APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT LAWRENCE COUNTY, SOUTH DAKOTA, HONORABLE RANDALL L. MACY Judge.
The opinion of the court was delivered by: Meierhenry, Justice
ARGUED ON NOVEMBER 19, 2009
[¶1.] The Spearfish Education Association (Association) filed a grievance against the Spearfish School District #40-2 and Board of Education (collectively referred to as District) with the Department of Labor (DOL). The Association alleged that the District committed a grievable action when it failed to pay all teachers in the district according to the 2006-07 salary schedule, which was implemented as a result of a collective bargaining impasse. DOL found the District's actions constituted a grievable offense. The District appealed to circuit court. The circuit court reversed DOL. The Association appeals. We reverse and remand.
[¶2.] The Association is the labor organization designated to represent the Spearfish teachers in negotiations with the District. The parties had a negotiated agreement for the 2005-06 school year but reached an impasse in negotiations for the 2006-07 school year. The duration of the 2005-06 agreement was stated in the agreement as follows: "If a successor agreement is not ratified by August 11, 2006, this agreement shall remain in effect until such time as a subsequent contract is approved by the parties or the implementation of contract terms pursuant to SDCL 3-18-8.2." In the spring of 2006, the District and the Association began negotiating a successor agreement for 2006-07. While negotiations were still in progress, the District hired fifteen new teachers for the 2006-07 school year. These teachers were hired based on the 2005-06 salary schedule. The Association and the District continued negotiations over the summer months but were unable to reach an agreement. An impasse was declared, and DOL was asked to mediate. The mediation was unsuccessful, and the parties remained at an impasse.
[¶3.] Consequently, the District implemented its last offer for the 2006-07 school year on August 14, 2006, as required by statute. See SDCL 3-18-8.2. The District's last offer incorporated a new salary schedule that departed significantly from the 2005-06 agreement. In implementing its last offer, the District adjusted the teachers' salaries to reflect the new salary schedule. In doing so, the District discovered that seven of the fifteen new hires would receive lower salaries under the new salary schedule than the salaries listed in their individual contracts based on the 2005-06 salary schedule.
[¶4.] Without notifying the Association, the District unilaterally decided not to adjust the salaries of these seven teachers. After learning of the District's action, the Association filed a grievance with DOL. The Association claimed that not paying all teachers according to the 2006-07 salary schedule was a grievable action. The Association argued that SDCL 3-18-8.2 required the District's last offer to bind all teachers represented by the teachers' union, regardless of its effect on individual salaries. The first issue on appeal is whether the District committed a grievable offense when it failed to apply its last offer to all teachers in the bargaining unit. The second issue involves the appropriate remedy if the District's action constituted a grievable offense.
[¶5.] Whether the District committed a grievable offense when it failed to apply its last offer to all teachers in the bargaining unit. Statutory Definitions and Public Employee Collective Bargaining
[¶6.] A public employee grievance is defined in SDCL 3-18-1.1 as follows:
The term "grievance" as used in this chapter means a complaint by a public employee or group of public employees based upon an alleged violation, misinterpretation, or inequitable application of any existing agreements, contracts, ordinances, policies or rules of the government of the state of South Dakota or the government of any one or more of the political subdivisions thereof, or of the public schools, or any authority, commission, or board, or any other branch of the public service, as they apply to the conditions of employment. Negotiations for, or a disagreement over, a nonexisting agreement, contract, ordinance, policy or rule is not a "grievance" and is not subject to this section.
(Emphasis added). The Association's complaint alleges, among other things, that the District's failure to apply the salary schedule to all teachers in the bargaining unit constitutes an "inequitable application" of the contract implemented by the District's last offer.
[¶7.] Collective bargaining for public employees is generally governed by SDCL ch. 3-18 and SDCL ch. 60-9A. As public employees, teachers "have the right to form and join labor or employee organizations... [and] the right to designate representatives for the purpose of meeting and negotiating with the governmental agency or representatives designated by it with respect to grievance procedures and conditions of employment...." SDCL 3-18-2. "A collective bargaining unit chosen for the purpose of collective bargaining by a majority of the employees in the unit shall be the exclusive representative of all employees in such unit[.]" SDCL 60-9A-3. The exclusive representative has authority to bargain on behalf of the unit "in respect to rates of pay, wages, hours of employment, or other conditions of employment." SDCL 3-18-3. "The negotiations by the governmental agency or its designated representatives and the employee organization or its designated representatives shall be conducted in good faith." SDCL 3-18-2. Failure to negotiate in good faith constitutes an unfair labor practice. SDCL 3-18-3.1; SDCL 3-18-3.2.
[¶8.] The results of negotiations are often referred to as trade agreements between the union and the organization. J.I. Case Co. v. NLRB, 321 US 332, 334-35, 64 SCt 576, 579, 88 LEd 762 (1944). The United States Supreme Court described the agreements as follows:
Collective bargaining between employer and the representatives of a unit, usually a union, results in an accord as to terms which will govern hiring and work and pay in that unit. The result is not, however, a contract of employment except in rare cases; no one has a job by reason of it and no obligation to any individual ordinarily comes into existence from it alone. The negotiations between union and management result in what often has been called a trade agreement, rather than in a contract of employment.
Id. Cited with approval in Council of Higher Educ. v. S.D. Bd. of Regents, 2002 SD 55, ¶¶9-10, 645 NW2d 240, 243. This Court has also recognized that public employee collective bargaining agreements are trade agreements that are validly enforceable contracts between the teachers' union and the employer. Council of Higher Educ., 2002 SD 55, ¶10, 645 NW2d at 243-44.
This Court stated, "[t]he uniqueness of a trade agreement may make it something different than an employment contract, but the trade agreement remains a contract between the union and the organization." Id.
Additionally, "[t]he contracts negotiated between public school districts and teachers are like any other collective bargaining agreement, and disputes over the agreement are resolved with reference to general contract law." Wessington Springs Educ. Ass'n v. Wessington Springs Sch. Dist. #36-2, 467 NW2d 101, 104 (SD 1991) (citations omitted). Likewise, we have recognized that agreements imposed when an impasse is reached are also binding on the employer and the teachers' union. Council of Higher Educ., 2002 SD 55, ¶12, 645 NW2d at 244.
Thus, the terms of the District's last offer, implemented pursuant to SDCL 3-18-8.2, were just as binding on the parties, i.e., the District and the Association, as if they had reached an agreement, and the terms contractually obligated both parties.
Terms of the District's Last Offer
[¶9.] Both the 2005-06 negotiated agreement and the 2006-07 implemented last offer recite that the District "recognizes the Association as the exclusive representative for the purpose of negotiations under SDCL 3-18 for all certified teaching personnel" and "further agrees not to negotiate with any other teacher or teacher organization for the duration of this agreement." Negotiations for the 2006-07 agreement took place during the spring and summer of 2006. The District had been facing financial problems and was attempting to tie increases in teachers' salaries to the District's annual available funding. Consequently, the 2006-07 negotiations involved a new salary schedule with significant changes from the 2005-06 salary schedule.
[¶10.] The salary schedule in the 2005-06 agreement provided a $25,000 base salary with annual incremental increases based on years of service and education. It was replaced in the District's last offer for 2006-07 with an entirely new formula. The 2006-07 salary schedule increased the base salary to $27,000 and tied annual increases to (1) teachers' degrees and (2) a pool of money referred to as the Average Daily Membership (ADM) Advancement Pool. The amount of money in the ADM Advancement Pool determined the amount of increase teachers would receive for the 2006-07 school year. The primary factor in setting the amount of money available in the pool was based on the projected 2006-07 per student state allocation minus the prior year's allocation. For 2006-07, the pool amount was $165,000. The District then divided the pool pro-rata by the percentage of teachers with master's (47%) and bachelor's (53%) degrees. This calculation resulted in an increase of $1,588 for a teacher with a master's degree and an increase of $1,003 for a teacher with a bachelor's degree.
[¶11.] Under the 2006-07 salary schedule, the returning teachers retained their 2005-06 increment for initial placement on the new salary schedule.*fn1 Thus, all returning teachers realized an increase in salary under the new schedule. The negotiations also involved a separate salary schedule provision, Article X, that established salaries for 2006-07 new hires. Article X set the base salary for new hires at $27,000 with adjustments for educational degrees and prior years of teaching.*fn2
[¶12.] It appears from the written rationale as part of the negotiations that some discussion had been directed at the salary inequities between existing teachers and new hires. The District wrote: "the increment schedule has been adjusted so that all existing employees, assuming the District's proposed salary schedule is applied, will have salaries greater than the new hires with like years of experience and credits." The record does not, however, reflect any discussion concerning the new salary schedule's effect on new teachers hired during negotiations and prior to implementing the last offer. School administrators testified that it was not until the District began to adjust salaries in line with the new salary schedule that it realized some of the new hires would receive less pay.
Both parties agree that this was a unique situation they had not encountered before and one that neither party anticipated. The Association makes no ...