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THE SUPREME COURT OF NEW HAMPSHIRE

___________________________

Public Employee Labor Relations Board

No. 2016-0558

APPEAL OF NASHUA SCHOOL DISTRICT

(New Hampshire Public Employee Labor Relations Board)

Argued: June 1, 2017

Opinion Issued: October 4, 2017

Jackson Lewis P.C., of Portsmouth (Thomas M. Closson on the brief and 

orally), for Nashua School District.

Sean R. Cronin, of Manchester, on the brief, and Joseph L. DeLorey, of 

Boston, Massachusetts, on the brief and orally, for AFSCME, Council 93, Local 

365.

LYNN, J. The Nashua School District (District) appeals an order of the 

New Hampshire Public Employee Labor Relations Board (PELRB) finding that 

the District committed an unfair labor practice by refusing to bargain with the 

American Federation of State, County, and Municipal Employees (AFSCME), 

Council 93, Local 365, Nashua Custodial/Janitorial Staff (Union) concerning 

the District’s plan to subcontract custodial work at the expiration of the term of 

the collective bargaining agreement (CBA) between the parties. We reverse and 

remand.
2

I

The pertinent facts are as follows. The most recent CBA between the 

District and the Union covered the period from July 1, 2013 through June 30, 

2016. The CBA encompassed the employment of all full-time and part-time 

custodians and maintenance personnel employed by the District. Three 

provisions of the CBA are pertinent to the present dispute.

Article 5, entitled “Volunteering and Subcontracting,” states, in relevant 

part:

5.2 A. The District agrees there will be no layoffs, demotions or 

involuntary transfers as a result of contracting out work. 

Regardless of subcontracting, in the event of any layoff 

within a classification, the District shall cease to utilize 

any subcontractor for work specific to that classification 

except for work identified on the master list or previously 

agreed upon contracted projects, until such time [as] the 

staffing levels return to the pre-layoff levels. The Director 

of Plant Operations shall maintain a master list, initialled

by both parties, with mutually agreed-upon work that has 

been historically subcontracted out. Work on the master 

list shall not be assigned to bargaining unit employees to 

complete.

B. 1. The District shall present the work it is contemplating 

to subcontract in a reasonable period in advance and not 

delay the work so the volume of work is anything but for 

unforeseen circumstances. The Union shall respond in 

five (5) working days, or the District shall proceed with 

subcontracting the work.

2. The District shall identify the primary classification in 

accordance with the bargaining unit job description that 

it believes will be used in the work to be discussed. If the 

work will be completed on overtime, the District will post 

the overtime opportunity upon notice from the Union 

under Section B.1. above and the Union shall have the 

opportunity to survey the work force for interest and 

availability. If the agreed upon necessary workforce is not 

available by the mutually agreed upon date, then the 

District may contract out.

3. When bargaining unit employees are doing work which 

was initially contemplated to be subcontracted, custodial 

staffing of the building shall be subject to an agreement 
3

by the parties. Any agreement on building coverage

based on the previous sentence shall not be used outside 

of this process.

C. Should any work be contemplated to contract out, the 

District and the Union agree the following procedure shall 

occur prior to subcontracting.

1. Step One – The Union will designate one Union 

member. The Director of Plant Operations will advise 

this member of the work it is contemplating 

contracting out. A discussion as to whether or not 

bargaining unit members can complete the work shall 

occur. If an agreement cannot be reached and the 

District still desires to subcontract said work, the 

parties shall proceed to Step Two.

2. Step Two – The District shall bring the proposed work 

to the next scheduled joint labor-management 

committee meeting for discussion. If an agreement 

cannot be reached and the District still desires to 

subcontract said work, the parties shall proceed to 

Step Three.

3. Step Three – The parties shall mutually agree on an 

arbitrator to decide if the work is bargaining unit work 

or not. The basis for consideration shall be the job 

descriptions for all classifications, the scope of the 

bargaining unit work, as well as prior grievance 

decisions and/or grievance settlements. Overtime 

shall not be a factor in considering if the work is 

bargaining unit work or not. The District may 

subcontract out the work prior to arbitration; however, 

the subcontracting of the work cannot be used as 

consideration for the arbitrator’s decision and the 

District understands that an arbitrator’s decision that 

the work should have been done in-house will require 

the District to pay bargaining unit members for work 

already performed.

4. The Arbitrator’s decision shall be final and binding on 

the parties. The arbitration shall be in accordance 

with AAA rules. The cost of the arbitration shall be 

borne equally by both parties.
4

Article 28 of the CBA, entitled “Management Rights,” states:

Except as otherwise . . . provided in this Agreement, the Union 

recognizes that the direction of the District operations; the 

determination of the methods and means by which such 

operations are to be conducted; the supervision, management and 

control of the District work force; the right to hire, promote, 

transfer, and lay off employees; the right, lawfully and for just 

cause, to demote, discipline, suspend or discharge employees; the 

right to determine the hours and schedules of work and the work 

tasks and standards of performance for employees and all other 

rights and responsibilities not specifically provided in this 

[A]greement, shall remain the function of Management, all in 

accordance with RSA Ch. 273-A. It shall be the right of the Union, 

however, to present and process grievances of its members whose 

wages, working conditions or other rights expressly and specifically 

provided in this Agreement are violated by Management.

Article 29 of the CBA, entitled “Duration of Agreement” provides, in relevant 

part:

On June 30, 2016 and on each June 30th thereafter, this 

Agreement shall be deemed renewed and extended for the ensuing 

year, unless one hundred twenty (120) calendar days or more prior 

to such date, either party shall have delivered to the other, notice 

of its desire not to have the agreement in its then form renewed. 

Such notice shall be deemed delivered when mailed, postage 

prepaid, addressed to the last address of the addressee which is 

known to the sender of this notice. If such notice shall be sent and 

the parties shall negotiate for a new agreement or modification 

thereof, the terms hereof shall continue to apply until the new or 

modified agreement is executed.

In a September 2015 memorandum, the District provided written notice 

to the Union, in accordance with Article 29 of the CBA, that it did not wish to 

renew the CBA in its current form. The memorandum also stated that the 

District intended, following the expiration of the CBA, to contract with a private 

company to provide custodial services. The District cited financial reasons as 

the motivation for its decision to pursue privatization.

The next day, the Union responded to the District in a letter requesting 

that it immediately commence negotiations on a successor CBA for all 

employees covered by the then-current CBA. The District responded to the 

Union’s request with another letter, stating that, due to its decision to privatize, 

it declined to commence negotiations with the Union regarding the employment 

of custodians. However, the District did offer to commence negotiations on the 
5

terms and conditions of employment for all other positions included in the 

CBA. The District specifically clarified in the letter that its “agreement to open 

negotiations for a successor collective bargaining agreement for the [noncustodian] employees should in no way be construed as an offer to negotiate 

the terms and conditions for custodial personnel covered by the current 

collective bargaining agreement.” The Union declined this offer, stating that it 

expected the district to negotiate the terms and conditions of a successor CBA 

for all the employees that the Union represents. As a result, the parties did not 

commence any negotiations.1

In December 2015, the Union filed an Unfair Labor Practice charge with 

the PELRB, alleging that the District was in violation of its statutory bargaining 

obligations, as well as the terms of the CBA. The parties subsequently agreed 

to submit the breach of the CBA claim to arbitration and to seek a ruling from 

the PELRB with respect to the unfair labor practice claim only. The parties 

also agreed that the latter claim would be submitted to the PELRB based upon 

stipulated facts, exhibits, and written briefs.

In August 2016, the PELRB released an order in which it ruled that the 

District had improperly refused to bargain with the Union over the custodial 

personnel positions, violating the bargaining obligations imposed by RSA 273-

A:5, I(a) and (e) (2010). The PELRB also ruled that the District’s offer to 

conduct negotiations with regards to maintenance and security personnel had 

“activate[d] the Article 29 duration clause.” Moreover, the PELRB found that 

nothing in RSA chapter 273-A (2010 & Supp. 2016) “empowere[d] the District, 

by virtue of its Article 29 notice or otherwise, to simultaneously and 

unilaterally terminate its bargaining obligations, in whole or in part, at any 

point in time,” and ruled that only final and binding arbitration could serve as 

a proper forum to decide the matter of the District’s right to subcontract the 

work performed by its custodial employees. Independent of those rulings, the 

PELRB noted that nothing in RSA chapter 273-A allowed the District to 

“unilaterally modify the composition of the PELRB approved bargaining unit,” 

and ordered the District to “immediately commence bargaining in good faith 

with the Union as to all bargaining unit positions.” This appeal followed.

II

“RSA chapter 541 governs our review of PELRB decisions.” Appeal of 

Prof’l Fire Fighters of Hudson, 167 N.H. 46, 51 (2014); see RSA 273-A:14 

(2010); RSA 541:2 (2007). “Pursuant to RSA 541:13 (2007), we will not set 

aside the PELRB’s order except for errors of law, unless we are satisfied, by a 

clear preponderance of the evidence, that it is unjust or unreasonable.” Fire 

Fighters of Hudson, 167 N.H. at 51. “The PELRB’s findings of fact are 

 

1 The PELRB’s order stated that the parties had “undertaken negotiations, at least as to 

maintenance and security personnel.” However, both parties agree that this statement in the 

PELRB order is erroneous and that no negotiations between the District and the Union took place.
6

presumed prima facie lawful and reasonable.” Id.; see also RSA 541:13. “In 

reviewing the PELRB’s findings, our task is not to determine whether we would 

have found differently or to reweigh the evidence, but, rather, to determine 

whether the findings are supported by competent evidence in the record.” Fire 

Fighters of Hudson, 167 N.H. at 51. “We review the PELRB’s rulings on issues 

of law de novo.” Id.

Reduced to its essence, the issue before the court in this case is whether 

our prior decisions in Appeal of City of Nashua Board of Education, 141 N.H. 

768 (1997), and Appeal of Hillsboro-Deering School District, 144 N.H. 27 

(1999), preclude a public employer from ever unilaterally determining to 

subcontract work that is performed by Union members under a CBA. The 

Union, in essence, asserts that they do; the District argues that they do not. 

We agree with the District.

In Appeal of City of Nashua, following the expiration of a collective 

bargaining agreement between the city and the union, the parties commenced 

negotiation of a successor agreement. Appeal of City of Nashua, 141 N.H. at 

770. While the negotiations were in progress, the city informed the union that 

it planned a reorganization in which 28 full-time custodians would be laid off 

and replaced with over 30 part-time custodians, who would be paid lower 

wages and would not receive fringe benefits. Id. The union responded by filing 

an unfair labor practice charge. Id. It asserted that, although a “pure” layoff 

would neither have violated the terms of the CBA nor constituted an unfair 

labor practice, the combination of the layoff with the hiring of part-time 

personnel to perform the same work as had been performed by bargaining unit 

members constituted a unilateral change in the conditions of employment that 

violated the CBA as well as several provisions of RSA 273-A:5, I. Id.

The PELRB found that the city had committed an unfair labor practice by 

making a unilateral change in the terms and conditions of employment during 

the status quo period,2 and we upheld that determination. Id. at 770-71, 777. 

In reaching our decision, we noted that, during the status quo period in which 

the union and the public employer are negotiating a new contract, the 

employer is prohibited from making unilateral changes only with respect to 

mandatory subjects of bargaining. Id. at 773. No similar restriction applies 

with respect to permissive subjects of bargaining. Id. Relying upon the threestep test we articulated in Appeal of State of New Hampshire, 138 N.H. 716, 

722-23 (1994), we held that the city’s proposal to replace full-time employees 

with part-time employees receiving lower wages and benefits satisfied all three 

prongs of the test, and was therefore a mandatory subject of bargaining rather 

than a matter of “managerial policy within the exclusive prerogative of the 

public employer” within the meaning of RSA 273-A:1, XI (1987). Id. at 773-76.

 

2 The “status quo period” is the period after the expiration of a CBA during which the parties 

negotiate for a successor agreement while generally operating under the terms and conditions of 

the expired CBA. See Appeal of Alton School Dist., 140 N.H. 303, 307 (1995).
7

In Appeal of Hillsboro-Deering, during the term of an existing collective 

bargaining agreement, the school district terminated the employment of all 

members of the bargaining unit and subcontracted their duties to workers 

employed by an independent contractor. Appeal of Hillsboro-Deering, 144 N.H. 

at 28. The PELRB sustained the union’s unfair labor practice complaint, 

rejecting the district’s claim that its decision to subcontract was a matter 

within its sole discretion under the CBA and RSA 273-A:1, XI. Id. at 28-29. 

On appeal, we delineated the issue before us as “whether the PELRB correctly 

ruled that the school district committed an unfair labor practice by laying off 

bargaining unit employees, so it could subcontract with private companies to 

perform identical services, during the term of the CBA.” Id. at 29 (emphasis 

added). Again applying the three-part test of Appeal of State of N.H., we found 

that replacing bargaining unit members with subcontracted workers to perform 

the same duties satisfied all prongs of the test, was therefore a mandatory 

subject of bargaining, and could not be unilaterally implemented by the 

district. Id. at 31-33. The dissent in Appeal of Hillsboro-Deering found the 

case distinguishable from Appeal of City of Nashua, in that the district “was 

not laying off to rehire new workers at a cost saving, but to put a private 

contractor in charge with full responsibility for the function.” Id. at 33-34 

(Horton, J., joined by Thayer, J., dissenting). In the dissent’s view, “such a 

‘reorganization’ is a classic example of managerial policy and outweighs the 

claim of impact on the terms and conditions of employment.” Id. at 34.

Neither party has asked us revisit our decisions in Appeal of City of 

Nashua or Appeal of Hillsboro-Deering, nor provided us with a stare decisis 

analysis demonstrating a proper basis to do so. Although we are thus bound 

to adhere to those decisions, we are under no obligation to expand their reach. 

Here we find strong reasons not to do so because this case is distinguishable 

from the foregoing cases in important respects.

First, unlike in Appeal of City of Nashua, the District’s proposed 

reorganization in this case does not involve replacing employees of one kind 

(full-time) with employees of another kind (part-time). Under the plan, the 

workers who perform custodial work for the District will not be employees of 

the District, but rather will be employees of an independent third party 

contractor. Thus, the proposal envisions a qualitatively different relationship 

between the District and its custodial staff — one lacking contractual privity —

from the relationship that existed under the expired CBA. The replacement of 

employees with workers provided through an independent contractor involves 

more than simply substituting one group of individuals for another group who 

perform the same work. The use of an independent contractor relieves the 

District of the responsibility for providing the kind of close supervision that 

typically characterizes the employer-employee relationship, allowing the 

District to delegate to the independent contractor responsibility for such things 

as the instruction, training, and orientation of the workers, the provision of the 

tools and instrumentalities needed to accomplish their tasks, and the details of 
8

the manner in which the work is accomplished. See Petition of City Cab of

Manchester, 139 N.H. 220, 221-22 (1994) (reciting factors that bear upon 

question of whether person is employee or independent contractor). By 

relieving management of these responsibilities, the employer not only enables 

management employees to devote more time and effort to other duties, but also 

may reduce the need for the level of support staff (e.g., human resource 

personnel) required by the organization. In short, the District’s decision to 

replace its custodial employees with subcontracted workers employed by an 

independent contractor is far different from the replacement of full-time 

employees with part-time employees at issue in Appeal of City of Nashua.

Second, in this case, unlike in Appeal of City of Nashua, the District did 

not propose its reorganization plan during the time it was negotiating for a new 

contract with members of the same bargaining unit. Instead, it notified the 

Union of its intention to lay off the custodians at the expiration of the CBA 

before negotiations for a successor CBA commenced. This is significant 

because a proposed reorganization by management made during the course of 

bargaining for a successor agreement is more likely to be perceived as an 

unfair effort to skew the level playing field of the bargaining process, perhaps 

with a view to obtaining concessions on other, unrelated issues. Where, as 

here, the District provides notice of the reorganization in advance of 

negotiation, and the record contains no indication that the reorganization was 

in any way tied to other issues that would be the subject of the future 

negotiations, there is far less danger that the reorganization will disrupt the 

bargaining process.

Third, this case is distinguishable from Appeal of Hillsboro-Deering, in 

that that case involved an effort by the school district to lay off employees and 

subcontract bargaining unit work during the term of the existing CBA. In that 

decision, we had no occasion to consider whether, after the expiration of the 

CBA, it is within the management prerogative of a public employer to 

reorganize its operations by contracting with a third party for the performance 

of the work of bargaining unit members.

Here, we agree with the District that, if we were to apply the status quo 

doctrine in the manner that the Union advocates, the result could be that the 

District would be perpetually precluded from reorganizing its operations so as 

to subcontract custodial work to an independent contractor. The CBA that 

expired on June 30, 2016 is ambiguous with respect to the issue of layoffs and 

subcontracting. The first sentence of Article 5.2.A of the CBA seems flatly to 

prohibit the District from laying off bargaining unit members as a result of 

contracting out work. However, Article 5.2 goes on to include language that 

indicates that some contracting-out can occur; it provides that proposals to 

contract out work are subject to a four-step bargaining procedure which 

culminates in binding arbitration. In considering application of the status quo 

doctrine in light of these terms, it is important to note a crucial difference 
9

between private sector collective bargaining and public sector collective 

bargaining under the Public Employees Labor Relations Act (PELRA). In the 

private sector, after good faith bargaining to impasse, the employer is entitled 

to implement unilaterally the terms consistent with its proposals made during 

bargaining. See Litton Financial Printing v. N.L.R.B., 501 U.S. 190, 198 

(1991). Under the PELRA, however, the employer is not relieved of its 

obligation to continue bargaining even after impasse has been reached and all 

of the dispute resolution procedures specified in RSA 273-A:12 (2010 & Supp. 

2016) have been exhausted. See RSA 273-A:12, IV (“If the impasse is not 

resolved following the action of the legislative body, negotiations shall be 

reopened.”).

If the status quo doctrine were applied to require that the terms of Article 

5 of the now-expired CBA remain in effect until agreement is reached on a new 

CBA, the District could be effectively precluded from ever implementing its 

reorganization plan by the Union refusing to agree to a new CBA that allowed

for layoffs. And, at best, during the continuation of the status quo period, the 

fate of the District’s plan would be removed from its control and placed in the 

hands of an arbitrator. Cf. Appeal of Milton School Dist., 137 N.H. 240, 245-46

(1993) (noting concern that overly expansive application of status quo doctrine 

may improperly shift the balance of collective bargaining in favor of the union).

The District’s position that this case is distinguishable from Appeal of 

City of Nashua and Appeal of Hillsboro-Deering is supported by the PELRB’s 

decision in Lisbon Teachers Association, NEA-New Hampshire v. Lisbon 

Regional School District, PELRB Decision No. 1998-067 (Aug. 12, 1998). In 

that case, which was decided by the PELRB after its decision, which we 

affirmed, in Appeal of Hillsboro-Deering,

3 the PELRB rejected an unfair labor 

practice charge filed by the union based upon the school district’s 

announcement that at the end of the then-current CBA it intended to eliminate 

the school nurse position and to subcontract for nursing services, and that it,

therefore, would not negotiate salary or benefits for that position. Lisbon 

Teachers Ass’n, PELRB Decision No. 1998-067, at 5. After reviewing a number 

of its prior decisions, including its Hillsboro-Deering decision, as well as our 

decision in Appeal of City of Nashua, the PELRB reasoned:

[I]t is apparent that there is an appropriate time when 

management may make changes in its organizational structure. If 

this were not the case and management was required to maintain 

a given organizational structure or category of employees 

 

3 Although our decision in Appeal of Hillsboro-Deering came after the PELRB’s decision in the 

Lisbon Teachers Ass’n case, our opinion did not in any way undermine or question the reasoning 

of the PELRB decision in the Hillsboro-Deering case. See generally Appeal of Hillsboro-Deering, 

144 N.H. at 27. Consequently, the basis upon which the PELRB distinguished the Lisbon

Teachers Ass'n case from its own Hillsboro-Deering decision also is not undermined by our 

decision in Appeal of Hillsboro-Deering.
10

indefinitely, it would lose control of its expenditures and its ability 

to ‘continue control of governmental functions.’ RSA 273-A:1, XI.

It makes sense that the break point for changes in 

organizational structure should come at the conclusion of a given 

CBA. This maintains the integrity of the CBA during its term.

Id. After also observing that in Appeal of City of Nashua we were careful to 

make clear that “[t]erms and conditions of employment imposed as the result of 

the status quo doctrine do not become final forever,” the PELRB “conclude[d] 

that the [school district] acted reasonably, prudently and in concert with RSA 

ch. 273-A when it gave notice of its intent to eliminate the school nurse 

position and not negotiate salary or benefits for it for School Year 1999-2000, 

after the conclusion of the current CBA.” Id. (quotation and italics omitted) 

(emphasis in original).

Although in its subsequent decision in Farmington Education Support 

Professionals United, NEA-NH v. Farmington School District, PELRB Decision 

No. 2014-080 (Mar. 28, 2014), and in the instant case, the PELRB did not 

adhere to the reasoning of Lisbon Teachers Ass’n, it gave no explanation in 

either case for its failure to do so.4 We think the PELRB’s treatment of the 

subcontracting issue in Lisbon Teachers Ass’n was correct, and we now adopt 

its reasoning. RSA 273-A:1, XI (Supp. 2016) specifically provides that 

“‘managerial policy’ within the exclusive prerogative of the public employer . . .

include[s] . . . the public employer’s organizational structure, and the selection, 

direction and number of its personnel, so as to continue public control of 

governmental functions.” The implications of applying the status quo doctrine 

in a manner that would effectively give the Union or an arbitrator a perpetual 

veto over the District’s ability to reorganize its structure so as to replace 

bargaining unit members with subcontracted workers was not a matter we had 

occasion to consider in Appeal of City of Nashua or Appeal of Hillsboro-Deering. 

Squarely facing this issue now, we conclude that applying the status quo 

doctrine in this manner does not satisfy the third step of the Appeal of State of 

N.H. test because it would unduly interfere with public control of governmental 

functions. See Appeal of State of N.H., 138 N.H. at 722-23. Accordingly, we 

hold that the District did not commit an unfair labor practice by refusing to 

bargain with the Union concerning its plan to lay off its custodial employees 

and replace them with subcontracted workers after the expiration of the 2013-

16 CBA.

III

The Union also argues, however, that the PELRB correctly determined 

that, by unilaterally making the decision to lay off custodians and replace them 

 

4 In fact, the PELRB’s decisions in these later cases neither cited nor discussed its Lisbon

Teachers Ass’n decision at all.
11

with subcontracted workers, the District, in effect, “modified” the bargaining 

unit so as to relieve itself of the obligation to bargain with the custodians, and 

that this constituted an unfair labor practice in violation of RSA 273-A:5, I(a) 

and (e). There are two answers to this argument. First, we disagree that the 

District’s layoff and subcontract plan in any way modified the bargaining unit. 

The Union and the PELRB do not cite, nor are we aware of, any authority 

supporting the proposition that decertification or modification of a bargaining 

unit is a prerequisite to the District’s ability to exercise its management 

prerogatives pursuant to RSA 273-A:1, XI.

Second, the District would have had no proper basis to seek 

decertification or modification of the bargaining unit. The reason is that, 

although we have held in section II that the District’s decision to implement its 

layoff and subcontract plan after the expiration of the CBA falls within its 

managerial prerogatives, it does not follow from the fact that the District is not 

required to bargain over that decision that the District is completely relieved of 

its obligation to bargain with the Union concerning the custodians. Once 

again, we believe that the PELRB correctly addressed this very issue in its 

Lisbon Teachers Ass’n decision. In that case, the PELRB determined that, 

notwithstanding its ruling that the school district had acted properly in 

unilaterally determining to lay off the school nurse and subcontract for nursing 

services, this did not relieve the district of its obligation to bargain with the 

union regarding the impact of its decision on the laid-off employee. See Lisbon

Teachers Ass’n, PELRB Decision No. 1998-067, at 6.

The same is true here. The District continues to be obligated to engage 

with the Union in impact bargaining regarding, for example, such matters as 

severance benefits for the custodians who will lose their jobs as a result of the 

District’s decision to subcontract. Thus, the bargaining unit remains intact for 

this purpose. The distinction recognized in Lisbon Teachers Ass’n between the 

District’s managerial prerogative to subcontract custodial work, on the one 

hand, and its obligation to bargain with the Union regarding the impact of its 

decision on the employees who will be terminated, on the other hand, is 

entirely consistent with our recognition of a similar distinction in Appeal of 

Berlin Education Ass’n, 125 N.H. 779 (1984). See Appeal of Berlin Educ. Ass’n, 

125 N.H. at 784 (recognizing distinction between school board’s unilateral 

authority to decide whether to offer extracurricular programs and its obligation 

to bargain with union regarding the wages to be paid its members who provide 

services for such programs, if they are offered).

Reversed and remanded.

DALIANIS, C.J., and HICKS and BASSETT, JJ., concurred.