The Missouri Supreme Court, in a decision that provides detailed insight into “at-will” employment, recently upheld a law that drastically impacts union activity for state employees. In 2018, the Missouri Legislature passed Senate Bill 1007. SB 1007 provides that all non-merit state employees “shall be employed at-will,” and accordingly prohibits the State from “bargaining with Unions over terms and conditions that impact or alter this at-will status.”
The Merit System Act, enacted in 1945, established a merit system of personnel administration for many state employees. Merit system legislation guaranteed certain rights to applicable employees. These rights included seniority considerations, grievance procedures, and requirements of cause and notification before hiring, firing, layoff, and discipline. Under the merit system, unions and State employers entered into collective bargaining agreements that would provide protections and procedures for union employees, including some additional rights beyond those enshrined in the Merit System Act and accompanying legislation.
Pursuant to SB 1007, only limited state employees are still subject to the merit system (charitable or penal agencies, and those required by federal law to be so). The remaining state employees are now employed “at-will.” At-will employment, as recognized by the Court in this case, is defined by two major characteristics: “indefinite duration and termination without cause.”
Several Unions filed suit seeking to have SB 1007 struck down as unlawful. After the Unions prevailed in the trial court, the Missouri Supreme Court reversed that decision and ruled in favor of the State, upholding the validity of SB 1007. American Federation of State, County and Municipal Employees, AFL-CIO, Council 61 v. State, SC99179 (Mo. banc Oct. 4, 2022).
The Unions first attempted to preserve the existing system by arguing that SB 1007 merely set a default rule of at-will employment, while allowing the State and Unions to continue to bargain over additional conditions of employment. The Court held that was not the case, and, except for the few exceptions provided in the statutes, all state employees were required to be at-will. The Court further explained that, because the two defining characteristics of at-will employment are indefinite duration and termination without cause, SB 1007 requires those characteristics to be applicable to all at-will state employees, and it prohibits the State from bargaining over conditions of employment that would provide for a definite duration or require cause for termination. However, other conditions of employment that do not conflict with “at-will” employment, may still be bargained for. According to the Supreme Court, grievance procedures, seniority protections, and “for-cause” requirements that do not limit the right to terminate an employee at any time without cause are not necessarily inconsistent with “at-will” employment. For example, if an employer is required to consider seniority “as a deciding factor in termination,” then that requirement would interfere with at-will employment by restricting the right to fire an employee based on the employee’s amount of experience. As another example, a “for cause” provision that prohibited disciplinary action unless certain conduct occurred is not inconsistent with at-will employment, according to the Supreme Court.
The Supreme Court also found that SB 1007’s restrictions on collective bargaining did not violate the Missouri Constitution, despite the constitutional right of both public and private sector employees to “organize and to bargain collectively.” Art. I, Sec. 29. The Court held that SB 1007 does not outright prohibit the State from engaging in good faith bargaining, it merely limits the terms and conditions that the State can bargain for – i.e., the State cannot bargain for conditions that are inconsistent with at-will employment. Unions and the State can still bargain for provisions that are consistent with at-will employment. This includes grievance procedures, seniority protections, and “for-cause” requirements that do not limit the right to terminate an employee at any time without cause.
Additionally, after the passage of SB 1007, the State Personnel Advisory Board amended State rules to attempt to implement the new law. The Supreme Court held that many of the amendments were unlawful, because they prevented the State from bargaining over terms that were still consistent with at-will employment. For instance, the Court invalidated an amendment prohibiting negotiations for seniority protections for layoffs. The Court pronounced that requiring seniority protections for layoffs is consistent with at-will employment and should still be permitted under SB 1007, because a layoff is not a complete break in employment (unlike termination). Therefore, SB 1007’s prohibition on such a term was unlawful. The Court also invalidated amendments that precluded for-cause protections and grievance procedures for demotions using the same reasoning – a demotion, suspension, or furlough is not a “complete break in employment,” and therefore “for-cause” requirements for those actions are still consistent with at-will employment, and thus permitted under SB 1007.