(1)Under existing law, subject to exception, an application for registration is required to be made to the Department of Motor Vehicles (DMV) within 20 days following the date registration became due for a vehicle last registered in a foreign jurisdiction that is subject to registration in California.

This bill would additionally provide that for a vehicle described above whose registration becomes due in 2018, an application for California registration is required to be made to the department DMV within 110 90 days following the date registration became due.

(4)This bill would declare that it is to take effect immediately as an urgency statute.

The Bill of Rights for State Excluded Employees permits, among other things, excluded employee organizations to represent their excluded members in their employment relations, including grievances, with the state. That law defines excluded employees as all managerial employees, confidential employees, supervisory employees, as well as specified employees of the Department of Personnel Administration, the Department of Finance, the Controllers office, the Legislative Counsel Bureau, the Bureau of State Audits, the Public Employment Relations Board, the Department of Industrial Relations, and the State Athletic Commission.

This bill would enact the Excluded Employee Arbitration Act to permit an employee organization that represents an excluded employee who has filed certain grievances with the Department of Human Resources to request arbitration of the grievance if specified conditions are met. The bill would require the designation of a standing panel of arbitrators and, under specified circumstances, the provision of arbitrators from the California State Mediation and Conciliation Service within the Public Employment Relations Board. The bill would then require the arbitrator to be chosen in a specified manner and would prescribe the duties of that arbitrator. The bill would provide that a party to the arbitration has the right to have a certified shorthand reporter transcribe the proceeding and that the transcription would be the official record of the proceeding. The bill would require a nonprevailing party, other than an excluded employee, to bear the costs of arbitration, including the cost of a certified shorthand reporter, and would prohibit the costs of arbitration from being passed on to the excluded employee. The bill would make a statement of legislative intent and various findings and declarations with regard to the above.

The Bill of Rights for State Excluded Employees permits, among other things, excluded employee organizations to represent their excluded members in their employment relations, including grievances, with the state. That law defines excluded employees as all managerial employees, confidential employees, supervisory employees, as well as specified employees of the Department of Personnel Administration, the Department of Finance, the Controllers office, the Legislative Counsel Bureau, the Bureau of State Audits, the Public Employment Relations Board, the Department of Industrial Relations, and the State Athletic Commission.

This bill would enact the Excluded Employee Arbitration Act to permit an employee organization that represents an excluded employee who has filed certain grievances with the Department of Human Resources to request arbitration of the grievance if specified conditions are met. The bill would require the designation of a standing panel of arbitrators and, under specified circumstances, the provision of arbitrators from the California State Mediation and Conciliation Service within the Public Employment Relations Board. The bill would then require the arbitrator to be chosen in a specified manner and would prescribe the duties of that arbitrator. The bill would provide that a party to the arbitration has the right to have a certified shorthand reporter transcribe the proceeding and that the transcription would be the official record of the proceeding. The bill would require a nonprevailing party, other than an excluded employee, to bear the costs of arbitration, including the cost of a certified shorthand reporter, and would prohibit the costs of arbitration from being passed on to the excluded employee. The bill would make a statement of legislative intent and various findings and declarations with regard to the above.

The Bill of Rights for State Excluded Employees permits, among other things, excluded employee organizations to represent their excluded members in their employment relations, including grievances, with the state. That law defines excluded employees as all managerial employees, confidential employees, supervisory employees, as well as specified employees of the Department of Personnel Administration, the Department of Finance, the Controllers office, the Legislative Counsel Bureau, the Bureau of State Audits, the Public Employment Relations Board, the Department of Industrial Relations, and the State Athletic Commission.

This bill would enact the Excluded Employee Arbitration Act to permit an employee organization that represents an excluded employee who has filed certain grievances with the Department of Human Resources to request arbitration of the grievance if specified conditions are met. The bill would require the designation of a standing panel of arbitrators and, under specified circumstances, the provision of arbitrators from the California State Mediation and Conciliation Service within the Public Employment Relations Board. The bill would then require the arbitrator to be chosen in a specified manner and would prescribe the duties of that arbitrator. The bill would provide that a party to the arbitration has the right to have a certified shorthand reporter transcribe the proceeding and that the transcription would be the official record of the proceeding. The bill would require a nonprevailing party, other than an excluded employee, to bear the costs of arbitration, including the cost of a certified shorthand reporter, and would prohibit the costs of arbitration from being passed on to the excluded employee. The bill would make a statement of legislative intent and various findings and declarations with regard to the above.

SENATE THIRD READING

STR Bill Id:SB 76

Author:(Nielsen)

As Amended Ver:June 29, 2017

Majority vote

SENATE VOTE: 40-0

SUMMARY: Establishes the Excluded Employee Arbitration Act (EEAA) which authorizes binding arbitration on behalf of an excluded employee for alleged violations of certain working conditions, and whose grievance has not been resolved after the fourth level of review. Specifically, this bill:

1. Declares legislative intent that excluded employees of the state have the right to arbitration as another step to the excluded employee grievance procedure, and states that the present grievance procedure leaves too many grievances unresolved resulting in more cases being filed in California's courts, which could have been resolved at a lower level.
2. Makes findings and declarations regarding the existing grievance process for excluded employees.
3. Defines "Department" to mean the Department of Human Resources; "Excluded employee" to mean an certain excluded employees of the state; "Employee organization" to mean any organization that represents excluded employees of the State of California; "Employer" to mean the State of California; and, "Arbitration" to mean the process that results in a binding ruling that resolves an excluded employee grievance as the third or fourth level of the excluded employee grievance process.
4. Establishes the EEAA which authorizes an employee organization that represents an excluded employee who has filed a grievance with the California Human Resources Department (CalHR) to request binding arbitration when the following conditions are met:
   1. The grievance alleges a dispute that is subject to the procedures established in Section 599.859 of Title 2, California Code of Regulations as that section read on January 1, 2017.
   2. The grievance has not been resolved to the employee organization's satisfaction after either of the following, as applicable, pursuant to CalHR's regulations governing grievances for excluded employees:
      1. The fourth level of review.
      2. In cases where there is no fourth level of review, the third level of review.
   3. The employee organization requests arbitration in writing to CalHR, within 21 days of a decision rendered in either of the following, as applicable:
      1. The fourth level of review.
      2. In cases where there is no fourth level of review, the third level of review.
5. Requires CalHR and the employee organization, following a request for arbitration, to designate a standing panel of at least 20 arbitrators to be made available for resolving arbitrations, as authorized.
6. Provides that if fewer than three arbitrators are available, then the employee organization or the employer may obtain the names of an additional five arbitrators from the California State Mediation and Conciliation Service within the Public Employment Relations Board.
7. Sets forth a process whereby the employee organization and the employer may consecutively strike any arbitrator from the arbitration panel until the name of one arbitrator is agreed upon, or, if no agreement is made, the last remaining person on the panel shall be designated the arbitrator. The name of that arbitrator shall be submitted in writing to CalHR.
8. Provides that if the employee organization does not submit its choice of an arbitrator within 45 days after requesting arbitration, the request for arbitration shall be considered withdrawn. However, a withdrawn request shall not be construed to prevent the employee from pursuing other grievance procedures available under law.
9. Provides that a party to the arbitration has the right to have a certified shorthand reporter transcribe the proceeding and specifies that the transcript shall be the official record of the proceeding.
10. Specifies that the arbitrator shall apply California law to the facts and that the decision shall be based solely on the written record in the grievance, the grievance response, and the oral presentations made at the arbitration. Specifies that the arbitrator's decision shall be legally binding.
11. Requires the arbitrator to issue a written decision within 45 days of the conclusion of the hearing, and that the arbitrator order that the nonprevailing party pay the cost of the arbitration, including the costs of a certified shorthand reporter. The arbitrator is prohibited from ordering the excluded employee to pay the costs of arbitration or reporter and specifies that the costs of arbitration and reporter cannot be passed on to the excluded employee.

EXISTING LAW:

1. Establishes the Ralph C. Dills Act (Dills Act) which provides a statutory framework that governs labor relations between the state and state employees.
2. Excepts from the Dills Act's definition of "state employee," managerial employees, confidential employees, supervisory employees, and certain employees of the Department of Finance, the State Controller's Office, the Bureau of State Audits, Office of the Inspector General, Office of the State Chief Information Officer, State Athletic Commission, the PERB, Legislative Counsel Bureau, and councilors of the State Mediation and Conciliation Service.
3. Establishes the Bill of Rights for State Excluded Employees (BRSEE) which defines excluded employees as those employees excepted from the Dills Act, and provides that the purpose of the BRSEE includes informing excluded employees of their rights and terms and conditions of employment and also serves to promote harmonious personnel relations among those representing state management in the conduct of state affairs.
4. Prohibits excluded employees from holding office in employee organizations representing rank-and-file employees or participating in any employee representational matters on behalf of nonexcluded employees, and provides that excluded employee organizations shall have the right to represent their excluded members in their employment relations, including grievances, with the State of California.
5. Authorizes supervisory employees to form, join and participate in the activities of supervisory organizations of their own choosing for purposes of representation on all matters of supervisory employee relations, as provided, or to refrain from so doing. They also have the right to represent themselves individually in their employment relations with the state employer.
6. Authorizes the CalHR to adopt reasonable rules and regulations for the administration of employer-employee relations.

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill will result in an unknown fiscal impact. While the additional costs per additional arbitration are approximately $40,000 General Fund (GF), there is considerable uncertainty about the total costs to the state. Specifically, the fiscal effect of this bill is dependent on case outcomes and the impact of arbitration on other parts of the formal grievance procedure.

COMMENTS: A form of dispute resolution that is held outside of the courts, arbitration is an alternative where a neutral third party, (i.e., arbitrator), renders a binding award to one of the parties to the dispute. There is no requirement for an arbitrator to be learned in law, nor a lawyer. Generally, an arbitration agreement provides the procedures that are to be followed during an arbitration hearing such as whether the award must be in writing, public disclosure of information as to the arbitration, or justification for an award.

With ongoing complaints by excluded employees as to the ineffectiveness of the current grievance process, this bill seeks to improve the process and its efficacy for these employees.

Please see the policy committee analyses for a full discussion of this bill.

Analysis Prepared by: Michael Bolden / P.E.,R., & S.S. / (916) 319-3957 FN: 0001688

Date of Hearing: July 19, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 76

Author:(Nielsen) – As Amended Ver:June 29, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill creates the Excluded Employee Arbitration Act in order to permit an organization that represents certain excluded employees to request arbitration of an employee grievance. Specifically, this bill:

1. Authorizes an employee organization that represents an excluded employee to request binding arbitration if that employee has filed a grievance with the California Department of Human Resources (CalHR) and that grievance has not been resolved by either the fourth or third level review, whichever is applicable.
2. Requires CalHR and the employee organization to designate a standing panel of at least 20 arbitrators to be made available for resolving arbitrations, and creates a process by which the employee organization and the employer may select arbitrators.
3. Requires the arbitrator to order the non-prevailing party to pay the costs of arbitration and prohibits the arbitrator from ordering the employee to pay the costs of arbitration.
4. Requires the arbitrator to apply California law and facts in the decision and that the decision must be based on the written record in the grievance, the grievance response, and the oral presentations. The arbitrator is required to issue a written decision within 45 days of the conclusion of the hearing, and the arbitrator’s decision is legally binding.

FISCAL EFFECT:

Unknown fiscal impact. While the additional costs per additional arbitration are approximately $40,000 General Fund (GF), there is considerable uncertainty about the total costs to the state. Specifically, the fiscal effect of this bill is dependent on the following factors:

1. Case outcomes. The costs of arbitration would be offset in instances when the state employer wins arbitration proceedings and is therefore compensated for its costs.
2. The impact of arbitration on other parts of the formal grievance procedure. The new arbitration process could create competing incentives within the grievance process. Currently, CalHR processes an average 150 grievances per year for excluded employees. It can be assumed a number of these would have been elevated to arbitration if such an option were available to employees, since arbitration is perceived as producing better outcomes for workers. Even a handful of additional cases that are elevated to arbitration would result in GF costs in excess of $150,000 GF. However, SB 76 may also result in savings that are difficult to calculate in advance. The threat of arbitration could mean that an agreement between the employee and employer is reached earlier in the formal grievance process, thereby reducing administrative costs. Moreover, to the extent that arbitration is pursued instead of taking a case to court, departments could see significant reduction in litigation costs.

COMMENTS:

1. Background. Existing law authorizes excluded employee organizations to represent excluded employees in employment relations, including grievances, with the State. Current state regulations provide a standard grievance procedure which requires each party involved to attempt to resolve the grievance promptly and within the time limits contained in the grievance procedure, unless the parties mutually consent to extend a time limit. The grievance procedure is required to be completed in as few levels of review as possible, but no more than four levels, as follows:
2. Informal Discussion. The excluded employee or the excluded employee’s representative must discuss the grievance with the excluded employee’s immediate supervisor. If the grievance is not settled within five work days, a written grievance may be filed.
3. Formal Grievance – Level 1. A formal grievance may be filed no later than 10 work days after the event or circumstances occasioning the grievance. The first level of review must respond to the grievance in writing within 10 work days after the receipt of the formal grievance.
4. Formal Grievance – Level 2. The grievant may appeal the decision of the first level within 10 work days after receipt of the response. Within 15 work days after receipt of the appealed grievance, the person designated by the appointing power as the second level of review must respond in writing to the grievance.
5. Formal Grievance – Level 3. The grievant may appeal the decision of the second level within 10 work days after receipt of the response to the appointing power or his/her designee. Within 15 work days after receipt of the appeal, the appointing power or his/her designee must respond in writing to the grievance.
6. Formal Grievance – Level 4. The grievant may appeal the decision of the third level within 10 work days after receipt of the response to the Director, Department of Personnel Administration or his/her designee. Within 20 work days the Director, or his/her designee must respond in writing to the grievance
7. Purpose. According to the author, SB 76 will improve the excluded grievance process to make it more effective for workers and the state. The author argues that the current system doesn’t function properly for excluded employees.
8. Arbitration. Arbitration is a form of alternative dispute resolution held outside of courts where a third-party (rather than a judge) makes a binding (and rarely appealable) award. Because most arbitration is created by entering into a contract (usually a contract that is adhesive or take-it-or-leave-it), the arbitration agreement will lay out the procedures that will be followed during the arbitration hearing. For example, the terms of the arbitration agreement may stipulate that the award need not be written or justified (unlike in court), and that the entire process be kept in secret (rather than in public view). Arbitrators do not need to be lawyers, nor do they need to be trained in the law.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: June 27, 2017

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

SBPCA Bill Id:SB 76

Author:(Nielsen) – As Amended Ver:March 22, 2017

As Proposed to be Amended

SENATE VOTE: 40-0

SUBJECT: EXCLUDED EMPLOYEES: ARBITRATION

KEY ISSUE: SHOULD AN ORGANIZATION THAT REPRESENTS EXCLUDED EMPLOYEES—PRIMARILY MANAGERIAL AND SUPERVISORY EMPLOYEES WHO ARE NOT REPRESENTED BY UNIONS—BE PERMITTED TO REQUEST ARBITRATION FOR AN AGGRIEVED EMPLOYEE IF PRIOR LEVELS OF ADMINISTRATIVE REVIEW HAVE NOT RESOLVED THE GRIEVANCE TO THE EMPLOYEE'S SATISFACTION? 

SYNOPSIS

Under existing law, certain classifications of employees—most notably managerial, executive, and supervisory employees—are excluded from the provisions of the Ralph Dills Act, which guarantees the collective bargaining right of state employees.  To provide some level of representation to these employees, in 1990, the Legislature enacted the Excluded Employee Bill of Rights (EEBR), which permits excluded employee organizations to represent excluded employees who have to file a grievance with their state employer.

According to the author, however, this existing process under EEBR is not very effective or efficient.  EEBR establishes four "levels of review," which in practice appears to consist of an employee filing a written grievance, the employer usually issuing a denial, and the employee filing an appeal of the denial, until it reaches the fourth level of review, where the employee generally appeals to the Department of Personnel Administration.  After the fourth level the aggrieved employee's only option is to bring an action in the appropriate court or the State Personnel Board. 

This bill would effectively create another level of review by allowing an employee organization to request binding arbitration as an alternative to immediately bringing an action in court.  The bill also sets forth a process for selecting arbitrators from a designated panel, requires the arbitrator to issue a written decision within 45 days of the completion of the hearing, and provides that the non-prevailing party shall pay the costs of arbitration, as specified.  The bill would also, most significantly, specify that the withdrawal of an arbitration request does not bar pursuit of other remedies available under law; that a party to the arbitration has a right to have a certified reporter transcribe the proceeding; and that the arbitrator shall apply applicable California law to the facts. 

This bill is substantially similar to SB 950 (Nielsen), 2016, which passed the Legislature but was vetoed by the Governor. His veto message stated that SB 950 would have reduced departments' ability to effectively manage state operations and would have resulted in significant unbudgeted state costs.

The bill is supported by several law enforcement groups and professional associations, including the California Correctional Supervisors Organization and the Association of California State Supervisors. The bill is opposed by the California Department of Human Resources (CalHR) and the Department of Finance. This bill recently passed out of the Assembly Committee on Public Employees, Retirement, and Social Security on 6-0 vote with one member not voting. 

The bill summary and analysis reflect several technical amendments that will be taken in Committee. 

SUMMARY: Establishes the Excluded Employee Arbitration Act in order to permit an organization that represents excluded employees, as defined, to request arbitration of an employee grievance, as specified.  Specifically, this bill:

1. Creates the Excluded Employee Arbitration Act which authorizes an employee organization that represents an excluded employee to request binding arbitration when the following conditions are met:
   1. The grievance alleges a dispute that is subject to the procedures established in Section 599.859 of Title 2 of the California Code of Regulations.
   2. The grievance has not been resolved satisfactorily at the third or fourth level of review, as provided.
   3. The employee organization requests arbitration in writing to CalHR within 21 days of a decision rendered at the third or fourth level of review, as provided.
2. Defines arbitration to mean the binding ruling that resolves an excluded employee grievance as the third or fourth level of the excluded employee grievance process.
3. Requires CalHR and the employee organization, following a request for arbitration, to designate a standing panel of at least 20 arbitrators to be made available for resolving arbitrations authorized by this bill and sets forth a process by which the employee organization and employer may select arbitrators from the panel.
4. Provides that if the employee organization does not submit its choice of an arbitrator within 45 days after requesting arbitration, the request for arbitration shall be considered withdrawn. However, a withdrawn request shall not prevent the employee from pursuing other grievance procedures available under law.
5. Provides that a party to the arbitration has the right to have a certified shorthand reporter transcribe the proceeding and specifies that the transcript shall be the official record of the proceeding.
6. Specifies that the arbitrator shall apply California law to the facts and shall issue a decision for each grievance heard during the arbitration.  The decision shall be based solely on the written record in the grievance, the grievance response, and the oral presentations made at the arbitration. Specifies that the arbitrator's decision shall be legally binding.
7. Requires the arbitrator to issue a written decision within 45 days of the conclusion of the hearing.
8. Requires the arbitrator to order that the non-prevailing party to pay the cost of the arbitration, including the costs of a certified shorthand reporter.  The arbitrator is prohibited from ordering the excluded employee to pay the costs of arbitration or reporter and specifies that the costs of arbitration and reporter cannot be passed on to the excluded employee.
9. States that it is the intent of the Legislature that state excluded employees shall have the right to arbitration as another step to the excluded employee grievance procedure; that the present grievance procedure leaves too many grievances unresolved; and that this lack of resolution has caused more cases to be filed in California’s courts, which should have been resolved at a lower level.
10. Makes other findings and declarations.

EXISTING LAW:

1. Permits, under the Excluded Employee Bill of Rights, an excluded employee organization to represent an excluded employee in their employment relations, including grievances, with the state.  (Government Code Section 3525 et seq.  Unless stated otherwise, all further statutory references are to the Government Code.)
2. Defines “excluded employees,” for purposes of the above, to include all managerial employees, confidential employees, supervisory employees, and specified employees of the Department of Personnel Administration, the Department of Finance, the Controller’s office, the Legislative Counsel Bureau, the Bureau of State Audits, the Public Employment Relations Board, the Department of Industrial Relations, and the State Athletic Commission.  (Section 3526.)
3. Establishes the Ralph C. Dills Act (Dills Act) which sets forth a framework that governs labor relations between the state and state employees.  Defines “state employee” for purposes of the Dills Act so as to exempt managerial employees, confidential employees, supervisory employees, and other employees, as specified.  (Section 3512 et seq.)
4. Establishes, pursuant to Title 2 of the California Code of Regulations, a grievance procedure and time line by which an excluded employee and his or her state employer may attempt to resolve an employee grievance.  The procedure provides for four levels of review, ranging from informal discussions, to formal written grievances and written responses, to appeal to the Director of Department of Personnel Administration or his or her designee.  (Cal. Code Regs., tit. 2, Section 559.859 (d).)
5. Defines a grievance as a dispute of one or more excluded employees involving the application or interpretation of a statute, regulation, policy, or practice that falls under the jurisdiction of the Department of Human Resources.  (Cal. Code Regs., tit. 2, Section 559.859 (c).)
6. States that the right to petition a court for writ of mandate, or to bring or maintain any action or proceeding based on or related to any civil service law of this State or the administration thereof shall not be affected by the failure to apply for rehearing by filing written petition therefor with the board.  (Section 19588.)
7. Establishes that the State Personnel Board shall enforce the civil service statutes and, by majority vote of all its members, shall prescribe probationary periods and classifications, adopt other rules authorized by statute, and review disciplinary actions.  (Cal. Const., art. VII, Section 3.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: Justice Brennan once said that, “courts are the central dispute-setting institutions of our society. They are bound to do equal justice under the law, to rich and poor alike.” It comes as no surprise then that the phrase, “Equal Justice Under Law,” is engraved above the entrance to our nation’s highest court. And so it seems, we put a great deal of faith in our courts—but would we expect any less? We anticipate our courts to apply the law in a fair, neutral, and open manner. We hold judges to high standards, and ask that they avoid even the appearance of impropriety. We count on our judiciary to advance the law, issue orders, and render written opinions. And yet, we acknowledge that our system isn’t perfect and that despite their best efforts, courts sometimes get it wrong. Acknowledging the imperfection of our justice system is undoubtedly one reason why it has safeguards. We remember that decisions of courts are reviewed by appellate courts and indeed, reviewed by our elected branches. In order to facilitate the right to appeal, we provide a record of the proceedings, in criminal matters at least. And so, when our families, friends, and neighbors are injured, wronged, or have a dispute, we rely upon that faith that our courts—the institution we trust upon to promote fairness—will deliver equal justice under the law.

In contrast, arbitration is a form of alternative dispute resolution held outside of courts where a third-party (rather than a judge) makes a binding (and rarely appealable) award. Because most arbitration is created by entering into a contract (usually a contract that is adhesive or take-it-or-leave-it), the arbitration agreement will lay-out the procedures that will be followed during the arbitration hearing. For example, the terms of the arbitration agreement may stipulate that the award need not be written or justified (unlike in court), and that the entire process be kept in secret (rather than in public view). Arbitrators do not need to be lawyers, nor do they need to be trained in the law. Arbitrators who issue favorable awards to a particular company can be repeatedly-hired by that same company to serve as the arbitration-neutral without ever notifying the public about that award-history.

Background on labor arbitration. With all of this being said, an arbitration of a labor dispute arising from a collective bargaining agreement seems to fall into a different category and is generally seen as a fair process that is protective of employees.  Presumably, this is because the terms of the collective bargaining agreement are not on a take-it-or-leave-it basis; rather, the terms are negotiated by the employer and the bargaining unit at arms-length, and the parties mutually and voluntarily agree to resolve their disputes through an arbitrator. Indeed, it has been noted in the legal community that arbitration in the labor context is markedly different than in the context of commercial and consumer disputes. According to one legal scholar, “[g]rievance arbitration in the unionized workplace is part of the continuing process of collective bargaining....[Involuntary] employment arbitration in the nonunionized workplace does not serve the same function.” (Malin & Ladenson, Privatizing Justice: A Jurisprudential Perspective on Labor and Employment Arbitrartion from the Steelworkers Trilogy to Gilmer (1993) 44 Hastings L.J. 1187, 1239.)  In fact, labor arbitration is so favored that many public employment contracts between state bargaining units and the State agree to use arbitration as an alternative dispute resolution forum for the resolution of grievances for represented employees.

Currently, excluded employees resolve their grievances through a process established by the California Department of Human Resources (CalHR). Current law authorizes CalHR to adopt reasonable rules and regulations for the administration of employer-employee relations. CalHR has adopted regulations that set out a Grievance and Appeal Procedure for excluded employees.

Under Title 2, Section 599.859 of the California Code of Regulations, supervisory employee organizations or individual supervisors may pursue resolution of disagreements over issues with their employer that fall within the jurisdiction of CalHR through a grievance procedure that typically includes an informal review and four formal levels of review by the employer according to the following timeline:

Informal Level:  Within 5 work days of the incident, an informal discussion between the excluded employee and the employee's supervisor or manager.

Level 1:  If unsatisfied with the informal review, the employee may file a formal grievance within 10 work days of the incident and the employer's designee for the first level of review must respond within 10 working days.

Level 2:  The employee may appeal the employer's Level 1 decision within 10 work days of receipt of the employer's response and the employer's designee for the second level of review must respond within 15 work days.

Level 3:  The employee may appeal the employer's Level 2 decision within 10 work days of receipt of the employer's response and the employer's designee for the third level of review must respond within 15 work days.

Level 4:  The employee may appeal the employer's Level 3 decision to CalHR within 10 work days of receipt of the employer's response and CalHR's designee for the fourth level of review must responds within 20 work days.

Upon denial at the fourth level of review, the employee or the employee organization representing the employee may pursue a claim with the State Personnel Board or a state superior court depending on the issue in dispute.

Problem this bill seeks to solve. According to the author:

Currently, the excluded employee grievance system has proven to be ineffective and is functioning at an unenforceable level. The vast majority of these grievances are summarily denied, and the only option for excluded employee organizations is to escalate their grievances to the Superior Court or the State Personnel Board. This means that a simple low- or no-cost grievance can and has cost the state thousands of dollars and taken years to resolve.

This bill.  This bill allows an excluded employee--if represented by an employee organization--to have a grievance that is filed with the Department of Human Resources be heard through arbitration. Although this bill applies to excluded employees, the arbitration procedures created under this bill are similar to the procedures adopted under traditional labor arbitration. For example, this bill requires the arbitrator to issue a written decision, and requires that the decision be based on the record, and presentations made at the arbitration—common in labor arbitration, but not required in commercial arbitration.  Furthermore, the bill gives the excluded employee the right to have a certified shorthand reporter transcribe the proceeding, and makes the transcript the official record of the proceeding. This bill also requires an arbitrator, when conducting an arbitration proceeding involving an excluded employee, to “apply California law to the facts.” These provisions appear to further the author’s goal of ensuring fairness in the arbitration proceeding. Additionally, these provisions enhance the integrity and reliability of the arbitration process.

By creating one additional step in the grievance process, this bill does not appear to interfere with the powers of the State Personnel Board. CalHR opposes this bill because it believes this bill will impair the state’s ability to manage state operations and employees.  In a letter of opposition, it writes:

Arbitration costs are estimated to far exceed the moderate litigation costs the state currently expends to defend litigation in civil court arising from excluded employee grievances…. Since arbitration decisions under SB 76 are legally binding, the bill gives a non-governmental entity—the arbitrator—the authority to set excluded employee terms and conditions of employment, and interfere with the legislative branch’s appropriation authority. For example, SB 76 could allow an individual arbitrator to compel the state to adjust employee salaries, grant or deny promotions, or modify hiring and layoff procedures. Under SB 76, an arbitrator could require a state department to adjust performance benchmarks, work schedules, or job duties.  The California Supreme Court has long held that a legislative body may not leave the resolution of fundamental policy issues to others.  Accordingly, SB 76 not only interferes with the state’s ability to manage its own employees, but also violates the separation of powers doctrine embodied in Article 3, Section 3 of the California Constitution.

CalHR suggests that this bill interferes with the powers of the State Personnel Board, and thus violates the State Constitution. Under the State Constitution, the State Personnel Board is required to enforce the civil service statutes and review disciplinary actions. The California Supreme Court has held that the State Personnel Board—as the sole constitutionally mandated body to review disciplinary actions against state civil service employees—has exclusive authority to review disciplinary decisions.  (See State Personnel Bd. v. Department of Personnel Admin. (2005) 37 Cal.4th 512.)

Similar legislation vetoed by the governor. SB 950 (Nielsen, 2016) is substantially similar to this bill. The Governor vetoed SB 950, and provided the following veto message:

This bill adds arbitration to the existing four step grievance process for state supervisors.

Expanding the grievance process for the state's managers to include legally binding arbitration will reduce departments' ability to effectively manage state operations and will result in significant unbudgeted state costs.

Technical amendment. To clarify that the arbitration proceeding is one additional step in the grievance process and not necessarily the final step so as not to interfere with the State Personnel Board’s authority, the author has agreed to take the following technical and clarifying amendment in Committee.

On page 2, line 2, strike “a fifth” and insert “another”

On page 3, line 13, strike “final” and insert “third or fourth”

REGISTERED SUPPORT / OPPOSITION:

Support

California Correctional Supervisors Organization (co-sponsor)

Association of California State Supervisors (co-sponsor)

Association for Los Angeles Deputy Sheriffs

California Association of Code Enforcement Officers

California Association of Professional Scientists

California College and University Police Chiefs Association

California Narcotic Officers Association

Civil Justice Association of California

Los Angeles County Professional Peace Officers Association

Los Angeles Police Protective League

Professional Engineers in California Government

Riverside Sheriffs Association

Opposition

California Department of Human Resources

Department of Finance

Analysis Prepared by: Eric Dang / JUD. / (916) 319-2334

 THIRD READING  

Bill No: SB 76

Author:

:

Vote:

SENATE PUBLIC EMP. & RET. COMMITTEE: 5-0, 3/27/17

AYES: Pan, Morrell, Leyva, Moorlach, Portantino

SENATE JUDICIARY COMMITTEE: 7-0, 4/18/17

AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/25/17

AYES: Lara, Bates, Beall, Bradford, Hill, Nielsen, Wiener

SUBJECT:

SOURCE: California Correctional Supervisors Organization

DIGEST:

This bill establishes the Excluded Employee Arbitration Act which authorizes binding arbitration on behalf of an excluded state employee for alleged violations of working conditions, as specified, whose grievance has not been resolved after the fourth level of review.

ANALYSIS:

Existing law:

1. Establishes the Ralph C. Dills Act (Dills Act) which sets forth a framework that governs labor relations between the state and state employees.
2. Excepts from the Dills Act’s definition of “state employee”: managerial employees, confidential employees, supervisory employees, and other employees, as defined.
3. Establishes the Bill of Rights for State Excluded Employees which defines excluded employees as those employees excepted from the Dills Act.
4. Provides that the purpose of the Bill of Rights for State Excluded Employees includes informing excluded employees of their rights and terms and conditions of employment and also serves to promote harmonious personnel relations among those representing state management in the conduct of state affairs.
5. Prohibits excluded employees from holding office in employee organizations representing rank and file employees or participating in any employee representational matters on behalf of non-excluded employees.
6. Provides that excluded employee organizations shall have the right to represent their excluded members in their employment relations, including grievances, with the State of California.
7. Authorizes supervisory employees to form, join and participate in the activities of supervisory organizations of their own choosing for purposes of representation on all matters of supervisory employee relations, as provided, or to refrain from so doing. They also have the right to represent themselves individually in their employment relations with the state employer.
8. Authorizes the California Department of Human Resources (CalHR) to adopt reasonable rules and regulations for the administration of employer-employee relations.

This bill:

1. Declares legislative intent that state excluded employees have the right to arbitration as a fifth step to the excluded employee grievance procedure; and states that the present grievance procedure leaves too many grievances unresolved resulting in more cases being filed in California’s courts, which could have been resolved at a lower level.
2. Makes findings and declarations as follows:
   1. The grievance system for state excluded employees is virtually illusory, with the overwhelming majority of grievances of excluded employees being summarily denied.
   2. The practice of blanket grievance denial forces excluded employee organizations to go to court. Litigation is not only time consuming, but also costly to both the excluded employee organizations and the State of California.
   3. Employee Grievance Arbitration for excluded employees results in timely resolution of grievances and is far less costly than litigation for both the state and for excluded employees.
   4. Employee Grievance Arbitration promotes settlement of grievances in advance of actual arbitration. Sixty percent of arbitration requests are settled in advance of any arbitral hearing.
3. Creates the Excluded Employee Arbitration Act which authorizes an employee organization that represents an excluded employee who has filed a grievance with CalHR to request binding arbitration when the following conditions are met:
   1. The grievance alleges a dispute that is subject to the procedures established in Section 599.859 of Title 2, California Code of Regulations as that section read on January 1, 2017.
   2. The grievance has not been resolved satisfactorily to the employee organization’s satisfaction after either of the following, as applicable, pursuant to CalHR’s regulations governing grievances for excluded employees:
      1. The fourth level of review.
      2. In cases where there is no fourth level of review, the third level of review.
   3. The employee organization requests arbitration in writing to CalHR, within 21 days of a decision rendered in either of the following, as applicable:
      1. The fourth level of review.
      2. In cases where there is no fourth level of review, the third level of review.
4. Requires CalHR and the employee organization, following a request for arbitration, to designate a standing panel of at least 20 arbitrators to be made available for resolving arbitrations authorized by this bill.
5. Provides that if fewer than three arbitrators are available, then the employee organization or the employer may obtain the names of an additional five arbitrators from the California State Mediation and Conciliation Service within the Public Employment Relations Board.
6. Sets forth a process whereby the employee organization and the employer may consecutively strike any arbitrator from the arbitration panel until the name of one arbitrator is agreed upon, or, if no agreement is made, the last remaining person on the panel shall be designated the arbitrator. The name of that arbitrator shall be submitted in writing to CalHR.
7. Provides that if the employee organization does not submit its choice of an arbitrator within 45 days after requesting arbitration, the request for arbitration shall be considered withdrawn. However, a withdrawn request shall not be construed to prevent the employee from pursuing other grievance procedures available under law.
8. Provides that a party to the arbitration has the right to have a certified shorthand reporter transcribe the proceeding and specifies that the transcript shall be the official record of the proceeding.
9. Specifies that the arbitrator shall apply California law to the facts and that the decision shall be based solely on the written record in the grievance, the grievance response, and the oral presentations made at the arbitration. Specifies that the arbitrator's decision shall be legally binding.
10. Requires the arbitrator to issue a written decision within 45 days of the conclusion of the hearing.
11. Requires the arbitrator to order that the non-prevailing party pay the cost of the arbitration, including the costs of a certified shorthand reporter. The arbitrator is prohibited from ordering the excluded employee to pay the costs of arbitration or reporter and specifies that the costs of arbitration and reporter cannot be passed on to the excluded employee.

Background

Current law authorizes CalHR to adopt reasonable rules and regulations for the administration of employer-employee relations. CalHR has adopted regulations that set out a Grievance and Appeal Procedure for excluded employees.

Under Title 2, Section 599.859 of the California Code of Regulations, supervisory employee organizations or individual supervisors may pursue resolution of disagreements over issues with their employer that fall within the jurisdiction of CalHR through a grievance procedure that typically includes an informal review and four formal levels of review by the employer according to the following timeline:

• Informal Level: Within five work days of the incident, an informal discussion between the excluded employee and the employee’s supervisor or manager.

• Level 1: If unsatisfied with the informal review, the employee may file a formal grievance within 10 work days of the incident and the employer’s designee for the first level of review must respond within 10 working days.

• Level 2: The employee may appeal the employer’s Level 1 decision within 10 work days of receipt of the employer’s response and the employer’s designee for the second level of review must respond within 15 work days.

• Level 3: The employee may appeal the employer’s Level 2 decision within 10 work days of receipt of the employer’s response and the employer’s designee for the third level of review must respond within 15 work days.

• Level 4: The employee may appeal the employer’s Level 3 decision to CalHR within 10 work days of receipt of the employer’s response and CalHR’s designee for the fourth level of review must respond within 20 work days.

Upon denial at the fourth level of review, the employee or the employee organization representing the employee may pursue a claim with the State Personnel Board, the Department of Fair Employment and Housing, or the State Superior Court depending on the issue in dispute.

Related/Prior Legislation

SB 950 (Nielsen, 2016) was substantially identical to this bill. The Governor vetoed SB 950 because “Expanding the grievance process for the state's managers to include legally binding arbitration will reduce departments' ability to effectively manage state operations and will result in significant unbudgeted state costs.”

AB 526 (Evans, 2007), held on suspense in the Senate Appropriations Committee, was identical to AB 1584 (Evans, 2006).

AB 1584 (Evans, 2006), held on suspense in the Senate Appropriations Committee, would have permitted an excluded employee to request mediation after the fourth level of review.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to Senate Appropriations Committee, CalHR indicates that it would incur increased staffing costs representing itself and other departments in arbitration proceedings as a result of the bill. The number of additional grievances/arbitrations that would result is unknown; specifically, CalHR estimates a cost of $40,000 per arbitration (General Fund). However, the bill’s costs would be partially offset to the extent that CalHR were to win arbitration proceedings.

Senate Appropriations Committee staff notes that to the extent that the provision requiring the non-prevailing party to pay the cost of the arbitration incentivizes resolution during one of the initial four levels of review currently in place, costs resulting from the bill could be reduced. Also, the bill will likely achieve litigation savings (as arbitration is generally less expensive than litigation). However, the state departments realizing any savings would likely not have their budgets correspondingly reduced. Consequently, the aggregate level of state spending would likely not be impacted.

SUPPORT: (Verified 5/26/17)

California Correctional Supervisors Organization (source)

Association for Los Angeles Deputy Sheriffs

California Association of Code Enforcement Officers

California Association of Professional Scientists

California College and University Police Chiefs Association

California Narcotic Officers’ Association

Civil Justice Association of California

Los Angeles County Professional Peace Officers Association

Los Angeles Police Protective League

Professional Engineers in California Government

Riverside Sheriffs’ Association

OPPOSITION: (Verified 5/26/17)

None received

ARGUMENTS IN SUPPORT: According to the sponsor, “the excluded employee grievance system is virtually illusory for excluded employees and is functioning at an unenforceable level.”

“Of all the grievances filed, 99% are denied because there is no consequence for the state agency to not follow the rules, and there is no objective oversight.” Thus, employee organizations respond by going to SPB or Superior Court resulting in high cost litigation for both the State and the employee representatives that takes years to resolve.

“The inability to have arbitration has cost the state unnecessary litigation costs. This bill will bring a more meaningful effort to resolve issues and problems, at a much lower level and save the taxpayer money.”

Prepared by:

5/27/17 18:41:54

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 76 (Nielsen) - Excluded employees: arbitration

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

SB 76 would authorize binding arbitration on behalf of an excluded state employee for alleged violations of specified working conditions, whose grievance has not been resolved after the fourth level of review.

Fiscal Impact:

The California Department of Human Resources (CalHR) indicates that it would incur increased staffing costs representing itself and other departments in arbitration proceedings as a result of the bill. The number of additional grievances/arbitrations that would result is unknown; specifically, CalHR estimates a cost of $40,000 per arbitration (General Fund). However, the bill’s costs would be partially offset to the extent that CalHR were to win arbitration proceedings (See Staff Comments).

Background:

Current law authorizes excluded employee organizations to represent excluded employees in employment relations, including grievances, with the State. Current state regulations (California Code of Regulations, Title 2, Section 599.859(d)) provide a standard grievance procedure which requires each party involved to attempt to resolve the grievance promptly and within the time limits contained in the grievance procedure, unless the parties mutually consent to extend a time limit. The grievance procedure is required to be completed in as few levels of review as possible but no more than four levels, as follows:

• Informal Discussion. The excluded employee or the excluded employee’s representative shall discuss the grievance with the excluded employee’s immediate supervisor. If the grievance is not settled within five work days, a written grievance may be filed.
• Formal Grievance – Level 1. A formal grievance may be filed no later than 10 work days after the event or circumstances occasioning the grievance. The first level of review shall respond to the grievance in writing within 10 work days after the receipt of the formal grievance.
• Formal Grievance – Level 2. The grievant may appeal the decision of the first level within 10 work days after receipt of the response. Within 15 work days after receipt of the appealed grievance, the person designated by the appointing power as the second level of review shall respond in writing to the grievance.
• Formal Grievance – Level 3. The grievant may appeal the decision of the second level within 10 work days after receipt of the response to the appointing power or his/her designee. Within 15 work days after receipt of the appeal, the appointing power or his/her designee shall respond in writing to the grievance.
• Formal Grievance – Level 4. The grievant may appeal the decision of the third level within 10 work days after receipt of the response to the Director, Department of Personnel Administration or his/her designee. Within 20 work days the Director, or his/her designee shall respond in writing to the grievance.

Proposed Law:

This bill would establish the Excluded Employee Arbitration Act, which would, among other things, do the following:

• Create the Excluded Employee Arbitration Act which would authorize an employee organization that represents an excluded employee to request binding arbitration when the following conditions are met:
  • The excluded employee has filed a grievance with CalHR alleging a violation of Title 2, California Code of Regulations.
  • The grievance has not been resolved satisfactorily at the fourth level of review.
  • In cases where there is no fourth level of review, the employee organization requests arbitration in writing to CalHR within 21 days of a decision rendered at the third level of review.
• Define arbitration as the process that results in a binding ruling that resolves an excluded employee grievance at the final level of the excluded employee grievance process.
• Specify a selection process for determining potential arbitrators.
• Require the arbitrator to issue a decision for each grievance heard during the arbitration. The decision shall be based solely on the written record in the grievance, the grievance response, and the oral presentations made at the arbitration. The arbitrator’s decision shall be legally binding.
• Require the arbitrator issue a written decision within 45 days of the conclusion of the hearing.
• Order that the non-prevailing party pay the cost of the arbitration, except that an arbitrator would be prohibited from ordering the excluded employee to pay the costs of arbitration and would prohibit the costs of arbitration from being passed on to the excluded employee.

Related Legislation:

• SB 950 (Nielsen, 2016), was substantially similar to this bill. The bill was vetoed by the Governor.
• AB 1584 (Evans, 2006) would have permitted an excluded employee to request mediation after the fourth level of review. The bill was held under submission on the suspense file of this Committee.

Staff Comments:

As noted above, CalHR indicates that the bill would require additional personnel time representing itself and other departments in arbitration proceedings. In addition, CalHR notes that the cost of this bill could be even greater as it allows for the arbitration of a variety of regulations that fall outside of CalHR’s jurisdiction. Current regulations limit grievances only to matters within CalHR’s jurisdiction. Based on those current regulations, CalHR responds to approximately 150 excluded employee grievances per year.

CalHR’s estimate of $40,000 per arbitration assumes arbitration hearings last two days (and reflects additional time for preparation and decision time), and includes the fee for the arbitrator, attorney fees, court reporter fees, and costs to the employee’s appointing power to produce witnesses and documents. The figure excludes costs related to travel and accommodations. Should CalHR prevail in an arbitration proceeding, its costs would be paid by the excluded state employee’s representing organization, lowering the fiscal impact of the bill.

Staff notes that to the extent that the provision requiring the non-prevailing party to pay the cost of the arbitration incentivizes resolution during one of the initial four levels of review currently in place, costs resulting from the bill could be reduced.

Staff notes that the bill would likely achieve litigation savings (as arbitration is generally less expensive than litigation). However, the state departments realizing any savings would likely not have their budgets correspondingly reduced. Consequently, the aggregate level of state spending would likely not be impacted.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2017-2018 Regular Session

Bill No: SB 76 (Author:Nielsen)

Version: March 22, 2017

Hearing Date: April 18, 2017

Fiscal: Yes

Urgency: No

Consultant: TSG

SUBJECT

Excluded employees: arbitration

DESCRIPTION

This bill, to be known as the Excluded Employee Arbitration Act, would give managerial, confidential, supervisory, and other excluded state employees the option, after exhausting normal grievance procedures, of requesting binding arbitration as a method for resolving disputes with their State employers. Under the bill’s provisions, the party that loses the arbitration must pay the costs of the arbitration, though it is the employee organization – not the individual employee – that pays.

BACKGROUND

Most California state employees are represented by unions. However, because of the managerial or supervisorial nature of their work, or because they handle confidential human resources information, some state workers cannot be part of these unions. Such employees are known as “excluded employees.”

To ensure protection of excluded employees’ workplace rights, in 1990, the Legislature enacted the Excluded Employees Bill of Rights (EEBR). (Gov. Code 3525 et seq.) Among other things, the EEBR permits excluded employee organizations to represent their excluded members in employment relations, including grievances, with the State.

If an excluded employee has a grievance against his or her employer, the California Codes of Regulation establish levels of administrative review that the employee must exhaust before he or she can file a civil action in court to litigate the matter. (2 C.C.R. Sec. 599.899.) The author and supporters of this bill contend that, instead of engaging seriously at the various levels of the grievance process, state agencies generally deny the grievances summarily and wait to engage seriously until after the excluded employee has taken the more drastic step of pursuing the matter in civil court or with the State Personnel Board.

Over the years several pieces of legislation have attempted to provide mediation or arbitration of the grievance as an alternative to, or a step prior to, the filing of a civil action. (See Prior Legislation, below, for greater detail.) This is another such bill.

This bill would enact the Excluded Employee Arbitration Act. It would give an employee organization representing an excluded employee the option of requesting binding arbitration, instead of a lawsuit in court, as the final stage of the established grievance resolution procedure. The losing party would bear the costs of the arbitration, though the employee organization, not the excluded employee, would be required to pay it.

This bill is quite similar to SB 950 (Nielson, 2016) in its final form. SB 950 passed the Assembly 75-1 and the Senate 39-0, but Governor Brown vetoed it. In his veto message, the Governor wrote:

This bill adds arbitration to the existing four step grievance process for state supervisors. Expanding the grievance process for the state's managers to include legally binding arbitration will reduce departments' ability to effectively manage state operations and will result in significant unbudgeted state costs.

This bill differs from the final form of SB 950, however, in that SB 950 would have applied to all alleged violations of Title 2 of the California Code of Regulations. Title 2 covers a wide variety of issues related to the administration of state government. The operations of the Secretary of State’s office and the Department of Fair Employment and Housing are part of Title 2, for example. Theoretically, therefore, SB 950 could have applied the arbitration option to matters involving the operation of those entities.

By contrast, SB 76 applies only to disputes subject to the procedures established in Section 599.859 of that Title. That is, SB 76 applies only to “a dispute of one or more excluded employees involving the application or interpretation of a statute, regulation, policy or practice that falls under the jurisdiction of the Department.” (2 C.C.R. Sec. 599.859(b)(1).)

CHANGES TO EXISTING LAW

Existing law establishes the Bill of Rights for State Excluded Employees, which generally provides rights for excluded employees in grievances against state employers. (Gov. Code Sec. 3525.)

Existing law provides the following definitions:

• “employee” means a civil service employee of the State of California, which includes those state agencies, boards, and commissions as may be designated by law that employ civil service employees, except the University of California, Hastings College of the Law, and the California State University;
• “excluded employee” means all managerial employees, as defined, all confidential employees, as defined, and all supervisory employees, as defined, and all civil service employees of the Department of Human Resources, professional employees of the Department of Finance engaged in technical or analytical state budget preparation other than the auditing staff, professional employees in the Personnel/Payroll Services Division of the Controller’s office engaged in technical or analytical duties in support of the state’s personnel and payroll systems other than the training staff, employees of the Legislative Counsel Bureau, employees of the Bureau of State Audits, employees of the Public Employment Relations Board, conciliators employed by the California State Mediation and Conciliation Service, employees of the office of the State Chief Information Officer, except as provided, and intermittent athletic inspectors who are employees of the State Athletic Commission;
• “supervisory employee organization” means an organization that represents members who are supervisory employees, as defined;
• “excluded employee organization” means an organization that includes excluded employees of the state, as defined, and that has as one of its primary purposes representing its members in employer-employee relations; and
• “state employer” or “employer,” for purposes of meeting and conferring on matters relating to supervisory employer-employee relations, means the Governor or his or her designated representatives. (Gov. Code Sec. 3527.)

Existing law provides excluded employee organizations the right to represent their excluded members in their employment relations, including grievances, with the State of California. (Gov. Code Sec. 3530.)

Existing law provides that the scope of representation for supervisory employees includes all matters relating to employment conditions and supervisory employer-employee relations including wages, hours, and other terms and conditions of employment. (Gov. Code Sec. 3532.)

This bill would enact the Excluded Employee Arbitration Act and authorize an employee organization representing an employee who has filed a grievance with the Department of Human Resources (department) to request arbitration of the grievance if all of the following conditions are met:

• the grievance alleges a dispute that is subject to the procedures established in Section 599.859 of Title 2 of the California Code of Regulations as that section read on January 1, 2017;
• the grievance has not been resolved to the employee organization’s satisfaction after either of the following, as applicable, pursuant to regulations of the department governing grievances for excluded employees: (1) the fourth level of review; or (2) in cases where there is no fourth level of review, the third level of review; and
• the employee organization requests arbitration in writing, submitted to the department, within 21 days of a decision rendered in either of the following, as applicable: (1) the fourth level of review; or (2) in cases where there is no fourth level of review, the third level of review.

This bill would provide the following definitions:

• “excluded employee” means an excluded employee of the state, as defined;
• “employee organization” means any organization that represents excluded employees of the State of California;
• “employer” means the State of California; and
• “arbitration” means the binding ruling that resolves an excluded employee grievance at the fifth level of the excluded employee grievance process.

This bill would require, after a request for arbitration is made, that the department and the employee organization designate a standing panel of at least 20 arbitrators to be available for arbitration.

This bill would provide that if there are fewer than three arbitrators available, then the employee organization or the employer may obtain the names of an additional five arbitrators from the California State Mediation and Conciliation Service within the Department of Industrial Relations.

This bill would authorize the employee organization and the employer to consecutively strike any arbitrator from the standing panel until the name of one arbitrator is agreed upon, or, if no agreement is made, the last remaining person on the panel shall be designated the arbitrator.

This bill would require the name of the chosen or the sole remaining arbitrator to be submitted in writing to the department.

This bill would provide that if the employee organization does not submit its choice of an arbitrator within 45 days after requesting arbitration, the request for arbitration would be considered withdrawn.

This bill would require the arbitrator to issue a decision for each grievance heard during the arbitration and require the decision to be based solely on the written record in the grievance, the grievance response, and the oral presentations made at the arbitration.

This bill would make the arbitrator’s decision legally binding.

This bill would require the arbitrator to issue a written decision within 45 days of the conclusion of the hearing.

This bill would require the arbitrator to order the nonprevailing party to pay the cost of the arbitration, however, the arbitrator could not order the excluded employee to pay the cost of the arbitration nor could the excluded employee’s representative pass the cost on to the excluded employee.

This bill would codify the intent of the Legislature that: (1) state excluded employees shall have the right to arbitration as a fifth step to the excluded employee grievance procedure; (2) the present grievance procedure leaves too many grievances unresolved; and (3) this lack of resolution has caused more cases to be filed in California’s courts, which should have been resolved at a lower level.

COMMENT

1. Stated need for the bill

According to the author:

Currently, the excluded employee grievance system has proven to be less than effective and is functioning at an unenforceable level. The vast majority of grievances are summarily denied by CalHR instead of being properly addressed. Consequently, excluded employee organizations have been forced to escalate to the Superior Court or the State Personnel Board. This is very costly for both the state and the employee organization and takes years to resolve.

In contrast, where arbitration is permitted among non-excluded employees, it permits problems to be resolved much more quickly than if they were elevated to the court system. Additionally, grievances rarely escalate to arbitration among represented employees – in fact, even when arbitration is requested, most grievances are settled outside of arbitration because the state agencies are incentivized to make equitable and just rulings.

In support, the California Correctional Supervisors Organization writes:

This bill would improve the excluded employee grievance process to make it effective and would result in reduced costs to the State of California as well. Currently, the excluded employee grievance system is virtually illusory for excluded employees and is functioning at an unenforceable level. Of all the grievances filed, 99% are denied because there is no consequence for the state agency to not follow the rules, and there is no objective oversight. As it stands now, the state agencies will deny all grievances because it’s in their best interest and there is nowhere for the excluded employee to go, it is a closed system.

To combat this, excluded employee organizations have been going to Superior Court or the State Personnel Board. This is very costly for the state and the employee organizations and takes years to resolve. This means that a simple low-cost grievance can and has resulted in major litigation costs to the State of California. How high are these costs? Well the aggregate litigation costs for the California Correctional Supervisors Organization in its grievance litigation with the State of California is around $1 million. It is reasonable to assume that the litigation costs for the state in defending grievance litigation is significantly in excess of that figure.

Senate Bill 76 will result in decreased costs for two reasons. First, arbitration is significantly less expensive than litigation. Second, the provisions of SB 76 that require the loser to pay the costs of the arbitration has [sic] the impact of incentivizing the parties to attempt to settle the grievance prior to arbitration. In other words, the countervailing savings caused by the replacement of litigation with arbitration, and the new incentives for the parties to settle grievances assures that passage of SB 76 will result in decreased costs of grievances.

In further support, a group of organizations representing law enforcement personnel writes:

Senate Bill 76 will assure that there is a viable system for resolving grievances for excluded employees by providing for binding arbitration of those grievances. Currently, the excluded employee grievances system is virtually illusory, with the overwhelming majority being automatically denied. Those denials have proven to be a false economy, however, since excluded employee organizations have been going to Superior Court or the State Personnel Board… This is a just bill that will improve labor relations between management and excluded employees.

2. Cost issues

Last session, a bill virtually identical to this one passed both the Assembly and Senate on consent, only to be vetoed by the Governor. In his veto message, the Governor cited two reasons for his decision. “Expanding the grievance process for the state's managers to include legally binding arbitration,” he wrote, “will reduce departments' ability to effectively manage state operations and will result in significant unbudgeted state costs.”

With regard to the costs associated with the binding arbitration option that this bill would give to excluded employees, the author responds that the Governor’s analysis is:

based on two inaccurate assertions: (1) that every case where arbitration is requested actually goes to arbitration, and (2) that the state will lose every arbitration case.

First, among represented employees, less than half of arbitration requests actually go to arbitration. This is because requesting arbitration forces a serious settlement discussion to take place, even among represented employees who split the arbitration cost regardless of the final ruling. SB 76 will foster a further incentive to settle via the loser-pays model.

Second among represented employees, the state does not lose every arbitration case – the breakdown is closer to 60/40. Additionally, Department of Finance failed to take into consideration the fact that the current system encourages litigation, a process which is much more expensive and time intensive than arbitration.

Support: The Association for Los Angeles Deputy Sheriffs; The Association of California State Supervisors; California Association of Code Enforcement Officers; California Association of Professional Scientists; California College and University Police Chiefs Association; California Correctional Supervisors Organization; California Narcotic Officers Association; Civil Justice Association of California; Los Angeles County Professional Peace Officers Association; Los Angeles Police Protective League; Professional Engineers in California; Riverside Sheriffs Association

Opposition: None Known

HISTORY

Source: California Correctional Supervisors Organization (sponsor), Association of California State Supervisors (co-sponsor)

Related Pending Legislation: None Known

Prior Legislation:

SB 950 (Nielsen 2016). See Background.

AB 526 (Evans, 2007) was nearly identical to AB 1584, below. AB 526 was held on suspense in the Assembly Appropriations Committee and died there.

AB 1584 (Evans, 2006) would have established the Excluded Employees Mediation Act permitting excluded employees to request mediation after the fourth level of grievance review. AB 1584 passed the Assembly on consent, but died in the Senate Appropriations Committee.

AB 1258 (Matthews, 2003) was nearly identical to AB 2802, below. AB 1258 died at the Assembly Desk without committee referral.

AB 2802 (Strom-Martin, 2002) would have established arbitration procedures for supervisory employees of the Department of Corrections and the Department of the Youth Authority. AB 2802 was held under submission in the Assembly Appropriations Committee.

SB 511 (Ayala, Chapter 1522, Statutes of 1990) enacted the Excluded Employees Bill of Rights (EEBR), which permits, among other things, excluded employee organizations to represent their excluded members in employment relations, including grievances, with the State.

Prior Vote: Senate Public Employment and Retirement Committee (Ayes 5, Noes 0)

**************

SENATE COMMITTEE ON

PUBLIC EMPLOYMENT AND RETIREMENT

Dr. Richard Pan, Chair

2017 - 2018 Regular

Bill No: SB 76 Hearing Date: 3/27/17

Subject: Excluded employees: arbitration

SOURCE: California Correctional Supervisors Organization

DIGEST: This bill establishes the Excluded Employee Arbitration Act which authorizes binding arbitration on behalf of an excluded state employee for alleged violations of working conditions, as specified, whose grievance has not been resolved after the fourth level of review.

ANALYSIS:

Existing law:

1. Establishes the Ralph C. Dills Act (Dills Act) which sets forth a framework that governs labor relations between the State and state employees.
2. Excepts from the Dills Act’s definition of state employee: managerial employees, confidential employees, supervisory employees, and other employees, as defined.
3. Establishes the Bill of Rights for State Excluded Employees which defines excluded employees as those employees excepted from the Dills Act.
4. Provides that the purpose of the Bill of Rights for State Excluded Employees includes informing excluded employees of their rights and terms and conditions of employment and also serves to promote harmonious personnel relations among those representing state management in the conduct of state affairs.
5. Prohibits excluded employees from holding office in employee organizations representing rank and file employees or participating in any employee representational matters on behalf of non-excluded employees.
6. Provides that excluded employee organizations shall have the right to represent their excluded members in their employment relations, including grievances, with the State of California.
7. Authorizes supervisory employees to form, join and participate in the activities of supervisory organizations of their own choosing for purposes of representation on all matters of supervisory employee relations, as provided, or to refrain from so doing. They also have the right to represent themselves individually in their employment relations with the state employer.
8. Authorizes the California Department of Human Resources (CalHR) to adopt reasonable rules and regulations for the administration of employer-employee relations.

This bill:

1. Declares Legislative intent that state excluded employees have the right to arbitration as a fifth step to the excluded employee grievance procedure; and states that the present grievance procedure leaves too many grievances unresolved resulting in more cases being filed in California’s courts, which could have been resolved at a lower level.
2. Makes findings and declarations as follows:
   1. The grievance system for state excluded employees is virtually illusory, with the overwhelming majority of grievances of excluded employees being summarily denied.
   2. The practice of blanket grievance denial forces excluded employee organizations to go to court. Litigation is not only time consuming, but also costly to both the excluded employee organizations and the State of California.
   3. Employee Grievance Arbitration for excluded employees results in timely resolution of grievances and is far less costly than litigation for both the state and for excluded employees.
   4. Employee Grievance Arbitration promotes settlement of grievances in advance of actual arbitration. Sixty percent of arbitration requests are settled in advance of any arbitral hearing.
3. Creates the Excluded Employee Arbitration Act which authorizes an employee organization that represents an excluded employee who has filed a grievance with CalHR to request binding arbitration when the following conditions are met:
   1. The grievance alleges a dispute that is subject to the procedures established in Section 599.859 of Title 2, California Code of Regulations as that section read on January 1, 2017.
   2. The grievance has not been resolved satisfactorily to the employee organization’s satisfaction after either of the following, as applicable, pursuant to CalHR’s regulations governing grievances for excluded employees:
      1. The fourth level of review.
      2. In cases where there is no fourth level of review, the third level of review.
   3. The employee organization requests arbitration in writing to CalHR, within 21 days of a decision rendered in either of the following, as applicable:
      1. The fourth level of review.
      2. In cases where there is no fourth level of review, the third level of review.
4. Requires CalHR and the employee organization, following a request for arbitration, to designate a standing panel of at least 20 arbitrators to be made available for resolving arbitrations authorized by this bill.
5. Provides that if fewer than three arbitrators are available, then the employee organization or the employer may obtain the names of an additional five arbitrators from the California State Mediation and Conciliation Service within the Public Employment Relations Board.
6. Sets forth a process whereby the employee organization and the employer may consecutively strike any arbitrator from the arbitration panel until the name of one arbitrator is agreed upon, or, if no agreement is made, the last remaining person on the panel shall be designated the arbitrator. The name of that arbitrator shall be submitted in writing to CalHR.
7. Provides that if the employee organization does not submit its choice of an arbitrator within 45 days after requesting arbitration, the request for arbitration shall be considered withdrawn. However, a withdrawn request shall not be construed to prevent the employee from pursuing other grievance procedures available under law.
8. Provides that a party to the arbitration has the right to have a certified shorthand reporter transcribe the proceeding and specifies that the transcript shall be the official record of the proceeding.
9. Specifies that the arbitrator shall apply California law to the facts and that the decision shall be based solely on the written record in the grievance, the grievance response, and the oral presentations made at the arbitration. Specifies that the arbitrator's decision shall be legally binding.
10. Requires the arbitrator to issue a written decision within 45 days of the conclusion of the hearing.
11. Requires the arbitrator to order that the non-prevailing party pay the cost of the arbitration, including the costs of a certified shorthand reporter. The arbitrator is prohibited from ordering the excluded employee to pay the costs of arbitration or reporter and specifies that the costs of arbitration and reporter cannot be passed on to the excluded employee.

Background

Current law authorizes CalHR to adopt reasonable rules and regulations for the administration of employer-employee relations. CalHR has adopted regulations that set out a Grievance and Appeal Procedure for excluded employees.

Under Title 2, Section 599.859 of the California Code of Regulations, supervisory employee organizations or individual supervisors may pursue resolution of disagreements over issues with their employer that fall within the jurisdiction of CalHR through a grievance procedure that typically includes an informal review and four formal levels of review by the employer according to the following timeline:

• Informal Level: Within five work days of the incident, an informal discussion between the excluded employee and the employee’s supervisor or manager.

• Level 1: If unsatisfied with the informal review, the employee may file a formal grievance within 10 work days of the incident and the employer’s designee for the first level of review must respond within 10 working days.

• Level 2: The employee may appeal the employer’s Level 1 decision within 10 work days of receipt of the employer’s response and the employer’s designee for the second level of review must respond within 15 work days.

• Level 3: The employee may appeal the employer’s Level 2 decision within 10 work days of receipt of the employer’s response and the employer’s designee for the third level of review must respond within 15 work days.

• Level 4: The employee may appeal the employer’s Level 3 decision to CalHR within 10 work days of receipt of the employer’s response and CalHR’s designee for the fourth level of review must respond within 20 work days.

Upon denial at the fourth level of review, the employee or the employee organization representing the employee may pursue a claim with the State Personnel Board (SPB), the Department of Fair Employment and Housing, or the State Superior Court depending on the issue in dispute.

Related/Prior Legislation

SB 950 (Nielsen, 2016), was substantially identical to this bill. The Governor vetoed SB 950 because “Expanding the grievance process for the state's managers to include legally binding arbitration will reduce departments' ability to effectively manage state operations and will result in significant unbudgeted state costs.”

AB 526 (Evans, 2007), held on suspense in the Senate Appropriations Committee, was identical to AB 1584 (Evans, 2006).

AB 1584 (Evans, 2006), held on suspense in the Senate Appropriations Committee, would have permitted an excluded employee to request mediation after the fourth level of review.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

California Correctional Supervisors Organization (source)

Association for Los Angeles Deputy Sheriffs

California Association of Code Enforcement Officers

California College and University Police Chiefs Association

California Narcotic Officers’ Association

Civil Justice Association of California

Los Angeles County Professional Peace Officers Association

Los Angeles Police Protective League

Riverside Sheriffs’ Association

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to the sponsor, “the excluded employee grievance system is virtually illusory for excluded employees and is functioning at an unenforceable level.”

“Of all the grievances filed, 99% are denied because there is no consequence for the state agency to not follow the rules, and there is no objective oversight.” Thus, employee organizations respond by going to SPB or Superior Court resulting in high cost litigation for both the State and the employee representatives that takes years to resolve.

“The inability to have arbitration has cost the state unnecessary litigation costs. This bill will bring a more meaningful effort to resolve issues and problems, at a much lower level and save the taxpayer money.”