Labor Law Update

Evergreen and Status Quo

HB 2, the state budget trailer bill, contains a change to RSA 273-A, the state collective bargaining law. It provides that, upon expiration of a collective bargaining agreement, parties subject to the agreement shall become at-will employees whose salaries, benefits, and terms of conditions of employment shall be at the discretion of the employer. During the committee deliberations, it was stated that the change includes a prohibition on any possible locally negotiated evergreen language; such contract language would be null and void upon the expiration of the contract. Current required status quo provisions would also no longer apply.

Tenure and Nonrenewal

SB 114, originally introduced by Senator Larsen (Concord) to prohibit the assessment of teacher performance based solely on student assessment scores, was amended by the Senate Education Committee. The bill now increases from 3 years to 5 years the time required to be entitled to reasons and opportunity for a hearing when given notice of nonrenewal (Failure to be Renominated or Reelected) under 189:14-a. The bill also removes any standard of review for school board hearings in cases of nonrenomination due to unsatisfactory performance. However, it does require that a teacher's performance not be based solely on state or national assessment scores received by pupils in the teacher's class. 

Pension Reform

Pension reform continues to be a priority of the legislature. In addition to reform measures being incorporated into HB 2, both the Senate and House have separate bills addressing comprehensive changes.

In the Senate

SB 3, sponsored by Senator Jeb Bradley, received several technical changes/amendments in the Senate Finance Committee. Due to timeline concerns expressed by NHRS, various provisions were delayed until January 1, 2012. This includes the recertification of employer rates to reflect the impact of changes made, including increases in employee contributions. As a result of the later date, increases in employee rates are no longer phased in: the 2% increase will become effective January 1, 2012. The provision to recertify employer rates will mean that those new rates will likely be impacted by pending NHRS Board of Trustees action to lower the assumed rate of return. The actuary for the system has recommended lowering the assumed rate from the current 8.5% to 7.75%. Board action on this recommendation will likely occur within the next month or two, and would then be factored into the recalculated employer rates, likely determined sometime in the fall. As you recall, employer contributions of behalf of employees and teachers are currently scheduled to increase this July from 9.16% and 10.70% respectively, to 11.09% and 13.95% respectively. Any revised rates calculated next fall would reflect not only changes in employee contributions, but also the lower assumed rate of return. Other provisions of SB 3 remain intact. The bill is scheduled for a Senate vote next week. Assuming a favorable vote, it then moves to the House for consideration.

In the House

HB 580, a somewhat more aggressive comprehensive proposal, makes various changes to the state retirement system including:

I. Increasing retirement ages of group I members to 65 and group II members to 50.  

II. Changing the definition of earnable compensation to exclude unused sick/vacation time and making average final compensation based on 5 years instead of three.

III. Changing the composition of the board of trustees: 4 member & 4 employer representatives, 4 experts & state treas.  

IV. Eliminating the special account.

V. Increasing employee contribution rates.  

VI. Establishing a committee to study the establishment of a voluntary defined contribution plan.

VII. Prohibiting a member in service from concurrently receiving benefits.  

HB 580 has been recommended Ought to Pass by the House Special Committee on Public Employee Pensions Reform and is scheduled for a House vote next week. Assuming a favorable vote, it then moves to the Senate for consideration. 

28-a Litigation Update by the NH Municipal Association

Several board members have requested an update on the status of the lawsuit challenging the increase, mandated by the legislature in 2009, in the public employer contributions to the New Hampshire Retirement System. The lawsuit was filed in early 2010 as a class action on behalf of all cities, towns, school districts, and counties. The plaintiffs representing the class are the City of Concord, the Mascenic Regional School District, and Belknap County. The lawsuit asserts that by increasing the amount that political subdivisions are required to contribute (done by decreasing the state contribution), the state has violated Part I, Article 28-a of the New Hampshire Constitution, which prohibits unfunded state mandates. The action was filed in Merrimack County Superior Court. After completing the discovery process, the plaintiffs filed a motion for summary judgment-a pleading stating that there are no significant disputes about the facts, and the case should be decided as a matter of law in favor of the plaintiffs, without the need for a trial. The state filed a cross-motion for summary judgment. In essence, both sides agree on the facts, but disagree (obviously) about which side is correct on the law.