Insight Municipal Golf Course Privatization and Labor Law

Do you enjoy playing a round of golf at the local “muni”? Economic pressures borne by both the golf industry and local governments may portend a change in the way municipalities manage their golf courses.

The propriety of privatizing municipal golf courses has been widely discussed in the golf industry over the past decade. Unsurprisingly, the discussion is heating up again today. Indeed, city-owned golf courses pair an industry lamenting declines in participation rates with bureaucratic entities struggling to keep balanced budgets in a stagnant economy. As a result, it is unsurprising that privatization has once again percolated to the front of the golf industry’s drawing board.

While the pros and cons of municipal golf course privatization are already being weighed, few consider the legal ramifications of such a choice. Further, potential legal problems may not be accounted for in the privatization cost analysis. Therefore, without opining on whether a municipal golf course should privatize some or all of its operations, I would like to discuss one important legal issue implicated in a decision to privatize: state labor law.

I. Where Privatization and Labor Law Meet

Privatization does not mean transitioning a municipal golf course into a private club. Rather, privatization of a municipal course often occurs through hiring a private company to manage the golf course in the city’s stead. State labor law is implicated in this process because of the obligations municipalities may owe to public employees who might not be hired by the private company assuming control of the golf course.

II. Case in Point: A Labor Law Challenge to Municipal Golf Course Privatization

For example, union representatives of golf course employees for the District of Cook County, Illinois, claimed that the District’s announcement that it was implementing a plan to privatize its municipal golf course and lay off 97 employees violated the District’s obligation under Illinois state law to bargain in good faith with public employees’ exclusive representatives. See 5 Ill. Comp. Stat. § 315/10(4). In October of 2002, the District had announced the impending privatization of the municipal golf course due to budgetary problems (the privatization of which would begin in December of the same year) without consulting with the golf course employees’ representatives.

Illinois courts apply a three-part test to determine “whether a matter is a mandatory subject of bargaining” between an employer and employee representatives. First, matters dealing with wages, hours, and terms and conditions of employment require bargaining. Second, the matter must not be one of inherent managerial authority or, third, if the matter is one of inherent managerial authority, the benefits of bargaining outweigh the burdens of doing so on the employer. Forest Preserve Dist. v. Ill. Labor Rels. Bd., 369 Ill. App. 3d 733, 753 (2006).

The Illinois Court of Appeal agreed with the employees that the District had engaged in an unfair labor practice. It determined that the privatization decision was sufficiently “connected with the terms and conditions of employment,” and justified bargaining even though the District was faced with pressing budgetary problems. Though the budgetary crisis was one of a managerial nature, the importance of bargaining outweighed the burden on the District. Of particular importance to the Court was the time between the announced privatization (October) and implementation of the plan (December). There was yet time to bargain. See id. at 753-54.

III. Conclusion

This is but one example of labor issues that may arise during the municipal golf course privatization process. In addition, labor laws vary from state to state. Thus, to ensure that the transition from publicly owned and managed, to publicly owned and privately managed, results in a costs savings to the municipality (often the primary impetus behind municipal golf course privatization), a city or county would do well to carefully review its obligations under relevant labor law rather than risk the expense of labor litigation.

I welcome any comments or inquiries relating to the issue of municipal golf course privatization, or any others hewing to the intersection of golf and the law.

If you have any questions, please contact Employment Group or call 208.344.6000.