Community Transit Services, Inc.

National Labor Relations Board - Board DecisionsSep 21, 1988

290 N.L.R.B. 1167 (N.L.R.B. 1988)

COMMUNITY TRANSIT SERVICES 1167 Community Transit Services, Inc. and Amalgamated Transit Union, AFL-CIO-CLC, Local 256, Pe- titioner. Case 20-RC-16015 September 21, 1988 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On May 23, 1986 , the Regional Director for Region 20 issued a Decision and Direction of Elec- tion in this proceeding , in which he asserted juris- diction over the Employer under the test set forth in National Transportation Service, 240 NLRB 565 (1979) The Employer filed a timely request for review, and on June 30, 1986, the Board issued an Order granting the request for review and remand- ing the above-captioned proceeding to the Region- al Director for further consideration in light of the decisions in Res-Care, Inc, 280 NLRB 670 (1986), and Long Stretch Youth Home, 280 NLRB 678 (1986), "including a reopening of the record, if nec- essary, and the issuance of a Supplemental Deci- sion, if appropriate " On September 11, 1986, the Regional Director issued an Order reopening the record and remanding the proceeding for further hearing pursuant to the Board 's remand order On November 5, 1986, a hearing was held pursuant to the Regional Director's order On May 18, 1987 , the Acting Regional Director issued a Supplemental Decision and Order rescind- mg the initial Decision and Direction of Election- and directing that the petition be dismissed The Acting Regional Director , applying the standards set forth in Res-Care, supra, and Long Stretch, supra, concluded that the Employer did not have the final say over the employees' wages and bene- fits and, therefore, was precluded from engaging in meaningful bargaining with the Union Pursuant to Section 102 67 of the Board's Rules and Regula- tions, the Petitioner filed a timely request for review of the Acting Regional Director 's Supple- mental Decision and Order , which the Board granted by mailgram dated November 6, 1987 The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel The Board has reviewed the entire record in this proceeding with respect to the issues under review We find that the Employer retains control over sufficient terms and conditions of employment and that the limitations imposed by the exempt entity are insufficient to preclude the Employer from en- gaging in meaningful bargaining Accordingly, we conclude, contrary to the Acting Regional Direc- tor, that jurisdiction should be asserted The Employer, Community Transit Services, Inc (CTS) is a California corporation that provides public transportation in Yuba City, California, pur- suant to a series of contracts negotiated with the the Hub Area Transit Authority (HATA) HATA is a governmental entity that operates under a joint powers agreement among Sutter County, Yuba County, the city of Marysville, and Yuba City to provide transportation services The Employer has contracted with HATA since 1978, and the most recent agreement negotiated was in effect from July 1, 1986 , through June 30, 1987 HATA owns the buses as well as the fares collected , and the name HATA appears on the side of the to the routes determined by HATA HATA approves the uniforms that are worn by the CTS drivers In 1984, a performance audit was conducted by an independent consultant of HATA's costs and ex- penditures , which resulted in HATA's adoption and incorporation in its contract with CTS of cer- tain measures to reduce HATA's operating costs The first of these modifications was an agreement that CTS would bill HATA for actual costs rather than HATA compensating CTS for projected ex- penditures . Another important change incorporated in the 1985-1986 CTS/HATA contract was a pro- vision whereby CTS agreed not to exceed the max- Imum hourly wage for the employee classifications set forth in an attachment to the contract The con- sultant also suggested that HATA solicit bids from other contractors to reduce its costs To dissuade HATA from soliciting bids from other contractors, CTS agreed to freeze its wage rates at the previous year's scale and thus ensure the continuity of the contract The wage scales CTS attached to the contract had not been previously negotiated with HATA The wage attachment lists starting wages and periodic increases for the classifications of vehicle operators , controllers/dispatchers , vehicle wash- ers/janitors, maintenance/helper , and mechanics The wage rate attachment provides for merit in- creases for the classifications of vehicle operators and controllers/dispatchers Jon Monson , the Em- ployer's vice president of operations , testified that no merit increases had been granted after 1985 The wages of a number of employees who re- ceived meet increases of 5 to 15 cents an hour prior to the 1985 freeze and who are still being paid in excess of the corresponding wage rate for their classification are not reflected in the attach- ment There is no maximum hourly rate set forth for employees who have been employed more than 6 years . The wage scale and rates of the 1985-1986 agreement were incorporated in the 1986-1987 contract without change 290 NLRB No 154 1168 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD The contract does not require that CTS' wages be comparable to those of city or county employ- ees, or set forth any guidelines or restrictions that wages must conform to any minimum standards. According to both William Harper, HATA chair- man, and Allen Eager, a HATA board member, the purpose of attaching the wage scale to the con- tract is to provide information and to serve as a check by HATA on CTS' billings. According to Harper, HATA does not approve the actual wages, promotions, or overtime pay given to employees. Further, Harper stated, CTS could pay higher wages as long as it does not affect what CTS bills HATA. If, however, CTS wanted to obtain reim- bursement for amounts in excess of those set forth in the wage scale for a certain classification, it must obtain prior HATA approval. The 1986-1987 contract awards CTS a total annual sum of $602,077, which is divided into three principal areas. The contract awards $320,477 for fixed costs, an amount distributed as a weekly fee of $6163. This weekly fee compensates CTS for ve- hicle operators' nonservice wages, management's controllers' and maintenance employees' wages, those employees' fringe benefits and indirect labor costs, bus washing and cleaning supplies, uniforms, report reproduction, dispatch office supplies, radio maintenance , vehicle insurance, vehicle preventive maintenance , project telephones, and all other op- erating costs. The contract also awards CTS $299,100 a year in variable costs for "Vehicle Op- erator Revenue Labor." This amount is divided by a maximum of 38,922 vehicle service hours for an hourly amount per vehicle service hour of $7.685. The hourly rate compensates CTS for vehicle op- erators' wages, fringe benefits, and indirect labor costs. Finally, the contract gives CTS $62,500 as a management fee. There are no provisions in the contract specifying the manner in which this amount shall be used. The fixed and variable costs for a 12-month period are described in the contract as projected costs, and the contract requires that CTS present HATA with a summary of its actual costs for each calendar quarter. CTS submits to HATA monthly a labor distribution report showing the hours worked and the gross wages earned by each em- ployee. If the actual costs are lower than the pro- jected costs, the contract provides that the sums owed for vehicle service hours and the weekly fee shall be adjusted downward to the actual costs. However, if a downward adjustment is made and a refund paid to HATA in a particular quarter, HATA will reimburse CTS for actual costs in excess of projected costs in the following quarter in an amount not to exceed the prior quarterly ad- justment. Other than this provision, the contract does not obligate HATA to pay CTS for expendi- tures incurred in excess of projected costs. Al- though HATA's primary concern is that CTS not exceed the total contract price, the record is un- clear whether HATA would allow CTS to transfer funds allotted for one purpose to cover expenses incurred in another area. The contract defines the relationship of CTS with HATA as that of an independent contractor. In a policy statement issued on April 22, 1986, HATA reaffirmed its position that it views CTS as an independent contractor and stated that HATA will not intervene in the employer-employee rela- tionship between CTS and its employees. Accord- ing to Harper, the intent of both the contract and the policy statement is that HATA will not be in- volved in CTS' labor relations. Eager also stated that HATA is not to be involved in setting terms and conditions of employment for CTS employees. The CTS Yuba City location is managed by a site supervisor, who in turn reports to a regional manager headquartered in Fairfield, California. CTS follows a companywide uniform policy re- garding all its fringe benefits, i.e., health and life in- surance, holidays, and vacations, as well as a stock ownership plan. The contract with HATA is silent concerning CTS' employee fringe benefits and HATA sets no standards, limitations, or review procedures on the fringe benefits CTS awards its employees. CTS has changed health insurance car- riers without notifying HATA or seeking prior ap- proval. Similarly, CTS also maintains a uniform com- panywide policy in other personnel areas through the use of an employee handbook that covers areas such as discipline, grievances, promotions, perform- ance appraisals, probationary periods, and over- time. In order to ensure compliance with the manual and enforcement of CTS' policies, monthly meetings are conducted with the different area su- pervisors and CTS' manager of labor relations. There is no HATA intervention in any of the above-stated areas. CTS conducts all its hiring at the Yuba City fa- cility, with the exception of the site supervisor, without intervention from HATA.' The contract specifically provides that HATA will not interfere in the disciplining and firing of CTS employees al- though HATA may advise CTS of any employee's inadequate performance and demand, in extreme cases, the removal of an employee. There is evi- ' The contract requires that the site supervisor be approved by HATA. According to Monson , the resume of the Yuba facility site supervisor was submitted to HATA at the time of his hire. COMMUNITY TRANSIT SERVICES 1169 dence of one instance in which CTS terminated an employee at HATA's request, although the circum- stances are not set forth in the record The training of new employees at the Yuba City location is con- ducted by CTS The contract with HATA does re- quire that CTS submit its training program for HATA's review and approval , as well as submit a list of the drivers who have completed the training CTS must also, according to the contract , conduct monthly safety meetings that have been attended by the HATA manager In Res-Care, supra, and in Long Stretch , supra, the Board reaffirmed and refined the principles set forth in National Transportation Service, supra, for determining whether assertion of jurisdiction over an employer providing services to or for an exempt entity is warranted Under National Transportation Service, supra, once it is determined that an em- ployer meets the definition of "employer" in Sec- tion 2(b) of the Act the inquiry is whether the em- ployer retains sufficient control over the employ- ment conditions of its employees to engage in meaningful and effective bargaining with a union In Res-Care, the Board complemented this inquiry by setting forth its counterpart, an examination of the amount of control exercised by the exempt entity over an employer , particularly in the areas of wages and fringe benefits In Res-Care, the Board concluded that it was the exempt entity, the Department of Labor (DOL), that retained the ulti- mate discretion for setting wage and benefit levels, thus effectively precluding the employer from meaningful bargaining In the instant case , the Acting Regional Director found that the control exercised by HATA was similar to the control exercised by the exempt entity over the employer in Res-Care, and therefore precluded meaningful bargaining The Acting Re- gional Director relied on HATA's ability to set direct limitations on the maximum amounts of em- ployee compensation as well as the need for prior HATA approval , and concluded that HATA effec- tively controlled the wages and benefits CTS could provide its employees We find that the Acting Regional Director erred in including benefits as items controlled by HATA The contract contains no mention of limits on the fringe benefits that CTS may accord its employees Further, there is no evidence that HATA has re- viewed or has knowledge of the benefits offered by TS. Although the contract lists fringe benefits as one of the items for which CTS is compensated, no restrictions are attached, and their inclusion is only part of a general description of the overall items for which CTS is awarded moneys The contract offers compensation for costs CTS might incur in the area of fringe benefits but it is not tantamount to finding that HATA exercises direct monetary control in these areas CTS grants and implements fringe benefits based on companywide policy and financial considerations relating to its whole oper- ation, not just the Yuba City facility Based on these considerations , CTS alone determines health and life insurance , vacations, paid holidays, and the stock ownership plan for its employees However, as regards wages, the HATA contract does impose limitations by effectively precluding CTS from raising its wage rates above the amounts set forth in the attachment to the contract Al- though the salary rates are initially set by CTS, once they are incorporated into the contract they become an integral part of the contract price and cannot be modified without HATA's prior approv- al if CTS wishes to ensure reimbursement Thus, HATA, by requiring prior approval for payment of wages beyond a specified amount , controls the sal- aries of CTS ' employees and impedes meaningful bargaining over this subject 2 In contrast to the employer in Res-Care, howev- er, CTS retains control over all other economic and noneconomic bargamable subjects 3 The Em- ployer controls a myriad of economic terms and conditions of employment, i e , health and life in- surance, vacations , paid holidays, overtime, sick and annual leave, and the stock ownership plan, as well as all other noneconomic personnel related matters 4 CTS exclusively handles, in conformity with its employee handbook and its policy of cen- tral labor relations, all its personnel-related matters in the areas of grievances , discipline, promotions, performance appraisals, leaves of absence, and overtime CTS also conducts all its hiring , firing, and training HATA's limited control is directed at ensuring the minimum qualifications of the employ- ees Although the site supervisor's resume must be approved by HATA , there is no evidence that HATA has actually participated in the hiring deci- sion or opposed any candidate selected by CTS 2 Res-Care, supra, fns 12 and 14 See PHP Healthcare Corp, 285 NLRB 182 (1987) a Res-Care had to submit for DOL's approval its personnel policies concerning compensatory-time, overtime, severance pay, holidays, vaca- tions, probationary employment , sick leave, cost of living increases, in- centives, and equal employment opportunities DOL also imposed restric- tions in other personnel related matters Res-Care had to submit its selec- tion criteria and hiring procedures for DOL approval Further, DOL had to specifically approve the hir ing of the center director, all senior staff and supervisors, all the employees who made more than $15,000 a year, and relatives of currently employed employees 4 Although Res-Care held that wages and benefits are the primary ele- ments which must be examined in the employer-exempt entity relation- ship, Res-Care recognized the importance of evaluating the controls exer- cised by the exempt entity and the employer in other personnel related areas, i e discipline, hiring, and grievances, in order to determine wheth- er meaningful bargaining is possible Res-Care, supra 1170 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD The limitations on wages, along with the very limited controls by HATA, are insufficient, in and of themselves , to warrant a finding that the em- ployer is precluded from engaging in any meaning- ful bargaining . To decline jurisidiction in this case based solely on the basis of these limitations would understate all the other areas over which the Em- ployer exercises effective control , and would ignore the underlying premise of both National Transportation and Res-Care , that the Board will assert jurisdiction unless the employer cannot effec- tively bargain with the union over the terms and conditions of employment of its employees.5 5 In Res-Care, supra, the Board at one point stated that if an employer does not have the final say on the entire package of employee compensa- tion, i.e., wages and benefits , meaningful bargaining is not possible. Id. Viewed in isolation , this statement could arguably stand for the proposi- tion that the employer must retain control over each of the economic as- pects of its labor relations if meaningful bargaining is to be possible. This statement , however, read in the context of the decision , merely stressed the Board 's position that to ensure meaningful bargaining the employer Based on the foregoing , we find , after examining the degree of control exercised by CTS as well as by HATA over CTS' labor relations, that CTS re- tains sufficient control over the essential terms and conditions of employment of its employees to enable it to engage in meaningful bargaining. Ac- cordingly , the Acting Regional Director 's Supple- mental Decision and Order is reversed and we shall reinstate the petition and remand to the Re- gional Director for further appropriate action. ORDER The petition in Case 20-RC-16015 is reinstated and remanded to the Regional Director for appro- priate action. must exercise control over economic terms and conditions of employ- ment, rather than control over solely noneconomic terms. Chairman Stephens agrees that this case is distinguishable from Res- Care on this point, and he also finds this position consistent with his con- curring view in Res-Care.