By:  Ashley S. Kircher, Esq.

On Wednesday, a Pennsylvania appeals court found that 1,100 unionized Temple University Hospital employees were eligible for unemployment benefits during their month-long work stoppage in 2010.  See Temple Univ. Health Sys. v. Unemployment Comp. Bd. of Review, No. 1539 C.D. 2012 (Pa. Commw. Ct. June 4, 2013).  The three-judge panel reasoned that the work stoppage counted as a lockout, not a strike.

The dispute between the hospital and the employees centered around the hospital’s tuition reimbursement program.  A collective bargaining agreement (“CBA”) that was effective from October 1, 2003 through September 30, 2006 stated that full-time employees would be eligible for tuition reimbursement in accordance with the hospital’s policy.  In March 2006, before the expiration of that CBA, the hospital issued a revised tuition reimbursement policy that stated that the policy did not constitute an express or implied contract and that the hospital could modify, alter, delete, suspend, or discontinue the policy in its sole discretion with or without notice to employees.

The CBA for the period of October 1, 2006 through September 30, 2009 provided that full-time and part-time employees and dependents of full-time employees were eligible for tuition reimbursement in accordance with the hospital’s policy.  In March 2009, the hospital instituted a revised tuition reimbursement policy that restricted reimbursement to full-time employees only.  The union immediately filed an unfair labor practice charge with the Pennsylvania Labor Relations Board. 

In January 2010, the PLRB found that the hospital’s March 2009 change to the tuition reimbursement policy constituted an unfair labor practice, reasoning that even though the union did not grieve or file unfair labor practice charges regarding the hospital’s change to the policy in March 2006, it did not waive its right to negotiate employee tuition reimbursement, a mandatory subject of bargaining.  The PLRB rejected the hospital’s claim that it could unilaterally discontinue parts of the tuition reimbursement program, reasoning that the CBA’s statement that reimbursement shall be in accordance with the hospital’s policy meant only that the hospital had the right to determine how the reimbursement would be paid and when it would be paid, not that it had the right to eliminate the reimbursement altogether.  For the hospital to have the right to eliminate the reimbursement, the CBA itself would have had to contain the “sole discretion” language that the hospital added to the policy in 2006.

The PLRB directed the hospital to immediately reinstate the tuition reimbursements that were in effect before the March 2009 revision and to immediately make the adversely affected employees whole for the benefits they would have received under the former policy.  When the hospital failed to do so, the union gave notice of its intent to initiate a work stoppage.  The work stoppage began on March 31, 2010 and did not end until April 29, 2010, following a negotiated settlement.  The employees then filed claims for unemployment benefits for the period of the work stoppage.  When they were granted such benefits, the hospital appealed.  

The Pennsylvania appellate court determined that because the hospital had precipitated the work stoppage, the stoppage was a lockout rather than a strike and the employees were therefore eligible for unemployment benefits.  The court reasoned that the hotel unilaterally caused the disruption and was required to restore the status quo in order to avoid the lockout, and that the employees could properly condition their return to work on the restoration of the status quo.  

Although the case was decided under Pennsylvania law, the decision underscores the need for employers to, before they unilaterally change employment policies that are applicable to union-represented employees, determine whether such changes are a mandatory subject of bargaining.  The decision also highlights the need for employers to be aware that if a work stoppage is ruled a lockout rather than a strike, then the non-working employees will be eligible for unemployment benefits.