Considerations for Public Agencies Before Implementing Furloughs and Layoffs

03.27.2020

These are challenging and difficult times for employers amidst the pandemic spread of the Coronavirus (“COVID-19”). As a result, many cities, counties, housing authorities, transit districts, water districts, and other special districts are facing operational and financial challenges in an effort to comply with the law and protect employee health. Many public agencies are considering furloughs and layoffs to address the long-term impacts of COVID-19.

Bargaining obligations affect a public agency's consideration of these options. Public agencies generally owe a duty to negotiate with union representatives before implementing furloughs. Further, public agencies may be bound by contractual limitations on layoffs within a union memorandum of understanding (“MOU”).

This Alert seeks to explore the bargaining implications triggered by furlough and layoffs, and identify other alternative options to avoid taking these actions.

Duty to Bargain on Furloughs and Layoffs

Public agencies should note the following bargaining obligations associated with furloughs and layoffs.  The Meyers-Milias-Brown Act (“MMBA”) governs employer-employee relations for public agencies. Under the MMBA, public agencies are required to negotiate with their unions to impasse regarding wages, hours, and other conditions of employment.

A furlough involves a temporary reduction of employees’ work hours because of lack of funds. (See California Attorneys v. Brown (2011) 195 Cal.App.4th 119, 125-126.) Many public agencies  unilaterally implemented furloughs during the recession of 2008-2009, as a means of addressing the overall financial crisis and budgetary shortfalls.  However, in the civil litigation that ensued, it became clear that public agencies ordinarily owe a duty to negotiate with unions regarding a decision to implement furloughs.  (See Professional Engineers v. Schwarzenegger (2010) 50 Cal.4th 989.)  The Public Employment Relations Board likewise has found a duty to bargain as to furloughs, as they directly affect wages and hours, specifically enumerated as negotiable subjects in Section 3504 of the Government Code.

A layoff is the elimination of jobs, often without regard to employee performance, usually due to lack of work or funds. Terms and conditions related to layoffs may sometimes be defined in a MOU. A public agency’s decision to conduct layoffs is a management prerogative and is not subject to negotiation. (City of Richmond (2004) PERB Decision No. 1720-M.) However, public agencies have an obligation to negotiate with unions over the effects of the decision to implement layoffs. (Fire Fighters Union v. City of Vallejo (1974) 12 Cal.3d 608, 621-622.) The effects of a layoff can include issues such as the number of employees affected, the order of the layoff, the timing of the layoff, bumping rights, and reemployment rights.

A public agency has greater autonomy over these options with respect to unrepresented employees.

Emergency Exception to Duty to Negotiate

Under Government Code section 3504.5(b), where an “actual emergency” exists and there is not time for a public agency to engage in meaningful negotiations with its union, the public agency can take unilateral action on a negotiable subject without first completing the meet and confer process. In addition, the emergency must leave no alternative to the action taken. In the event unilateral action is justified under this exception, the public agency is required to provide notice to its union and an opportunity to meet as soon as possible.   

COVID-19 likely constitutes an “actual emergency”, based on the World Health Organization’s and Centers for Disease Control and Prevention’s classification of COVID-19 as a global pandemic, the Presidential Proclamation of a National Emergency, and Governor Newsom’s Executive Order N-33-20 (“Governor’s Order”). However, in addition, public agencies would need to explain why operational and fiscal issues require them to take immediate action to mitigate the impact of COVID-19, and why they cannot negotiate any changes with unions before taking action. Public agencies had difficulty relying on this argument to justify furloughs during the recession of 2008-2009, illustrating the need to offer detailed and compelling evidence to support this emergency exception.

The Rules of Labor MOUs Must Be Followed

Public agency MOUs may contain rules dictating how furloughs or layoffs may be imposed. For instance, these MOUs may contain rules dictating how layoffs may be imposed, such as seniority rules and bumping rights. Some MOUs may also contain notice requirements, which require that public agencies give notice to their employees that they will be laid off.  Public agencies are required to follow mutually agreed-upon procedures on these subjects. Thus, public agencies should review their MOUs to see if any such rules exist. 

“Zipper clauses” may pose a further challenge. These provisions close a labor agreement, and preclude the obligation to bargain on subjects covered by the labor agreement unless both parties agree to do so. Depending on the contractual language and particular circumstances, a union could rely on a “zipper clause” in refusing to negotiate about furloughs or layoffs. However, given the severity of the threat posed by COVID-19, public agencies have good reason to request that unions come to the table.  

Other Options to Consider in Light of COVID-19

In addition to implementing furloughs and layoffs, public agencies should consider other alternatives that may help alleviate operational and financial issues. For example, public agencies should consider: (1) placing some of their employees on leave; (2) transitioning sections of its workforce to work remotely; (3) modifying employee work schedules to minimize the number of employees present at any given period of time at the worksite (alternating work shifts such as work shift “A”, “B”, and “C”); (4) implementing work share programs, in which employees have reduced hours and share duties with other similar situated employees.  Several of these changes would involve a duty to bargain, as they would arguably impact terms and conditions of employment.

The Worker Adjustment and Retraining Notification Act (“WARN”)

If your agency is laying off more than 50 employees, please contact one of the authors of this alert or your legal counsel, as the federal WARN Act may be implicated.

Due Process

Some public agencies provide a "Skelly light" notice of layoff, which gives employees an opportunity to raise concerns or objections with a Skelly officer prior to layoff.  Please contact one of the authors of this alert , or your legal counsel, if you would like assistance with such a notice.

In Summary

Should any public agency decide to conduct furloughs or layoffs, they should carefully navigate this process to avoid legal exposure and craft their plan of action with the advice of an attorney.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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