As Amended June 4, 2014.
Appeal from the Iowa District Court for Polk County, Michael D. Huppert, Judge. Public employee organization appeals district court decision on judicial review that reversed ruling of Public Employment Relations Board on scope-of-bargaining issue.
DISTRICT COURT JUDGMENT AFFIRMED IN PART AND REVERSED IN PART; REMANDED WITH INSTRUCTIONS.
Mark T. Hedberg of Hedberg & Boulton, P.C., Des Moines, for appellant.
Thomas J. Miller, Attorney General, and Matthew T. Oetker, Assistant Attorney General, for appellee State of Iowa, Department of Administrative Services.
Ann M. Smisek, Des Moines, for appellee Iowa Public Employment Relations Board.
WATERMAN, Justice. All justices concur except Appel, J., who takes no part.
The fighting issue in this appeal is whether a collective bargaining proposal addressing outsourcing of work performed by public employees is a " procedure for staff reduction" and therefore a mandatory subject of bargaining pursuant to Iowa Code section 20.9 of the Public Employment Relations Act (PERA), Iowa Code chapter 20. See Iowa Code § 20.9 (2013). The Iowa Public Employment Relations Board (PERB) determined that the State of Iowa's Proposal 8(B) is subject to mandatory bargaining. The State and AFSCME Iowa Council 61 (AFSCME) filed cross-petitions for judicial review. The district court reversed PERB's ruling on this issue, and AFSCME appealed. We retained the appeal.
In Waterloo Education Association v. Iowa Public Employment Relations Board ( Waterloo II ), our court thoroughly reviewed
the history of public employee collective bargaining and the methods courts and agencies use to resolve scope-of-bargaining issues. 740 N.W.2d 418, 420-28 (Iowa 2007), abrogated in part by statute, 2010 Iowa Acts ch. 1165, § 6 (codified at Iowa Code § 20.6(1) (2011)). We reaffirmed a two-pronged test for ascertaining whether a proposal is a mandatory or permissive subject of bargaining. Id. at 429. PERB used the Waterloo II test. The parties disagree over the meaning and effect of Proposal 8(B) and disagree over its predominant purpose under the Waterloo II test. This case presents our first opportunity to review PERB's application of that test since the legislature amended PERA to expressly grant PERB the authority to interpret and apply the chapter. See 2010 Iowa Acts ch. 1165, § 6 (codified at Iowa Code § 20.6(1) (2011)). Our review " do[es] not pass in any way on the merits" of the proposal. Waterloo II, 740 N.W.2d at 431.
For the reasons explained below, we hold that Proposal 8(B), as interpreted by the State to require staff retention, is a permissive subject of bargaining. However, Proposal 8(B) is a mandatory subject under AFSCME's interpretation, which permits the employer to " bump" other public employees after transfers resulting from outsourcing. The record is inadequate to determine which interpretation is correct. Accordingly, we affirm the district court's judgment in part, reverse in part as to Proposal 8(B), and remand for further proceedings consistent with this opinion.
I. Background Facts and Proceedings.
AFSCME  is an employee organization certified by PERB to represent certain State employees in collective bargaining. In November 2012, AFSCME began negotiating its 2013-2015 collective bargaining agreement with the State. On November 30, the State provided its initial bargaining position for the terms of the new contract. The State proposed deleting certain contract provisions from the existing contract. The State asserted the proposed deletions " concern permissive subjects which the State need not negotiate in accordance with Iowa Code section 20.9."
Proposal 8(B) of the State's bargaining position deleted a provision of the then-current collective bargaining agreement, which stated:
If, as a result of outsourcing or privatization following an Employer initiated competitive activities process, positions are eliminated, the Employer shall offer affected employees other employment within Iowa State government. Other employment shall first be sought within the affected employee's department and county of employment. Affected employees accepting other employment shall not be subject to loss of pay nor layoff pending placement in other employment under this Section. Neither shall such employees be subject to a decrease in pay in their new position. However, affected employees will not be eligible for any pay increase until such time as their pay is within their new pay grade range. In the alternative, employees may elect to be laid off.
Employees placed in other employment under this Section, as well as those electing to be laid off, will be eligible for recall to the classification held at the time of outsourcing or privatization, in
accordance with Article VI of this Agreement.
AFSCME disputed the State's classification of this provision as a permissive bargaining subject, arguing that the provision was instead a " procedure for staff reduction," which is a mandatory bargaining subject under Iowa Code section 20.9 (2013).
Because the parties could not agree whether this provision, and others, were mandatory bargaining subjects, the State filed a " Petition for Expedited Resolution of Negotiability Dispute" with PERB. PERB ruled on the State's petition on February 8, 2013. It rejected the State's argument that the predominant purpose of Proposal 8(B) is to retain staff. PERB found the predominate purpose of Proposal 8(B) " is to designate a process for implementing a staff reduction that occurs due to outsourcing." PERB was not persuaded by the State's argument that Proposal 8(B) " makes outsourcing economically infeasible because [the State] must maintain employment for displaced employees under the proposal." It ruled " [t]his argument relates to the merit of the proposal rather than the test of negotiability." PERB further found Proposal 8(B) did not infringe on the State's authority to decide to reduce staff, but instead " focuses on what happens once a decision to reduce staff has been made." It therefore concluded " [b]ecause the predominant purpose of [Proposal 8(B)] is to set out a process for implementing procedures for a staff reduction, it is mandatory." PERB concluded the State's other proposals were permissive.
Both the State and AFSCME filed petitions for judicial review. On July 12, the district court affirmed PERB's decision on all proposals except for Proposal 8(B). The district court determined Proposal 8(B) did not fit within the ...