## Facts

- Oregon faced a major revenue shortfall for the 2003–2005 biennium, and the Governor proposed a statewide salary freeze for state employees.
- The legislature approved a budget that provided no funding for cost-of-living adjustments or step increases for state employees during the biennium.
- The state negotiated with multiple unions under a consistent wage-freeze approach, commonly described as pattern bargaining.
- AOCE negotiated with the Department of Corrections (DOC) through multiple bargaining and mediation sessions but did not agree on wages; the dispute went to statutory interest arbitration requiring selection between the parties’ last best offers.
- The arbitrator selected DOC’s last best offer, which imposed a 24-month salary freeze.
- OSPOA negotiated with the Oregon State Police (OSP) and reached a contract that also imposed a two-year salary freeze.
- AOCE and OSPOA filed unfair labor practice (ULP) complaints with the Employment Relations Board (ERB), alleging surface bargaining and lack of good faith under the Public Employees Collective Bargaining Act (PECBA).
- ERB consolidated the cases and dismissed both ULP complaints; the unions sought judicial review.

## Issues

1. Whether DOC and OSP violated PECBA’s duty to bargain in good faith by insisting on a two-year wage freeze grounded in the Governor’s budget and the legislature’s appropriation.
2. Whether using a uniform wage-freeze pattern across multiple bargaining units, and declining wage increases inconsistent with budget constraints, constituted unlawful surface bargaining.

## Decision

- The Oregon Court of Appeals affirmed ERB’s dismissal of the ULP complaints.
- The court held that substantial evidence supported ERB’s finding that DOC and OSP bargained in good faith under the totality of the circumstances.
- The court concluded that adherence to a wage-freeze position tied to legislative appropriations reflected permissible hard bargaining, not unlawful surface bargaining.
- The court accepted ERB’s determination that pattern bargaining, without more, does not establish bad faith in public-sector negotiations funded through a common appropriation.

## Legal Principles

- PECBA’s good-faith bargaining duty is evaluated under the totality of the circumstances; a firm economic position does not alone establish bad faith.
- Surface bargaining requires evidence of sham negotiations or an absence of intent to reach agreement, not merely insistence on a consistent proposal.
- Hard bargaining—holding firmly to a position while meeting, conferring, exchanging proposals, and using bargaining procedures—does not violate PECBA.
- Pattern bargaining is not per se unlawful, particularly where a single legislative appropriation constrains available wage funds across bargaining units.
- Reviewing courts defer to ERB’s administration of PECBA when ERB’s findings are supported by substantial evidence and its legal conclusions are free of legal error.

## Conclusion

The court upheld ERB’s dismissal of the unions’ ULP complaints, holding that the agencies’ wage-freeze stance and pattern bargaining, when tied to legislatively imposed budget limits and accompanied by continued negotiation, constituted lawful good-faith bargaining rather than surface bargaining under PECBA.


Ass’n of Or. Corr. Emps. v. State, Dep’t of Corr., 213 Or. App. 648, 164 P.3d 291 (2007)