When a Virginia locality enacts a collective bargaining ordinance under § 40.1-57.2 for its public employees, can it require that a neutral Labor Relations Administrator be removed only by mutual consent of management and unions? Can the ordinance impose binding arbitration on non-financial bargaining impasses?

Subject

Local governments may include provisions for a neutral Labor Relations Administrator who can only be terminated prior to the expiration of his or her contract by mutual agreement of the locality's management and its employee unions in collective bargaining ordinances enacted under § 40.1-57.2. Local governments may also include such provisions whether or not an employee union has been certified. The inclusion of a binding arbitration provision in a collective bargaining ordinance is a reasonable method to resolve negotiation impasses over non-financial issues and does not violate the Dillon Rule.

Plain-English summary

In 2020, Virginia's General Assembly enacted Va. Code § 40.1-57.2, which gives local governments the authority to enter into collective bargaining agreements with their employees' exclusive representatives. The statute is intentionally bare-bones: it grants the authority but leaves localities discretion to design the structure of bargaining.

Senator Jennifer Boysko and Delegate Suhas Subramanyam asked the AG about two design choices localities were considering for collective bargaining ordinances:

1. Can the ordinance create a "neutral Labor Relations Administrator" (the LRA) who can be removed before their contract expires only by mutual agreement of the locality and the unions? Does the answer change if no unions have yet been certified?

2. Can the ordinance impose binding arbitration to resolve negotiation impasses on non-financial issues, with a mutually selected arbitrator?

The AG said yes to both, with the qualification that binding arbitration on financial issues is barred by § 40.1-57.2(B).

The reasoning runs through the Dillon Rule. Virginia is a Dillon Rule state, so local governments have only those powers expressly granted, necessarily implied, or essential to fulfilling their purpose. Section 40.1-57.2 grants the authority to set up collective bargaining but doesn't specify mechanics. Under City of Virginia Beach v. Hay, 258 Va. 217 (1999), localities exercising a statutory grant of authority have discretion that must be reasonably exercised in light of legislative intent.

The AG concluded that protecting the LRA's neutrality through a mutual-consent removal requirement is a reasonable means of accomplishing collective bargaining. Same for binding arbitration on non-financial issues. The Virginia Public Procurement Act doesn't bar localities from setting contract termination conditions either.

What this means for you

For Virginia localities drafting collective bargaining ordinances

The opinion holds that, under § 40.1-57.2 and Virginia's Dillon Rule, a locality may provide in a collective bargaining ordinance that a neutral Labor Relations Administrator can be terminated before the contract expires only by mutual agreement of management and the employee unions, because that protects the Administrator's neutrality and is a reasonable method of accomplishing collective bargaining. It holds the same rule applies whether or not a union has been certified, and that nothing in the Virginia Public Procurement Act restricts a locality's authority to set such a contract-cancellation condition. It holds binding arbitration of non-financial impasses is permissible, while § 40.1-57.2(B) prohibits binding arbitration of financial issues.

For unions seeking to be certified in Virginia localities

The opinion holds that a mutual-consent termination requirement for the Labor Relations Administrator is a permissible ordinance provision that protects the Administrator's neutrality, including during the pre-certification period when interested unions may participate to maintain that neutrality. It holds that binding arbitration of non-financial impasses (matters other than financial issues) does not violate the Dillon Rule, while financial-issue arbitration is barred by § 40.1-57.2(B).

For public employees in Virginia localities considering bargaining

The opinion holds that whether to adopt these provisions is left to the locality's discretion under § 40.1-57.2, and that an ordinance may protect the Administrator from removal except by mutual consent, which the opinion reasons fosters confidence in the fairness of the Administrator's decisions.

For labor relations professionals

The opinion notes that states and localities across the country use binding impasse arbitration in their collective bargaining systems, and relies on that to conclude binding arbitration is a reasonable method to resolve non-financial impasses that does not violate the Dillon Rule.

Common questions

What is § 40.1-57.2?
Virginia's 2020 statute authorizing local governments to enter into collective bargaining agreements with their employees' exclusive representatives. Before this statute, public employees in Virginia generally couldn't collectively bargain at the local level.

What's a Labor Relations Administrator?
A neutral third party who runs the local bargaining process: certification elections, grievance hearings, impasse procedures. The role works only if both sides perceive the LRA as truly neutral.

Why does the removal-by-mutual-consent rule matter?
Without it, the locality (which usually pays the LRA's salary) could fire an LRA whose decisions favored the union, or vice versa. Mutual consent for early termination protects the LRA from one-sided pressure.

Does it matter if no union has been certified yet?
No. The AG explicitly said the same rule applies during the pre-certification period. Unions expressing interest in representing employees can participate in protecting LRA neutrality.

Can localities use binding arbitration to resolve disputes about union contracts?
For non-financial issues (work rules, scheduling, grievance procedures): yes. For financial issues (budget, salaries, benefits in their budget impact): no. Section 40.1-57.2(B) bars financial-issue provisions that would restrict the governing body's budget authority.

Why does Dillon Rule come into this?
Virginia limits localities to expressly granted, necessarily implied, or essential powers. When the General Assembly grants a power generally, like the power to enact collective bargaining ordinances, localities have discretion to fill in the mechanics, but those mechanics have to be reasonable means of achieving the granted purpose. City of Virginia Beach v. Hay, 258 Va. 217, 222 (1999), is the standard cite.

Does the Virginia Public Procurement Act block any of this?
No. The VPPA doesn't restrict a locality's authority to set conditions for contract cancellation, so long as those conditions don't undermine the principles of contract award.

Background and statutory framework

Section 40.1-57.2 was enacted in 2020. Subsection (A) lets localities authorize collective bargaining by ordinance or resolution. Subsection (B) provides that no such ordinance shall restrict the governing body's authority over the budget or appropriations. Subsection (C) lets the ordinance provide procedures for certification and decertification of exclusive bargaining representatives.

The AG cross-referenced 2021 Op. Va. Att'y Gen. No. 21-009, which had already established the framework: localities have discretion under § 40.1-57.2 subject to the Dillon Rule. Discretion is reasonable if it accomplishes the goal of collective bargaining and doesn't conflict with legislative intent, and unreasonable if it expands the power beyond rational limits.

The opinion notes that the Virginia Public Procurement Act (Va. Code § 2.2-4300 et seq.) does not restrict a locality's authority to set conditions for contract cancellation, so long as they do not circumvent the principles underlying the award. On that basis it concludes the VPPA does not bar a mutual-consent termination clause for an LRA contract.

For binding arbitration on non-financial issues, the AG noted that several other states have adopted similar mechanisms (Maryland, New Mexico, Connecticut, New York). Virginia's general statutory framework "has authorized and encouraged arbitration of disputes involving local governments." The 2021 Op. No. 21-009 reached the same conclusion.

Citations

• Va. Code § 2.2-505 (AG advisory opinions)
• Va. Code § 2.2-4300 et seq. (Virginia Public Procurement Act)
• Va. Code § 2.2-4343(A)(12) (VPPA carve-outs for localities with own procurement ordinances)
• Va. Code § 40.1-57.2 (local collective bargaining authority)
• 2021 Op. Va. Att'y Gen. No. 21-009
• City of Virginia Beach v. Hay, 258 Va. 217 (1999)
• Montgomery County, Md. Code, Chapter 33, Article VII, § 33-108 (referenced)
• N.M. Stat. Ann. § 10-7E-18(B)(2) (referenced)
• Conn. Gen. Stat. § 7-473c (referenced)
• N.Y. Civ. Serv. Law § 209 (referenced)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: http://www.oag.state.va.us/files/Opinions/2021/21-071-Boysko-and-21-061-Subramanyam-issued.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

COMMONWEALTH of VIRGINIA

Office of the Attorney General

Mark R. Herring
Attorney General
202 North Ninth Street
Richmond, Virginia 23219
804-786-2071
Fax 804-786-1991
Virginia Relay Services
800-828-1120

December 10, 2021

The Honorable Jennifer B. Boysko
Member, Senate of Virginia
Post Office Box 247
Herndon, Virginia 20172

The Honorable Suhas Subramanyam
Member, Virginia House of Delegates
Post Office Box 302
Ashburn, Virginia 20146

Dear Senator Boysko and Delegate Subramanyam:

I am responding to your requests for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issues Presented

You ask several questions regarding provisions that a local government may enact in a collective bargaining ordinance. First, you ask whether a local government could include a provision stating that a neutral Labor Relations Administrator can only be terminated (before the expiration of his or her contract) by mutual agreement of the locality's management and its employee unions. You ask if the answer to that question differs based on whether the unions in question have been certified. Next, you inquire whether a collective bargaining ordinance may include a binding arbitration procedure to resolve negotiation impasses over non-financial issues, with the arbitrator mutually selected by an employee union and the locality.

Applicable Law and Discussion

A recent Attorney General opinion addressed § 40.1-57.2 and the use of collective bargaining agreements by localities. That opinion stated that § 40.1-57.2

empower[s] localities to negotiate and enter into collective bargaining agreements with their employees' exclusive representatives. The statute is otherwise silent as to any additional direction to the localities regarding this authorization. Given this lack of specificity, under Virginia's application of the Dillon Rule, localities choosing to authorize collective bargaining have a scope of discretion, which must be reasonably exercised.

The same application of the Dillon Rule applies to the questions presented here. Whether a local government may enact certain provisions in a collective bargaining ordinance "depends on whether that is a reasonable method to accomplish the goal of collective bargaining, or whether it is contrary to legislative intent." The Supreme Court of Virginia has held that "the chosen method is unreasonable if it is contrary to legislative intent or inappropriate for the ends sought to be accomplished by the grant of the power." "[I]f the implementation expands the power beyond rational limits necessary to promote the public interest, it is unreasonable."

A collective bargaining ordinance that provides for a neutral Labor Relations Administrator who can be terminated prior to the expiration of his or her contract only by mutual agreement of the locality's management and its employee unions ensures the continued neutrality of the Labor Relations Administrator. That neutrality helps protect the rights of all parties who may appear before the Administrator and fosters confidence in the fairness of the Administrator's decisions and oversight. Accordingly, such provisions are reasonable methods of accomplishing collective bargaining. Your request mentions the Virginia Public Procurement Act (VPPA), but nothing in the VPPA restricts a locality's authority to set requirements or conditions for contract cancellation, so long as they do not circumvent principles underlying the award. Thus, none of the provisions of the VPPA would bar a locality from enacting the proposed provision for terminating the Labor Relations Administrator prior to the expiration of his or her contract.

You next ask whether the answer differs based on whether the employee unions in question have been certified. It does not. Section 40.1-57.2 empowers localities to "provide for procedures for the certification and decertification of exclusive bargaining representatives." The neutrality of the Labor Relations Administrator during the precertification period and in overseeing union representation elections helps ensure those elections are fair and fosters confidence in them by all parties and the public. If no employee unions were certified, those unions expressing interest in representing the locality's employees could participate to ensure the neutrality of the Labor Relations Administrator is maintained.

Finally, you inquire whether a locality could enact a collective bargaining ordinance that includes a binding arbitration procedure to resolve negotiation impasses over non-financial issues, with the arbitrator mutually selected by an employee union and the locality. The method proposed by local government, enacting a procedure for binding arbitration to resolve negotiation impasses over non-financial issues, is not contrary to the legislative intent of the statute, nor is it inappropriate to accomplish the goal of establishing procedures for collective bargaining in the locality. The plain language of § 40.1-57.2(B) prohibits binding arbitration to resolve impasses over financial issues. However, non-financial issues were not addressed in the statute. Had the General Assembly intended to prohibit binding impasse arbitration for non-financial issues, it could have so provided in the statute. Therefore, non-financial issues are left to the discretion of the local government when structuring a collective bargaining ordinance.

Additionally, states and localities across the country use binding impasse arbitration in their collective bargaining systems in order to resolve disagreements in contract negotiations. Binding arbitration is, therefore, a reasonable method to resolve negotiation impasses over non-financial issues and does not violate the Dillon Rule. As previously stated, "[t]he General Assembly has authorized and encouraged arbitration of disputes involving local governments."

Conclusion

Accordingly, it is my opinion that local governments may include provisions for a neutral Labor Relations Administrator who can only be terminated prior to the expiration of his or her contract by mutual agreement of the locality's management and its employee unions in collective bargaining ordinances enacted under § 40.1-57.2. Local governments may also include such provisions whether or not an employee union has been certified. Finally, the inclusion of a binding arbitration provision in a collective bargaining ordinance is a reasonable method to resolve negotiation impasses over non-financial issues and does not violate the Dillon Rule.

With kindest regards, I am,

Very truly yours,

Mark R. Herring
Attorney General