Illinois Appellate Court Upholds School Board Decision Regarding Subcontracting of Transportation Services Reversing IELRB

By April 2, 2014April 29th, 2015News

In a major ruling affecting all Illinois school districts, on June 5 the Illinois Appellate Court (Fourth District) reversed the decision of the Illinois Educational Labor Relations Board (“IELRB”).

The IELRBhad ruled that McLean County Unit District No. 5 violated the Illinois Educational Labor Relations Act(“IELRA”) when it unilaterally entered into a contract for transportation services with an outside contractor without bargaining in good faith to impasse, and terminated union members for their union activity. (See June 2013Extra Mile.)

Given the importance of the IELRB decision and its impact on all Illinois school districts, your professional organization, the Illinois Association of School Boards, retained HLERK to file a “friend of the court” brief with the appellate court. The brief, authored by Stan Eisenhammer and John DiJohn, successfully argued that the IELRB’s decision was incorrect, both legally and factually.

In Community Unit School District No. 5 v. IELRB, the school district decided to explore subcontracting its transportation services after American Federation of State, County, and Municipal Employees Council 31 (“AFSCME”) was certified by the IELRB as the exclusive representative of its bus drivers and monitors and after it issued its demand to bargain an initial contract. After several months of bargaining, AFSCME refused to issue its final best proposal to the school district. The district then entered into a subcontract which resulted in a $1.5 million cost savings to the school district and eliminated the operational issues that it incurred with the transportation department.

The IELRB upheld AFSCME’s retaliation claim because it determined that the school district’s stated reason for subcontracting, cost savings, was not legitimate where the school district did not mention it until after the parties had been bargaining for several months and did not establish that it was experiencing financial problems.

Realizing its factual findings were on shaky ground, the IELRB bolstered its position by declaring the school district’s act of subcontracting was “inherently destructive of employee rights” because such a finding would permit the IELRB to overlook any legitimate employer objective and find a violation. The IELRB also found that the school district lacked an “open mind and sincere desire to reach an agreement with AFSCME” and, thus, bargained in bad faith, because the school district did not offer any proposals other than the bid received from the third party vendor which proposed to perform the bargaining unit work at a savings of approximately $1.5 million.

The appellate court reversed the IELRB’s decision, finding that the record did not support a finding of anti-union animus when there was no evidence establishing that the school district had any other viable alternatives to outsourcing or that it did nothing to address the operational issues facing the transportation department.

Importantly, the appellate court also rejected the IELRB’s finding that the school district’s proffered business reasons for its actions lacked legitimacy. Instead, the court recognized that the school district could not have known of any potential cost savings until it had solicited and opened bids, and it was not imperative for the school district to demonstrate that it was having financial problems.

Further, the appellate court expressly refused to apply the “inherently destructive” doctrine to subcontracting. In so doing, the court stated that subcontracting “is both an inherent managerial right and an economic weapon of self-help. . . [t]hus, an employer’s ability to outsource, or threaten outsourcing, is part of the bargaining process and an important weapon in negotiations.”

The appellate court also held that the IELRB erred in its finding that the school district bargained in bad faith because it did not offer any proposals other than the subcontractor’s bid. That IELRB finding ignored prior precedent establishing the requirements for good faith bargaining in a subcontracting context, in which an employer’s refusal to move off of the subcontractor’s bid was not evidence of bad faith. The court stated that “. . . if the employer were required to compromise [its position], the IELRB would in effect be determining the substance of the bargaining agreement and the circumstances under which an employer could determine to contract out bargaining unit work.”

Contact Stan Eisenhammer or John DiJohn with your subcontracting inquiries or about the application of the appellate court’s ruling to your school district.