Ordinance vs. Collective Bargaining Agreement: Who Wins?

By Attorney Gordon E. McQuillen, WPPA Director of Legal Services
and Attorney Anne Debevoise Ostby, WPPA Legal Researcher

            One question which arises frequently, especially in smaller Wisconsin municipalities, is whether a municipality may adopt an ordinance that conflicts with an existing collective bargaining agreement. The issue arises most frequently when newly elected officials attempt to “undo” an agreement that had been made with a bargaining representative by the officials’ predecessors. In fact, oftentimes the newer officials have campaigned on some such issue as reducing labor costs, requiring employees to pay more toward health insurance, etc. So, can a municipality adopt an ordinance which conflicts with an agreement between the municipality and the bargaining unit of its employees? In a word: No.

            The Wisconsin Supreme Court has held that when a collective bargaining agreement conflicts with a specific ordinance that applies to those with whom contract negotiations are made, then the collective bargaining agreement prevails. This principle applies whether the ordinance is enacted either before or after a collective bargaining agreement is effective. Although as a general rule the law takes precedence over a contract and parties cannot contract to avoid the law, a narrow exception exists when the groups targeted by the ordinance and the contract are identical. This does not create disparity; although individual groups contract separately, the key element is that all targeted groups have the opportunity to contract in regard to the subject matter of any specific ordinance.

            In Wisconsin, a collective bargaining agreement controls over an ordinance which “is specific to certain parties and is the subject of a contract negotiation between those same parties.” City of Madison v. Madison Professional Police Association, 144 Wis. 2d 576, 592, 425 N.W.2d 8, 14 (1988). In City of Madison, the Supreme Court partially overruled one of its earlier decisions, WERC v. Teamsters Local No. 563, 75 Wis. 2d 602, 250 N.W.2d 696 (1977), which the appellate court in the City of Madison had read to find that an ordinance supercedes contract terms because parties may not contract to violate a law. In overruling the court of appeals, the Supreme Court said that City of Madison specifically limited Local No. 563 to situations where the conflict between an ordinance and a collective bargaining agreement is “oblique.” Id. It created a “narrow exception to the general rule that parties cannot avoid action of law or ordinance by contract.” Id. at 595. The exception applies when the ordinance and the contract target the identical group. Id.

            Leading up to the City of Madison case, the Madison Professional Police Officers Association had filed a grievance against the City for applying unilaterally an ordinance which provided for residency requirements for City employees, including police officers, despite a “me too” clause in the MPPOA agreement that had been triggered by the City’s agreement with its bus system employees to the effect that the residency ordinance did not apply to the bus employees. An arbitrator had found for the MPPOA. Id. at 584.

            The Dane County Circuit Court upheld the arbitrator’s award as one due great deference. Id. at 584-5. The court of appeals, however, applied the 1977 WERC v. Teamsters Local No. 563 case, finding it had “held that an ordinance overcomes the terms of the contract.” Id. The Supreme Court reversed the court of appeals on two grounds. First, it upheld the arbitrator’s decision since he had not exceeded his authority. Id. Second, it modified its earlier holding in Teamsters Local No. 563, thereby identifying an exception to the general rule that parties cannot contract to avoid the applicability of an ordinance. Id. In its reasoning, the Court found that the “City of Madison contemplated waiver of its residency requirement by agreeing to insertion of the ‘me too’ clause in the MPPOA contract.” Id. at 595. The Court further reasoned that this fact precluded the City from arguing that the ordinance controlled the situation despite the fact the “me too” provision had been triggered by the City’s exemption of bus employees from the residency requirement. Id.

            After a discussion of the validity of the arbitrator’s award, the Court addressed whether the arbitrator exceeded his authority as a matter of law under WERC v. Teamsters Local No. 563. The Court expressly distinguished Local No. 563 from the Madison conflict between ordinance and agreement to circumstances involving “implied, or oblique” conflicts between the ordinance and collective bargaining agreement. Id. at 590. Applying case law it found more persuasive, it overruled Local 563's application as a broad rule requiring that an ordinance supercede a contract.

            In limiting its holding from Local No. 563, the Court relied on Cayo v. Milwaukee, 41 Wis. 2d 643, 165 N.W.2d 198 (1969). Id. at 591. Although the issue in Cayo was not the conflict between a collective bargaining agreement and an ordinance, the City of Madison Court cited Cayo as finding that a collective bargaining agreement “supersedes any ordinance in conflict with it.” Id. The Court found that Cayo correctly stated the law in a situation “where the ordinance being challenged is specific to certain parties, and is the subject of a contract negotiation between those same parties.” Id. It found the reasoning supporting Local 563 – that parties cannot contract to violate a law or ordinance – applies only in situations where the ordinance targets a general, as opposed to a specific, group. The Court recognized that when an ordinance is meant to apply to a general group, it would contravene public policy to allow a sub-group to avoid application of the law by contract. Id. at 592. However, the Court noted that an action by the City allowing only one group of city employees to avoid the application of the residency ordinance – such as the bus employees – was not inequitable since “all groups of employees are free to contract.” Id.

            The Court’s application of the principles in Cayo to the facts of City of Madison demonstrated its reasoning. The Court explained that the residency ordinance was directed only at city employees and found that the City had agreed to the inclusion of a “me too” clause specifically addressing the residency requirement. Id. at 593. In addition, the court pointed out that the ordinance “contemplated circumstances which would alter or vitiate the ordinance.” Id. Principles of waiver supplemented the Court’s reasoning, because it also found that under the factual circumstances present in the case, the collective bargaining agreement must prevail in order to prevent the City from making “one representation at the contract table, and another through the common council.” Id. “No city contract directed at a specific group would long have effect if a city ordinance directed at the same group could overcome it.” Id.

            The Wisconsin Supreme Court has created a clear exception to the general rule that parties cannot avoid the law for situations where an ordinance and a collective bargaining agreement apply to the same group of people. In those situations, the collective bargaining agreement prevails.

            The WPPA recommends that all of its locals review ordinances and resolutions affecting employees in their municipalities to see whether there is any conflict between those enactments and the collective bargaining agreements under which members of the local association are employed. If there are such conflicts, or if you have questions about the validity of any ordinances, please contact your business agent, who, in turn, can contact the WPPA legal department if additional research or advice might be needed.