| SERVICE EMPLOYEES INTERNATIONAL | | | CASE NO. 741 |
| UNION, LOCAL UNION NO. 226, | | | |
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| Petitioner | | | |
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| v. | | | DECISION AND ORDER |
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| SCHOOL DISTRICT NUMBER 17 OF | | | |
| DOUGLAS COUNTY, NEBRASKA, | | | |
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| Respondent. | | |
Appearances:
For the Petitioner: Michael J. Haller, Jr.
and Robert E. O'Connor
Robert E. O'Connor & Assoc.
2437 So. 130th Circle
Omaha, NE 68144
For the Respondent: Malcolm D. Young
Young & White
8901 Indian Hills Drive, Suite 210
Omaha, NE 68114-4071
KRATZ, J:
Before: Judges Kratz, Cope, and Mullin.
Service Employees International Union, Local Union No. 226 (hereafter referred to as Petitioner), has represented the custodial employees of School District Number 17 of Douglas County, Nebraska (hereafter referred to as Respondent) for approximately 15 years. During that period the parties have regularly negotiated collective bargaining agreements. In May of 1988, the parties commenced negotiating an agreement to replace the agreement which would expire on August 31, 1988. There were nine different negotiation meetings from May through October and the subcontracting of bargaining unit work became a significant issue in the negotiations, both as a proposed contract condition and because the Respondent had, on June 20, 1988, entered into a contract with FBG Service Corporation (hereafter referred to as FBG) for custodial services at the new Kiewit Middle School. Petitioner claimed that by entering into this contract with FBG, the Respondent had engaged in bad faith bargaining and it filed this Petition with the Commission of Industrial Relations.
At the pretrial conference, the parties agreed that the following issues would be presented and considered:
1.Whether School District No. 17 violated the previous contract with SEIU 226 by entering an agreement with FBG Services Corporation.
2.Whether or not the District bargained in good faith with SEIU 226 over the issue of subcontracting.
3.Whether it is within the jurisdiction of the CIR to require a contract provision restricting subcontracting to be placed in a contract.
A summary of the significant facts is as follows:
1. At the initial negotiation meeting, the Petitioner asked that new language be inserted into the contract which would prohibit the Respondent from contracting out custodial services.
2. This proposal was rejected at the second meeting, but it continued to be discussed, however briefly, at each of the succeeding seven meetings from May through October.
3. On April 22, 1988, the Respondent distributed specifications and publicly advertised for bids on custodial services for the Kiewit Middle School. Bids were received on June 6, 1988, and the contract was awarded on that date to FBG Service Corporation at an open and public meeting of the Respondent School Board. The contract was executed on June 20 and FBG commenced work under its contract at the Kiewit Middle School on July 1, 1988.
4. Respondent never specifically advised or officially notified the Petitioner that it intended to subcontract custodial services at the Kiewit Middle School, but members of Petitioner were aware of the Respondent's intention in this regard.1 The advertising for bids and the awarding of the contract was a public process and while the Respondent did not specifically and officially notify the Petitioner about its intentions in this regard, it is clear that there was no attempt to, or intent to, conceal the fact that Respondent intended to subcontract some of the custodial work at the Kiewit Middle School.
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1 Two of the Petitioner's members assisted in developing the specifications and dividing the custodial work that would be contracted out.
5. There apparently was some discussion between the parties regarding the impact and the effects of the contracting out of custodial services at the Kiewit Middle School, but these discussions didn't come until the fifth negotiating meeting on August 11, and were only discussed because the Petitioner at that negotiating session voiced its objection to Respondent's contracting out of bargaining unit work.
6. Kiewit Middle School was a new school that was still under construction at the time the negotiations between the parties commenced. Five custodial employees were needed at the Kiewit Middle School and when these custodial services commenced, the subcontractor furnished three employees and two were provided by the Petitioner. No bargaining unit members were replaced, transferred or laid off because of the employees hired by the subcontractor at Kiewit Middle School.
7. Respondent has in the past regularly subcontracted work as a supplement to the work performed by its regular employees.
8. In 1976, Respondent subcontracted custodial services at the Millard North High School. At the time of that arrangement the collective bargaining agreement between the parties was similar to the agreement between the parties herein which is Exhibit P-2.
9. At the August 11 bargaining session, Petitioner asked about the subcontracting of custodial services at the Kiewit Middle School and was given the specifics of this contract arrangement. As we have mentioned, there was discussion then regarding management's right to subcontract the custodial work and the possible impact and effect this would have on the Petitioner.
10. At the seventh negotiation meeting on August 23, the Petitioner suggested that Respondent experiment with contracting out for the 1988-1989 school year and then discuss the issue again at the next negotiations. This suggestion was rejected. Also, at this meeting the Respondent explained it had no intent to replace bargaining unit employees inasmuch as the work performed by FBG would not involve work previously performed by members of the bargaining unit.
The basic issue in this case is whether the Respondent engaged in bad faith bargaining when it entered into a subcontract for custodial services at the Kiewit Middle School. This Commission has previously held that subcontracting of custodial work can be a subject for bargaining under the Court of Industrial Relations Act. Service Employees International Union, Local Union No. 226 v. School District No. 66, of Douglas County, Nebraska , 3 CIR 514. The exact language of that ruling is as follows:
Similarly, the issue of subcontracting janitor work which has previously been done by employees in the bargaining unit is primarily related to wages and conditions of employment rather than to the formulation or management of public policy. We hold that such subcontracting is a subject for bargaining under the Court of Industrial Relations Act.
However, "such" subcontracting in that case was "janitor work which has previously been done by employees within the bargaining unit." In the instant case, the custodial work subcontracted to FBG was not work which had been previously performed by employees within the bargaining unit.
The Court of Industrial Relations Act is similar to the National Labor Relations Act and the Nebraska Supreme Court has held that interpretations of the National Labor Relations Act by the National Labor Relations Board should be considered "helpful" in interpreting the Court of Industrial Relations Act. City of Grand Island v. American Federation of State, County, & Municipal Employees , 186 Neb. 711, 185 N.W. 2d 860 (1971). The key case for interpretation of the National Labor Relations Act regarding the issue of subcontracting of bargaining unit work is the United States Supreme Court decision in Fibreboard Paper Products Corp. v. NLRB , 379 U.S. 203 (1964). In this case, just a few days before the collective bargaining agreement expired, the employer representatives notified the union that there was no need for a collective bargaining agreement inasmuch as they had decided to subcontract the maintenance work that was being performed by the members of the bargaining unit. In stating the issue in this case, the Supreme Court said as follows;
...we are concerned here only with whether the subject upon which the employer allegedly refused to bargain -- contracting out of plant maintenance work previously performed by employees in the bargaining unit, which the employees were capable of continuing to perform -- is covered by the phrase "terms and conditions of employment" within the meaning of Section 8(d).
The court then held as follows:
We are thus not expanding the scope of mandatory bargaining to hold, as we do now, that the type of "contracting out" involved in this case -- the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment -- is a statutory subject of collective bargaining under Section 8(d). Our decision need not and does not encompass other forms of "contracting out" or "subcontracting" which arise daily in our complex economy.
Thus, it is clear that the members of the Supreme Court are saying that not all "contracting out" is a statutory subject for collective bargaining. They are only saying that subcontracting which involves "the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment" is a statutory subject for collective bargaining. The key word, of course, is "replacement" and the afore described narrow scope of this decision is confirmed by the following comment from the concurring opinion of Justice Stewart:
The question posed is whether the particular decision sought to be made unilaterally by the employer in this case is a subject of mandatory collective bargaining within the statutory phrase "terms and conditions of employment". That is all the court decides. ...The court holds no more than that this employer's decision to subcontract this work, involving "the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment" is subject to the duty to bargain collectively. Within the narrow limitations implicit in the specific facts of this case, I agree with the court's decision.
Stewart further says "I would agree that the employer had a duty to bargain collectively concerning the replacement of his internal maintenance staff by employees of the independent contractor." The basis for the court's decision, according to Justice Stewart, is employment security and the court's judgment involves "the substitution of one group of workers for another to perform the same task." He says "no problems in the domestic economy are of greater concern than those involving job security and employment stability."
The significant parts of this decision, as we apply it to the facts of the case at bar, are (1) the emphasis on the fact that this subcontract agreement resulted in the replacement of employees in the bargaining unit, and (2) the Court's strong pronouncement that the decision does not necessarily encompass other forms of subcontracting. Subsequent to Fibreboard, the National Labor Relations Board clarified its position on the issue of subcontracting of bargaining unit work. In Westinghouse Electric Corp. and Local 711, International Union of Electrical, Radio and Machine Workers, AFL-CIO , 150 NLRB No. 136 (1965), the Board said Fibreboard "was not intended as laying down a hard and fast new rule to be mechanically applied regardless of the situation involved." It is not " a per se unfair labor practice in all situations for an employer to let out unit work without consulting the unit bargaining representative." The Board then established the following guidelines for bargaining about subcontracting of bargaining unit work:
In sum--bearing in mind particularly that the recurrent contracting out of work here in question was motivated solely by economic considerations; that it comported with the traditional methods by which the Respondent conducted its business operations; that it did not during the period here in question vary significantly in kind or degree from what had been customary under past established practice; that it had no demonstrable adverse impact on employees in the unit; and that the Union had the opportunity to bargain about changes in existing subcontracting practices at general negotiating meetings--for all these reasons cumulatively, we conclude that Respondent did not violate its statutory bargaining obligation by failing to invite union participation in individual subcontracting decisions.
With regard to the aforelisted guidelines, the evidence herein shows the following: (1) The subcontract was entered into with FBG because of economic considerations. (2) The Respondent traditionally subcontracted maintenance type work (mechanical, electrical, plumbing, carpentry, bus driving and snow removal) as a supplement to the work performed by its regular employees. (3) In 1976, Respondent subcontracted the custodial services at another one of its schools. (4) The FBG subcontract was for work to be performed on a newly constructed school building and therefore no bargaining unit employees were replaced. (5) There was bargaining with regard to the insertion of some type of clause in the collective bargaining agreement on the subject of subcontracting of bargaining unit work. (6) There was a belated discussion at the bargaining table regarding the impact and effects of the FBG subcontract.
The application of the aforedescribed facts to the Westinghouse guidelines indicates that Respondent had no legal obligation to bargain about its subcontractor decision. This is not, however, an easy decision. The most significant factor in this type of determination is the question of whether the subcontract causes bargaining unit employees to be replaced. In Fibreboard they replaced the entire unit. If bargaining unit employees are replaced there is clearly a "demonstrable adverse impact on the employees in the unit." While no bargaining unit employees are replaced because of the FBG contract, the bargaining unit is nevertheless deprived of three employees that would have been in the unit. It is generally recognized, of course, that if you reduce the size of a collective bargaining unit you weaken its effectiveness. Therefore, it would seem to follow that if you increase the size of the collective bargaining unit you strengthen its effectiveness. The Westinghouse case cites Fibreboard (footnote 4) for the following proposition: "the contracting out of work done, or which may be done, by employees in a bargaining unit is a subject of mandatory bargaining" (emphasis supplied). The work subcontracted out here, of course, "may be done" by members of the bargaining unit.
In Service Employees International Union, Local Union No. 226 v. School District No. 66, of Douglas County, Nebraska , supra, this Commission said "Defendants claim that no employees were eliminated from the unit, since all three employees whose jobs were replaced received other employment from the defendant, is not valid. The bargaining unit was clearly damaged. They lost three jobs, which ordinarily would have been filled by members of the unit." On the other hand, there is merit to Judge Green's concurring opinion in this case wherein he says there is a significant difference between the public sector and the private sector on the issue of subcontracting of bargaining unit work and he concludes that there should be no requirement under any circumstance for negotiation over subcontracting of bargaining unit work in the public sector because "the decision to contract out...is an option that public officials should have available,unfettered by judicial review, when they believe that wage rates have risen above the ability of the community to pay."
Nevertheless, considering all of the evidence as a whole (i.e., respondent's past practices of subcontracting, the fact that the subcontract applied to a new school and no bargaining unit employees were replaced, the discussions at the bargaining table regarding possible language in the agreement on subcontracting, the discussions at the bargaining table (although limited and late) regarding the possible effects and impact of the subcontract, and the fact that the decision to subcontract was motivated by economic considerations), we conclude that Respondent did not violate its statutory bargaining obligations by entering into a subcontract with FBG for custodial services at the Kiewit Middle School. In Fibreboard, Justice Stewart emphasizes that the problem with the subcontract in Fibreboard was that it caused replacement of employees and interfered with job security and employment stability. We have concluded that the FBG subcontract herein simply does not create any of those problems.
Our conclusion in this regard answers the 1st and 2nd issues set out herein (page 2) and would seem to render the 3rd issue moot. Furthermore, regarding the 3rd issue, counsel for Petitioner says the Petitioner is not asking this Commission "to insert a clause or provision in the contract restricting subcontracting" (p. 8 of Petitioner's post trial brief).
The Petition is dismissed.
Entered April 26, 1989.
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