BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
LOCAL NO. 316 I.A.F.F.
CITY OF OSHKOSH
Mr. John B. Kiel, Attorney at Law, Schneidman, Myers, Dowling, Blumenfeld,
Ehlke, Hawks & Domer appearing on behalf of the Union.
Mr. Warren P. Kraft, City Attorney, City of Oshkosh, appearing on behalf of the
The Union and the Employer named above are parties to a 1997-1999
collective bargaining agreement that provides for final and binding arbitration
of certain disputes. The parties asked the Wisconsin Employment Relations
Commission to appoint an arbitrator to hear and decide a grievance involving the
number of pay periods in a year. The undersigned was appointed and held a
hearing on April 30, 1998, in Oshkosh, Wisconsin, at which time the parties were
given the opportunity to present their evidence and arguments. The parties
completed filing briefs by September 24, 1998.
The issue to be decided is:
Did the City violate the collective bargaining agreement when it declared a 27th
pay period for the calendar year of 1997, thereby delaying the wage increase for
1998 until January 3, 1998? If so, what is the appropriate remedy?
The Union and the City have been parties to many collective bargaining
agreements. They have not bargained specifically for the date of pay increases
to start but have generally agreed that the effective date of pay increase for a
new calendar year does not start on January 1 of that year, but starts with the
first pay period, which often starts in December of the preceding year.
This grievance arose because the first pay period in 1998 started on
January 3rd due to the fact that the City declared a 27th pay period in the
calendar year of 1997. Normally, there are 26 pay periods because employees are
paid on a bi-weekly basis. However, every 10 or 11 years, there is a 27th pay
The City declared the pay period between December 20, 1997, and January 3,
1998, to be the 27th pay period for 1997. The Union believes that this pay
period should have been the first one for 1998, and that the City should not
have a 27th pay period until the year 2000.
In the early part of the 1970's, the parties agreed to convert the bi-monthly pay
periods to bi-weekly pay periods. Everyone was aware that this
conversion required a 27th pay period in approximately every 11 years.
Employees never have less than 26 pay periods in a year, and will have 27 pay
periods every 10 or 11 years.
The dates in the labor contracts calling for wages effective January 1st
or for the first pay period have not been dates that were negotiated. The
Director of Administrative Services, Norbert Svatos, has supplied the dates when
they were known or he has put in the pay period. The City has been responsible
for putting the contract in its final form, and Svatos testified that he simply
supplied the dates when they were known.
The 1972 labor contract had bi-weekly rates, with a wage schedule for
January 1, 1972, to December 31, 1972. The last day of the year, December 31,
1972, would have been the first day of the first pay period for 1973.
The 1973 labor contract also referred to the wage schedule for January 1,
1973, to December 31, 1973. However, the wage increase started on pay period #1
on December 31, 1972, and ended with pay period #26 on December 29, 1972.
The 1974 contract was similar, in that it called for a wage schedule on
January 1, 1974, to December 31, 1974. But the wage increase for 1974 would
have started on December 30, 1973, with pay period #1, and ended with pay period
#26 on December 28, 1974.
1975 - same thing happened. The contract says January 1, 1975 to December
31, 1975. The wage increase started December 29, 1974, and ended on pay period
#26 on December 27, 1975.
1976 - the contract contained split wage increases, the first increase to
be from January 1, 1976 to June 26, 1976. The increase actually started on
December 28 with pay period #1. June 26 of 1976 appears in the middle of the
14th pay period. The second part of the year's increase was from June 27, 1975
to December 31, 1976. The record does not show whether the increase actually
took place on June 27th. And in 1976, the first 27th pay period shows up,
starting on December 19th and running through January 1 of 1977.
1977 & 1978 - the contract stated the correct date of pay period #1,
January 2, 1977. It also showed that the wage schedule ran through December 31,
1977, which was the date that pay period #26 ended that year. The contract
contained a wage reopener for 1978, and when the parties reached an agreement on
the reopener, the wage schedule was for increases for January 1, 1978, to
December 31, 1978. The January 1st date worked as pay period #1 started then,
but the 26th pay period ended on December 30, 1978, not the 31st.
1979 & 1980 - the contract called for the wage schedule effective pay
period #1, 1979. However, the pay period started on December 31, 1978, and
ended on December 29, 1979. The contract for 1980 again referred to the pay
period #1, 1980, which started on December 30, 1979, and ended on December 27,
1981 & 1982 - there were split increases in both years of this contract.
Both wage schedules referred to the wage schedule effective pay period #1 and
#14. The first pay period started on December 28, 1980, the 14th pay period
start on July 5, 1981, and the 26th pay period ended on December 26, 1981.
Accordingly, the first pay period of 1982 started on December 27, 1981, and the
last pay period of the year ended on December 25, 1982.
1983's labor contract called for a wage increase effective pay period #1,
which started on December 26, 1982.
1984 - the labor contract called for a wage increase effective January 1,
1984. That was not followed - the first pay period started December 25, 1983.
1985 - 1986 - 1987 - a three year contract started with the wage increase
effective January 1, 1985, which was actually paid on the first pay period
starting on December 23, 1984. The contract also called for the wage increase
for 1986 to be effective on January 1, 1986, but it was actually effective
December 22, 1985. Then at the end of 1986 - a 27th pay period shows up again,
running from December 21, 1986, to January 3, 1987. The third year of that
three year contract called for a wage increase effective pay period #1, 1987,
which started on January 4, 1987. No grievance was filed.
1988 - 1989 - 1990 - shows split increases in each of three years, with
the wage schedules to be effective on the first and fourteenth pay periods. The
first pay period for the year 1988 started on January 3, 1988. The first pay
period for the year 1989 started on January 1, 1989. The first pay period for
the year 1990 started on December 31, 1989.
1991 - 1992 - the contract shows a wage increase effective pay period #1,
which would have started on December 30, 1990. There were further schedule
increases for pay period #14 and #21, with a salary reopener for 1992. The 1992
agreement calls for a wage increase effective pay period #1, which started on
December 29, 1991.
1993 - 1994 - the 1993 wage increase was to be effective pay period #1,
which started on December 27, 1992. The 1994 increase was effective pay period
#1, which started on December 26, 1993.
1995 - 1996 - the 1995 wage increase was to be effective pay period #1,
which started on December 25, 1994. The 1996 wage increase used the same
procedure, with the effective pay period #1 actually starting on December 24,
The current contract for 1997, 1998 and 1999 starts with a wage increase
effective pay period #1, 1997. Pay period #1 for 1997 started in 1996 on
December 22 and ran through January 4, 1998. Then the City created a 27th pay
period in 1997, which ran from December 21, 1997, through January 3, 1998. This
is the event that triggered the grievance.
The labor contract provides for a wage increase effective pay period #1,
1998, which started on January 4, 1998. The contract also provides for a wage
increase effective pay period #1, 1999, which will start on January 3, 1999.
Union President John Gee has been on the bargaining committee since 1988.
The Union's expectation is that wage increases are to occur on the first pay
period, which typically comes after pay period #26. Gee expected the pay raise
for 1998 to begin after the end of pay period #26. He believed that pay period
#1 should start on December 21 of 1997 and run through January 3 of 1998. Gee
calculated that he lost $43 in wages because of the delayed pay period in 1998.
The impact continues into 1999.
The Union believes that the 27th pay period would naturally occur in the
year 2000 where the 27th pay period would end on December 30, 2000. Then
December 31, 2000 would start pay period #1 for the year 2001. The next time a
27th pay period would naturally occur, under the Union's analysis, would be
2011, when it would end on December 31, 2011.
Svatos is responsible for personnel, labor relations, purchasing, and
payroll, among other things. He has been on the bargaining team since 1970 and
recalled the move from a bi-monthly payroll to a bi-weekly payroll in 1973.
Svatos testified that no matter what the labor contract said, the pay raise date
always started with pay period #1. From the City's standpoint, it was a matter
of paying 650 employees their increases at the same time for payroll purposes,
rather than breaking down the bargaining unit which has about 87 employees in
it. The documents for the labor contracts were generated by Svatos' office, and
he supplied the dates for increases when known in advance.
All of the eight bargaining units in the City knew that there would be an
additional pay period every 10 or 11 years, and the City always worked it out so
that the dates of increases favored employees. The raises occurred more often
in December than in January. During the year 1977, when the pay increases
started on January 2, 1977, none of the bargaining units in the City objected to
the date of the pay raise. Also, none of the units objected when a 27th pay
period occurred in 1986.
The parities never negotiated over a 27th pay period or the specific date
of an increase for the start of a calendar year. The Union was probably not
aware of the possibility of a 27th pay period when negotiating for the current
THE PARTIES' POSITIONS
The Union argues that this is not a case about management rights but a
case about money and the effective date of the 1998 wage increase. The City's
action has taken a unilateral wage concession from its fire fighters, as much as
$46.25 on the top step. The Union asks that the City be ordered to make its
fire fighters whole.
The Union asserts that at the time the parties executed the 1997-99
collective bargaining agreement, they intended the wage increase to become
effective on December 21, 1997. The City should not be allowed to use
arbitration to rewrite the bargain. The express language of the contract, the
negotiations, the bargaining history and past practice all support the Union's
claim that the parties intended to make the 1998 wage increase operative
December 21, 1997, when they agreed to an increase "Effective Pay Period 1,
1998." The language states that paydays will be bi-weekly with a one-week hold
back. If allowed to proceed uninterrupted, the bi-weekly pay period system
naturally produces a 27th pay period every 12 years. The parties knew that when
they negotiated the 1997-99 contract.
The Union states that prior to 1998, the parties negotiated a series of
agreements that had wage increases taking effect before January 1st, and
negotiated wages that took effect on or before January 1st in 22 of the 25 years
preceding their 1997 negotiations. As they negotiated the current contract,
they not only knew of the existing practice but also agreed on the pay periods
then in effect. There was no dispute that the last pay period of 1996 ended on
December 21, 1996, or that the first pay period of 1997 began on December 22,
1996. With that knowledge, the City agreed to wages effective on pay period #1
and it negotiated the effective date of wage increases without notifying the
Union that it wanted to alter the past practice or the natural progression of
the bi-weekly pay system. Therefore, the Union asserts, the City acquiesced to
the status quo requiring wage increases taking effect before January 1st into
the current contract.
The Union argues that the City's silence at the bargaining table and the
past practice of implementing wage increases on the first day of the pay period
each December supports the grievance. The City should be estopped from
declaring the 27th pay period in 1997 because of its silence in bargaining while
it was aware that wage increases regularly became effective in December. The
City made no proposal to make the wage increase effective January 4, 1998 nor
did it propose a reopener to deal with the effective date of the wage increase.
Allowing the City to change the effective date of the wage increase after the
contract is settled has a destablizing effect on the Union's confidence in its
contract and undermines the relationship between the parties. Issues such as
this should not be resolved through unilateral action or the grievance process.
The Union states that Article XV incorporates past practice into the
contract, and past practices involving monetary subjects of bargaining are
solidly binding on an employer. The practice of wage increases taking effect on
or before January 1st of any given year went unabated for 25 years, with only
two instances of deviation which were mutually agreed upon in 1977 and in 1987.
Those isolated instances do not support the City's unilateral action. A past
practice need not be absolutely uniform, but be the predominate pattern of
The Union further argues that an award to the City would produce an
unreasonable result, because the City asks the Arbitrator to declare that it has
the right to create a 27th pay period in 1997 that is removed from the process
of collective bargaining. If the City prevails, it could perpetually delay the
effective date of the wage increases by perpetually declaring a 27th pay period,
which is illogical and should be rejected. The City has a duty to bargain with
the Union over matters primarily related to wages, hours and conditions of
employment. The date of a wage increase is a mandatory subject of bargaining.
The City could, the Union believes, unilaterally secure an automatic
concession by simply delaying the effective date of a wage increase through the
declaration of a 27th pay period. An award to the Union, on the other hand, is
reasonable because the employer has to deal with the effective date of a
particular wage increase at the bargaining table.
The City asserts that the first source of information to resolve this
grievance is the contract. That document indicates that pay period #1 is the
effective date of pay increases, but there is no language, express or implied,
as to when pay period #1 would begin. The contract does not show that the
parties have a meeting of the minds as to when the first pay period begins. The
Employer has rights not otherwise altered by the contract. Therefore, the
Arbitrator must resort to other evidence, which showed two uncontroverted points
- 1, that the Union never expressed any expectations as to when pay period #1
was to begin, and 2, past practice indicates that the City unilaterally
established dates when pay period #1 and pay period #14 started when increases
were split during a given year.
The City points out that the Union maintained silence in bargaining over
the effective date of the wage increase. While the Local President Gee
testified as to his expectation of the effective date of the wage increase, he
did not share that expectation or understanding at the bargaining table. Gee
testified that there was no discussion at the bargaining table about the
effective date for pay period #1 for 1998, despite the Union's argument that the
parties were aware of when a 27th pay period would naturally occur. Gee agreed
that the City started pay period #1 on January 4, 1987, and there were no
objections from any of the bargaining units about the declaration of the 27th
pay period in that year.
The City believes that the past practice supports its position. Svatos'
bargaining history extends at least 15 years beyond Gee's tenure on the Union
negotiating team. Svatos testified that when the City bargained for the bi-weekly pay cycle,
all the bargaining units understood that periodic adjustments
would be necessary to keep the bi-weekly cycle in sync with the calendar years.
The changeover from a bi-monthly system was made in 1973, and all the units were
made aware that a 27th pay period would be necessary every 10-11 years. In most
years, pay period #1 began as early as 10 days before January 1st.
Despite language which established a specific pay increase date, the City always
followed a pay period #1 date regardless of where the date fell on the calendar.
For example, the 1973 contract calls for a pay increase to be effective on
January 1, but Svatos testified that it actually took place one day earlier. In
succeeding years, the City began the pay increase on December 30, 1973, for the
1974 increase, on December 29, 1974 for the 1975 increase, and on December 28,
1975, for the 1976 increase. The City also instituted the June 27, 1976, split
increase on June 20, 1976. The City ignored the contractual start dates because
of the easier administration with over 650 employees.
While the Union argues that the1977 pay increase is clearly stated in the
contract as January 2, 1977, Svatos testified that he was the one who inserted
those dates into the contract, and the subject was not discussed by the parties.
Svatos testified that if the Employer unreasonably exercises one of its
management rights, the Employer loses that right. He suggested that declaring
only 25 pay periods in a contract year was irresponsible, as would be starting
pay period #1 as early as December 2nd. The issue of how many pay periods in a
contract year has never been negotiated. The record shows that in more contract
years than not, the employees benefited from the City's declaration of the start
date of pay period #1.
The Union acquiesced to the City's establishment of the effective dates of pay
increases. Gee was familiar with payroll procedures, and even the 1986 practice
occurred on his watch. The City asserts that the Union's theory about a
naturally occurring 27th pay period in 1999 and 2011 is correct only because the
City declared 27 pay periods in the past.
The City also notes that this grievance potentially affects several
hundred other employees in other bargaining units. If the Union's position were
upheld, an absurd result would be created whereby one union got its 1998 pay
increase two weeks earlier than all other employees because it sought through
the grievance procedure what it admittedly failed to negotiated at the
The Union's Reply
The Union responds to the City's arguments by stating that the City is
asking the Arbitrator to give the management rights clause an unduly expansive
reading. The clause does not give the City the right to make unilateral
determinations about the effective date of wage increases. That is the purpose
of Article V, Pay Police, and the appendix regarding wages and fringe benefits.
Allowing the City to periodically delay wage increases beyond the beginning of a
calendar year allows it to evade Article V and the appendix.
Moreover, the Union argues, the past practice does not support the City.
The City argued that all of its bargaining units agreed that a 27th pay period
was necessary to keep the bi-weekly pay cycle in sync with the calendar year.
But that is not so, because a 27th pay period naturally occurs within a calendar
year and the delay of the pay increase was not necessary to the operation of the
bi-weekly pay structure. There is no evidence to show that other bargaining
units agreed to a unilateral addition of a 27th pay period whenever the City
deems it appropriate. It is unreasonable to rely on Svatos' recollection of
bargaining agreements reached two and one-half decades ago, where the documents
themselves are available. The Union further states that if the City reached
an understanding with the fire fighters' Union to allow it to periodically
declare a 27th pay period, it should have reduced that agreement to writing.
The Union argues that the fact that the City implemented wage increases at
the start of pay period #1 rather than the contractual date of January 1st does
not allow the City to unilaterally declare a 27th pay period. The decision to
start wage increases earlier than called for by contract was made unilaterally
and done for ease of administration with all employees. Therefore, it was a
benefit to the City. The Union did not object because its members got their
wage increases earlier than expected. However, adding the 27th pay period does
not make the pay system easier to administer and it saves the City money at the
expense of its employees. If the City believes that the practice should swing
both ways, it should seek an explicit agreement at the bargaining table.
The Union cites Article XV, Present Benefits, as a source of a potential
contract violation. That Article states:
The parties agree to maintain the present level of benefits and policies that
primarily relate to mandatory subjects of bargaining, not specifically referred
to in this agreement. This provision is expressly limited to mandatory subjects
The City cites Article II, Management Rights, as a source of potential
justification for its action. That Article states:
The City possesses the sole right to operate City government and all management
rights repose in it, but such rights must be exercised consistently with the
other provisions of this agreement.
The powers, rights and/or authority herein claimed by the City are not to be
exercised in a manner that will undermine the union or as an attempt to evade
the provisions of this agreement or to violate the spirit, intent or purposes of
Article V as cited by the Union only states that pay days will be bi-weekly with a
one-week hold back. The appendix states that wage increases are
effective pay period #1. Nothing in the contract specifically supports the
Union's position that the pay increase should take place in the later part of
December rather than the early part of January.
It is necessary to resort to past practice to resolve this dispute because
the contract does not say when pay period #1 takes effect, and the past practice
shows how the pay periods have been implemented for many years - over 25 years
without a grievance. A past practice must be unequivocal, clearly enunciated
and acted upon, readily ascertainable over a reasonable period of time as a
fixed and established practice accepted by both parties. The practice here has
met the criteria sufficiently to be a binding past practice.
It has been unequivocal in that the wage increase has always started on
pay period #1, since the early 1970's. It has been clearly enunciated, acted
upon and readily ascertainable over time. Both parties have agreed to wage
increases effective upon the date of pay period #1, even where the labor
contracts provided for different dates. For example, the 1972, 1973, 1974,
1975, 1976, 1984, 1985, and 1986, contracts all called for wage increases on
January 1st, but pay increases never took place on January 1st of any of those
years. When the correct date of the wage increase was put in the contract, it
was only there because Svatos knew the exact date of pay period #1 when he or
the personnel office prepared the final draft of the labor contract, as happened
in 1977. In the rest of the contracts, the wage increase was to be effective on
pay period #1.
Both parties have acquiesced in the practice of pay periods starting both before
and after January 1st. Wage increases started before January 1st in 1973, 1974,
1975, 1976, 1979, 1980, 1981, 1982, 1983, 1984, 1985, 1986, 1990, 1991, 1992,
1993, 1994, 1995, 1996, and 1997. Wage increases started after January 1st in
1977, 1987, and 1988. Wage increases started on January 1st in 1978 and 1989.
In 1976, 1986 and 1997 - there was a 27th pay period. Both parties acquiesced
the early wage increases, despite contract language to the contrary, and both
acquiesced in late wage increases as well as those that came on January 1st.
Both parties acquiesced in the 27th pay period on two prior occasions at ten-year intervals.
It is only the last one that is being grieved now.
The City always established the dates of the pay periods. Most of the time, the
pay periods have to be in 26 periods, but they have to be adjusted for a 27th
pay period every decade or so. The Union acquiesced in the City's establishment
of the dates of the pay periods, even during the years that the City's
determination of a 27th pay period resulted in the wage increases becoming
effective after the first of the year. The City has not used the declaration of
a 27th pay period to save money. In fact, it has given pay raises early most of
There is no evidence that the parties ever negotiated the dates of increases,
particularly the starting date of the first increase of a new year, although
they may have given more thought to the date of a split increase. To the
contrary, the dates were put in by the City personnel office. The parties could
have negotiated that the pay raises were to start on January 1 - or any other
date - of any given year, but they did not do so. Moreover, the Union is not
arguing that the pay raise should start on January 1 - it wants it to start on
December 21, 1997 - 11 days prior to the start of the new year.
The Union overreaches a little here - it wants the benefit of having its pay
raises 11 days early for 1998 and 15 days early by the year 2000. It discounts
all the early pay raises it has enjoyed in the past, where the numbering of the
pay periods has worked to the advantage of employees more often than not. It
has not negotiated for pay raises to start in the prior year but has taken the
benefit of pay period #1 reaching back into those years. The few instances in
this contract that pay period starts in early January is not a violation of the
contract, where the Union has not negotiated for a specific date of the wage
Both parties accuse each other of being silent at the bargaining table on this
issue. They are both correct - neither party appeared to raise the issue during
bargaining. The parties could have, of course, agreed that wage increases were
to take effect on January 1st or any other date of any given year. They have
instead agreed that wage increases take effect in the first pay period or what
is called pay period #1. They never negotiated when pay period #1 was to start
- the City has always supplied that date.
The Union never grieved when the contracts called for the increases to
start on January 1st and the City started those increases in December of the
previous years. This happened on several occasions without any protest, as
noted previously. The Union never grieved when the City declared a 27th pay
period on two prior occasions. It never grieved when pay raises started after
January 1st until the current contract.
If the Union wants to get rid of this practice, it should do so at the
bargaining table and not through arbitration. Bargaining for the effective date
of a wage increase is one of the most common practices occurring in
negotiations. If the Union wants to change the practice of a wage increase
effective as of pay period #1, it can do so in the future in contract talks.
The grievance is denied and dismissed.
Dated at Elkhorn, Wisconsin this 9th day of October, 1998.
Karen J. Mawhinney /s/
Karen J. Mawhinney, Arbitrator