H.E. NO. 84-66

STATE OF NEW JERSEY

BEFORE A HEARING EXAMINER OF THE

PUBLIC EMPLOYMENT RELATIONS COMMISSION

In the Matter of

MONROE TOWNSHIP BOARD OF EDUCATION,

Respondent,

-and-	Docket No. CO-84-6-51

MONROE TOWNSHIP EDUCATION ASSOCIATION,

Charging Party.

Appearances:

For the Respondent, Aron & Salsberg, Esqs.

(Richard Salsberg, of Counsel)

For the Charging Party, Klausner & Hunter, Esqs.

(Stephen B. Hunter, of Counsel)

HEARING EXAMINER'S RECOMMENDED

REPORT AND DECISION

On July 5, 1983, the Monroe Township Education Association ("Association") filed an unfair practice charge against the Monroe Township Board of Education ("Board") with the Public Employment Relations Commission. The charge alleges that the Board violated the New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-1 et seq. ("Act"), specifically subsections 5.4(a)(1), (3), (5) and (6),1/ when it subcontracted all cafeteria services to a private contractor without first discussing this decision with the Association or offering to the Association any justification for the decision. The charge also alleges that the sole reason for the Board's subcontracting decision was to punish negotiations unit members for exercising their protected rights. It is further alleged that the Board's decision to subcontract after completion of contract negotiations, relating in part to cafeteria employees, has made a sham of the entire negotiations process.

It appearing that the allegations of the unfair practice charge may constitute unfair practices within the meaning of the Act, a Complaint and Notice of Hearing was issued on December 5, 1983. On December 12, 1983, the Board filed an Answer. The Board admitted having subcontracted its cafeteria services, however it claimed that its decision was a good faith exercise of an inherent managerial prerogative and further that it has granted the Association the opportunity to present its views on any economic issues implicated by its decision.

A hearing was held in this matter on March 12, 1984, in Newark, New Jersey, at which time the parties had the opportunity to examine and cross-examine witnesses, present relevant evidence, and argue orally. Post-hearing briefs and reply briefs were received by June 14, 1984.2/

An unfair practice charge having been filed with the Commission, a question concerning alleged violations of the Act exists, and after hearing and consideration of the post-hearing briefs, the matter is appropriately before the Commission by its designated Hearing Examiner for determination.

Upon the entire record the Hearing Examiner makes the following:

Findings of Fact

1.	The Monroe Township Board of Education is a public employer within the meaning of the Act and is subject to its provisions.

2.	The Monroe Township Education Association is an employee representative within the meaning of the Act and is subject to its provisions.

3.	There are approximately 240 unit members represented by the Association. Of these 240, approximately 20 are cafeteria employees.

4.	The Board and the Association entered into negotiations for a successor agreement on December 7, 1982. The new agreement became effective on July 1, 1983. Formal negotiation sessions were held on January 13th and 27th, February 14th, April 28th, May 12th and 24, and June 1st of 1983. Two informal sessions were conducted on June 6th and 12th (Transcript "T" pp. 7, 50, 144). The sessions conducted on February 14th and May 12th concerned the cafeteria employees exclusively (T 159).

5.	In the Fall of 1982 the Board Secretary and Business Administrator, Ronald Novak, with the consent of the Superintendent of Schools, Dr. Richard Marasco, asked Servomation, the managing company in charge of the cafeteria services, to prepare a cost benefit analysis. Mr. Novak wanted to see a cost comparison between continual employment of those employees by the Board or employment by an independent contractor (T 96). The net savings to the Board in subcontracting its cafeteria services were $14,404, and these savings came primarily from medical insurance (T 98). Sometime in either late December 1982 or early January 1983, Mr. Novak advised the Board of this labor cost comparison (T 98, 116).

Upon receipt of this information, the Board authorized Mr. Novak and Dr. Marasco to proceed further into the matter, however it gave no specific directions to them (T 99, 108, 139, 160).

6.	On or about April 15, 1983, Mr. Novak advertised for bids (T 9). No formal Board action was taken authorizing Mr. Novak to receive these bids (T 117).

Alternate bids were solicited: one for a bid with the cafeteria employees as employees of the independent contractor and one for a bid with the cafeteria employees as employees of the Board, but managed by the contractor (T 10).

Two bids were received and opened on May 4, 1983 (T 9, 10). Service Dynamics offered the lowest bid, however Servomation was the lowest responsible bidder (T 119).3/

7.	On May 12, 1983, during a negotiation session concerning cafeteria employees, John Wilson, a Board member, stated that there was little need to negotiate concerning the cafeteria employees since they probably would not be employed by the Board in the following year (T 25, 49, 76, 141).4/ Upon hearing this, members of the Association's negotiation team questioned the Board about the possibility of subcontracting the cafeteria services and were told by Dr. Marasco that no decision had been made by the Board and that the situation was merely under consideration (T 143). The Association requested that it be kept informed (T 41) and it made no requests to negotiate any aspect of the subcontracting decision (T 41).5/ There was no mention by any member of the Board's team that bids had been advertised or received (T 27, 50, 77, 142, 164).

Following the May 12th meeting, there were four more negotiation sessions, both formal and informal.

8.	On June 15, 1983, the parties signed a Memorandum of Agreement which was later ratified by the Association (T 82). In that memorandum there was the following language pertaining to cafeteria employees:

13.	The following articles are agreed to conditionally upon the Board maintaining the present type [of] cafeteria operation. Nothing contained herein shall restrict the Board's ability or right to restructure its cafeteria operation (e.g. full service operation with cafeteria workers employed directly by management company) in any way it (the Board) deems in the best interests of the school district. Therefore, the following are agreed to if the 1982-83 cafeteria operation continues in its present format for 1983-84:

(a)	A regular cafeteria employee substituting for another employee who receives a premium, will receive such premium pay beginning 3 days after the substituting duty commences.

(b)	Cafeteria employees shall receive 1-1/2 times the hourly rate for any work performed beyond 40 hours in a given week.

(c)	Uniform allowance (Article XXIII, A.) language intact -- change dollar amount to $80 for 1983-84 and $90 for 1984-85. (C-1 in evidence).

The Memorandum of Agreement was reviewed by various Association members three days prior to its execution (T 59, 78), and on June 15th, no questions were raised by the Association concerning the subcontracting issue (T 64).

9.	The bid of Servomation Corporation was accepted by the Board at a public meeting on June 22, 1983. The Board requested that Servomation offer contracts to all cafeteria employees who had been regularly employed by the Board during the 1982-83 school year (T 11).

10.	On June 27, 1983, Ronald Novak sent a letter to all of the cafeteria employees advising them of the Board's decision to subtract the cafeteria operation. The letter further stated that Servomation would offer employment to all of the cafeteria staff (T-1 in evidence).6/

A meeting was held between Arline Friscia and the cafeteria employees on June 27, 1983, at which the Board's subcontracting decision was discussed. The employees had not yet received Mr. Novak's letter and Ms. Friscia requested that she be informed as soon as they received notification that their contracts would not be renewed. It was at this meeting that the decision to file the instant unfair practice charge was made (T 44). Aside from the filing of the unfair practice charge, no other action was taken by the Association when it received word of the Board's decision.7/

11.	On July 5, 1983, the Association filed the present charge. In response to the charge, Dr. Marasco sent a letter to the Association's attorney, Stephen B. Hunter (R-2 in evidence). In that letter, Dr. Marasco stated that the Board did not believe that unfair practices had been committed. He further stated that:

Since, however, the Board's decision to subcontract its cafeteria services has obviously concerned your clients enough to ask you to file an unfair practice charge, the Board has authorized me to meet with the [A]ssociation again, at any reasonable time, in order to answer any questions it may have and to discuss the matter in full to any further degree that the [A]ssociation may care to. The Board stands ready and willing as it has in the past to explore any viable alternatives that the [A]ssociation may provide.

12.	On August 9, 1983, Dr. Marasco sent a letter to the cafeteria employees informing them that Servomation would be offering them employment and that Servomation had expressed a willingness to retain the salary rates that had been conditionally agreed upon during negotiations (R-3 in evidence).

13.	On August 17, 1983, the parties met with representatives of Servomation (T 8, 53, 54). The meeting centered around a discussion by the cafeteria employees about the benefits they would be receiving from Servomation (T 70, 111, 134, 152). There was no request by the Association to negotiate either substantive or procedural aspects of the subcontracting decision (T 66, 80, 110, 152).8/

Analysis

The undersigned has reviewed the record in this matter and finds that the Board did not violate the Act when it subcontracted its cafeteria services. The undersigned further finds that the Board did not refuse to negotiate those aspects of its subcontracting decision which are mandatorily negotiable.

This case is controlled by Local 195, IFPTE v. State of New Jersey, 88 N.J. 303 (1982). In that case the Supreme Court held that a public employer is not obligated to negotiate over its decision to subcontract. It further held however that the parties are free to discuss a public employer's decision to subcontract when that decision is based on purely economic reasons and when the subcontracting will result in layoffs or job displacements.9/ The Court also held that procedural aspects, such as notice to employees who are going to be laid off, are negotiable.10/

The Association claims that under the Local 195 decision, the Board had several obligations which it failed to meet. It first claims that the Board had an obligation to make full and timely disclosures concerning each and every aspect of its subcontracting decision, and to give its reasons for the decision before it was made. It also claims that the Board was obligated to advise the Association of whether it had advertised for bids and to keep the Association apprised of the status of the bidding process. It finally claims that the Board was obligated to negotiate over severance pay and reemployment rights.

Simply because the Supreme Court has allowed for discussion of subcontracting between a public employer and public employee representative when subcontracting is contemplated for purely fiscal reasons, this does not place a burden on the employer to make a full disclosure as the Association suggests, or even to discuss its decision.11/ In any event, the undersigned is satisfied that the Board committed no unfair practices by its actions.

To begin with, in order for there to be any discussion whatsoever on the subcontracting topic, the decision to subcontract must be made only for reasons of economy. While the Board admits that absent the financial considerations, it never would have subcontracted (T 128), the record shows that there were other reasons. Aside from relieving the Board of having to hire, fire and discipline the cafeteria employees (T 100-106), Ronald Novak testified that there had been some problems concerning the cafeteria supervisor, employed by Servomation, and the employees. He testified that on several occasions the supervisor had asked employees to perform certain tasks and they refused, claiming that they were Board employees and not obligated to follow the directives of non-Board employees (T 100). While these additional reasons were not weighty enough in themselves for the Board to decide to subcontract, the undersigned is convinced that they played a part in the Board's consideration.

Even if this were not the case however, and the Board's decision to subcontract was based solely on economy, it appears from the record that the Association was made aware of the Board's interest in subcontracting its cafeteria services and that there was opportunity to discuss this subject with the Board. The Association alleges that the Board violated the Act in failing to give it an opportunity, prior to making its decision to subcontract, to present its views or proposals on any economic issues implicated by its subcontracting decision, and that the Board had unfairly kept it in the dark concerning all aspects of the decision. It further alleged that it would have introduced negotiations proposals regarding mandatorily negotiable components of the subcontracting issue had the Board not led it to believe that it would be kept informed concerning the status of its subcontracting considerations.

While it is true that the Association was only made aware of the subcontracting decision during a negotiations session on May 12, 1983, and that no mention was made by the Board that it had either solicited or received bids for the cafeteria services, the fact remains that the Association was made aware of the subcontracting possibility more than a month before it executed a Memorandum of Agreement.12/ In subsequent negotiation sessions the record indicates that the Association raised the issue of subcontracting but chose not to pursue the discussions any further when the Board continued to tell its team members that no decisions had been made and that it would be kept informed. At no time did the Board refuse to discuss the issues relating to subcontracting and it was a risk assumed by the Association when it failed to pursue the discussion any further.13/

The record further indicates that the language in the parties' Memorandum of Understanding leaves no question that the Board still was contemplating a subcontracting decision. It was signed by the Association after several days of review. Association team member William Hoolihan testified that he interpreted the conditional language in the memorandum to mean that the Board had the right to subcontract its cafeteria services and that if it did, those clauses concerning the cafeteria employees would no longer bind the Board (T 60). He further stated that he did not question the Board about whether it was going to subcontract when he signed the memorandum (T 64). There is no indication that the Board either refused to discuss any aspects of its subcontracting decision or that the Association requested negotiations on the procedural components of its decision at any time prior to or at the signing of the memorandum.14/ The undersigned is not convinced by the Association's argument that the reason for its silence was because it was never certain that the Board actually was going to subcontract and until it knew that for sure, the necessity to discuss and negotiate did not exist.

Following the above line of reasoning, it is important to review the actions of both parties after the decision to subcontract was made on June 22, 1983. William Hoolihan testified that he was first informed by the N.J.E.A. of the Board's decision. He stated that once he was made aware of the decision he did not ask the Board to negotiate either procedural aspects or severance pay nor did he offer any alternative plans for the Board to consider (T 64, 65). Arline Friscia testified that on June 27, 1983, she held a meeting with the cafeteria employees who told her of the subcontracting decision. She told them to call her as soon as they received written notification that their contracts would not be renewed. She did not request negotiations with the Board or communicate with them in any way. Rather, on July 5, 1983 the Association filed an unfair practice charge.

The Association alleges that the filing of its unfair practice effectively put the Board on notice concerning its negotiations obligations and that once the charge was filed there was no need to make a formal demand to negotiate. While it is true that the Commission has issued several decisions in which it has stated that when an employer unilaterally alters a term and condition of employment the employee organization is free to file an unfair practice charge and is relieved of its obligation to request negotiations on that subject, those cases are not controlling in this instance.15/ In those cases the Commission first of all found that the employers had violated the Act by their actions and in so doing relieved the employee representatives from its obligation to request negotiations. The changes which resulted from the employer's action could not have been unilaterally made and the employers were obligated under N.J.S.A. 34:13A-5.3 to negotiate, prior to implementation, the proposed change. In the present instance, the Board had a managerial prerogative to subcontract its cafeteria services and was under no obligation to negotiate this decision. It engaged in several, albeit limited, discussions with the Association which it had no mandatory obligation to do, and never once refused to negotiate those aspects of the subcontracting decision which are mandatorily negotiable.

Although the undersigned is convinced that the Board has not violated the Act by its actions, it is important to note that the Board did respond to the Association's unfair practice charge and invited its attorney as well as the cafeteria employees to a meeting in which it welcomed the opportunity to discuss the subcontracting matter and listen to any proposed alternatives. If, as the Association suggests, it had no obligation to request negotiations after having filed its charge, it was under some obligation to pursue its negotiation interests at the meeting.16/ Two Association witnesses testified that at the meeting on August 17, 1983, the Association did not request negotiations on any aspect of the subcontracting but merely sought to discern how the cafeteria employees would be treated under their new employer. Whatever obligations the Board may have had, never arose, either prior to the filing of the unfair practice charge or subsequent thereto.

With respect to the Association's (a)(3) charge, the undersigned is not persuaded that the facts show that the Board subcontracted its cafeteria services in order to discourage its employees in the exercise of the rights guaranteed by the Act, and that the manner in which the Board's decision was made was so "inherently destructively" that the Association is relieved from offering any proof as to the Board's underlying motive. There is no nexus between the Board's decision to subcontract and any exercise of employee protected activity, and the Association has failed to meet its burden of proof as established in In re Bridgewater Township, 95 N.J. 235 (1984).17/

Accordingly, it is recommended that the Association's Unfair Practice Complaint be dismissed in its entirety.18/

/s/Nathaniel L. Fulk

Hearing Examiner

DATED:	June 18, 1984

Trenton, New Jersey