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STATE OF ILLINOIS
ILLINOIS LABOR RELATIONS BOARD
STATE PANEL
American Federation of State, County and )
Municipal Employees, Council 31, )
)
Charging Party, )
) Case Nos. S-CA-17-067
and ) S-CA-17-089
)
State of Illinois, Department of Central )
Management Services, )
)
Respondent. )
ADMINISTRATIVE LAW JUDGE’S RECOMMENDED DECISION AND ORDER
On December 6, 2016, the American Federation of State, County and Municipal
Employees, Council 31, (Union) filed a charge with the Illinois Labor Relations Board’s State
Panel (Board) alleging that the State of Illinois, Department of Central Management Services
(Respondent or State) engaged in unfair labor practices within the meaning of Sections 10(a)(4)
and (1) of the Illinois Public Labor Relations Act (Act) 5 ILCS 315 (2014), as amended. The
Union filed a second charge on February 6, 2017. The charges were investigated in accordance
with Section 11 of the Act. On May 1, 2017, the Board’s Executive Director consolidated the
cases and issued a Complaint for Hearing. A hearing was conducted on September 21 and 22, and
October 3, 2017, in Chicago, Illinois, at which time the parties presented evidence in support of
the allegations and all parties were given an opportunity to participate, to adduce relevant evidence,
to examine witnesses, and to argue orally. The parties filed timely post-hearing briefs. After full
consideration of the parties’ stipulations, evidence, arguments, and briefs, and upon the entire
record of the case, I recommend the following:
I. PRELIMINARY FINDINGS1
The parties stipulate and I find that:
1. At all times material, the State has been a public employer within the meaning of Section
1 This is only a partial list of the parties’ 38 stipulations. The remaining stipulations are included in the
statement of facts.
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3(o) of the Act.
2. At all times material, the State has been subject to the jurisdiction of the State Panel of the
Board, pursuant to Section 5(a-5) of the Act.
3. At all times material, the Union has been a labor organization within the meaning of Section
3(i) of the Act.
4. At all times material, the Union has been the certified exclusive representative of a number
of bargaining units (Units) comprised of the Respondent’s employees in numerous state
agencies.
5. At all times material, the Union and the State have been parties to a master collective
bargaining agreement (CBA) for the Units with a stated expiration date of June 30, 2015.
6. On or about February 9, 2015, the Union and the State commenced negotiations for a
successor CBA.
7. On June 25, 2015, prior to the expiration of the CBA referenced in paragraph 4, the parties
reached agreement on a Tolling Agreement.
8. During negotiations, the parties negotiated a series of three (3) “Tolling Agreements” dated
June 25, 2015, July 29, 2015, and September 9, 2015.
9. At the bargaining session on January 8, 2016, State spokesperson, John Terranova, stated
that the State believed that the parties had reached impasse and presented a piece of paper
called Last, Best and Final Offer.
10. Also at the January 8, 2016 bargaining session, Terranova asked the Union’s negotiators
if the Union agreed that the parties had reached impasse. Roberta Lynch responded that
the Union did not agree that the parties were at impasse.
11. On or about January 15, 2016, the State filed an unfair labor practice charge against
Charging Party in Case No. S-CB-16-017, alleging that the Union had repudiated the
parties’ Tolling Agreement, and on March 22, 2016, the Board’s Executive Director issued
a complaint for hearing. On February 22, 2016, the Union filed an unfair labor practice
charge in Case No. S-CA-16-087 regarding the State’s declaration of impasse, and on
March 22, 2016, the Board’s Executive Director issued a complaint for hearing
12. Board Case No. S-CB-16-017 and Board Case No. S-CA-16-087 were consolidated.
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13. On September 2, 2016, a Board Administrative Law Judge issued a Recommended
Decision and Order (RDO) in Consolidated Case Nos. S-CB-16-017 and S-CA-16-087,
and the parties filed exceptions to the RDO.
14. On November 15, 2016, the Board, in its public meeting, held that the parties were
deadlocked in their negotiations on the single critical issue of subcontracting, which
justified a declaration of impasse with respect to all issues still open between the parties.
II. ISSUES AND CONTENTIONS
The first issue is whether the State violated Sections 10(a)(4) and (1) of the Act when, since
December 8, 2016, it allegedly refused to resume bargaining over the issue of subcontracting. The
second issue is whether the State violated Sections 10(a)(4) and (1) of the Act when, since January
9, 2017, it allegedly refused to resume bargaining with the Union over a successor contract. The
threshold question raised by these issues is whether the Union’s letters of November 21, 2016
and/or January 9, 2017 broke the parties’ impasse and thereby revived the State’s obligation to
bargain.
The Union argues that its letter of November 21, 2016 broke the parties’ impasse because
it stated that the Union had actual, new proposals to present to the State on subcontracting, the
issue that caused the parties’ overall impasse, according to the Board in Impasse I.2 The Union
reasons that the letter’s reference to the Board’s earlier decision sufficiently explained the Union’s
new position on subcontracting. The Union further asserts that the State was not entitled to demand
details about the proposal before deciding whether to return to the table. It contends that the State’s
claimed failure to understand the intent of the Union’s letter was unreasonable and demonstrated
willful ignorance.
The Union next contends that its January 9, 2017 letter also broke the parties’ impasse
because it likewise showed that circumstances had changed. Specifically, the Union indicated it
was willing to make concessions on wages and insurance, two key issues that separated the parties.
The Union also notes that the uncertainties, which then existed regarding the State’s authority to
implement its final offer, weigh in favor of finding that the letter broke the parties’ impasse. The
Union concludes that its willingness to move from its pre-impasse position broke the impasse,
2 State of Ill., Dep’t of Cent. Mgmt. Servs., Charging Party and Am. Fed. of State, Cnty. and Mun. Empl.,
Council 31 “Impasse I”, 33 PERI ¶ 67 (IL LRB -SP 2016).
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even if the parties remained far apart and the State was unwilling to agree to the Union’s
framework of concessions.
The State argues that it did not violate the Act when it refused to return to the table
following the Union’s first letter because that letter did not indicate that the Union was sincere in
its claim of new proposals or that it was offering concessions on subcontracting. The State
emphasizes that the Union’s sincerity, or good faith, is key to the outcome of the case and that it
had reasonable grounds to doubt that sincerity. It reasons that the Union’s letter was vague and
non-specific, the Union’s final offer at interest arbitration proposed to maintain the status quo on
subcontracting, and the State had reason to believe that the Union’s bargaining committee never
approved any new proposals.
The State argues that the Union’s January 9, 2017 letter likewise failed to revive the State’s
obligation to bargain because it did not change the circumstances that caused the impasse, namely
the parties’ disagreement on subcontracting. It made no mention of subcontracting at all, appeared
to be “public messaging” rather than a proposal, and still left the parties nearly $3 billion apart.
III. FINDINGS OF FACT
The Union and the State were parties to a master collective bargaining agreement with a
stated expiration date of June 30, 2015.
Article 29 of the parties’ 2012-2015 contract addresses subcontracting. It states that the
“Employer reserves the right to contract out any work it deems necessary or desirable because of
greater efficiency, economy, or other related factors.” This provision has been included in the
parties’ contracts, substantially unchanged, since 1979. It also sets forth the procedures by which
the State will seek subcontracts, including its obligation to notify the union. Finally, it provides
that the State will make an effort to have the contractor offer positions to employees who are
adversely affected by the decision to subcontract.
Article 32, Section 4 of the parties 2012-2015 contract also contains provisions regarding
the payment of step increases.
1. The Parties’ Negotiation for a 2015-2019 Successor Contract
On February 9, 2015, the parties began their negotiations for a successor collective
bargaining agreement. Chief Spokesperson and Lead Negotiator in the negotiations on behalf of
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the Union was its Executive Director Roberta Lynch. On days that Ms. Lynch was not available,
the Union’s Deputy Director Michael Newman served as Chief Spokesperson and Lead
Negotiator. Chief Spokesperson and Lead Negotiator in the negotiations on behalf of the State
was Department of Central Management Services Deputy Director, Labor Relations, John
Terranova. On days that Mr. Terranova was not available, outside counsel, Mark Bennett of Laner
Muchin, Ltd., served as Chief Spokesperson and Lead Negotiator on behalf of the State.
The parties met in twenty-four (24) bargaining sessions encompassing a total of sixty-seven
(67) days between February 9, 2015 and January 8, 2016. Typically, the Union would bring
between 250 to 300 members to participate in negotiations.
On February 26, 2015, the parties agreed upon Ground Rules for negotiations. The Ground
Rules provide the following in relevant part:
Each party shall identify a chief spokesperson. The chief spokesperson for each
party will be the only person who can accept or reject proposals, offer counter
proposals, and agree to the same. During negotiation sessions, bargaining team
members shall direct all questions and comments to the chief spokesperson of each
party, and the chief spokesperson has the discretion to designate members of the
bargaining team to respond to particular questions or to provide a rationale with
respect to the proposal under discussion. Outside of negotiation sessions, each
chief spokesperson will direct all correspondence between the parties relating to the
acceptance of proposals, the rejection of proposals, the offering of proposals and/or
offering counter proposals to the chief spokesperson of the other party or his or her
designee.
The Union negotiated to include the last sentence of the paragraph above to ensure that the
chief spokespersons would not negotiate “in public” and would instead address each other,
directly, outside of negotiations. The parties’ prior Ground Rules required the parties to present
their proposals and counterproposals at the bargaining table. However, the Union negotiated
language in the 2015-2019 Ground Rules that allowed correspondence between the parties’ chief
spokespersons relating to the offering of proposals and counter proposals.
On February 27, 2015, the State presented its initial comprehensive non-economic
proposals. On March 18, 2015, the Union presented its initial comprehensive non-economic
proposals. On May 26, 2015, the State presented its initial comprehensive economic proposals.
On June 17, 2015, the Union presented its comprehensive economic proposals. Beginning on June
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15, 2015, at least one (1), and at some sessions two (2), mediators from the Federal Mediation and
Conciliation Service were present at most bargaining sessions.
On July 1, 2015, the State ceased paying employees step increases. On July 24, 2015, the
Union filed a charge with the Board in Case No. S-CA-16-006 (“Step Increase Case”), which
alleged that the State violated Section 10(a)(4) and (1) of the Act by that conduct. The Union
later amended the charge to allege that the State also violated the Act by refusing longevity pay,
and certain promotions-related raises pending negotiations for the successor bargaining agreement.
The Board’s Executive Director issued a Complaint for Hearing, and the matter ultimately
proceeded to hearing before an Administrative Law Judge.
During negotiations, the parties negotiated a series of three (3) successive “Tolling
Agreements.” The Tolling Agreements provided that the parties would adhere to their statutory
obligation to bargain in good faith and that neither party would resort to strike, work stoppage,
work slowdown, or lockout until impasse was reached. The parties’ third and final Tolling
Agreement, executed on September 9, 2015,3 provided that the agreement would remain in effect
until impasse was reached. It further provided that if the parties could not agree that they reached
impasse, the Board would decide that issue, and that the Tolling Agreement would remain in effect
until the Board resolved the question of impasse.
During the course of negotiating a successor agreement, the parties were able to reach
agreement on nine packages, each made up of a number of individual provisions. The agreed-to
packages bear the following titles: Classifications and Filling of Vacancies; Miscellaneous
Package; Hours of Work and Overtime Package; CU-500 Package; Integrity of the Bargaining
Unit and Authority of the Contract; Transfer on Recall, Acceptance of Position, and Grading;
Work Rules and Discipline; Temporary Assignment, Grading and Timeliness of Filling of
Vacancies; and Grievance Procedure and Union Business.
At the bargaining session on January 8, 2016, State spokesperson John Terranova stated
that the State believed that the parties had reached impasse and presented a document called Last,
Best and Final Offer. This document listed the State’s final offers on the twelve (12) package
proposals on which the parties had not reached agreement: (1) Wages and Steps; (2) Health
Insurance Appendix A; (3) Outstanding Economic Issues; (4) Subcontracting; (5) Management
Rights and Check-Off/Fair Share; (6) Vacation/Holiday/LOA including Pension; (7) Layoff; (8)
3The first and second Tolling Agreements were dated June 25, 2015 and July 29, 2015, respectively.
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Semi-Automatic/Classification; (9) DOC/DJJ Roll Call; (10) Mandatory Overtime; (11) Non-
Discrimination/UMP/Filling of Vacancies; and (12) Health and Safety Outstanding Issues. Also
at the January 8, 2016 bargaining session, Terranova asked the Union’s negotiators if the Union
agreed that the parties had reached impasse. Roberta Lynch responded that the Union did not
agree that the parties were at impasse.
On January 8, 2016, after the State declared impasse, the Union made a counterproposal
on wages and a counterproposal on health insurance. The State maintained that the parties were
at impasse.
2. The Parties’ Final Offers on Subcontracting, Wages, and Health Insurance, as of
January 8, 2016
a. Subcontracting
In relevant part, the State’s final offer on subcontracting provided that the “Employer
reserves the right to contract out any work it deems necessary.” It also contained a section entitled
“Managed Competition.” That section stated that, “upon formal consideration to subcontract any
work performed by bargaining unit employees which would result in the layoff of bargaining unit
employees,” the State would give the Union advance notice. It would also provide the Union with
an opportunity to discuss the State’s reasons for considering such a contract and to provide the
Employer with alternatives. The proposal provided that if the State decides to contract out
bargaining unit work, the State “may offer the Union the opportunity to create a labor management
team.” That team could prepare a proposal, which the State would then review to “determine
whether that proposal more effectively meets the Employer’s needs than bids or proposals from
external vendors.” It further specified that the “approval would be at the discretion of the
Employer based on operational need.”
The Union’s final offer on subcontracting retained the contract’s qualifying language on
the Employer’s authority to contract out bargaining unit work. Specifically, that language stated
that “the Employer reserves the right to contract out any work it deems necessary or desirable
because of greater efficiency, economy, or other related factors.”
In addition, the Union’s final offer contained other qualifications and principles, which
further limited the State’s authority to subcontract. For example, it stated that “public services
should never be turned over to companies that seek to make profits at the expense of service
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quality, public accountability or fair treatment of employees.” It stated that “privatization shall
not be used as a means to deny employees the right to union representation, to drive down
employee wages and benefits, or to otherwise diminish the rights of employees.” It also provided
that “state government must hold contractors accountable for their performance, and ensure that
the public receives quality services at a reasonable cost.”
Addressing the State’s managed competition provision, the Union proposed that the
“Employer shall offer the Union he opportunity to form a labor management team” that could
“prepare an alternate plan to be considered by the Employer.” It further stated that “unless the
bids or proposals from any external bidder meet the standard of greater efficiency, economy or
other related factors, the labor-management team’s alternative plan shall be accepted.”
Terranova explained that there were two related “sticking points” in negotiations on
subcontracting. First, the State consistently proposed to delete existing contract language that
qualified the State’s right to subcontract, while the Union in each of its nine subcontracting
proposals consistently proposed to retain it. The relevant language provided that the State had the
right to subcontract when it deemed subcontracting necessary or desirable because of “greater
efficiency, economy, or other related factors.” Terranova explained that the State objected to the
quoted language because it gave an arbitrator the authority to interpret those terms and offer an
opinion on whether the State could subcontract in any given case. Second, the State and the Union
disagreed on the State’s managed competition proposal. Although the Union offered its own
version of managed competition, the Union’s proposal still incorporated the standard contained in
the existing contract (“because of greater efficiency, economy, or other related factors”), which
limited the State’s subcontracting authority and potentially subjected each instance of
subcontracting to review by an arbitrator.
b. Wages
In relevant part, the State proposed to freeze step increases for the duration of the
agreement. The State proposed zero general wage increases. Finally, the State proposed incentive
bonuses for unit employees. It proposed a one-time non-pensionable $1000 bonus for employees,
based on attendance. It also proposed to develop and implement a merit incentive program, which
would be a non-pensionable incentive, applicable in each year of the contract. The proposal
provided that “any employee who accepts merit pay compensation does so voluntarily and with
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the knowledge and on the express condition that the merit pay compensation will not be included
in any pension calculations.” To fund the merit pay program, the State proposed to set aside 2%
of the budgeted base payroll costs for a “bonus pool.” The State proposed to distribute .5% of the
Bonus Pool based on attendance criteria and adherence to work rules. The State proposed to
distribute the remaining 1.5% to no fewer than 25% of employees based on “satisfaction of
performance standards to be developed by the Employer in consultation with the Union.”
The Union proposed to maintain step increases. The Union proposed general increases of
0%, 2.25%, 3%, and 3% for each year of the contract. Finally, the Union proposed a one-time
pensionable $1000 stipend on the effective date of the agreement.
c. Health Insurance
Both parties proposed to maintain the existing health insurance benefits for the first year
of the contract, but their proposals differed with respect to the remaining years.
The State proposed a 60/40 split of costs between active members and the employer, stating
in the second year of the contract, where the State would pay 60% of health insurance costs and
members would pay 40% of health insurance costs. This amounted to a 102% increase in
premiums for the second year of the contract. For the third and fourth years, the State’s final offer
permitted employees’ percentage increase to rise as high as 10% to help offset the State’s own
increasing costs of health insurance. The State also proposed to introduce several new health
insurance plans with different actuarial values. The State’s proposal gave employees the option to
keep their existing plans, but pay higher premiums or to join other plans with lower premiums and
fewer benefits.
The Union proposed an approximately 5% increase in employees’ premiums and out-of-
pocket costs and an additional increase in deductibles for employees and dependents of $25 per
year, starting in the second year of the contract. The Union did not propose the introduction of
new health insurance plans.
a. Cost Comparison of the Parties’ Final Offers
Tim McDevitt, Deputy Director of Transformation and Metrics within the Governor’s
office, prepared a cost comparison of the State’s last, best, and final offer and the last proposal that
the Union tendered at the bargaining table on January 8, 2016.
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McDevitt calculated the gap between the Union’s last proposal and the State’s last, best,
and final offer as $3.269 billion. According to McDevitt, the cost of the Union’s wage proposal
was $486 million and the cost of the Union’s health insurance proposal was $3.269 billion.
However, the Union contends that the gap is in fact smaller because McDevitt incorrectly
calculated the costs of the Union’s health insurance proposal by calculating the cost as if the
proposal applied to all members of State’s health plan, and not just AFSCME union members. The
Union contends that since AFSCME union members make up only one third of State employees,
a more accurate costing of the Union’s proposal is approximately one third of the number McDevitt
calculated.
3. The Impasse Case (Case Nos. S-CB-16-017 and S-CA-16-087) and the Union’s
Demand for Compulsory Interest Arbitration
On or about January 15, 2016, the State filed an unfair labor practice charge against the
Union in Case No. S-CB-16-017, alleging that the Union had repudiated the parties’ last Tolling
Agreement.
On February 22, 2016, the Union filed an unfair labor practice in Case No. S-CA-16-087
regarding the State’s declaration of impasse. That day, the Union also filed a Demand for
Compulsory Interest Arbitration with the ILRB for the RC-6 and CU-500 bargaining units, which
were also included in the parties’ negotiations for a successor agreement.
On March 22, 2016, the Board’s Executive Director issued complaints for hearing in the
two cases, and the Board consolidated the cases.
On September 2, 2016, a Board Administrative Law Judge issued a Recommended
Decision and Order (RDO) in Consolidated Case Nos. S-CB-16-017 and S-CA-16-087. She found
that the parties had reached impasse on some packages, but not on others. In so holding, she
considered whether the Union’s subsequent conduct had broken the impasse and found that it did
not. In addition, she excluded from evidence a letter from Newman to Terranova, dated June 6,
2016, which stated that “AFSCME has new proposals to make on outstanding issues in bargaining,
and is requesting that the State return to the bargaining table.”
On November 15, 2016, the Board, in its public meeting, held that the parties were
deadlocked in their negotiations on the single critical issue of subcontracting, which justified a
declaration of impasse with respect to all issues still open between the parties. The Board focused
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on the fact that the parties were stuck on existing contract language that limited the State’s
authority to subcontracting to cases where it was “necessary or desirable because of greater
efficiency, economy, or other related factors.” The Board also affirmed the ALJ’s finding that the
Union’s subsequent conduct did not break the impasse. Finally, the Board affirmed the ALJ’s
evidentiary ruling excluding the Union’s June 6, 2016 letter from evidence. The Board reasoned
that the letter was duplicative of other, earlier letters that were insufficient to break the impasse.
The earlier letters included the Union’s January 21, 2016, letter from Newman to Terranova, which
stated in relevant part that “the Union was in the process of evaluating other proposals and
developing counter proposals.”
The State’s attorneys and Union Deputy Director Newman were present at the November
15 Board meeting. Terranova was not present at the meeting; however, he received a report about
the meeting prior to November 21, 2016.
4. The State Files an Appeal of the Impasse Case and Announces its Intent to
Implement; the Union Responds
After the Board meeting, the State filed a Petition for Review of the Board’s decision in
the Fourth District Appellate Court. In addition, the State announced that it would implement its
last, best, and final offer.
On November 16, 2016, Terranova sent a letter to all AFSCME members, which stated in
relevant part that “the Illinois State Labor Board yesterday confirmed what we have known since
January 8 of this year—the State and AFSCME’s negotiating team are at an impasse in bargaining
for a new collective bargaining agreement.” He further stated “[w]e hope AFSCME will partner
wi[th] us as we implement them and analyze how and when it would be best to implement the rest
of our last, best, and final offer.”
On Friday, November 18, 2016, the Union learned that the Employer had appealed the
Board’s decision to the Appellate Court.
On or about November 21, 2016, Newman sent a letter to Terranova. The letter stated the
following:
The Union has informed you on several occasions that we have new proposals we
wish to present to the Employer. Although we are under no obligation to be more
specific prior to the Employer agreeing to resume bargaining, due to the discussion
that took place at the November 15 meeting of the Illinois Labor Relations Board,
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we think it is worthwhile to provide you with more specific information. Among
the new proposals we have is a proposal on subcontracting that specifically
addresses the issues raised by the ILRB on that issue.
We are, once again, requesting that the Employer return to the bargaining table so
that the parties can resolve our contract dispute with as little disruption as possible.
On December 5, 2016, the Board issued a written Decision and Order reflecting its decision
made in its November 15, 2016 public meeting. This decision was later declared null and void by
the Circuit Court of Cook County.
On or about December 8, 2016, Terranova sent a letter responding to Newman’s November
21, 2016 letter. Terranova stated the following in relevant part:
As you know, getting AFSCME and the State’s bargaining committees at the table
is very challenging logistically – finding a space large enough to hold
approximately 250-300 people for joint bargaining sessions with smaller rooms for
caucuses in a location that also has sufficient hotel accommodations, travel and
related expenses for members of both bargaining committees, as well as time away
from work and other obligations. These were issues often raised by AFSCME in
negotiations when the State sought to set additional bargaining dates.
Although your letter indicates that you have new proposals, there is nothing in your
letter indicating that AFSCME has changed its position, stated repeatedly across
the table, that it refused to agree to a contract that contains: no step increases, no
wage increases, a merit pay program as proposed by the State, health insurance as
proposed by the State, or overtime only after 40 hours in a workweek. Further,
although promising a new subcontracting proposal, your letter fails to indicate that
AFSCME is willing to agree to a subcontracting provision that does not limit the
State’s subcontracting decisions to those based on “efficiency, economy, or related
factors.”
Absent evidence that AFSCME has changed its position on these significant issues,
the State believes returning to the table would be a futile exercise. Therefore, if
AFSCME’s new proposals referred to in your letter truly represent a serious
commitment to meet the State’s positions stated above, the State suggests that
AFSCME send its proposals to the State so that it can determine whether a return
to the table, especially in light of the logistical challenges, would be a productive
or futile exercise.
Or, if AFSCME does not want to provide its proposals as suggested, because the
State anticipates receiving AFSCME’s final offer in the interest arbitration over the
RC-6 and CU-500 bargaining units – bargaining units representing approximately
a quarter of the employees over which the parties are negotiating – shortly…the
State can make its determination regarding a return to the table at that time.
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At hearing, Terranova testified that he did not know what subcontracting issues Newman
was referencing in his November 21, 2016 letter. Terranova further testified that he remained
confused, even after he read the Board’s written decision, because it made several references to
subcontracting.
On December 13, 2016, the Board at its public meeting adopted a final written Decision
and Order reflecting the decision it made in its November 15, 2016 public meeting.
After the ILRB issued the written decision, the Union filed a Petition for Review in the
First District Appellate Court.
On or about December 21, 2016, Newman sent a letter responding to Terranova’s
December 8, 2016 letter. Newman rejected Terranova’s claim that the Union’s subcontracting
proposal was “unspecified” or insufficiently clear. He noted that the Employer’s attorneys were
present at the November 15, 2016 Board meeting and heard the Board’s discussion. Accordingly,
they were aware that “the issues raised by the Board members on the issue of subcontracting were
entirely focused upon the Employer’s rejection and the Union’s inclusion of the words ‘efficiency,
economy, or related factors.’” Newman further specified that his letter was “sufficiently clear that
those were the issues [that the Union’s] proposal would directly address.” He noted that he
believed that it was inappropriate for the State to condition further negotiations on the Union’s
acceptance of the State’s proposals on other topics such as step increases, merit pay, health
insurance and overtime, because the Board did not find that the parties had reached impasse
because of their positions on those issues. Newman further rejected Terranova’s assertion that
there were “logistical challenges” to meeting for further negotiations. He observed that the parties
had overcome such challenges to meet 67 times over an 11-month period and that, in any event,
the Union had assumed primary responsibility for finding and reserving appropriate space. Finally,
he corrected Terranova’s misapprehension that the State would receive the Union’s final offer on
subcontracting during interest arbitration. He explained that there would be differences between
the proposals presented at interest arbitration and the proposals provided across the table during
bargaining because interest arbitration and bargaining are different processes.4
4 At hearing, Newman expanded on this last point, by explaining the differences between traditional
bargaining and interest arbitration. In traditional collective bargaining, there is give and take, and the parties
are free to agree to any terms. The parties try to persuade the other party to accept their proposals or to
reach a middle ground. There is no such give and take at the final stage of interest arbitration. Each party
14
Terranova testified that, even after he received Newman’s December 21, 2016 letter, he
was uncertain as to the subcontracting issues on which the Union intended to present new proposals
because the Board had devoted a number of pages to the issue of subcontracting. He further
observed that the non-specific nature of Newman’s letters contributed to his decision not to return
to the bargaining table. He testified that he had received a similar letter in June 2016, after the
State declared impasse on January 8, 2016. He noted that the Board, in its written ruling, stated
that those letters with their non-specific references to proposals were not sufficient to compel the
parties to return to the table.
5. Board Dismisses Step Increase Complaint During Pendency of Impasse Case
A Board ALJ issued a decision in the Step Increase Case after the parties filed their charges
in the Impasse Case, but before the Executive Director had issued the complaints. On February 3,
2016, the ALJ determined that the State did not violate the Act when it stopped paying employees
step increases, and she dismissed the Complaint.
The Union filed exceptions to the ALJ’s decision. In addition, on April 26, 2016, the Union
filed a complaint in the St. Clair County Circuit Court, Case No. 16 CH 302, contending, in part,
that the State violated the Tolling Agreement by refusing to pay step increases, longevity pay, and
certain promotions-related raises pending negotiations for the successor bargaining agreement,
after July 1, 2015. As of September 14, 2017, that case remained pending in the Circuit Court.
On May 26, 2016, the Board affirmed the ALJ’s dismissal of the Complaint in the Step
Increase Case, and on June 3, 2016, the Union filed a petition for review of the Board’s decision
in Fifth District Appellate Court (No. 5–16–0229).
6. The Union Obtains a Stay of the Board’s Decision in the Impasse Case
On December 22, 2016, the Union filed a motion for a stay of the Board’s December 13,
2016 Decision and Order pending appeal with the First District of the Illinois Appellate Court. The
Union also filed a Memorandum in Support of Its Motion and a Supporting Record in Support of
its Motion.
must convince the arbitrator that their proposal is more reasonable than the proposal offered by the opposing
party.
15
On December 23, 2016, the First District of the Illinois Appellate Court ordered a
temporary stay of the Board’s Decision and Order, ordering the State “to keep the status quo
pending this court’s receipt and review of any response.” The State filed a Response to the Union’s
Motion and a Supporting Record in Support of its Response.
While the stay is in place, the State must maintain the existing health insurance plan and
cannot realize the financial benefits of its new health insurance proposal. McDevitt admitted that
the parties’ delay in reaching agreement on health insurance caused the state to lose money and
that the loss constituted economic pressure on the State.
When the Court issued the first stay in December 2016, the parties did not know whether
the stay would remain in place throughout the appeal process. Terranova admitted that uncertainty
often “drives deals” at the bargaining table.
7. The Union’s January 9, 2017 “framework for a contract settlement”
On or about January 9, 2017, AFSCME Executive Director Roberta Lynch sent a letter to
Governor Bruce Rauner. Lynch did not send a copy of her letter to Terranova. Terranova read
the letter on the Capitol Fax blog.
The letter stated the following in relevant part:
Since your administration has refused to meet with us, last week the AFSCME
bargaining team met and voted to take the initiative to seek common ground by
publicly putting forward a new framework that significantly modifies our previous
positions on core economic issues. We believe the following terms represent a
framework for a contract settlement that is fair and responsible:
• Employees would forgo any base wage increases in all four years of the
contract.
• Employee contributions toward health insurance premium costs would
increase by 2.5% immediately and an additional 3% in both FY 18 and FY
19, along with increases in co-pays and deductibles—the same terms which
the independent arbitrator found to be acceptable in the State Police interest
arbitration.
• The amounts you have already proposed to expend on employee bonuses--
$1000 per employee in the first year of the contract and 2% of payroll in
each subsequent year—would be equitably distributed to all employees as
one-time payments in each of those years.
• In order to prevent large pay differentials among employees performing the
same work, the 40% of employees who have not reached the top of their
pay plan would move up to the next step in that plan in FY 18 and 19.
16
I want to emphasize that these terms do not represent our “last, best and final offer”
on the issues listed—and, moreover, that we are prepared to engage in further
negotiations on the full range of other outstanding issues.
Terranova testified that he did not consider Lynch’s January 9, 2017 letter to be a proposal
for the following reasons. First, he believed that it did not comply with the ground rules that
specify that proposals must be sent to the opposing party’s chief spokesperson. Terranova was the
State’s chief spokesperson and the Union did not send the letter to him. Second, Lynch did not
refer to the terms of the letter as a proposal. Rather, she described it as a framework. Terranova
testified that he had never heard that term before, though he had negotiated at least six contracts
with the Union on the State’s behalf.
In addition, Terranova testified that he did not believe the letter indicated that the Union
would be willing to make a proposal at the bargaining table that reflected the terms contained in
the letter. He further stated that he did not believe that it constituted an indication that the Union
might agree to its terms at the table. He also stated that he believed the letter was unclear with
respect to the Union’s position on step increases. Finally, he testified that he did not believe, after
reading the letter, that the parties would overcome what the Board identified as the
“insurmountable deadlock” on subcontracting because the letter did not mention subcontracting at
all.
McDevitt performed a financial analysis of the public framework described in Lynch’s
January 9, 2017 letter. Terranova asked McDevitt whether the items listed in the letter “move[d]
the needle.” McDevitt replied that the framework did not constitute significant movement by the
Union.
The Union did not receive a response letter from the Governor or any agent of the State
with respect to the framework set forth in Lynch’s letter. However, on January 9, 2017, Governor
Rauner’s spokesperson, Catherine Kelly, issued a statement in response to Lynch’s January 9,
2017 letter to Governor Rauner, stating:
The Bi-partisan Labor Relations Board ruled unanimously that AFSCME
and the State are at impasse. AFSCME’s latest proposal does not bridge the
more than $3 billion gap between the parties. Instead of this superficial letter,
we invite AFSCME to drop its litigation blocking the administration’s last,
best and final offer and work with us on implementing common sense
17
proposals like earning overtime for working 40 hours in a week, using
volunteers, and creating workplace safety programs.
8. Costing of Lynch’s Public Framework and Union’s Movement from its January 8,
2016 Position
The parties dispute the cost difference between the Union’s offer of January 8, 2016 and
the Union’s public framework. They also dispute the financial gap between the Union’s position,
as expressed in the framework, and the State’s last, best final offer.
In sum, the Union contends its framework would cost the State approximately $633 million
less than its January 8, 2016 offer, if the terms of the framework were implemented. By contrast,
the State contends that the cost savings of the framework is $365 million, which McDevitt testified
does not substantially bridge the economic or policy-related gaps between the parties. The Union
contends that the parties are approximately $2.3 billion apart. By contrast, the State contends that
the parties are in fact $2.904 billion apart, which it argues is a negligible difference from the
approximately $3 billion gap that existed when the State declared impasse.5
The Union’s framework on general wage increases represents a cost savings to the State of
$486 million from the Union’s January 8, 2016 offer, if it is viewed as a proposal. This provision
of the framework matches the State’s last, best, and final offer on general wage increases because
the State proposed zero base wage increases and the Union’s framework similarly states that
employees would forgo base wages increases for all four years of the contract. The framework’s
elimination of general wage increases would also provide the State with some savings on overtime
pay because general wage increases serve as the basis for calculating overtime, but McDevitt
testified that such savings would be relatively small.
The Union’s framework as it relates bonuses and additional monetary disbursements
imposes new costs to the State, which were not included in the Union’s final offer. The cost of
the $1000 bonus is approximately $40 million. The cost of disbursing a sum equal to 2% of
payroll, for each of the last three years of the contract, is $190 million.6
5 As discussed below, this difference arises primarily from the parties’ divergent calculations of health
insurance costs. 6 To reach this number, McDevitt calculated 2% of the payroll for AFSCME members covered under the
personnel code. He then added on an additional 15.5% of that number to account for the State’s pension
contribution and an additional 7.75% to account for FICA costs. Next, he calculated 2% of the payroll for
18
The Union notes that its framework incorporates financial aspects of the State’s last, best,
and final offer on merit pay, but the State disagrees. The State emphasizes that in addition to
imposing a new cost, not contained in the Union’s offer of January 8, 2016, the Union’s
disbursements impose additional pension costs not contained in the State’s own last best and final
offer on merit pay. The State observes that its proposal on merit pay was a non-pensionable
incentive, which employees could receive only if they accepted the condition that the sums would
not be included in any pension calculation. The Union counters that the State could save those
pension costs only if the court accepted the State’s position that requiring employees’ agreement
to the condition does not constitute an impermissible infringement on their constitutional rights.7
The parties dispute the financial impact of the Union’s framework as it relates to step
increases. The Union claims that the framework represents a cost savings of $292 million with
respect to step increases because it does not include step increases for all four years, as did the
Union’s offer of January 8, 2016.8 However, the State asserts that it represents a cost savings of
zero on step increases because the Union is still seeking to recover the first two years of step
increases through litigation. If the State were to accept the Union’s framework and the Union
prevailed in its litigation, then the Union would obtain four years of step increases.
The parties likewise dispute the impact of the Union’s framework as it relates to health
insurance because they dispute the manner in which health insurance costs should be calculated.
The Union contends that the appropriate method for calculating the cost of a health insurance
proposal is one that takes into consideration only the cost of the proposal as applied to AFSCME
members, while the State contends that a more accurate cost calculation considers the cost of the
proposal as applied to all individuals under the State’s health plan. The State asserts that its cost
for health insurance is 3.269 billion, while the Union contends that a more accurate cost calculation
employees outside the personnel code or those who are additional hires and added that number to the total.
Finally, he multiplied that total by three to calculate the costs for the term of the contract. 7 McDevitt testified that the State’s merit proposal has a greater value than the Union’s framework, which
distributes the same lump sum differently, because a proposal that distributes money based on merit might
save the State money by incentivizing better performance. However, McDevitt did not perform an analysis
on the saving that the State might obtain by incentivizing better performance. He also did not perform any
calculation of the costs to the State of employees who decide to leave state employment because they are
not receiving regular raises. 8 The Union’s last offer on step increases for four years had a cost of $407 million, while the cost of the
two years of step increases proposed in the Union’s public framework is $115 million. The difference is
$292 million.
19
for purposes of collective bargaining is one third of that number (~$1.0897 billion) because that is
the cost attributable to AFSCME employees. The health insurance provision of the Union’s
framework represents a cost reduction of $69 million from the Union’s offer of January 8, 2016,
if the framework’s terms are applied to all members of the State’s health insurance plan. That
same provision represents a cost reduction of $45 million from the Union’s offer of January 8,
2016, if the framework’s terms are applied to just AFSCME members.
Both Terranova and McDevitt further explained that the Union’s framework failed to
address the policy aspects of the State’s proposal. On wages, the State sought to provide increases
solely based on merit. The Union’s framework did not further that goal because it proposed to
disburse a pool of money equivalent to 2% of payroll to all employees equally and proposed to
retain at least two years of step increases. On health insurance, the State wished to change the
relative amount that the State and employees paid for insurance, and to substantially shift costs to
employees. The State also wished to give employees more and different health insurance options.
However, the Union’s framework identified specific and relatively small premium increases, under
which employees’ costs would remain at the fixed levels identified by the Union; they would not
bear a direct relationship to the State’s own costs. In addition, the Union’s framework did not
introduce greater health insurance options.
9. The State’s Current and Projected Financial Circumstances
Marc Staley, Deputy Director at the Governor’s Office of Management and Budget
(“GOMB”), testified to the State’s current and projected financial circumstances. As of the date
of hearing, the State’s backlog of bills was $15.1 billion. The estimated budgetary deficit for
fiscal year 2017 is $5.6 billion. The State also offered into evidence forecasted budgetary deficits
for fiscal years 2018 and 2019, drawn from reports created in 2016. However, the forecasted
budgetary deficits for those years do not accurately reflect the amount of revenue that the State
will have in those fiscal years because the State enacted a tax increase in July 2017, which was
estimated to add $5 billion to the State’s revenue in fiscal year 2018. The reports also failed to
reflect resources from “Other State Funds” and federal resources, from which some State
employees are paid.
The State planned to issue bonds by the end of 2017 that would generate money to allow
it to pay down some of its bill backlog. The immediate impact of the issuance is that the State
20
would be able to pay down some of its bills. However, the sale of bonds merely refinances the
State’s debt and does not reduce it because bonds are the mechanism by which the State borrows
money.
10. Interest Arbitration for Units RC-6 and CU-500
On January 10, 2017, counsel for the Union submitted, via email, the Union’s final
proposal for the successor contract for RC-6 and CU-500 in the Interest Arbitration to Interest
Arbitrator Dan Nielsen and copied counsel for the State. The final offer included a proposal to
maintain the language on subcontracting that existed in the parties’ expired contract. It also
included a proposal to forgo any base wage increases for the term of the contract. Finally, it
proposed step increases for the final two years of the contract and included the following language
reserving its right to obtain step increases in the first two years of the contract, if it prevailed in
litigation that is pending on this issue:
The issue of step increases is currently the subject of litigation in cases AFSCME
Council 31 v. Illinois Labor Relations Board, No. 5-16-0229 and AFSCME Council
31 v. Illinois Department of Central Management Services, No. 16-CH-302, and in
a grievance between the parties. The outcome of these cases will determine
whether the above language will be applicable for the period prior to the date upon
which the Award becomes final. Regardless of the outcome of the litigation
however, the above language providing for step increases will apply for FY 18 and
FY 19.
Terranova testified that the Union’s final offer at interest arbitration moved the parties
away from agreement on the issue of subcontracting because the Union’s proposal, tendered to the
State on January 8, 2016, included a version of the State’s own managed competition proposal.
By contrast, the Union’s final offer at interest arbitration removed any incorporation of the State’s
managed competition principles.
11. Continuing Litigation before the Courts
a. Illinois Supreme Court Transfer Petitions for Administrative Review to
Fourth District
On January 31, 2017, the Illinois Supreme Court granted the State’s motion to transfer
three petitions for administrative review (Case Nos. 1-16-3136, 1-16-3206, and 1-16-3217) in the
21
First District of the Illinois Appellate Court to the Fourth District and to consolidate those petitions
with another petition pending in the Fourth District (Case No. 4-16-0827).
b. Fourth District Denies State’s Motion to Lift Stay
On March 1, 2017, the Illinois Appellate Court of the Fourth District denied the State’s
motion to lift the temporary stay of the Board’s decision, pending the outcome of the petitions for
administrative review.
Terranova testified that, in his opinion, the Court’s stay of the Board’s decision made it
less likely that the parties would reach agreement on the subcontracting issue. Terranova stated
that the stay removed the State’s option to exercise economic pressure on the Union by
implementing its last best final offer. Terranova explained that the State’s inability to apply such
pressure made it less likely that the parties would return to the table.
c. Fifth District Reverses Board in Step Increase Case
On November 6, 2017, the Fifth District Appellate Court issued an opinion in the Step
Increase Case, reversing the Board’s dismissal of the Complaint, and finding that the State violated
the Act by refusing to pay employees’ step increases after July 1, 2015. Am. Fed’n of State,
County, & Mun. Employees, Council 31 v. Illinois Labor Relations Bd., 2017 IL App (5th)
160229.
IV. DISCUSSION AND ANALYSIS
The State violated Sections 10(a)(4) and (1) of the Act when it refused to return to the
bargaining table after it received the Union’s January 9, 2017 letter because that letter broke the
parties’ impasse. However, the State did not violate Sections 10(a)(4) and (1) of the Act when it
refused to return to the bargaining table earlier, after it received the Union’s November 21, 2016
letter, because that letter did not break the parties’ impasse.
The Board previously held that the Union and the State were at impasse on their
negotiations for a successor contract. State of Ill., Dep’t of Cent. Mgmt. Servs., Charging Party
and Am. Fed. of State, Cnty. and Mun. Empl., Council 31 “Impasse I”, 33 PERI ¶ 67 (IL LRB -
SP 2016). However, an impasse does not permanently release a party from its duty to bargain
collectively in good faith. City of Peoria, 11 PERI ¶ 2007 (IL SLRB 1994); Cnty. of Jackson, 9
22
PERI ¶ 2040 (IL SLRB 1993). The existence of an impasse has been described as only a temporary
deadlock or hiatus in the parties' negotiations. City of Peoria, 11 PERI ¶ 2007; Cnty. of Jackson,
9 PERI ¶ 2040; Webb Furniture Co., 152 NLRB 1526 (1965), aff'd, 366 F.2d 314 (4th Cir. 1966).
“Anything that creates a new possibility of fruitful discussion (even if it does not create a likelihood
of agreement) breaks an impasse” and revives the parties’ bargaining obligation. Cnty. of Jackson,
9 PERI ¶ 2040 (internal quotes omitted), citing Gulf States Manufacturing v. NLRB, 704 F.2d
1390 (5th Cir. 1983). Furthermore, in order for an impasse to exist, neither party must be willing
to compromise. County of Jackson, 9 PERI ¶ 2040; City of Peoria, 11 PERI ¶ 2007. When the
circumstances which caused the impasse no longer exist, the parties are required to resume good
faith bargaining. County of Jackson, 9 PERI ¶ 2040; City of Peoria, 11 PERI ¶ 2007.
Here, the Union sent the State two letters, one on November 21, 2016 and one on January
9, 2017. The impact of each letter on the State’s bargaining obligation is addressed in turn below.
1. The Union’s letter of November 21, 2016 did not break the parties’ impasse
The Union’s letter of November 21, 2016 did not revive the State’s obligation to bargain
because it did not break the parties’ impasse on subcontracting. Rather, it was too vague to
adequately convey that the Union was willing to make concessions on that issue.
One party’s expressed willingness to make concessions constitutes a changed circumstance
that requires the parties to resume collective bargaining. County of Jackson, 9 PERI ¶ 2040 citing
NLRB v. Webb Furniture Co., 366 F.2d 314 (4th Cir. 1966). However, the substance of a union’s
statements to that effect and the parties’ bargaining history are relevant to determining whether the
union’s claimed willingness to make concession is genuine and whether the alleged concessions
demonstrate that the circumstances that caused the impasse no longer exist. Impasse I, 33 PERI ¶
67; City of Peoria, 11 PERI ¶ 2007; Providence Medical Center, 243 NLRB 714, 732 (1979); Acf
Indus., LLC & United Steelworkers of Am., Afl-Cio, Clc, 347 NLRB 1040, 1041-2 (2006).
Applying these principles here, the Union’s assertion that it had a new proposal on
subcontracting did not break the impasse. The parties’ bargaining history shows that the parties
were capable of making incremental modifications to their respective subcontracting proposals,
but that they consistently disagreed on whether to keep the “efficiency, economy or related factors”
contract language. The State viewed that language as a “poison pill” because it subjected the
State’s subcontracting decision to review by an arbitrator, who in turn could block the State’s
23
subcontracting decisions upon a determination that the State did not base its decision on
“efficiency, economy or related factors.” Nevertheless, the Union retained that language in each
of its nine proposals, to impasse, even while it adopted other aspects of the State’s approach (e.g.,
“managed competition”). While the Union continuously modified its subcontracting proposal, it
also added further restrictions on the State’s authority to subcontract. Accordingly, the Union’s
mere claim that it had a new proposal on subcontracting did not break the impasse where the Union
previously demonstrated that it could produce many new proposals that, from the State’s
perspective, all suffered from the same flaw—the inclusion of the phrase “efficiency, economy or
related factors.” Acf Indus., LLC & United Steelworkers of Am., Afl-Cio, Clc, 347 NLRB at
1042; cf. County of Jackson, 9 PERI ¶ 2040 and Jano Graphics Inc., 339 NLRB 251, 251 (2003).
The evidence of the parties’ bargaining history, presented here, renders this case
distinguishable from County of Jackson, on which the Union relies. In that case, there was “very
little specific evidence in the record regarding what occurred” at the parties’ last three bargaining
sessions, and in turn, no reason to suspect that the union might return with proposals that made
changes in form but not substance. County of Jackson, 9 PERI ¶ 2040 (Board interpreted Union’s
statements as evidencing a willingness to make concessions, sufficient to break the parties’
impasse, even though the union simply stated, in general terms, that it had counterproposals).
Here, by contrast, the nature of the parties’ past bargaining and clearly defined positions with
respect to the major issue of subcontracting justified the employer in seeking additional
information from the Union to show that its bargaining position had in fact changed. Providence
Medical Center, 243 NLRB at 732 (considering nature of past bargaining and the clearly defined
positions with respect to the major issue in determining that generalized statements did not break
the impasse); Acf Indus., LLC & United Steelworkers of Am., Afl-Cio, Clc, 347 NLRB at 1041-
2 (considering parties’ extensive bargaining history and the fact that parties remained far apart on
a number of issues in finding that union’s claim of new proposals, absent specifics, failed to break
impasse); cf. Jano Graphics Inc., 339 NLRB at 251 (finding parties not at impasse, but noting that,
if they had been, any impasse was broken when the Union stated it had new proposals and was
seeking further bargaining) and Beverly Farm Found., Inc., 323 NLRB 787, 793 (1997), review
denied, order enforced sub nom. Beverly Farm Found., Inc. v. N.L.R.B., 144 F.3d 1048 (7th Cir.
1998) (same).
Contrary to the Union’s contention, Newman’s letter of November 21, 2016 did not clearly
24
convey the Union’s willingness to make concessions on subcontracting, nor did it demonstrate that
the Union had made a substantial change from its pre-impasse position. It simply expressed that
the Union had a new subcontracting proposal, but was noticeably silent on whether that proposal
represented any movement toward the State’s position on the core, disputed issue: “whether to
include [contract] language that required the State to show ‘efficiency, economy, or related factors’
when subcontracting.” Impasse I, 33 PERI ¶ 67. Newman merely stated that the Union had a new
“proposal on subcontracting that specifically addresse[d] the issues raised by the ILRB on that
issue.”
Notably, the Union’s letter remained vague even though the State reasonably understood
that the parties’ impasse on subcontracting arose because the Union had insisted on language that
limited the State’s authority to subcontract. The primary flaw in the Union’s letter, from the State’s
perspective, was that it failed to convey that the Union was willing to compromise on that point.
The Union’s letter cast further doubt on whether the Union would offer a concession on the
“efficiency, economy, or related factors” language because it failed to acknowledge that the
parties’ dispute over that language was the crux of the parties’ disagreement. Instead, it noted
that the were multiple “issues” raised by the Board on subcontracting, and thereby suggested that
its new proposal might speak to ancillary matters that would not resolve the “primary issue of
contention” identified by the Board. Impasse I, 33 PERI ¶ 67 (“primary issue of contention [was]
whether to include language that required the State to show ‘efficiency, economy, or related
factors’ when subcontracting”). Although, as discussed below, the Union subsequently clarified
that its proposal would “address” the “efficiency, economy, or related factors” language, the Union
still failed to demonstrate that its new proposal would offer any concessions.
The Union argues that the State should have known from the November 21 letter that the
Union planned to give up on the “efficiency, economy or related factors” language because a
proposal to that effect would have broken the impasse, but that is circular logic. The Union thereby
presupposes that the letter demonstrated the Union’s willingness to make concessions on
subcontracting, while the letter on its face makes no such claim. Clearly, the Union cannot justify
its interpretation of the letter on the grounds that the impasse could have been broken only under
such an interpretation.
The Union’s desire to forestall implementation does not render the November 21 letter any
clearer, nor does it show that the Union had a sincere desire to recommence bargaining on
25
subcontracting. Indeed, the desire to prevent implementation is a common goal of a union after
an employer declares impasse, but that aim is not equivalent to a desire to resume bargaining in
good faith. City of Peoria, 11 PERI ¶ 2007. Accordingly, the Union’s last-minute statements,
issued in the face of what then appeared to be an imminent implementation of the State’s last, best
final offer, must be viewed with some skepticism in the absence of any specifics to show that the
Union was in fact willing to make concessions. Acf Indus., LLC & United Steelworkers of Am.,
Afl-Cio, Clc, 347 NLRB at 1042 (vague and unsubstantiated claims of new proposals not sufficient
to avoid a finding of impasse); cf. Webb Furniture Co., 152 NLRB at 1529 (union outlined its
new proposals to show substantial modification of the position it took in prior bargaining
negotiations); cf. Grinnell Fire Protection Sys., 328 NLRB 585, 586 (1999) (union had previously
given employer proposals that differed from the position to which the respondent allegedly
believed the union was wedded); cf. Airflow Research & Mfg. Corp., 320 NLRB 861, 863 n. 10
(1996) (union listed proposals which were different from pre-impasse proposals and indicated a
willingness to reduce some of its economic demands); cf. Storer Communications, 294 NLRB
1056, 1089 (1989) (union was not required to show material change in position where employer
never gave union the opportunity to debate aspects of its final offer, made unlawful unilateral
changes, and where union engaged in an unfair labor practice strike).
The Board’s approach in Impasse I confirms that the Union’s claim of a new proposal on
subcontracting did not break the impasse on that issue. In Impasse I, the Board held that the
Union’s post-impasse statements did not revive the State’s obligation to bargain because they were
non-specific assertions that the Union was willing to move, akin to those made by the union in
City of Peoria. Impasse I, 33 PERI ¶ 67. Significantly, the Board affirmed the ALJ’s evidentiary
ruling to exclude a letter of June 6, 2016, in which the Union requested bargaining and stated it
had new proposals. The Board reasoned that the letter was duplicative of other letters already
contained in the record, which were similarly non-specific, and the Board thereby suggested that
the Union was required to reveal details concerning its new position to demonstrate that
circumstances had changed. The Union did not do so in the November 21 letter because it
described the new subcontracting proposal in terms that appear intentionally vague, noting only
that the proposal “specifically addresses the issues raised by the ILRB on that issue.” Pepsi-Cola-
Dr. Pepper Bottling Co., 219 NLRB 1200, 1200 (1975) (counteroffer that merely adopted, by
reference, the terms of a contract with another party did not break impasse where NLRB could not
26
determine whether union’s reference to that contract’s terms constituted a substantial change in
the union’s pre-impasse position).
The Union contends that the Board’s earlier reliance on County of Jackson demonstrates
that its current claim of new proposals is sufficient to break an impasse, even absent additional
details regarding their contents, but the Union’s interpretation does not square with the Board’s
ruling. Had the Board determined that the mere statement from the Union that it had new proposals
was sufficient to break the impasse, it would have reversed the ALJ’s evidentiary ruling on the
letter and found that it was not duplicative evidence. More importantly, the Board would have
changed its ultimate determination on the case since the letter would have been different from the
others only if it had revived the State’s bargaining obligations, as the earlier letters had not. To the
extent that there is any ambiguity in the Board’s decision in Impasse I, the Board is in the best
position interpret it.
There is also no merit to the Union’s suggestion that the November 21 letter is
distinguishable from the letters examined by the Board in Impasse I. Although the Union’s
November 21 letter made general reference to the new subcontracting proposal’s subject matter,
(“issues raised by the ILRB on that issue”), where the earlier letters did not, the November 21 letter
still failed to convey that the Union was offering concessions or that it had changed its position.
As discussed above, the parties’ bargaining history demanded that the Union provide greater detail.
Acf Indus., LLC & United Steelworkers of Am., Afl-Cio, Clc, 347 NLRB at 1041-2 (requiring
union to provide specifics about its claimed new proposals where the parties were far apart at their
last bargaining session).
Contrary to the Union’s contention, the State’s December 8, 2016 request for clarification
of the November 21 letter does not illustrate that the Union’s letter broke the parties’ impasse. It
is not an admission from the State that further bargaining would be fruitful nor is it evidence that
the State understood that the Union had substantially changed its pre-impasse position on
subcontracting. To the contrary, the State carefully stated that it could not determine whether a
return to the table would be a productive exercise “absent evidence that [the Union had] changed
its position.” The Union cites to an NLRB ALJ decision in Atrium of Princeton for the proposition
that such statements by an employer demonstrate that there is no impasse, but the NLRB never
27
adopted the ALJ’s analysis on this point. Atrium at Princeton, LLC, 353 NLRB 540, 540 (2008)9
(“We find it unnecessary to decide whether the parties had reached a genuine impasse in their
negotiations, however, as any impasse that existed was broken…when [the]
Respondent…unilaterally implemented a new health insurance plan….”). Moreover, the ALJ used
such statements to ascertain the contemporaneous understanding of the parties in applying the Taft
Broadcasting factors, and not to determine whether circumstances had changed sufficiently to
break any pre-existing impasse, at issue in this case. Atrium at Princeton, LLC, 353 NLRB at 560.
Next, the purported clarification that Newman provided on December 21, 2016 likewise
fails to indicate that the Union was willing to withdraw its insistence on the “efficiency, economy,
or related factors” language. Newman simply stated the obvious, that the Board’s finding of
impasse was “entirely focused upon the Employer’s rejection and the Union’s inclusion of the
words ‘efficiency, economy, or related factors.’” Newman added that he believed his earlier letter
was “sufficiently clear that those were the issues our proposal would directly address.” Yet, his
letter fell conspicuously short of describing whether or how the Union planned to bridge that
divide. Absent such a description from the Union, the State reasonably feared that it would expend
resources to attend negotiations and yet again receive a proposal that retained that language or
replaced it with synonyms, still subject to interpretation by an arbitrator. Accordingly, the State’s
approach was not willful ignorance but caution arising from the parties’ bargaining history during
which the Union proposed additional restrictions on the State’s authority to subcontract even while
purporting to accept the State’s “managed competition” framework. Acf Indus., LLC & United
Steelworkers of Am., Afl-Cio, Clc, 347 NLRB at 1042 (claim by union that it had new proposals
did not prevent finding of impasse, even when union informed employer of their general subject
matter); cf. County of Jackson, 9 PERI ¶ 2040 (implied bargaining concessions deemed sufficient
to break impasse; employer had burden and there was no evidence of what occurred at last three
bargaining sessions).
Moreover, the Union’s steadfast refusal to give any details on its new subcontracting
proposal, despite requests from the State, further calls into question the Union’s claim that it
intended to offer concessions on subcontracting. It is reasonable to infer that Newman omitted
9 This case was reaffirmed and incorporated by reference by Atrium at Princeton, LLC, 356 NLRB 5 n. 3
(2010), review denied, enforcement granted sub nom. Atrium of Princeton, LLC v. N.L.R.B., 684 F.3d
1310 (D.C. Cir. 2012).
28
such express representations regarding the Union’s bargaining position to preserve its flexibility
at the bargaining table. Newman was a union agent, designated by the Union to negotiate on its
behalf, and he reasonably knew that any misrepresentations concerning the Union’s yet-
undisclosed proposals could be viewed as bad faith, for which the Union could be held liable.
Longshoremen ILWU (Sunset Line & Twine Co.), 79 NLRB 1487, 1509 (1948) (a principal may
be responsible even when it has “specifically forbidden the act in question … if the principal
actually empowered the agent to represent him in the general area within which the agent acted”);
Dep’t of Cent. Mgmt. Services v. Illinois State Labor Relations Bd., 216 Ill. App. 3d 570, 573 (4th
Dist. 1991) (agent has apparent authority to bind principal absent clear notice to contrary). In
turn, the very careful omission of the Union’s commitment to withdraw from its insistence on the
key language, itself calls into question the Union’s sincerity. The clarity with which the Union
now claims Newman’s letters expressed a willingness to make concessions on subcontracting10
further highlights the letters’ ambiguity. Although the Union claims that it was not legally
required to provide any additional details, the ambiguity that remained even after Newman’s
purported clarification reasonably justified the State’s suspicion that the Union had not in fact
altered its position. Cf. County of Jackson, 9 PERI 2040 (employer could not assume that union’s
willingness to make concessions would not resolve the parties’ disagreements where it never asked
for specifics).
While the parties’ bargaining history and the content of Newman’s letter sufficiently
demonstrate that the Union did not break the impasse on November 21, the Union’s internal
procedures should not be used to support this outcome, as the State contends. Internal union
procedures, analogous to the procedures for approving proposals at issue here, are not subject to
question by an employer and cannot justify conduct by an employer that would otherwise
constitute an unlawful refusal to bargain. Newtown Corp., 280 NLRB 350, 351 (1986), enfd. 819
F.2d 677 (6th Cir. 1987) (employer could not raise questions about validity of union contract
ratification procedures to avoid its obligation to sign contract), decision supplemented, 278 NLRB
393 (1986) (same). Indeed, any obligation on the Union’s part to obtain its members’ approval of
new proposals is part and parcel of the duty of fair representation owed to its members and not to
10 The Union asserts that the letters made clear that the Union was willing to “giv[e]…up on the efficiency
economy or related factors language.”
29
the employer. Standard Fittings Co. v. N.L.R.B., 845 F.2d 1311, 1318 (5th Cir. 1988) (“no breach
of a union's duty of fair representation can negate an employer’s duty to bargain”).
Moreover, the State should not be permitted to cast doubt on the sincerity of Newman’s
statements based on internal union procedures because the State was entitled to rely on Newman’s
representations. An individual appointed to negotiate a collective bargaining agreement is deemed
to have apparent authority to bind the principal in the absence of clear notice to the contrary. Dep’t
of Cent. Mgmt. Services v. Illinois State Labor Relations Bd., 216 Ill. App. 3d 570, 573 (4th Dist.
1991); Tri-State Professional Firefighters Union, Local 3165, IAFF, 31 PERI ¶ 78 (IL LRB-SP
2014). Here, the Union identified Newman as one of its bargaining agents and never expressed
any limitation to the State on his authority to present proposals, bargaining demands, or bargaining
positions to the employer. While the State may have been aware of the process that the Union
previously used to approve its proposals, the State was entitled to presume that the Union had
satisfied them once Newman informed the State that the Union had new proposals to present. Even
if the Union had failed to follow proper procedures to approve the new proposals, that failure
would not constitute clear notice to the State that Newman lacked authority. Notably, Terranova
never questioned Newman’s authority to present the new proposals he claimed to possess, and
never inquired into whether the membership had approved them. Nevertheless, Newman’s claim
of new proposals was not sufficient to break the parties’ impasse under the facts of this case.
In sum, the Union’s letter of November 21, 2016 did not break the parties’ impasse and the
State did not violate the Act when it refused to return to the table after receiving it.
2. The Union’s letter of January 9, 2017 broke the parties’ impasse
The Union’s letter of January 9, 2017 broke the parties’ impasse because it articulated a
substantial change from the Union’s pre-impasse bargaining position.
The ILRB has held that parties are required to resume good faith bargaining when the
circumstances that caused the impasse no longer exist. County of Jackson, 9 PERI ¶ 2040; City
of Peoria, 11 PERI 2007. The NLRB has specified that the circumstances that caused the impasse
no longer exist where the position of one of the parties undergoes a substantial change. Airflow
Research & Mfg. Corp., 320 NLRB at 862; Pepsi-Cola-Dr. Pepper Bottling Co., 219 NLRB at
1200; Webb Furniture, 152 NLRB at 1529. Thus, a party can break an impasse by making a
substantial change in its bargaining position. Webb Furniture, 152 NLRB 1526, 1529 (1965).
30
The ILRB has not yet determined what kind of change in a party’s bargaining position
constitutes a “substantial change.” Nor has the ILRB determined whether the analysis of that
change differs depending on the parties’ bargaining history or how the parties initially reached
impasse. However, the NLRB’s case law indicates that a change in bargaining position may be
substantial and may in turn break an impasse, even if the change concerns a different issue than
the one that led to an overall breakdown in the parties’ negotiations.
The NLRB’s discussion of the single critical issue impasse test, applied by the Board in
Impasse I, supports this conclusion because the focus of that test is the impact of the single critical
issue on bargaining as a whole. Parties may reach overall impasse when they have reached impasse
on a single critical issue provided that (1) there is a good faith bargaining impasse; (2) the issue as
to which the parties are at impasse is in fact a critical one; and (3) the impasse on the critical issue
led to a breakdown in overall negotiations. CalMat Co., 331 NLRB 1084, 1097 (2000). In short,
the party claiming impasse must show that “there can be no progress on any aspect of the
negotiations until the impasse relating to the critical issue is resolved.” CalMat Co., 331 NLRB at
1097 (emphasis added). By extension, an overall impasse is broken if there is evidence that the
parties can make progress on some aspect of their negotiations, even aspects separate and apart
from the critical issue that initially led to the overall breakdown in bargaining. Necessarily then,
a substantial change in a party’s bargaining position creates the possibility of fruitful negotiation,
even if it does not address the issue that originally caused the overall impasse, because such
movement opens the possibility of progress on at least one aspect of negotiations. See generally
CalMat Co., 331 NLRB 1097 (considering whether there can be progress on other aspects of
negotiation in applying the single critical issue impasse test); Atl. Queens Bus Corp., 362 NLRB
No. 65 (2015) (finding that deadlock over critical issue of “most favored nation clause” did not
lead to overall breakdown in negotiations where it “did not prevent parties from making progress
on other issues” including wages); Southcoast Hosps. Group, Inc. & Massachusetts Nurses Ass'n,
365 NLRB No. 100, *1 n. 1 and *3 (2017) (considering progress on other issues of significance to
the parties, e.g. involuntary reassignment or “floating,” in finding that there was no overall
breakdown in negotiations because of parties’ positions on wages, holidays, and pensions).
This approach also accords with the well-established principle that “bargaining does not
take place in isolation and [that] a proposal on one point serves as leverage for positions in other
areas.” Castle Hill Health Care, 355 NLRB 1156 (2010) (finding that parties had not yet reached
31
impasse) (citing Patrick & Co., 248 NLRB 390 (1980), enfd. 644 F.2d 889 (9th Cir. 1981) and
Sacramento Union, 291 NLRB 552, 556 (1988), enfd. 888 F.2d 1394 (9th Cir. 1981). Where one
party makes a substantial change in its position on one point, a face-to-face meeting might well
lead to changes of position “even on issues where [the parties] appear to be hopelessly apart.”
Span, R. James DBA John L. Gibson, 189 NLRB 219, 223-4 (1971) (“genuine and continuing
impasse” on certain subjects “did not relieve respondent of an obligation to negotiate further on
other subjects where the Union made significant concessions”).
This approach finds support even in those rare cases where the NLRB has determined that
the parties reached overall impasse because of their deadlock on a single critical issue and where
it has likewise determined that the parties’ subsequent conduct did not break that impasse. Those
cases show that the NLRB considers relevant the parties’ movement on issues other than the
critical one, provided that there is a connection between the critical issue and the one on which the
concession is proposed. For example, in Richmond Elec. Services, Inc., a majority of the NLRB
determined that the parties’ impasse on the single critical issue of wages led to a breakdown in
negotiations, but the majority nevertheless considered whether the union’s post-impasse
correspondence regarding the scope of the unit (a non-critical issue) constituted a concession.
Richmond Electrical Services, 348 NLRB 1001, 1003 (2006). The majority concluded that the
union’s statements regarding unit scope did not break the impasse both because the statements
were too ambiguous to convey a concession and because a concession on unit scope would “not
have resolved the critical issue of wages.” Richmond Electrical Services, 348 NLRB at 1001.
Significantly, in explaining the latter point, the majority reasoned that the union’s proposal to
exclude vacant positions from the unit would not provide the employer any cost savings that might
impact the parties’ impasse on wages. Id. at 1003 n. 10. (disagreeing with dissent’s claim that
such a concession would have resulted in “significant potential cost savings,” sufficient to preclude
a finding of continued impasse).
Similarly, in Holiday Inn Downtown-New Haven, the NLRB found that the parties had
reached impasse on the critical issue of subcontracting, but nevertheless considered the impact of
the employer’s post-impasse offer and later implementation of a wage increase in determining
whether the overall impasse had been broken. Holiday Inn Downtown-New Haven, 300 NLRB
774, 775 (1990). While the NLRB concluded that the wage increase did not break the impasse,
the NLRB explained that there “[was] no evidence suggesting a connection nor linkage between
32
the wage and subcontracting proposals.” Id. at 776, n. 10; cf. Calmat Co., 331 NLRB 1084, 1094
(2000) (NLRB had no occasion to consider parties’ movement on other subjects, after date on
which NLRB found impasse occurred, where parties subsequently discussed only the critical
pension issue and where such bargaining was unproductive); cf. Financial Institution Employees,
Local 1182 v. NLRB, 738 F.2d 1038, 1042-1043 and n. 2 (9th Cir. 1984) (employer’s subsequent
movement on other issues did not break the impasse reached because of dues checkoff issue; union
did not object to ALJ’s finding of impasse and NLRB determined that parties regarded themselves
as deadlocked).
As discussed below, the Union made a substantial change to its bargaining position on
wages and made a significant change to its economic demands in the aggregate, which are
sufficient to break the parties’ impasse. Moreover, the clear connection between the parties’
proposals on wages and subcontracting further supports the finding that the Union’s substantial
reduction of its economic demands “creates a new possibility of fruitful discussion.” Cnty. of
Jackson, 9 PERI ¶ 2040 (internal quotes omitted).
Here, the Union made a substantial change to its bargaining position when it stated it would
give up base wage increases for all four years of the contract and accept yearly percentage increases
in employee health insurance contributions as part of a “framework for contract settlement.” First,
the Union’s relinquishment of base wage increases for all years of the contract is a stark change
from the proposal it presented when the State declared impasse, which included general wage
increases of 2.25%, 3%, and 3% for each of the last three years of the contract, respectively.
Standing alone, this represents a potential financial concession of $486 million.11 Cf. Calmat Co.,
331 NLRB at 1098 (2000) (finding overall impasse arising from deadlock on critical pension issue
despite union’s earlier concessions in “comparatively minor areas of holidays and vacations”).
Second, the set of economic concessions set forth in the Union’s January 9, 2017 letter
constitutes significant movement by the Union. Although the Union admittedly added a $190
million cost to its position to cover bonuses, the total value of the Union’s concessions, as set forth
in the public framework, still amounts to $365 million by the State’s own calculation.12 Airflow
Research & Mfg. Corp., 320 NLRB at 863 n. 10 (1996) (change to union’s position deemed
11 The Union’s framework also adds new costs, but by the State’s own calculation, the framework still
represents the Union’s willingness to make concessions valued in the hundreds of millions of dollars, as
discussed below. 12 The Union’s calculation is hundreds of millions of dollars greater than the State’s calculation.
33
substantial despite addition of new cost to employer where union’s financial demands decreased
significantly over all). This is a large dollar amount even when viewed in the context of the overall
difference between the parties, which the State claims to be $2.9 billion and the Union claims to
be $2.3 billion.
Third, the Union’s stated willingness to accept contract language that provides for just two
years of step increases likewise contributes to the significance of the Union’s change in position,
though its value is harder to quantify. Its value is uncertain because it depends on the outcome of
the parties’ step increase litigation. If the Union prevails in that litigation,13 the cost of the Union’s
framework on steps will equal the cost of the Union’s last offer on steps during bargaining—four
years of step increases. The State would pay two years of step increases pursuant to the terms of
the framework over the last two years of the contract, but it would pay an additional two years of
step increases pursuant to a court order requiring it to maintain the status quo during the period of
negotiations. However, if the State prevails, the cost of the Union’s framework to the State will
be $292 million less than the cost of the Union’s last offer during bargaining. The State would
pay two years of step increases pursuant to the terms of the framework over the last two years of
the contract, but would have no obligation, under the duty to bargain in good faith, to pay any
increases during the parties’ negotiations, which have extended into the proposed term of the
parties’ successor agreement. In sum, the Union’s framework abandons contractual language that
entitles employees to four years of step increases and replaces it with two years of step increases
plus the risk that either party could obtain its position on step increases for the first two years of
the contract. While full the value of the framework with respect to the step increases is conditioned
upon uncertain future events, that value is not zero.
Contrary to the State’s contention, the Union’s framework constitutes a substantial enough
shift in the Union’s position to revive the State’s bargaining obligation, even though the Union did
not accept the State’s broader approach to health insurance or wages. A union’s concession is not
“trivial or picayune” where it “approaches the minimum and the employer’s position.” Webb
Furniture Corp., 366 F.2d at 315 (union’s concession on holidays was significant where it met the
employer’s position on eligibility and reduced annual dollar amount demanded). Here, the Union
13 The Fifth District Illinois Appellate Court issued a judgment in the Union’s favor, but the State has filed
a petition for leave to appeal in the Illinois Supreme Court.
34
framework indicated that the Union would accept the very minimum on general wage increases—
zero—and it thereby met the State’s position, which proposed the very same terms.
There remains a “philosophical” divide between the State and the Union on both wages
and health insurance, but that divide does not indicate that further bargaining would be futile, as
the State suggests. “There is generally a price at which the parties will surrender” their bargaining
demands even on closely held, philosophically-based matters. Duffy Tool and Stamping, LLCC
v. NLRB, 233 F. 3d 995, 999 (7th Cir. 2000) (noting that the employer might be able to extract
general concessions in exchange for backing down from its proposal for a “no fault” attendance
policy). While a union’s initial concessions might not induce such a surrender, an employer
“might reasonably be required to recognize that negotiating sessions might produce other or more
extended concessions,” once a union has already tendered some. Webb Furniture Corp., 366 F.2d
at 316.
Here, the Union admittedly remains opposed to the State’s desire to create a greater number
of health insurance plans with different actuarial values and to provide wage increases based solely
on merit. However, the magnitude, scope, and timing of the Union’s concessions suggest that the
Union might be willing to make even more movement at the bargaining table. First, the Union’s
movement was no longer small and incremental, as it was when the State declared impasse.
Instead, the Union indicated that it was ready to accept the State’s position that employees would
receive zero general wage increases and to add to its members’ health insurance costs in each
remaining year of the contract—a $365 million reduction in the Union’s financial demands, at
minimum.
Second, the Union offered concessions in three different areas of bargaining: general wage
increases, health insurance, and step increases. In fact, the Union’s movement on step increases
was unprecedented in this bargaining cycle because the Union never previously moved from its
position that employees should retain step increases for all years of the contract.
Third, the timing of the Union’s change in position on step increases created a window of
opportunity for the State to obtain greater movement from the Union, when viewed in the context
of the parties’ ongoing step-increase litigation. While the State relies on that pending litigation to
dismiss the Union’s revised position as disingenuous, the settled Board decision and then-
35
undecided appeal presented an opening for the parties to negotiate a settlement.14 Had the State
successfully negotiated the Union’s withdrawal of the appeal and related litigation, the State would
have obtained an additional $292 million in savings from the Union under the terms of the
framework. Although the Union never broached the issue of withdrawal, “it would be
extraordinary to suppose…that [the union’s] initial modification of its demands would go to the
ultimate limits of its possible agreement.” Webb Furniture Corp., 366 F.2d at 316. Terranova’s
observation, that uncertainty drives deals, further justifies a reasonable expectation that greater
concessions may have been forthcoming, had the parties returned to the table at that time.
The State contends that the Union has not bridged the $2.9 billion gap between the parties’
positions, the bulk of which represents the State’s health insurance costs, but neither that remaining
gap nor the State’s anticipated rejection of the Union’s proposal demonstrates that the parties are
still at impasse. A concession by one party on a significant issue in dispute precludes a finding of
impasse even if a wide gap between the parties remains because under such circumstances there is
reason to believe that further bargaining might produce additional movement. Saunders House v.
NLRB, 719 F.2d 683, 688 (3d Cir. 1983) (stating principle, but finding no change in position where
union merely repeated an off-the-record position on the record). Moreover, such a concession will
break an impasse even where the employer argues that it would not accept the union’s new terms.
Webb Furniture Corp., 366 F.2d at 316 (union’s concessions broke impasse even where employer
argued that one “could not reasonably suppose” that it would accept the union’s modified
proposal).
The clear link between the State’s proposal on wages and subcontracting further supports
the finding that the Union’s substantial concession on wages and significant overall reduction in
economic demands broke the parties’ impasse. The connection between the issues of
subcontracting and wages is clear from the State’s representations at the bargaining table and the
terms of its final offer on subcontracting. The State expressly justified its subcontracting proposal
on economic grounds, and indicated that one of the proposal’s primary goals was to save the State
money. Impasse I, 33 PERI ¶ 67. The “managed competition” provision of the subcontracting
proposal reflects this goal because it allows the Union to compete for the work that the State seeks
14 Although, the Union could not be compelled to negotiate a withdrawal of its litigation, there is nothing
in the record that indicates the Union’s opposition to exploring that option. Bd. of Trustees, Southern Ill.
Univ. at Edwardsville, 19 PERI ¶ 83 (IL ELRB 2003) (a proposal to settle an unfair labor practice case is
a permissive subject of bargaining).
36
to subcontract. If the Union offered a bid that provided the lowest cost to the employer or resulted
in the highest points award under the Procurement Code, the State would “endeavor to forgo”
subcontracting unit work “so that the services [would] continue to be provided by public
employees.” While the State never packaged its wage and subcontracting proposals together, there
is nevertheless a connection because of the plain, labor-cost-saving objectives of the State’s
subcontracting proposal. Cf. Holiday Inn Downtown-New Haven, 300 NLRB at 776, n. 10 (no
connection between wages and subcontracting found where employer had no present intention to
subcontract and gave employees a wage increase).
Moreover, the State’s own Chief Negotiator, Terranova, acknowledged a connection
between subcontracting, wages, and other economic issues when he rejected Newman’s request to
resume bargaining over the Union’s new proposals. Terranova commented that Newman’s letter,
which referenced a subcontracting proposal, lacked detail and did not demonstrate any change of
position on other “significant issues” such as merit pay, step increases, health insurance, wages,
and overtime. He specifically observed that the Union had not changed its position of refusing to
agree to a contract with “no wage increases.” He concluded that further bargaining would be a
“futile exercise,” “absent evidence that AFSCME ha[d] changed its position on [such] significant
issues.” Terranova thereby admitted that the bargaining would be fruitful if the Union’s
substantially changed its position on key subjects, apart from subcontracting. Accordingly, the
State cannot now deny that the Union’s willingness to meet the State’s position in one respect, by
accepting zero general wage increases, constitutes substantial movement that revives the State’s
obligation to bargain.
There is no merit to the State’s claim that the Union’s letter could not have broken the
impasse because it was not a formal proposal. Letters and oral representations are sufficient to
break an impasse provided they demonstrate the party’s willingness to make concessions or
describe a change in the party’s position. County of Jackson, 9 PERI ¶ 2040 (letter that articulated
willingness to make counterproposal broke impasse, where it was viewed as an offer of
concessions); Circuit Wise, Inc., 309 NLRB 905, 920 (1992) (union presented respondent with
detailed and substantial proposed changes on significant unresolved issues through mediators);
Airflow Research & Mfg. Corp., 320 NLRB at 862-3 (letter that listed proposals broke impasse).
Here, the January 9 letter demonstrates that the Union was willing to make the concessions
it indicated, and that the Union intended to present those stated terms at the bargaining table. First,
37
the Union asserted that the letter outlined a new bargaining position, stating that it “significantly
modifie[d] [the Union’s] previous positions on core economic issues.” Second, the Union
identified the letter as a “framework for contract settlement,” indicating that the parties could
hasten the conclusion of the negotiations, on the whole, if the State accepted its terms.
The specificity of the letter further supports the conclusion that Union was willing to
present the letter’s terms at the table. An employer is not entitled to assume that a union is
intransigent in its position when it states the opposite and provides details regarding the change in
its bargaining position. Grinnell Fire Protection Sys., 328 NLRB at 586 (union demonstrated its
willingness to compromise by offering the employer proposals that were different from the
position that the respondent believed the union would ultimately take). Here, the Union used
percentages and dollar values: Employees would forgo base increases for four years; their health
insurance contributions would increase by 2.5% immediately, and would again increase 3% in
fiscal years 2018 and 2019; they would receive a $1000 bonus in the first year and receive bonuses
in the remaining years in an amount that was an equitable share of a lump sum, calculated as 2%
of the State’s payroll costs; and they would receive step increases in fiscal year 2018 and 2019,
provided they had not yet reached the top of the wage scale. While the State contends that it did
not view the Union’s letter as setting forth terms that the Union might offer at the bargaining table,
that view is not reasonable. Cf. Providence Medical Center, 243 NLRB at 731-2 (union’s
assertion, that remaining disputed issues would resolve themselves if parties could agree on wages
and duration of the contract, did not break the impasse).
Contrary to the State’s contention, the January 9, 2017 letter broke the parties’ impasse
even though the Union sent it to the Governor rather than to Terranova, as the parties’ ground rules
reasonably required. While a party’s refusal to adhere to ground rules may be an indicium of bad
faith bargaining, an employer cannot adhere to ground rules to the point that it undermines the
negotiating process or justifies bad faith bargaining. Beacon Sales Acquisition, Inc., 357 NLRB
789, 789 & n.13 (2011). Here, the parties’ ground rules state that “outside of negotiations…all
correspondence related to the offering…of proposals” must be directed “to the other party’s chief
spokesperson.” And, there is little question that the Union failed to follow these rules when it sent
its January 9, 2017 “framework for contract settlement” directly to Governor Rauner, who was not
the State’s designated chief spokesperson. However, the State cannot rely on the parties’ ground
rules to ignore the Union’s communication because the letter itself evidences a substantial change
38
in the Union’s bargaining position and a sincere desire to resume bargaining. Thus, condoning the
State negotiators’ refusal to acknowledge that communication would elevate form over substance.
Beacon Sales Acquisition, Inc., 357 NLRB at 789 & n.13 (2011) (adopting ALJ’s finding that
respondent violated the Act by refusing to meet with the union even though union had violated the
ground rules by refusing to continue bargaining with a mediator); Cnty. of Kane and Kane Cnty.
Sheriff, 4 PERI ¶ 2031 (IL SLRB 1988) (ground rules “cannot be permitted to detour negotiations
over wages, hours and terms and conditions of employment”; articulating principle in support of
holding that employer could not insist on stenographer at bargaining sessions).
The State cannot rely on the Union’s breach of the parties’ ground rules to impugn the
Union’s sincerity under the circumstances presented here. First, the Union’s submission of the
letter to the Governor, rather than to Terranova, cannot reasonably be disregarded as “public
messaging.” The Union directed the correspondence to the Governor—the individual with ultimate
authority to take action on the Union’s terms. It did not simply send an open letter to the press.
Next, the State itself did not view the framework as simply public messaging because the
Governor’s spokesperson characterized it as a “proposal,” albeit one that did not “bridge the gap”
between the parties. In addition, the State points to no pattern of conduct by the Union in which
it made overtures of movement directly to the Governor and then refused to follow through at the
table. Cf. City of Peoria, 11 PERI ¶ 2007 (non-specific assertions that union was willing to move
did not break the impasse where employer presented evidence that union agents were trained to
make such statements upon employer’s declaration of impasse); cf. Holiday Inn Downtown-New
Haven, 300 NLRB 774, 775 (union had previously made statements that it was prepared to make
new proposals, but those statements were both non-specific and were similar to statements made
earlier by the union which had proven false and reasonably led employer to doubt union’s
sincerity).
Finally, the State’s skepticism of the Union’s sincerity is inconsistent with the State’s
earlier claim that the Union’s final offer at interest arbitration was probative of the Union’s
intentions during bargaining. The State argued that it reasonably doubted the Union’s intention to
present concessions on subcontracting during bargaining because the Union’s arbitration offer
proposed to maintain restrictions on the State’s authority to subcontract. In an about-face, the
State now disregards the Union’s final offer at interest arbitration by maintaining its skepticism of
the Union’s framework’s concessions, even though they mirror the Union’s final offer at interest
39
arbitration. While there are indisputably differences between traditional bargaining and interest
arbitration which could justify the presentation of different offers in the two forums,15 the State’s
unexplained and selective reliance on the Union’s interest arbitration positions weakens any claim
that the State had a good faith doubt of the Union’s sincerity.
In sum, the Union’s letter of January 9, 2017 broke the parties’ impasse and revived the
State’s obligation to return to the table.
V. CONCLUSIONS OF LAW
1. The State did not violate Sections 10(a)(4) and (1) of the Act when it refused to bargain
after receiving the Union’s November 21, 2016 letter.
2. The State violated Sections 10(a)(4) and (1) of the Act when it refused to bargain after
receiving the Union’s January 9, 2017 letter.
VI. RECOMMENDED ORDER
The Complaint in Case No. S-CA-17-067 is dismissed.
IT IS HEREBY ORDERED that the Respondent, State of Illinois, Department of Central
Management Services, its officers and agents shall:
1) Cease and desist from:
a. Failing and refusing to bargain collectively in good faith with the Charging Party,
American Federation of State, County and Municipal Employees, Council 31, on
a successor contract.
b. In any like or related manner, interfering with, restraining or coercing its employees
in the exercise of the rights guaranteed them in the Act.
2) Take the following affirmative action necessary to effectuate the policies of the Act:
15 In interest arbitration, the arbitrator determines whether a disputed issue is economic or non-economic.
If he determines that the issue is economic, that determination is conclusive, and he must then select either
the union’s proposal or the employer’s proposal on that issue and cannot formulate his own compromise.
5 ILCS 315/14(g). In addition, a union representing security employees in compulsory interest arbitration
would likely not offer concessions on subcontracting where the Private Correctional Facility Moratorium
Act prohibits the State from subcontracting the provision of services relating to the operation of a
correctional facility. 730 ILCS 140/3.
40
a. On request, bargain collectively in good faith with the Charging Party, American
Federation of State, County and Municipal Employees, Council 31, on a successor
contract.
b. Post, at all places where notices to employees are normally posted, copies of the
Notice attached to this document. Copies of this Notice shall be posted, after being
duly signed, in conspicuous places, and be maintained for a period of 60
consecutive days. The Respondent will take reasonable efforts to ensure that the
notices are not altered, defaced or covered by any other material.
c. Notify the Board in writing, within 20 days from the date of this Decision, of the
steps the Respondent has taken to comply with this order.
VII. EXCEPTIONS
Pursuant to Section 1200.135 of the Board’s Rules, parties may file exceptions to the
Administrative Law Judge’s Recommended Decision and Order and briefs in support of those
exceptions no later than 30 days after service of this Recommendation. Parties may file responses
to exceptions and briefs in support of the responses no later than 15 days after service of the
exceptions. In such responses, parties that have not previously filed exceptions may include cross-
exceptions to any portion of the Administrative Law Judge’s Recommendation. Within seven days
from the filing of cross-exceptions, parties may file cross-responses to the cross-exceptions.
Exceptions, responses, cross-exceptions and cross responses must be filed with the Board’s
General Counsel, at 160 North LaSalle Street, Suite S-400, Chicago, Illinois 60601-3103, or to the
Board's designated email address for electronic filings, at [email protected]. All filing
must be served on all other parties. Exceptions, responses, cross-exceptions and cross-responses
will not be accepted at the Board’s Springfield office. The exceptions and/or cross-exceptions sent
to the Board must contain a statement of listing the other parties to the case and verifying that the
exceptions and/or cross-exceptions have been provided to them. The exceptions and/or cross-
exceptions will not be considered without this statement. If no exceptions have been filed within
the 30-day period, the parties will be deemed to have waived their exceptions.
41
Issued at Chicago, Illinois this 2nd day of March, 2018
STATE OF ILLINOIS
ILLINOIS LABOR RELATIONS BOARD
STATE PANEL
/S/ Anna Hamburg-Gal
Anna Hamburg-Gal
Administrative Law Judge
NOTICE TO EMPLOYEES FROM THE
ILLINOIS LABOR RELATIONS BOARD
ILLINOIS LABOR RELATIONS BOARD One Natural Resources Way, First Floor
Springfield, Illinois 62702 (217) 785-3155
160 North LaSalle Street, Suite S-400 Chicago, Illinois 60601-3103
(312) 793-6400
THIS IS AN OFFICIAL GOVERNMENT NOTICE AND MUST NOT BE DEFACED.
Case No. S-CA-17-089 The Illinois Labor Relations Board, State Panel, has found that the State of Illinois, Department of Central Management Services has violated the Illinois Public Labor Relations Act and has ordered us to post this Notice. We hereby notify you that the Illinois Public Labor Relations Act (Act) gives you, as an employee, these rights:
• To engage in self-organization • To form, join or assist unions • To bargain collectively through a representative of your own choosing • To act together with other employees to bargain collectively or for other mutual aid and protection • To refrain from these activities
Accordingly, we assure you that: WE WILL cease and desist from refusing to bargain in good faith with the Charging Party, American Federation of State, County, and Municipal Employees, Council 31. WE WILL cease and desist from in any like or related manner interfering with, restraining or coercing our employees in the exercise of the rights guaranteed them in the Act. WE WILL upon request by the Charging Party, American Federation of State, County, and Municipal Employees, Council 31, resume bargaining in good faith over a successor contract. DATE ____________ __________________________________
State of Illinois, Department of Central Management Services
