Opinion ID: 2581016
Heading Depth: 3
Heading Rank: 1

Heading: Indemnification Is a Mandatory Subject of Bargaining.

Text: We first address whether indemnification is a mandatory subject of bargaining. The ALRA concluded that indemnification is a mandatory subject of bargaining because public employees would have strong economic interests in legal representation from their public employer as a result of getting sued for a work-related function. Because the agency employed its special expertise in labor relations in reaching this conclusion, we will affirm its judgment so long as it is reasonable. [22] We believe that it is. The duty to bargain over what are often called mandatory subjects of bargaining [23] arises from the requirement that the state and the union negotiate collectively over wages, hours, and other terms and conditions of employment. [24] The terms and conditions of employment include the hours of employment, the compensation and fringe benefits, and the employer's personnel policies affecting the working conditions of the employees. [25] Mandatory subjects of bargaining have traditionally been defined as those subjects most closely related to the economic interests of employees. [26] While the state concedes that its decision whether to provide a legal defense will have a financial impact on its employees, it contends that not all subjects that affect employees' economic interests are mandatory subjects of bargaining. Indeed, the state argues that it has historically considered legal indemnification to be a permissive subject of bargaining due to the state's prerogative to set public policy and to control its litigation strategy. In support of this argument, the state cites Public Defender Agency v. Superior Court, Third Judicial District, [27] a case in which we recognized the power of the attorney general to bring any action which he thinks necessary to protect the public interest, ... [including the corollary power] to make any disposition of the state's litigation which he thinks best, ... [which] includes the initiation, prosecution and disposition of cases. [28] The state contends that, because indemnification is more closely related to government policies than to the economic interests of employees, it is a permissive rather than mandatory subject of bargaining. In holding that indemnification is a mandatory subject of bargaining, the ALRA relied upon administrative decisions in New York [29] and New Jersey [30] as well as the balancing test we articulated in Kenai I. [31] In that case, we explained: a matter is more susceptible to bargaining the more it deals with the economic interests of employees and the less it concerns professional goals and methods. Bargaining over the latter topics presents particular problems because there is less likely to be any politically organized interest group other than the union concerned with these issues.... Furthermore, it is such an abstract and abstruse subject that it is unlikely that any appreciable portion of the public will either understand it or care greatly about it. In such circumstances, the risk that effective power over the governmental decision will come to rest with the union is significantly greater. Moreover, it is more likely there will be disagreements among union members on questions of this nature than on bread and butter issues; the risk that minority viewpoints within the union will not be meaningfully represented in the bargaining is a real one.[ [32] ] We therefore held that matters such as salaries, fringe benefits, the number of hours worked, and the amount of leave time were mandatory subjects of bargaining, while issues such as preparation time and class size were within the realm of school management and function, despite their obvious relation to the teachers' working conditions. [33] It is often difficult to characterize an issue as either mandatory or permissive. The practical challenges of this process were elucidated in Alaska Public Employees Ass'n v. State, [34] a case in which we considered whether job classifications and salary range assignments were mandatory subjects of bargaining. [35] Because of the close relationship between the job classification plan and the state merit principle, we held that job classification should be exempt from bargaining. [36] With respect to the assignment of positions to salary ranges, we determined the issue to be a permissive subject of bargaining  one on which state employees could be heard at the state's discretion  but not a mandatory subject of bargaining under existing state salary programs. [37] In reaching this conclusion, we adapted the test for negotiability set out in Kenai I, creating instead a division between mandatory and permissive subjects of bargaining in cases, such as this one, where the government employer's constitutional, statutory, or public policy prerogatives significantly overlap the public employees' collective bargaining prerogatives. [38] Under this modified test, a matter is more susceptible to categorization as a mandatory subject of bargaining the more it deals with the economic interests of employees and the less it concerns the employer's general policies. [39] ALRA found that public employees' ... strong economic interests in legal representation from their public employer as a result of getting sued for a work-related function is sufficient to ensure that they have the right to bargain over such an issue. While we are sympathetic to the state's argument that indemnification is closely tied to a governmental function and implicates more than just a public employee's financial interests, we nonetheless conclude that the ALRA had a reasonable legal and factual basis to find otherwise. But because we also agree with the ALRA that the parties to a CBA can waive the right to grieve a mandatory subject of bargaining, we conclude that requiring the parties to negotiate over the subject of indemnification will not infringe upon the state's right to direct its litigation strategies and legal resources where, as here, it exempts such decisions from the grievance process.