UC regents limit contracting out, but unions say move not enough

As thousands of University of California janitors, cooks, medical techs and other workers staged a oneday strike across the state this week to protest what they called illegal efforts by UC to replace them with cheaper contractors, the regents approved a new policy

Thursday meant to remove the incentive for hiring those outsiders.

At its meeting in San Francisco, the Board of Regents voted to “generally prohibit” contracting out for services.

At an estimated cost of $108 million a year, the new rule requires UC to pay contractors the same wage as employees doing the same work — ending the moneysaving rationale for hiring them — and to hire longtime contractors as employees. UC also expects to follow state hiring regulations and exceed them “whenever reasonable,” with details to be hashed out in the coming months.

“As the thirdlargest employer in the state of California, this is something we can be proud of,” said Regent Richard Leib, who helped write the new rules with Regent Cecilia Estolano and board Chairman John Pérez.

But the new rules aren’t good enough, said leaders of UC’s largest labor union, which represents about 26,000 workers who keep UC’s hospitals and campuses humming.

“The board is acknowledging for the first time the unfair outsourcing our members have spent years fighting against. That’s good,” said Kathryn Lybarger, president of the American Federation of State, County & Municipal Employees, Local 3299. “But a policy is not a contract. So if you’re serious, stop opposing state legislation and binding contract language that could actually deliver what your policies promise.”

While outsourcing is up

52% since 2016, Lybarger said, “you’re spending $523 million this year alone to replace what should be UC jobs with povertywage contractors.”

The union filed six complaints with the state’s Public Employment Relations Board last month alleging illegal and improper contracting practices at UC.

UC’s labor contract with AFSCME requires the university to tell the union when it seeks bids from vendors who do the same work as employees. But UC has repeatedly failed to do that, the union says. It also alleges that UC broke state law by unilaterally hiring the contractors, expanding the size of the contracts, and failing to put contracts out for competitive bidding.

UC says it’s reviewing the complaints. Regents Chairman Pérez told The Chronicle, “We’re going to investigate them.”

“However, as of this time, there has been no finding that the university has violated the law or acted inappropriately,” UC spokeswoman Claire Doan said.

The union also points to a 2017 state audit that bolsters some of its claims, including that UC skirted competitive bidding and failed to justify the use of contractors over employees in many cases.

UC President Janet Napolitano didn’t dispute the findings at the time, and called the auditor’s recommendations for fixing the problems constructive.

Napolitano praised the new policy and its components, and said that it will meet and often exceed state standards.

Pérez told The Chronicle: “All work that can be done by permanent employees should be. We should be a model employer.”

He said state law provides an incentive for UC and other employers to use contractors because it lets them pay 85% of what they pay their own employees. But the regents group that came up with the new policy found that other top universities, including Harvard, have a stricter standard and pay contractors 100% of what they pay employees. So that’s part of the new policy.

“We want to make sure it’s not economically advantageous to find a back channel to contract out in an effort to save money,” he said.

That view represents a shift for UC, which opposed three recent efforts by the state Legislature to end the wage and benefits disparity between UC employees and its vendors.

All three bills — SB574 in 2017, SB959 in 2016 and SB376 in 2015 — passed the Legislature and were vetoed by thenGov. Jerry Brown. Echoing UC’s objections, Brown said in his 2017 veto message that the equal pay requirement “locks in cumbersome and overly costly contracting rules that provide little flexibility.”

At the same time, UC approved its “Fair Wage/ Fair Work” policy in 2015, ending its practice of paying vendors less than the minimum wage of UC employees.

But even that didn’t provide equal pay between the groups, said union spokesman Todd Stenhouse, because “not one of our members makes minimum wage.”