The National Law Journal

A pair of recent court rulings are giving unions new and potentially potent ammunition against furloughs of public employees.

On Aug. 18, a federal judge struck down a furlough plan in Prince George's County, Md., holding that the plan violated the U.S. Constitution by unilaterally cutting wages guaranteed through collective bargaining. On July 29, a state judge in Hawaii issued a similar ruling, saying a furlough violated the state constitution and criticizing officials for ordering unpaid leave without first negotiating with public employee unions.

Furloughs are the strategy du jour in states and municipalities hard hit by the recession. To date, more than 728,500 public employees in at least 21 states have taken or will soon be forced to take furloughs, according to the National Conference of State Legislatures. If other courts agree, the argument that furloughs illegally ignore union contracts could have wide implications: More than 3 million public employees nationwide are covered by collective-bargaining agreements, according to U.S. Department of Labor statistics.

Already, in furlough battles across the country, word of the Hawaii and Maryland rulings is spreading quickly. Bruce Lerner of Washington, D.C.'s Bredhoff & Kaiser, who represented the Fraternal Order of Police in the Maryland case, said he has received a handful of phone calls from unions that want to see his complaints and arguments. And unions in Ohio and Florida have called the Fraternal Order of Police, expressing interest in resurrecting failed furlough challenges, said a police union official.

In California, where state employees are suing in state court over furloughs ordered by Gov. Arnold Schwarzenegger, Paul E. Harris III, chief counsel of the Service Employees International Union Local 1000 in Sacramento, said he plans to cite the Maryland ruling in upcoming oral and written arguments. "We hope to achieve similar results here," he said.

THEY HAD A CONTRACT

As in the Maryland case, California employees are targeting the furloughs as contract violations. SEIU Local 1000 alleges that state employee furloughs announced in December and July are illegal pay cuts, and that Schwarzenegger used false pretenses to declare a state of emergency so that he could order unnecessary furloughs without prior negotiation. Harris described the Maryland ruling as "persuasive authority" for the California court.

Persuasive maybe, although the ruling must survive on appeal first, said Peter Conrad of New York's Proskauer Rose, who handles labor disputes on behalf of employers. That said, he's not counting on a reversal, and he predicted that unions will use this "to the maximum extent possible."

Unions will have a lot of fodder to use, Lerner said. During oral arguments before the U.S. District Court for the District of Maryland, he compared Prince George's County to a lawyer who loses his job and calls the mortgage company claiming he can't pay his loan, only to get caught later with a huge savings account. Or, in this case, $97 million in reserve funds that the county could have tapped, said Lerner.

It was a detail that didn't go unnoticed. "[A]lthough the County suggests to the Court that it faced dire circumstances and had no other reasonable alternatives, the record suggests otherwise," Judge Alexander Williams Jr. ruled on Aug. 18. He concluded that county furloughs ran "roughshod" over the unions "who in good faith negotiated a binding contract."

Prince George's County is appealing to the 4th U.S. Circuit Court of Appeals. William Wilkins, the former chief judge of that court, has been tapped to represent the county in the appeal. Wilkins, now a partner in the Greenville, S.C., office of Columbia, S.C.-based Nexsen Pruet, declined comment.

MESSAGE: CALL UNION

In Pennsylvania, the fight has a slightly different flavor. Alaine Williams of Philadelphia's Willig, Williams & Davidson will argue on Sept. 16 before the Pennsylvania Supreme Court that, during the summer, the state unlawfully forced thousands of employees to work without paychecks. Pennsylvania's payless paydays grew out of a plan to furlough workers last year because of a budget impasse in the state Legislature. Council 13 of the American Federation of State, County, and Municipal Employees sued, and a state court ruled that the governor could either furlough everyone or require everyone to work without pay until a budget passed.

The ruling prompted the governor this year to order state employees to work without pay. A supplemental appropriations bill was approved earlier this month -- everyone has now been paid -- but the union still wants the state Supreme Court to declare the payless payday unlawful.

Unions and furloughs were also an issue in a New Jersey case. In April, the state appellate court reached a mixed result, upholding the government's power to initiate furloughs in an economic crisis, but staying a plan for "staggered layoffs." That kept 33,000 members of the New Jersey State Policemen's Benevolent Association from being furloughed.

Police union spokesman Jim Ryan said the Maryland and Hawaii decisions bolster what unions have been saying all along about furloughs: "They undermine the credibility of a collective-bargaining agreement."

Herbert Takahashi of Honolulu's Takahashi Vasconcellos & Covert, who represented the Hawaii unions in their toppling of the governor's furlough program, said, "Furloughs are -- in effect -- a reduction in wages, which are a core subject of collective bargaining."

The Hawaii State Teachers Association and the United Public Workers sued Gov. Linda Lingle in state court. Judge Karl Sakamoto held that because the state constitution gives public employees the right to collectively bargain, the state cannot make "unilateral changes on matters that are subject to mandatory bargaining." Hawaii is appealing.

Not all unions are crying foul, said lawyers who have helped draft government furlough plans that were not legally challenged. Tim Yeung of the Sacramento office of San Francisco's Renne Sloan Holtzman Sakai said most of his firm's 40 municipal clients have initiated furloughs -- negotiated first with the unions -- and none have been challenged. The unions "understand that the only alternative to furloughs would be layoffs," he said.

Yeung also doubts the Maryland ruling will affect California cases. "It seemed like the [Maryland] court was trying to second-guess the county's fiscal practices, and that's something the courts just aren't equipped to do," he said.

Zachary Hummel, a partner in the New York office of Bryan Cave, said a third of his public clients have furloughed employees, and none have been sued. He added that each government employer either negotiated the furlough with the union or convinced the union there were no other options. Public employers must make the effort to show "that what you did was a reasonable response to an economic necessity," he said.