## Facts

- An employer and a union were parties to a collective bargaining agreement (CBA) covering production and maintenance employees.
- The CBA provided for arbitration of “any grievance” concerning compliance with “any provision” of the agreement.
- The CBA contained no express clause restricting subcontracting of bargaining-unit work.
- The employer subcontracted janitorial work to Don’s Window Cleaning Company.
- The employer subcontracted certain manufacturing work involving operating mechanisms to Kramer Industries.
- The subcontracted work had historically been performed by bargaining-unit employees.
- The union filed two grievances alleging the subcontracting violated the CBA, relying on an implied covenant of good faith and fair dealing and implied job-security limits derived from the CBA’s structure.
- The employer contested arbitrability and denied any contractual breach, asserting subcontracting was a reserved management right.
- The dispute proceeded to contract grievance arbitration before Arbitrator Smith.

## Issues

1. Whether challenges to subcontracting are arbitrable under a CBA that covers “any grievance” about compliance with “any provision” of the agreement, despite the absence of an express subcontracting restriction.
2. If arbitrable, whether subcontracting bargaining-unit work violated the CBA based on an implied covenant of good faith and fair dealing or other implied limits inferred from the agreement as a whole.

## Decision

- The arbitrator found the grievances arbitrable under the CBA’s broad “any grievance” arbitration clause.
- The arbitrator concluded that implied contractual obligations could be treated as part of the agreement for purposes of arbitrability.
- On the merits, the arbitrator sustained the union’s grievances in substantial part.
- The arbitrator determined the employer’s subcontracting, under the circumstances presented, was inconsistent with an implied duty of good faith and fair dealing and therefore breached the CBA.
- The award limited the employer’s ability to subcontract the disputed work, though publicly available accounts do not fully specify the remedy’s details.

## Legal Principles

- A broad labor-arbitration clause covering “any grievance” about compliance with “any provision” of a CBA can encompass disputes premised on implied contractual terms, not only express language.
- Management rights, including subcontracting, may be constrained by implied obligations inferred from the CBA’s structure and purpose, even without an explicit subcontracting article.
- An implied covenant of good faith and fair dealing may limit subcontracting where outsourcing customary bargaining-unit work would materially erode negotiated expectations tied to recognition, seniority, or job security.
- Past practice regarding which work is treated as bargaining-unit work can inform whether subcontracting is consistent with the parties’ implied understandings under the CBA.

## Conclusion

The arbitrator held that subcontracting disputes were arbitrable under a broadly worded grievance clause and that, despite contractual silence on subcontracting, the employer’s outsourcing of customary bargaining-unit work violated implied good-faith limits derived from the CBA read as a whole.


Allis-Chalmers Mfg. Co., 39 Lab. Arb. Rep. (BNA) 1213 (1962)