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April 20, 2011

Contracting out a negotiating unit's work

Contracting out a negotiating unit's work
Vestal Employees Asso., NEA/NY v Vestal CSD, 94 N.Y.2d 409

Management may attempt to “contract out” work claiming that to do so is more efficient or less expensive or because the tasks are “too technical” for its employees to perform. Unions typically object to contracting out, contending that its unit members can perform the tasks as well or better than “outsiders” and that it is more economical to use unit members than to go outside the organization for this purpose.

Suppose a school district asks a BOCES to enter into a contract to perform services that the school district’s employees are current performing. Is such “contracting out” of services a mandatory subject of collective bargaining within the meaning of the Taylor Law? This was the critical question in the Vestal Employees Association case. The ruling sets out the tests that the Court of Appeals said should be used in deciding such issues.

Typically the contracting out of exclusive unit work is a mandatory subject of collective bargaining. Further, if the work to be contracted out is not “exclusive unit work,” the impact of such action of the collective bargaining unit may constitute a mandatory subject to negotiations under the Taylor Law.

In deciding the Vestal case, the Court of Appeals, following the rationale set out in its ruling in Webster Central School District v PERB, 75 NY2d 6, confirmed an exception this general rule -- where legislative scheme provides for such contracting out, as in the case of a school district-BOCES contract arrangement, the employer may unilaterally decide to “sub-contract” work to a BOCES.

In the Webster case the Court of Appeals held that Education Law Section 1950(4)(bb) allowed a school district to substitute BOCES summer school programs for its own summer school programs without first undertaking collective bargaining with its teachers’ unions.

In Vestal, the high court said that another provision set out in the same section, Section 1950(4)(d), allows a school district to contract with a BOCES to perform printing services then being performed by one of its own employees without first negotiating the change with the union.

The case began in September 1995, when the Vestal Central School District “contracted” for printing services with the Broome-Tioga BOCES. The decision indicates that the single Vestal district employee affected by the printing contract agreed to transfer to the BOCES and currently provides printing services for Vestal and a second school district.

The Vestal Employees Association filed an improper practice charge with the Public Employment Relations Board [PERB]. PERB’s Administrative Law Judge ruled that the district’s action constituted an improper practice and that it could not unilaterally subcontract out printing services performed exclusively by a bargaining unit employee (Matter of Vestal Employees Association, 30 PERB 4514).

On appeal, PERB reversed the ALJ’s ruling (Matter of Vestal Employees Association, 30 PERB 3029), holding that Section 1950(4)(d) allows unilateral changes of shared noninstructional services. PERB relied on the Commissioner of Education’s approval of the contract as evidence that “the printing services in issue in this case fall within the ‘other services’ authorized by the statute.”

Although a state supreme court justice sustained PERB’s ruling, the Appellate Division reversed, holding that “the broad scope of the Commissioner’s authority to approve cooperative services contracts could not overcome the Taylor Law’s mandate for public sector employment collective bargaining [Matter of Vestal Employees Association, 260 AD2d 699]. The Court of Appeals overturned the Appellate Division’s holding, reinstating PERB’s determination.

The high court said that the answer turned on whether or not printing falls within the scope of Section 1950(4)(d)(1). If it does, the statute must be examined to determine if there is any indication of a legislative intent that a school district’s decision to subcontract printing services was to be a mandatory subject of collective bargaining.

The Court of Appeals concluded that “[i]t is evident from the statute that the Legislature did not intend to limit the ‘available shared services’ to those enumerated in the statute” and delegated responsibility to the Commissioner of Education to identify the types of services that can be shared by school districts for the benefit of students. Accordingly, the statute does not limit contracts for “such other services as the commissioner may approve” to those that are “educational” or “nurturing” and therefore allows a school district to enter into a contract with a BOCES for such non-instructional services as printing.

In support of this view, the court noted that in 1996 the Legislature specifically limited the Commissioner’s discretion to approve school district/BOCES contracts in specified areas. Chapter 474 of the Laws of 1996 sets out the activities which “the commissioner shall not be authorized to approve as aidable shared services.”

Since printing does not fall within the list of prohibited “shared services,” and is a type of service that would promote the policy underlying the statute, the Court of Appeals concluded that “that printing falls within ... a service the Commissioner may approve to be offered on a cooperative basis by BOCES.”

The bottom line: the court decided that the statutory scheme embodies a legislative intent that a school district’s decision to subcontract printing services be exempt from collective bargaining.

This ruling has significant implications with respect to a school district’s plans to have a BOCES provide services that the district itself is then providing utilizing its own work force.

However, the court pointed out that Section 1950(4)(bb), which controlled in the Webster case, incorporated the job protection provisions. In contrast, the Court of Appeals noted that Section 1950(4)(d) “does not expressly refer to any job protection provisions for public employees whose jobs are transferred to a BOCES district as a result of a shared services contract.”

Here, however, the Vestal employee, an employee in the classified service, was “afforded certain protections upon the transfer of his functions as provided by Section 70.2 of the Civil Service Law. According, said the court, “[w]e need not explore the exact scope of the employee’s rights under Civil Service Law Section 70(2) because his Civil Service status has not been affected by the transfer and no allegation has been made to the contrary.”

This suggests that the courts might apply a stricter standard in situations where the contract has an adverse impact on the employment situations of the employees affected by the change.

A program takeover by BOCES pursuant to Education Law Section 3014-a involving classified service personnel is considered a transfer pursuant to Section 70 of the Civil Service Law. Accordingly, the Court of Appeals said that “the broad recognition that BOCES program takeovers are to be considered transfers under Section 70 implies that any action taken by BOCES pursuant to Section 1950 of the Education Law will not be subject to collective bargaining.” 

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