Florida Supreme Court Reaffirms Sanctity Of Public Labor Contracts

On March 2, 2017, the Supreme Court of Florida issued its long awaited opinion on the City of Miami’s declaration of “financial urgency,” reaffirming the sanctity of public sector labor contracts and the public employer’s lack of power to modify such contract absent a compelling state interest. Walter E. Headley, Jr., Miami Lodge No. 20, Fraternal Order of Police, et al, v. City of Miami, No. SC13-1882 (Fla. March 2, 2017). Donnelly + Gross appeared in this case as Amicus Curiae on behalf of Communications Workers of America.

What was this case about? Specifically, the court addressed the City of Miami’s unilateral decision to implement changes to public workers’ contractual wages, pension benefits, and other economic terms of employment based on the employer’s declaration of “financial urgency” under section 447.4095, Florida Statutes. The court initially stated:

The right to contract is expressly guaranteed by article 1, section 10 of the Florida Constitution. It is equally enforceable in labor contracts by operation of article 1, section 6 of the Florida Constitution.

Id., p. 6.

Section 447.4095 purports to allow a public employer to declare “financial urgency” in an effort to avoid contractual obligations. The statute says the bargaining that follows should be no longer than 14 days during which the union cannot file a unfair labor practice. While the statute does not expressly allow the employer to make changes without completing the lengthy impasse process, the Public Employees Relations Commission (PERC) has long taken that position. The statute also does not define “financial urgency.” Both PERC and courts were accepting employers claims of financial urgency as evidence in fact, not subject to rigorous contest, allowing employers to make significant, insignificant, financial and nonfinancial changes to the labor contract.

In the recent decision, the court affirmed that “financial urgency,” a term not defined in section 447.4095 or elsewhere, is “a dire financial condition requiring immediate attention and demanding prompt and decisive action, but not necessarily a financial emergency or bankruptcy.” Id. at pp. 8-9. Modification of the contract must be required, meaning there are “no other reasonable alternative means” of addressing the financial condition and “preserving its contract with the public workers, either in whole or in part.” Id. at pp. 11-12 (emphasis in original). For instance, in this case, the union had suggested that the City of Miami raise the millage rate, install red light cameras, impose non-union employee layoffs and furloughs, freeze the current cost of living adjustment, and change the pension funding method. And, the employer cannot make any unilateral change until the parties have bargained the changes – not just the impact of the changes – and completed the impasse resolution process under section 447.403, and failed to ratify the agreement.

What does this decision mean to public workers in Florida? A public employer who declares “financial urgency” under section 447.4095, may not unilaterally modify the labor contract unless and until:

1. the employer demonstrates a dire financial condition requiring immediate attention and demanding prompt and decisive action;
2. the employer demonstrates no other reasonable alternative means of preserving its contract with public workers, either in whole or in part; and
3. the parties have bargained over said changes – not just the impacts of said changes – and completed the impasse resolution proceedings and failed to ratify the agreement.