STATE OF WASHINGTON
                                   
          BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION
                                   
                                   
ANACORTES POLICE SERVICES GUILD,   )    
                                   )
                    Complainant,   )    CASE      17453-U-03-4524 
                                   )    CASE      17454-U-03-4525
                                   )    
          vs.                      )    DECISION 9004 - PECB
                                   )
CITY OF ANACORTES,                 )    
                                   )    
                                   )    FINDINGS OF FACT, 
                                   )    CONCLUSIONS OF LAW 
                    Respondent.    )    AND ORDER
                                   )
___________________________________)

                                   
     Cline & Associates, by George E. Merker, Attorney at Law, for
     the union.

     Summit Law Group, by Denise L. Ashbaugh, Attorney at Law, for
     the employer.


On April 21, 2003, the Anacortes Police Services Guild (union) filed
two nearly identical unfair labor practice complaints with the
Public Employment Relations Commission.  The union's complaints
named the City of Anacortes (employer) as respondent.  The union is
the exclusive bargaining representative of a unit of all full and
part-time commissioned Anacortes Police Department employees, and a
unit of noncommissioned employees.(fn:1)  The union filed one complaint
on behalf of the commissioned employees and the second complaint on
behalf of the noncommissioned employees. 
____________________
fn:1     The collective bargaining agreements for both bargaining units
exclude the chief of police, assistant chief, captain, and the
administrative assistant.


Agency staff issued a preliminary ruling on December 29, 2003,
finding a cause of action existed under RCW 41.56.140(4)(fn:2)
regarding the employer's alleged unilateral changes in employee
co-payments for health insurance benefits, without first providing
an opportunity to bargain.
____________________
fn:2     The preliminary ruling also found a cause of action under RCW
41.56.140(1) as a derivative interference violation.


On March 25, 2004, the union filed amended complaints against the
employer.  An amended preliminary ruling was issued on August 3,
2004, finding an additional cause of action to exist under RCW
41.56.140(4) regarding the employer's alleged unilateral change in
health insurance premiums, without first providing an opportunity to
bargain.  Agency staff consolidated the two cases for hearing.(fn:3) 
Examiner Joel Greene conducted a hearing on October 6, 2004.  Each
party filed a post-hearing brief.(fn:4)
____________________
fn:3     Prior to hearing, the union filed a motion for partial summary
judgment.  I  denied the motion by letter dated September 16, 2004.

fn:4     In addition to its post-hearing brief, the employer  submitted
a pleading titled "Motion to Strike the Guild's Reliance and
References to Evidence Not in the Record."  When rendering a
decision, I can only consider exhibits and testimony offered and
admitted on the official record.  I will not rely on any statements,
declarations, arguments, or other information not contained in the
official record.


ISSUES PRESENTED

1)   *    Did the employer make a unilateral change in a mandatory
          subject of bargaining when it decided to transfer
          increases in the AWC prescription drug co-payments to its 
          employees?
 
     *    If the employer made a unilateral change in a mandatory
          subject of bargaining, does the employer have a valid
          affirmative defense of waiver by inaction that relieved it
          from the duty to bargain its decision to increase
          prescription drug co-payments?

2)   *    Did the employer make a unilateral change in a mandatory
          subject of bargaining when it decided to transfer
          increases in the Association of Washington Cities (AWC)
          health insurance premiums to its employees?
     
Based on the record as a whole, I find the employer made a
unilateral change in a mandatory subject of bargaining when it 
decided to transfer increases in the AWC prescription drug
co-payments to its employees.  I find the employer proved a valid
affirmative defense of waiver by inaction that relived it from the
duty to bargain its decision to increase prescription drug
co-payments.  Regarding the second issue, I find the employer
violated RCW 41.56.140(4) by making a unilateral change in employee
health insurance premiums, without providing the union an
opportunity to bargain the increase.
               
ANALYSIS

ISSUE 1:  EMPLOYER INCREASES IN PRESCRIPTION DRUG CO-PAYMENTS

Did the employer make a unilateral change in prescription drug 
co-payments?
From January 1, 2001 to December 31, 2003, the employer and the
union were parties to collective bargaining agreements with both the
commissioned and noncommissioned employees of the City of Anacortes
Police Department.  These agreements contained virtually identical
provisions, particularly with regard to health and welfare benefits.

The employer obtained health benefits for its employees from the AWC
Benefit Trust.  The AWC is an organization of over 280 incorporated
cities and towns in Washington.  The AWC provides a pooling
mechanism that enables its member organizations to purchase employee
benefit services.

In the fall of 2002, the AWC notified the employer that the AWC
would increase co-payments for prescription drugs in 2003.  The
increase would more than double the cost of prescription drug
co-payments for city employees as follows:  an increase from $7.00
to $15.00 for name-brand prescriptions (34-day supply), and from
$14.00 to $30.00 for name-brand prescriptions obtained by mail-order
(90-day supply).   The employer implemented the increases on January
1, 2003.  Co-payments for generic prescriptions and prescriptions at
the Group Health Cooperative remained the same.
          
RCW 41.56.030(4) requires an employer and exclusive bargaining
representative to bargain in good faith on personnel matters,
including wages, hours, and working conditions.  A party to a
collective bargaining agreement commits an unfair labor practice if
it unilaterally changes these mandatory subjects of bargaining
without exhausting its obligation to bargain the changes.  City of
Pasco v. Public Employment Relations Comm'n, 119 Wn.2d 504 (1992).

The Commission has long recognized that health benefits are
mandatory subjects of bargaining.  Spokane County, Decision 2167-A
(PECB, 1985).  Prescription drug co-payments fall under the umbrella
of health benefits and are mandatory subjects of bargaining.  City
of Kirkland, Decision 8822 (PECB, 2004).

Because prescription drug co-payments are mandatory subjects of
bargaining, the employer had a duty to bargain with the union over
the proposed changes in co-payments.  The employer failed to
negotiate before it decided to transfer increases made by the AWC to
its employees.  I therefore find the employer violated its duty to
bargain a change in a mandatory subject.  However, if the employer
can prove an affirmative defense, the employer is relieved of its
obligation to bargain and did not commit an unfair labor practice.

Employer's affirmative defense of wavier by inaction.
Absent the existence of a waiver or impasse, a unilateral change in
a mandatory subject of bargaining constitutes an unfair labor
practice.  City of Wenatchee, Decision 2194 (PECB, 1985).

Commission rules require the moving party, here the union, to carry
the burden of proof that the employer committed an unfair labor
practice.  WAC 391-45-270(1)(a).  The responding party, here the
employer, carries the burden of proving an affirmative defense.  WAC 
391-45-270(1)(b).

In the instant case, the employer asserts a "waiver by inaction"
defense.  The employer claims the union never requested to bargain
the increase in prescription drug co-payments.  An affirmative
defense of waiver by inaction exists when an employer proposes a
change in a mandatory subject of bargaining, provides an opportunity
to bargain, and yet the affected party does not request to bargain
in a timely manner.  Whatcom County, Decision 7643 (PECB, 2002).

An employer must give adequate notice to the union in advance of
making a change in a mandatory subject.  Once an employer provides
sufficient notice, the union must show it made a timely request to
bargain.  The request must signify a desire to bargain the issue. 
The union's filing of an unfair labor practice complaint does not
constitute a valid bargaining request.  Clover Park Technical
College, Decision 8534-A (PECB, 2004).

The union argues that the employer presented the union with a fait
accompli, thereby eliminating the union's obligation to request
bargaining.  A fait accompli occurs when the employer makes a change
at the same time it provides notice of the change.  City of
Kirkland, Decision 8822.  The notice requirement is the critical
distinction between fait accompli and waiver by inaction.  Richland
School District, Decision 8454 (PECB, 2004). 

At the hearing, Emily Schuh, the human resources director for the
employer, testified that after the AWC notified her of the expected
increases in prescription co-payments she prepared an open
enrollment memorandum, dated October 23, 2002.  In this memo, Schuh
outlined the anticipated increases in prescription drug co-payments
and health insurance premiums.  Schuh sent the memo to each
employee.  In addition, Carol Wilmes, program coordinator for the
AWC Employee Benefit Trust, testified that the AWC sent a wellness
newsletter to each employee's home.  The newsletter  outlined the
increases in prescription drug co-payments.  The employer's memo and
the AWC newsletter effectively put the union on notice the employer
intended to increase prescription co-payments.

Lou D'Amelio was the union president during the time in question. 
On November 6, 2002, D'Amelio sent Schuh an e-mail responding to
Schuh's memo and objecting to the increase in insurance premium
costs.  D'Amelio did not mention or object to the increase in
prescription drug co-payments.  Schuh testified that, prior to the
union's filing of these unfair labor practice complaints, the union
did not bring any concerns about the increased co-payments to her
attention.  The union presented no evidence to the contrary during
the hearing.

I find that the employer met its duty to provide adequate notice to
the union regarding its decision to transfer increases in the AWC 
prescription drug co-payments to union members.  The union  received
the notice and failed to raise a timely objection.  The employer
carried its burden of proving the union waived its bargaining rights
by inaction under RCW 41.56.030(4), relieving the employer of a
"refusal to bargain" violation related to increases in prescription
drug co-payments.(fn:5)
____________________
fn:5     In its post-hearing brief, the employer asserted other
affirmative defenses.  Having granted the employer's defense of
waiver by inaction, I need not address the other defenses raised by
the employer.


ISSUE 2:  EMPLOYER INCREASES IN HEALTH INSURANCE PREMIUM PAYMENTS

Did the employer make a unilateral change in health insurance
premiums?    
From January 1, 1998, to December 31, 2000, the employer and the
union were parties to collective bargaining agreements with both the
commissioned and noncommissioned employees.  These agreements were
virtually identical, particularly with respect to health and welfare
coverage.  Article 12 of each contract identified health and welfare
benefits as follows:

     Article 12   HEALTH AND WELFARE COVERAGE  For the plan year
     beginning October 1998 the city will contribute $525.00 per
     employee per month into the costs of the City's Health and
     Welfare Program for employees and dependents.  The extent of
     coverage, cost containment, the amount of deductible and/or
     co-insurance and other such issues are negotiable.  The City's
     contribution for plan years beginning October 1999 and October
     2000 will be negotiated at appropriate times during the course
     of this contract.
     
An addendum to the 1998-2000 contract described an agreement to
transfer insurance coverage to the AWC Benefit Trust on September 1,
2000. 

Prior to the transfer to the AWC plan, the employer contributed
$525.00 per employee per month into its own medical insurance
program, enough to cover the entire cost of insurance premiums. 
However, due to the rising cost of health insurance, by January
2001, the $525.00 cap was no longer sufficient to cover the actual
cost of premiums. 

In November 2000, Schuh notified D'Amelio that, due to AWC premium
increases for 2001, union members would be responsible for costs
exceeding the $525.00 cap.  At that time, the parties had not yet
completed negotiations for the 2001-2003 contract.  The 1998-2000
contracts would expire on December 31, 2000.

On January 1, 2001, the employer began deducting from employee
paychecks premium amounts that exceeded the portion covered by the
$525.00 cap.(fn:6)  Meanwhile, the parties continued to negotiate a
successor agreement for 2001-2003. 
____________________
fn:6     Union president D'Amelio testified that the deductions were
taken only for a "short period of time" because both sides realized
they were close to settling the contract for 2001-2003.  Schuh
explained that "some months there were deductions made, and some
months there were not," depending on the census for the month.


The parties had not yet reached agreement on the 2001-2003 contract 
by the time the AWC premiums increased again in the fall of 2001. 
Schuh again notified employees of the anticipated increases.  As
before, the employer continued to pay the negotiated cap, and the
employer would deduct the remaining portion from employee paychecks
beginning in January 2002.

In January 2002, the parties finally agreed upon a new contract for
the years 2001-2003.  Article 12, which defines health and welfare
benefits, changed quite significantly from previous agreements. 
Instead of agreeing to maintain a defined contribution, or an
expressly stated monetary cap (like the $525 cap described above),
the employer agreed to pay 100 percent of the health and welfare
premiums "[f]or the duration of the contract (beginning in 2002)."

The employer reportedly agreed to pay 100 percent of the premiums
because the union agreed to change insurance plans from AWC Plan A
to a lower-cost preferred provider organization (PPO) plan.  The
result was a change from a $5.00 co-payment plan to a $10.00
co-payment plan.  The employer paid 100 percent of the premiums in 
2002.

In the fall of 2002, the AWC once again notified the employer of
anticipated rate changes for 2003.  On October 23, 2002, Schuh sent
an open enrollment memorandum to each employee, indicating that the
premium rates would be increasing.  D'Amelio replied by e-mail on
November 6, 2002, stating that because of the 2001-2003 contract
language, the employer was still responsible for 100 percent of the
health insurance premiums.  After looking at the contract, Schuh
agreed with D'Amelio, and the employer continued to pay 100 percent
of the premiums for 2003.

In the fall of 2003, the AWC again notified the employer of further
premium increases.  On October 14, 2003, after notifying guild
president Emerson Nordmark, Schuh sent an open enrollment memorandum
to each employee, indicating that the city would continue to pay the
same amount toward premiums in 2004 as it had in 2003.  However,
employees would be responsible for any increases in premiums between
the 2003 and 2004 rates.  

On October 20, 2003, the union's attorney sent a letter to Schuh. 
The union objected to the employer's open enrollment memorandum. 
Schuh responded to the union on October 24.  Schuh stated that the
employer was not obligated to cover any premium amounts that
exceeded the 2003 contribution amounts, subject to change depending
on the terms of any future agreements between the parties.

In January 2004, the employer began deducting excess premium amounts
from employee paychecks.  As a result, on March 25, 2004,  the union
filed amended complaints to its original unfair labor practice charges.

Did the employer properly preserve the status quo?
The employer is obligated to maintain the status quo with regard to
all mandatory subjects of bargaining during the hiatus between
contracts.  City of Shelton, Decision 7602 (PECB, 2002).  During
this period, any change in practice that is arguably less
advantageous (or more favorable) to employees might be seen as a
threat (or coercion), in violation of RCW 41.56.140(1).

Contract termination rules for noncommissioned employees in this
case are governed by RCW 41.56.123.  Under that statute, all terms
and conditions specified in a collective bargaining agreement must
remain in effect until the parties settle a new contract, not to
exceed one year from the date the contract expired.  RCW
41.56.123(1).  For uniformed personnel, mandatory subjects of
bargaining must remain in effect while the case is pending before an
arbitration panel, unless the parties mutually agree otherwise.  RCW
41.56.470. 

The employer argues that it was not obligated to pay the 2004
premium increases (i.e. 100 percent of the premium amount) because
it maintained the status quo by continuing to pay the same dollar
amount it paid for 2003 premiums.  The employer further insists that
the language in the collective bargaining agreement "[f]or the
duration of the contract" means that its obligation to pay 100
percent of the health insurance premiums lapsed on December 31,
2003, the date the contract expired.

The employer's interpretation of the contract language directly
conflicts with statutory mandates.  RCW 41.56.123 requires all terms
and conditions of an agreement remain in effect until the effective
date of a subsequent agreement, or by mutual agreement to exclude
provisions with separate and specific termination dates.  RCW
41.56.470 applies a similar concept to uniformed personnel.  

Contrary to the statutory mandates, the employer disrupted the
status quo when it began deducting portions of the health care
premiums from employee paychecks, an unlawful change in a term of
employment.  By failing to maintain the status quo, the employer
committed an unfair labor practice within the meaning of RCW
41.56.140(4) and (1).

I find any facts or arguments presented at hearing that are not
addressed in this decision are not persuasive or are immaterial.

                           FINDINGS OF FACT
               
1.   The City of Anacortes is a public employer within the
     meaning of RCW 41.56.030(1).

2.   The Anacortes Police Services Guild is a bargaining
     representative within the meaning of RCW 41.56.030(3). 
     The union is the exclusive representative of all
     commissioned and noncommissioned police department
     employees, excluding the chief of police, the assistant
     chief, the captain, and the administrative assistant.

3.   The parties have a history of collective bargaining and
     have entered into numerous agreements, including the
     contracts covering the periods 1998-2000 and 2001-2003,
     which are referenced in this decision.

4.   Prior to September 2000, the employer provided self-insured
     health insurance benefits to its employees.

5.   In September 2000, the employer began providing health
     insurance benefits to its employees through the Association of
     Washington Cities (AWC) Benefit Trust.

6.   In the fall of 2002, each employee was notified, by memorandum
     from the employer and newsletter from the AWC, that the
     employer intended to increase employee costs for name-brand
     prescription drug co-payments.

7.   The union responded to the employer's memorandum but did not
     mention or object to the increase in prescription drug 
     co-payments.

8.   On January 1, 2003, the employer increased the cost of name-
     brand prescription drug co-payments for employees under the AWC 
     plan.

9.   Beginning in January 2002, the employer agreed by express
     contract language to pay 100 percent of health and welfare
     premiums "[f]or the duration of the contract."  The 2001-2003
     contract expired on December 31, 2003.

10.  On January 1, 2004, the employer transferred increases in AWC
     health insurance premiums to employees and began deducting
     portions of health insurance premiums from employee paychecks.
                          CONCLUSIONS OF LAW

1.   The Public Employment Relations Commission has
     jurisdiction in this case pursuant to Chapter 41.56 RCW
     and Chapter 391-45 WAC.

2.   Under RCW 41.56.140(4), the issues related to increases in
     employee co-payments for prescription drugs, and increases in
     employee health insurance premiums, are mandatory subjects of
     bargaining which must be bargained before the employer
     implements a unilateral change.
               
3.   Regarding increases to the prescription drug co-payments, the
     employer did not commit an unfair labor practice and did not
     violate RCW 41.56.030(4) and (1).  The employer provided
     adequate notice of the increase in prescription drug
     co-payments, and the union did not request to bargain the issue.

4.   Regarding increases to the medical insurance premium payments,
     the employer committed an unfair labor practice and violated
     RCW 41.56.030(4) and (1).  The employer failed to maintain the
     status quo when it unilaterally increased health insurance
     premiums on January 1, 2004.

                                ORDER

I ORDER the City of Anacortes, its officers and agents, immediately
to take the following actions to remedy its unfair labor practices:

1.   CEASE AND DESIST from: 

     a.   Refusing to bargain collectively with the Anacortes Police
          Services Guild on the subject of health insurance
          premiums.   
     b.   Refusing to pay 100 percent of the employees' medical
          insurance premium payments for employees who are members
          of the two bargaining units represented by the Anacortes
          Police Services Guild, beginning on January 1, 2004.

     c.   In any other manner interfering with, restraining, or
          coercing its employees in the exercise of their collective
          bargaining rights secured by the laws of the state of 
          Washington.

2.   TAKE THE FOLLOWING AFFIRMATIVE ACTION to effectuate the
     purposes and policies of Chapter 41.56 RCW:

     a.   Reimburse the commissioned and noncommissioned employees
          represented by the Anacortes Police Services Guild for
          their portion of health insurance premiums paid as a
          consequence of the employer not maintaining 100 percent
          employer-paid insurance premiums beginning on January 1, 
          2004.

     b.   Restore the status quo ante by reinstating the wages,
          hours and working conditions which existed for employees
          in the two affected bargaining units prior to the
          unilateral change found unlawful in this order.
     
     c.   Give notice to, and upon request, negotiate in good faith
          with the Anacortes Police Services Guild before
          implementing changes in health insurance premiums.
     
     d.   Post, in conspicuous places on the employer's premises
          where notices to all employees are usually posted, copies
          of the notice attached hereto and marked "Appendix."  Such
          notices shall be duly signed by an authorized
          representative of the respondent, and shall remain posted
          for 60 days.  Reasonable steps shall be taken by the
          respondent to ensure that such notices are not removed,
          altered, defaced, or covered by other material.
     
     e.   Read the notice attached to this order into the record at
          a regular public meeting of the Anacortes City Council,
          and permanently append a copy of the notice to the
          official minutes of the meeting where the notice is read
          as required by this paragraph.
     
     f.   Notify the complainant, in writing, within 20 days
          following the date of this order, as to what steps have
          been taken to comply with this order, and at the same time
          provide the complainant with a signed copy of the notice
          attached to this order.
     
     g.   Notify the Executive Director of the Public Employment
          Relations Commission, in writing, within 20 days following
          the date of this order, as to what steps have been taken
          to comply with this order, and at the same time provide
          the Executive Director with a signed copy of the notice
          attached to this order.

Issued at Olympia, Washington, this  24th  day of June, 2005.


                    PUBLIC EMPLOYMENT RELATIONS COMMISSION



                    JOEL GREENE, Examiner 


This order will be the final order of the
agency unless a notice of appeal is filed
with the Commission under WAC 391-45-350.
                                                                      APPENDIX

                    PUBLIC EMPLOYMENT RELATIONS COMMISSION
                                    NOTICE

THE PUBLIC EMPLOYMENT RELATIONS COMMISSION, A STATE AGENCY, HAS HELD A LEGAL
PROCEEDING IN WHICH ALL PARTIES WERE ALLOWED TO PRESENT EVIDENCE AND
ARGUMENT.  THE COMMISSION HAS FOUND THAT WE HAVE COMMITTED UNFAIR LABOR
PRACTICES IN VIOLATION OF A STATE COLLECTIVE BARGAINING LAW, AND HAS ORDERED
US TO POST THIS NOTICE TO OUR EMPLOYEES:
     
WE WILL reimburse City of Anacortes employees, who are members of the
bargaining units represented by the Anacortes Police Services Guild, for
their portion of medical insurance premiums paid as a consequence of the
employer not maintaining 100 percent employer-paid insurance premiums
beginning on January 1, 2004.
         
WE WILL NOT, in any other manner, interfere with, restrain, or coerce our
employees in the exercise of their collective bargaining rights under the
laws of the state of Washington.

DATED:  _________________


              City of Anacortes



              BY:  ______________________________
               Authorized Representative


THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED BY ANYONE.

This notice must remain posted for 60 consecutive days from the date of
posting, and must not be altered, defaced, or covered by any other material.
 Questions concerning this notice or compliance with the order issued by the
Commission may be directed to the Public Employment Relations Commission,
112 Henry Street NE, Suite 300, PO Box 40919, Olympia, Washington 
98504-0919.  Telephone:  (360) 570-7300.