Labor Board Drops Changing DROP


The Pennsylvania Labor Relations Board agreed with the legal position asserted by SW client AFSCME District Council 33, declaring the City of Philadelphia’s unilateral changing of the City’s DROP program in September 2011 to be unlawful.  DROP is the acronym for Deferred Retirement Option Plan, enacted for all City employees in 1999.  For the rank-and-file employees D.C. 33 represents, DROP is a crucial benefit.  It often acts as a kind of savings plan for employees who, as a group, are the lowest-paid segment of the City’s workforce, often survive by working paycheck-to-paycheck, and perhaps have the most pressing need for such a benefit as compared to the other higher-paid groups of City employees who enjoy the benefits of DROP – the uniformed officers, professionals, supervisors and managers, and elected officials.  In 2011, Council sought to correct perceived abuses by enacting certain changes which swept far too broadly and, in sum, worsened the benefit for the lower-paid non-police and fire employees.  Pete Matthews, D.C. 33’s President, testified before City Council and explained that, if enacted without collective bargaining, changing this important benefit would violate Pennsylvania labor law.

As soon as the Ordinance changing the DROP was enacted, SW attorney Sam Spear filed unfair labor practice charges with the PLRB, asserting the illegality of this unilateral change. At the same time, he filed a lawsuit to enjoin enforcement of the Ordinance, which the City responded to by agreeing that an injunction should issue protecting the Union’s bargaining unit members’ pension rights pending a final decision by the Labor Board.  That injunction has preserved this important benefit for these union members.

Finally, on December 18, 2014, the PLRB issued its decision, in which the Board’s Hearing Examiner agreed that the City’s failure to collectively bargain these pension changes violated its legal obligation, imposed by the Public Employe Relations Act, to bargain in good faith with the Union.  He ordered the City to rescind the Ordinance and to make whole any employees who may have been harmed by the changes.  The City has filed an appeal, but, in the meantime, these members continue to be subject to the terms of the unchanged DROP benefit plan. Coverage by Philadelphia Magazineof this important decision (including a link to the Order itself) can be viewed here.