Philadelphia acted illegally when it made changes to its Deferred Retirement Option Plan (DROP) in 2011 without first negotiation the changes with unions, according to a hearing examiner for the Pennsylvania Labor Relations Board.
The changes were meant to reduce the cost of the DROP, but unions quickly challenged the changes.
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City Council voted unanimously in 2011 to reduce the cost of the retirement program by tweaking its eligibility requirements and changing the way the interest rate is calculated on workers’ DROP accounts. Nutter vetoed the legislation only because he didn’t think it went far enough: He wanted to nix DROP altogether.
District Council 33 and District Council 47, which represent the city’s blue- and white-collar workers, promptly filed challenges to the law, arguing that the city could not unilaterally make changes to DROP without bargaining with the unions.
A hearing examiner for the Pennsylvania Labor Relations Board agreed with both unions, writing in both initial decisions last month:
“Having considered the respective arguments of the Union and the City, I must conclude that the record in this case supports finding that the City violated its duty to bargain as set forth in Sections 1201(a)(1) and (5) when it enacted the 201l DROP ordinance amendment.”
Sam Spear, a lawyer for District Council 33, says the union is pleased with the orders.
“[Union president] Pete Matthew testified before the bill was passed at City Council and he told them if you do this, it would be illegal,” he says, “The hearing examiner agreed with us 100 percent, and I think the labor board will agree with us 100 percent.”
The DROP changes haven’t yet affected any city workers. That’s because the implementation of the changes were put on hold after challenges by unions.
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