BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
FOREST COUNTY COURTHOUSE EMPLOYEES'
WISCONSIN PROFESSIONAL POLICE
FOREST COUNTY (COURTHOUSE)
(Health Insurance Premium Grievance)
Mr. Richard Thal, General Counsel, Wisconsin Professional
Police Association, 340 Coyier Lane, Madison, WI
53713, appearing on behalf of the Forest County Courthouse Employees' Association.
Ruder, Ware & Michler, S.C., by Attorneys Dean R.
Dietrich and Bryan Kleinmaier, 500 Third Street, P.O.
8050, Wausau, WI 54402-8050, appearing on behalf of Forest County.
Ms. Carol J. Nelson, Executive Director, Northern Tier
UniServ-East, P.O. Box 9, Crandon, WI 54520, appearing
on behalf of the Forest County Deputy Sheriffs' Association, Grievants in Case 82, No.
Pursuant to the provisions of the collective bargaining agreement between the parties,
Courthouse Employees' Association, WPPA/LEER (hereinafter referred to as the Union) and
(hereinafter referred to as the County) requested that the Wisconsin Employment Relations
Commission designate a
member of its staff to serve as arbitrator of a dispute over assessment of health insurance
premium payments to
employees in the Union's bargaining unit. An arbitration request over the identical issue was
received from Northern
Tier UniServ-East on behalf of the Forest County Deputy Sheriffs' Association
(Case 82, No. 59476, MA-11311). The undersigned was designated as the
arbitrator in both matters, which were
consolidated for hearing and decision. A hearing was held on February 13, 2001, at
the County Courthouse in
Crandon, Wisconsin, at which time the parties were afforded full opportunity to present such
testimony, exhibits, other
evidence and arguments as were relevant. A stenographic record was made of the hearing
for use by the County, but
the parties did not agree to use the transcript as the official record of the case, and the
Arbitrator did not receive a copy
of the transcript. The parties submitted post-hearing briefs, which were exchanged through
the undersigned on April
16, 2001. On April 23, the parties advised the Arbitrator that they were waiving the
submission of rely briefs,
whereupon the record was closed.
Now, having considered the testimony, exhibits, other evidence, contract language,
arguments of the parties
and the record as a whole, the undersigned makes the following Award.
To maximize the ability of the parties we serve to utilize the Internet
software to research decisions and arbitration awards issued by the Commission and its staff,
footnote text is found in the body of this decision.
The parties agreed that the matter is properly before the Arbitrator. The substantive
before the Arbitrator is stipulated to be:
Did Forest County violate the Collective
Bargaining Agreements when it billed employees and
deducted from their pay premium payments that were based on an amount that was greater
premium contributions that the County was actually paying to the insurance carrier?
If so, what is the appropriate remedy?
Courthouse Employees Collective
ARTICLE I RECOGNITION
Section 1.01: The County
recognizes the Association as the exclusive bargaining representative for all regular full-time
and regular part-time employees of the Courthouse and Annexes, Sheriffs, Highway and
for the purposes of conferences and negotiations pertaining to
matters of wages, hours and conditions of
employment. Excluded from the bargaining unit are professional, confidential, supervisory
and managerial employees,
non-clerical employees of the Highway Department, employees of the Sheriff's Department
with powers of arrest,
elected officials and temporary employees.
. . .
ARTICLE XVIII - INSURANCE
Section 18.01: For the calendar
year 1995, the Employer agrees to pay the full premium for single and family
health insurance. Effective January 1, 1996, the Employer will provide a three tier premium
schedule consisting of
a Single rate, Single Plus 1 rate and a Family rate. Also effective January 1, 1996, provided
the Employer has made
available an IRS Section 125 Plan for premiums only, employees will pay three percent (3%)
of the health insurance
premium for the Single Plan or for the Single Plus 1 Plan. Employees who qualify for the
Single Plus 1 Plan, or the
Family Plan will pay three percent (3%) of the Single Plus 1 Plan premium and the
Employer will pay the balance of
the health insurance premiums for employees. Effective July 1, 1997, the employees will
pay five percent (5%) of the
health insurance premium for the Single Plan or Single Plus 1 Plan. Employees who qualify
for the Single Plus 1 Plan
or the Family Plan will pay five percent (5%) of the Single Plus 1 Plan and the Employer
will pay the balance of the
health insurance premiums for the employees. In the event of a change in carrier, there shall
be no change or lowering
of current benefits. The parties recognize that insurance deductibles may be renegotiated in a
Employees under the single plan shall receive fifteen dollars ($15.00) per month, and
employees who are not covered
by the insurance offered by the County shall receive twenty five dollars ($25.00) per month.
However, if a husband
and wife are both employed by Forest County, in no case shall the cost to Forest County per
family for hospital and
health insurance, exceed the family plan rate.
. . .
Deputy Sheriffs' Collective Bargaining
Section 1.01: The
County hereby recognizes the Association as the exclusive bargaining agent for all the
Forest County full-time Deputies, Investigators, Jailer/Dispatchers and Deputized
Clerk-Matron, (excluding the
officials, supervisors, managers and confidential
employees) hereinafter called the Association for the
purpose of bargaining collectively on the matters pertaining to wages, benefits and working
Section 1.02: The
Association shall be represented in all such bargaining or negotiating with the County by
such person or committee as the Association may deem advisable.
. . .
Section 11.01: All
full-time deputies after six (6) months of service, shall be included in the Wisconsin County
Association Group Health Trust Insurance Plan with a two hundred dollar ($200.00)
deductible per person, three
(3) per family (maximum out of pocket cost, six hundred dollars ($600.00) per family), with
the County paying
one hundred percent (100%) of the cost of the family plan and one hundred percent (100%)
of the cost of the
single plan. The level of benefits set forth in the health insurance plan offered by the County
shall not be
modified or changed unless agreed to by the Association. Employees who elect to take a
single plan but are
eligible for a family plan, shall be reimbursed fifteen dollars ($15.00) per month. Effective
January 1, 1999, the
employees will pay five percent (5%) of the health insurance premium for the Single Plan or
Single Plus One
Plan. Employees who qualify for the Single Plus One Plan or the Family Plan will pay five
percent (5%) of the
Single Plus One Plan premium and the Employer will pay the balance of the health insurance
premium for the
. . .
The County is a municipal employer providing general governmental services to the
people of Forest County
in north central Wisconsin. Among the services provided are the operation of a courthouse
and a Sheriff's Department.
The exclusive bargaining representative for the courthouse employees is the Wisconsin
Association/LEER Division. The exclusive bargaining representative for the deputy sheriffs
is Northern Tier UniServ-East.
Both unions have collective bargaining agreements with the County.
provide health insurance benefits, and provide that employees are to pay 5% of the premium
and that "the Employer will pay the balance of the health insurance premiums for the
employees." The Wisconsin County's Association Group Health Trust
Insurance ("GHT") is
the County's vendor for insurance. A representative of the GHT, Bob Wurtz, met with the
County's Finance Committee on October 25, 1999, to review their insurance experience and
present options to hold down a large anticipated increase in premiums. One of the options
under consideration was a retrospective system, whereby the County would pay a
monthly premium approximately 9% lower than the premium calculated by the insurance
company. If claims experience during the year was less than expected, a savings would be
realized. However, if experience exceeded the premiums paid, the County would be liable
the difference at the end of the year. The minutes of the October 25th
meeting generally reflect the committee's discussion of the topic in an open
FINANCE COMMITTEE MINUTES
DATE: October 25, 1999
PLACE: County Board Room
TIME: 7:00 P.M.
Members Present: David Wilson,
Marlyn Zuehike, William Kalata and Erhard Huettl
Visitors Present: Bob Wurtz and Dora
Meeting was called to order by Chairman
Wilson at 7 P.M. Notice of meeting and agenda were read by Chairman.
Motion by Zuehike, seconded by Kalata to accept agenda as read. All voting aye. Motion
Motion by Kalata, seconded by Zuehike to
accept the minutes of previous meetings held on August 31; October
8 and October 14. All voting aye. Motion carried.
Bob Wurtz, Representative from the WCA
Group Health Trust Insurance, addressed the committee regarding
health insurance premiums for 2000. Mr. Wurtz explained what has been going on
with the insurance over the past
three (3) years. For the years 1997 and 1998, our claims were much higher than premiums
paid and this will result
in a required substantial increase in our premium for 2000, if we maintain the same
coverages. Mr. Wurtz explained
a couple of options the county could consider to keep premiums lower. Since these options
would have to be presented
to the unions, it was tentatively decided to have Karen Reynolds of the WCA Group Health
Trust meet with employees
and union representatives to explain the various options available for the 2000 renewal rates.
. . .
While the Committee anticipated setting up a meeting with the
various unions and a representative of the
insurance company, no such meeting was ever held, and no union was notified of the
Committee's plans to explore
insurance options. Forest County Board
Chairman Erhard Huettl, a member of the Finance Committee, was a strong proponent
of the retrospective plan, even
though the insurance company's representatives advised him that the full premium quoted
was accurate, and warned
him that the County would be incurring a substantial risk of paying more at the end of the
year under the retrospective
plan than it would over the course of the year if it simply accepted the premium as quoted.
On December 8, 1999, the Finance Committee met again in open session, and voted
to adopt the retrospective
plan, with the County paying 95% of the lower rate, but employees paying 5% of the higher,
FINANCE COMMITTEE MINUTES
DATE: December 8, 1999
PLACE: County Board Room
TIME: 7:00 P.M.
Members Present: David Wilson,
Marlyn Zuehlke, William Kalata and Erhard Huettl
Visitors Present: Linda Turner,
Leah Van Zile, David and Cory Campbell, Roger Wilson, Dan Hagelin, Rick Huber
and Dora James
Meeting was called to order by Chairman Wilson at 7 P.M.
Notice of meeting and agenda were read by Chairman.
Motion by Zuehike, seconded by Kalata to accept agenda as read. All voting aye. Motion
Motion by Kalata, seconded by Zuehlke to
accept minutes of previous meeting. All voting aye. Motion carried.
. . .
Motion by Kalata, seconded by Zuehlke that
Forest County go with the minimal renewal rates for health insurance
for 2000 with employees to pay percentage on maximum rates. It is legal for the county to
do this as long as all funds
are in an insurance account and if there are any surplus funds at the end of the year, the
surplus funds would be applied
to next years insurance premiums and not rolled over into the General Fund (Clerk received
information from Shawano
County to support this action.) All voting aye. Motion carried.
. . .
The net effect of the Committee's vote was that the employees
paid 5.5% of the monthly premiums being paid by the
County during 2000. The excess employee contributions were accounted for under the
insurance line in the County's
accounting system, although there was no segregated insurance account separate from the
County's general fund. No
meeting was ever held with County employees or the unions to discuss this arrangement, and
no notice was provided
to any bargaining representative. 1/
1/ There was a meeting
in July involving the various unions and a representative of GHT, and possible cost
increases for the future were discussed. However, the subject of monthly premiums for
calendar year 2000 and the
retrospective plan was not discussed.
Payroll, including insurance deductions and the payment of premiums, is processed
the County Clerk's office. When staff members in her office, both members of the WPPA
unit, asked whether the Unions and employees should be told of the retrospective plan,
Dora James instructed them that they had not been directed to do that, and that the Finance
Personnel Committee would take care of notifying the interested parties.
James retired in the summer of 2000, and was replaced by Betsy Ison. Ison noticed
appeared to be a discrepancy between the deductions shown on payroll records and the
actually paid to the insurance company. She asked Sue Miller, the Deputy Clerk, about it,
told that the staff had been ordered not to discuss it.
In the fall of 2000, the parties prepared to bargain successor contracts. The WPPA
insurance information and on October 2nd, the County's labor attorney sent
them data, including the
rates then in effect. The local president of WPPA noticed that the premiums did not match
deductions being made from employee checks. She contacted S. James Kluss, the
of WPPA and business agent for the Forest County local. Kluss investigated, and discovered
County was using different premium amounts for its payment and for employee deductions.
instant grievance was filed on October 5th. The Deputies Association
became aware of the dispute,
and filed its grievance on October 17th.
In December, 2000, the GHT advised the County that the claims experience for the
been such that the full premium had to be paid for the year. A bill for $68,864.03 was sent
December 15th. Another bill for $6,104.89 was sent in January of 2001.
The County paid both bills.
With these additional payments, the employee contributions collected during the course of
equaled 5% of the County's overall payments for health insurance.
The grievances were not resolved in the lower steps of the grievance procedure.
consolidated for hearing and decision, and an arbitration hearing was held on
February 13, 2001. At
that time, in addition to the facts recited above, the following testimony was taken:
S. James Kluss, Executive Director of WPPA
S. James Kluss testified that he had been the business agent for the Forest County
16 years, and had until recently also represented the Sheriff's Deputies. In his time
Forest County locals, the County had never proposed more than one insurance
rate, and prior to this case, Kluss had never been approached about a retrospective
Kluss testified that he first became aware of the discrepancy in premium amounts when the
president contacted him in October, and that he promptly filed a grievance.
Kluss reviewed the October 25, 1999 Finance Committee minutes, and stated that the
attendees did not include any members of the bargaining units. Although the minutes state
unions will be contacted and a meeting will be held, in fact no one ever contacted him about
retrospective premium plan and no meeting was ever held. Kluss expressed the opinion that
have been willing to negotiate over paying lower premiums during the year, with the
possibility of a
lump sum payment at the end of the year, had he ever been approached with the idea. On
cross-examination, Kluss agreed that minutes of the Finance Committee were prepared by the
Clerk's office and that insurance payments were made through the County Clerk's office.
agreed that WPPA had two members working in the County Clerk's office. He reiterated,
that the first time he or any official of the local union became aware of the insurance
discrepancy was in October of 2000.
Dora James, Former Forest County Clerk
Dora James testified that she never told anyone to hide information about the
though she did advise her staff when they asked that the Finance and Personnel committee
to notifying employees, and that the County Clerk's office had not been directed to do so.
that the County had intended to schedule a meeting with the unions to discuss the
premium option, but that there were conflicts with other County committee meetings and
"it just didn't get put together." James testified that insurance funds were not placed in a
account, although they were listed as separate accounting entries. She did not know whether
County received interest on its accounts.
Betsy Ison, Forest County Clerk
Betsy Ison appeared under subpoena. She testified that, when she first noticed the
discrepancy in the premium deductions and the premium payments, she was concerned that it
ethical to keep quiet about it. Ison stated that she paid the additional invoices from GHT in
December of 2000 and January 2001, and that she believed the total amount paid for
2000 eventually exceeded what would have been paid if the County had paid the full
throughout the year.
Erhard Huettl, Forest County Board Chairman
Erhard Huettl testified that he argued in favor of the retrospective payment
because he thought that it presented a chance to get the lowest rate possible for the County.
acknowledged that the insurance company warned him against this, and told him the County
be taking a big risk of higher than anticipated costs if experience was unfavorable. Huettl
that the County's experience in 2000 was bad enough that insurance costs exceeded even the
premium amounts originally quoted by GHT, though he wasn't sure if the County or the
Huettl testified that he was not familiar with the County's accounts, but did not
was a segregated trust fund for insurance monies. He had told the County Clerk to keep the
amounts separate, though he did not know if this was done. Huettl was not sure why no
ever held with the unions and the employees to discuss the retrospective premium plan, but
the opinion that everyone knew what was going on with insurance.
Additional facts, as necessary, are set forth below.
ARGUMENTS OF THE PARTIES
The Position of the WPPA
The WPPA takes the position that the County deliberately overcharged its members
insurance during the course of 2000, and should be obligated as a remedy to disgorge the
amounts that were collected. The County assessed the employees 5% of the "maximum" rate
quoted by the insurance company. However, the County itself elected to instead pay a
rate that was 10% lower. The County did so in hopes that the claims experience during the
would warrant the lower rates. It never advised the employees nor the unions of this
Sometime after the scheme was discovered, the County was forced, because of adverse
to pay retrospective premiums for the year to the insurance company, and the overall charges
what it would have paid under the "maximum" rate.
The Arbitrator must reject the County's claim that there is no violation, or at least no
due, because in the end it paid an amount that totaled 19 times what it collected from
equivalent of 95% of the premium). What the County did was clearly wrong. It hoped for a
at the expense of its workers. At a minimum, it forced the employees to float interest free
it during the course of the year. Had it not concealed its plans from employees and their
agents, there would have been an opportunity for an orderly and informed system of
risks presented by the County's desire to pay only a minimum premium. Instead the County
unilaterally. The Arbitrator has broad
remedial powers, and in this case there must be a meaningful remedy for the violation,
one that will
deter this type of conduct here and elsewhere in the future. The only appropriate remedy is
reimburse the employees for the amount that they were overcharged, plus interest.
The Position of the Northern Tier UniServ-East
The UniServ Council takes the position that, whatever its subjective intentions, the
acted wrongfully in deducting amounts from employee paychecks that were more than 5% of
the County was paying for insurance. Whether the Arbitrator believes that the County was
bad faith, seeking to retain any savings from insurance for its own purposes, or was acting in
faith, hoping to generate a savings that might benefit both itself and employees, is irrelevant.
is important is that the County acted secretly and unilaterally. It overcharged employees
course of the year. The Arbitrator must order a meaningful remedy, in the form of an order
the overpayments, with interest.
The Position of the County
The County takes the position that there is no contract violation in this case. The
obligates the County to pay 95% of the cost of health insurance. For the year 2000, the
95% of the cost of health insurance. That is the only obligation the contract imposes. There
language obligating the County to make its payments on any specific schedule. The fact that
County elected to pay smaller monthly increments, then made larger lump sum payments at
of the year, is of no account under the contract. The Unions have no right to dictate the
schedule of payment by the County to its insurance provider, and the Arbitrator cannot
a right under the guise of interpreting the contract. Given that the undisputed evidence
that the County satisfied its obligations, there is no violation and the grievances must be
Even if there was a problem with the County's manner of payment in this case, the
cannot legitimately challenge it. This is because both acquiesced in the County's decision to
"minimum" rates. Acquiescence occurs when a party is aware of a plan or a decision, and
protest its implementation. In this case, the County's plan to pay "minimum" rates was
a public meeting of the Finance Committee on December 9, 1999. The decision was
in the minutes of that meeting, which are on file in the County Clerk's office. The actual
of insurance payments is done in the County Clerk's office, which employs members of the
bargaining unit. Plainly, the amounts being paid for health insurance were known or should
known to the Unions in late 1999 or early on in 2000. Under the labor agreement, there is a
time limit on grievance filing. These grievances were filed in October of 2000. The lack of
response to the County's plan for ten months after it was announced demonstrates that
acquiesced in the decision.
The Arbitrator must reject the Unions' contentions that the County somehow tried to
what it was paying for insurance. Although one witness, County Clerk Betsy Ison, testified
Deputy Clerk Sue Miller claimed she was ordered not to discuss the matter, that contention
hold up under scrutiny. The retired County Clerk, Dora James, testified that she had never
anyone to keep quiet about the County's payment of the "minimum" rates. Ms. James, being
has no part in this dispute, and has no reason to lie. Moreover, it makes no sense that
would be told to keep quiet about a plan that was discussed and approved in a public
is significant about Ison's testimony is that Miller, a member of the WPPA bargaining unit,
to knowing of the County's payment of "minimum" rates virtually from the start. Again,
acquiescence occurs when a party knows of a decision and does not dispute it. The evidence
establishes that the Unions knew of the decision to pay "minimum" rates, and did not contest
Accordingly, the Arbitrator must dismiss the grievances in their entirety.
Assuming solely for the sake of argument that the payment of "minimum" rates
year in 2000 somehow violated the collective bargaining agreement, the County argues that
no remedy available. As previously noted, the County paid every penny that it was
obligated to pay for insurance in 2000, and the employees paid exactly 5% of the total, just
contract provides. Thus, there can be no question of rebating premium amounts. The only
remaining theory for monetary relief would be a claim for interest on the "excess" sums paid
employees during the course of the year. However, this arbitrator and others have
commented in the
past that interest is not a generally available remedy in arbitration, and should only be
the parties themselves have bargained to make interest a part of the arbitrator's remedial
There is nothing in the contracts here to suggest that these parties have ever contemplated an
of interest in an arbitration proceeding. Neither is there anything in the record of this case
that interest is appropriate because of some peculiarity in the facts of the case. Again, the
to pay "minimum" rates was made in an open meeting, and was openly administered. It was
to benefit both the County and the employees by holding down insurance costs. Given these
an award of interest is not appropriate. Instead, the Arbitrator must conclude that all parties
exactly what the contract required them to pay, and that no monetary relief of any type is
Three questions are presented by these grievances. The first is whether the County's
decision to charge
employees deductions for health insurance based on premiums that were 10% higher than the
actually being paid was a violation, given that the County ultimately paid lump sums that
brought its contribution to
95% of the actual annual premium, and the employees share to 5% of the actual annual
premium. The second is
whether the employees and/or the labor organizations acquiesced in the allocation of
premiums, and thereby waived
any remedy. The final question is, if there is a violation, and a remedy has not been waived,
what remedy is
appropriate. Each is addressed in turn.
Did the County Violate the Collective Bargaining
The collective bargaining agreements provide that employees will pay 5% of the
premium and the County will
pay the balance. For calendar year 2000, the County was quoted premium costs of $309.93
per month for Single
coverage, $619.89 per month for Single Plus One coverage, and $840.13 per month for
Family coverage. Employees
were assessed monthly deductions from their checks for 5% of these amounts. However,
these premiums were 10%
higher than the premiums the County itself elected to pay. Had claims experience during the
year justified the lower
rate, there would have been no additional assessment to the County.
The contract language is clear as to be parties' respective obligations: "Employees
who qualify for the Single
Plus One Plan or the Family Plan will pay five percent (5%) of the Single Plus One Plan
premium and the Employer
will pay the balance of the health insurance premium for the employees." This language
cannot be reasonably read
to mean that the employees will pay something other than 5% of the amount the County is
paying to the insurance
company. On its face, the County's actions in charging employees more than 5% of what it
was paying in monthly
premiums violates the contract.
The County's position is essentially that, since it had to pay assessments at the end of
2000 that brought its
costs up to what the original quote was, there has been no contract violation. With all due
respect to the County, this
amounts to a claim that it meant to violate the contract, took steps to violate the contract,
violated the contract for 11
months, but in the 12th month was forced by the insurance company to
come into compliance with the contract. The
County Board Chairman testified that he was confident that they would save money by
paying the lower premium.
The Finance Committee took the action to save money against future insurance premium
costs. The December 8th
minutes state their intentions as to any savings:
Motion by Kalata, seconded by Zuehlke that Forest County go
with the minimal renewal rates for health insurance
for 2000 with employees to pay percentage on maximum rates. It is legal for the county to
do this as long as all funds
are in an insurance account and if there are any surplus funds at the end of the year,
the surplus funds would be
applied to next years insurance premiums and not rolled over into the General Fund . .
From this, it does not appear that excess employee contributions were to be rebated to
employees, nor even that there
would be a future credit for employees, other than indirectly. Applying the savings to future
insurance premiums would
benefit the employees, in the sense that they would be paying 5% of a lower premium, but
would more greatly benefit
the County, since it pays 95% of the premium and thus garners 95% of the savings. If those
represent unwitting advance payments by employees, rather obviously there is a contract
violation. The contract does
not provide for advance employee payments against future insurance costs, and those
payments cannot be collected
without the consent of the bargaining representatives.
The subjective intent of the County's representatives is in issue,
because the question
of a contract violation depends in part on whether the County planned to simply structure its
payments over the year, as it contends in its brief, or instead sought to pay an amount less
the amount used to calculate the employee contributions. The County is perfectly entitled to
make agreements on its schedule of payments to the insurer, so long as those agreements do
not implicate employee costs and coverage. However, that is not a plausible interpretation of
what happened here. The minutes of the Finance Committee and the testimony of Chairman
Huettl make it clear that the County believed it would realize lower annual costs through the
minimum rate plan. While the County ultimately had to pay lump sums, it never intended to
do so, and made the payments only because the insurance company compelled the payments.
In short, the County set out on a course of action that had employees paying more than 5%
of the premium it was paying on a monthly basis, and it proceeded on this course of action
the belief that it would not have to make any payments in addition to the monthly premiums.
This is a clear violation of the contract. The lump sum payments at the end of 2000 were
the County's doing, and while they impact the remedy, they do not erase the continuing
violation of the contract during the first 11 months of the year.
Did the Employees and/or the Unions Acquiesce or Waive Their Right
to Any Remedy?
While the County's claim that it was just structuring its payments puts
intent in issue, the further question of good motive or bad motive is not directly in issue on
question of whether there was a contract violation. No matter whether the County acted
altruism or consciously sought to overcharge employees, the basic fact is that the County
believed the rate would be the lower one, they intended that the rate be the lower one, they
contracted to pay the lower one, and they charged employees for the higher one. However,
question of whether the County acted in an above board fashion does directly come in issue
in connection with the argument that the employees acquiesced in this arrangement and
thereby waived their right to object. The County asserts that bargaining unit members knew
or should have known about the difference in monthly rates from the beginning, and that if
they had an objection they were bound to raise it at the earliest possible point. The source of
this asserted knowledge is twofold -- first, that employees in the County Clerk's office
knew of the arrangement, and second that the information was public knowledge, having
discussed at a public meeting and recorded in the minutes, which are public records. This is
not a persuasive argument.
The record evidence clearly indicates that the County took steps to
and the bargaining representatives from learning of the lower monthly rates. While former
County Clerk Dora James testified that she never told anyone to hide the retrospective rate,
when her employees asked if they should tell other County employees about it, she did tell
them in essence that it was not their business to do so, and that the Finance Committee
take care of that. This would be reasonably understood in the same manner that her Deputy
Clerk Sue Miller interpreted it when later asked by Ison that she was told not to
the employees were so advised by a County official, and I find that they
were, the County
cannot argue that they should have ignored their supervisor's orders and have publicized the
The conclusion that the County sought to hide the lower insurance rates
by the fact that the Finance Committee started off the process by acknowledging that a
meeting with the unions would be required, and by specifying who from the insurance
company should be present for the meeting, but then never actually scheduled a meeting.
explanation that there were schedule conflicts and the like is not particularly compelling,
that 11 months passed between the first notation that a meeting should be scheduled and the
date on which the Unions actually became aware of the retrospective rates. Scheduling
conflicts do not explain why the representatives of employees could not have been notified in
writing and asked for comment, nor why the topic was not raised even as late as July when
insurance company representative met with the employees to discuss future
It is true, as the County argues, that these comments were made and these votes were
taken at public meetings
and were recorded in the minutes of those meetings. It is also the case that the County Clerk
and the County Board
Chairman were present at those meetings, and knew full well who was and was not in
attendance. Something hidden
in plain sight is nonetheless hidden. Waiver is not lightly inferred, and the suggestion that
the employees and unions
waived their right to object by failing to ask the right question or look in the right places for
information is not sound.
I am not concluding in this discussion that a plan was made to disguise the retrospective
premium plan from the outset.
Neither do I conclude that the County had some evil motive for its actions. Rather, it
appears that County officials
initially intended to discuss the matter with the Unions, but that as time went on either
decided that it was more
advantageous to simply proceed unilaterally or that it was too awkward to tell the labor
organizations that action had
already been taken. Whatever the case, the result was the same. The premium payments
went forward, without notice
to the Unions or the employees.
Based on the foregoing discussion, I conclude that the County did violate the
collective bargaining agreement,
and that the employees and the labor organizations did not waive their right to a remedy for
the violation. The question
then is what remedy, if any, is appropriate.
What is the Appropriate Remedy?
The remedy question in this case is muddied by the events after the
filed. Had the County not been forced to pay lump sums at the end of the year that brought
its contribution up to a level of 95% of the premium that employees were charged, the
appropriate remedy would clearly be to order a full reimbursement of the excess amounts
by employees. That would be the minimum needed to make the employees whole, and to
enforce the contract's promise that they would pay only 5% of the premium. That is the
by the Unions. However, that remedy poses very significant problems.
Arbitral remedies are
compensatory, not punitive. While the contract obligates the County to pay all but 5% of the
premium, it equally obligates employees to pay 5% of the cost. Even though it was not what
the County intended, the monthly cost of insurance in 2000 was, ultimately, 20 times the
amount the employees paid. Thus, the employees paid 5%, just as they were obliged to, and
the County paid the full balance, as it was obliged to. An order to reimburse employees
yield an employee insurance contribution of less than 5%. The contract is jurisdictional, and
absent extraordinary circumstances, the Arbitrator has no more right to order a contract
violation in favor of employees than he does to ignore a violation that disadvantages
2/ In making this
observation, the Arbitrator would caution that there may be cases in which it is not possible
to craft a remedy that conforms to each separate provision of the contract. Employees have
an obligation to pay
5% of the premium. Given the language of this contract, employees also have the right to
expect that insurance
deductions will be in equal monthly amounts. Fortunately for the County, this is not a case
where the gamble on
rates results in much higher than projected premiums and lump sum payments that exceed the
original worst case
scenario. In that case, an attempt to retroactively enforce the employees' obligation to pay
5% of the cost by
collecting a balloon payment at the end of the year would directly implicate the employees'
contractual right to
make their insurance payments on a current basis in equal monthly
To find that a reimbursement of overpayments conflicts with the
contract is not to say
that there is no remedy. In practical terms, the County forced employees to unknowingly
it money during the course of the year. The County was banking their excess payments
than passing them along to the insurance company. There is a value to the use of money,
that value is generally reflected in the payment of interest on borrowed amounts.
The County argues that interest is not generally awarded by labor
arbitrators, and cites
numerous awards, including one by this arbitrator, for that proposition. The awards cited by
the County reflect the general view of arbitrators, including this arbitrator. However, those
awards are not on point. The awards relied upon by the County discuss the granting of
interest on monetary remedies, such as backpay awards. In those cases, the compensatory
remedy is the backpay, and the claim for the payment of interest is in addition to the
compensation. Even though an economically rational argument can be made for paying
interest on those sums, it is not available, principally as a matter of custom. In this case, the
payment of interest is not an adjunct to the compensatory remedy it is
remedy. The loss to the employees was not the whole of the excess payments, since those
payments were ultimately applied to the insurance and not retained by the County. The loss
to the employees was in the use of the money before it was paid to the insurance company,
this loss was improperly imposed by the County. Failure to award interest would be failure
to remedy the specific violation. Moreover, any interest earned on these excess amounts
they were paid to the insurance company represents an illegitimate gain to the County.
Allowing the County to retain those sums would be rewarding it for the contract
Given the peculiar facts of the case, the appropriate remedy is to order
the County to
pay each employee interest on the excess sums. The record does not reflect whether the
County actually received interest, nor the rate of interest it may have received. The
appropriate rate of interest in this case is the higher of: (1) the rate the County received on
deposits during this time or (2) the highest rate generally available for deposits in local
financial institutions during this time. The higher rate is specified because it represents
what the employees could have earned, and thus lost, or what the County illegitimately
and must disgorge to avoid unjust enrichment. Given the uncertainty of the rate of interest,
the Arbitrator will retain jurisdiction over this matter for a period of sixty (60) calendar days
from the date of the Award for the sole purpose of resolving any disputes over the
On the basis of the foregoing, and the record as a whole, I have made the following
1. Forest County violated the Collective Bargaining Agreements when it billed
and deducted from their pay premium payments that were based on an amount that was
the premium contributions that the County was actually paying to the insurance carrier;
2. The appropriate remedy is for Forest County to make the affected employees
by paying each of them interest on the amounts they paid in excess of 5% of the monthly
the County was actually paying in 2000, at the higher of (a) the interest rate the County
its deposits during this time or (b) the highest interest rate generally available for deposits in
financial institutions during this time.
3. The Arbitrator will retain jurisdiction over the grievances for a period of sixty
(60) days following
the dates of this Award, for the sole purpose of resolving disputes over the remedy.
Dated at Racine, Wisconsin, this 20th day of July, 2001.
Daniel Nielsen, Arbitrator