Municipal Employer Refused to Bargain in Good Faith When it Unilaterally Discontinued the Practice of Assigning Take Home Cars to Certain Employees

Tuesday, June 17, 2014

A divided New York Court of Appeals recently ruled that the Town of Islip’s permanent assignment of “take home” vehicles to certain employees was a past practice regarding terms and conditions of employment and, as such, it qualified as a mandatory subject of bargaining, which the Town could not unilaterally discontinue. Town of Islip v. New York State Public Employment Relations Board (PERB), 2014 WL 2515720 (June 5, 2014). However, the Court also determined that PERB’s remedial order, which required the Town to restore vehicle assignments to the affected employees, was unreasonable because the vehicles had been sold.

Under the Town’s code of ethics and financial disclosure rules within the Town Code, employees were not permitted to use Town-owned vehicles except to conduct official business. The Town’s administrative procedural manual provided for the permanent assignment of vehicles to certain employees whose positions required them to be on-call 24 hours a day, and it also provided for temporary assignments of vehicles under some circumstances. All employees with “take home” vehicles were directed to keep a mileage log and not to use the vehicles for personal errands. These employees were issued a card and key for access to the Town’s gasoline pumps, and the Town’s fleet management division carried out repairs and maintenance on the vehicles. The Town deducted $3 per day from the employees’ paychecks to reflect the estimated value, for tax purposes, of the provision of employer-owned cars for travel to and from work.

In September 2007, the Town and Union began negotiating the terms of a successor collective bargaining agreement (CBA). In October 2007, the Town proposed the topic of “take home” vehicle use as a subject of bargaining, but it withdrew those proposals in December 2007, the month the existing agreements expired. In February 2008, an impasse was declared and a mediator was appointed. Meanwhile, in April 2008, the Town Board of Supervisors adopted a resolution endorsing a new vehicle policy, which provided that only three categories of employees were to be assigned “take home” vehicles: (1) specified elected officials; (2) 24/7 responders; and (3) employees with multi-worksite jobs. All other employees were instructed to use the pool vehicles available at the locations where they reported to work.

In June 2008, just a few days before this new vehicle policy went into effect, the Town’s Director of Labor Relations informed the Union that, on account of a “revision” of existing policy, approximately 45 of the Union’s members would be “shifted from taking a Town vehicle home to utilization of a pool vehicle located at their reporting work location[s].” The Union’s attorney responded shortly thereafter, stating in a letter that “employee use of a Town-owned vehicle for personal purposes (driving to and from work) is an economic benefit and therefore, a mandatory subject of bargaining. As such, the Union’s attorney demanded that the Town retract any orders requiring unit members to turn in the keys to assigned vehicles, pending negotiations over the Town’s decision and its impact. The Union subsequently filed an improper practice charge with PERB, claiming that the Town violated Civil Service Law § 209-a(1)(a) and (d) by unilaterally adopting the new vehicle policy and thereby eliminating the ability of certain union employees to continue to use Town-owned vehicles to commute to work.

Following an evidentiary hearing, an administrative law judge (ALJ) found that the Union had carried its burden of demonstrating a clear and unequivocal 20-plus year practice with respect to determining which employees/job titles were eligible for “take home” vehicles, thus creating a reasonable expectation among Union members that the same practice would continue. Accordingly, the ALJ held that the Town violated Section 209-a(1)(d) by canceling “take home” vehicle assignments without negotiation. After PERB essentially affirmed the ALJ’s decision, the Town filed an Article 78 proceeding in Supreme Court, which was later transferred to the Appellate Division, to annul the Board’s decision. The Appellate Division held that substantial evidence supported PERB’s determination that the permanent assignment of Town-owned vehicles to the affected employees constituted a past practice as to a term or condition of employment, a mandatory subject of negotiation, which the Taylor Law barred the Town from unilaterally discontinuing. The Appellate Division rejected the Town’s argument that its code of ethics and financial disclosure rules within the Town Code specifically forbade the use of Town vehicles in violation of Town policy, finding that the Town frequently and openly ignored that Code and its policy for managing its vehicle fleet. The Town subsequently appealed that decision to the Court of Appeals.

The Court of Appeals noted, at the outset of the majority’s decision, that “the Taylor Law requires all public employers and employee organizations to negotiate in good faith to determine represented employees’ terms and conditions of employment.” Moreover, the Court continued, “PERB has long held that employee use of an employer-owned vehicle for transportation to and from work is an economic benefit and a mandatorily negotiable term and condition of employment; therefore, a public employer may not unilaterally discontinue a past practice of providing its employees with this benefit.”

The Town urged that PERB’s determination of an improper practice was arbitrary and capricious, an abuse of discretion and not supported by substantial evidence for two related reasons. First, that an illegal practice cannot ripen into a binding past practice because employees may not reasonably expect illegal activity to continue indefinitely. And second, that the Town adopted the new vehicle policy to conform its practice for permanently assigning “take home” vehicles with the Town Code, and an employer has no duty to negotiate with a union before discontinuing a past practice that is illegal under local law.

The Court of Appeals concluded that PERB reasonably applied its precedent to determine that the Town engaged in an improper practice when it unilaterally discontinued the permanent assignment of “take home” vehicles to employees who enjoyed this benefit before the Town adopted and implement the new vehicle policy in 2008. However, the Court also concluded that PERB’s remedial order was unreasonable insofar as it required the Town to restore vehicle assignments to affected employees. “Forcing the Town to invest significant taxpayer dollars to replace these vehicles is unduly burdensome . . . and does not further the goal of reaching a fair negotiated result.”

The Court of Appeals declined to resolve the question of whether the parties’ past practice was illegal under local law, which Judge Pigott, in a dissenting opinion, argued was an issue squarely presented to the Court for review. Judge Pigott also observed that there was nothing in the previous CBAs or in the laws and regulations of the Town that would allow public employees to take advantage of taxpayers by obtaining municipally-provided transportation at discount rates. Therefore, Judge Pigott argued that the conduct engaged in by the Town and its employees was against the law and PERB’s determination could not make it legal.

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