End of Year Minnesota Interest Arbitration Update

When we last talked about interest arbitration in Minnesota, there were a total of seven arbitration awards over the course of eight months to discuss, with mixed results. Between September and November of this year, there were five interest arbitration hearings held involving four jurisdictions. Of the five, four resulted in resounding victories for the employer, and averages remain lower than what many jurisdictions are seeing in Union proposals. Of the decisions in 2018, the average award for 2018 was 2.25%; awards for 2019 averaged 1.85%; and awards for 2020 averaged 2.625% (of the two awards on wages for 2020).

In Wabasha County and Law Enforcement Labor Services, the union was seeking three percent wage increases for all three years of the contract. This is a pattern we are seeing across the board from Minnesota’s largest law enforcement employee union. LELS is clearly attempting to set the standard increase at three percent across the state, despite little evidence that the market calls for such an increase. Such was the reasoning for Arbitrator Jacobs’s award, along with the strong internal pattern that had been established by the County’s previous settlements. Despite the fact that it had a salary position below the average of its comparable county group, there was no demonstrated retention issue with the County, and the internal pattern prevailed.

In City of Lino Lakes and Law Enforcement Labor Services, the union again came in with a 3% proposal for both 2018 and 2019 for its officers. Again, looking at internal equity, Arbitrator Ver Ploeg awarded the employer’s position. In doing so, the arbitrator distinguished between general wage increases and market adjustments, noting that including market adjustments in general wage increases creates “problematic evidence,” especially considering the parties had negotiated such increases separately in the past.

In Hennepin Healthcare Systems, Inc. and AFSCME Council 5, Arbitrator Jacobs again made the call regarding range movement, after the parties agreed to a 2% wage increase. In awarding the employer’s proposal to move away from the 5% annual range movement, the arbitrator noted that a larger group within the organization had already moved away from the 5% annual increase after receiving a similar general wage adjustment. Again, internal consistency wins the day.

Finally, both the Deputies and the Jailers from Houston County went into arbitration over wages for the years of 2018-2020, and came away with differing results. Both groups came into arbitration with a proposal of 3% per year (take a moment to pick up your jaw off the floor), while the employer came in with a proposal of 1%, 2% and 2%.

In her decision, Arbitrator Imes found that there were no recruitment or retention issues, no ability to pay issues, and no problems with pay equity. However, because only one internal group had settled, Imes looked to comparable jurisdictions for guidance, where she found settlements in the 2.5% to 3.0% range, allegedly. Because of this, and the lower employer proposal for 2018, she found the Union’s proposal to be “not unreasonable,” and awarded 3% per year.

On the other hand, Arbitrator O’Donnell found the same lack of internal pattern within Houston County. In looking externally, he applied the average adjustment that he saw in comparable jurisdictions for 2018 and 2019, and a lack of sufficient data for 2020. He did note, however, that it is common practice to negotiate “front-loaded” contracts “with lesser increases in following years.” As a result, the award was for 2.75% in 2018, 2.5% in 2019 and 2.25% in 2020.

In general these are some great awards for employers. Those with an established internal pattern and no retention issues continue to have great success in arbitration. However, in reading the arbitration awards from Houston County, one can see how perilous it can be heading into arbitration. With near identical information on the employer’s behalf for both hearings, the different bargaining units ended with two completely different awards on wages. As always, the only sure thing about interest arbitration is you are not guaranteed a certain result.

If your jurisdiction needs any advice during its negotiations or interest arbitration, contact the Wiley Law Office for trusted experience that works.