In labor law, we’ve all come to recognize the difference between Fair Labor Standards Act (“FLSA”) overtime, and contract overtime.  FLSA overtime is the result of employees working the requisite number of hours in a given work period, and being entitled to time and a half pay for their work under the law.  Contract overtime, on the other hand, is determined by the terms of a collective bargaining agreement.  Employers and collective bargaining representatives are free to negotiate language in their agreements that is even more generous than the law, allowing for overtime pay in any number of circumstances where the parties believe employee time is more valuable than regular hours worked.

In the case of SEIU Local 5000 and Mille Lacs Health System, the calculation of overtime was brought in front of Arbitrator Steven Hoffmeyer, for the determination of whether employee PTO hours would be considered hours worked under the parties’ overtime article.  The relevant overtime article stated that employees would be paid “one and one-half times their regular rate of pay for all hours worked (to include restricted on-call hours) in excess of forty (40) hours during the workweek.”  In the contract’s “Paid Time Off” section, the article stated, “Employees will be paid PTO as hours worked.”  The dispute arose after the parties first contract was ratified and it was discovered that the employer was not including PTO in the “Hours worked” calculation of overtime.

The union asserted that the “paid time off” language meant that hours taken as PTO counted as hours worked for the calculation of overtime.  The employer countered that the language only stated the hours would be paid as hours worked, and the parties never agreed to include PTO in the overtime calculation.

To settle the issue, Arbitrator Hoffmeyer looked at the parties’ negotiations and their conduct.  After evaluating the parties’ proposals and counterproposals, the arbitrator found that the employer “retained the Union’s PTO proposals within the language document exchange, never as part of an ‘economic proposal.’”  The arbitrator determined this to be significant as it showed the employer never intended the PTO language to be considered economic; but rather a language proposal meant to clarify how PTO would be classified.

Furthermore, the arbitrator found no “specific declaration by either party to the contrary in negotiations” as to their intent when agreeing on the language.  In addition to that, he stated, “In a first CBA interpretation Award it would be unconscionable to award a possible unforeseen ‘gotcha’ which damages a potential long-term relationship.”  With that, the arbitrator denied the grievance.

This was a very close case.  The arbitrator could have easily gone the other way if the notes or proposals were unclear.  In negotiations, even after the contract is settled, every word must be carefully selected when making proposals or countering language.  If you, or your organization is in need of assistance with negotiating its next contract, or defending that language after it was put in the contract, contact Wiley Reber Law, for negotiations experience that works.