Lead Opinion
In Jаnuary 1996, respondent New York State Racing and Wagering Board reduced per diem wages for its seasonal employees by 25%. In response, the New York State Public Employees Federation, AFL-CIO (PEF) filed an improper practice charge, alleging that the reduction in wages violated Civil Service Law § 209-a (1) (d). In this CPLR article 78 рroceeding, the issue is whether the decision of respondent Public Employment Relations Board (PERB), dismissing that improper practice charge, was affected by an error of law or was arbitrary and capricious or an abuse of discretion. We conclude that it was not.
I
PEF is the certified collective bargaining representative for the Professional, Scientific and Technical Services Unit of New York State employees. That unit includes seasonal track personnel employed by the Racing Board,
In October 1995, PEF and the executive branch of the State— through its bargaining agent respondent New York State Governor’s Office of Employee Relations (GOER) — entered into a collective bargaining agreement (CBA) that was operative from 1995 to 1999. Aрpendix II of the CBA contained a “Memorandum of Interpretation,” or side letter agreement,
In January 1996, approximately two months after the side letter agreement was executed, the Racing Board’s chair announced a 25% reduction in the per diem pay of seasonal track employees, effective with the January 1996 appointments. In response, PEF filed an improper practice charge with PERB, alleging that this reduction violated the Racing Board’s duty to negotiate in good faith under Civil Service Law § 209-a (1) (d). The Racing Board answered, raising the affirmative defense of waiver.
PERB dismissed the improper practice charge. It found that, while the Racing Board had an obligation to negotiate the wages of seasonal employees, the side letter agreement was “a negotiated limitation upon the State Budget Director’s discretion with respect to unilateral adjustments in the rates of compensation for seasonal positions in the unit” and, therefore, the duty to negotiate was satisfied (45 PERB ¶ 3041 [2012]).
The Appellate Division revеrsed, with two Justices dissenting (
Respondents — PERB (and its Chairman), GOER, and the Racing Board — appeal as of right pursuant to CPLR 5601 (a).
II.
Pursuant to the State Finance Law, the chair of the Racing Board hаs the discretion to set the compensation of seasonal track employees, including per diem compensation, “subject to the approval of the director of the budget” (State Finance Law § 44 [1]; see also id. § 49). Nevertheless, the Taylor Law— namely, Civil Service Law § 209-a (1) (d) — makes it an improper practice for a public employer, in this case the Racing Board, “to refuse to negotiate in good faith with the duly recognized or certified representatives of its public employees” — in this case, PEF. The parties do not dispute that per diem compensation rates must be negotiated. Instead, the parties dispute whether this duty tо negotiate was satisfied by the negotiation of the side letter agreement.
“Duty satisfaction occurs when a specific subject has been negotiated to fruition and may be established by contractual terms that either expressly or implicitly demonstrate that the parties had reached accord on that sрecific subject” (Matter of Nassau County Sheriffs Corr. Officers Benevolent Assn., Inc. [County of Nassau], 48 PERB ¶ 3014 [2015]). To succeed on a duty satisfaction defense, “a respondent has the burden of prov
Our scope of review in this context is limited to whether PERB’s decision “was affected by an error of law or was arbitrary and capricious or an abuse of discretion” (CPLR 7803 [3]; see also Matter of Town of Islip v New York State Pub. Empl. Relations Bd.,
Respondents argue that the side letter agreement made it “reasonably clear” that the parties satisfied their bargaining obligations concerning limits to be placed on the Budget Director’s discretion to set wages. Specifically, respondents argue that paragraph (C) of the side letter agreement shows that, outside the specific negotiated wage increases, the parties understood that the Budget Director retained the statutory discretion to set wages. Respondents further argue that the Appellate Division erred by declining to defer to, and substituting its own judgment for, PERB’s construction of the parties’ side letter agreement.
Petitioner argues that the “specific subject” of the improper practice charge is the 25% wage decrease and that it is not reasonably clear from the side letter agreement that PEF and the Racing Board negotiated concerning the Budget Director’s ability to unilaterally reduce wages. According to petitioner, PERB’s determination was in error and the Appellate Division’s order holding it arbitrary and capricious should be affirmed.
III.
By statutе, the per diem compensation for seasonal employees is set at the discretion of the Racing Board chair, subject to
The side letter agreement sets out the specific circumstances that limit the Budget Director’s discretion to set wages. Paragraphs (A), (B), and (C) of section 2 of the side letter agreement each address specific areas of compensation. Section 2 (A) details lump-sum payments to be paid to eligible employees in fiscal years 1996-1997 and 1997-1998. Section 2 (B) limits the Budget Director’s discretion to set the wage rates for fiscal years 1997-1998 and 1998-1999 by mandating a 3.5% increase for eligible employees. Section 2 (C) provides that even if the Budget Director “at [his/her] discretion” increases wages to comply with federal minimum wage requirements, the increases outlined in sections 2 (A) and 2 (B) will still be implemented to the extent that they raised the employees’ wages above the federal minimum wage.
The side letter agreement was comprehensive in addressing all conditions of employment for seasonal employees for 1995 to 1999. It included specific pay increases for specific years, but not for the fiscаl year in which the 25% reduction took effect. The side letter agreement did not rule out pay reductions and did not impose any conditions precedent to pay reductions.
While the respondents highlight the explicit mention of the “discretion of the Director of the Budget” in section 2, paragraph (C), of the side letter agreement, it is not this language alone that supports the conclusion reached by PERB. Each of the compensation sections of the side letter agreement demonstrates negotiation with respect to the statutorily authorized discretion.
Accordingly, the order of the Appellate Division should be reversed, withоut costs, and the judgment of Supreme Court reinstated.
Notes
. Effective February 1, 2013, the Racing Board merged into the New York State Gaming Commission, a newly created entity.
. At the time the Racing Board’s answer was filed, PERB did not distinguish between the defenses of duty satisfaction and waiver (Matter of Kent v Lefkowitz,
. Notably, on at least one occasion prior to 1996, the wages of seasonal employees were reduced at the discretion of the Racing Board chair.
Dissenting Opinion
(dissenting). I respectfully dissent and would affirm the Appellate Division order. The sidе letter agreement is the product of a negotiation between the New York State Public Employees Federation, AFL-CIO (PEF) and respondent New York State Governor’s Office of Employee Relations. Both of those sophisticated entities are well schooled in the art of negotiation. To say that PEF implicitly agreed to a 25% wage reduction strains credulity.
The majority essentially concludes that because the side letter incorporates more than 50 articles from the 1995-1999 collective bargaining agreement (CBA) between PEF and the State regarding employees in the Professional, Scientific and Technical Services Unit, the compensation reduction now in question necessarily was negotiated by PEF and the State— even though it is undisputed that neither those articles nor the balance of the side letter considers that issue. In doing so, the majority supposes that because many parts of the CBA were incorporated into the side letter, and bеcause the side letter otherwise considers salary increases, the compensation reduction now at issue must have been contemplated by that agreement.
Although respondent New York State Public Employment Relations Board (PERB) is entitled to “deference in matters
Indeed, the deference afforded PERB, while “great” (.Matter of Town of Southampton v New York State Pub. Empl. Relations Bd.,
Said another way, in assessing the side letter we should not confuse quantity with specificity sо as to conclude that the absent item is present. Under these circumstances, I cannot agree that an item absent from an agreement containing a comprehensive explanation of negotiated items prepared by sophisticated parties somehow is encompassed by that compаct. For those reasons, I agree with the Appellate Division that PERB’s determination that the side letter embraced the pay reduction in question is arbitrary and capricious, and I respectfully dissent.
Order reversed, without сosts, and judgment of Supreme Court, Albany County, reinstated.
This case is governed by the Taylor Law (Civil Service Law § 200 et seq.), which, in matters within its purview, imposes a “strong and sweeping” obligation (Matter of Board of Educ. of City School Dist. of City of N.Y. v New York State Pub. Empl. Relations Bd., 75 NY2d 660, 667 [1990] [internal quotation marks omitted]) to “collective[ly] bargain! ] over all ‘terms and conditions of employment’” (Matter of Patrolmen’s Benevolent Assn, of City of N.Y., Inc. v New York State Pub. Empl. Relations Bd.,