Labor commission reforms advance

Lawmakers gave first-round approval May 4 to a proposal that would make changes to the Nebraska Commission on Industrial Relations (CIR), the state’s arbiter of labor disputes between public sector employees and government employers.

Omaha Sen. Steve Lathrop introduced LB397, which he described as a compromise between labor and management that arose from concerns initially raised by the League of Nebraska Municipalities.

“The first thing we did was listen to the concerns of the cities,” Lathrop said. “And we deliberately listened to the league of municipalities because it was not going to be an Omaha bill, and it was not going to be a Lincoln bill, and it was not going to be a Fremont or Grand Island bill. It was going to be a bill that worked for all the cities across the state.”

A Business and Labor Committee amendment, adopted 29-9, became the bill.

Lathrop said the amended bill would address three main concerns about the CIR regarding predictability, distortions in wage comparisons and the impact of employee benefits.

The CIR acts according to general guidelines found in state law, Lathrop said, but most of the rules governing their actions have been established by case law. He said the goal of LB397 is to provide specific guidelines in state law in a number of areas that impact labor disputes in order to bring greater predictability to the CIR process.

Among other provisions, the bill would set the following criteria for choosing an array for wage comparison purposes:

• remove the rule of evidence requirement;
• provide a preference for geographic proximity;
• specify a 70 percent match of duties performed and time spent performing those duties;
• set criteria for the size of comparable out-of-state cities and metropolitan statistical areas;
• allow public and private comparisons when matches are appropriate and available; and
• set the preferred array size at between seven and 13, with as few as five allowed if all array members are Nebraska employers.

If a comparison were made with an out-of-state city or metropolitan statistical area, the amendment would require that wage information be adjusted to reflect Nebraska’s cost of living – a process Lathrop called “Nebraska-tizing” the numbers.

“The [current wage] distortions come primarily from getting data, or comparators, from outside the state of Nebraska,” Lathrop said.

The bill also would incorporate health insurance and pension benefits into an hourly rate value. Lathrop said the provision would allow cities to receive credit for benefits provided to workers, rather than relying solely on wage comparisons within an array.

“We’re reducing everything to a common denominator,” he said.

Under the bill, the CIR would freeze wages of Nebraska public sector employees found to be receiving higher compensation than other comparators in an array using the hourly rate value calculation. Wages would be frozen for twice as long as the time it takes the other employees in the array to achieve a comparable hourly rate value.

Employees would be able to negotiate decreases in their retirement or health insurance plans to reduce their hourly rate value and end a wage freeze.

Omaha Sen. Brad Ashford said the possibility of negotiating retirement plans might provide relief to cities facing daunting contractual retirement obligations.

“Omaha has a pension shortfall of $642 million,” he said. “They are essentially bankrupt if they had to pay up tomorrow.”

The bill also includes provisions of LB555, originally introduced by Scottsbluff Sen. John Harms, intended to streamline the collective bargaining processes of Nebraska’s college and university systems. Among other changes, the provisions would eliminate use of a special master, authorize appeals directly from the CIR to the Nebraska Supreme Court and tighten timelines in the dispute resolution process.

Hastings Sen. Dennis Utter supported LB397, saying he originally supported abolishing the CIR but came to believe that an arbiter in labor disputes is needed to determine fair wages and benefits for public employees.

“I believe that Nebraska public employees should not be the lowest paid in our state with inadequate benefits, nor should they be the highest paid with the best benefits,” Utter said.

Lathrop offered a second amendment that would, among other provisions, require a protective order prohibiting dissemination of private sector employee information to those not party to a dispute. Lathrop said the provision was a response to concerns that private employer data that is subpoenaed to provide information for comparisons in a labor dispute might become public knowledge.

Omaha Sen. Beau McCoy opposed the amendment, saying the CIR should use public data that is available for job comparisons rather than using subpoena power to access private employer information.

Sen. Tony Fulton of Lincoln agreed. Private employers use publicly available aggregated data when making decisions regarding wages and benefits, he said, and public employers should do the same.

Lathrop’s amendment was adopted on a 30-9 vote.

Fulton offered and later withdrew an amendment that would have replaced provisions of LB397.

Among other provisions, the Fulton amendment would have authorized a public employer to implement their last, best and final offer if they reached an impasse in a labor dispute with public employees. The CIR would have had authority only to determine if a public employer bargained in good faith.

Fulton said his proposal would allow local officials to manage their budgets and control personnel costs, while retaining public employees’ collective bargaining rights. Local officials should have the final say in labor disputes, Fulton said, because they are elected to allocate tax dollars responsibly.

Kearney Sen. Galen Hadley expressed concern that public employees, who have no right to strike, would be left with only the option of quitting their jobs if no appeal process existed and a public employer were able to unilaterally institute a final compensation offer.

“If you underpay people, eventually they switch jobs,” he said.

Lathrop said further adjustments to LB397 are possible, but he said changing the fundamental role of the CIR is not an option.

Senators voted 31-0 to advance the bill to select file.