Los Angeles Unified School District (PERB 2326E)

STATE OF CALIFORNIA
DECISION OF THE
PUBLIC EMPLOYMENT RELATIONS BOARD
CALIFORNIA SCHOOL EMPLOYEES
ASSOCIATION and its CHAPTER 500,
Charging Party,
V.
LOS ANGELES UNIFIED SCHOOL DISTRICT,
Respondent.
Case No. LA-CE-5419-E
PERB Decision No. 2326
September 20, 2013
Appearances: 	Christina C. Bleuler, Attorney, for California School Employees Association
and its Chapter 500; Office of the General Counsel by Richard Ettensohn, Assistant General
Counsel, for Los Angeles Unified School District.
Before Martinez, Chair; Huguenin, Winslow and Banks, Members.
DECISION
MARTINEZ, Chair: This case comes before the Public Employment Relations Board
(PERB or Board) on exceptions filed by the California School Employees Association and its
Chapter 500 (CSEA) to the proposed decision of a PERB administrative law judge (ALJ). 	The
complaint, and underlying unfair practice charge, alleged that the Los Angeles Unified School
District (District) violated the Educational Employment Relations Act (EERA) 1 by failing and
refusing to bargain in good faith in violation of section 3543.5, subdivision (c), and by failing
and refusing to participate in impasse procedures in good faith in violation of section 3543.5,
subdivision ( e) when, after having been notified by CSEA that they opposed including a
District bargaining proposal in their successor agreement, the District insisted on it to impasse.
1EERA is codified at Government Code section 3540 et seq. Unless otherwise indicated, all
statutory references herein are to the Government Code.

The dispute arose in the context of negotiations for a successor agreement. The
District's proposal was to continue in effect contract language that defined certain reductions
in hours and workyear bases as a "layoff." It also gave the District unfettered discretion over
decisions with respect to such reductions. Through this contract language, the District sought
to retain unilateral control over a mandatory subject of bargaining, i.e., hours of employment.
Over CSEA's continuing objection, the District insisted on the proposal to the point of
impasse.
CSEA filed an unfair practice charge upon which the Office of the General Counsel
issued a complaint. After the formal hearing, the ALJ issued a decision dismissing the
complaint and underlying unfair practice charge, concluding that the District's proposal
concerned a mandatory subject of bargaining, which the District had the right to insist on to
impasse.
We have reviewed the entire record in this matter and given full consideration to the
exceptions and the response. We agree with the ALJ that the District did not commit an unfair
practice in insisting to impasse on a bargaining proposal by which it sought to retain unfettered
discretion over a mandatory subject of bargaining. As a general rule, an employer is privileged
to implement its last, best and final offer upon impasse. For reasons explained below,
however, we recognize an exception to this general rule for proposals such as the District's
proposal here. Parties to a collective bargaining agreement are free to agree to a proposal by
which the employer maintains unfettered discretion over a mandatory subject of bargaining.
Where the parties do not reach agreement, however, such a proposal may not be implemented
unilaterally as part of the employer's last, best and final offer. Accordingly, we hereby order
that the ALJ' s proposed decision be vacated and the matter remanded to the Chief ALJ for
assignment to an ALJ to conduct further proceedings as directed herein.
2

FACTUAL BACKGROUND
CSEA is the exclusive representative of public school employees employed by the
District in Bargaining Unit D. The 2005-2008 Agreement, Unit D (Office-Technical and
Business Services), Los Angeles Unified School District and California School Employees
Association (2005-2008 Agreement), was the last collective bargaining agreement entered into
by and between the parties.
As reflected in the District's Board of Education Report dated October 14, 2008, the
District sunshined its initial bargaining proposals for successor agreements commencing
July 1, 2008, for Bargaining Units A, B, C, D, E, F, G, Hand S. By letter to the Board of
Education dated February 3, 2009, CSEA sunshined its initial bargaining proposal for a
successor agreement to the 2005-2008 Agreement for Bargaining Unit D.
From March 25; 2009 through September 16, 2009, CSEA and the District \Vere
engaged in successor agreement negotiations. After 12 negotiating sessions, and the exchange
of approximately 10 proposals and counter-proposals, the parties reached agreement on all but
one issue. Appendix Chad been part of the parties' collective bargaining agreements since
1991, but CSEA no longer agreed to its inclusion.
CSEA first made known its position on Appendix C in its February 3, 2009, letter to the
Board of Education containing its initial bargaining proposal. The letter states: "CSEA
maintains that, according to the Rowland decision, CSEA does not intend upon entering into an
agreement to maintain the waiver in the parties' successor agreement. Please be advised that
insistence to impasse on these subject matters constitutes a violation of the Educational
Employment Relations Act Section 3542.5(c)." CSEA maintained its opposition to inclusion
in the successor agreement of what it refers to as the "waiver" embodied in Appendix C
throughout the course of negotiations.
3

By the conclusion of negotiations, the "waiver" language in Appendix C was moved
into a new article within the main body of the successor agreement, Article XXI.2 It provides
in pertinent part:
1.0 	Definition oflayoff for purposes of this Article:
"Layoff'' shall mean a personnel action initiated by the
District pursuant to Education Code 45308 and related
Personnel Commission Rules which results in:
(1) separation from District employment; (2) an involuntary
reduction in hours from full-time to part-time, i.e., from a 7
or 8 hour assignment to an assignment of 6 hours or less; or
(3) a change in an employee's annual assignment basis
which results in a workyear reduction of ten or more
working days per year.
2.0 	Notice ofLayoff Decision(s): Decisions with respect to
layoff, as defined above, shall rest within the District's
discretion, subject to the Education Code and Personnel
Commission Rules, enforceable through Personnel
Commission jurisdiction.
(Editing marks and text in strike-out omitted.)
The paiiies met for one more negotiation session on November 17, 2009, but to no
avail, as they could not reach agreement on the Appendix C language. CSEA filed with PERB
a request for impasse determination/appointment of mediator. CSEA described the issue in
dispute as follows: 	"In the new Layoff Article, maintaining the unilateral right to reduce work
year without negotiating with the Exclusive Representative."3 By letter to the parties dated
December 1, 2009, PERB certified that an impasse existed. On January 14, 2010, the parties
2 Appendix C in the 2005-2008 Agreement also contains the parties' agreement on
effects and implementation applicable in case of layoff, i.e., notice and seniority protections.
Throughout this decision, further references to "Appendix C," "the Appendix C language," the
"District's proposal," or any similar variation thereof are only to that portion of the original
Appendix C embodying what CSEA refers to as the "waiver" and not to the parties' agreement
on effects and implementation.
3 Although the request for impasse determination/appointment of mediator states that
there was a second issue in dispute (working out of classification), the parties reached
agreement in concept on the issue subject to further "tweaking" of the language.
4

met with a mediator from the State Mediation and Conciliation Service. By e-mail message to
the parties dated March 29, 2010, the mediator concluded that there was "really nothing to
fact-find" and that the mediation would be placed in abeyance pending the outcome of the
unfair practice charge.
Prior to initiation of successor agreement negotiations, there were over 6,000
employees in Bargaining Unit D. From June 2009 through October 2010, the District
implemented a "layoff' plan in four phases.4 After the plan was fully implemented, fewer than
5,000 employees remained in Bargaining Unit D. Of those who remained, 1,200 employees
experienced a reduction in their workyear basis.
It was in the context of that period of hardship that the dispute over Appendix C arose.
From the District's perspective:5
As the District has noted, the definition of "Layoff' as contained in
the District's proposal is simply the same definition which the
parties previously negotiated and have lived under for some two
decades .... By negotiating to include certain reductions in hours
within the definition of "Layoff', the parties agreed that those
reductions in hours would receive notice and seniority protections as
do layoffs resulting in separation of employment, but also agreed
that the provisions of Appendix C fully satisfied the parties'
bargaining obligations with respect to such reductions in hours.
In sum, there was an appropriate negotiated tradeoff between the
parties. The District fully understands and appreciates its
bargaining obligations. The District is simply desirous of
concluding negotiations with respect to these reductions in hours in
the context of the successor agreement, just as the parties did in
negotiating Appendix C. The District has explained that particularly
given the financial crisis facing the District, the District urgently
needs your cooperation. The District has further explained that
given its size, its scope and the complexity of its challenges, the
The first phase began in June 2009, approximately three months after initiation of
negotiations for a successor agreement. The second phase began in March 2010; the third in
July 2010; and the last in October 2010.
5 Letter dated September 23, 2009, from John Bowes, Ed. D., administrator for the
District, to Dvora Mayer (Mayer), senior labor relations representative for CSEA.
5

District has to maintain the flexibility and ability to respond
promptly to District operational needs which was properly
recognized by the parties in Appendix C.
From CSEA's perspective: 6
A 	[W]e had started to have problems with 1B and
section two [of Appendix C] in late 2007, early 2008. And we had
agreed as a team to wait until the successor proposal and put the
District on notice that we're going to have to deal with this. We
can't just have this answer for everything anymore. It's a waiver of
our right to deal with it in separate issues.
Q 	And when you say there were concerns in 2007, what
were those concerns? What was happening?
A 	It started at the school sites where the District
started using this section to reduce hours of employees, and had
no long any -
MR. ETTENSOHN: Objection, lack of foundation.
ADMINISTRA. TIVE LAW JUDGE ALLEN: Overruled.
You can continue with your answer.
THE WITNESS: It started that when employees were started
to be reduced in work hours that when we would object to Staff
Relations, they would say they have the right to do this. It no longer
became school site specific or because of budgetary. It just became
an overall riding answer that we don't have the right to challenge
these people losing their work hours anymore.
A 	We were being very adamant that this, in this
successor proposal that the decision to reduce work hours and
years was not something we could afford to give the District a
unilateral decision-making process anymore. This was a different
age. This was a different era. These were different reasons for
things that were happening. And actually, each layoff that
happens, or each reduction in work year that happens, is for
different reasons.
6 PERB formal hearing transcript, testimony of Mayer.
6

PROCEDURAL BACKGROUND
On January 20, 2010, six days after the failed mediation effort, CSEA filed the instant
unfair practice charge.
Parenthetically, CSEA had filed a prior unfair practice charge, Case No.
LA-CE-5373-E, on August 31, 2009, in response to the first phase of the layoff plan, which
began in June 2009. In that charge, CSEA alleged that the District engaged in unlawful
unilateral changes when it reduced all 12-month vacant positions to 10-month positions, and
when it reduced the workyear of the bargaining unit by 40 percent. By letter dated July 8,
2010, PERB' s Office of the General Counsel dismissed the charge. The letter of dismissal
explains that while a waiver of a statutory right to bargain does not survive the expiration of
the collective bargaining agreement, Article C also contains terms and conditions of
employment that continue in effect until the parties reach a new agreement. CSEA did not
appeal from the dismissal of that charge.
On July 30, 2010, 22 days after the Office of the General Counsel dismissed the unfair
practice charge in Case No. LA-CE-5373-E, the Office of the General Counsel issued the
complaint in this case. The complaint alleges that the District failed and refused to bargain in
good faith in violation of section 3543.5, subdivision (c), when, after having been notified by
CSEA that CSEA opposed including Appendix C in a successor agreement, the District
insisted on it to impasse. The complaint also alleges that the District failed and refused to
participate in impasse procedures in good faith in violation of section 3543.5, subdivision (e),
when it continued to insist that Appendix C be included in the successor agreement while the
parties were participating in impasse procedures pursuant to sections 3548 through 3548.3.
PERB held informal settlement conferences on September 9 and October 19, 2010, but
the parties were unable to settle their dispute. PERB held a formal hearing on February 9,
7

2011. With the receipt of the final post-hearing brief on April 25, 2011, the ALJ took the
matter under submission. The ALJ's proposed decision issued on August 5, 2011. CSEA
timely filed exceptions to the proposed decision on September 27, 2011, and the District timely
filed a response on November 10, 2011.
THE PROPOSED DECISION OF THE ALJ
The ALJ framed the issue as whether the District insisted to impasse on a non
mandatory subject of bargaining. According to the ALJ, this issue turned on the question
whether a proposal to give the District discretion over hours of employment, a mandatory
subject of bargaining, was itself a mandatory subject. Asserting that PERB generally follows
federal law, the ALJ discussed two cases decided under federal law in answering that
question in the affirmative. The first, NLRB v. American Nat'! Ins. Co. (1952) 343 U.S. 395
(.4merican Nat'! Ins. Co.), was cited for the principle that an employer does not violate the
National Labor Relations Act (NLRA)7 by insisting on a management functions clause.
The ALJ also relied on the following passage from NLRB v. McClatchy Newspapers, Inc.
(D.C. Cir. 1992) 964 F.2d 1153, 1159:
At the outset, it should be noted that a mandatory subject of
bargaining does not lose status as such if one party seeks to gain
complete control over the subject pursuant to collective
bargaining. Thus, it is now well settled that proposals by which
one side would retain discretion over a mandatory subject are also
mandatory subjects.
The ALJ also found that CSEA's reliance on Rowland Unified School District (1994)
PERB Decision No. 1053 (Rowland) was misplaced. As the ALJ reasoned, the issue in
Rowland concerned a post-impasse unilateral implementation of a waiver of, or limitation on,
an exclusive representative's statutory right to bargain rather than an insistence to impasse on
such a waiver or limitation.
7 The NLRA is codified at 29 U.S.C. section 151 et seq.
8

Based on the above analysis, the ALJ concluded that the District's proposal to retain
discretion over decisions concerning reductions in hours and workyear bases involved a
mandatory subject of bargaining; that, as a mandatory subject, the parties were obligated to
negotiate over the proposal; and that, therefore, the employer was entitled to insist to the point
of impasse on the proposal in a successor agreement.
DISCUSSION
The issue presented on appeal concerns the District's conduct with respect to a proposal
by which the District sought to retain unfettered managerial discretion, i.e., unilateral control,
over decisions to reduce hours and workyear bases.8 CSEA contends that the District's
insistence to impasse on the Appendix C language constitutes an impermissible waiver of
CSEA's statutory right to negotiate over future reductions in workyear bases and hours.
According to CSEA, the Board's decision in Rowland, supra, PERB Decision No. 1053
supports its theory of the case, and the ALJ' s reliance on federal law was misplaced.
8 Given the factual context involved here, arguments invoking the unilateral change
doctrine will not be addressed, nor will we address arguments concerning the validity of a
contractual waiver. We also need not examine in detail the bargaining conduct of the parties
during the course of successor agreement negotiations as the issue of surface bargaining is
neither raised by the facts nor alleged as a violation.
The parties also make reference to the Office of the General Counsel's dismissal of
CSEA's prior unfair practice charge in Case No. LA-CE-5373-E. The prior charge was based
on a different set of factual allegations, i.e., the District's "layoff," and a different theory of
law, i.e., unlawful unilateral change. The dismissal was not appealed. The Board therefore
does not herein determine whether the dismissal was in error. While certain foundational
principles are common to the prior charge and the one before us now, it bears mention that the
Office of the General Counsel issued the complaint in this matter shortly after dismissing the
prior charge. If this charge were susceptible to the same analysis and disposition as the prior
charge, we would be here on appeal from dismissal, not on exceptions to a proposed decision.
Moreover, despite the District's multiple references to the dismissal of the prior charge, the
District fails to offer legal argument as to why dismissal of the prior charge constitutes a basis
for issue or claim preclusion under principles of res judicata or collateral estoppel.
9

The District contends that its proposal relates to hours
of
employment, a mandatory
subject
of
bargaining and, therefore, the District was entitled to insist on its inclusion in the
successor agreement to the point
of
impasse. According to the District, the Rowland case is
distinguishable in that it involved a proposal limiting the "statutory right" to file grievances
whereas the proposal here limits collective bargaining rights.9 Also, the District contends that
the ALJ' s reliance on federal law was proper.
The issue in dispute involves a complex set
of
considerations. We therefore begin with
a review
of
the applicable general law.
General Principles
of
Law
EERA requires public school employers and exclusive representatives to meet and
negotiate with one another on matters within the scope ofrepresentation. (EERA, § 3543.3.)
Section 3543.2, subdivision (a), provides in pertinent part: "The scope
of
representation shall
be limited to matters relating to wages, hours
of
employment, and other terms and conditions
9 The District also argues that the exceptions fail to comply with PERB
Regulation 32300, subdivision (a), which sets forth the required content for exceptions.
(PERB Regs. are codified at Cal. Code Regs., tit. 8, § 31001 et seq.) Compliance with PERB
Regulation 32300, subdivision (a), is required "in order to afford the respondent and the Board
an adequate opportunity to address the issues raised." (Temecula Valley United School District
(1990) PERB Decision No. 836.) Specifically, the District complains that CSEA did not make
specific exceptions to the proposed decision and did not cite to the administrative record other
than in the Statement
of
Facts.
The case tried before the ALJ rested on a single legal issue. The ALJ's analysis
of
the
issue is contained on two pages. That CSEA did not except to individual sentences in separate
exceptions is acceptable,
if
not appreciated. That CSEA did not designate by page citation or
exhibit number the portions of the record relied on except in the Statement of Facts is not
surprising given that the issue before us is primarily legal, not factual, in nature. CSEA has
sufficiently designated its points of disagreement with the ALJ' s proposed decision in the
exceptions and the District has had an adequate opportunity to address the issues raised therein.
We therefore find that, under the facts of this case, the exceptions comply with PERB
Regulation 32300, subdivision (a).
10

of
employment."
10
A decision to reduce hours or employee work year is within the scope
of
representation because "although the same managerial concerns are present as with layoffs,
on
balance, the impact is greater
on
employees and more directly affects both hours and wages
of
those employees whose positions are reduced." (Zerger et. al, California Public Sector
Labor
Relations (Release No. 23, July 2012) § 11.05[1 l][c], p. 11-56, citing San Ysidro School
District (1997) PERB Decision 1198; Oakland Unified School District (1985) PERB Decision
No. 540; Healdsburg Union High School District and Healdsburg Union School
District/San Mateo City School District (1984) PERB Decision No. 375; North Sacramento
School District (1981) PERB Decision No. 193; Pittsburg Unified School District (1983)
PERB Decision No. 318; Eureka City School District (1985) PERB Decision No. 481).
11
Neither the employer nor the exclusive representative has a duty to bargain with respect
to subjects outside the scope
of
representation. As to these subjects, the parties may negotiate
on a permissive basis. Otherwise, proposals concerning permissive subjects may not be
10
The test for determining whether a subject is within the scope
of
representation under
EERA is set forth in Anaheim Union High School District (1981) PERB Decision No. 177
(Anaheim), as approved by the California Supreme Court in San Mateo City School Dist.
v.
Public Employment Relations Bd. (1983) 33 Cal.3d 850, 857-858. A subject is negotiable
if
it
falls within the list
of
enumerated subjects in section 3543.2. Otherwise, the subject is
negotiable
if
it meets the following three-part test: (1) it is logically and reasonably related to
wages, hours, or an enumerated term and condition
of
employment; (2) the subject is
of
such
concern to management and employees that conflict is likely to occur, and the mediatory
influence
of
collective negotiations is the appropriate means
of
resolving the conflict; and
(3) the employer's obligation to negotiate would not significantly abridge its freedom to
exercise those managerial prerogatives (including matters
of
fundamental policy) essential to
the achievement
of
its mission.
11
Reductions in hours and employee work year are within the scope of representation
even though they are authorized under the California Education Code. A public school
employer violates EERA by making unilateral changes in hours or employee work year.
(Pittsburg Unified School District, supra, PERB Decision No. 318.)
11

insisted on to the point
of
impasse. (NLRB
v.
Wooster Division
of
Borg-Warner Corp. (1958)
356 U.S. 342, 349 (Borg-Warner) ["The duty is limited to those subjects [wages, hours and
other terms and conditions
of
employment], and within that area neither party is legally
obligated to yield. Labor Board
v.
American Ins. Co., 343 U.S. 395. As to other matters,
however, each party is free to bargain or not to bargain, and to agree or not to agree.")
When a party decides it does not wish to bargain over a nonmandatory (i.e., permissive)
proposal, that party must express its opposition as a prerequisite to charging the other party
with committing an unfair practice. Where opposition has been expressed on a permissive
proposal, a party commits a per se violation
of
the duty to meet and negotiate by insisting
on
it
to impasse. (Lake Elsinore School District (1986) PERB Decision No. 603 (Lake Elsinore).)
As the Supreme Court held in Borg-Warner:
The company's good faith has met the requirements
of
the statute
as to the subjects
of
mandatory bargaining. But that good faith
does not license the employer to refuse to enter into agreements
on the ground that they do not include some proposal which is not
a mandatory subject
of
bargaining. We agree with the Board that
such conduct is, in substance, a refusal to bargain about the
subjects that are within the scope
of
mandatory bargaining. This
does not mean that bargaining is to be confined to the statutory
subjects. Each
of
the two controversial clauses is lawful in itself.
Each would be enforceable
if
agreed to by the unions. But it does
not follow that, because the company may propose these clauses,
it can lawfully insist upon them as a condition to any agreement.
(Borg-Warner, supra, 356 U.S. 342, 349.)
Impasse is defined under EERA as follows: 	"'Impasse' means that the parties to a
dispute over matters within the scope
of
representation have reached a point in meeting and
negotiating at which their differences in positions are so substantial or prolonged that future
meetings would be futile." (§ 3540.1, subd. (f).) PERB has held that an impasse in bargaining
exists where "the parties have considered each other's proposals and counterproposals,
12

attempted to narrow the gap of disagreement and have, nonetheless, reached a point in their
negotiations where continued discussion would be futile." (Mt. San Antonio Community
College District (1981) PERB Order Ad-124.) 12
When the parties have reached a bona fide impasse in negotiations, the parties are
obligated to participate in specified statutory impasse procedures including mediation and fact
finding. 	EERA imposes a mutual duty on the parties to participate in good faith in the
statutory impasse procedures. (§ 3543.5, subd. (e).)
Ifthe impasse procedures are exhausted without breaking the deadlock, the parties
remain at impasse. 13 At that point, the employer may "take unilateral action to implement the
last offer the union has rejected." (Public Employment Relations Bd. v. Modesto City Schools
Dist., supra, 136 Cal.App.3d 881, 900, citing NLRB v. Katz (1962) U.S. 736, 745.) The terms
and conditions so implemented must be "reasonably comprehended within the pre-impasse
proposals." (Public Employment Relations Bd. v. Modesto City Schools Dist., supra,
136 Cal.App.3d 881, 900.)
Impasse is only a temporary deadlock or hiatus in negotiations "which in almost all
cases is eventually broken, through either a change of mind or the application of economic
force." (Charles D. Bonanno Linen Service, Inc. (1979) 243 NLRB 1093, 1093-1094.) An
impasse may be "brought about intentionally by one or both parties as a device to further,
rather than destroy, the bargaining process .... [T]here is little warrant for regarding an
impasse as a rupture of the bargaining relation which leaves the parties free to go their own
ways." (Ibid.)
13 Impasse suspends the parties' obligation to bargain only until changed circumstances
demonstrate that an agreement may be possible. (Modesto City Schools (1983) PERB Decision
No. 291.) If the bargaining impasse is subsequently broken, the bargaining obligation revives.
(Public Employment Relations Bd. v. Modesto City Schools Dist. (1982) 136 Cal.App.3d 881,
899.) 	Offers by either party to make concessions sufficient to break the impasse revive the
duty to bargain. (Ibid.)
13

The Characterization
of
Bargaining Proposals under PERB Precedent
Consequences flow from the characterization
of
bargaining proposals as mandatory or
permissive.
14
As described above, the duty to bargain extends to each and every subject within
the scope
of
representation, i.e., "wages, hours
of
employment, and other terms and conditions
of
employment." It is an unfair practice for either side to refuse to bargain about such a
subject upon the request
of
the other. (NLRB
v.
Katz, supra, 369 U.S. 736.)
There are subjects that unambiguously present as mandatory or permissive in nature
where the rules described above uniformly apply. Then there are subjects that do not as easily
fit within this paradigm. One type concerns individual employee rights or guarantees found in
non-EERA statutes like those found in the California Labor Code. The Board's most recent
decision in this area, Berkeley Unified School District (2012) PERB Decision No. 2268
(Berkeley), involved a proposal to recoup from employees' pay alleged overpayments. The
proposal had previously been agreed to by the union and incorporated into the parties'
collective bargaining agreement. The proposal was inconsistent with the wage garnishment
statutes set forth in the Labor Code.
Relying on the California Supreme Court decision in San Mateo City School Dist.
v.
Public Employment Relations Bd., supra, 33 Cal.3d 850, the Board found the proposal to be
both nonmandatory and nonnegotiable. The parties may agree to incorporate the external law
derived right into the collective bargaining agreement. The parties may negotiate in areas left
As the court said in Retlaw Broadcasting Co.
v.
NLRB (9 th
Cir. 1999) 172 F.3d 660,
quoting Silverman
v.
Major League Baseball Player Relations Comm., Inc. (S.D.N.Y.)
880 F. Supp. 246, 253,
affd
(2d Cir. 1995) 67 F.3d 1054:
As other courts have observed, framing a subject as mandatory or
permissive has significant consequences for the parties' bargaining
obligations under the Act: "The distinction between mandatory and
permissive subjects of bargaining is crucial in labor disputes,
because it determines to what extent one party may compel the
other to bargain over a given proposal
....
"
14

unaddressed by the external law. The parties may agree to incorporate the external law
derived right into the collective bargaining agreement and negotiate more generous terms.
(Regents of the University Of California (2010) PERB Decision No. 2094-H.) The parties to a
collective bargaining agreement may not, however, negotiate away individual employee rights
guaranteed by statutes that "set an inflexible standard or insure immutable provisions."
(San Mateo City School Dist. v. Public Employment Relations Bd., supra, at pp. 864-865.)
To do so would be to infringe on rights that individual employees enjoy as a matter of law.
As the Board's decision in Berkeley, supra, PERB Decision No. 2268, demonstrates,
the rules regarding permissive subjects do not uniformly apply to nonnegotiable subjects.
Although a union must voice its opposition to bargaining over a permissive subject in order to
preserve its right to charge the employer with an unfair practice, the same is not true of a
norm.egotiable subject. .As the Board stated in Berkeley, the "negotiating party does not waive
its right not to negotiate over an otherwise non-negotiable subject by failing to object that the
subject is also non-mandatory." 15
Another subject that PERB has characterized as nonmandatory or permissive is
described as involving "statutory rights," referring to rights originating in EERA itself.
Because the statutory rights line of Board precedent underlies Rowland, supra, PERB Decision
No. 1053, the decision relied on by CSEA here, we undertake a review of those cases next.
One of the first statutory rights decisions is South Bay Union School District (1990)
PERB Decision No. 791 (South Bay), affirmed in South Bay Union School Dist. v. Public
Employment Relations Bd. (1991) 228 Cal.App.3d 502. The case arose in the context of
This category is similar to the category referred to as "illegal" subjects by the
National Labor Relations Board (NLRB). Under the NLRB rubric, proposals on illegal
subjects result in a violation when insisted on to the point of impasse similar to proposals on
permissive subjects. Unlike a permissive subject, however, a proposal on an illegal subject
may not by mutual consent be incorporated into the agreement. (See 1 Higgins, The
Developing Labor Law (5 th ed. 2006), p. 1394.)
15

successor agreement negotiations. The employer proposed retaining the grievance article
of
the collective bargaining agreement, which did not permit the union to file a contract grievance
in its own name. The union proposed changes to the article that would allow the union to file a
contract grievance in its own name. The employer refused to change its position and during
the course
of
negotiations the union repeatedly asserted its right to file and prosecute
grievances in its own name. After three months
of
negotiations, the parties reached impasse.
During mediation, the parties maintained their pre-impasse positions, but ultimately, in order to
secure an agreement, the union agreed to accept the grievance article without change.
South Bay held that the employer's insistence to impasse on the proposal limiting the
right
of
the union to file a grievance in its own name was an unfair practice. There was no
majority analysis, however. Member Camilli wrote a concurrence finding the employer's
proposal nonmandatory but not based on the test set forth in Anaheim, supra, PERB Decision
No. 177. Member Camilli analyzed the issue as
"a
statutory right [derived from the right
of
employee organizations to represent their members under section 3543.1, subdivision (a)]
which is not among the enumerated mandatory subjects
of
bargaining." Member Camilli's
statutory rights analysis would prevail as the majority analysis in subsequent cases.
The next "statutory rights" decision is Chula Vista City School District (1990) PERB
Decision No. 834 (Chula Vista). 	It, too, involved a grievance proposal limiting the union's
right to file a grievance in its own name. The Board held that such a limitation on the right to
bring a grievance is categorically nonmandatory because the employer is not insisting to
impasse on a "term or condition
of
employment, but rather is insisting that the Association
waive a basic statutory right." (Ibid.) The Board stated that the usual rules apply, i.e., the
parties may negotiate over such a proposal on a permissive basis and opposition to further
negotiations must be voiced. The Board then reviewed other aspects of the grievance proposal,
16

dividing them into mandatory and nonmandatory subjects. The Board found that aspects of the
proposal limiting the right to take grievances to arbitration without the permission of the
employee grievant and limiting the right to seek unit modification were also nonmandatory.
These aspects of the proposal "impinge[d] upon the Association's statutory right to represent
its members." (Ibid.) 	On the other hand, the Board found that the right to be physically
present at the informal stages of the grievance procedure concerned a mandatory subject. As
the Board explained, the characterization of a proposal as mandatory or nonmandatory turns on
the identification of a union representational right found to exist under EERA. If such a right
exists, the proposal will be deemed nonmandatory. If such a right does not exist, it will not.
One of the defenses raised by the employer in Chula Vista was the union's failure to
state its opposition to bargaining. Although the union did not take the position that the
proposals were outside the scope of representation, the union did state that insistence to
impasse was improper. On the issue of whether the union's opposition was adequate, the
Board held:
There is nothing in the law that says a party needs to chant the
magic words that a specific subject is outside the scope of
representation to preserve its right, after having bargained about a
nonmandatory subject, to take the position that the nonmandatory
proposal shall not be included in the contract.
(Chula Vista, supra, PERB Decision No. 834.)
Mt. Diablo Unified School District (1990) PERB Decision No. 844 (Mt. Diablo)
involved proposals waiving the union's rights to arbitrate grievances without the permission of
the employee grievant and to file grievances in its own name. A majority of the Board agreed
with the ALJ that the proposals were nonmandatory but expressly rejected that portion of the
ALJ' s analysis that utilized a modified version of the test set forth in Anaheim, supra, PERB
Decision No. 177 to arrive at that conclusion. 	The majority instead adopted "the 'statutory
17

right' analysis set forth in Chula Vista." (Ibid.) The Board described the Chula Vista analysis
as follows:
In Chula Vista, the majority found that application of the
Anaheim test to determine the negotiability of the grievance
proposals was unnecessary since the District was not actually
insisting to impasse on a term or condition of employment, but
was rather insisting that the Association waive a basic statutory
right. (Chula Vista City School District, supra, PERB Decision
No. 834, at pp. 22-23.)
(Mt. Diablo, supra, PERB Decision No. 844.)
Travis Unified School District (1992) PERB Decision No. 917 (Travis) demonstrated
the full alignment of the Board on the statutory rights analysis. The proposal at issue barred
the union from filing grievances in its own name. Based on finding that the proposal involved
the statutory right to represent, the Board concluded that the proposal was nonmandatory. 	In
response to the employer's defense that the union failed to inform the employer prior to
impasse that it was removing the subject from the bargaining table, the Board stated:
The facts of this case are very similar to those of Chula Vista. In
Chula Vista, the parties reached impasse with the Association
continuing to propose changes to the restrictive grievance
language, and the District insisting on maintenance of the status
quo. While the Association did not explicitly state that the
proposals in question were "outside the scope of bargaining," the
Association did make clear its contention that it was improper for
the District to insist on language which it believed deprived it of
its statutory rights. The Board found in Chula Vista that "the
Association's statements [were] sufficient to put the District on
notice that the Association was unwilling to waive its statutory
right to represent its members." (Chula Vista, p. 26.)
(Travis, supra, at pp. 4-5.)
In San Mateo County Community College District (1993) PERB Decision No. 1030
(San Mateo), the PERB complaint alleged that the employer conditioned a final agreement on
the union's waiving the right to a reasonable amount of released time. The ALJ analyzed
released time as a statutory right and therefore a nonmandatory subject of bargaining that the
18

employer was not privileged to insist to impasse. The Board disagreed, affirming the principle
that released time is a mandatory subject
of
bargaining in addition to a statutory right.
	At
first
blush, this decision appears to take a different approach than the "statutory rights" cases
by
characterizing the proposal at issue as mandatory. For this reason, the District stresses the
importance
of
this decision in its response to the exceptions. The District's reliance on it,
however, is misplaced. In San Mateo, the proposal did not seek to waive the union's statutory
right to released time. The dispute between the parties turned on the issue
of
reasonableness.
In contrast, in the statutory rights cases where a violation was found, the proposals at issue
sought a waiver
of
a right guaranteed by statute.
In San Mateo, the Board made a distinction between ordinary nonmandatory subjects
and proposals concerning statutory rights:
As ·with a
nonma...ridatory
or permissive subject, the employer
cannot insist to impasse on a proposal concerning a statutory
right. The distinction is that while statutory rights are not directly
rooted in terms and conditions
of
employment, as is the case with
nonmandatory subjects, statutory rights are directly based on
rights protected by the Legislature.
To reach impasse unlawfully on a nonmandatory or permissive
subject is to engage in bad faith bargaining by injecting
extraneous subjects in preference to subjects on wages, hours,
and other terms and conditions
of
employment. With statutory
rights, the employer cannot insist to impasse because to do so is
an infringement on a right not given the employer.
(San Mateo, supra, PERB Decision No. 1030.)
On the heels of these statutory rights cases the Board issued its decision in Rowland,
supra, PERB Decision No. 1053. This case arose in the context
of
a post-impasse
implementation of the employer's last, best and final offer, which included the following
language:
[T]erms and conditions of employment shall be effective July 1,
1992 through August 31, 1993,
...
This implementation resolves
19

negotiations affecting the 1992-93 school year except as follows:
[The Association] and the District may select up to two subjects
for meeting and negotiating in connection with the 1992-93
school year.
Following implementation, the union submitted to the employer initial proposals for the
1992-1993 school year covering a large number of contractual items. The ALJ concluded that
although the employer was entitled to implement, the union's proposals constituted changed
circumstances breaking the parties' impasse and reviving the employer's duty to negotiate.
Relying on the "statutory rights" holdings in South Bay, supra, PERB Decision No. 791, and
Chula Vista, supra, PERB Decision No. 834, the Board disagreed with the ALJ's analysis,
holding:
If an employer cannot insist to impasse on the waiver/limitation
of a statutory right, certainly an employer is prohibited from
implementing the waiver/limitation of a statutory right following
impasse. EERA gives the parties the right to collectively
negotiate terms and conditions of employment. If the employer
can unilaterally implement a waiver/limitation of the right to
bargain it would negate the purposes of EERA. Accordingly, an
employer may not, following impasse, unilaterally impose a
waiver/limitation of an exclusive representative's statutory right
to bargain. Such a waiver/limitation of the statutory right to
bargain may only occur within the context of a mutually agreed
collective bargaining agreement.
(Rowland, supra, PERB Decision No 1053.)
Rowland differed from the prior statutory rights decisions in two ways. First, it arose in
the context of a post-impasse implementation of the employer's last, best and final offer, as
opposed to pre-impasse negotiations. Also, specific manifestations of the right to represent,
such as the right to arbitrate grievances or to file grievances in the union's own name, were not
at issue. Rowland is therefore significant in extending the "statutory rights" analysis to a
broader type of representational interest, i.e., the right to engage in collective bargaining as the
exclusive representative of the bargaining unit.
20

In State
of
California (Department
of
Personnel Administration) (2009) PERB Decision
No. 2081-S (State
of
California I), the issue on appeal from dismissal was whether the union
expressed "its opposition to further negotiation on the [statutory right] proposal as a
prerequisite to charging the other party with bargaining to impasse on a nonmandatory
subject
of
bargaining," citing San Mateo, supra, PERB Decision No. 1030 and Lake Elsinore,
supra, PERB Decision No. 603. The union argued that the standard articulated in these
cases imposed a more difficult burden by requiring the union to refuse to bargain over
the proposal. The union argued that the Board should apply the standard articulated in
Chula Vista, supra, PERB Decision No. 834, and Travis, supra, PERB Decision No. 917. The
Board held that there was no difference in standard between the two sets
of
cases. The Board
rejected the union's claim that the following language was sufficient to put the employer on
notice that it was unwilling to agree to language waiving or limiting its statutory rights: 	"Your
current proposal has several sections that require us to agree to waive state law for our
members. That is not a legitimate effort towards agreement." (State
of
California L supra,
B Decision No. 2081-S.)	PER
In State
of
California (Department
of
Personnel Administration) (2010) PERB Decision
No. 2130-S (State
of
California II), the Board clarified the holding in Rowland. The Board
explained that the problematic language in Rowland, supra, PERB Decision No. 1053, was not
the duration clause but the intrusion into the union's bargaining rights. The Board held that the
"inquiry in a case involving implementation upon impasse of a term of agreement provision is
whether the provision has the effect of waiving or limiting the union's statutory right to
bargain." (lb id.)
These cases affirm a number of basic principles. Under the "statutory rights" decisions,
an employer proposal premised on the abandonment of representational rights guaranteed to an
21

exclusive representative by statute may be negotiated on a permissive basis and memorialized
in a collective bargaining agreement
if
agreement is reached. Such proposals may not,
however, be insisted on to the point
of
impasse
if
the exclusive representative has expressed its
opposition.
16
Such conduct violates EERA.
In addition, under Rowland, supra, PERB Decision No. 1053, the Board made
clear
that
the range
of
matters subject to implementation by
th·e
employer upon impasse is not unlimited.
As the Board explained in State
of
California
IL
supra, PERB Decision No. 2130-S, an
employer's post-impasse implementation
of
a proposal that undermines fundamental principles
of
collective bargaining constitutes an unfair practice.
The NLRB Approach
The proposed decision states that federal law "seems to be reasonably clear" that
proposals by '.vhich one side seeks to retain discretion over a mandatory subject
of
bargaining
are also mandatory subjects
of
bargaining.
	In
concluding that the District did not commit an
unfair practice by insisting to impasse on the Appendix C language regarding reduction
in
hours and workyear bases, the ALJ stated that Rowland was distinguishable and found
"no
reason not to follow federal law as PERB has done in the past." We have identified two main
problems with this analysis.
First, the proposed decision correctly distinguishes Rowland as involving a charge
alleging a violation based on a post-impasse implementation rather than on a pre-impasse
insistence to impasse. The proposed decision fails, however, to explain whether the reasoning
in Rowland, which was based on the statutory rights line
of
precedent, would apply in a pre-
The exclusive representative need not specifically state that the proposal is outside
the scope of bargaining. As the Board has always stated, there are no magic words. The
exclusive representative must, however, place the employer on notice that insisting to impasse
on language it believes deprives it of its statutory right to represent its members is improper,
and that such language may not be included in a contract.
22

impasse insistence to impasse setting. Similarly, the proposed decision fails to explain whether
post-impasse implementation
of
the District's proposal would constitute a violation even
if
pre-impasse insistence to impasse on it would not. These issues are integrally interconnected.
Second, the proposed decision paints an incomplete picture
of
federal decisional law.
The United States Court
of
Appeals for the District
of
Columbia Circuit issued two decisions
in the McClatchy case. In the first decision, the court refused enforcement
of
an NLRB
decision and order, which found an employer in violation
of
the NLRA for implementing upon
impasse a discretionary merit pay proposal, a mandatory subject
of
bargaining. The court
found the NLRB's "waiver" analysis to be contrary to law. The ALJ's proposed decision in
the instant case relies on the court's critique
of
the NLRB decision as expressed in its first
decision. The proposed decision does not, however, explain that the court, in remanding the
matter to the NLRB for further consideration, was willing to consider enforcement under an
alternate theory
of
law. On remand, the NLRB maintained its position that the employer was
in violation
of
the NLRA for implementing a merit pay proposal upon impasse, despite the fact
that the subject matter
of
the proposal was a mandatory subject
of
bargaining, but this time
girded its decision to a different legal rationale. On appeal, the same court affirmed the new
NLRB approach as correctly premised and reasoned, and granted enforcement. The proposed
decision in this matter does not discuss these further developments in the law
of
the case, nor
other private-sector cases in which the NLRB, and to some extent, the federal courts, have
extended and clarified the reasoning adopted in the McClatchy case.
We therefore next review federal decisional law so as to provide a more complete
treatment of the McClatchy case and, more broadly, a better understanding of the NLRB
approach to the issues raised herein. As will be seen below, the McClatchy case is well
23

accepted doctrine in private sector labor law and its reasoning has been applied and developed
beyond the specific facts
of
that case.
The McClatchy Decisions
The NLRB issued its first decision in this case in 1990. (McClatchy Newspapers
( 1990) 299 NLRB 1045 (McClatchy
I)
	During successor agreement negotiations, the union
sought a
25
percent wage increase and discontinuance
of
merit pay. The employer counter
proposed that all compensation be based solely on merit, that starting salaries be established by
the employer, and that merit pay decisions not be subject to bargaining or the grievance and
arbitration procedure. Unlike the merit pay arrangement in the expiring contract, the
employer's proposal contained no provision for union participation in the evaluation and
appeal processes. The NLRB' s ALJ agreed with the NLRB' s General Counsel that the
employer's merit pay proposal was a permissive subject
of
bargaining and that the employer
was guilty
of
bad faith bargaining when it insisted on it to impasse. Agreeing with the result
but disagreeing with the ALJ's analysis, the NLRB concluded that the parties were engaged in
good faith negotiations and reached impasse on a mandatory subject
of
bargaining, i.e.,
negotiated wages versus merit pay, but that the employer unlawfully implemented its proposal
after reaching impasse. The NLRB reasoned that a proposal seeking unlimited managerial
discretion over the determination
of
the timing and amounts
of
merit increases was in reality
seeking the union's waiver
of
its statutory right to bargain. The NLRB stated that the
employer "was free to insist to impasse that the Union agree to waive its statutory rights, but
was not privileged to proceed with implementation after impasse as though it had successfully
secured the Union's waiver." (Id. at pp. 1046-1047.)
24

On petition by the NLRB to the United States Court
of
Appeals for the District
of
Columbia for enforcement, a majority
of
the panel in a per curiam order found that McClatchy
I did not constitute reasoned decision-making. The court denied enforcement and remanded
the case to the NLRB for further consideration. (NLRB
v.
McClatchy Newspapers Inc., supra,
964 F.2d 1153.) Each
of
the justices wrote separate statements
17
to accompany the
court's
per curiam order. In the lead opinion, Justice Edwards described the issue as follows:
	"While
seemingly narrow in scope, this is a deceptively difficult question, reaching to the heart
of
labor law. And, although this particular question only recently has been raised, it occupies a
space between several well-established doctrines
of
labor law." (Id. at p. 1154.) Justice
Edwards summarized those doctrines as follows: 	(1) proposals covering wages are mandatory
subjects
of
bargaining, with respect to which the parties must bargain in good faith in an effort
to reach agreement; (2) even ,vhere a party is guilty
of
bargaining in bad faith, the NLRB may
not compel either side to accede to a particular proposal; (3) following good faith negotiations,
a party may take unilateral action with respect to a mandatory subject
of
bargaining over which
impasse has been reached (the impasse rule); (4) unilateral action may not be taken with
17
Because the NLRB ultimately adopted Justice Edwards' approach on remand, we
have summarized his statement at length. For the same reason, we forego discussion
of
the
statements
of
the other two justices. It suffices to say that Justice Silberman found the NLRB's
waiver theory to "have a certain symmetrical elegance." Justice Henderson, on the other hand,
while agreeing with Justices Edwards and Silberman to refuse enforcement
of
McClatchy I,
disagreed that remand was appropriate. She found the decision was unsupportable and
objected to serving up "a smorgasbord
of
possible explanations of what the Board has done."
(NLRB v. McClatchy Newspapers Inc., supra, 964 F.2d 1153,1179, quoting Enterprise Ass
'n
of
Steam, Hot Water, Hydraulic Sprinkler, Pneumatic Tube, Ice Mach. & Gen. Pipefitters
ofN
Y
& Vicinity
v.
NLRB (D.C. Cir. 1975) 521 F.2d 885, 891, fn. 9.)
25

respect to permissive subjects of bargaining; and (5) with respect to certain categorical
exceptions to the impasse rule, i.e., provisions concerning the statutory right to strike,
arbitration, union security and dues check-off, 18 and withdrawal from multi-employer
bargaining, such provisions can be implemented only by mutual consent of the parties to the
bargaining relationship. 19
The ALJ in the case before us relied on a portion of Justice Edw~rds' opinion stating
that a mandatory subject of bargaining does not lose that status if one party seeks to gain
complete control over it pursuant to collective bargaining. As Justice Edwards explained, it is
well settled that proposals by which one side would retain discretion over a mandatory subject
are also mandatory subjects. (NLRB v. McClatchy Newspapers, Inc., supra, 964 F.2d 1153,
1159.) Relying on American Nat'! Ins. Co., supra, 343 U.S. 395, as did the ALJ in this case,
Justice Edwards stated "whether the subject will be committed to one party's discretion or set
18 Closely related to these doctrines is the status quo doctrine, which requires that the
employer honor contractually established terms and conditions of employment until a new
contract is negotiated or until the parties reach impasse. In a recent decision overturning
decades of NLRB precedent, the NLRB ruled that a dues check-off provision, which requires
an employer to deduct union dues from an employee's paycheck, survives expiration of the
contract. (WKYC-TV, Inc. (2012) 359 NLRB 30.) The NLRB acknowledged that some
mandatory subjects of bargaining, like arbitration provisions, no-strike clauses and
management rights clauses, do not survive expiration of the contract because they involve a
voluntary waiver of rights. By contrast, according to the NLRB, dues check-off is an
"administrative convenience" like employee savings accounts that does not entail a waiver of
rights and therefore survives a contract's expiration. (Ibid.)
19 The Supreme Court in Litton Financial Printing Div. v. NLRB (1991) 111 S. Ct. 2215
explained that provisions coming within these categorical exceptions, like the one concerning
the right to arbitration, are by statute a matter of consent.
26

by definite terms should be decided by bargaining and the relative economic strength of the
employer and union."20 (Ibid.)
That a merit pay proposal does not lose its status as a mandatory subject of bargaining
where one party seeks unfettered discretion over its implementation did not, in Justice
Edwards' view, entirely resolve the issue. There are countervailing legal doctrines that come
into play as discussed in Borg-Warner. For example, as Justice Edwards explained, where a
proposal seems on its face to address a mandatory subject but includes direct dealing between
the employer and the employee or would deprive a union of its central statutory role as the
collective representative of the workers, the proposal may constitute only a permissive subject.
Examples given included proposals that seek to gain discretion over a bargaining unit or to set
the amount of an agency fee. 	In Justice Edwards' view, these issues demonstrate a tension
20 In American Nat'! Ins. Co., supra, 343 U.S. 395, 409, the Supreme Court held:
Whether a contract should contain a clause fixing standards for
such matters as work scheduling or should provide for more
flexible treatment of such matters is an issue for determination
across the bargaining table, not by the Board. If the latter
approach is agreed upon, the extent of union and management
participation in the administration of such matters is itself a
condition of employment to be settled by bargaining.
Accordingly, we reject the Board's holding that bargaining for
the management functions clause proposed by respondent was,
per se, an unfair labor practice. Any fears the Board may
entertain that use of management functions clauses will lead to
evasion of an employer's duty to bargain collectively as to "rates
of pay, wages, hours and conditions of employment" do not
justify condemning all bargaining for management functions
clauses covering any "condition of employment" as per se
violations of the Act. The duty to bargain collectively is to be
enforced by application of the good faith bargaining standards of
Section 8 ( d) to the facts of each case rather than by prohibiting
all employers in every industry from bargaining for management
. functions clauses altogether.
27

between the teachings of Borg-Warner, supra, 356 U.S. 342, and American Nat'l Ins. Co.,
supra, 343 U.S. 395.
Justice Edwards criticized the NLRB decision for the following reason:
The Board has attempted to take the words from decisions
involving claims of "waiver" in situations where an agreement
exists and apply them to cases where the parties are bargaining to
secure an agreement; it does not work because, in the latter
situation, the impasse rule comes into play (thus making "waiver"
irrelevant).
(NLRB v. McClatchy Newspapers, Inc., supra, 964 F.2d 1153, 1168.)
As Justice Edwards explained, where a collective bargaining agreement is in effect,
consent as memorialized in the agreement, not bargaining to impasse, is required in order to
lawfully implement a change in a mandatory subject of bargaining. The doctrine of waiver
arises in this context. By contrast, where parties are negotiating over a successor agreement,
an employer may lawfully implement a change in a mandatory subject of bargaining, not
through consent, but by having made a lawful proposal that the parties bargained over in good
faith to impasse. The doctrine of waiver, as it has come to be understood as an affirmative
defense to an unlawful unilateral change allegation, does not arise in this context.
Justice Edwards agreed to a remand in order to give the NLRB the opportunity to
justify the result reached pursuant to a coherent theory of labor law, which he offered might
include classifying a unilateral merit pay proposal as a permissive subject of bargaining, as a
categorical exception to the impasse rule, or as a new category of subjects somewhere between
mandatory and permissive.
Justice Edwards observed:
Admittedly, the unilateral change doctrine generally presumes
that implementing changes post-impasse does not hurt collective
bargaining. But if the employer can indefinitely adjust employee
28

wages pursuant to the implemented proposal, impasse will no
longer be the "temporary" phenomenon described in Bonanno.
Impasses generally will be broken by the application of economic
pressure by one side or by changing conditions which alter the
economic calculus of one of the sides. 	[Citations.] 	... Where the
employer has the unconstrained authority to adjust wages to
respond to changing conditions, it will have substantially smaller
incentives to restart collective bargaining.
Additionally, when the employer grants individualized merit pay
increases, it disturbs the "collectivized" nature of collective
bargaining over wages. 	See J.I. Case. Co., 321 U.S. at 339 (direct
dealing impermissible where majority "collectivizes"
employment relationship). When the employer presses to
impasse a demand for discretion on individual merit payments, it
takes a position which pits it against the employees as a group.
But when the employer goes the next step and grants merit pay
increases to selected individuals, it necessarily divides the
employees and "de-collectivizes" the employees' bargaining
position with respect to wages. The employees' group decision
to utilize each individual's "merit" as a group asset has been
nullified. This is very nearly direct dealing ....
(NLRB v. McClatchy Newspapers, Inc., supra, 964 F.2d 1153, 1172-1173, fn. omitted.)
The NLRB issued McClatchy Newspaper (1996) 321 NLRB 1386 (McClatchy 11)21 on
remand, maintaining its position that the merit pay proposal was a mandatory subject of
bargaining on which the employer could lawfully insist to impasse but that implementation
upon impasse was unlawful. The NLRB, however, abandoned its prior rationale that the merit
pay proposal sought a waiver of the union's right to bargain. The NLRB summarized its new
rationale as follows: 	"[W]e find that preservation of the integrity of the collective-bargaining
process requires that we recognize a narrow exception to the implementation-upon-impasse
rules, at least in the case of wage proposals, such as the one at issue here, that confer on an
21 The NLRB issued a second decision on remand, McClatchy Newspaper (1996)
322 NLRB 812. This decision, which borrowed heavily from McClatchy II, found that the
employer failed and refused to satisfy its obligation to bargain with the union prior to granting
merit wage increases to unit employees.
29

employer broad discretionary powers that necessarily entail recurring unilateral decisions
regarding changes in the employees' rates of pay." (Id. at p. 1388.)
In McClatchy II, the NLRB reviewed the purpose of impasse. As the NLRB stated,
impasse is designed to be a "temporary circumstance." It is not "a device to allow any party to
continue to act unilaterally or to engage in the disparagement of the collective-bargaining
process." (McClatchy II, supra, 321 NLRB 1386, 1390.) After reviewing the case law
regarding exceptions to the post-impasse implementation rule, the NLRB found that if the
employer was granted "carte blanche authority over wage increases (without limitation as to
time, standards, criteria, or the Guild's agreement), it would be so inherently destructive of the
fundamental principles of collective bargaining that it could not be sanctioned as part of a
doctrine created to break impasse and restore active collective bargaining." (Id. at pp. 1390
13 91, italics in original, fn. omitted.) As the NLRB pointed out, the employer's ongoing
exercise of discretion in setting wage increases and the union's ongoing exclusion from
negotiating directly impacts a key term and condition of employment and a primary basis for
negotiations as well as disparages the union by demonstrating "its incapacity to act as the
employees' representative in setting terms and conditions of employment." (Id. at p. 1391.) In
concluding, the NLRB held:
Were we to allow the Respondent here to implement its merit
wage increase proposal and thereafter expect the parties to
resume negotiations for a new collective-bargaining agreement, it
is apparent that during the subsequent negotiations the Guild
would be unable to bargain knowledgably and thus have any
impact on the present determination of unit employee wage rates.
The Guild also would be unable to explain to its represented
employees how any intervening changes in wages were
formulated, given the Respondent's retention of discretion over
all aspects of these increases. Further, the Respondent's
implementation of this proposal would not create any fixed,
objective status quo as to the level of wage rates, because the
Respondent's proposal for a standardless practice of granting
raises would allow recurring, unpredictable alterations of wages
30

[sic] rates and would allow the Respondent to initially set and
repeatedly change the standards, criteria, and timing of these
increases. The frequency, extent, and basis for these wage
changes would be governed only by the Respondent's exercise of
its discretion ....
. . . We are confident that this modification of the impasse
doctrine will maintain a proper balance, designed to further the
bargaining process, between the competing legitimate interests of
the parties by preserving the employer's right to propose and
bargain to impasse over merit pay and the obligation to provide
the employees' statutory bargaining agent with the opportunity
for negotiation over the terms and conditions of employment.
(Id. at p. 1392, fns. omitted.)
On petition for enforcement, the United States Court of Appeals for the District of
Columbia Circuit affirmed the decision of the NLRB in McClatchy II and granted enforcement.
(McClatchy Newspapers v. NLRB (D.C. Cir. 1997) 131 F.3d 1026.) The court viewed the
NLRB' s new analysis as creating a narrow exception to the post-impasse implementation rule
in cases where post-impasse implementation of a discretionary proposal on a mandatory
subject of bargaining would have a deleterious impact on the collective bargaining process.22
In the final chapter of this saga, the United States Supreme Court denied the employer's
petition for writ of certiorari on June 22, 1998.
22 The court observed that despite the NLRB's view that the merit pay proposal was a
mandatory subject of bargaining, the NLRB acknowledged that the proposal contained no
substantive terms. McClatchy II cited NLRB v. Katz, supra, 369 U.S. 736 for the proposition
that a purely discretionary merit wage policy, i.e., without identifiable procedures and criteria,
does not "establish" terms and conditions of employment at any point prior to the actual
exercise of discretion. Although the court observed that this might suggest that such a
proposal is permissive and that the impasse rule would not even apply, the court declined to
comment further because it was not the view ultimately adopted by the NLRB in McClatchy II.
The court further observed that the NLRB decision would not preclude an employer from
implementing a merit pay proposal post-impasse so long as there are objective procedures and
criteria.
31

The Post-McClatchy Decisions23
The rationale underlying the McClatchy exception was aptly summarized in Edward S.
Quirk Co. v. NLRB (1 st Cir. 2001) 241 F.3d 41, 43:
The reasons for this limitation, on the part of both the Board and
the D.C. Circuit, are highly pragmatic. The Board thinks that
allowing a succession of unilateral changes by the employer, as
opposed to an initial change, would make a union seem impotent
to its members over time and further undermine the union's
bargaining ability by creating uncertainty about prevailing terms.
By contrast, permitting one set of unilateral changes per impasse
lets the employer make an initial adjustment, but forces it to
bargain again with the union if it wishes to make further
adjustments down the road. 	[Citations.]
The court in Quirk pointed out that nothing in the NLRA explicitly gives the employer the
right to impose its last offer unilaterally at impasse. The NLRB and the courts developed the
doctrine administratively and judicially to achieve a workable balance. And, although
generally the NLRB and the courts should not sit in judgment on the substantive terms of an
agreement, the McClatchy exception is designed to promote bargaining by requiring the
23 We undertake a review of post-McClatchy administrative and judicial decisions to
demonstrate both that the McClatchy doctrine is well established and accepted doctrine in
private sector labor law and that it has been applied in a variety of factual settings. The
decisions discussed herein are included for consideration and guidance, not necessarily for
explicit adoption. 	(See Fire Fighters Union v. City of Vallejo (1974) 12 Cal.3d 608.)
Moreover, although decisions of circuit courts are included in our review, the following is
noted:
"It has been the Board's consistent policy for itself to determine
whether to acquiesce in the contrary views of a circuit court of
appeals or whether, with due deference to the court's opinion, to
adhere to its previous holding until the Supreme Court of the
United States has ruled otherwise. . . . Only by such recognition
of the legal authority of Board precedent, will a uniform and
orderly administration of a national act, such as the National
Labor Relations Act, be achieved."
(Iowa Beef Packers, Inc. (1963) 144 NLRB 615, 616, quoting Insurance Agents (The
Prudential Insurance Company of America) (1957) 119 NLRB 768, 773, and Novak Logging
Co. (1958) 119 NLRB 1573, 1575-1576.)
32

employer to return to the bargaining table instead of engaging in recurring unilateral changes
over time. As the court in Quirk stated, "[ e]mployer discretion in setting wages is fine if the
parties agree: It is the unilateral use of such a plan to impair further bargaining that concerns
the Board." (Id. at p. 44.)
Woodland Clinic (2000) 331 NLRB 735 involved a pay-for-performance proposal,
which the Board found to fall within the McClatchy exception because it conferred on the
employer broad discretionary powers. The NLRB' s General Counsel charged that the
employer was not privileged to insist to impasse on a proposal permitting the employer to deal
directly with the employees in the determination of merit wage increases because such a
proposal by its nature was a permissive subject of bargaining. The NLRB rejected the General
Counsel's argument, explaining that the employer was required to bargain with the union prior
to implementation of any pay-for-performance system and prior to any employee being given
an increase under such system, and that therefore the proposal was mandatory. The NLRB
dismissed the complaint allegation that the employer unlawfully bargained to impasse over the
proposal.
KSM Indus. (2001) 336 NLRB 133, reconsideration granted in part KSM Indus. (2002)
337 NLRB 987, applied the McClatchy exception to a medical and dental insurance proposal.
The employer implemented a proposal that reserved to it sole discretion to change the
method/means for providing medical/dental benefits provided that the change is first discussed
with the union and any deductibles/co-insurance limits not exceed a certain amount. The
NLRB found the employer's implementation of the proposal upon impasse to be unlawful
because the proposal nullified the union's authority to bargain and therefore was "inimical to
the postimpasse, ongoing collective bargaining process." (Id. at p. 135.)
33

In
E.I
du Pont de Nemours &
Co.
(2006) 346 NLRB 553, enforced
E.I
du Pont de
Nemours & Co.
v.
NLRB (D.C. Cir. 2007) 489 F.3d 1310, the majority found that the
employer's implementation
of
its healthcare proposal was not unlawful because it was a
narrow, specific clause that "by its terms, sets limits on the Respondent's discretion to act with
respect to healthcare." (Id. at
p.
560.) In reaching this result, the majority recognized that the
health care plan contained a broad provision permitting the employer to make changes in the
plan, including prices and level
of
coverage, subject to a time limitation. The majority found
that the broad provision "predated current negotiations, and indeed had always been included
in the Beneflex plan." (Ibid.) And, the majority found that the specific provision offered
during the negotiations did not reserve to the employer '"the manner, method, and means
of
providing"' benefits and therefore did not run afoul
of
the McClatchy rule. (Ibid., quoting
KSM
Indus., supra, 336 NLRB 133, 135.)24
24
The dissent stated:
It cannot be argued that the prior agreement between the parties
indicates the scope and limitations
of
the Respondent's discretion
on implementing cost-sharing changes. Such prior agreements
are irrelevant. In McClatchy, supra, the parties had also
previously agreed to give the employer broad discretion in
granting merit wage increases, but this history did not permit the
employer to unilaterally implement its proposal for continued
discretion following subsequent negotiations which resulted in
lawful impasse. On the contrary, the Board held that an employer
could retain discretion over changes in mandatory subjects
of
bargaining only
if
"definable objective procedures and criteria
have been negotiated to agreement or to impasse." McClatchy,
321 NLRB at 1391. Those limitations are conspicuously absent
here, and the Union certainly did not agree to cede broad
discretion to the Respondent over further health insurance cost
changes, whatever their previous agreements or discussions
entailed.
(E.I du Pont de Nemours & Co., supra, 346 NLRB 553, 564.)
34

In Mail Contractors
of
America
v.
NLRB (D.C. Cir. 2008) 514 F.3d 27, the proposal at
issue involved a change to the relay point on one
of
the trucking routes. Because
compensation was determined by hours spent driving, the location
of
a relay point potentially
affected the compensation
of
drivers who served the relay point. During successor
negotiations, the employer offered a proposal seeking to retain the right to unilaterally change
the location
of
relay points. The issue was whether the employer was entitled to implement the
relay point proposal when negotiations with the union had reached impasse. The NLRB found
a violation based on the McClatchy exception. 	On petition for review, the court found
the
NLRB decision to be arbitrary and capricious, and denied enforcement, for three reasons.
Placement
of
a relay point is a "quintessentially managerial decision" with no more effect on
wages than the effect
of
any management decision regarding the scheduling
of
work or its
allocation amongst plants or shifts. The employer's reservation
of
the right to change a relay
point posed no "realistic threat" to the process
of
collective bargaining. Finally, a non
discretionary proposal was not possible because relay points, unlike wages, are changed
in
response to infrequent and external events.
In sum, under the McClatchy line
of
cases, there is a narrow, and well-defined,
exception to the post-impasse implementation rule. 	The exception applies where
implementation
of
a particular proposal would be inherently destructive
of
the principles
of
collective bargaining.
The post-McClatchy decisions demonstrate a number
of
points. First, the McClatchy
exception is a well-established doctrine that has been applied and affirmed over time. Second,
the McClatchy exception has been applied outside the context of merit pay proposals. Last, the
common denominator amongst the proposals that have been found subject to the McClatchy
post-impasse implementation exception is that they attempt to give the employer unconstrained
35

authority to make unlimited and recurring decisions regarding mandatory subjects of
bargaining, which is precisely the problem with the District's proposal in the instant case.
The Analysis
By the District's proposal, the District seeks to retain unfettered discretion to engage in
unilateral decision-making for an unlimited length of time regarding reductions in the hours
and workyear bases of bargaining unit members. Pursuant to the Appendix C language, the
District asserts that it has the authority to unilaterally decide to reduce an employee's status
from full-time to part-time or to unilaterally decide to reduce an employee's workyear basis
where the reduction in working days per year is 10 or more. At the same time, the District
acknowledges that reductions in hours and workyear bases are mandatory subjects of
bargaining. Wielding Appendix C during successor negotiations, the District unilaterally
decided to reduce the workyear bases of 1,200 employees.
CSEA consented to the adoption of Appendix C in 1991, and it has been incorporated
into every collective bargaining agreement between these parties25 since that time. During
negotiations for a successor agreement to the 2005-2008 Agreement, CSEA voiced its
opposition to inclusion of the Appendix C language at issue. The complaint alleges, and
CSEA argues, that the District committed an unfair practice by insisting to the point of impasse
on the Appendix C language to which CSEA had objected.
Relying on a passage from NLRB v. McClatchy Newspapers, Inc., supra,
964 F.2d 1153, the ALJ concluded that the Appendix C language concerns a mandatory subject
of bargaining, and that therefore the District's insistence to impasse on it was not unlawful.
Although the allegations of the complaint are limited to allegations concerning pre-impasse
bargaining, we find that the proposed decision falls short in its failure to explain the parameters
25 No other bargaining unit in the District works under such a contract provision.
36

of
post-impasse implementation. Pre-impasse insistence to impasse and post-impasse
implementation involve corollary concepts that are better understood together. In addressing
the allegations concerning pre-impasse insistence to impasse, the Board is presented with
an
opportunity to answer an analytical question lurking beneath the surface
of
this case, i.e., what
happens after impasse.
There is a fundamental problem here, which is that CSEA no longer wishes to
consent
to adoption
of
the Appendix C language at issue, but appears incapable
of
removing it
from
the
parties' collective bargaining agreement on Bargaining Unit
D's
behalf. Thus, contract
language reserving to the District unfettered managerial discretion to make unilateral decisions
regarding reductions in hours, a mandatory subject
of
bargaining, will continue in effect where
the District merely remains firm in its resolve. The District's position implies that what the
District won at the bargaining table in 1991 through skillful negotiations, the employer retains
in perpetuity as a form
of
entitlement. This type
of
bargaining conduct replaces bilateralism in
decision-making with unfettered managerial discretion and unilateral control.
Through this device, the District is handed an advantage over CSEA that is plainly
inimical to the bilateral nature
of
collective bargaining. Bargaining by the employer for
exclusive control
of
decision-making over mandatory subjects, particularly those at the top
of
the hierarchy such as wages and hours, tests the remedial powers
of
the Board. Unless the
statutory scheme dictates otherwise, the Board should not apply general rules blindly
if
to do
so has the unwitting effect
of
weakening, rather than strengthening, the collective bargaining
relationship. (See State
of
California
IL
supra, PERB Decision No. 2130-S.)
37

We agree with the ALJ that we should look to the NLRB for guidance.26 In so doing,
we agree with the ALJ that the District did not commit an unfair practice by insisting to
impasse on the Appendix C language. This is so because the Appendix C language regarding
reduction in hours and workyear bases concerns a mandatory subject
of
bargaining, i.e., hours
of
employment. Bargaining over the amount
of
managerial discretion an employer may retain
over a mandatory subject is part
of
bargaining over the mandatory subject itself. Therefore, the
District was privileged to insist on the Appendix C language to the point
of
impasse and
through statutory impasse procedures.27 We do not agree, however, with the ALJ that the
complaint and underlying unfair practice charge should be dismissed. We hold that although
the District was privileged to insist on its proposal through the impasse procedures, it was not
privileged to implement the proposal after the completion
of
impasse procedures.
The corollary to insisting to impasse is what happens after impasse occurs. Adoption
of
the NLRB approach, as stated in McClatchy II, as a framework for resolving disputes arising
out
of
employer bargaining proposals seeking unfettered discretion over mandatory subjects
of
bargaining strikes an appropriate balance. With this approach, the employer is privileged to
bargain for a proposal that seeks to retain unfettered managerial discretion over a mandatory
subject, and even insist on it to impasse, as the District did here. An exclusive representative
may be willing to agree to it, as CSEA also did here beginning in 1991. Where no agreement
is reached, however, the exclusive representative will no longer be left with the Robson's
choice. As the NLRB in McClatchy IL supra, 321 NLRB 1386, stated, unilateral
26
PERB may refer to the NLRA and cases interpreting it for guidance in construing
California's labor laws. (Fire Fighters Union
v.
City
of
Vallejo, supra, 12 Cal.3d 608.)
27 PERB applies the same legal standard to determine if a party has participated in
impasse proceedings in good faith as it does when determining if the party negotiated in good
faith before impasse was reached. (Temple City Unified School District (2008) PERB Decision
No. 1972.)
38

implementation upon impasse "would be so inherently destructive of the fundamental
principles of collective bargaining that it could not be sanctioned as part of a doctrine created
to break impasse and restore active collective bargaining." (Id. at pp. 13 90-13 91, italics in
original, fn. omitted.) If we failed to recognize an exception to the post-impasse
implementation rule, impasse would becoine an opportunity to act unilaterally concerning
matters within the scope of representation on a recurring basis without regard to the collective
bargaining process.
In reaching this conclusion, we have determined that the doctrine of waiver is
inapplicable, for the reasons given by Justice Edwards in NLRB v. McClatchy Newspapers,
Inc., supra, 964 F .2d 115 3. The District has not unilaterally decided to change an existing
policy falling within the scope of representation during the life of the agreement without
providing the exclusive representative with notice and opportunity to bargain. Such cases turn
on whether the exclusive representative has consented to the change by waiving its right to
bargain in clear and unmistakable contractual terms. (Amador Valley Joint Union High School
District (1978) PERB Decision No. 74.) By contrast, the context involved here is negotiations
over a successor agreement. Ordinarily the employer need not obtain the union's consent to
implement a proposal if the proposal is lawful and the parties have negotiated over it in good
faith and reached impasse.
We likewise are not persuaded that a proposal that seeks to retain unfettered managerial
discretion over a mandatory subject of bargaining is a permissive subject of bargaining under
the statutory rights line of Board precedent. The statutory rights cases involve proposals that
limit or waive the union's substantive representational rights. These rights derive directly from
the statute codifying a union's right to represent. The statutory rights analysis is predicated on
the existence of a representational right found in the collective bargaining statute, such as the
39

exclusive representative's right to pursue a grievance in its own name or to elevate a grievance
to arbitration.
Although the exclusive representative has collective bargaining rights in a general
sense, the statutory scheme speaks about collective bargaining in terms of a procedural duty
shared equally by the employer and the exclusive representative. Where the parties are
engaged in good faith negotiations over the amount of discretion an employer may retain over
a mandatory subject, a union's collective bargaining rights are not being waived or limited.
The parties are in fact fulfilling their statutory obligations. There is a procedural duty to
bargain collectively, but there is no substantive right to a fixed pay rate, the issue in
McClatchy, or to a fixed set of hours, the issue here. Thus, the statutory rights analysis, though
sound where a representational right is at stake, has no direct application here.
Our decision is predicated on two main factual points. First, CSEA no longer is willing
to consent to inclusion of the Appendix C language in the successor agreement. Second, an
aura of absolute power has seemingly allowed the District to maintain the Appendix C
language in place as part of the status quo after expiration of the 2005-2008 Agreement,28 and
insist on it to impasse in successor negotiations ostensibly in order to continue to impose it on
Bargaining Unit D, in theory, in perpetuity. In the face of CSEA's unwillingness to consent,
the District's position is untenable. If we were to characterize the District's proposal as
permissive and thereby remove it from any bargaining obligation, that would be one way to
address this problem. For the following reasons, however, we come down in favor of adopting
28 During the life of a collective bargaining agreement, the Appendix C language
would serve as a waiver of CSEA's right to bargain over reduction in hours and workyear
bases. Not all contract provisions involving mandatory subjects of bargaining survive the
expiration of a collective bargaining agreement. A waiver of the statutory right to bargain, for
example, does not remain in effect beyond the negotiated term of the agreement. (Antelope
Valley Union High School District (1998) PERB Decision No. 1287.)
40

the NLRB approach used in the private sector of creating a narrow exception to the post
impasse implementation rule for bargaining proposals involving unfettered employer
discretion.
First, distinctions between public and private sector labor relations do not dissuade us
from adopting the NLRB approach. Under both public and private sector labor law, employers
and exclusive representatives have similar bargaining obligations, namely the good faith duty
to try to reach agreement. Although an employer may insist on a discretionary proposal such
as Appendix C to the point of impasse as a matter of bargaining strategy, the employer's
overriding obligation to try to reach agreement should be informed by the knowledge that such
a proposal cannot be imposed upon impasse.
Second, either approach would require the Board to engage in line-drawing around
degrees of employer discretion,29 whether for the purpose of determining whether a proposal
involves a mandatory or permissive matter under one approach or whether it falls within the
McClatchy exception under the other. Regardless of approach, the Board will be called on to
determine on a case-by-case basis whether a proposal contains sufficient objective standards
with respect to the implementation of discretionary decision-making to ensure that the role of
the exclusive representative is preserved rather than undermined, and to ensure for bargaining
unit members a measure of certainty, or at least predictability, in their wages, hours and terms
and conditions of employment. Under the NLRB approach, we move that line-drawing
determination to the end of the bargaining process at the point impasse is reached and
implementation is threatened.
Third, because discretion is a matter of degree subject to modification, concession or
compromise, proposals involving employer discretion are better left to the bargaining table
29 "[D]iscretion is a matter of degree, implicating policy judgments informed by Board
expertise." (Quirk v. NLRB, supra, 241 F.3d 41, 45.)
41

where a party can decide for itself whether and how such a proposal can best be used to its own
advantage. The NLRB approach recognizes that all collective bargaining negotiations involve
give and take on matters within the scope ofrepresentation and that the parties are in the best
position to determine the terms and conditions of employment under which they are willing to
work. 	It also avoids the dilemma faced by the exclusive representative of having to voice
opposition to a bargaining proposal in order to preserve its right to charge the employer with
insistence to impasse as an unfair practice while at the same time attempting to horse trade
over the proposal as a way of gaining something of greater value or benefit in exchange.
Under the approach adopted by the NLRB in McClatchy and other cases, parties remain
free to propose, and agree to, provisions that would permit one side to retain discretion over
one or more subjects of bargaining, just as the parties had done here for many years before the
present dispute arose. With this decision, however, we ensure that when no such agreement is
reached, broad discretionary proposals will not become a way for an employer to make
recurring, unilateral decisions over fundamental subjects of bargaining such as hours and
employee workyear by simply "imposing" its last, best and final offer, and thereby eroding the
very basis for collective bargaining with the employees' representative. Although we
recognize that the rule adopted here may encourage employers to temper their discretionary
proposals, by including objective standards or criteria or by abandoning such proposals
altogether before reaching impasse, we neither require that they do so, nor do we express any
view on what substantive terms should or should not be included in the parties' agreements.
(H K. Porter Co. v. NLRB (1970) 397 U.S. 99, 106.)
Last, adopting the NLRB approach with respect to bargaining proposals involving
employer discretion is consistent with prior Board precedent, specifically State of California II,
42
where a party can decide for itself whether and how such a proposal can best be used to its own
advantage. The NLRB approach recognizes that all collective bargaining negotiations involve
position to determine the terms and conditions of employment under which they are willing to
work. It also avoids the dilemma faced by the exclusive representative of having to voice
opposition to a bargaining proposal in order to preserve its right to charge the employer with
insistence to impasse as an unfair practice while at the same time attempting to horse trade
Under the approach adopted by the NLRB in McClatchy and other cases, parties remain
free to propose, and agree to, provisions that would permit one side to retain discretion over
present dispute arose. With this decision, however, we ensure that when no such agreement is
eached, broad discretionary proposals will not become a way for an employer to make
recurring, unilateral decisions over fundamental subjects of bargaining such as hours and
employee workyear by simply "imposing" its last, best and final offer, and thereby eroding the
very basis for collective bargaining with the employees' representative. Although we
proposals, by including objective standards or criteria or by abandoning such proposals
altogether before reaching impasse, we neither require that they do so, nor do we express any
(H. K. Porter Co. v. NLRB (1970) 397 U.S. 99, 106.)
Last, adopting the NLRB approach with respect to bargaining proposals involving

supra, PERB Decision No. 2130-S. Citing to the federal McClatchy decisions, the Board
opined:
Nonetheless, PERB and NLRB ~recedent also counsel against
interpreting [Ralph C. Dills Act 0] section 3517.8, subdivision (b)
to grant DPA absolute discretion as to which LBFO provisions it
may implement upon impasse. As discussed above, an employer
may not implement a provision that waives or limits the union's
right to bargain over a particular subject for a specified period
of
time. (Rowland Unified School District, supra.) The NLRB has
held that an employer may not implement a provision that grants
the employer authority to unilaterally change wages without
further bargaining. (McClatchy Newspapers, Inc. (1996) 321
NLRB 1386, 1390-1391, enforced McClatchy Newspapers, Inc.
v.
National Labor Relations Bd. (D.C. Cir[.] 1997)
131
F.3d 1026.)
In each case, the respective board concluded that the employer's
unilateral implementation
of
the provision undermined
fundamental principles
of
collective bargaining.
(Ibid.)
As we see it, the McClatchy exception functions as a gate, at the end
of
a process that
assumes good faith on both sides, and is designed to ensure that the employer's unilateral
implementation
of
its last, best and final offer does not include a proposal that has a
destabilizing effect on the collective bargaining process itself. That both sides must be
negotiating with the requisite subjective intent to reach agreement is a given. We will examine
carefully the facts
of
each case that comes before us to ensure that the McClatchy exception is
not being worked as a way
of
avoiding a contract or otherwise evading a good faith
engagement in the process as is required
of
both sides.
31
30
The Dills Act is codified at section 3 512 et seq.
31
The facts here do not suggest that the parties were bargaining without the requisite
subjective intent to reach agreement.
	If
that were not the case, regardless of the applicability
of
the McClatchy exception, PERB would not be precluded from finding a per se violation on
other grounds such as refusal to bargain or a surface bargaining violation based on the totality
of circumstances such as failing to act on the other side's proposals or to offer counter
proposals, taking inflexible bargaining positions, engaging in piecemeal bargaining, failing to
attempt to reconcile differences, etc.
43

At present we cannot opine on the applicability of the McClatchy post-impasse
implementation exception in this case because, understandably, there is no evidentiary record
as to what happened after impasse was reached. Given the interconnectedness between
insistence to impasse and post-impasse implementation where a discretionary bargaining
proposal such as Appendix C is at issue, a decision without such a ruling would leave the
parties without a complete understanding of their respective obligations. In adopting the
McClatchy exception, we recognize that there is not a meaningful difference between refusing
to negotiate over a mandatory subject (an unfair practice), on the one hand and on the other,
insisting to impasse and implementing upon impasse a proposal to not negotiate a mandatory
subject, i.e., a proposal that seeks unfettered managerial discretion over that subject. Because
we agree with the NLRB that implementation upon impasse of such a proposal is inherently
destructive of the bargaining relationship, the applicability of the McClatchy exception to the
general rule allowing an employer to implement its last, best and final offer upon impasse must
be determined.
EERA was enacted in order to accomplish these goals:
[T]o promote the improvement of personnel management and
employer-employee relations within the public school systems in the
State of California by providing a uniform basis for recognizing the
right of public school employees to join organizations of their own
choice, to be represented by the organizations in their professional
and employment relationships with public school employers, to select
one employee organization as the exclusive representative of the
employees in an appropriate unit, and to afford certificated
employees a voice in the formulation of educational policy ....
(§ 3540.)
Without an exception to the post-impasse implementation rule, fundamental principles
of collective bargaining as recognized in the above-quoted section of EERA are turned on their
head. Impasse, intended as a temporary state, becomes the status quo, in which the employer
44

may take recurring unilateral actions, each ostensibly authorized by the broad discretionary
language of its last, best and final offer. Where the employer has unconstrained authority to
adjust employees' hours to respond to changing conditions, that employer has less motivation
to restart collective bargaining. Implementation of the last, best and final offer, rather than
imposing a fixed set of terms and conditions of employment on the bargaining unit, imposes a
discretionary employment practice devoid of objective standards governing the frequency or
timing of the changes permitted to be unilaterally decided upon by the employer, the basis or
criteria for such changes or the extent to which such changes may be made. Allowing an
employer to implement a proposal upon impasse retaining unfettered managerial discretion
over a mandatory subject of bargaining, such as hours of employment, has the effect of "de
collectivizing" the employees' bargaining position with regard to that subject, in the words of
Justice Edwards. Bilateralism in decision-making is replaced by unilateral control unilaterally
imposed. Each of these byproducts is antithetical to the fundamental principles of collective
bargaining, and destructive of the bargaining relationship between the employer and the
exclusive representative.
Accordingly, we hereby order that the ALJ's proposed decision be vacated and the
matter remanded to the Chief ALJ for assignment to an ALJ to conduct further proceedings
consistent with our decision. The Board directs the assigned ALJ to do the following:
(1) allow CSEA 30 days within which to move to amend the complaint to allege that the
District's Appendix C proposal (contained in Article XXI) was in effect as of the date of
issuance of our decision as a result of the District's implementation of its last, best and final
offer; (2) allow the District 10 days from issuance of an amended complaint by which to file an
answer; (3) notice the setting of an informal settlement conference to allow the parties an
opportunity to resolve their dispute and enter into a settlement agreement that disposes of the
45

amended complaint without further proceedings; (4) in the event the parties are unable to
resolve their dispute informally, notice the setting
of
a formal hearing to take evidence and
hear argument on the amended complaint; and (5) issue a new proposed decision based on the
augmented hearing record consistent with the Board's decision herein.
Because the Board's opinion employs a new analysis with respect to bargaining
proposals involving employer discretion, we apply it prospectively as
of
the date
of
issuance
of
the Board's decision. Prospective application under the unique facts and procedural posture
of
this case ensures no undue prejudice to the parties from lack
of
notice
of
the Board's
reasoning. 	Should the assigned ALJ find that the Appendix C language was still in effect as
of
the date
of
issuance
of
the Board's decision as a result
of
the District's implementation
of
its
last, best and final offer upon impasse in successor negotiations, the ALJ is directed to order
the District to rescind it and to cease and desist from enforcing it. The ALJ is to consider
appropriate posting and notice remedies, as well.
In addition to the question whether the District implemented the Appendix C language
as part
of
its last, best and final offer following impasse in successor negotiations, there is also
the question whether the District subsequently unilaterally reduced an employee's hours or
workyear basis pursuant to its purported Appendix C authority. To the extent any Bargaining
Unit D members have suffered losses in wages and/or benefits as a result
of
a District decision
to enforce the Appendix C language, amendment
of
the complaint will be subject to the
following: 	(1) the date of the District decision will determine whether an independent
unlawful unilateral change violation may be pursued; (2) District decisions made prior to the
date of issuance of the Board's decision may not be pursued; and (3) District decisions made
subsequent to the date of issuance of the Board's decision may be pursued and will be subject
to a potential remedy.
46

ORDER
Upon the foregoing discussion and the record as a whole, the Public Employment
Relations Board VACATES the Administrative Law Judge's (ALJ) proposed decision and
REMANDS Case No. LA-CE-5419-E to the Chief ALJ for assignment to an ALJ to conduct
further proceedings consistent with the decision herein.
Members Huguenin, Winslow and Banks joined in this Decision.
47