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American Federation of State v. Pennsylvania Labor Relations Bd.

Supreme Court of Pennsylvania

March 25, 2015


Argued October 7, 2014.

Page 1141

Appeal from the Order of the Commonwealth Court at No. 929 CD 2012 dated 8/1/13 which affirmed the order from the Pennsylvania LaborRelations Board at No. PERA-C-10-185-E dated 4/17/12. Appeal Allowed March 5, 2014 at 640 MAL 2013.

Intermediate Court Judges: Dan Pellegrini, President Judge, Bernard L. McGinley, Judge, Renee Cohn Jubelirer, Judge, Robert E. Simpson, Judge, Mary Hannah Leavitt, Judge, P. Kevin Brobson, Judge, Patricia A. McCullough, Judge.

For Luzerne County, INTERVENOR: Scott Charles Gartley, Esq., Koff, Mangan, Vullo, Gartley & Lach, P.C., Robert David Zaruta, Esq.

For American Federation of State, County and Municipal Employees, District Council 87, APPELLANT: Amy Louise Rosenberger, Esq., Willig, Williams & Davidson.

For Pennsylvania Labor Relations Board, APPELLEE: John Best Neurohr, Esq., Carolyn M. Sargent, Esq., PA Labor Relations Board.

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, MCCAFFERY, STEVENS, JJ. MR. CHIEF JUSTICE SAYLOR. Former Chief Justice Castille, former Justice McCaffery and Mr. Justice Stevens did not participate in the decision of this case. Messrs. Justice Eakin and Baer and Madame Justice Todd join the opinion.


Page 1142


This discretionary appeal addresses whether a county was required to bargain collectively with a union representing county employees before a local workforce investment board could seek competitive bids for the provision of workforce development services previously provided by the county employees. The primary issue is whether the local board acted as the county's agent when it sought bids and contracted with private entities for the services in question.

In 1998 Congress passed the Workforce Investment Act (the " WIA" ),[1] a portion of which pertains to the establishment and functioning of state and local workforce investment systems. See 29 U.S.C. § § 2811-2872. The WIA allocates funds for distribution to state and local workforce investment boards with the goal of improving the quality of the workforce, increasing participants' employment, retention, and earnings, and reducing welfare dependency. See 29 U.S.C. § 2811; 81 C.J.S. Soc. Sec. & Pub. Welfare § 32 (2014). See generally Richards v. City of Lowell, 472 F.Supp.2d 51, 58 (D. Mass. 2007); 10 HR Advisor: Legal & Practical Guidance Issue 3 (2004).

Pursuant to the WIA and its state counterpart, the Workforce Development Act (the " WDA" ),[2] Pennsylvania is divided into a number of geographic regions known as workforce investment areas, each overseen by a local workforce investment board. See 29 U.S.C. § § 2831-2833; 24 P.S. § § 6250.501-6250.505.[3] These local boards are tasked with setting policy and establishing workforce development services in their geographic region in collaboration with various educational institutions. See 24 P.S. § 6250.501. The majority of the local boards' membership consists of individuals engaged in private business. The remaining members are drawn from such entities as local educational institutions, economic development organizations, community-based groups, and labor organizations.

Page 1143

See 24 P.S. § 6250.502(a)(1). Under the WDA, all local board members should be " individuals who have optimum policymaking authority within the organizations, agencies or other entities which they represent." 24 P.S. § 6250.502(a)(2).

The geographic area consisting of Luzerne County (the " County" ) and Schuylkill County has been designated as the Luzerne/Schuylkill Workforce Investment Area, also termed the NE075 local workforce investment area. To serve this area, the Luzerne/ Schuylkill Workforce Investment Board (the " Local Board" ) was incorporated in 2006 as a Pennsylvania nonprofit corporation. The Local Board consists of 43 members, 24 appointed by the Luzerne County Commissioners, 17 appointed by the Schuylkill County Commissioners, and two appointed by the Commonwealth. The members are appointed to staggered, fixed terms and can only be removed for conflicts of interest. See 29 U.S.C. § 2832(g); 24 P.S. § 6250.503. The Local Board oversees federally-funded services to residents of Luzerne and Schuylkill Counties under Title I of the WIA, including adult and dislocated worker services, as well as youth programs (the " Title I programs" ).[4] The Local Board also acts as the conduit to provide services on behalf of the Department of Public Welfare (" DPW" ), which include Employment Advancement and Retention Network (" EARN" ) services.[5]

In 2007, after competitive bidding, the Local Board awarded a contract to the County's Workforce Investment Development Agency (the " County Agency" ) to provide Title I youth services in the County until June 30, 2010. The County Agency employed 39 individuals who carried out the agency's duties under the contract and provided other Title I and EARN services. Such individuals are part of the residual bargaining unit of Luzerne County employees, which is exclusively represented by Appellant, the American Federation of State, County and Municipal Employees, District Council 87 (the " Union" ). The Union maintains a collective bargaining agreement with the County (the " CBA" ); the CBA in force between the Union and the County at all relevant times was finalized in September 2009. During CBA negotiations, the County did not propose any language concerning the contracting-out of residual bargaining unit work. The Local Board, which contracted out the work in question, is not a party to the CBA.

In May 2009 the Pennsylvania Department of Labor and Industry (" L& I" ) released a performance audit for NE075, identifying thirteen deficiencies with regard to the provision of Title I and EARN services and requiring a corrective plan. At that time the County Agency's executive director was acting as fiscal agent for NE075. He submitted a corrective plan;

Page 1144

however, it did not cure all deficiencies. In November 2009, Maryanne Petrilla, Chair of the Luzerne County Board of Commissioners, transferred fiscal agent status to the Local Board and made the Board the recipient of WIA funds. The Local Board eventually submitted to L& I a plan of corrective actions to remedy any outstanding problems.[6]

At some point in November 2009 after becoming fiscal agent for NE075, the Local Board met with Ms. Petrilla, as well as her counterpart from Schuylkill County, and informed them that it had decided to seek competitive bids for all Title I and EARN programs then being handled by the County Agency. The chairpersons concurred with this decision. Several months later, in March 2010, the Local Board issued requests for proposals (" RFPs" ), seeking bids from parties interested in providing Title I and EARN services beginning July 1, 2010. The Union wrote to the County demanding that it engage in collective bargaining over any proposed contracting-out of its bargaining unit work, but the County did not respond.

The Local Board's RFPs indicated that its choice of contractor(s) would be subject to approval by the County. The County Agency submitted a bid in an effort to continue providing workforce development services. However, the Local Board did not select the County Agency's bid and instead awarded contracts to three private entities.

Consistent with the RFPs' representation concerning County approval, the Local Board submitted its choice of the three companies to the County, terming it a recommendation. The County, however, never acted on the submission. Chairperson Petrilla testified that, although she and the other County Commissioners were upset over the County Agency losing the work, they had been advised by the County solicitor that the Local Board could make the decision autonomously and that the Commissioners had no authority to vote on the selection of a provider. Likewise, the Local Board was advised by its attorney that County approval was unnecessary. Thus, the Local Board entered into contracts with the providers without receiving any input from the County.[7] These companies began providing Title I and EARN services on July 1, 2010, at which time the County Agency's employees were discharged.

Meanwhile, in late May 2010, the Union filed a charge of unfair labor practices with the Pennsylvania Labor Relations Board (the " PLRB" ), alleging that the County had violated Sections 1201(a)(1) and (5) of the Public Employe Relations Act (" PERA" ).[8] See 43 P.S. § § 1101.1201(a)(1), (5). 

Page 1145

Subsection (a)(1) precludes public employers from interfering, restraining, or coercing employees in the exercise of their PERA rights, see id. § 1101.401 (relating to employee rights), and subsection (a)(5) prohibits public employers from refusing to bargain collectively in good faith with the exclusive representative of employees in a particular bargaining unit. See id. § 1101.1201(a)(5).

Under prevailing Pennsylvania law, subsection (a)(5)'s good-faith bargaining requirement has been understood to mean that a public employer must bargain to a bona fide impasse before moving bargaining-unit work to a private contractor. See Snyder County Prison Bd. v. Pa. Labor Rels. Bd., 912 A.2d 356, 364 (Pa. Cmwlth. 2006); cf. PLRB v. Mars Area Sch. Dist., 480 Pa. 295, 389 A.2d 1073 (1978) (holding that a school district violated PERA by firing its teacher aides and replacing them with volunteers without first bargaining with the teacher aides' bargaining agent). Thus, the Union alleged that, by issuing RFPs and unilaterally contracting out the Title I and EARN work without first engaging in collective bargaining, the County violated this provision and more generally " interfered, restrained, and coerced employees in the exercise of their rights" under PERA. Charge of Unfair Practice(s) under PERA at 2, R.R. 4a. Although ...

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