Subcontracting Made Easier


Over two decades ago, the Minnesota Supreme Court held that the decision by a public employer to contract out bargaining unit work is an inherent managerial right and the employer is not required to negotiate this decision with the affected union.  Indep. Sch. Dist. No. 88, New Ulm v. Sch. Serv. Emp. Union Local 284, 503 N.W.2d 104 (Minn. 1993).  Seems pretty cut and dry, right?  Well, not so fast.  While the Court held that subcontracting is a decision left to the school district, the Court went on to hold that “…the school district still must negotiate over the effects of its decision and may not unilaterally contract out the work until impasse has been reached…”  Id. at 105 (emphasis added).

Since the issuance of this decision, its application has been the source of controversy between school districts and unions.  What exactly is considered an “effect” that must be negotiated?  How is impasse defined when BMS mediators are not authorized to declare impasse?  Recently Jennifer Earley, shareholder at Ratwik, Roszak & Maloney, P.A., received two favorable decisions on behalf of her school district clients upholding their right to subcontract work, even if it meant the elimination of an entire bargaining unit. See SEIU Local 284 v. ISD 2687, Howard Lake, BMS No. 17-PA-0025 (Arb. Latimer, January 19, 2017); SEIU Local 284 v. ISD 727, Big Lake, BMS No. 17-PA-0139 (Arb. Ver Ploeg, March 31, 2017).

In these decisions, the arbitrators reiterated the holding of the Court in New Ulm, that absent an express waiver in the contract, the school districts had the inherent managerial right to subcontract.  Arbitrator Ver Ploeg further determined in the Big Lake decision that, contrary to the Union’s arguments, the recognition and duration clauses of the contract do not create an implied obligation to negotiate the decision to subcontract.  Arbitrator Latimer and Arbitrator Ver Ploeg also were unpersuaded by the union’s arguments that impasse had not been reached.  It was determined in both cases that, as neither party was willing to change its position following the last best offers submitted by the school districts in mediation, impasse had been reached.  Finally, the school districts were able to create a record that evidenced their decisions were not impacted by improper motivations or anti-union animus.

If your school district is seeking to explore the benefits of subcontracting, these cases evidence that a public employer can permissibility implement this decision with a methodical and well planned approach in negotiations.  If you would like more information as to what steps can assist your school district in attaining these results, our attorneys are available to offer you such guidance.