Matthew Leffler
Matthew Leffler

Act 10 and Act 32 Are Not Retroactive in Coverage

February 10, 2014

As you may recall, the highly contentious 2011 Wisconsin Act 10 and Act 32 budget bills imposed limitations on collective bargaining in the public sector. Recently, the Wisconsin Court of Appeals analyzed both laws and upheld the validity of a “piggybacked” collective bargaining agreement (CBA) that was entered into before the laws were passed but did not go into effect until 2013.

Background

In 2010 and 2011, the city of Racine and unions representing municipal workers entered into two CBAs for back-to-back two-year periods, 2011-12 and 2013-14, respectively. The city and the unions negotiated and ratified the agreements, which were aptly called “piggybacked CBAs,” before the passage of Act 10 and Act 32. Neither the city nor the union disputed the validity or enforceability of the 2011-12 CBA because Act 10 and Act 32 expressly state that they apply only to employees “covered by” an existing CBA that expires or is modified.

The city rescinded the entire 2013-14 CBA for three categories of general employees and various provisions of the CBA for two groups of public safety employees. The unions filed a lawsuit to reinstate the CBA. Piggybacked CBAs were common in municipal settings before Act 10 and Act 32. In this case, even though the CBAs were jointly negotiated, they were separate contracts. The circuit court reinstated the 2013-14 CBA. The city of Racine appealed.

Court of Appeals’ Decision

On appeal, the Wisconsin Court of Appeals was presented with the issue of whether the piggybacked CBA covering 2013 and 2014 was enforceable.

Legislative enactments are generally presumed to operate prospectively (i.e., going forward). Under Wisconsin law, reading a statute to apply retroactively is generally disfavored, and there is a presumption against retroactive application of legislation. That presumption may be rebutted by showing there was an express intent for legislation to apply retroactively. For example, if the Wisconsin Legislature expressly states, “This section shall apply retroactively,” it is safe to say that the presumption will be rebutted. (However, this may raise certain constitutional issues.) The policies behind the rules of interpretation are based on the idea that the primary function of the legislature is to regulate future behavior.

Both Act 10 and Act 32, and the restrictions therein, apply to employees already “covered by” a CBA once and if “the agreement expires or is terminated, extended, modified, or renewed, whichever occurs first.” The court of appeals endeavored to determine whether the legislature expressed an intention for Act 10 and Act 32 to apply retroactively. The court found “no clear expression of the intention to retroactively upend the settled expectations of piggybacked CBAs that were negotiated and agreed upon months before those acts took effect.”

The court of appeals agreed with the lower court’s plain reading of the term “covered by.” The court held that an employee is “covered by” a CBA when the agreement “has been approved and [the] employee falls within the category of to whom the CBA pertains.” Thus, Act 10 and Act 32 were not “designed to retroactively invalidate CBAs that were freely and voluntarily entered into” by a municipality and a union and were negotiated and ratified before the passing of the statutes.

Bottom Line

The new collective bargaining laws were not designed to retroactively rescind otherwise valid CBAs. If you are a local government employer, proceed carefully with respect to previously ratified CBAs.

This article was featured in the January 2014 issue of the Wisconsin Employment Law Letter, which is edited by Attorney Troy Thompson and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.

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