The state has agreed to remove private contractual workers from the State Laboratories Facility in Pearl City.
The United Public Workers filed the complaint with the Hawaii Labor Relations Board last year, alleging unfair labor practices.
Under the agreement signed this week, civil service workers must be in the jobs by July 1. The union estimates there are seven jobs affected.
UPW charged that, in 1995, the state hired private companies to handle custodial, building maintenance, groundskeeping and ground maintenance work at the new facility.
The companies hired were Metropolitan Maintenance Inc., Akamai Landscaping & Maintenance Services, ABC Corp. and York International Corp.
UPW attorney Herbert Takahashi said that under state law, jobs such as custodial, building maintenance, groundskeeping and grounds maintenance are typically bargaining unit jobs and not eligible for privatization.
Only unique or specialized jobs can be exempted from state civil laws, which UPW argues helps maintain integrity in government hiring.
"We did what we had to do," said Patrick Johnston, a spokesman for the Health Department. The Department of Accounting and General Services had frozen budget positions, so the department went outside through the bidding process.
"The question becomes, is it customarily and historically work that we've done, and the answer is yes," Takahashi said.
"It was very clear that the whole operation was a government operation," echoed UPW chief Gary Rodrigues. He noted that more specialized fields at the facility are bargaining unit members of the Hawaii Government Employees Association.
Johnston said the state was spending about $130,000 annually for the four contract providers. He said estimates range as high as $200,000 for the work to be done with state workers.
"It's a safe assumption because of extra benefits that state workers get, it would cost more," Johnston said.
UPW officials say their studies show no cost savings, although no numbers were provided yesterday.
Still, Rodrigues praised the Cayetano administration, with whom he has had sharp labor disagreements, for signing the settlement. He views it as a signal that Cayetano may be seeing the unions' way on privatization.
Rodrigues and Takahashi said a Hawaii Supreme Court decision that came down Feb. 28 may have played a factor in the state's decision to settle.
But state negotiator Manabu Kimura said the administration had proceeded before the Supreme Court ruling.
The high court ruled that Hawaii County erred when it hired Waste Management Inc. to build and run the Puuanahulu Landfill near Kona.
But Cayetano spokeswoman Kathleen Racuya-Markrich warned that the agreement should not be overanalyzed.
"This doesn't signal a change in policy," she said. "This settlement basically recognizes that there is custodial work at the ... facility that can be done by state workers and doesn't need to be farmed out."