Michigan Employment Relations Commission Upholds School District's Privatization of Custodial Work

On February 12, 2015, the Michigan Employment Relations Commission ("MERC") issued a Decision and Order that rejected several unfair labor practice challenges to a School District's decision to privatize its custodial services. These challenges included (1) the School District's decision to subcontract was motivated by anti-union animus, (2) the School District bargained in bad faith during negotiations for a successor collective bargaining agreement, (3) the School District engaged in direct dealing with employees, bypassing the Union, and (4) the Union was not afforded an equal opportunity to bid on the subcontracting of bargaining unit work. Tri County Area Schools and Tri County Custodial/Maintenance Association, MEA/NEA, MERC Case No. C13E-081.

The custodial bargaining unit had one classification that performed both cleaning and maintenance tasks. All job positions in the bargaining unit were assigned on a strict seniority basis. For some time, the School District wanted to create separate job classifications for maintenance and cleaning workers and make assignments based on qualifications and skill sets, but the Union rejected these proposals.

Faced with declining state funds and reduced enrollment, the School District experienced successive annual deficits. In an effort to reduce costs, the Board of Education issued a request for proposals ("RFP") to subcontract its custodial services. The Union submitted a bid proposal along with several other vendors. However, the Union's bid disregarded the RFP requirements. Among other defects, the Union did not submit any pricing proposal. Instead, the Union's bid simply stated that it would engage in collective bargaining with the School District. 

MERC rejected the Union's argument that it was not afforded an opportunity to bid on an equal basis with other vendors. In order to bid on a contract on an equal basis as other bidders, the Union must submit a bid that complies with the RFP. Here, the Union's bid did not comply with the RFP, especially since it did not present any pricing proposal. 

MERC rejected the Union's argument that the School District bargained in bad faith for a successor contract. Before the Board adopted the subcontracting recommendation, the School District proposed during collective bargaining negotiations to retain four bargaining unit positions as maintenance positions if the Union would agree to certain concessions which included the seniority bidding. The Union refused. In its unfair labor practice charge, the Union argued that the School District's proposal to spare four bargaining unit positions from the subcontracting decision if the Union would agree to certain concessions constituted a pre-condition to bargaining. 

MERC rejected this contention. The School District's desire to match employee skill sets with specific job requirements was a legitimate business concern. Also, MERC found that the School District's concerns over lost revenue and the necessity of cost cutting were legitimate business concerns. 

The Union accused the School District of anti-union animus when it refused to sign a Union security agreement before the March 26, 2000 deadline, when Public Act 349 took effect, that made union security clauses unlawful. MERC ruled that the fact the Superintendent would not agree to extend the Union's security clause unless the parties had settled on the entire contract was a legitimate and lawful position.

Lastly, MERC rejected the Union's contention that the School District engaged in direct dealing. The Union's direct dealing allegations focused on statements made by a frontline supervisor of custodian bargaining unit members. During annual evaluation interviews, he responded to bargaining unit member's questions about subcontracting. He commented that employees should consider the School District's position on job classifications and seniority. Since the supervisor had no involvement in negotiations, his casual comments did not constitute direct dealing.

MERC's decision builds on previous cases that have recognized subcontracting of non-instructional support services as a prohibited subject of bargaining. Under Tri County, School Districts have some flexibility in collective bargaining negotiations over the difficult subject of subcontracting. Rather than treating subcontracting as an all or nothing decision, School Districts can explore through collective bargaining negotiations, without the risk of committing an unfair labor practice, subcontracting parts of a bargaining unit as opposed to the entire bargaining unit.

If you have any questions regarding the Tri County case or subcontracting on non-instructional support services, please contact your Clark Hill Education Law attorney.