Association of Oregon Corrections Employees v. State

170 January 17, 2013 No. 4

IN THE SUPREME COURT OF THE

STATE OF OREGON

ASSOCIATION OF OREGON

CORRECTIONS EMPLOYEES,

Petitioner on Review,

v.

STATE OF OREGON

and Department of Corrections,

Respondents on Review.

(UP 3303; CA A143552; SC S059971)

On review from the Court of Appeals.*

Argued and submitted September 21, 2012.

Becky Gallagher, Fenrich & Gallger, P.C., Eugene,

argued the cause and filed the brief for petitioner on review.

Leigh A. Salmon, Assistant Attorney General, Salem,

argued the cause and filed the brief for respondents on

review. With her on the brief were Mary H. Williams, Deputy

Attorney General, and Anna M. Joyce, Solicitor General.

Todd A. Lyon, Barran Liebman LLP, Portland, filed

the brief for amicus curiae Oregon Public Employer Labor

Relations Association and The League of Oregon Cities.

Jason A. Weyand, Senior Legal Counsel, Oregon

AFSCME, Salem, filed the brief for amicus curiae Oregon

AFSCME. With him on the brief was Jennifer K. Chapman.

Before Balmer, Chief Justice, Kistler, Walters, Linder,

and Landau, Justices, and Durham and De Muniz, Senior

Judges, Justices pro tempore.**

______________

** On judicial review from the final order of the Employment Relations Board,

dated July 23, 2009. 246 Or App 477, 268 P3d 627 (2011).

** Brewer and Baldwin, JJ., did not participate in the consideration or

decision of this case.

Cite as 353 Or 170 (2013) 171

WALTERS, J.

The decision of the Court of Appeals is reversed, and

the case is remanded to the Court of Appeals for further

proceedings.

The Association of Oregon Corrections Employees (AOCE) brought an unfair

labor practice claim against the Department of Corrections (DOC), alleging that

DOC had changed the schedules of its employees without first bargaining with

the AOCE in violation of the Public Employees Collective Bargaining Act. The

Employment Relations Board (ERB) held in favor of AOCE, determining that DOC

had not demonstrated that AOCE contractually had waived its statutory right to

bargain. The Court of Appeals reversed, holding that ERB had erred in using the

waiver analysis to evaluate DOC’s contractual defense, and determining that the

CBA unambiguously granted DOC the right to make the changes at issue. Held:

(1) ERB did not err when it utilized a waiver analysis to evaluate DOC’s contrac-

tual defense; (2) ERB did not err when it concluded that the terms of the parties’

collective bargaining agreement did not constitute a clear and unmistakable waiv-

er of AOCE’s right to bargain over the contested changes to employee schedules.

The decision of the Court of Appeals is reversed, and the case is remanded to

the Court of Appeals for further proceedings.

172 Assn. of Oregon Corrections Emp. v. State of Oregon

WALTERS, J.

The Department of Corrections (DOC), a public

employer, made changes to its employees’ scheduled days off

and their shift stop and start times without first bargaining

with representatives of the employees’ union, the Association

of Oregon Corrections Employees (AOCE). As an affirmative

defense to AOCE’s ensuing complaint alleging that DOC

had committed an unfair labor practice, DOC asserted that

the terms of the parties’ collective bargaining agreement

(CBA) permitted its unilateral action. The Employment

Labor Relations Board (ERB) rejected DOC’s argument and

concluded that DOC had committed an unfair labor practice

under ORS 243.672(1)(e).1 The Court of Appeals reversed.

Assn. of Oregon Corrections Emp. v. State of Oregon, 246

Or App 477, 268 P3d 627 (2011) (AOCE II). We reverse the

decision of the Court of Appeals and remand to that court to

permit it to consider an assignment of error that it did not

reach.

I. FACTS AND PROCEDURAL BACKGROUND

AOCE is the exclusive representative of a bargaining

unit of correctional officers, sergeants, and corporals

employed by DOC, a public employer, at the Oregon State

Penitentiary. AOCE and DOC were parties to a collective

bargaining agreement that was effective from July 1, 2001,

through June 30, 2003. Shortly before May 27, 2003, AOCE

learned that DOC intended to post a new work schedule.

The new schedule changed, among other things, employees’

scheduled days off and their shift start and stop times. At a

bargaining meeting on May 27, 2003, AOCE informed DOC

that, in its view, the intended changes affected mandatory

subjects of bargaining and that DOC would be committing

an unfair labor practice if it implemented them without

bargaining with AOCE. On May 30, 2003, DOC posted the

new schedule. On June 27, 2003, AOCE filed a complaint

1

ORS 243.672(1)(e) provides, in part:

“(1) It is an unfair labor practice for a public employer or its designated

representative to do any of the following:

“* * * * *

“(e) Refuse to bargain collectively in good faith with the exclusive

[bargaining] representative [of its employees].”

Cite as 353 Or 170 (2013) 173

with ERB alleging, among other things, that DOC had

committed an unfair labor practice under ORS 243.672(1)(e),

the provision of the Public Employees Collective Bargaining

Act (PECBA) that prohibits a public employer from refusing

to bargain collectively in good faith with the bargaining

representative of its employees.2

DOC denied AOCE’s allegations and raised a

number of affirmative defenses, one of which alleged that

“the Collective Bargaining Agreement allows management

to set the work schedule(s).” For that contractual defense,

DOC relied on Article 3 of the CBA, which included a

management rights clause providing that DOC “retains all

inherent rights of management” and “retains all rights to

direct the work of its employees, including but not limited

to, the right * * * to schedule work * * * except as modified

or circumscribed by the terms of this Agreement.” DOC

also alleged as a separate affirmative defense that AOCE

had waived its right to bargain by failing to file a timely

demand, as required by ORS 243.698(3).

ERB first determined that “scheduling the particular

hours of the day and days of the week that an employee

is assigned to work constitutes ‘hours of work’, a per se

mandatory subject of bargaining under ORS 243.650(7)(a).”

Ass’n of Oregon Corr. Employees v. State of Oregon, Dep’t of

Corr., 20 PECBR 890 (2005). ERB then concluded that DOC

had made a unilateral change with respect to those matters

and, thus, had committed an unfair labor practice.3 Id. at

899. In doing so, ERB rejected DOC’s contractual defense,

2

In its complaint, AOCE alleged that DOC had committed an unfair labor

practice under ORS 243.672(1)(e) not only by unilaterally altering employee days

off and start-stop times for shifts, but also by unilaterally altering the incumbency

provision of the CBA and the rank that employees must hold to bid on certain

assignments.

3

ERB rejected AOCE’s other allegations that DOC had violated ORS

243.672(1)(e). ERB determined that AOCE was required to raise its claim

concerning the incumbency provision as a grievance or through an unfair labor

complaint under ORS 243.672(1)(g), which provides that it is an unfair labor

practice for a party to violate the provisions of any written contract with respect

to employment relations. ERB determined that DOC was not required to bargain

over the changes that it made to employee ranking because those changes

concerned the assignment of duties and minimum qualifications, both of which are

permissive subjects for bargaining. ORS 243.650(7)(g). AOCE did not challenge

those aspects ERB’s decision in the Court of Appeals.

174 Assn. of Oregon Corrections Emp. v. State of Oregon

determining that DOC had not demonstrated that AOCE

contractually had waived its statutory right to bargain over

the contested changes.4 Id. at 899-900.

DOC appealed to the Court of Appeals. Its primary

argument on appeal was that ERB had erred in its analysis

of DOC’s contractual defense. ERB had erred, DOC

contended, in evaluating the CBA to determine whether

DOC had demonstrated a waiver of the statutory right to

bargain. Instead, DOC argued, ERB legally was required

to decide, as an initial matter, whether the CBA authorized

DOC to make the changes at issue. The court agreed with

DOC and did not reach DOC’s other arguments: that Article

3 constituted a waiver of AOCE’s right to bargain even

under ERB’s waiver analysis, and that AOCE had waived its

right to bargain by failing to file a timely demand to bargain

under ORS 243.698(3). The Court of Appeals reversed and

remanded the case to ERB, instructing ERB to determine

in the first instance “whether, under the terms of the CBA,

DOC was authorized to make the changes * * * that it did.”

Association of Oregon Corrections Employees v. DOC, 209

Or App 761, 770, 149 P3d 319 (2006) (AOCE I).

On remand, ERB determined that the terms of

the CBA were ambiguous and, after considering extrinsic

evidence, concluded that the parties had not authorized

DOC to make the contested changes. Ass’n of Oregon Corr.

Employees v. State of Oregon, Dep’t of Corr., 23 PECBR

222 (2009). The Court of Appeals again reversed. AOCE II,

246 Or at 479. The court determined that the terms of the

CBA unambiguously granted DOC the right to make the

contested changes and that ERB had erred in concluding

that DOC had committed an unfair labor practice under

ORS 243.672(1)(e). Id. AOCE sought review in this court,

which we allowed.

4

As to DOC’s defense that AOCE had waived its right to bargain by failing

to file a timely demand to bargain, ERB held that PECBA does not require a

formal demand to bargain under these circumstances. According to ERB, AOCE’s

statements, in which it contested DOC’s scheduling changes and argued that those

changes would constitute an unfair labor practice, were sufficient. Moreover, ERB

concluded, even if AOCE’s statements were insufficient to constitute a demand

under ORS 243.698(3), DOC’s unilateral implementation of the schedule three

days after AOCE had objected “essentially presented AOCE with a fait accompli.”

There is no requirement that a union demand to bargain, ERB explained, when

the employer already has made the unilateral change. Id. at 900-01.

Cite as 353 Or 170 (2013) 175

Before we begin our discussion of the issues for

our consideration, we note that DOC does not dispute that

(1) employees’ days off and shift stop and start times are

mandatory subjects of bargaining; (2) DOC had a statutory

obligation and AOCE had a statutory right to bargain over

those matters; and (3) DOC made changes to those matters

without first bargaining with AOCE. Thus, whether ERB

was correct in concluding that DOC committed an unfair

labor practice under ORS 243.672(1)(e) depends on whether

ERB was correct in deciding that DOC had not established

a sufficient affirmative defense to the charge that it made

a change in a mandatory subject of bargaining without first

bargaining with AOCE.

The first issue that we must reach in deciding

that question is the correct legal framework by which to

measure DOC’s affirmative defense. In its 2005 decision,

ERB had used a waiver analysis—an analysis that the

Court of Appeals rejected in AOCE I. AOCE did not petition

for review in AOCE I. Therefore, ERB used the method of

analysis that the Court of Appeals required in AOCE I when

it considered DOC’s affirmative defense on remand in 2009

and again concluded that DOC had committed an unfair

labor practice under ORS 243.672(1)(e). The question before

us on review of the Court of Appeals decision in AOCE

II is whether ERB was correct in its conclusion. Because

whether DOC committed an unfair labor practice depends

on the merits of its affirmative defense, we must decide, as

an initial matter, the appropriate legal framework by which

to evaluate that defense, and we must do so despite the

fact that that matter was directly at issue in AOCE I and

is only indirectly at issue here. The correct legal measure

of DOC’s affirmative defense is so inextricably intertwined

with its merits that we consider the following questions in

turn: First, did ERB err in deciding that, to prevail on its

contractual defense, DOC was required to demonstrate that

the terms of the CBA established a clear and unmistakable

waiver of AOCE’s statutory right to bargain? Second, did

ERB err in concluding that the terms of the CBA did not

meet the correct legal standard?5

5

Because the first of those questions was directly presented only in AOCE I,

we asked the parties for supplemental briefing on that issue. We have received and

considered that briefing.

176 Assn. of Oregon Corrections Emp. v. State of Oregon

II. ERB’S WAIVER ANALYSIS

We begin our inquiry into whether ERB erred in

its waiver analysis of DOC’s contractual defense with the

applicable unfair labor practice statute—ORS 243.672(1)(e)—

which provides, in part:

“(1) It is an unfair labor practice for a public employer

or its designated representative to do any of the following:

“* * * * *

“(e) Refuse to bargain collectively in good faith with the

exclusive [bargaining] representative [of its employees].”

“Collective bargaining” is defined in ORS 243.650(4) as

“the performance of the mutual obligation of a public

employer and the representative of its employees to meet

at reasonable times and confer in good faith with respect

to employment relations for the purpose of negotiations

concerning mandatory subjects of bargaining, to meet and

confer in good faith in accordance with law with respect to

any dispute concerning the interpretation or application of

a collective bargaining agreement, and to execute written

contracts incorporating agreements that have been reached

on behalf of the public employer and the employees in the

bargaining unit covered by such negotiations.”

(Emphasis added.)

“Employment relations”—about which a public

employer must bargain in good faith—is defined in ORS

243.650(7)(a) to include

“matters concerning direct or indirect monetary benefits,

hours, vacations, sick leave, grievance procedures and

other conditions of employment.”

(Emphasis added.) “Employment relations” is further

defined in ORS 243.650(7)(g) to exclude “scheduling of

services provided to the public[.]”

Thus, a public employer commits an unfair labor

practice under ORS 243.672(1)(e) if it refuses to bargain with

respect to matters that are included within, and not excluded

by, the definition of “employment relations.” Those matters

are referred to as “mandatory” subjects of bargaining. See

Tualatin Valley Bargaining v. Tigard School Dist., 314 Or

274, 277, 840 P2d 657 (1992) (so explaining).

Cite as 353 Or 170 (2013) 177

As DOC acknowledges, a public employer commits

a per se violation of ORS 243.672(1)(e) if it makes a

unilateral change regarding a mandatory subject of

bargaining while the employer has a duty to bargain.6 See

Wasco County v. AFSCME, 46 Or App 859, 613 P2d 1067

(1980) (upholding ERB’s authority to adopt “violation per

se” analysis of unilateral changes). When reviewing an

allegation of unlawful unilateral change, ERB considers

(1) whether an employer made a change to an “established

practice,” often referred to as the “status quo”;7 (2) whether

the change concerned a mandatory subject of bargaining;

and (3) whether the employer exhausted its duty to bargain.

Ass’n of Oregon Corr. Employees, 20 PECBR 890, 897. When

asserted, ERB also considers an employer’s affirmative

defense of waiver:

“A party may waive its right to bargain through (1) ‘clear

and unmistakable’ contract language, (2) a bargaining

history that shows the party consciously yielded its right to

bargain, or (3) by the party’s action or inaction.”

Id.

At issue in this case is ERB’s use of the waiver

standard to evaluate DOC’s contractual defense. DOC

does not contend that ERB’s recognition of an affirmative

defense of waiver is beyond its statutory authority or

conflicts with ORS 243.672(1)(e) or any other provision of

PECBA. Instead, DOC argues that ERB erred in confining

its analysis of DOC’s contractual defense to a consideration

of whether the parties’ collective bargaining agreement

demonstrated a clear and unmistakable waiver of AOCE’s

6

ERB’s per se rule is modeled after an analogous rule adopted by the National

Labor Relations Board to enforce the duty to “bargain collectively” under section

8(a)(5) of the National Labor Relations Act (NLRA). The Supreme Court explained

the rationale for that rule in Labor Board v. Katz, 369 US 736, 747, 82 S Ct 1107, 8

L Ed 2d 230 (1962) (holding that an employer violates section 8(a)(5) of the NLRA

if it makes a unilateral change to employment conditions without bargaining over

the relevant term).

7

ERB has explained that cases dealing with allegations of unilateral change

that occur during the term of a CBA generally refer to the prohibited activity

as a change in employer “past practice,” while cases dealing with allegations of

unilateral change during the course of post-contract negotiations (the “hiatus

period”) refer to changes in the “status quo.” ERB has noted, however, that there

is “little difference analytically between these two.” Coos Bay Police Officers’ Ass’n

v. City of Coos Bay, 14 PECBR 229, 232-33 (1993).

178 Assn. of Oregon Corrections Emp. v. State of Oregon

statutory right to bargain. DOC argues that ERB also was

required to consider whether the CBA authorized DOC to

take the unilateral action that it did. That requirement is

imposed, DOC contends, both by this court’s decision in

OSEA v. Rainier School Dist. No. 13, 311 Or 188, 808 P2d

83 (1991), which instructs ERB to consider the terms of a

collective bargaining agreement according to ordinary rules

of contract interpretation, and by PECBA. ERB’s analysis is

at odds with PECBA, DOC contends, because it “undermines

the sanctity of the written contract; * * * injects uncertainty

and instability into the labor-management relationship;

and * * * effectively ignores the preliminary step in any

unilateral change claim—namely, whether there has, in fact,

been a change in the status quo.” (Emphasis in original.)

Before we consider DOC’s arguments, it is helpful

to trace the origins of ERB’s waiver analysis. ERB initially

applied the waiver analysis in considering an employer’s

contract defense to an unfair labor practice charge in

Corvallis School Dist. 509J v. Oregon School Employees Ass’n,

Chapter No. 2, 6 PECBR 5409 (1982). ERB took guidance

from cases decided by the National Labor Relations Board

(NLRB) under the National Labor Relations Act (NLRA),

the federal act on which PECBA was modeled. Elvin v.

OPEU, 313 Or 165, 177, 832 P2d 36 (1982). ERB held that,

under those cases, it was “settled law that any waiver of

the statutory right to bargain over a mandatory subject of

bargaining must be in clear and unmistakable language.”

Corvallis School Dist. 509J at 5412 (citing N L Industries v.

NLRB, 92 LRRM 2937, 2938 (1976)).

The NLRB first applied a waiver analysis in

considering an employer’s contractual defense to an unfair

labor practice charge in Tidewater Associated Oil Company,

85 NLRB 1096, 1098 (1949). In that case, a union charged that

an employer had made a unilateral change to its employees’

pension plan without first bargaining with the union. In its

defense, the employer relied on a “Management Functions”

clause in the parties’ collective bargaining agreement. The

NLRB rejected the employer’s defense, upholding the Trial

Examiner’s finding that the broad “Management Functions”

clause “was at least ambiguous.” “Our agreement with the

Cite as 353 Or 170 (2013) 179

Trial Examiner,” the NLRB wrote, “is based primarily

upon the absence of a specific waiver of the Union’s right to

bargain * * *. We are reluctant to deprive employees of any

rights guaranteed them by the [NRLA] in the absence of a

clear and unmistakable showing of a waiver of such rights.”

Id. at 1098.

The United States Supreme Court affirmed the

NLRB’s application of waiver as a defense to an unfair

labor practice charge in Metropolitan Edison Co. v. NLRB,

460 US 693, 103 S Ct 1467, 75 L Ed 2d 387 (1983). In that

case, a union had charged that an employer had committed

an unfair labor practice by treating union officials more

harshly than other union members in the aftermath of a

strike, thus discouraging union membership in violation of

29 USC §158(a)(3).8 The Court considered whether a general

no-strike provision, such as the one in the parties’ collective

bargaining agreement, was sufficient to waive the specific

right to strike over an unfair labor practice. Id. at 708. The

Court began by stating that it “long has recognized that a

union may waive a member’s statutorily protected rights[.]”

Waivers are valid, the Court explained, because they rest on

the premise of fair representation and presuppose that the

selection of the bargaining representative remains free. Id.

at 705. However, the court cautioned:

“[W]e will not infer from a general contractual provision

that the parties intended to waive a statutorily protected

right unless the undertaking is ‘explicitly stated.’ More

succinctly, the waiver must be clear and unmistakable.”

Id. at 708.9

8

29 USC § 158(a)(3) provides, in part:

“(a) * * * It shall be an unfair labor practice for an employer

“* * * * *

“(3) by discrimination in regard to * * * any term or condition of

employment to encourage or discourage membership in any labor organization

* * *.”

9

In Metropolitan Edison, the Court relied on Mastro Plastics Corp. v. Labor

Board, 350 US 270, 76 S Ct 349, 100 L Ed 309 (1956), in which it had addressed

the question whether a general no-strike provision waived the specific right to

strike over an unfair labor practice. The Court in Mastro Plastics determined

that, although a waiver could be valid if it were “explicitly stated,” the terms

of the collective bargaining agreement at issue were not clear enough: a “more

compelling expression” of the waiver was required. Id. at 283.

180 Assn. of Oregon Corrections Emp. v. State of Oregon

The NLRB continues to use the same waiver

analysis that it articulated in Tidewater. See Provena St.

Joseph Medical Center, 350 NLRB 808, 815 (2007) (when

an employer in a unilateral change case asserts that the

contract authorizes it to act unilaterally, the employer

must prove its defense by clear and unmistakable contract

language). See also John E. Higgins ed., 1 The Developing

Labor Law 1068 (6th ed 2012) (“Consistent with the

traditional common law view of waiver, the [NLRB] [has]

* * * confined the waiver doctrine narrowly and [has] been

reluctant to infer a waiver.”).10

In Oregon School Employees Ass’n v. Bandon School

Dist. #54, 19 PECBR 609 (2002), ERB decided to adhere to

the waiver analysis that it had articulated in Corvallis.

That analysis, ERB explained, was “historically recognized

by [ERB] and the private sector,” is “well-established,” and

“there is a large body of case law available for guidance in

deciding such cases.” Id. at 623-24. Considering the purposes

of PECBA, ERB determined that a waiver analysis was

most appropriate because it “keeps the focus where it should

be: on the general rule that there is a continuing duty to

bargain during the contract term over mandatory subjects

10

Although the Supreme Court has not yet applied the waiver analysis

followed in Metropolitan Edison to a charge that an employer committed an unfair

labor practice by refusing to bargain, the Ninth Circuit Court of Appeals has

done so. See Local Joint Exec. Bd. Of Las Vegas v. N.L.R.B., 540 F3d 1072, 1075

(9th Cir 2008) (applying Metropolitan Edison to hold that “[w]here a unilateral

change is defended on a claim of contractual right, the alleged waiver must be

* * * clear and unmistakable”). Decisions from the Second, Third, Fourth, Seventh,

and Eighth Circuits similarly have applied the waiver standard in cases where

employers invoked contract provisions as authority for making unilateral changes

in terms and conditions of employment. See, e.g., Bonnell/Tredegar Industries,

Inc. v. N.L.R.B., 46 F3d 339, 346 n 6 (4th Cir 1995); Olivetti Office U.S.A., Inc. v.

N.L.R.B., 926 F2d 181, 187 (2d Cir 1991), cert den, 502 US 856 (1991); Ciba-Geigy

Pharmaceuticals Div. v. N.L.R.B., 722 F2d 1120, 1127 (3d Cir 1983); American Oil

Co. v. N.L.R.B., 602 F2d 184, 188-89 (8th Cir 1979); Murphy Diesel Company. v.

N.L.R.B., 454 F2d 303, 307 (7th Cir 1971).

Not all courts agree. See, e.g., Bath Marine Draftsmen’s Ass’n v. N.L.R.B., 475

F3d 14, 25 (1st Cir 2007) (adopting the District of Columbia Circuit’s “contract

coverage” test); Enloe Medical Center v. N.L.R.B., 433 F3d 834, 838 (DC Cir 2005)

(rejecting the NLRB’s use of the waiver standard in the context of a unilateral

change case); Chicago Tribune Co. v. N.L.R.B., 974 F2d 933, 936-37 (7th Cir 1992)

(adopting the District of Columbia Circuit’s “contract coverage” test).

Cite as 353 Or 170 (2013) 181

unless there is showing of waiver.”11 Id. at 624 (emphasis in

original).

As noted, DOC does not contend that ERB’s waiver

defense exceeds its statutory authority or constitutes legal

error; instead, it contends that, under PECBA and this

court’s decision in Rainier School Dist. No. 13, 311 Or 188,

ERB cannot reach the issue of waiver until it first decides

whether a collective bargaining agreement permits an

employer’s unilateral action. For the reasons that follow, we

conclude that ERB’s analysis was not legally erroneous and

that neither PECBA nor any other source of law compelled

ERB to adopt the analysis for which DOC advocates.

We return first to the text of ORS 243.672(1)(e), set

out infra, 353 Or at 176, and observe that it does not specif-

ically delineate or address defenses to a charge that an em-

ployer has committed an unfair labor practice by refusing to

bargain with respect to a mandatory subject of bargaining.

We then look to the enactment history of that statute and

case law interpreting it and learn that the Oregon legisla-

ture enacted PECBA in 1973 to model the NLRA. Elvin, 313

Or at 175 n 7. Therefore, cases decided under the NLRA, in-

cluding those outlining affirmative defenses to unfair labor

practice charges, provide guidance in interpreting PECBA.

Id. at 177-78. Importantly for this case, the NLRB’s use of

a waiver rubric to analyze contract defenses to unfair labor

practice charges was well-established by 1973. Thus, we in-

fer that the Oregon legislature intended that defenses to

unfair labor practice charges under ORS 243.672(1)(e) be

analyzed under that same rubric. See State Treasurer v.

11

Prior to Oregon School Employees Ass’n v. Bandon School Dist. #54, 19

PECBR 609 (2002), ERB had permitted employers to defend unfair labor practice

claims by demonstrating that the union had agreed to contract terms that were

“specifically relevant to the issue in dispute.” See, Oregon School Employees Ass’n

v. Astoria School District 1, 13 PECBR 474, 480 (1992). However, ERB also had

continued to analyze contract terms asserted as an affirmative defense under its

waiver analysis. See Fed’n of Oregon Parole and Probation Officers v. Washington

County, 19 PECBR 441, 428 (2001) (holding that a general management rights

clause did not constitute a waiver). In Bandon, ERB determined that it would no

longer permit the “specifically relevant” defense. Id. at 609. The Court of Appeals

affirmed that shift, recognizing that ERB’s formulation of what constitutes an

adequate defense may change over time. Lincoln Cty Ed. Assn. v. Lincoln Cty Sch.

Dist., 187 Or App 92, 98, 67 P3d 951 (2003). In this case, DOC does not challenge

ERB’s authority to make that shift, nor does it argue that the law requires ERB to

permit a “specifically relevant” defense.

182 Assn. of Oregon Corrections Emp. v. State of Oregon

Marsh & McLennan Companies Inc., 353 Or 1, 20, ___ P3d

___ (2012) (applying that principle of statutory interpreta-

tion).

DOC’s argument that ERB’s waiver analysis

conflicts with the purposes of PECBA is not convincing. ERB’s

analysis does not undermine the sanctity of the written labor

contract or inject uncertainty or instability into the labor-

management relationship. If an employer and a union agree

by written contract terms that, going forward, the employer

will have the right to make unilateral changes to employees’

terms and conditions of employment, then those contract

terms will establish a waiver of the union’s statutory right

to bargain over those issues and will be enforced. The

parties can avoid uncertainty and instability by making the

employer’s right to take that future unilateral action clear

and unmistakable. The parties also may use ORS 243.672

to address alleged contract violations. ORS 243.672 makes

it an unfair labor practice for a public employer or public

employee to “[v]iolate the provisions of any written contract

with respect to employment relations.” ORS 243.672(1)(g);

ORS 243.672(2)(d). If a collective bargaining agreement

requires or permits certain action, a party that alleges a

failure to comply with such a provision may file an unfair

labor practice complaint alleging a contractual violation

under that statute. ERB’s waiver analysis does not conflict

with the terms of PECBA or thwart the legislature’s intent

or purpose.

We also are not persuaded that ERB’s waiver

analysis is legally erroneous because it is contrary to this

court’s decision in Rainier School Dist. No. 13, 311 Or 188.

It is true that in that case, the court held that “[a] collective

bargaining agreement is one type of contract” and that “[i]n

discharging its statutory responsibility, ERB is required to

interpret collective bargaining agreements * * * in the same

manner and pursuant to the same rules of construction

as do courts.” Id. at 194. However, the court’s holding in

Rainier School Dist. No. 13 arose not in the context of ORS

243.672(1)(e), the statutory provision at issue in this case,

but in the context of ORS 243.672(1)(g), which makes it an

unfair labor practice for a public employer to “[v]iolate the

Cite as 353 Or 170 (2013) 183

provisions of any written contract with respect to employment

relations.”12 In a charge under ORS 243.672(1)(g), the

inquiry is whether an employer has done what the collective

bargaining contract required it to do. In a defense to a charge

under ORS 243.672(1)(e), the inquiry is whether the union,

by agreeing to certain contract terms, has relinquished

its statutory right to bargain. Both inquiries require the

interpretation of the collective bargaining agreement, but

because the purpose of the inquiry is different, the rules of

construction also may differ.

The fact that a collective bargaining agreement

is a contract and must be construed as such does not

preclude ERB from requiring that contract terms offered

to establish an affirmative defense to a charge under ORS

243.672(1)(e) be evaluated under a waiver rubric. Absent a

sufficient affirmative defense, a union has a statutory right

to insist that an employer bargain over mandatory subjects

before making changes to the status quo. The general rule

in Oregon is that, although waivers of constitutional and

statutory rights may be expressed through contract terms,

those terms must clearly indicate an “ ‘intention to renounce

a known privilege or power.’ ” Johnson v. Swaim, 343 Or

423, 431, 172 P3d 645 (2007) (quoting Great American Ins.

v. General Ins., 257 Or 62, 72, 475 P2d 415 (1970)). Under

Oregon law, a waiver is “ ‘the intentional relinquishment of

a known right.’ ” Id. at 431 (quoting Waterway Terminals

v. P. S. Lord, 242 Or 1, 26, 406 P2d 556 (1965)). “To make

out a case of waiver of a legal right there must be a clear,

unequivocal, and decisive act of the party showing such

a purpose * * *.” Waterway Terminals, 242 Or at 27. See

also Taylor v. U.S. National Bank, 248 Or 538, 544, 436

P2d 256 (1968) (stating that contract language construed

to relinquish a widow’s statutory right to homestead and

exempt property must evince a “clear and explicit” waiver

of those rights).

12

In its 2005 decision in this proceeding, ERB distinguished between AOCE’s

claims that alleged that DOC had failed to bargain in good faith under ORS

243.672(1)(e) and those that alleged that DOC had breached its contract with

AOCE in violation of ORS 243.672(1)(g). A breach of the CBA alone, the ERB

explained, does not constitute bad faith bargaining; rather, such claims must be

raised as grievances under the CBA or through an unfair labor practice complaint

under ORS 243.672(1)(g). Ass’n of Oregon Corr. Employees, 20 PECBR 890 (2005).

184 Assn. of Oregon Corrections Emp. v. State of Oregon

This court’s statement in Rainier School Dist.

No. 13 does not preclude ERB’s waiver analysis, nor does

it compel the analysis for which DOC advocates. As the

United States Supreme Court explained in Mastro Plastics

Corp. v. Labor Board, 350 US 270, 279, 76 S Ct 349, 100

L Ed 309 (1956), collective bargaining agreements are like

other contracts in that they “must be read as a whole and

in the light of the law relating to it when made,” but, when

the terms of a collective bargaining agreement are raised to

contest a union’s statutory right, the contract terms must

demonstrate that the union waived that right.

Finally, ERB’s analysis does not ignore, but in

fact requires, consideration of the preliminary step in any

unilateral change claim—whether there has been a change

in the status quo. As noted, the first step in ERB’s unfair labor

practice inquiry is whether the employer made a change to

an “established practice.” To make that determination, ERB

considers “[w]hether the parties have, by their words or

actions, defined their rights and responsibilities with regard

to a given employment condition.” Coos Bay Police Officers’

Ass’n v. City of Coos Bay, 14 PECBR 229, 233 (1993). ERB

looks to a variety of sources, including not only the terms of

a current or an expired collective bargaining agreement, but

work rules, policies, and an employer’s “pattern of behavior.”

Id. Thus, ERB does consider the terms of the parties’

collective bargaining agreement, among other factors, in its

analysis of whether the employer has made a change to the

status quo.

DOC has not convinced us that PECBA or any other

provision of Oregon law required ERB to adopt a different

analysis in its consideration of whether an employer has

made a unilateral change in violation of ORS 243.672(1)(e).

When an employer relies on contract terms as an affirmative

defense against a charge that it changed the status quo

without first bargaining with the union, ERB may consider

those terms in evaluating whether they demonstrate that

the union waived the right to bargain about such changes.

The law does not demand that ERB first consider those

contract terms to determine, under the status quo rubric,

whether they authorized the employer’s action. Such a

Cite as 353 Or 170 (2013) 185

requirement would effectively displace the waiver analysis

as a contract-based affirmative defense to a charge under

ORS 243.672(1)(e), and we can discern no legal basis for

imposing it.

In summary, the Court of Appeals was incorrect

when it decided in AOCE I that ERB had erred in its use

of the waiver analysis to evaluate the merits of DOC’s

contractual affirmative defense. ERB’s waiver analysis

recognizes that the duty to bargain under ORS 243.672(1)

(e) continues after the parties have entered into a collective

bargaining agreement and that a union retains its right

to bargain on mandatory subjects of bargaining unless it

waives that right.

III. APPLICATION OF WAIVER ANALYSIS

Because the Court of Appeals determined in AOCE

I that ERB had erred in its waiver analysis, the court

did not reach DOC’s alternative argument that, even if

ERB were correct in its use of that analysis, ERB erred in

concluding that the contract terms on which DOC relied did

not establish a clear and unmistakable waiver of AOCE’s

statutory right to bargain about changes to employees’

scheduled days off and their shift stop and start times. We

address that argument now. For the following reasons, we

hold that ERB did not err in its interpretation of the parties’

collective bargaining agreement.

As noted, DOC invokes Article 3 of the CBA, which

provides:

“The Association agrees that the Employer retains all

inherent rights of management and hereby recognizes

the sole and exclusive right of the State of Oregon, as the

Employer, to operate and manage its affairs in accordance

with its responsibilities to maintain efficient governmental

operations. The Employer retains all rights to direct the

work of its employees, including, but not limited to, the

right to hire, promote, assign, transfer, demote, suspend,

or discharge employees for proper cause; to schedule work;

determine the processes for accomplishing work; to relieve

employees from duties because of lack of work or for other

legitimate reasons; to take action as necessary to carry

out the missions of the State; or determine the methods,

186 Assn. of Oregon Corrections Emp. v. State of Oregon

means, and personnel by which operations are to be carried

on, except as modified or circumscribed by the terms of this

Agreement. The retention of these rights does not preclude

any employee from filing a grievance, pursuant to Article

44, Grievance and Arbitration Procedure, or seeking a

review of the exercise of these rights, when it is alleged

such exercise violates provisions of this agreement.”

(Emphasis added.)

In its 2005 decision, which was at issue in AOCE

I, ERB recognized that the legislature had distinguished

between scheduling services to the public and scheduling

employee work hours. Ass’n of Oregon Corr. Employees, 20

PECBR at 897-98. The latter was a mandatory subject of

bargaining, the former was not.13 ERB explained that, in

Article 3, the parties could have been referring to either

subject:

“It is unclear * * * whether the language applies to

scheduling services to the public, or instead to individual

employee work hours. The language might also apply to the

employer’s decision about when during the day to schedule

a particular task, rather than to the hours a particular

employee works.”

Id. at 900. “One point is clear,” ERB concluded: “[T]he

provision does not expressly give DOC the right to unilaterally

change the start/stop times and days off of employees. Such

ambiguity and lack of specificity preclude us from finding

a ‘clear and unmistakable’ waiver of bargaining over these

subjects.” Id.

When ERB reconsidered its decision in 2009 after

remand by the Court of Appeals in AOCE I, ERB described

the phrase “inherent rights of management” in Article 3 as

one that is “commonly used in labor law” and stated that it

had “repeatedly used the phrase to refer to subjects that are

permissive for bargaining.” Ass’n of Oregon Corr. Employees,

23 PECBR at 237. ERB concluded that the phrase

“is a term of art in labor-management relations, and the

parties used the phrase as it is commonly understood in

13

Under ORS 243.650(7)(a), “employment relations” about which a public

employer must bargain in good faith, includes “matters concerning * * * hours[.]”

Under ORS 243.650(7)(g), “employment relations” does not include “scheduling of

services provided to the public.”

Cite as 353 Or 170 (2013) 187

the labor-management community. Use of the phrase

indicates that the parties intended the management rights

clause to apply only to permissive subjects for bargaining.

If so, the clause would not apply to work hours issues such

as employee start-stop times and days off because they

concern mandatory subjects for bargaining.”

Id. at 238. That interpretation was bolstered, ERB noted,

by the use of the word “retain” in Article. A party cannot

retain, ERB reasoned, something that it never had in the

first place. Thus, one plausible reading of Article 3 was that

it authorized DOC to keep only those rights that it had

prior to negotiating that provision (i.e., the right to schedule

services to the public); it did not grant DOC rights that it

did not have (i.e., the right to schedule employee work hours

unilaterally). Prior to negotiating Article 3, DOC did not

have the right unilaterally to change employee work hours,

a mandatory subject for bargaining, and, ERB concluded,

Article 3 did not unambiguously bestow that right.

In AOCE I, DOC argued to the Court of Appeals that

the CBA granted DOC the broad right to “schedule work”

and that, in the exercise of that right, DOC necessarily had

to determine when such work would start and stop and on

what days the work would occur. The fact that DOC’s right

to schedule might also encompass the scheduling of tasks did

not mean that the provision was “ambiguous”; rather, DOC

argued, it was merely an indication that DOC’s scheduling

powers were broad.

DOC renews its argument in this court. Citing

UFORMA/Shelby Business Forms, Inc. v. N.L.R.B., 111

F3d 1284, 1290 (6th Cir 1997), DOC contends that a broadly

worded management rights clause operates as a clear and

unmistakable waiver of a union’s right to bargain with respect

to subjects covered by that clause. We are not convinced. As

ERB explained, there is a question in this case about the

subject matter that is covered by Article 3. In theory, Article

3 could cover scheduling employee work hours. However,

given ERB’s prior interpretation of the term of art included

in that Article and the parties’ use of the word “retain,” ERB

did not err in concluding that the meaning of the term “to

schedule work” in Article 3 also could be limited to directing

188 Assn. of Oregon Corrections Emp. v. State of Oregon

the work of employees and scheduling the services that they

provide to the public. Consequently, ERB also did not err in

concluding that Article 3 did not clearly and unmistakably

waive its statutory right to bargain over changes to

employees’ scheduled days off and their shift stop and start

times.14

IV. FAILURE TO FILE DEMAND TO BARGAIN

DOC also asks that we address an additional

argument—that AOCE waived its right to bargain about

the changes that DOC made by failing to file a demand to

bargain within 14 days as required by ORS 243.698(3). The

Court of Appeals did not reach that argument in AOCE I

or AOCE II, and, because it involves arguments that differ

significantly from those we address here, we remand to

permit the Court of Appeals to consider those issues in the

first instance.

The decision of the Court of Appeals is reversed,

and the case is remanded to the Court of Appeals for further

proceedings.

14

ERB’s ruling is consistent with its own prior case law. See Fed’n of Oregon

Parole and Probation Officers v. Washington County, 19 PEBCR 411 (2001) (general

language typically found in management rights clauses does not constitute a

waiver); Days Creek Ass’n of Classified Employees v. Days Creek School Dist. 15, 16

PECBR 187, 202 (1995) (same); Service Employees Int’l Union, Local #49 v. Pacific

Communities Hospital, 13 PECBR 753, 767 (1992) (“This Board does not often find

a waiver of future bargaining rights in contract language. * * * Management rights

* * * clauses * * * typically find their way into contracts with little discussion of the

parties’ intent. Moreover, most are worded so broadly that it cannot be concluded

that a union ‘clearly and unmistakably’ waived a bargaining right which might

never mature, and which concerns a subject not demonstrably in the contemplation

of either party at the time of the purported waiver.”).