California Inspection Rating Bureau

National Labor Relations Board - Board Decisions

Dec 16, 1974

215 N.L.R.B. 780 (N.L.R.B. 1974)

780 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
California Inspection Rating Bureau and Professional
and Clerical Employees Division of Teamsters Local
No. 856, Petitioner . Case 20-RC-12062
December 16, 1974
DECISION AND DIRECTION OF ELECTION
BY CHAIRMAN MILLER AND MEMBERS FANNING AND
JENKINS
Upon a petition duly filed on May 17, 1974, under
Section 9(c) of the National Labor Relations Act, as
amended, a hearing in this case was held on various
days in June, July, and August, 1974, before Hearing
Officer Edward S. Kaplan. Pursuant to Section 102.67
of the National Labor Relations Board's Rules and
Regulations, Series 8, as amended, the above-entitled
matter was duly transferred by the Regional Director
for Region 20 to the Board for decision. The Employer
filed a brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel.
The Board has reviewed the Hearing Officer's rul-
ings made at the hearing and finds that they are free
from prejudicial error. They are hereby affirmed.
Upon the entire record in this case, the Board finds:
1. The labor organization involved claims to repre-
sent certain employees of the Employer.
2. A question affecting commerce exists concerning
the representation of certain employees of the Em-
ployer within the meaning of Section 9(c)(1) and Sec-
tion 2(6) and (7) of the Act.'
3. The basic issues in this case are whether the Cali-
fornia Inspection Rating Bureau, herein called the Bu-
reau or the Employer, is an "employer" within the
meaning of Section (2) of the Act2 and, if so, should
the Board in its discretion decline to assert jurisdiction
because of the special relationship of the Employer to
exempt state functions. The Employer contends that it
is exempt from coverage of the Act because it is a
political subdivision of the State of California directly
engaged in state-related functions. In the alternative,
the Employer contends that, even if the Board should
find that it is an employer subject to the Board's juris-
diction, the Board should exercise its discretionary au-
thority to refuse to assert jurisdiction because of the
"unique relationship" and "intimate connection"
I The record shows that the Employer receives revenues from fees and
assessments in excess of $500,000 annually, and purchases goods directly
or indirectly from suppliers who in turn purchase goods outside the State
of California in excess of $50,000 annually
2 Sec 2(2) of the Act provides in relevant part, "the term 'employer'
shall not include any state or political subdivision thereof.. "
which the Bureau enjoys with the State of California
which is exempt from coverage under the Act.
The Employer is a nonprofit association organized
under the authority of the California statutes and li-
censed by the Insurance Commissioner of the State of
California pursuant to its workmen's compensation
legislation. Although the code does not preclude the
establishment and operation of more than one rating
organization similar to the Employer's, in practice no
other rating organization has ever been established, and
only the Employer performs the workmen's compensa-
tion insurance rating functions set out in the California
Insurance Code.
The Bureau functions exclusively in California, and
the rating and statistical work performed by the Bureau
pertains only to workmen's compensation insurance
business written in the State of California. The Bureau
does not write or sell insurance policies, but performs
a regulatory function required and provided for by the
State Insurance Commissioner and the California In-
surance Code. It performs the same assessment func-
tions for all licensed firms which write workmen's com-
pensation in the State, including the State fund.
Additionally, the Bureau performs for the Insurance
Commissioner certain statistical work required by the
Insurance Code.
Although not defined as a state agency, the State
Insurance Code provides that the Employer must oper-
ate according to a detailed series of specific codified
legislative restrictions, and that the State's Insurance
Commissioner or his representative has the right to
attend all the meetings of the Employer or any of its
committees. The Bureau has a governing committee
which formulates the Bureau's budget and appoints the
Bureau's general manager. The governing committee,
which is elected by the insurance company members of
the Bureau, is made up of six insurance company repre-
sentatives. The six members respectively come from
two nonstock companies, three stock companies, and
the State Insurance Fund. Other committees which
function in overseeing the Employer's operations are
the classification and rating committee, the actuarial
committee, and various subcommittees. Each of these
committees also consists of six members, and a repre-
sentative of the State Workmen's Compensation Fund
is represented on each committee.
Under the State's statutes workmen's compensation
insurance is compulsory for virtually all employers in
the State. The Insurance Code further requires that all
insurance companies writing workmen's compensation
must be a member of a rating organization. Since the
Employer is the only organization in the State which
performs such functions, all of the approximately 280
insurance companies licensed to write workmen's com-
pensation insurance in California, including the Cali-
215 NLRB No. 145
CALIFORNIA INSPECTION RATING BUREAU 781
fornia State Compensation Insurance Fund , are mem-
bers of the Bureau.
The Bureau derives its operating revenue by charg-
ing each member a nominal membership fee and by
assessments which are directly proportionate to the
amount of premiums the individual member carrier has
written within the State in the preceding year. The
Bureau receives no subsidy of tax money from the State
and no operating expenses are provided by the State's
budget . The revenues collected by its assessments are
its only source of income , 80 percent of which is used
to pay employee salaries and benefits.
For the most part the insurance companies which are
members are commercial companies which write work-
men's compensation insurance and other forms of in-
surance and operate in States other than California.
The most notable exception is the State Compensation
Insurance Fund , mentioned above , set up by the Cali-
fornia State legislature which operates only in Cali-
fornia and writes approximately 22 percent of the total
workmen 's compensation insurance in California,
twice as much as the next largest carrier.
As the State' s sole rating organization , the Bureau is
relied on by the State Insurance Commissioner to ini-
tially perform the evaluation function of setting the
insurance rate and evaluating the performance of each
insurance company . Depending upon their nature,
complaints relating to classifications and rates are in-
vestigated by the Bureau , and normally requests or
evidence presented by the carriers are submitted to or
through the Bureau to the State Commissioner.
The Bureau 's rulings concerning an issued insurance
policy can be appealed to the Insurance Commissioner,
although the Insurance Commissioner is not required
to grant a hearing . The Commissioner has the statutory
right to overrule or modify the Bureau's recommenda-
tion . In the typical case the Bureau's recommendations
are recognized by the Commissioner as authoritative. If
a hearing is held, the Bureau is generally represented.
The parties may in certain cases carry their appeals, if
an adverse decision is made , to the state courts. The
Bureau may not.
The Bureau also evaluates proposed legislation
which could affect the State 's workmen 's compensation
legislation system. The Bureau 's evaluation of prospec-
tive legislation is submitted to both the Commissioner
and the legislature itself . The Bureau receives no com-
pensation for this advisory service, but its work is nev-
ertheless given substantial weight by the State Insur-
ance Commissioner and in practice the Commissioner
has never supported any proposed legislation pertain-
ing to the California workmen's compensation insur-
ance system which the Bureau has opposed.
The Bureau , unlike nonstatutory insurance rating
organizations operating in, California with regard to
classes of insurance other than workmen 's compensa-
tion , is protected by a legislative declaration which
grants it immunity from liability for malfeasance or
misfeasance . In the case of the Bureau the reason for
the grant does not appear to be the usual ground of
governmental sovereignty , but to remove a possible im-
pediment to its effective operations.
The employees of the Bureau are not state employees
nor are they required to meet any civil service require-
ments . They are hired directly by the Bureau , trained
by the Bureau , and subject to the Bureau 's personnel
policies . There is no showing that Bureau employees'
salary scales are in any way related to those of state
employees . The salaries are paid entirely from the Bu-
reau 's own budget which is raised by assessing mem-
bers , including the State Fund . The State has no control
over the employees , nor do the employees consider
themselves state employees . In many cases , because the
nature of the requirements of many of its jobs are
unique to the Bureau , the Bureau conducts its own
in-hours training programs , utilizing experienced ex-
ecutives who have worked in the insurance industry. It
appears that the State Commissioner of Insurance has
no authority to interfere in any way with the hiring,
promoting , training , discharging , or the performance
of any of the employees working for the Bureau.
Based on the above , and the record as a whole, we
are unable to agree with the Employer that the Bureau
is a "political subdivision" and the Section 2(2) exemp-
tion of the Act is applicable. Although the term "politi-
cal subdivision" is nowhere defined in the Act, the
Board and the courts have applied the political subdivi-
sion exemption to organizations that are either (1) di-
rectly created by the State, so as to constitute depart-
ments or administrative arms of the State government;
or (2) administered by individuals who are responsible
to public officials or to the general electorate.' We
find that the Bureau meets neither criteria.
Contrary to the Employer, we do not find controlling
the facts that its operations exist and were created by
virtue of state statutes , that it is the only organization
of its kind in the State , and that it operates only in the
State of California . It is clear that the state code pro-
vides for competing organizations, and it is purely for-
tuitous that only one organization , the Bureau, was
established to provide the necessary services , evalua-
tions , and recommendations required by the state code
for companies writing workmen 's compensation in the
State of California . Because of this situation the Bureau
has built up an expertise and created a dependency by
3 Cf NL.R B v Natural G a s Utility District ofHawkins County, Tennes-
see, 402 U S 600 (1971 ), Current Construction Corp., 209 NLRB 718
(1974), The City Public Service Board of San Antonio, 197 NLRB 312
(1972), Natchez Trace Electric Power Association , 196 NLRB 765 (1972),
cnfd 476 F 2d 1042 (C A 5, 1973), Fayetteville-Lincoln County Electric
System, 183 NLRB 101 (1970)
782 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the State upon the work it performs , which gives much
of the Bureau 's work an aura of official action and
public imprimatur . We find highly significant, how-
ever , that its recommendations are not necessarily final
and may be appealed to higher authorities.
We note that its operations are run by internal com-
mittees of the member companies . Although the Com-
missioner of Insurance has the right to have an ex
officio representative on all governing committees, the
role of such member is advisory and is only for liaison
purposes. The presence of the state representative does
not in our opinion make the committees or the Bureau
a creature of the Commissioner or the State. ,
The Board has previously held that an employer
engaged in rendering special rating services to groups
of insurance companies pursuant to special statutory
regulation in connection with their underwriting, and
required to report such findings to the insurance com-
missioner , is not thereby operating as an arm or sub-
division of the State .' It is immaterial that the em-
ployer is a nonprofit corporation motivated by
considerations not strictly commercial where the ac-
tivities the corporation supports are themselves com-
mercial in nature .' We see no compelling reason for
making an exception in this case because of special
circumstances in which the Bureau operations here are
confined only to the State of California , and because of
its monopoly its recommendations and work are given
important and, many times , controlling weight.
We find no merit to the Employer 's argument that,
if the work it performs were not done by the Bureau,
the work would have to become a state function.
Clearly, the State could set up a similar organization to
do the work the Bureau performs . In any case such
contention would appear to be speculative , since there
is no showing in the record that the Employer intends
to cease its operations now or in the near future , or that
the State will in any way take over its work or func-
tions.
Nor can we agree with the Employer's contention
that it is administered by state -appointed or publicly
elected officials . The record is clear that the Employer
is privately organized , supported by nonstate revenues,
and operates, much as a privately organized public
utility generally operates , within the constrictions of its
license and the State 's laws and regulations . The Bu-
reau performs functions not directly a part of the state
government , outside the control of the State both as to
its employment practices and its rates and oversight
functions.
We note particularly that the Bureau sets its own
labor relations policies , does its own hiring and firing,
See Middle Department Association of Fire Underwriters, 122 NLRB
1115 (1959)
5 See The New York Board of Fire Underwriters , 193 NLRB 551 (1971)
and handles its own personnel matters . Its employees
are separate from the State 's payroll and independent
from the State's labor relations policies or require-
ments.
Accordingly , we find that the Employer is not a
political subdivision of the State of California , but is an
employer within the meaning of the Act.
Nor do we find support for the contentions of the
Employer that the Board in its discretion should never-
theless refuse to assert jurisdiction since the work and
the services provided by the Bureau are so closely
related to the State 's functions , which are exempt from
the Board 's jurisdiction , and the State's control over
the Bureau 's operations are of such a high degree that
the Bureau cannot in any case effectively bargain with
a union.
We find, therefore , that the Employer is not the type
of nonprofit business or operation over which the
Board has declined to assert jurisdiction , and that it
will effectuate the policies of the Act for the Board to
assert jurisdiction in this case.
The parties disagree as to the scope of the unit and
certain unit placements . The Petitioner seeks a unit
loosely described as "all office clerical employees" and
related employees located in San Francisco , California.
The Bureau's employees fall into seven broad catego-
ries, which are designated Groups I through VII, based
on skills , educational requirements , complexity of the
work, degree of responsibility , technical knowledge of
the work, professional status and salary levels.
There is no dispute regarding the employees in
Groups V, VI, and VII which are not sought by the
Petitioner. Nor is there any dispute regarding inclusion
in the unit of the clerical employees in Groups I
through III who perform filing , typing , keypunching,
transcription and nontechnical statistical work, and
other routine and repetitive tasks.
The Group I, II, and III jobs do not require ad-
vanced education or a knowledge of the technical rules
and regulations under the California workmen's com-
pensation law, or the use of independent judgment.
Part-time employees: The Employer , however, would
exclude approximately 16 part-time Group I, II, and
III clerical positions occupied by high school and col-
lege students. The work period of these students gener-
ally lasts one or two school semesters , and the students
rarely remain with the Bureau as permanent em-
ployees . Normally part-time employees do not look
upon their work as leading to a career with the Bureau
and, in the event a part -time employee decides to re-
main with the Bureau following graduation from high
school , such employee would not necessarily receive
hiring preference over other applicants unless the em-
ployee had all the basic requirements for employment
with the Bureau.
CALIFORNIA INSPECTION RATING BUREAU 783
The part-time student employees may hold jobs with
other employers, are paid lower wages than other
Group I, II, and III employees, generally work differ-
ent hours, and receive limited fringe benefits. No part-
time employee has continued as a full-time Bureau em-
ployee since the summer of 1973.
On the basis of the foregoing, and the record as a
whole, we conclude, in agreement with the Employer,
that the part-time student employees lack a community
of interest with regular full-time clerical employees. We
shall, therefore, exclude them from the unit found ap-
propriate herein.
Two accounting clerks: The Employer would also
exclude two accounting clerks, Patty Lightell and Jan
Monsef,6 on the basis that they are confidential em-
ployees. Neither employee is involved in typing corre-
spondence nor preparing documentation or other infor-
mation which is directly related to the labor relations
functions of the unit. The Employer would base their
exclusion on the fact that both employees have access
to personnel files and confidential material of all Bu-
reau employees and assist in preparing the information
regarding advice on personnel matters. They also assist
in preparing budget estimates for personnel items.
However, they do not work under an official who is
directly involved in personnel decisions, but under a
supervisor who reports to the administrative division
manager. The majority of the two accounting clerks'
time is devoted to accounting matters and the prepara-
tion of expense accounts. In addition to having access
to the Bureau's personnel files, the two accounting
clerks, because of their proximity to the personnel of-
fices, frequently have knowledge of various personnel
decisions made by the Bureau before the employees
affected by those decisions are made aware of the action
by their supervisors.
In assessing the merits of the Employer's contention,
we apply the standard the Board enunciated in B. F
Goodrich Company, 115 NLRB 722, 724 (1956), and
has consistently followed; namely, clerical employees
will be excluded as confidential only when it appears
that they "assist and act in a confidential capacity to
persons who formulate, determine, and effectuate man-
agement policies in the field of labor relations." This,
of course, is not the factual situation here. Moreover,
merely having access to personnel or confidential mate-
rials or files has never been a basis for applying an
exception to the Board's standard.'
Under the uncontradicted facts, we are not per-
suaded that the employees in question are disqualified
from unit exclusion and find no basis for doing so on
6 The parties agree that Eileen Masterson , Diane Wright , and Kaleria
Sychoff, who work as secretaries to top personnel officials, should be ex-
cluded from the unit as confidential employees We, therefore , exclude them
from the unit here found appropriate
7 Weyerhaeuser Company, 173 NLRB 1170, 1172-73 (1968)
the contention that they are confidential employees.
We shall, therefore, include the two accounting clerks
in the appropriate unit.
Group IV employees: The Employer contends that
the approximately 50 Group IV employees as a class
are either professional and/or technical employees who
have little or no community of interest with the approx-
imately 200 clerical employees, described above as
Group I, II, and III employees, and should be excluded
from the unit sought by the Petitioner.
The job requirements of the Group IV employees
involve the application, analysis, interpretation, and
evaluation of the rules and regulations of the State's
administrative , insurance , and labor codes , as well as a
working knowledge of the pertinent state statutes.
The Bureau requires a 4-year undergraduate degree
or other advanced educational achievement as a meas-
ure of learning capacity and ability for entering em-
ployees in Group IV. Group IVA is the entry level
position to higher categories. It includes field represen-
tative trainees, programmer trainees, and underwriter
trainees. Each Bureau employee in Group IVA is in
training for the position indicated by his title. Thus, an
underwriter trainee is being trained as an underwriter,
a programmer trainee is being trained as a program-
mer, and a field representative trainee is being trained
as a field representative.
Inasmuch as there is no specialized curriculum or
degree in workmen 's compensation insurance , consid-
erable intensive on-the-job training is provided. For
example, the actuarial assistant is required to complete
courses and pass examinations developed by the Casu-
alty Actuarial Society. Computer programmers are re-
quired to take special courses designed specifically
around the type of specialized insurance knowledge
that is required to perform their duties for the Bureau.
Group IV employees must take and complete college
level courses dealing in all aspects of workmen's com-
pensation insurance , commercial as well as noncom-
mercial, before reaching the journeyman level. This
may take a period of several years.
As Group IV employees acquire more knowledge,
experience, skill, and expertise they become senior jour-
neymen with the expectation that they will perform
their work with a minimum of supervision and use
independent judgment as guided by an expert knowl-
edge of numerous manuals, codifications of the law and
precedents, and developments in the field of workmen's
compensation insurance. -
Group IV employees, including auditors, underwrit-
ers, classifiers, statisticians, programmers, actuarials,
and field representatives, are necessarily in constant
contact with each other and must be familiar with the
functions and operations of the work of other Group IV
employees. Policy examination is a fundamental func-
784 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tion for practically all employees in the Group IV clas-
sification, and most Group IV employees have had
some training as a policy examiner. Indeed, such
knowledge and experience is a requirement to promo-
tion to higher classification work. Similarly, the Bureau
does not assign employees to the classification and au-
dit review department until they have first had field-
work experience.
Within Group IV there is not only constant upward
mobility, but also horizontal transfers. Thus 7 out of
the 20 employees in the policy examination department
have had previous experience in other departments of
the Bureau; practically all of the employees in the clas-
sification and audit review department, field service
department, systems and programming department,
and rating and statistical department have had work
experience in at least one other department of the Bu-
reau, and in many cases in several departments in its
Group IV classifications. It is the policy of the Bureau
to encourage exchange and interchange among Group
IV employees, and such varied experience is a prerequi-
site to many of the positions. Within the past 10 years
only two employees have been hired from Group I, II,
and III jobs into Group IV jobs, and it is the policy of
the Bureau to treat the Group IV jobs as a separate
competitive area from the standpoint of advancement
within the organization.
By contrast, employees in Group I through III jobs
are considered to have the potential to advance only as
far as Group III, the senior specialized rating clerk. By
contrasting the job requirements of a policy examiner,
the lowest level Group IV employee, with the duties of
the senior specialized rating clerk, the highest level
Group III employee, the marked demarcation between
Group IV employees and the office clerical employees
becomes readily apparent.
A Group IV policy examiner is required to have
extensive knowledge and practical understanding of the
technical manuals which guide the work of the Bureau.
The policy examiner also regularly consults the Bu-
reau's general files and has access to all Bureau memos,
correspondence records, circulars, and technical
memoranda. On the other hand, a Group III special-
ized rating clerk has no occasion to utilize the Bureau's
work products, and works under close supervision, in
some cases under Group IV staff members.
The distinctive and high level work of the Group IV
employees can perhaps be best illustrated by the work
done in the policy examination department. This de-
partment occupies the fourth and fifth floors of a mul-
tistory office building in an area separate and distinct
from the office clerical employees.
The title given to positions in this department is
"underwriter." They perform, inter alia, the following
functions: (1) code policies and endorsements for com-
puter processing; (2) examine rates and nonrated risks
for compliance with the published rules and regula-
tions, and determine when a particular policy or en-
dorsement is in compliance; (3) request the field ser-
vices to make physical surveys; (4) process applications
for group insurance in accordance with the require-
ments of the Insurance Code; and (5) process high risks
requiring excess insurance. In performing these func-
tions they independently apply the laws and various
interpretations of the State's code to the facts involved
in a particular case in an approach not unlike that of
an attorney. In addition, the underwriters must have a
working knowledge of the advanced computers used by
the Bureau and must utilize them constantly in their
work.
Employees working in field services, rating and sta-
tistical, classification and audit review, systems and
programming, and actuarial departments are similarly
required to have a comprehensive understanding of the
code.
Based on the foregoing, and the record as a whole,
we find, aside from any considerations as to whether
the Group IV employees are either professional and/or
technical employees, that they have little or no com-
munity of interest with the Group I, II, and III em-
ployees who are engaged almost entirely in routine,
clerical work. Accordingly, we find that a combined
unit of Group I, II, and III employees with the Group
IV employees would be inappropriate.
We shall, therefore, exclude Group IV employees
from the unit of office and clerical employees petitioned
for by the Union, and direct an election only among the
employees in classifications as described below.'
We find that the following group of employees con-
stitutes an appropriate unit:
All employees in classifications Groups I, II, and
III, employed at the Employer's San Francisco,
California, operation, including the accounting
clerks, Monsef and Lightell, but excluding all
part-time student employees, all Group IV em-
ployees, and all professional employees, confiden-
tial employees, guards, and supervisors as defined
in the National Labor Relations Act.
[Direction of Election and Excelsior footnote omit-
ted from publication.]
8 In the event the Petitioner does not wish to participate in an election
in such a unit, we shall permit it to withdraw its petition without prejudice
upon notice to the Regional Director within 5 days from the date of inssu-
ance of this Decision and we shall thereupon vacate the Direction of Elec-
tion