Pros & Cons of Outsourcing Employees

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1 Pros & Cons of Outsourcing Employees Kirsten Bagley; PIMS Coordinator; BLaST IU 17 Ellis Katz; Sweet, Stevens, Katz & Williams LLP 1 BLaST IU 17 Experience Who, What and When Outsourced as of January 1, 2014 Substitutes Outsourced as of February 14, 2014 (as vacancies occurred) Paraprofessionals Job Coaches COTAs ESY Staff 2 BLaST IU 17 Experience - Why Cost Savings Need to consider Markups when comparing costs and projecting savings Affordable Health Care Implications Retirement Health Care Unemployment Worker s Compensation Access to AESOP Management No advertising No interviewing No paperwork Cost Competitive Other vendors to not retirement costs and different health care costs 3 Pros & Cons of Outsourcing Employees 1

2 BLaST IU 17 Experience Who Not Current Staff Office Staff Technology Staff 4 BLaST IU 17 Experiences Issues/Concerns Attracting Staff Geographical Challenges Clearances Marketing Guest Teachers Emergency Certifications Poor Performance Interactions with IU Employees 5 BLaST IU 17 Experience It takes time!! 6 Pros & Cons of Outsourcing Employees 2

3 Legal Issues Concerning Subcontracting Ellis H. Katz, Esquire Sweet, Stevens, Katz & Williams LLP 7 SUBCONTRACTING General Rule: Subcontracting bargaining unit work is considered a mandatory subject of bargaining. That designation, in turn, means that the employer cannot unilaterally implement a subcontract and that it must bargain in good faith with the union before it implements a subcontract. Conversely, if a subcontract has not taken place, no bargaining is required. 8 I. What is not subcontracting? A. Subcontracting is not the situation where the employer completely and permanently eliminates the performance of duties that were being performed by bargaining unit members. B. It is not the situation where the employer eliminates positions and reassigns the work to other bargaining unit members. C. It also is not the situation where work that is not exclusively bargaining unit work is reassigned outside the bargaining unit. D. It is not the situation where new technology is utilized but work is not removed from the bargaining unit. II. What is subcontracting? Subcontracting is any time work that is exclusively performed by bargaining unit members is transferred or reassigned to non-bargaining unit members or outside contractors. 9 Pros & Cons of Outsourcing Employees 3

4 III.Subcontracting (and, thus, the duty to bargain) encompasses the following: A. Use of volunteers to perform work that had been exclusively performed by bargaining unit members, even if no bargaining unit members were laid off, or if no employees lose hours, or the position is vacant. B. Alteration of past practices related to assignment of bargaining unit work to non-unit members or the alteration of the extent to which bargaining unit members or non-bargaining unit members shared work. C. Mutual-Aide Agreements - This would include a consortium of school districts. D. Transferring the work of teaching and assessing students to an E-Learning Pilot Program. 10 IV.Once it has been determined that a subcontract is at issue, there are two scenarios to consider. A. Subcontracting mid-contract: Scenario: Employer decides in the middle of a collective bargaining agreement that it wishes to subcontract bargaining unit work. 11 Analysis: 1. Does the collective bargaining agreement expressly permit or prohibit it? (a)if the collective bargaining agreement prohibits subcontracting, the employer cannot do it. Language such as the following would prevent it: No one who is not a member of the bargaining unit represented by the (insert name of union) shall perform work in the School Entity, which has been usually performed solely by bargaining unit members of (insert name of union). Such persons shall not be used to displace any bargaining unit member. For purposes of preserving work and job opportunities for the bargaining unit, the School Entity agrees that no work or services of the kind, nature or type presently performed solely by bargaining unit members will be subcontracted, transferred, leased, assigned or conveyed in whole or in part to any other group, person or non-bargaining unit employee. 12 Pros & Cons of Outsourcing Employees 4

5 1. The question not clearly answered is whether language such as the above becomes part of the status quo after the agreement expires. If so, then no subcontracting would be permitted after the agreement expires, even though absent such language, subcontracting is permitted during the period after a collective bargaining agreement expires. b) If the collective bargaining agreement permits subcontracting or the employer articulates a sound arguable basis for its interpretation of the agreement that it does, then the employer has met its bargaining obligation. c) A broadly worded management rights clause does not constitute a basis to argue that the collective bargaining agreement permits subcontracting. d) Bargaining history can support an argument that subcontracting is allowed provided that the history shows that the issue was fully discussed and consciously yielded. e) It is not clear, if the collective bargaining agreement 13 is silent, whether it can be done. B. Subcontracting after contract expires. This is the usual scenario. In this situation, the employer is able to subcontract provided it has engaged in good-faith bargaining to impasse before deciding to subcontract. C. What constitutes good-faith bargaining? 1. Test An objective examination of the totality of the circumstances surrounding the bargaining process to determine whether the offending party cametothebargainingtablewithasinceredesire to reach agreement. A party will be found to have bargained in bad faith where it can reasonably be concluded that the party never intended to achieve agreement, demonstrated unreasonableness or displayed a single minded purpose to thwart the public policy. 14 D. Specific issues that have been litigated to be considered in making the decision if the employer has met its obligation to bargain in good faith: 1. An employer has an affirmative duty to seek out the union, announce its intentions and provide the union with relevant information necessary for it to fulfill its bargaining obligation and request the union to make a counter-proposal. 2. The employer must supply the union with the results of the bids which the district has received. 3. The employer must set forth a position or a target which, if met by the union, will save bargaining unit member positions. 4. The employer is not required to make a counterproposal, however, its failure to do so may constitute some evidence of an overall failure to make a serious effort to reach agreement. 15 Pros & Cons of Outsourcing Employees 5

6 5. The employer must bargain to impasse before it decides to subcontract. Impasse is defined as the point where the parties have exhausted the prospects of concluding an agreement and further discussions would be fruitless. Impasse cannot be reached unless the statutory impasse procedures are exhausted. 6. Once impasse has been reached, the employer can subcontract. 7. The employer may set a deadline for making a decision. However, if it does so, it must disclose the deadline and insist on frequent meetings and may have to be prepared to adjust the deadline. 8. The usual remedy if the PLRB finds bad faith bargaining is to rescind the subcontract, restore the work and make employees whole for lost wages and benefits. Exceptions to this usual remedy will only be ordered in rare cases. 16 V. What really happens? The parties bargain to the point where the School Entity decides to proceed with awarding the subcontract; the School Entity enters into a contract with a private company; the union then files a charge of unfair practices with the PLRB alleging a refusal to bargain in good faith either because no bargaining took place prior to the awarding of the contract or because the union believes the bargaining that did occur was not sufficient because it was not given the appropriate opportunity to respond to the bids. In summary, the decision to replace bargaining unit employees with contracted services requires the School Entity to bargain with the union before a final decision is made. The way to combat any charge of unfair practices alleging a refusal to bargain is to be open with and accessible to the union concerning the possibility of a subcontract. 17 The process that should be followed is: A.Determine if the School Entity seriously wishes to consider subcontracting. That discussion can take place in executive session. In this regard, I emphasize the word seriously. The decision to consider subcontracting will be viewed by the union as a declaration of war. The process to reach the point where the Board can make the decision will be arduous. Accordingly, to commence the process of considering subcontracting solely as a tactic to try to gain concessions from the union during bargaining for the new contract will create a host of problems. Thus, it is my opinion that the decision to proceed to consider subcontracting should be based on a sincere desire to analyze the benefits of doing so. The preliminary decision to prepare Requests for Proposals ( RFP ) can take place in the executive session and no public vote need occur. B.If the Board wishes to consider a RFP, it needs to be created. 18 Pros & Cons of Outsourcing Employees 6

7 C.If the Board decides to proceed, the School Entity should notify the union of its intention to consider subcontracting and of its willingness to provide information and a copy of the proposal the union will be competing against once that decision is made. D.The union then should be provided with the details of the selected RFPs and be given the opportunity to meet or beat the savings identified in the RFPs. 19 It is at this point, typically, that the bargaining process begins. The union s goal initially, typically, is to set up as many roadblocks as possible. It will seek information of all kinds and it will be slow to schedule bargaining sessions. It will seek mediation and may seek fact finding. The School Entity will be obligated to respond to the information requests and to accommodate the bargaining timetable as much as is reasonable. The biggest delay in reaching the end of the bargaining process will be if the union seeks fact finding. That process, typically, is at least a 60-day process from start to finish. In view of the likely timeline necessary for bargaining to the point when the School Entity will have met its bargaining obligation, it is very important that the process begin early. One of the reasons the PLRB finds for concluding that an employer has not met its bargaining obligation is a failure to have a sufficient number of meetings with the union. 20 Pros & Cons of Outsourcing Employees 7