and confer in good faith. (Santa Clara, supra,
PERB Decision No. 2321-M.)
1.	
Waiver by Contract
The ALJ concluded that MSA had contractually waived its right to bargain over the
decision to implement the outsourcing
of
bargaining unit work by Section 7.01.4
of
the parties'
MOU. The ALJ made this determination based on her interpretation
of
the contract language
and the parties' bargaining history.
20

MSA contends that a waiver
of
its bargaining rights must
be
expressly contained in
Section 7.01 .4. MSA argues that under the Civil Code a contract must
be
taken as a whole
with effect given to every part. 	According to MSA, Section 7.01.4 must be read in light
of
MOU Section 1.01 which, in relevant part, states that the MOU "is subject to all ordinances,
resolutions, and personnel rules
of
the City, except as expressly provided to the contrary by
this Memorandum
of
Understanding." Since Section 7.01.4 does not expressly exempt that
provision from City Resolution 5981, the no layoffs/no contracting out provision must be
subject to the restrictions contained in the City Resolution 5981.
13
The City, on the other hand, contends that making Section 7.01.4 subject to City
Resolution 5981 would render Section 7.01.4 meaningless and with(?ut effect. The City would
remain subject to a pre-existing bargaining obligation concerning contracting out and would
have surrendered its right to implement layoffs with nothing in return. According to the City,
rather than following Civil Code section 1641, such an interpretation would violate it.
We concur with the ALJ that based on the language
of
the provision and the parties'
bargaining history, Section 7.01.4 contains both a restriction on the City's managerial right to
• conduct layoffs and a limited waiver
of
the MSA's right to meet and confer over the decision
to contract out bargaining unit work. The waiver
ofMSA's
right to bargain is limited
by
the
occurrence
of
one
of
the triggering events identified in Section 7.01.4, the City's loss
of
RDA
or a general fund deficit
of
$7 million. Since there is no dispute that the City lost RDA
funding in 2012, we conclude that the City was entitled to implement layoffs and contracting
out
of
MSA bargaining unit work subject only to reasonable notice.
MSA contends that the ALJ erred because there was no evidence that the loss
of
RDA
had any impact on the City's ability to provide street, park and tree maintenance: the services
13
The whole of a contract is to be taken together, so as to give effect to every part,
if
reasonably practicable, each clause helping to interpret the other. (Civ. Code, § 1641.)
21

performed
by
MSA's bargaining unit members. However,
by
its plain terms, Section 7.01
.4
does not require such a demonstration; it only requires the loss
of
RDA or a demonstration by
the City that it had a deficit in its general fund
of
$7 million. Thus, even
if
the City's budget
projection was insufficient evidence that a $7 million existed in the general fund, the loss
of
RDA-which
is not in
dispute-was
sufficient to trigger the contracting out provision.
Therefore MSA's exception that the ALJ erroneously relied on the City's budget projections to
conclude that the "triggering events" for Section 7.01.4 lacks merit.
The ALJ's determination that MSA contractually waived its right to bargain over the
decision to implement the contracting out
of
MSA bargaining unit work is affirmed. Therefore
MSA's exception that the ALJ erred in determining that the union contractually waived its
right to bargain over the decision to outsource also lacks merit.
2. 	Waiver by Inaction
As an alternative to waiver by contract, the ALJ also determined that MSA waived its
right to bargain by inaction. As we have concluded, Smith made a bargaining demand in its
March 5, 2012, e-mail to Williams. Any waiver
of
a right to bargain over a negotiable
contracting out decision must be clear and unmistakable. (Long Beach Community College
District (2003) PERB Decision No. 1568.) Therefore, MSA's March 5, 2012, bargaining
demand obviates a determination that the union waived its right to bargain by inaction.
We reverse the ALJ's determination that MSA waived its right to meet and confer over
the contracting out
of
bargaining unit work by inaction. Therefore, we grant MSA's exception
which claimed that it did not waive its right to bargain the decision to outsource by inaction.
However, since we affirm the ALJ's determination that MSA did contractually waive its right
to bargain, this determination does not change the outcome of the case.
22

Notice Requirement
The ALJ determined that the City did not provide MSA with 120 days' notice
of
its
decision to implement contracting out. The City took exception to the ALJ's determination on
the basis that the ALJ should have used the date
of
implementation
of
the outsourcing rather
than the date
of
adoption
by
the City Council. As we have stated above, we reject the City's
contention and affinn the
ALJ's
determination that the City changed its policy when it failed to
provide MSA with 120 days' notice
of
its decision to outsource bargaining unit work.
However, because we have also determined that the City had an affirmative defense to its
unilateral change, the City's failure to provide 120 days' notice does not change the outcome .
of
the case.
CONCLUSION
In summary, we affirm the ALJ's determinations in the proposed decision that MSA
contractually waived its right to bargain over the decision to outsource bargaining unit work
and that the City failed to provide MSA with adequate notice
of
its decision to outsource
bargaining unit work. We also reverse the ALJ' s determination that MSA waived by inaction
its right to bargain the decision to outsource bargaining unit work. However, sincewe
conclude that the City had an affirmative defense via contractual waiver, this determinat~on
does not change the outcome
of
the case.
ORDER
The complaint and underlying unfair practice charge in Case No. SF-CE-958-M are
hereby DISMISSED.
Members Banks and Gregersen joined in this Decision.
23

STATE OF CALIFORNIA
PUBLIC EMPLOYMENT RELATIONS BOARD
MILPITAS EMPLOYEES ASSOCIATION,
Charging Party,
V.
CITY OF MILPITAS,
Respondent.
UNFAIR PRACTICE
CASE NO. SF-CE-956-M
MILPITAS SUPERVISORS' ASSOCIATION,
Charging Party,
V.
CITY OF MILPITAS,
Respondent.
UNFAIR PRACTICE
CASE NO. SF-CE-958-M
PROPOSED DECISION
(August 30, 2013)
Appearances: United Public Employees
of
California by David
G.
Ritchie, Attorney, for
Milpitas Employees Association and Milpitas Supervisors' Association; Renne Sloan
Holtzman Sakai by Erich Shiners, Attorney, for City
of
Milpitas.
Before Alicia Clement, Administrative Law Judge.
PROCEDURAL HISTORY
On April 30, 2012, the Milpitas Employees Association (MEA) filed an unfair practice
charge alleging that the City
of
Milpitas (City) violated the Meyers-Milias-Brown Act
(MMBA) 	by unilaterally changing the Memorandum of Agreement (MOA) with regard to
outsourcing bargaining unit work. Also on April 30, 2012, the Milpitas Supervisors'
Association (MSA) filed an identical charge against the City arising from the same conduct.2
1
1 The MMBA is codified at Government Code section 3500 et seq. Unless otherwise
noted, all statutory references are to the Government Code.
2 Collectively, MEA and MSA will be referred to as the Unions.

PERB issued complaints on both charges on August 3, 2012. A single informal settlement
conference was held on September 12, 2012, for both charges, but neither charge settled. The
charges were consolidated for formal hearing on February 20, 2013.
On February 20, 2013, counsel for the Unions made a motion to amend the complaint to
include an alleged breach
of
the duty to meet and confer in good faith over the decision to
contract out 	bargaining unit work, and to ex.elude consideration
of
any failure to meet and
confer over- the effects
of
that decision, including the subsequent layoffs
of
bargaining unit
employees. Counsel for the Unions argued in his opening statement, "This case is really about
what steps need to occur in order for a city to provide notice and an opportunity to employee
associations when they've decided to take action, particularly in connection with contracting
out, something that impacts upon employees' fundamental wages, hours, and working
conditions in a significant way." The motion to amend was granted over the City's objections.
3
AMENDMENT TO THE COMPLAINT
The complaint that PERB issued on August 3, 2012, asserted a violation
of
the duty to
meet and confer in good faith based on a unilateral change to section 5.01
of
the parties'
MOAs, as well as a unilateral change to City Resolution 5981, Section IV. The Unions moved
at the hearing to amend the complaints to include the issue
of
whether the City violated the
statute when it failed to meet and confer over the decision to outsource bargaining unit work.
PERB Regulation 326484 permits a party to move to amend a complaint at the hearing.
In determining the appropriateness
of
the amendment, the Board agent shall consider the
3 The parties appear to use the phrases "outsourcing" and "contracting out"
interchangeably.
4 PERB Regulations are codified at California Code of Regulations, title 8,
section 31001 et seq.
2

possibility of prejudice to the respondent. The City argues that the motion was improperly
granted because the Board agent failed to consider the possibility of prejudice to the
respondent in making the ruling.
An amendment is appropriate where (1) the facts are intimately related to the
complaint; (2) the conduct in question was part of the same course of conduct as alleged in the
complaint; and (3) the issue was fully litigated and the parties had an opportunity to examine
and cross-examine witnesses. (San Diego Unified School District (1991) PERB Decision
No. 885.) Amending a complaint to reflect the allegations in the original unfair practice charge
does not substantially affect the rights of the parties. (Ibid.)
Review of the charges filed on April 30, 2012, demonstrates that the Unions alleged a
failure to meet and confer over the decision to outsource bargaining unit work as well as the
failure to provide sufficient notice of its decision. 5 Accordingly, it is clear that the City had
notice of the Unions' allegations. In its May 23, 2012, response to the charge, the City argued
that section 7.01.4 of the MOAs authorized it to outsource bargaining unit work in the event
that the City lost its redevelopment funds or its budget deficit exceeded $7 million. Given that
both triggering events occurred in the early part of 2012, the City argued that it was not
required to meet and confer prior to making its decision.
The City presented evidence that it gave notice of its proposal to outsource bargaining
unit work; that the City was ready, willing and able to meet and confer with the Unions over
the issue; that the Unions never demanded to meet and confer; and that the parties engaged in
conduct which, while the parties expressly agreed would not be considered a meet and confer,
5 The complaint that issued on August 3, 2012, did not address the alleged failure to
meet and confer over the decision to outsource bargaining unit work. Nor was this allegation
the subject of warning and dismissal letters.
3

involved the exchange
of
ideas and proposals to close the budget
·gap
without the necessity
of
outsourcing bargaining unit work. Accordingly, the City presented facts addressing each
of
the
elements
of
an alleged failure to meet and confer over a change to a subject within the scope
of
representation.
In addition to the fact that it clearly had notice
of
the Unions' allegation that the City
had a duty to meet and confer over the decision to outsource bargaining unit work, the City has
not presented any facts demonstrating that it was, in fact, prejudiced by the amendment.
Accordingly, the amendment
of
the complaint to include the additional legal theory
of
a breach
of
the duty to meet and confer over the decision to outsource bargaining unit work conformed
the complaint to the charge and did not result in any prejudice to the City, as the facts giving
rise to the alleged change to the notice policy arose from the same basic facts as the alleged
failure to meet and confer over the decision to outsource bargaining unit, all
of
which was
presented at hearing.
FINDINGS OF FACT
The Unions are exclusive representatives within the meaning
of
PERB
Regulation 32016(b)
of
an appropriate unit
of
employees. The City is a public agency within
the meaning ofMMBA section 350l(c) and PERB Regulation 32016(a).
The MEA and MSA have separate MOAs with the City. There are a number
of
similarities between the two MOAs, including the fact that both MOAs are valid from
January 1, 2011 through December 31, 2012; both MOAs appear to have been adopted on or
around June 2011; and both MO As contain the following relevant provisions:
4

SECTION 5.00[ 1 -ADVANCE NOTICE	6
5.01 Except in cases of emergency as provided in this
section, the City shall give reasonable written notice to
each recognized employee organization affected by an
ordinance, rule, resolution, or regulation directly relating
to matters within the scope of representation including
actions taken under City Rights that affect wages, hours
and other terms and conditions of employment proposed
to be adopted by the City and shall give such recognized
employee organizations the opportunity to meet with City
representatives.
SECTION 7 .00 - LAYOFF
7.01.4 No layoffs or new outsourcing of [Union]
positions during the term of this contract, except if the
State eliminates any portion of RDA[ l impacting the City
and/or the General Fund's deficit exceeds $7 million or
more in any fiscal year.
7
According to the Unions, the "no layoff, no out sourcing" clause, as section 7.01.4 is
called, was negotiated in exchange for other concessions, including wage reductions and
changes to the retirement benefits. The "no layoff, no out sourcing" clause first appeared in a
sideletter in the prior MOA. When the parties negotiated the MOA that is at issue here, the
language of section 7.01.4 was included in the body of both MO As.
Former MSA Union President Stephan "Steve" Smith (Smith) (now retired) testified
that during negotiations over the 2011 successor agreement, the language of section 7.01.4 was
incorporated as additional protection for the Unions against layoffs and outsourcing during the
term of the contract. Smith testified that if either of the triggering events occurred-
6 Both complaints allege a breach of the duty to meet and confer in good faith based on
a unilateral change to the policy in section 5.01 of the MOA. Only the MEA/City MOA
contains a section 5.Ql. However, the language in section 5.01 of the MEA MOA is identical
to the language at section 5.00 of the MSA MOA. Any reference to section 5.01 of the MSA
MOA is deemed a typographical error and should be understood to allege a breach of
section 5.00.
7 This acronym was identified at the hearing as "Redevelopment Agency."
5

elimination of any portion of Redevelopment Agency (RDA) or General Fund deficits of
greater than $7 million-the City would be required to meet and confer with the Unions prior
to implementing layoffs and outsourcing.
City Manager Tom Williams (Williams) testified that this language was first proposed
by the City in 2009 in anticipation of the loss of RDA fonds from the State. Because RDA
funds represented a significant source of annual revenue, the permanent loss of these funds
would create an on-going deficit unless corresponding permanent spending cuts were made.
Williams testified that when this language was included in the MOA, the parties had been
discussing ways to address the loss of RDA fimds if and when that event occurred. One of the
alternatives discussed by the parties at the negotiating table was to reduce the hourly rate of
employees in the Department of Public Works (DPW) to $28 per hour. This would have
constituted a significant decrease for some bargaining unit members who were making as much
as $54 per hour. The Unions rejected this proposal, among others, and ultimately,
section 7 .01 .4 was included in both MOAs.
In an April 2011 bargaining proposal, MSA acknowledges that the level of RDA
funding does not apply or impact the MSA unit. However, MSA proposed that if the triggering
events cited in section 7.01.4 occur, and the City exercised this option to conduct layoffs and
outsource bargaining unit work, the union would have an option to "cancel its concessions."
This language was not included in the MOA.
The City also has a "Prevailing Wage" ordinance, adopted in 1991, as City
Resolution 5981. Resolution 5981 contains the following language:
Section IV. Enforcement
D. In instances where a contracting out proposal is being
considered for work currently performed by City employees, the
6

rate
of
pay for contracted services must be greater
or
equal to the
current rate
of
pay and benefits. Advance notice
of
120 days
must be given to the collective bargaining agent with a call for
public hearing on the issue. This advance notice is subject to a
meet and confer process with the City's represented employees.
(Emphasis added.)
Smith testified at hearing that he understood the City policy regarding subcontracting to
include Resolution 5981, so that the City would not be permitted to subcontract bargaining unit
work unless the subcontracted employees were paid the same wages and benefits as City
employees, and also that the City was required to give the Unions 120 days' notice .before
doing so.
Williams called a meeting on January 5, 2012, with both Unions to discuss the
impending loss
of
RDA funds and the effect it would have on the City's 2012-2013 budget. In
attendance at the meeting were then-MSA President Smith, MEA President Robert DeLong
(DeLong), and other Union members. At this time, the City had already made a Request for
Proposals (RFP) for park maintenance work, street maintenance and street landscape
maintenance. This information was disclosed to all those present at the January 5 meeting.
On February 3, 2012, Williams drafted a memorandum that was sent to the Mayor and
City Council, informing them
of
the City's ongoing structural deficit
of
$12 million, and
proposing steps to address it. The reorganization
of
the DPW comprised the largest volume
of
annualized savings to address the City's ongoing deficit. Included in the reorganization was
the proposal to eliminate five supervisor positions, and to contract out street maintenance, park
maintenance and tree and landscape maintenance. The proposal contained a cost break-down
of
the savings that could be achieved through the end
of
the 2011-2012 fiscal year
if
layoffs
and outsourcing were implemented immediately ($769,375) as well as the annual savings that
7

could be achieved if layoffs and outsourcing were implemented for the 2012-2013 fiscal year
($2,085,000).
During a City Council meeting on February 7, 2012, Williams presented his proposal to
the Council. The February 7, 2012 City Council meeting was attended by Smith and MSA
bargaining team member Paul Mullett (Mullett). Both Smith and Mullett spoke at this
meeting, urging the City Council to permit the Unions to provide alternatives to layoffs and
outsourcing before a firm decision was made. In response to these requests, the City Council
continued the City Manager's recommendations for a period not to exceed three months, which
it deemed sufficient time to conduct a forensic audit and in order to allow City employees time
to come forward with proposals. The Council decided to utilize reserved funds in order to
continue to employ DP,W employees through the end of the fiscal year and proposed May 8,
2012 as the effective date for it to take action on the proposal presented by the City Manager.
On February 8, 2012, Williams sent an e-mail message to Smith, DeLong and other
Union members, notifying them that the State had eliminated RDA funds, and the City would
be forced to cut $9.2 million from its General Fund. Williams informed Smith and the other
recipients of the e-mail that he would be calling a meeting on February 9 for the purpose of
discussing "the best way to proceed and any information [the Unions] may need in the
preparation of [their] budget strategy."
A sign-in sheet from the February 9, 2012 meeting shows that six DPW employees
were present, including Smith and DeLong. Smith's notes from the February 9, 2012 meeting
reflect that all parties present agreed that the meeting was not a meet and confer session.
Smith testified that formal negotiations between the parties are customarily initiated by the
City in the form of a written proposal from the City's Human Resources Director or the City
8

Manager to the presidents of the Unions. Upon receipt of a formal proposal, Smith testified
that he would poll MSA members prior to crafting a counter-proposal. Often, he would also
make requests for additional information in order to ensure that the City's proposal was
understood.
During the February 9 meeting, the Unions raised concerns about the cost of the City's
public safety services like police and fire protection. Williams recalls addressing the Unions'
question whether the City had considered outsourcing public safety. At the time, the City had
outstanding RFPs for public safety services, and Smith acknowledges that he was aware of the
outstanding RFPs for DPW work at this time. The parties also discussed the possibility of the
City Council making a declaration of public emergency in order to trigger a lower threshold for
the adoption of an increase in sales tax.
In the City's notes from the February 9 meeting, Williams asks the Unions for their
ideas on a budget proposal to address the $9 .2 million deficit. Smith responded that the
Unions were forming a task force for this purpose. Smith also presented the City with a
request for 21 separate items of information. The City's notes indicated that the inquiries were
either addressed during the meeting or the City promised to provide the information in the
future. There is no mention in the City's notes as to whether the meeting was considered a
bargaining session. However, Williams testified that he considered the meeting to be a "meet
and confer" session.
The City's written notes from the meeting contain a transcript of 21 separate questions,
including the Citf s answers thereto. These inquiries include whether savings could be
achieved through outsourcing of work outside of the DPW, like public safety and non-core
services like payroll. Inquiry number 8 states, "In the next few months can the City help
9

employees find other employment and letters of recommendation?" to which the City
responded in the affirmative.
The outcome of the meeting was that the City and the Unions agreed to create a "Corp
Yard Task Force" to explore additional alternatives to the City's budget proposal. The origin
of this concept is unclear and both parties claim that the idea of the task force was their own.
Nevertheless, the Unions determined who would be on the Corp Yard Task Force, which was
made up of MSA and MEA members, including Smith.
In an e-mail message dated February 10, 2012, Smith made a request to Greg
Armendariz (Annendariz) for copies of the RFPs and bid results for contracting out "Parks,
Street Landscape, and Streets." Smith also requested copies of all existing maintenance
contracts.
On February 16, 2012, Smith sent an e-mail message to Armendariz and others,
requesting the methodology used to detennine the cost savings the City was attributing to
layoffs of the entire streets and street landscape divisions and contracting out of that work.
On March 2, 2012, Human Resources Director Cannen Valdez sent a memorandum to
Smith, requesting that MSA reopen the current MOA in order to address the loss of RDA
funds. 	Smith testified that he had received this request, but could not remember when and did
not remember whether it contained any reference to outsourcing. According to Smith, the
parties never met to discuss these items outside of the Task Force meetings.
During a City Council meeting on March 20, 2012, the City Manager presented another
update on the budget and proposed cost reductions. The focus of this meeting included
proposed cuts to non-public safety services as well as proposed cuts to non-public works
services.

During an April 3, 2012 City Council meeting, the Corp Yard Task Force presented its
findings and recommendations in a power point presentation. Ultimately, the plan presented
by the Task Force would amount to $1,382,702 in savings. This would be achieved through
attrition, the elimination of existing contracts with outside entities, and Union concessions in
longevity and standby pay. The Task Force's recommendations did not include layoffs of
existing DPW employees. The City Council moved to refer the recommendation to the City
Manager and the Director of Public Works to analyze the proposal and provide a response at
the next City Council meeting in two weeks.
In a response presentation from the City Manager at the April 17, 2012 City Council
meeting, the City Manager noted that the City's current service delivery model was that
90 percent of services were provided in-house, while only 10 percent of services were provided
through contract labor. Personnel costs comprised over 75 percent of the City's $12 million
deficit. Attrition was not an acceptable means for the City to achieve savings because of its
uncertainty-the City had no ability to control the effective dates ofretirements; nor could it
guarantee retirements prior to their effective dates. Transferring DPW employees to fill
Inspector positions would achieve some savings, but the City's estimated savings through this
course of events were 30 percent lower than the savings projected by the Unions. According to
the City, elimination of the existing service contracts would cost the City money, as in-house
DPW employees' hourly rates of pay were much higher than those of the contracted workers,
and the City would have to add nighttime shifts to the current in-house employees' schedules
in order to complete the work currently perfonned by contracted workers. In sum, the City
determined that adoption of the proposal put forward by the Task Force would result in
deferred maintenance, overtime costs, and a reduction in the level of overall service.
11

Ultimately, the City Manager urged the Council to reject the recommendation
of
the Task
Force and to adopt the City Manager's plan to implement $2.1 million in cuts to the DPW
budget for the 2012-2013 fiscal year.
On April 17, 2012, the Milpitas City Council approved the City Manager's proposed
cost reductions and authorized him to commence implementation
of
those cost reductions.
Smith did not have any specific recollection
of
the April 17, 2012 meeting. However, he
asserted that, prior to the April 17, 2012 meeting, the Unions never received an invitation to
bargain specifically over the issue
of
contracting out, or an actual proposal from the City that
detailed their desire to contract out. When Smith was asked in cross examination to explain
the difference between a proposal and a recommendation, he stated that a recommendation is
simply an opportunity to get the City Council's input and ideas, whereas a proposal
is
made
after the City Council adopts a recommendation or directs the City Manager to proceed with a
recommendation.
ISSUE
Whether the City violated MMBA section 3 505 by failing to meet and confer in good
faith over the decision to outsource bargaining unit work and whether it violated the MMBA
by failing to provide notice of its intent to outsource MEA bargaining unit work, as specified in
section 5.01
of
the parties' MOA, and City Resolution 5981.
POSITIONS OF THE PARTIES
The Unions
The Unions assert that section 7.01.4 of the MOAs was negotiated as a limitation on
further cuts to the DPW employees unless and until the City lost RDA funds or its budget
deficit exceeded $7 million. If either of those triggering events occurred, the City would then
12

be required to make a formal proposal to the Unions and meet and confer prior to
implementing layoffs and/or outsourcing bargaining unit work. Additionally, the City would
have to comply with its own Resolution 5981 which imposed public notice and a 120-day
waiting period. The City's April 17, 2012 decision to adopt a proposal which included both
outsourcing and layoffs
of
bargaining unit positions prior to making a formal proposal to
Unions and without observing the procedural requirements
of
Regulation 5981 constitutes an
unlawful unilateral change.
The City
The City argues that the language
of
section 7.01.4
of
the MOAs operates as a waiver
of
the right to meet and confer over the decision to layoff bargaining unit members or
outsource bargaining unit work
if
either
of
the triggering events described in that section
occurred. The City argues in the alternative that it gave notice to the Unions in "early
February"
of
its intent to layoff and outsource bargaining unit work and the Unions waived any
right to demand negotiations over the decision by failing to timely make the demand.
Accordingly, the City's adoption
of
the proposal on April 17, 2012 to outsource DPW work
and layoff DPW supervisors was not an unlawful unilateral change.
CONCLUSIONS OF LAW
In determining whether a party has violated MMBA section 3505 and PERB
Regulation 32603(c), PERB utilizes either the "per se" or "totality
of
the conduct" test,
depending on the specific conduct involved and the effect
of
such conduct on the negotiating
process. (Stockton Unffied School District (1980) PERB Decision No. 143.) Unilateral
changes are considered "per se" violations if certain criteria are met. Those criteria are:
(l)the
employer breached or altered the parties' written agreement or its own established past
13

practice; (2) the change was implemented without the employer fulfilling its duty to negotiate
with the exclusive representative, including providing adequate notice; (3) the change was not
merely an isolated breach of the contract, but amounts to a change in policy (i.e., it has a
generalized effect or continuing impact upon bargaining unit members' terms and conditions of
employment); and .C 4) the change in policy concerns a matter within the scope of 	·
representation. (San Joaquin County Employees Association v. City of Stockton (1984)
161 Cal.App.3d 813; Vernon Fire Fighters v. City of Vernon (1980) 107 Cal.App.3d 802;
Grant Joint Union High School District (1982) PERB Decision No. 196; Walnut Valley
Unified School District (1981) PERB Decision No. 160.)
Not all subcontracting decisions are within the scope ofrepresentation. (Ventura
County Community College District (2003) PERB Decision No. 1547 (Ventura).) Where an
employer's decision to subcontract constitutes a managerial decision based on factors not
amenable to negotiations, the matter may be deemed outside the scope of representation.
(Ibid.) However, where the decision to subcontract is related to overall enterprise costs, it is
within the scope of representation regardless of whether the decision can be characterized as a
decision "at the core of entrepreneurial control." (Ibid, citing Fibreboard Paper Prods. Corp.
v. NLRB (1964) 379 U.S. 203, 223.)
The City acknowledges in this case that the primary, if not sole motivating factor in its
decision to outsource job duties in the DPW was to address the City's budget deficit. Thus, the
City's decision to outsource DPW jobs to save money was a decision within the scope of
representation as defined by the statute. The essential issue in this case is pribiarily whether
the City was required to provide 120 days' notice of its decision to conduct layoffs and
14

outsource bargaining unit work and whether the "no layoff' clause in the MOA constitutes a
waiver authorizing the City to take unilateral action after the triggering events occurred.
1.
	Did the City fail to give the Unions reasonable notice
of
its proposal to layoff
bargaining unit members and outsource bargaining unit work?
Section 5.01
of
the Unions' MOA states that,
5.01 Except in cases
of
emergency as provided in this section,
the City shall give reasonable written notice to each recognized
employee organization affected
by
an ordinance, rule, resolution,
or regulation directly relating to matters within the scope
of
representation including actions taken under City Rights that
affect wages, hours and other terms and conditions
of
employment proposed to be adopted by the City and shall give
such recognized employee organizations the opportunity to meet
with City representatives.
The language in the MOA appears to be a simplified version
of
the language
of
the
MMBA's notice provision. 	Given the similarity
of
the two provisions, it is proper to apply
interpretations
of
section 3504.5
of
the MMBA to the parties' language in section 5.01
of
the
MOA. (See Fire Fighters Union
v.
City
of
Vallejo (1974) 12 Cal.3d 608 (City
of
Vallejo).)
Furthermore, when interpreting the MMBA, it is.appropriate to take guidance from cases
8
8 Section 3504.S(a)
of
the MMBA states,
( a) Except in cases
of
emergency as provided in this section, the
governing body
of
a public agency, and boards and commissions
designated by law or by the governing body
of
a public agency,
shall give reasonable written notice to each recognized employee
organization affected of any ordinance, rule, resolution, or
regulation directly relating to matters within the scope of
representation proposed to be adopted by the governing body or
the designated boards and commissions and shall give the
recognized employee organization the opportunity to meet with
the governing body or the boards and commissions.
15

interpreting the National Labor Relations Act9 and California labor relations statutes with
parallel provisions. (Ibid.)
In Stockton Police Officers' Assn. v. City of Stockton (1988) 206 Cal.App.3d 62 (City
of Stockton), the employer sent a letter to the exclusive representative notifying the
representative that its contract for counseling services was going to expire soon and it was
interested in changing the level of counseling services provided to bargaining unit members.
The employer sought "input" from the union prior to negotiating a new level of counseling
services. Three months after the employer notified the union of its desire to change the level
of services provided, it negotiated a new contract for counseling services with a third party,
resulting in a change in the level of benefits received by bargaining unit members. The
exclusive representative made no demand to bargain during the three months immediately
following the employer's notice. Nevertheless, three months after the new contract had been
negotiated, and approximately six months after the employer had first notified the union, the
union demanded to meet and confer over the change in the level of counseling services to
bargaining unit members. The employer refused to meet and confer with the union at that
time.
In ruling upon the issue of whether the employer's refusal to bargain violated the
MMBA, the court held that the statutory notice requirement does not mandate more than
simple notice of a desire to change a condition of employment. (City of Stockton, supra,
206 Cal.App.3d 62.) There is no duty for the employer to solicit input from the union. (Ibid.)
Furthermore, the duty to provide reasonable written notice exists only prior to the employer's
arrival at a determination of policy or course of action. (Id. at p. 66.) Indeed, the court held
9 The NLRA is codified at 29 U.S.C. section 151 et seq.
16

that "[t]he statute does not require the City to meet and confer after properly noticed policy has
been adopted without any such request from the employee organization seeking to bargain."
(Ibid.)
When interpreting the Educational Employment Relations Act (EERA), 	PERB has
held that what constitutes "reasonable" notice prior to an employer's change to working
conditions necessarily depends upon the individual circumstances of each case. (Victor Valley
Union High School District (1986) PERB Decision No. 565 (Victor Valley).) Even so, the
Board held that notice must be made to an official of the employee organization who has
authority to act on behalf of the organization, in a manner that clearly informs the recipient of
the proposed change, and sufficiently in advance of a firm. decision to allow the exclusive
representative to decide whether to make a demand to negotiate. (Ibid.) Even in the absence
of formal notice, proof that an authorized official of the exclusive representative had actual
knowledge of the proposed change will suffice. (Ibid.)
10
In this case, the City Manager recommended on February 3, 2012, that the DPW be
reorganized and a substantial portion of the work from that department be contracted out. The
City Manager then presented these recommendations to the City Council at a publicly noticed
meeting on February 7, 2012. The minutes from this meeting make it clear that the City
Council had not reached a decision at this time. Both Union Presidents attended the
February 7, 2012 City Council meeting and both made public comments in response to the City
Manager's proposal to outsource the DPW work. In response to the concerns raised by both
Union Presidents, the City Council agreed to stay its decision until May 8, 2012, and to permit
the Unions to present alternatives to the proposed cuts. Subsequent to the meeting,
10 EERA is codified at section 3540 et seq.
17

representatives of both Unions sought additional meetings with the City Manager for the
purpose of proposing alternatives to the outsourcing plan presented at the City Council
meeting. Under the circumstances, I find that the Unions had actual knowledge of the City's
proposal to outsource bargaining unit work on February 7, 2012. (Victor Valley, supra, PERB
Decision No. 565.)
As noted above, however, Resolution 5981 states, in relevant part:
Advance notice of 120 days must be given to the collective
bargaining agent with a call for public hearing on the issue. This
advance notice is subject to a meet and confer process with the
City's represented employees.
The Unions argue that what constitutes "reasonable" notice in the context of layoffs and
outsourcing is defined by the City's Resolution 5981. Notwithstanding the findings above, the
City adopted the proposal on April 17, 2012, fewer than 120 days after the Unions had notice
of the proposal-an apparent violation of Resolution 5981 and, by extension, the requirement
in the MOA that notice be "reasonable."
2. 	Did the Unions waive their right to meet and confer over the decision to layoff
bargaining unit members and outsource bargaining unit work?
The statutory proscription against precipitous unilateral decision-making by the
employer applies only to those decisions regarding matters within the scope of representation.
Where an employer makes a decision regarding matters outside the scope ofrepresentation, it
may unilaterally decide to implement changes. (City of Vallejo, supra, 12 Cal.3d 608, 621.) In
other words, if the parties do not have a duty to meet and confer over the subject matter of the
decision, the employer does not need to provide the exclusive representative with any notice
prior to reaching a firm decision to make a change.
18

a. 	Waiver By Contract
The Board has held that a union may waive its right to bargain about the contracting out
of unit work by agreeing in advance that the employer may unilaterally undertake such action.
(Barstow Unified School District (1996) PERB Decision No. 1138 (Barstow); see also, Island
Creek Coal Co. (1988) 289 ·NLRB 851, enfd. (D.C. Cir. 1989) 879 F.2d 939; American Stores
Packing Co. (1986) 277 NLRB 1656.) However, such a contractual waiver will not be
construed solely from a broadly based management-rights clause. (San Jacinto Unified School
District (1994) PERB Decision No. 1078.) To the contrary, any waiver of a right to bargain
over a negotiable contracting out decision must be "clear and unmistakable." (Amador Valley
Joint Unified School District (1978) PERB Decision No. 74; see also, Metropolitan Edison Co.
v. NLRB (1983) 460 U.S. 693, 708.). The "clear and unmistakable" standard is a high one and
mandated by the Board's previous findings that there is a strong public policy against finding
waivers based on inferences. (Los Angeles Community.College District (1982) PERB Decision
No. 252; Palo Verde Unified School District (1983) PERB Decision No. 321; see Daniel
Construction Company, Inc. (1979) 239 NLRB 1335, 1336.)
When determining whether contract language constitutes a waiver of the right to
bargain, PERB looks to the California Civil Code for guidance in interpreting contract
language. (Barstow, supra, PERB Decision No. 1138.) Not only is the parties' intention to be
ascertained from the language of the contract where it is clearly worded, but the whole contract
is to be taken together in order to give effect to every part. (See Civil Code,§§ 1638 and 1641,
respectively.)· When contract language is ambiguous, the Board may examine bargaining
history to determine the parties' true intentions. (Barstow.)
19

A waiver of an exclusive representative's right to bargain will never be lightly inferred.
( Oakland Unified School District ( 1982) PERB Decision No. 236.) In cases where the alleged
waiver is exceptional in "breadth and severity," the "clear and unmistakable" standard must be
stringently applied. (San Marcos Unified School District (2003) PERB Decision No. 1508
(San }lfarcos).) The burden of proof for establishing an affirmative defense of waiver rests
exclusively with the respondent. (Placentia Unified School District (1986) PERB Decision
No. 595.)
The language in the "No Layoff' clause appears, on its face, to limit the City's right to
implement layoffs or to outsource bargaining unit positions except under certain
circumstances.
No layoffs or new outsourcing of [Union] positions during the
term of this contract, except if the State eliminates any portion of
RDA impacting the City and/or the General Fund's deficit
exceeds $7 million or more in any fiscal year.
Because a decision to conduct layoffs is generally within the management prerogative
( City of Vallejo, supra, 12 Cal.3d 608), this provision would appear to impose restrictions on
the City's ability to lawfully implement layoffs. Conversely, the decision to subcontract
bargaining unit work must generally be negotiated prior to implementation (Ventura, supra,
PERB Decision No. 1547), such that the provision merely restates the parties' existing
statutory rights and duties with regard to outsourcing. In this case, the restriction that there
will be no new outsourcing of Union positions during the tenn of the contract must be read
with the qualifying phrase, "except if the State eliminates any portion of RDA impacting the
City and/or the General Fund's deficit exceeds $7 million or more in any fiscal year." When
read together, these two phrases appear to permit outsourcing of bargaining unit positions only
under the exceptions described. Thus, the provision appears to contain both a limitation on a
20

managerial right to implement layoffs as well as a limited waiver
of
the right to bargain over a
decision to subcontract bargaining unit work.
The Unions argue that they would never have agreed to waive negotiating rights over
the subject
of
outsourcing. Rather, the Unions argue that the "No
Layoff'
clause was
negotiated in exchange for other concessions
by
the Unions. This argument is undermined
by
the fact that in April 2011, when the parties were still negotiating the 2011-2012 MOA, MSA
sought to make this understanding explicit with an option for MSA to "cancel its concessions"
in the event
of
a layoff or outsourcing during the term
of
the MOA. Ultimately, this proposal
was· not adopted.
Further supporting the City's interpretation
of
the ''No Layoff' clause is the financial
data both before and during the term
of
the 2011 MOA. The City provided extensive
testimony and data demonstrating that even before RDA was eliminated, the City was in
serious financial straits. The earlier concessions were intended to address fiscal shortfalls the
City was experiencing independently
of
any future loss
of
RDA. According to the City, even
after concession bargaining with the Unions, additional cuts would be necessary in the event
that the State eliminated RDA. The "No Layoff" clause was not in exchange for earlier
concessions-it
was in contemplation
of
future cuts.
According to the City, it first proposed the "No Layoff' clause in 2009 in anticipation
of
the loss
of
RDA and the permanent reduction in City funds as a result. The provision was
later incorporated into the MOA in order to address the same prospective concern. During
successor negotiations, the parties explored a number
of
alternatives to layoffs and
outsourcing. Permanent wage reductions were ultimately rejected in lieu of provision 7.01.4.
In other words, during successor negotiations for the 2011 MOA, the parties met and conferred
21

regarding the decision to outsource bargaining unit work by exploring alternatives and other
possible savings.
It is significant that in this case, when the parties were negotiating the inclusion of
section 7.01.4 in the MOA, they considered and rejected an overall wage decrease for DPW
employees as an alternative to layoffs and outsourcing. This fact tends to demonstrate that the
parties understood that savings would have to come from employees' salaries in order to
address a loss of RDA. It also demonstrates that the parties negotiated possible alternatives to
layoffs at a time when the possibility of layoffs was not imminent, and when the parties would
have been better able to balance the cost of the provision against other working conditions-a
circumstance that would appear more advantageous than if the parties waited until a contract
was in place and their options were more limited.
Ultimately, I must find that the language in section 7.01.4 constitutes a restriction on
the City's right to conduct layoffs unless the triggering events occurred, as well as a limited
waiver of the Union's right to meet and confer over outsourcing of bargaining unit work in the
event that the triggering events occurred. This conclusion is based not only on the languageof
the provision, but on the parties' bargaining history. Given that both triggering events
occurred prior to January 2012, I find that the City did not have a renewed duty to meet and
confer over a decision to outsource bargaining unit work and layoff bargaining unit employees
prior to its April 17, 2012, adoption of the City Manager's recommendation.
b. 	Waiver By Inaction
Notwithstanding the above, the City argues that, even if the "No Layoff' clause does
not contain a waiver, the Unions failed to demand any negotiations over outsourcing,
constituting a waiver by inaction. PERB long ago adopted the general rule that the party
22

asserting a waiver by inaction must provide evidence of demonstrative behavior waiving a
reasonable opportunity to bargain over a decision not already finnly made by the other party.
(Sutter Union High School District (1981) PERB Decision No. 175.) Once it can be shown
that notice was given, if the charging party fails to request to bargain regarding the issue, that
is considered a waiver by inaction. (Sylvan Union Elementary School District (1992) PERB
Decision No. 919. 	)
11
In San Mateo County Community College District (1979) PERB Decision No. 94
(San Mateo), the employer's formal motion to pass increased benefits costs to employees was
altered to reflect the employer's readiness to absorb the costs for an additional 90 days, and the
union agreed to the 90-day period and knew of the need for a speedy decision but failed to
demand negotiations. There, the Board stated that "[e]mployee organizations may not shield
themselves behind a restraint on unilateral employer actions as a way of avoiding a measure of
responsibility for mitigating or resolving financial dilemmas confronting a public employer."
(Ibid.)
Here, the Unions' actions in the days and weeks immediately following the February 7,
2012 proposal are inconsistent with its assertion that the City failed to give reasonable notice.
The purpose of reasonable notice is so that the parties can engage in good faith negotiations
prior to a firm decision being made. The Unions knew on February 7, 2012, that the City was
proposing to outsource DPW work, but made no demand to meet and confer over the issue. As
with the San Mateo case, here the City formally announced its intention to delay a final
decision on the proposal for a period of 120 days, during which it would continue to absorb the
cost of its postponement. The Unions were present when the City announced its intention to
11 PERB's recent decision County of Santa Clara (2013) PERB Decision No. 2321-M
overruled Sylvan on other grounds.
23

delay its decision by 120 days with the effect that it would continue to grow the deficit in the
interim period. The Unions were aware that the City set a deadline of the coming fiscal year
for a final decision and implementation, but failed to demand negotiations throughout the
weeks immediately following the City's February 7, 2012 proposal. Instead, the Unions met
with the City Manager and other City representatives on many occasions, assiduously
maintaining that these meetings were not to be considered meet and confer sessions.
The Unions' failure to use the 120-day period for negotiations and instead invoking the
120-day period to prevent the City from implementing changes previously noticed, is also
inconsistent with the concept of good faith negotiations articulated by the Board in San Mateo,
supra, PERB Decision No. 94. Thus, even assuming the City had a duty to meet and confer
with the Unions over its proposal to layoff DPW employees and outsource their work after the
triggering events of loss of RDA and a General Fund deficit greater than $7 million, the
Unions' conduct for the six weeks following the City's announced proposal evidences a waiver
of any right it may have had to demand negotiations.
PROPOSED ORDER
Upon the foregoing findings of fact and conclusions oflaw, and the entire record in this
·case, the complaint and underlying unfair practice charge in Case No. SF-CE-956-M, Milpitas
Employees Association v. City of Milpitas, and Case No. SF-CE-958-M, Milpitas Supervisors'
Association v. City of Milpitas, are hereby dismissed.
Right of Appeal
Pursuant to California Code of Regulations, title 8, section 32305, this Proposed
Decision and Order shall become final unless a party files a statement of exceptions with the
24

Public Employment Relations Board (PERB or Board) itself within 20 days of service of this
Decision. The Board's address is:
Public Employment Relations Board
Attention: Appeals Assistant
1031 18th Street
Sacramento, CA 95811-4124
(916) 322-8231
FAX: (916) 327-7960
E-FILE: PERBe-file.Appeals@perb.ca.gov
In accordance with PERB regulations, the statement of exceptions should identify by
page citation or exhibit number the portions of the record, if any, relied upon for such
exceptions. (Cal. Code Regs., tit. 8, § 32300.)
A document is considered "filed" when actually received during a regular PERB
business day. (Cal. Code Regs., tit. 8, §§ 32135, subd. (a) and 32130; see also Gov. Code,
§ 11020, subd. (a).) A document is also considered "filed" when received by facsimile
transmission before the close of business together with a Facsimile Transmission Cover Sheet,
or received by electronic mail before the close of business, which meets the requirements of
PERB Regulation 32135(d), provided the filing party also places the original, together with the
required number of copies and proof of service, in the U.S. mail. (Cal. Code Regs., tit. 8,
§ 32135, subds. (b), (c) and (d); see also Cal. Code Regs., tit. 8, §§ 32090, 32091 and 32130.)
Any statement of exceptions and supporting brief must be served concurrently with its
filing upon each party to this proceeding. Proof of service shall accompany each copy served
on a party or filed with the Board itself. (See Cal. Code Regs., tit. 8, §§ 32300, 32305, 32140,
and 32135, subd. (c).)
25