BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
TEAMSTERS "GENERAL" LOCAL NO. 200
ALLIANT FOODSERVICE, INC.
(James Avery Contracting Out Grievance)
Previant, Uelman, Gratz, Miller & Brueggeman, S.C., by
Attorney Jill M. Hartley, 1555 North RiverCenter Drive,
Suite 202, Milwaukee, WI 53212, appearing on behalf of the Union.
Vedder, Price, Kaufman & Kammholz, by Attorney Edward C. Jepson,
Jr., 222 North LaSalle Street, Chicago, IL
60601, appearing on behalf of the Company.
Pursuant to the provisions of the collective bargaining agreement between the parties,
Teamsters "General" Local No. 200 (hereinafter referred to as the Union) and Alliant
Inc. (hereinafter referred to as the Employer or the Company) requested that the Wisconsin
Employment Relations Commission designate Daniel Nielsen of its staff to serve as arbitrator
dispute over the Company's contracting for certain hauling work. The undersigned was so
designated. The matter was held in abeyance for a time while the parties attempted to reach
voluntary settlement Those efforts were ultimately unsuccessful, and a hearing was held on
2001, in Milwaukee, Wisconsin, at which time the parties were afforded full opportunity to
such testimony, exhibits, other evidence and arguments as were relevant to the dispute. The
submitted post-hearing briefs, which were exchanged through the Arbitrator on July 19,
whereupon the record was closed.
Now, having considered the testimony, exhibits, other evidence, contract language,
of the parties and the record as a whole, the undersigned makes the following Award.
To maximize the ability of the parties we serve to utilize the Internet and
software to research decisions and arbitration awards issued by the Commission and its staff,
footnote text is found in the body of this decision.
The parties stipulated that the issue before the Arbitrator is:
Did the Company violate the collective bargaining agreement
when it contracted with an
outside carrier to perform backhaul work previously performed by the bargaining unit; and if
is the appropriate remedy?
ARTICLE I. RECOGNITION
Sec. 1. The Employer
recognizes the Union as the sole collective bargaining representative
on all matters pertaining to wages, hours and working conditions for all truck drivers and
warehousepersons, excluding all salespersons, office clericals, guards, and supervisors as
defined in the "Act", and all other employees of the Employer at its W137 N9245, Hwy 145,
Menomonee Falls, Wisconsin location.
. . .
Sec. 1. The Union
recognizes that all inherent management functions and rights which are not
expressly modified or restricted by a specific provision of this Agreement are retained and
exclusively in the Employer.
. . .
Sec. 1. Definition:
(a) Seniority is defined as the length of continuous service with the
Employer since the Employee's date of hire. Drivers, Warehouse
employees and Green Bay Drivers shall each be
separate seniority groups.
b) When 2 or more candidates
are qualified, seniority shall prevail in all matters pertaining
. . .
Sec. 7. Each calendar year the
Company will post a bid offering all Bargaining Unit
employees the ability to bid for all positions covered by this agreement. The bid will list the
jobs, the shifts, and the hours of the bid being offered. Employees will sign for the jobs and
the Employer will award the jobs based on the employee's seniority and the ability to
the job. The bid will be posted for a ten (10) day period. The bidding process will be
on or about the first week of December.
The Company is food distributor. The Union is the exclusive bargaining
drivers and warehousepersons at the Company's Milwaukee, Wisconsin facility. The
grievant in this
case, James Avery, is a driver working out of the Milwaukee facility and a steward for the
Most of the Company's drivers are engaged in delivery product to customers from
Milwaukee warehouse. Avery and other drivers had, for many years, also performed
work from the Chicago area. Backhauling involves picking up product from vendors and
it to the Milwaukee warehouse for later delivery to customers. Avery bid into the job, which
occupied his entire schedule, four days per week, ten hours per day. On two of the days,
would pick up product in Chicago after first making deliveries in Michigan. On the other
Avery would typically deadhead to Chicago, running empty from Milwaukee and returning
picked-up product. Avery averaged 15 hours of overtime per week while performing the
work. Avery did the bulk of the backhauling work in Chicago, though other drivers would
do some of this work at least two days per week. The backhauling routes were claimed by
and were generally considered desirable work because there were fewer stops to be made.
In addition to the drivers in the bargaining unit, the Company would use contractors
some hauling. Typically this would involve a situation in which, because of vacations or an
pick-up, a driver was not available for a backhaul, or for a "hotshot" delivery when a
missed or the wrong product was delivered, and the Company needed to quickly correct the
Some routes were routinely handled by contractors. Contractors typically handled hauling to
customer in Rochelle, Illinois, and, in 1996, a backhauling route to Champaign, Illinois, was
contracted out. When contractors handled backhauling work, the contractor's driver would
the product at the warehouse. Local 200 members handled
unloading of product hauled by bargaining unit drivers. The Union challenged the use
for hotshot deliveries, and the parties settled the case on the basis of the work being shared
unit members and contractors. The Union has never challenged the Company's right to use
contractors for hauling when unit drivers are occupied with other work or otherwise
In the late winter of 1999, the Company transferred the Michigan deliveries that
been making to its Detroit warehouse. On March 8, 1999, Avery was advised that the
backhaul routes would be eliminated and the work transferred to a private contractor. The
was initially supposed to be completed in March, but was delayed until June because the
customers initially resisted the change from the Milwaukee warehouse to the Detroit
The instant grievance was filed, protesting the contracting of the Chicago backhaul
It was not resolved in the lower steps of the grievance procedure and was referred to
the arbitration hearing, in addition to the facts recited above, the following testimony was
James Avery testified that it was common for routes to be eliminated when customers
lost or work was transferred to other warehouses, but not by reason of having the routes
subcontracted. He was aware of the elimination of the Champaign backhaul route in the
and also knew that deliveries were still being received from Champaign after that
explained that the Union did not file a grievance because this happened at about the same
the Company was sold, and he assumed the elimination of the route was tied to the sale,
Champaign warehouse was owned by Kraft Foods, the former owner of the Company. He
acknowledged that the Union had never filed a grievance over the use of contractors to fill-in
unit members were not available, since they recognized the Company's need to adequately
customers and had no wish to prevent it from doing so. However, he distinguished the
elimination of backhauling in Chicago from the occasional use of contractors to supplement
bargaining unit. Avery said that the size of the bargaining unit had not diminished with the
contracting of the Chicago backhaul routes, and that he did not know of anyone who had lost
hours, though he felt he had probably lost some overtime opportunities.
Frank Rosiak, Jr. testified that he is the Company's Transportation Manager at
He was involved in the decision to eliminate the Champaign backhaul route in the spring of
have it covered by a contractor. That decision was based purely on economics, since it cost
half as much to use a contractor for that work. Rosiak said it had nothing to do with the sale
Company by Kraft Foods, since that took place in January of 1995. There were no layoffs
as a result
of the contracting out of the Champaign route, and no grievance was filed. Rosiak also
the Company regularly used contractors on the Chicago backhaul route, usually to cover an
in demand for
deliveries or if the regular driver was off work. These decisions were not discussed
with the Union.
Rosiak said there was one backhaul route to Rochelle, Illinois, that was primarily serviced by
contractors, though unit drivers would sometimes do pick-ups there as well.
Robert Stefani testified that he is the Company's Regional Vice President of
stated that the Company is in a very competitive business with extremely small profit
thus has a strong need to control costs. Stefani made the decision to eliminate the Chicago
route and use contractors. The decision was based entirely on costs. According to Stefani,
of performing backhauls with bargaining unit personnel was at least 25-30% more than the
using contractors, even before the labor costs of unloading and overtime for the drivers, and
costs for equipment were factored in. Before deciding to eliminate the backhaul route, he
the potential impact on the bargaining unit and determined that no layoffs would result from
contracting out the Chicago route. Stefani stated that there had been no layoffs as a result of
contracting or since that time.
Additional facts, as necessary, are set forth below.
ARGUMENTS OF THE PARTIES
The Position of the Union
The Union takes the position that the Company clearly violated the collective
agreement by contracting out unit work and that the grievance must be sustained. While the
does not contain a specific subcontracting clause, it does contain Recognition, Seniority and
clauses. Arbitrators have long recognized that the inclusion of such clauses is inconsistent
unfettered right to give away the work of the bargaining unit. If the Employer is free to
the work, which is the subject of the labor agreement, the contract is rendered meaningless.
Moreover, contracting out the work of the bargaining unit violates the basic presumption of
dealing, which underlies every labor contract. Reading the collective bargaining as a
and taking into account the assumptions of the parties that they are negotiating a meaningful
document which comprehensively governs the work performed by the bargaining unit, the
must read the labor agreement as restricting the Company's right to subcontract bargaining
The Union recognizes that the contract contains a relatively broad management rights
but points to arbitral authority holding that a general reservation of management rights cannot
overcome the Union's compelling interest in preserving the work of the bargaining unit.
the Company's attempt to justify the contracting out of unit work on economic grounds be
To say that contracting out can be justified by economic considerations is to say that workers
penalized for their success at the bargaining table, and that a Company can contract out work
whenever it feels it is in its interest to do so. Rather than
being a defense to a contract violation, subcontracting for economic reasons is more
as an admission of a contract violation evasion of the wage and fringe benefit clauses
The Union dismisses any argument that it has acquiesced in subcontracting in the
Admittedly, the Company has used some contract carriers on Illinois routes in the past, but
has been sporadic and only in response to unanticipated needs, such as an inability to cover a
bargaining unit members. It is a far different thing to permanently contract out work that is
and regularly performed by unit members. The Union's willingness to recognize the
needs in those unusual circumstances should not now be turned against it. Likewise, the
contracting out of the Champaign, Illinois route several years before this subcontract is not a
comparison. In that case, the Union understood that the reason for the contracting out was
Company's ownership had changed, and the route had essentially been eliminated. This
have been mistaken, but that is beside the point. The Union's sincere belief adequately
reason for not grieving the decision, and thus the contracting of the Champaign route does
to illustrate the contractual rights of the parties in this case.
The Union agrees that there have been no layoffs as a result of this contracting, but
that this is not relevant to the determination of a contract violation. Whether the bargaining
abolished in one fell swoop or eaten away through attrition, over the long run the impact of
subcontracting is the same. The jobs covered by the contract are eliminated, and the wage
the seniority protections, the recognition of the Union, and eventually the contract as a whole
rendered nullities. That end result would not be allowed and the whittling away that leads to
not be allowed.
For all of these reasons, the Union asks that the grievance be sustained and that the
be ordered to immediately restore the backhauling work to the bargaining unit.
The Position of the Company
The Company takes the position that the grievance is utterly without merit and must
denied. It is well settled that the Union bears the burden of proof in language interpretation
here the Union has failed to provide any proof in support of the grievance. While the Union
challenges the Company's right to employ outside contractors, it offers no proof of a
on that right. The reason for this failure is simply that there is no such restriction or
contract is silent as to subcontracting, and thus the only obligation of the Company is that
attaches to all management rights to act reasonably and in good faith. The record
shows that the
Company has met this standard.
The subcontract in this case was prompted by legitimate and non-discriminatory
concerns. The Company competes in a low margin business and the work which has been
subcontracted usually featured Company drivers dead-heading trucks to Chicago.
Plainly, it is economically unreasonable to require such a wasteful use of Company
Conversely, it is economically reasonable to contract out such work, since the contractor then
the cost of the empty truck.
In addition to the economic justification for this contracting decision, the Company's
does not appreciably impact the bargaining unit. The Company has, for years, used
haul product when Company employees were not available or when the runs took place
the normal schedule. Indeed, an entire route to Champaign, Illinois, was eliminated in 1996,
Company then used contractors to service its clients. This was done without protest from the
The work has been shared between bargaining unit members and contractors in the past
objection, and this case is not materially different from those cases.
Moreover, the Company asserts that the work in issue in this case is a de
minimis portion of
the unit's jurisdiction. The work at issue is picking up product from vendors, while the
of the Company is distributing product. The contracted work is a narrow and minor task
the overall work of the Company. Further, the evidence adduced at hearing shows that 1
of 45 worked full-time on this work and he reported no loss of earnings or benefits as a
of the contracting out.
Measured by a standard of reasonableness, the Company maintains that the
decision in this case must be upheld. It was amply justified by economic considerations and
consistent with the past practice of the Company. Further, the contracting was narrowly
a task, which was tangential to the primary work of the unit, and had a minimal impact on
bargaining unit and the employees. Accordingly, the grievance must be denied.
The question before the Arbitrator is whether the Company had the right to replace
bargaining unit personnel
with a contractor on the Chicago backhaul routes. The contract is silent as to contracting out
it neither specifically
prohibits it nor expressly allows it. The Union argues that the effect of the contract's silence
on this point is that
subcontracting is prohibited, by necessary implication flowing from the Recognition,
Seniority and Wage Clauses of
the contract. For its part, the Company argues that the effect of the contract's silence is to
render its managerial
decision-making subject to review under a general standard of reasonableness.
The Union's position has some support in reported arbitration awards, but it reflects
distinctly a minority view. The great majority of reported arbitration decisions on the subject
implied limitation on subcontracting do, as the Union argues, hold that there is no unfettered
to subcontract. 1/ However, the mainstream of opinion does not extend to saying that
subcontracting is flatly prohibited. Instead, the scope of management's right is defined on a
case-by-case basis, and turns on the reasons for the decision and the impact on the
union and the workforce. As suggested by the Company's argument, this is generally
referred to as
a test of reasonableness and reflects an effort to balance the employer's interest in promoting
efficiency and economy with the union's interest in protecting jobs and the integrity of its
unit. 2/ Depending upon the facts of a given case, arbitrators have weighed a wide variety
considered in attempting to determine whether management has met this standard. Among
1/ "When the contract is silent, many
arbitrators hold that the employer retains the right to subcontract in
pursuit of efficiency. No arbitrator, however, deems this authority to be unfettered."
Antoine, et. al., The Common
Law of the Workplace, (BNA, 1998) at page 113.
2/ See, generally, Volz,
et. al., Elkouri and Elkouri, How Arbitration Works, 5th Edition (BNA, 1997),
746-757, and cases cited therein; also, Wolf in Bornstein, et. al., Labor and
Employment Arbitration, 2nd Edition
(Matthew Bender), Chapter 25, at pages 25-28 through 25-37; The Common Law of
the Workplace, at page 114.
1. The existence of any
past practice of subcontracting work;
2. The justification
offered for transferring the work outside of the bargaining unit and
whether it represents a sound business reason;
3. The effect of the
transfer of work on the union itself and the integrity of the bargaining
4. The effect of the
subcontract on individual bargaining unit employees, and whether
employees are thereby deprived of their jobs, regular or overtime earnings, or promotional
opportunities, or are discriminated against;
5. The type of work
subcontracted and whether it is the customary work of the employees,
or merely marginal or incidental, and whether such work is often the target of
subcontracting in the industry;
6. The availability of
properly qualified employees to perform the work if it was retained in
the bargaining unit;
7. The availability of
the equipment and facilities to perform the work within the bargaining
8. The frequency with
which the work was performed in the bargaining unit;
9. The extent to which
the subcontract represents a permanent removal of the work from the
10. Whether there are unusual circumstances,
such as time limits, emergencies, or outside
forces which mandate performance of the work by a subcontractor;
11. Whether the parties
have negotiated over subcontracting in the past, and the outcome of
such negotiations. 3/
3/ See, Elkouri and Elkouri, How
Arbitration Works, at pages 751-753, and cases cited therein.
In this case, there is no evidence of a prior history of contract negotiations over
subcontracting and that criterion does not bear on determining the reasonableness of the
Certain other criteria cut in favor of the Union's position. The work of running backhauls
Chicago has been done by subcontractors, but it has principally been performed by
members and the subcontracting has usually been prompted by the unavailability of unit
a pick-up was needed. The work is being permanently removed from the bargaining unit,
notwithstanding the availability of qualified drivers and necessary equipment and facilities
Company's own operation. There are no "time limits, emergencies, or outside forces"
use of a contractor for the work. The decision is wholly within the Company's control and
purely for reasons of reducing costs, primarily labor costs.
Other factors cut in favor of the Company's decision. As noted, the decision to
was not aimed at punishing or undermining the bargaining unit it was a business
decision based on
the cost of backhauling with Company personnel and equipment versus the cost of having the
done by contractors. This particular factor cannot be viewed as controlling, however, since
justify all but the most blatantly retaliatory subcontracts. Assuming a competent and rational
management, all decisions should have the effect of either increasing efficiency or reducing
this case, the legitimate reasons for the decision do not stand alone in support of the overall
reasonableness of the decision. Also weighing in the Company's favor are the facts that the
the bargaining unit is not affected, no employee was laid off as a result of the subcontract,
employee lost hours as a result of the subcontract and no employee demonstrably lost
as a result of the subcontract. That said, the strongest support for management's position
from the nature of the contracted work and the past practices of the parties.
The work of backhauling product from vendors is not the principal work of the
unit. Delivering product is what the drivers primarily do. Moreover, in about half of the
Chicago backhauling work required deadheading, which is obviously an expensive and
inefficient proposition for the Company. The transfer of the Michigan routes to the Detroit
warehouse would exacerbate this problem, as it would eliminate the delivery runs that
to avoid deadheading on two of the four days he backhauled from Chicago.
More important than any other factor in this particular case, is the past practice of
contractors to perform backhauling. While I agree with the Union that the use of contractors
"hotshot" deliveries and pick-ups and the occasional use of contractors to supplement the
established routes does not open the door to widespread contracting, the Company has for
primarily used contractors on a backhaul route to Rochelle, Illinois, and has exclusively used
contractors for backhauling on the former Champaign route since the mid-1990's. Avery
at the hearing that he assumed the elimination of the Champaign route was the result of the
the Company, but as the Company pointed out, the contracting of this route took place well
year after the Company was sold, and Avery conceded that he knew the route was still being
since product was still coming into Milwaukee from Champaign. The most reasonable
of the record is that the Company contracted this backhauling for economic reasons, that the
knew or should have known that a contractor was being used for the Champaign route, and
Union made no protest. This clearly demonstrates the Company's belief that the use of
was allowable in these situations. It also suggests that the Union understood that a contractor
be appropriately used where there was a compelling justification. At a minimum, the past
contractors for this work supports the Company's argument that the contracting here was a
reasonable exercise of management's rights.
The issue before the Arbitrator is whether the contract evinces a mutual intent by the
to prohibit the subcontracting at issue here. The contract is silent, leaving the decision to
fall on the test of reasonableness. Given the lack of substantial impact on the unit or unit
the specific nature of the work at issue, the strong business justification for using a
contractor on this
specific work and the practice of using contractors on backhaul routes in the past, including
complete elimination of a backhaul route in favor of contractors, I conclude that the balance
case favors the decision of the Company.
On the basis of the foregoing, and the record as a whole, I have made the following
The Company did not violate the collective bargaining agreement when it contracted
outside carrier to perform backhaul work previously performed by the bargaining unit. The
Dated at Racine, Wisconsin, this 11th day of October, 2001.
Daniel Nielsen, Arbitrator