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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Public Employee Labor Relations Board
No. 2016-0558
APPEAL OF NASHUA SCHOOL DISTRICT
(New Hampshire Public Employee Labor Relations Board)
Argued: June 1, 2017
Opinion Issued: October 4, 2017
Jackson Lewis P.C., of Portsmouth (Thomas M. Closson on the brief and
orally), for Nashua School District.
Sean R. Cronin, of Manchester, on the brief, and Joseph L. DeLorey, of
Boston, Massachusetts, on the brief and orally, for AFSCME, Council 93, Local
365.
LYNN, J. The Nashua School District (District) appeals an order of the
New Hampshire Public Employee Labor Relations Board (PELRB) finding that
the District committed an unfair labor practice by refusing to bargain with the
American Federation of State, County, and Municipal Employees (AFSCME),
Council 93, Local 365, Nashua Custodial/Janitorial Staff (Union) concerning
the District’s plan to subcontract custodial work at the expiration of the term of
the collective bargaining agreement (CBA) between the parties. We reverse and
remand.
I
The pertinent facts are as follows. The most recent CBA between the
District and the Union covered the period from July 1, 2013 through June 30,
2016. The CBA encompassed the employment of all full-time and part-time
custodians and maintenance personnel employed by the District. Three
provisions of the CBA are pertinent to the present dispute.
Article 5, entitled “Volunteering and Subcontracting,” states, in relevant
part:
5.2 A. The District agrees there will be no layoffs, demotions or
involuntary transfers as a result of contracting out work.
Regardless of subcontracting, in the event of any layoff
within a classification, the District shall cease to utilize
any subcontractor for work specific to that classification
except for work identified on the master list or previously
agreed upon contracted projects, until such time [as] the
staffing levels return to the pre-layoff levels. The Director
of Plant Operations shall maintain a master list, initialled
by both parties, with mutually agreed-upon work that has
been historically subcontracted out. Work on the master
list shall not be assigned to bargaining unit employees to
complete.
B. 1. The District shall present the work it is contemplating
to subcontract in a reasonable period in advance and not
delay the work so the volume of work is anything but for
unforeseen circumstances. The Union shall respond in
five (5) working days, or the District shall proceed with
subcontracting the work.
2. The District shall identify the primary classification in
accordance with the bargaining unit job description that
it believes will be used in the work to be discussed. If the
work will be completed on overtime, the District will post
the overtime opportunity upon notice from the Union
under Section B.1. above and the Union shall have the
opportunity to survey the work force for interest and
availability. If the agreed upon necessary workforce is not
available by the mutually agreed upon date, then the
District may contract out.
3. When bargaining unit employees are doing work which
was initially contemplated to be subcontracted, custodial
staffing of the building shall be subject to an agreement
2
by the parties. Any agreement on building coverage
based on the previous sentence shall not be used outside
of this process.
C. Should any work be contemplated to contract out, the
District and the Union agree the following procedure shall
occur prior to subcontracting.
1. Step One – The Union will designate one Union
member. The Director of Plant Operations will advise
this member of the work it is contemplating
contracting out. A discussion as to whether or not
bargaining unit members can complete the work shall
occur. If an agreement cannot be reached and the
District still desires to subcontract said work, the
parties shall proceed to Step Two.
2. Step Two – The District shall bring the proposed work
to the next scheduled joint labor-management
committee meeting for discussion. If an agreement
cannot be reached and the District still desires to
subcontract said work, the parties shall proceed to
Step Three.
3. Step Three – The parties shall mutually agree on an
arbitrator to decide if the work is bargaining unit work
or not. The basis for consideration shall be the job
descriptions for all classifications, the scope of the
bargaining unit work, as well as prior grievance
decisions and/or grievance settlements. Overtime
shall not be a factor in considering if the work is
bargaining unit work or not. The District may
subcontract out the work prior to arbitration; however,
the subcontracting of the work cannot be used as
consideration for the arbitrator’s decision and the
District understands that an arbitrator’s decision that
the work should have been done in-house will require
the District to pay bargaining unit members for work
already performed.
4. The Arbitrator’s decision shall be final and binding on
the parties. The arbitration shall be in accordance
with AAA rules. The cost of the arbitration shall be
borne equally by both parties.
3
Article 28 of the CBA, entitled “Management Rights,” states:
Except as otherwise . . . provided in this Agreement, the Union
recognizes that the direction of the District operations; the
determination of the methods and means by which such
operations are to be conducted; the supervision, management and
control of the District work force; the right to hire, promote,
transfer, and lay off employees; the right, lawfully and for just
cause, to demote, discipline, suspend or discharge employees; the
right to determine the hours and schedules of work and the work
tasks and standards of performance for employees and all other
rights and responsibilities not specifically provided in this
[A]greement, shall remain the function of Management, all in
accordance with RSA Ch. 273-A. It shall be the right of the Union,
however, to present and process grievances of its members whose
wages, working conditions or other rights expressly and specifically
provided in this Agreement are violated by Management.
Article 29 of the CBA, entitled “Duration of Agreement” provides, in relevant
part:
On June 30, 2016 and on each June 30th thereafter, this
Agreement shall be deemed renewed and extended for the ensuing
year, unless one hundred twenty (120) calendar days or more prior
to such date, either party shall have delivered to the other, notice
of its desire not to have the agreement in its then form renewed.
Such notice shall be deemed delivered when mailed, postage
prepaid, addressed to the last address of the addressee which is
known to the sender of this notice. If such notice shall be sent and
the parties shall negotiate for a new agreement or modification
thereof, the terms hereof shall continue to apply until the new or
modified agreement is executed.
In a September 2015 memorandum, the District provided written notice
to the Union, in accordance with Article 29 of the CBA, that it did not wish to
renew the CBA in its current form. The memorandum also stated that the
District intended, following the expiration of the CBA, to contract with a private
company to provide custodial services. The District cited financial reasons as
the motivation for its decision to pursue privatization.
The next day, the Union responded to the District in a letter requesting
that it immediately commence negotiations on a successor CBA for all
employees covered by the then-current CBA. The District responded to the
Union’s request with another letter, stating that, due to its decision to privatize,
it declined to commence negotiations with the Union regarding the employment
of custodians. However, the District did offer to commence negotiations on the
4
terms and conditions of employment for all other positions included in the
CBA. The District specifically clarified in the letter that its “agreement to open
negotiations for a successor collective bargaining agreement for the [non-
custodian] employees should in no way be construed as an offer to negotiate
the terms and conditions for custodial personnel covered by the current
collective bargaining agreement.” The Union declined this offer, stating that it
expected the district to negotiate the terms and conditions of a successor CBA
for all the employees that the Union represents. As a result, the parties did not
commence any negotiations.1
In December 2015, the Union filed an Unfair Labor Practice charge with
the PELRB, alleging that the District was in violation of its statutory bargaining
obligations, as well as the terms of the CBA. The parties subsequently agreed
to submit the breach of the CBA claim to arbitration and to seek a ruling from
the PELRB with respect to the unfair labor practice claim only. The parties
also agreed that the latter claim would be submitted to the PELRB based upon
stipulated facts, exhibits, and written briefs.
In August 2016, the PELRB released an order in which it ruled that the
District had improperly refused to bargain with the Union over the custodial
personnel positions, violating the bargaining obligations imposed by RSA 273-
A:5, I(a) and (e) (2010). The PELRB also ruled that the District’s offer to
conduct negotiations with regards to maintenance and security personnel had
“activate[d] the Article 29 duration clause.” Moreover, the PELRB found that
nothing in RSA chapter 273-A (2010 & Supp. 2016) “empowere[d] the District,
by virtue of its Article 29 notice or otherwise, to simultaneously and
unilaterally terminate its bargaining obligations, in whole or in part, at any
point in time,” and ruled that only final and binding arbitration could serve as
a proper forum to decide the matter of the District’s right to subcontract the
work performed by its custodial employees. Independent of those rulings, the
PELRB noted that nothing in RSA chapter 273-A allowed the District to
“unilaterally modify the composition of the PELRB approved bargaining unit,”
and ordered the District to “immediately commence bargaining in good faith
with the Union as to all bargaining unit positions.” This appeal followed.
II
“RSA chapter 541 governs our review of PELRB decisions.” Appeal of
Prof’l Fire Fighters of Hudson, 167 N.H. 46, 51 (2014); see RSA 273-A:14
(2010); RSA 541:2 (2007). “Pursuant to RSA 541:13 (2007), we will not set
aside the PELRB’s order except for errors of law, unless we are satisfied, by a
clear preponderance of the evidence, that it is unjust or unreasonable.” Fire
Fighters of Hudson, 167 N.H. at 51. “The PELRB’s findings of fact are
1The PELRB’s order stated that the parties had “undertaken negotiations, at least as to
maintenance and security personnel.” However, both parties agree that this statement in the
PELRB order is erroneous and that no negotiations between the District and the Union took place.
5
presumed prima facie lawful and reasonable.” Id.; see also RSA 541:13. “In
reviewing the PELRB’s findings, our task is not to determine whether we would
have found differently or to reweigh the evidence, but, rather, to determine
whether the findings are supported by competent evidence in the record.” Fire
Fighters of Hudson, 167 N.H. at 51. “We review the PELRB’s rulings on issues
of law de novo.” Id.
Reduced to its essence, the issue before the court in this case is whether
our prior decisions in Appeal of City of Nashua Board of Education, 141 N.H.
768 (1997), and Appeal of Hillsboro-Deering School District, 144 N.H. 27
(1999), preclude a public employer from ever unilaterally determining to
subcontract work that is performed by Union members under a CBA. The
Union, in essence, asserts that they do; the District argues that they do not.
We agree with the District.
In Appeal of City of Nashua, following the expiration of a collective
bargaining agreement between the city and the union, the parties commenced
negotiation of a successor agreement. Appeal of City of Nashua, 141 N.H. at
770. While the negotiations were in progress, the city informed the union that
it planned a reorganization in which 28 full-time custodians would be laid off
and replaced with over 30 part-time custodians, who would be paid lower
wages and would not receive fringe benefits. Id. The union responded by filing
an unfair labor practice charge. Id. It asserted that, although a “pure” layoff
would neither have violated the terms of the CBA nor constituted an unfair
labor practice, the combination of the layoff with the hiring of part-time
personnel to perform the same work as had been performed by bargaining unit
members constituted a unilateral change in the conditions of employment that
violated the CBA as well as several provisions of RSA 273-A:5, I. Id.
The PELRB found that the city had committed an unfair labor practice by
making a unilateral change in the terms and conditions of employment during
the status quo period,2 and we upheld that determination. Id. at 770-71, 777.
In reaching our decision, we noted that, during the status quo period in which
the union and the public employer are negotiating a new contract, the
employer is prohibited from making unilateral changes only with respect to
mandatory subjects of bargaining. Id. at 773. No similar restriction applies
with respect to permissive subjects of bargaining. Id. Relying upon the three-
step test we articulated in Appeal of State of New Hampshire, 138 N.H. 716,
722-23 (1994), we held that the city’s proposal to replace full-time employees
with part-time employees receiving lower wages and benefits satisfied all three
prongs of the test, and was therefore a mandatory subject of bargaining rather
than a matter of “managerial policy within the exclusive prerogative of the
public employer” within the meaning of RSA 273-A:1, XI (1987). Id. at 773-76.
2 The “status quo period” is the period after the expiration of a CBA during which the parties
negotiate for a successor agreement while generally operating under the terms and conditions of
the expired CBA. See Appeal of Alton School Dist., 140 N.H. 303, 307 (1995).
6
In Appeal of Hillsboro-Deering, during the term of an existing collective
bargaining agreement, the school district terminated the employment of all
members of the bargaining unit and subcontracted their duties to workers
employed by an independent contractor. Appeal of Hillsboro-Deering, 144 N.H.
at 28. The PELRB sustained the union’s unfair labor practice complaint,
rejecting the district’s claim that its decision to subcontract was a matter
within its sole discretion under the CBA and RSA 273-A:1, XI. Id. at 28-29.
On appeal, we delineated the issue before us as “whether the PELRB correctly
ruled that the school district committed an unfair labor practice by laying off
bargaining unit employees, so it could subcontract with private companies to
perform identical services, during the term of the CBA.” Id. at 29 (emphasis
added). Again applying the three-part test of Appeal of State of N.H., we found
that replacing bargaining unit members with subcontracted workers to perform
the same duties satisfied all prongs of the test, was therefore a mandatory
subject of bargaining, and could not be unilaterally implemented by the
district. Id. at 31-33. The dissent in Appeal of Hillsboro-Deering found the
case distinguishable from Appeal of City of Nashua, in that the district “was
not laying off to rehire new workers at a cost saving, but to put a private
contractor in charge with full responsibility for the function.” Id. at 33-34
(Horton, J., joined by Thayer, J., dissenting). In the dissent’s view, “such a
‘reorganization’ is a classic example of managerial policy and outweighs the
claim of impact on the terms and conditions of employment.” Id. at 34.
Neither party has asked us revisit our decisions in Appeal of City of
Nashua or Appeal of Hillsboro-Deering, nor provided us with a stare decisis
analysis demonstrating a proper basis to do so. Although we are thus bound
to adhere to those decisions, we are under no obligation to expand their reach.
Here we find strong reasons not to do so because this case is distinguishable
from the foregoing cases in important respects.
First, unlike in Appeal of City of Nashua, the District’s proposed
reorganization in this case does not involve replacing employees of one kind
(full-time) with employees of another kind (part-time). Under the plan, the
workers who perform custodial work for the District will not be employees of
the District, but rather will be employees of an independent third party
contractor. Thus, the proposal envisions a qualitatively different relationship
between the District and its custodial staff — one lacking contractual privity —
from the relationship that existed under the expired CBA. The replacement of
employees with workers provided through an independent contractor involves
more than simply substituting one group of individuals for another group who
perform the same work. The use of an independent contractor relieves the
District of the responsibility for providing the kind of close supervision that
typically characterizes the employer-employee relationship, allowing the
District to delegate to the independent contractor responsibility for such things
as the instruction, training, and orientation of the workers, the provision of the
tools and instrumentalities needed to accomplish their tasks, and the details of
7
the manner in which the work is accomplished. See Petition of City Cab of
Manchester, 139 N.H. 220, 221-22 (1994) (reciting factors that bear upon
question of whether person is employee or independent contractor). By
relieving management of these responsibilities, the employer not only enables
management employees to devote more time and effort to other duties, but also
may reduce the need for the level of support staff (e.g., human resource
personnel) required by the organization. In short, the District’s decision to
replace its custodial employees with subcontracted workers employed by an
independent contractor is far different from the replacement of full-time
employees with part-time employees at issue in Appeal of City of Nashua.
Second, in this case, unlike in Appeal of City of Nashua, the District did
not propose its reorganization plan during the time it was negotiating for a new
contract with members of the same bargaining unit. Instead, it notified the
Union of its intention to lay off the custodians at the expiration of the CBA
before negotiations for a successor CBA commenced. This is significant
because a proposed reorganization by management made during the course of
bargaining for a successor agreement is more likely to be perceived as an
unfair effort to skew the level playing field of the bargaining process, perhaps
with a view to obtaining concessions on other, unrelated issues. Where, as
here, the District provides notice of the reorganization in advance of
negotiation, and the record contains no indication that the reorganization was
in any way tied to other issues that would be the subject of the future
negotiations, there is far less danger that the reorganization will disrupt the
bargaining process.
Third, this case is distinguishable from Appeal of Hillsboro-Deering, in
that that case involved an effort by the school district to lay off employees and
subcontract bargaining unit work during the term of the existing CBA. In that
decision, we had no occasion to consider whether, after the expiration of the
CBA, it is within the management prerogative of a public employer to
reorganize its operations by contracting with a third party for the performance
of the work of bargaining unit members.
Here, we agree with the District that, if we were to apply the status quo
doctrine in the manner that the Union advocates, the result could be that the
District would be perpetually precluded from reorganizing its operations so as
to subcontract custodial work to an independent contractor. The CBA that
expired on June 30, 2016 is ambiguous with respect to the issue of layoffs and
subcontracting. The first sentence of Article 5.2.A of the CBA seems flatly to
prohibit the District from laying off bargaining unit members as a result of
contracting out work. However, Article 5.2 goes on to include language that
indicates that some contracting-out can occur; it provides that proposals to
contract out work are subject to a four-step bargaining procedure which
culminates in binding arbitration. In considering application of the status quo
doctrine in light of these terms, it is important to note a crucial difference
8
between private sector collective bargaining and public sector collective
bargaining under the Public Employees Labor Relations Act (PELRA). In the
private sector, after good faith bargaining to impasse, the employer is entitled
to implement unilaterally the terms consistent with its proposals made during
bargaining. See Litton Financial Printing v. N.L.R.B., 501 U.S. 190, 198
(1991). Under the PELRA, however, the employer is not relieved of its
obligation to continue bargaining even after impasse has been reached and all
of the dispute resolution procedures specified in RSA 273-A:12 (2010 & Supp.
2016) have been exhausted. See RSA 273-A:12, IV (“If the impasse is not
resolved following the action of the legislative body, negotiations shall be
reopened.”).
If the status quo doctrine were applied to require that the terms of Article
5 of the now-expired CBA remain in effect until agreement is reached on a new
CBA, the District could be effectively precluded from ever implementing its
reorganization plan by the Union refusing to agree to a new CBA that allowed
for layoffs. And, at best, during the continuation of the status quo period, the
fate of the District’s plan would be removed from its control and placed in the
hands of an arbitrator. Cf. Appeal of Milton School Dist., 137 N.H. 240, 245-46
(1993) (noting concern that overly expansive application of status quo doctrine
may improperly shift the balance of collective bargaining in favor of the union).
The District’s position that this case is distinguishable from Appeal of
City of Nashua and Appeal of Hillsboro-Deering is supported by the PELRB’s
decision in Lisbon Teachers Association, NEA-New Hampshire v. Lisbon
Regional School District, PELRB Decision No. 1998-067 (Aug. 12, 1998). In
that case, which was decided by the PELRB after we affirmed its decision in
Appeal of Hillsboro-Deering,3 the PELRB rejected an unfair labor practice
charge filed by the union based upon the school district’s announcement that
at the end of the then-current CBA it intended to eliminate the school nurse
position and to subcontract for nursing services, and that it, therefore, would
not negotiate salary or benefits for that position. Lisbon Teachers Ass’n,
PELRB Decision No. 1998-067, at 5. After reviewing a number of its prior
decisions, including its Hillsboro-Deering decision, as well as our decision in
Appeal of City of Nashua, the PELRB reasoned:
[I]t is apparent that there is an appropriate time when
management may make changes in its organizational structure. If
this were not the case and management was required to maintain
a given organizational structure or category of employees
3 Although our decision in Appeal of Hillsboro-Deering came after the PELRB’s decision in the
Lisbon Teachers Ass’n case, our opinion did not in any way undermine or question the reasoning
of the PELRB decision in the Hillsboro-Deering case. See generally Appeal of Hillsboro-Deering,
144 N.H. at 27. Consequently, the basis upon which the PELRB distinguished the Lisbon
Teachers Ass'n case from its own Hillsboro-Deering decision also is not undermined by our
decision in Appeal of Hillsboro-Deering.
9
indefinitely, it would lose control of its expenditures and its ability
to ‘continue control of governmental functions.’ RSA 273-A:1, XI.
It makes sense that the break point for changes in
organizational structure should come at the conclusion of a given
CBA. This maintains the integrity of the CBA during its term.
Id. After also observing that in Appeal of City of Nashua we were careful to
make clear that “[t]erms and conditions of employment imposed as the result of
the status quo doctrine do not become final forever,” the PELRB “conclude[d]
that the [school district] acted reasonably, prudently and in concert with RSA
ch. 273-A when it gave notice of its intent to eliminate the school nurse
position and not negotiate salary or benefits for it for School Year 1999-2000,
after the conclusion of the current CBA.” Id. (quotation and italics omitted)
(emphasis in original).
Although in its subsequent decision in Farmington Education Support
Professionals United, NEA-NH v. Farmington School District, PELRB Decision
No. 2014-080 (Mar. 28, 2014), and in the instant case, the PELRB did not
adhere to the reasoning of Lisbon Teachers Ass’n, it gave no explanation in
either case for its failure to do so.4 We think the PELRB’s treatment of the
subcontracting issue in Lisbon Teachers Ass’n was correct, and we now adopt
its reasoning. RSA 273-A:1, XI (Supp. 2016) specifically provides that
“‘managerial policy’ within the exclusive prerogative of the public employer . . .
include[s] . . . the public employer’s organizational structure, and the selection,
direction and number of its personnel, so as to continue public control of
governmental functions.” The implications of applying the status quo doctrine
in a manner that would effectively give the Union or an arbitrator a perpetual
veto over the District’s ability to reorganize its structure so as to replace
bargaining unit members with subcontracted workers was not a matter we had
occasion to consider in Appeal of City of Nashua or Appeal of Hillsboro-Deering.
Squarely facing this issue now, we conclude that applying the status quo
doctrine in this manner does not satisfy the third step of the Appeal of State of
N.H. test because it would unduly interfere with public control of governmental
functions. See Appeal of State of N.H., 138 N.H. at 722-23. Accordingly, we
hold that the District did not commit an unfair labor practice by refusing to
bargain with the Union concerning its plan to lay off its custodial employees
and replace them with subcontracted workers after the expiration of the 2013-
16 CBA.
III
The Union also argues, however, that the PELRB correctly determined
that, by unilaterally making the decision to lay off custodians and replace them
4In fact, the PELRB’s decisions in these later cases neither cited nor discussed its Lisbon
Teachers Ass’n decision at all.
10
with subcontracted workers, the District, in effect, “modified” the bargaining
unit so as to relieve itself of the obligation to bargain with the custodians, and
that this constituted an unfair labor practice in violation of RSA 273-A:5, I(a)
and (e). There are two answers to this argument. First, we disagree that the
District’s layoff and subcontract plan in any way modified the bargaining unit.
The Union and the PELRB do not cite, nor are we aware of, any authority
supporting the proposition that decertification or modification of a bargaining
unit is a prerequisite to the District’s ability to exercise its management
prerogatives pursuant to RSA 273-A:1, XI.
Second, the District would have had no proper basis to seek
decertification or modification of the bargaining unit. The reason is that,
although we have held in section II that the District’s decision to implement its
layoff and subcontract plan after the expiration of the CBA falls within its
managerial prerogatives, it does not follow from the fact that the District is not
required to bargain over that decision that the District is completely relieved of
its obligation to bargain with the Union concerning the custodians. Once
again, we believe that the PELRB correctly addressed this very issue in its
Lisbon Teachers Ass’n decision. In that case, the PELRB determined that,
notwithstanding its ruling that the school district had acted properly in
unilaterally determining to lay off the school nurse and subcontract for nursing
services, this did not relieve the district of its obligation to bargain with the
union regarding the impact of its decision on the laid-off employee. See Lisbon
Teachers Ass’n, PELRB Decision No. 1998-067, at 6.
The same is true here. The District continues to be obligated to engage
with the Union in impact bargaining regarding, for example, such matters as
severance benefits for the custodians who will lose their jobs as a result of the
District’s decision to subcontract. Thus, the bargaining unit remains intact for
this purpose. The distinction recognized in Lisbon Teachers Ass’n between the
District’s managerial prerogative to subcontract custodial work, on the one
hand, and its obligation to bargain with the Union regarding the impact of its
decision on the employees who will be terminated, on the other hand, is
entirely consistent with our recognition of a similar distinction in Appeal of
Berlin Education Ass’n, 125 N.H. 779 (1984). See Appeal of Berlin Educ. Ass’n,
125 N.H. at 784 (recognizing distinction between school board’s unilateral
authority to decide whether to offer extracurricular programs and its obligation
to bargain with union regarding the wages to be paid its members who provide
services for such programs, if they are offered).
Reversed and remanded.
DALIANIS, C.J., and HICKS and BASSETT, JJ., concurred.
11