2016-0558, Appeal of Nashua School District

remand. the collective bargaining agreement (CBA) between the parties. We rev erse and the District’s plan to subcontract custodial work at the expiration of the term of Council 93, Local 365, Nashua Custodial/Janitorial Staff (Union) conc erning American Federation of State, County, and Mun icipal Employees (AFSCME), the District committed an unfair labor practice by r efusing to bargain with the New Hampshire Public Employee Labor Relations Board (PELRB) finding that LYNN, J. The Nashua School District (District) appeals an order of the

365. Boston, M assachusetts, on the brief and orally, for AFSCME, Council 93, Local Sean R. Cronin, of Manchester, on the brief, and Joseph L. DeLorey, of

orally), for Nashua School District. Jackson Lewis P.C., of Portsmouth (Thomas M. Closson on the brief and

(New Hampshire Public Employee Labor Relations Board) APPEAL OF NASHUA SCH OOL DISTRICT

No. 2016 - 055 8 Public Employ ee Labor Relations Board

http://www.courts.state.nh.us/supreme. release. The direct address of the court's home page is: Opinions are available on the Internet by 9:00 a.m. on the morning of their reported by E - mail at the following address: reporter@courts.state.nh. us. corrections may be made before the opinion goes to press. Errors may be Doe Drive, Concor d, New Hampshire 03301, of any editorial errors in order that requested to notify the Reporter, Supreme Court of New Hampshire, One Charles as formal revision before publication in the New Hampshire Reports. Readers are NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as well 2

staffing of the building shall be subject to an agreement was initially contemplated to be subcontracted, custodial 3. When bargaining unit employees are doing work which

District may contract out. available by the mutually agreed upon date, then th e availability. If the agreed upon necessary workforce is not opportunity to survey the work force for interest and under Section B.1. above and the Union shall have the the overtime opp ortunity upon notice from the Union work will be completed on overtime, the District will post it believes will be used in the work to be discussed. If the accordance with the bargaining unit job description that p. 2 2. The District shall identify the primary classification in

subcontracting the work. five (5) working days, or the District shall proceed with unforeseen circumstances. The Union shall respond in delay the work so the volume of work is anything but for to subcontract in a reasonable period in advance and not B. 1. The District shall present the work it is contemplating

complete. list shall not be assigned to bargaining unit employees to been historically subcontracted out. Work on the master by both parties, with mutually agreed - upon work that has of Plant Operations shall maintain a master list, initialled staffing levels return to the pre - layoff levels. The Director agreed upon contracted projects, until such time [as] the except f or work identified on the master list or previously any subcontractor for work specific to that classification within a classification, the District shall cease to utilize Regardless of subcontracting, in the event of any layoff involuntary transfers as a result of contracting out work.

5. p. 2 2 A. The District agrees there will be no layoffs, de motions or

part: Article 5, entitled “Volunteering and Subcontracting,” states, in relevant

provisions of the CBA are p ertinent to the present dispute. custodian s and maintenance personnel employed by the District. Three p. 2 2016. The CBA encompassed the employment of all full - time and part - time District and the Union covered the period from July 1, 2013 through June 30, The pertinent facts are as follow s. The most recent CBA between the

occur prior to subcontracting. District and the Union agree the following procedure shall C. Should any work be contemplated to contract out, the

of this process. based on the previous sentence shall not be used outside by the parties. Any agreement on building coverage p. 4 4

of custodians. However, the District did offer to commence negotiations on the it declined to commence negotiations with the Union regarding the employment Union’s request with another letter, stating that, due to its decision to pr ivatize, employees covered by the then - current CBA. The District responded to the that it immediately commence negotiations on a successor CBA for all The next day, the Union responded to the District in a letter requesting

the motivation for its decision to pursue privatization. company to provide custodial services. The District cited financial reasons as Di strict intended, following the expiration of the CBA, to contract with a private renew the CBA in its current form. The memorandum also stated that the to the Union, in accordance with Article 29 of the CBA, that it did not wish to In a September 2015 memorandum, the District provided written notice

m odified agreement is executed. thereof, the terms hereof shall continue to apply until the new or the parties shall negotiate for a new agreement or modification known to the sender of this notice. If such notice shall be sent and prepaid, ad dressed to the last address of the addressee which is Such notice shall be deemed delivered when mailed, postage of its desire not to have the agreement in its then form renewed. to such date, either party shall have delivered to the other, notice year, unless one hundred twenty (120) calendar days or more prior Agreement shall be deemed renewed and extended for the ensuing On June 30, 2016 and on each June 30th thereafter, this

part: Article 29 of the CBA, en titled “Duration of Agreement” provides, in relevant

provided in this Agr eement are violated by Management. wages, working conditions or other rights expressly and specifically however, to present and process grievances of its members whose accordance with RSA Ch. 273 - A. It shall be the right of the Union, [A] greement, shall remain the function of Management, all in rights and responsibilities not specifically provided in this tasks and standards of performance for employees and all other right to determine the hours and schedules of work and the work cause, to demote, discipl ine, suspend or discharge employees; the transfer, and lay off employees; the right, lawfully and for just control of the District work force; the right to hire, promote, operation s are to be conducted; the supervision, management and determination of the methods and means by which such recognizes that the direction of the District operations; the Except as otherwise . . . provided in this Agreement, the Union

Article 28 of the CBA, entitled “Management Rights,” states: p. 5 5 PELRB order is erroneous and that no negotiations between the District a nd the Union took place. maintenance and security personnel.” However, both parties agree that this statement in the The PELRB’s order stated that the parties had “undertaken negotiations, at least as to 1

Fighters of Hudson, 167 N.H. at p. 5 51. “The PELRB ’ s findings of fact are clear preponderance of the evidence, that it is unjust or unreasonable.” Fire aside the PELRB ’ s order except for errors of law, unless we are satisfied, by a (2010); RSA 541:2 (2007). “Pursuant to RSA 541:13 (2007), we will not set Prof’l Fire Fighters of Hudson, 167 N.H. 46, 51 (2014); see RSA 273 - A:14 “RSA chapter 541 governs our review of PELRB decisions.” Appeal of

with the Union as to all bargaining unit positions.” This appeal followed. and ordered the District to “immediately commence bargaining in good faith “unilaterally modify the composition of the PELRB approved bargaining unit,” PELRB noted that nothing in RSA chapter 273 - A allowed the District to work performed by its custodial employees. Independent of those rulings, the a proper forum to decide the matter of the District’s right to subcontract the point in time,” and ruled that only final and binding arbitration could serve as unilaterally terminate its bargaining obligations, in whole or in part, at any by virtue of its Article 29 notice or otherwise, to simultaneously and nothing in RSA chapter 273 - A (2010 & Supp. 2016) “empowere[d] the District, “activate[d] the Article 29 duration clause.” Moreover, the PELRB found that conduct negotiations with regards to maintenance and security personnel had A: p. 5 5, I (a) and (e) (2010). The PELRB also ruled that the District’s offer to personnel positions, violating the bargaining o bligations imposed by RSA 273 - District had improperly refused to bargain with the Union over th e custodial In August 2016, the PELRB released an order in which it ruled that the

stipulated facts, exhibits, and written briefs. also agreed that the latter claim would be submitted to the PELRB based up on the PELRB with respect to the unfair labor practice claim only. The parties to submit the brea ch of the CBA claim to arbitration and to seek a ruling from obligations, as well as the terms of the CBA. The parties subsequently agreed the PELRB, alleging that the District was in violation of its statutory bargaining In December 201 p. 5 5, the Union filed an Unfair Labor Practice charge with

comme nce any negotiations. 1 for all the employees that the Union represents. As a re sult, the parties did not expected the district to negotiate the terms and conditions of a successor CBA collective bargaining agreement.” The Union declined this offer, stating that it the terms and conditions for custo dial personnel covered by the current custodian] employees should in no way be construed as an offer to negotiate negotiations for a successor collective bargaining agreement for the [non - CBA. The Di strict specifically clarified in the letter that its “agreement to open terms and conditions of employment for all other positions included in the p. 6 6 the expired CBA. See Appeal of Alton School Dist., 140 N.H. 303, 307 (199 p. 5 5). negotiate for a successor agreement while generally operating under the term s and conditions of The “status quo period” is the period after the expiration of a CBA during which the parties 2

public employer” within the meaning of RSA 273 - A:1, XI (1987). Id. at 773 - 7 p. 6 6. than a matter of “managerial policy within the e xclusive prerogative of the prongs of the test, and was therefore a mandatory subject of bargaining rather with part - time employees receiving lower wages and benefits satisfied all three 722 - 23 (1994), we held that th e c ity’s proposal to replace full - time employees step test we articulated in Appeal of State of N ew H ampshire, 138 N.H. 716, with respect to permissive subjects of bargaining. Id. Relying up on the three mandatory subjects of bargaining. Id. at 773. No similar restriction applies employer is prohibited from making unilateral changes only with respect to the union and the public employer are negotiating a new contract, the In reaching our decision, we noted that, during the status quo period in which the status quo period, and we upheld that determination. Id. at 770 - 71, 777. 2 m aking a unilateral change in the terms and conditions of employment during The PELRB found that the c ity had committed an unfair labor practice by

violated the CBA as w ell as several provisions of RSA 273 - A:5, I. Id. members constituted a unilateral change in the conditions of employment that personnel to perform the same work as had been performed by bargaining unit labor practice, the combination of the layoff with the hiring of part - time would neither have violated the terms of the CBA nor constituted an unfair an unfair labor practice c harge. Id. It asserted that, although a “pure” layoff wages and woul d not receive fringe benefits. Id. The u nion responded by filing and repl aced with over 30 part - time custodians, who would be paid lower it planned a reorganization in which 28 full - time custodians would be laid off 770. While the negotiations were in progress, the c ity informed the u nion that negotiation of a successor agreement. Appeal of City of Nashua, 141 N.H. at ba rgaining agreement between the city and the u nion, the parties commenced In Appeal of City of Nashua, following the expiration of a collective

We agree with the District. Union, in essence, asserts that they do; the District argues that they do not. subcontract work that is performed by Union members under a CBA. The (1999), preclude a public employer from ever unilaterally determining to 7 p. 6 68 (1997), and Appeal of Hillsboro - Deering School Dist rict, 144 N.H. 27 our prior decisions in Appeal of City of Nashua B oard of Educ ation, 141 N.H. Reduced to its essence, the issue before the court in this case is whe ther

of law de novo.” Id. Fighte rs of Hudson, 1 p. 6 6 p. 7 7 N.H. at 51. “We review the PELRB ’ s rulings on issues whether the findings are supported by competent evidence in the record.” Fire have found differently or to reweigh the evidence, but, rather, to determine reviewing the PELRB ’ s findings, our task is not to determine whether we would presumed prima facie lawful and reasonable.” Id.; see also R SA 541:13. “In 7

tools and instrumentalities needed to ac complish their tasks, and the details of as the instruction, training, and orientation of the workers, the provision of the District to delegate to the independent contractor responsibility for such things typically characterize s the employer - emplo yee relationship, allowing the District of the responsibility for providing the kind of close supervision that perform the same work. The use of an independent contractor relieves the more than simply substituting one group of individuals for another group who employees with workers provided through an independent contractor involv es from the relationship that existed under the expired CBA. The replacement of between the District and its custodial staff — one lacking contractual privity — contractor. Thus, the proposal envisions a qualitative ly different relationship the District, but rather will be employees of an independent third party workers who perform custodial work for the District will not be employees of (full - time) with employees of another kind (part - time). Under the plan, the reorganization in this case does not involve replacing employees of one kind First, unlike in Appeal of City of Nashua, th e District’s proposed

from the foregoing cases in important respects. Here we find strong reasons not to do so because th is case is distinguishable to adhere to those decisions, we are under no obligation to expand their reach. analysis demonstrating a proper basis to do so. Although we are thus bound Nashua or Appeal of Hillsbor o - Deering, nor provided us with a star e decisis Neither party has asked us revisit our decisions in Appeal of City of

claim of impact on the terms and conditions of employment.” Id. at 34. ‘reorga nization’ is a classic example of managerial policy and outweighs the (Horton, J., joined by Thayer, J., dissenting). In the dissent’s view, “such a contractor in charge with full responsibility for the function.” Id. at 33 - 34 not laying off to rehire new workers at a cost saving, but to put a private case distinguishable from Appeal of City of Nashua, in that the district “was district. Id. at 31 - 33. The dissent in Appeal of Hillsboro - Deering found the subject of bargaining, and could not be unilaterally implemented by the the same duties satisfied all prongs of the test, was ther efore a mandatory that replacing bargaining unit members with subcontract ed workers to perform added). Again applying the three - part test of Appeal of State of N.H., we found perform identical services, during the term of the CBA.” Id. at 29 (emphasis bargaining unit employees, so it could subcontract with private companies to ruled that the school district committed an unfair labor practice by laying off On appeal, we de lineated the issue before us as “whether the PELRB correctly within its sole discretion under the CBA and RSA 2 p. 7 73 - A:1, XI. Id. at 2 p. 8 8 - 29. rejecting the district’s claim that its decision to subcontract was a matter at 28. The PELRB sustained the union ’s u nfair labor practice complaint, employed by an independent contractor. Appeal of Hillsboro - Deerin g, 144 N.H. members of the bargaining unit and subcontracted their duties to workers bargaining agreement, the school district terminated the employment of all In Appeal of Hillsboro - Deering, during the term of an existing collective 8

doctrine in light of these terms, it is important to note a crucial difference culminates in binding arbitration. In considering application of the status quo contract out work are subj ect to a four - step bargaining procedure which indicates that some contracting - out can occur; it provide s that proposals to contracting out work. However, Article 5.2 goes on to include language that p ro hibit the District from laying off bargaining unit members as a result of subcontracting. The first sentence of Article 5.2.A of the CBA seems flatly to expired on June 30, 2016 is ambiguous with respect to the issue of layoffs and to subcontract custodial work to an independent contractor. T he CBA that District would be perpetually precluded from reorganiz ing its operations so as doctrine in the manner that the Union ad vocates, the result could be that the Here, we agree with the District that, if we were to apply the status quo

of the work of bargaining unit member s. reorganize its operations by contracting with a third party for the performance CBA, it is within the management prerogative of a public employer to decision, we had no occasion to consider whether, after the expiration of the subcontract bargaining unit work during the term of the existing CBA. In that that that case involved an effor t by the school district to lay off employees and Third, this case is distinguishable from Appeal of Hillsboro - Deering, in

bargain ing process. negotiations, there is far less danger that the reorganization will disrupt the in any way tied to other issues that would be the subject of the future negotiation, and the record contains no indication that the reorganization was here, the District provides notice of the reorganizat ion in advance of with a view to obtaining concessions on other, unrelated issues. Whe re, as unfair effort to skew the level playing field of the bargaining process, perhaps bargaining for a successor a greement is more likely to be perceived as an because a proposed reorganization by management made during the course of before negotiations for a successor CBA commenced. This i s significant Union of its intention to lay off the custodians at the expiration of the CBA contract with members of the same bargaining unit. Instead, it notified the not propose its reorganization plan during the time it was negotiating for a new Second, in this case, unlike in Appeal of City of Nashua, the District did

employees with part - time employees at issue in Appeal of City of Nashua. independent contractor is far differe nt from the replacement of full - time replace its custodial employees with subcontract ed workers employed by an personnel) required by the organization. In short, the District’s decision to may reduce the need for the level of support staff (e.g., human resource management employees to devote more time and effort to other duties, but also relieving management of these responsibilities, the employer not only enables question of whether person is employee or independent contractor). By Manchester, 13 p. 9 9 N.H. 220, 221 - 22 (1994) (reciting factors that bear up on the manner in which the work is accomplished. See Petition of City Cab of 9 decision in Appeal of Hillsboro - Deering. Teachers Ass'n c ase from its own Hillsboro - Deering decis i on also is not undermined by our 144 N.H. at 27. Consequently, the basis upon which the PELRB distinguished the Lisbon of the PELRB decision in the Hillsboro - Deering case. See generally Appeal of Hillsboro - Deering, Lisbon Teachers Ass ’n case, our opinion did not in any way undermine or question the reasoning Although our decision in Appeal of Hillsboro - Deering came after the PELRB’s decision in the 3

a given organizational structure or category of employees this were not the case and manage ment was required to maintain management may make changes in its organizational structure. If [I]t is apparent that there is an appropriate time when

decision in Appeal of City of Nashua, the PELRB reasoned: of its prior decisions, including its Hillsboro - Deering decision, as well as our Teachers Ass ’n, PELRB Decision No. 1 p. 9 998 - 067, at 5. After reviewing a number therefore, would not negotiate salary or benefits for that position. Lisbon the school nurse position and to subcontract for nursing services, and that it, announcement that at the end of the then - current CBA it intended to eliminate practice charge filed by the union based up on the school district’s affirmed, in Appeal of Hillsboro - Deering, the PELRB rejected an unfair labor 3 that case, which was decided by the PELRB after its dec ision, which we Regional School Dist rict, PELRB Decision No. 1998 - 067 (Aug. 12, 1998). In decision in Lisbon Teachers Association, NEA - New Hampshire v. Lisbon City of Nashua and Appeal of Hillsboro - Deering is supported by the PELRB’s The District’s position that this case is distinguishable from Appeal of

may improperly shift the balance of collective bargaining in favor of the union). (1 p. 9 993) (noting concern that overly expansive application of status quo doctrine hands of an arbitrator. Cf. Appeal of Milton School Dist., 1 37 N.H. 240, 245 - 46 fate of the District’s plan would be removed from its control and placed in the for layoffs. And, at best, during the continuation of the status quo period, the reorganization plan by the Union refusing to agree to a ne w CBA t hat allowed CBA, the District could be effectively preclude d fro m ever implementing its 5 of the now - expired CBA remain in effect until agreement is reached on a new If the status quo doctrine were a pplied to require that the terms of Article

reopened.”). resolved following the action of the legislative body, negotiations shall be 2016) have been exhausted. See RSA 273 - A:12, IV (“If the impasse is not of the dispute resolution procedures specified in RSA 273 - A:12 (20 p. 10 10 & Supp. obligation to continue ba rgaining even after impasse has been reached and all (1 p. 9 991). Under the PELRA, however, the employer is not relieved of its bargaining. S ee Litton Financial Printing v. N. L. R. B., 501 U.S. 190, 198 to implement unilaterally the terms consistent with its proposals made during private sector, after good faith bargaining to impasse, the employer is entitled bargaining under the Public Employees Labor Relations Act (PELRA). In the between p rivate sector collective bargaining and public sector collective 10 Teachers Ass ’n decision at all. In fact, the PELRB’s decisions in these later cases neither cited nor discussed its Lisbon 4

that, by unilaterally making the decision to lay off custodians and replace them The Union also argues, however, that the PELRB correctly determined

16 CBA. and replace them with subcontracted workers after the expiration of the 2013 bargain with the Union c oncerning its plan to lay off its custodial employees hold that the District did not commit an unfair labor practice by refusing to functions. See Appeal of State of N.H., 138 N.H. at 722 - 23. Accordingly, we N.H. test because it would unduly interfere with public control of governmental doctr ine in this manner does not satisfy the third step of the Appeal of State of Squarely facing this issue now, we conclude that applying the status quo occasion to consider in Appeal of City of Nashua or Appeal of Hillsboro - Deering. bargaining unit members with subcontracted workers was not a matter w e had veto over the District’s ability to reorganize its structure so as to replace in a manner that would effectively give the Union or an arbitrator a perpetual governmental functions.” The implications of a pplying the status quo doctrine direction and number of its personnel, so as to continue public control of include [s] . . . the public employer’s organizational structure, and the selection, “‘ managerial policy ’ within the e xclusive prerogative of the public employer. . . its reasoning. RSA 273 - A:1, XI (Supp. 2016) specifically provides that subcontracting issue in Lisbon Teachers Ass ’n was correct, and we now adopt eit her case for its failure to do so. We think the PELRB’s treatment of the 4 adhere to the reasoning of Lisbon Teachers Ass ’n, it gave no explanation in No. 2014 - 080 (Mar. 28, 2014), and in the instant case, the PELRB did not Professionals United, NE A - NH v. Farmington School Dist rict, PELRB Decision Alth ough in its subsequent decision in Farmington Education Support

(emphasis in original). after the conclusion of the current CBA.” Id. (quotation and italics omitted) position and not negotiate salary or benefits for it for School Year 1999 - 2000, ch. 273 - A when it gave notice of its inten t to eliminate the school nurse that the [school district] acted reasonably, prudently and in concert with RSA the status quo doctrine do not become final forever,” the PELRB “conclude[d] make clear that “[t]e rms and conditions of employment imposed as the result of Id. After also observing that in Appeal of City of Nashua we were careful to

CBA. This maintains the integrity of the CBA during its term. organizational structure should come at the conclusion of a given It makes sense that the break point for changes in

to ‘continue control of governmental functions.’ RSA 273 - A:1, XI. indefinitely, it would lose control of its expenditures and its ability p. 11 11

DALIANIS, C.J.