The Commonwealth Court of Pennsylvania significantly strengthened public employers’ ability to address rising costs by holding that minimum shift manning requirements are a non-bargainable managerial prerogative. The court also affirmed that a public employer has the ability to eliminate unlawful pension benefits and reduce costly COLA benefits through the Act 111 collective bargaining and arbitration process. 

In City of Allentown v. International Association of Firefighters, Local 302, the court heard the city’s appeal of an Act 111 award between the city and its paid firefighters  mandating that the city maintain a complement of 25 officers per shift. The city also appealed the arbitrator’s decision to allow unlawful pension benefits to remain in effect for a period of 60 days after the award before they were eliminated.

In an en banc decision, the court agreed with the city’s argument that an Act 111 interest arbitration panel has no power to mandate a minimum shift manning requirement. The court held that shift manning is a managerial prerogative because it is related to the city’s overall capacity to fight fires and should be determined by the employer, and not by an arbitrator or union. 

The court rejected the union’s argument that shift staffing requirements are similar to apparatus or equipment manning requirements, which have been held proper subjects of bargaining because they relate more to firefighter safety. The court held that “[b]y requiring the City to employ a minimum number of firefighters per shift, the award unduly infringes directly upon its managerial prerogative by restricting ‘the ultimate decision concerning what level of fire protection [the City] wishes, or can afford, to provide to its citizens.’”

The court also addressed Allentown’s ability to control pension costs by affirming the arbitrator’s elimination of the pension’s cost-of-living allowance (COLA) for current employees. The court held that the COLA benefit was only an expectation and was not vested for current employees. As a result, the COLA benefit was eliminated for all current firefighters employed or retiring after 2011. Significantly, the court emphasized that a COLA is not a vested right ad infinitium into the future.

The court also held that an Act 111 interest arbitration panel can eliminate illegal benefits already existing in a collective bargaining agreement. The contract enabled members of the Fire Department to buy up to four years of time towards calculation of pension benefits, allowing firefighters to retire at less than the minimum 20 years of service mandated under the Third Class City Code. The court found that since the provision was specifically prohibited by law, it was an illegal benefit, and the removal of it from the contract did not diminish employee’s pension benefits, as employees have no entitlement to illegal benefits.  In reaching this decision, the Commonwealth Court also noted that when eliminating unlawful pension benefits, there is no requirement that such action be preceded by an actuarial cost study under Act 205. 

The court’s decision is significant for protecting and enhancing public employers’ managerial rights and mandating the removal of illegal benefits through the Act 111 interest arbitration process. The ruling also appears to clarify some of the issues raised by the court’s recent decision in Flood City Lodge No. 86 v. City of Johnstown, which held that post-retirement health benefits for current employees could not be diminished under the Home Rule Charter Law. At the very least, the court’s decision in Allentown limits the application of Johnstown to only benefits that are not illegal and benefits that have not vested ad infinitum into the future.

This decision highlights the importance of reviewing post-retirement benefits for possible illegal benefits, analyzing what benefits are not fully vested and can be changed for current employees, and taking an aggressive approach in collective bargaining to protect managerial rights and eliminate costly pension benefits and other contract provisions.

Attorneys in Ballard Spahr’s Public Sector Labor and Employment Group have experience assisting Pennsylvania municipal clients with the full range of labor and employment issues, including collective bargaining and interest arbitration. For more information, please contact the member of the Group with whom you work.

Copyright © 2015 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

Related Practices

Labor and Employment
Public Sector Labor and Employment