PERB Finds “Exploding” Offer, Without Rationale, Constitutes Bad Faith Bargaining

July 10, 2019 by Kena Cador

Employers often use “exploding” offers – offers that expire on a certain date – as a hammer and incentive to move the parties to agreement. PERB has now issued an important decision placing limitations on such exploding offers. (City of Arcadia (6/12/19))

PERB ruled that a party cannot make an exploding proposal unless it can adequately explain a legitimate basis for doing so. In doing so, PERB pointed out that a threatened change in position is inherent in an exploding offer, and, without adequate rationale, such offers manifest an unlawful inflexibility and take-it-or-leave-it attitude.

PERB’s holding is rooted in the fact that making proposals that are overall less generous to the other party than prior offers, necessarily moves parties further away from agreement and indicates bad faith. Since exploding offers utilize a unilaterally established deadline to accomplish this task, it can often serve as a ploy rather than a sound negotiating practice.

In this particular case, PERB found that the employer’s rationale for its exploding offer – that the employer had “a need for speed” – was not adequately supported by the record, and thus was not an adequate rationale justifying the exploding offer.

Moving forward, PERB will consider an employer’s stated rationale and determine if it legitimately supports the exploding offer. Further, employers must be prepared to prove their rationale if asked.

The full opinion can be downloaded here: https://www.perb.ca.gov/decisionbank/pdfs/2648M.pdf (discussion of the bargaining allegations begins at pg. 34.)

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