FKW, Inc.

National Labor Relations Board - Board Decisions

Aug 31, 1992

308 N.L.R.B. 598 (N.L.R.B. 1992)

598
308 NLRB No. 84
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The only issue raised in the request for review is whether the Re-
gional Director erred in asserting jurisdiction under the Board’s deci-
sions in Res-Care, Inc., 280 NLRB 670 (1986), and Long Stretch
Youth Home, 280 NLRB 678 (1986).
FKW, Incorporated and Local Union 1141, Inter-
national Brotherhood of Electrical Workers,
AFL–CIO, Petitioner. Case 17–RC–10798
August 31, 1992
ORDER DENYING REVIEW
BY MEMBERS DEVANEY, OVIATT, AND
RAUDABAUGH
The Board has delegated its authority in this pro-
ceeding to a three-memnber panel, which has consid-
ered the Employer’s request for review of the Regional
Director’s Decision and Direction of Election (relevant
portions of which are attached). The request for review
is denied as it raises no substantial issues warranting
review.1
MEMBER DEVANEY, dissenting.
I would grant the Employer’s request for review.
APPENDIX
1 FKW, Incorporated (herein called the Employer) is a
State of Oklahoma Corporation engaged in providing archi-
tectural engineering services; installation operation and main-
tenance services; operation of telephone, computer, and other
information systems; and operation and installation of auto-
mated warehouse systems. The Employer maintains a facility
at 900 West 63rd Street, Oklahoma City, Oklahoma, and cur-
rently is party to a contract with the Small Business Admin-
istration (SBA), administered by the Federal Aviation Ad-
ministration (FAA), requiring the Employer to provide oper-
ation and maintenance services at the FAA’s Mike Monroney
Aeronautical Center in Oklahoma City, Oklahoma. This con-
tract is subject to the requirements of the Service Contract
Act of 1965, 41 U.S. 351, et seq.
2 The Petitioner seeks an election in a unit consisting of
all full-time and regular part-time operation and maintenance
employees of the Employer employed at the Mike Monroney
Aeronautical-Center, Oklahoma City, Oklahoma but exclud-
ing all electricians, office clerical employees, guards, and su-
pervisors as defined in the Act.
The Employer and the Petitioner stipulated at hearing that
the above-described unit is appropriate for collective bargain-
ing. The parties also stipulated that the Employer meets the
standards for the exercise of the Board’s statutory jurisdic-
tion. The Employer contends that under the policies set forth
in Res-Care, Inc., 280 NLRB 670 (1986) and Long Stretch
Youth Home, Inc., 280 NLRB 678 (1986) the Board should
decline to assert discretionary jurisdiction over the Employer
because of the extent to which the above exempt govern-
mental entities control the employment conditions of the em-
ployees in the petitioned-for unit. It is noted that while the
Petitioner has, since July 5, 1990, been the certified collec-
tive-bargaining representative of a unit of the Employer’s
electricians and electrician helpers employed at the Mike
Monroney Aeronautical Center (herein called the facility), no
issue regarding jurisdiction was raised in the earlier represen-
tation case.
Section 2(2) of the Act exempts from the definition of an
employer, ‘‘the United States or any wholly owned Govern-
ment corporation, or any Federal Reserve Bank, or any State
or political subdivision thereof . . . .’’ In National Trans-
portation Service, 240 NLRB 565 (1979), the Board estab-
lished as the test for determining whether to assert jurisdic-
tion over a non-exempt employer doing business with an ex-
empt entity, ‘‘whether the employer would be able to bargain
effectively about the terms and conditions of employment of
its employees’’ p. 565. Thereafter, the Board held in Res-
Care that the decision to assert jurisdiction will turn not only
on the extent of control retained by the employer over essen-
tial terms and conditions of employment, but also on the de-
gree of control exercised by the exempt entity over labor re-
lations. Thus, under the controlling test, where the employer
retains sufficient control over wages, hours, and conditions
of employment, including fringe benefits and labor policies,
to enable it to bargain meaningfully with a labor organization
as a representative of its employees, the Board will assert ju-
risdiction. Long Stretch Youth Home, Inc., supra. An employ-
er’s control over wages is not decisive, and the Board may
assert jurisdiction over an employer that ceded control of its
wages to the exempt entity but maintained sufficient auton-
omy regarding fringe benefits and labor policies to enable it
to bargain meaningfully with a labor organization. Commu-
nity Transit Services, Inc., 290 NLRB 1167 (1988). Further,
the Board stated in Dynaelectron Corporation, 286 NLRB
302 (1987), that the Service Contract Act does not, in itself,
bar meaningful bargaining. Ebon Research Systems, 302
NLRB 762 (1991).
The Service Contract Act applies to every contract with a
value in excess of $2,500 having a principal purpose of pro-
viding services to the Federal Government. Under the Serv-
ice Contract Act, the Department of Labor (DOL) issues area
wage determinations that set forth the minimum wages and
fringe benefits to be provided to service employees in a lo-
cality, and all contracts with private employers to provide
services to the government must meet these minimums.
The process whereby the Employer was selected as the
contractor to provide the above-described services involved
an initial Request for Proposal (ROP) issued by the FAA.
This ROP set forth 41 job classifications and the skills for
each classification, and specified a ‘‘core crew’’ of 67 em-
ployees including a 6 member administrative staff. Other
than the fact that any bid (or proposal) would have to include
wages and benefits which met or exceeded the minimums es-
tablished by the DOL (as discussed above), the ROP did not
specify any specific wages or benefits. The Employer, and all
other entities submitting a bid, developed its own wage scale
for each classification, including steps in each scale. Addi-
tionally, the Employer proposed which step in the scale it
would use to actually pay during the first year. Once the
FAA completed its consideration and awarded the contract to
the Employer, the wage scale and benefits devised and pro-
posed by the Employer became contractual terms. In future
years of the five year contractual term, on an annual basis,
the FAA reissues a new wage scale which incorporates the
minimum wages and benefits as adjusted by DOL. Each
wage step of each classification is adjusted by the same
599FKW, INC.
amount the minimum rate was increased or decreased by
DOL.
The contract began January 1, 1992. The contract is a
‘‘cost plus award fee’’ contract; i.e., it provides for the pay-
ment of the costs incurred by the Employer in providing the
services plus an ‘‘award’’ to the Employer. The reimbursable
costs covered by the contract are largely labor costs and are
expressly defined in the contract. The monetary award paid
to the Employer includes a base or minimum award for pro-
viding the services and a performance award that varies
based upon the FAA’s evaluation of the Employer’s perform-
ance under, the contract. Historically, the Employer has re-
ceived 70–92% of the possible performance award. The con-
tract is for an initial term of one year. The FAA has the uni-
lateral right to retain the services of the Employer for addi-
tional one-year periods over the next four years. The contract
includes a wage table which is identical to, and was estab-
lished by, the Employer’s bid. As set forth above, it specifies
a minimum and maximum wage rate for each job classifica-
tion and includes seven wage steps for each job classifica-
tion, each step being based upon a set percentage increase
over the preceding step. The contract also sets forth as pro-
posed, the specific wage step that each classification of em-
ployee shall be paid during the first year of the contract. The
contract provides that, after one year, employees are eligible
for a ‘‘merit’’ wage increase of an additional wage step on
the wage scale. Although the contract specifies standard op-
erating procedures (SOP) which govern eligibility require-
ments and the appropriate procedures for the granting of such
merit increases, it is the Employer that evaluates and ap-
proves employees for increases and creates an ‘‘approved
list’’ of recommended merit increases. The Employer failed
to present, and the record does not contain, any evidence re-
garding any review/approval which FAA may have over such
‘‘approved list.’’ The wage table itself is changed each year
to incorporate the most recent DOL wage determinations,
and the corresponding changes in the wage steps are made.
The wage table is apparently not subject to annual renegoti-
ation.
In addition, to, and separate and distinct from the wage
scales or merit increases, the contract provides the Employer
with an incentive pay fund, the amount of which is deter-
mined by a fixed percentage of the direct labor hours em-
ployees work. The Employer uses this fund to give wage in-
creases to employees. The Employer has total discretion in
awarding such incentive wage increases. The record does not
specify the amount in the incentive wage pool. However, the
Employer acknowledged at hearing that the amounts avail-
able in the incentive wage pool were not insignificant. As a
result of such incentive pay, employees may in fact be paid
more than the figures set out in the contractual wage table.
The contract also specifies that employees receive pension
benefits equal to 5% of their wages. The contract also speci-
fies that employees receive annually 80 hours holiday pay,
at least 80 hours vacation, and 8 hours personal leave. In ad-
dition, the contract specifies a formula ($1.84 per hour X
1872 hours annually) that determines the amount that will be
spent per employee for medical, dental, and disability insur-
ance. The $1.84 figure is the minimum benefit package de-
termination made by the DOL and, thus, presumably changes
annually. The various mix of benefits provided under this
formula is not specified and is at the Employer’s discretion.
The contract also expressly sets forth the social security,
worker’s compensation insurance, and federal and state un-
employment insurance costs for each job classification.
Although the number of employees to be hired and their
qualifications are set forth in the contract, the Employer may
hire additional temporary employees subject to approval of
the FAA’s contracting officer. The Employer advertises,
interviews, narrows down the candidates and ultimately se-
lects specific employees for hire. It then sends copies of the
recommended applicants’ resumes and professional licenses
to the FAA’s contracting officer for review. The FAA’s con-
tracting officer may reject or approve the Employer’s rec-
ommendation to hire an applicant. The hours of work are es-
tablished by the contract. The Employer is also permitted to
determine the shift start times for certain operations that are
staffed around the clock. The Employer is permitted, at its
sole discretion, to spend $1,500 every thirty days on over-
time work. Overtime expenditures in excess of $1,500 re-
quire the approval of the contracting officer or his represent-
ative. The FAA’s contracting officer is represented at the fa-
cility by a ‘‘contracting officer representative.’’ The FAA
also employs quality assurance specialists (QAS) who mon-
itor and assess the work performed by the Employer’s em-
ployees.
The QAS employed by the government issues work orders
directly to the Employer’s employees, and may designate
which employee is to perform the work. The government
maintains the contractual right to terminate any employee,
and certain designated ‘‘essential personnel’’ cannot be ter-
minated by the Employer without notification to and, pre-
sumably, approval from the contracting officer. The Em-
ployer has discretion in scheduling employees’ vacations and
issued a personnel handbook that covers, inter alia, attend-
ance and drug use policies. There is no evidence that the
FAA or any of its representatives were involved in the cre-
ation of the personnel handbook or that such attendance or
drug use policies were mandated by the government or the
contract.
Based upon a consideration of all the record evidence, I
find it appropriate to assert jurisdiction in this matter based
upon the principles set forth in National Transportation,
supra. Although, like the contract in Res-Care, the Employ-
er’s contract sets forth minimum and maximum wage ranges
for each job classification and specifies the specific wage
rate to be paid employees in each classification; the Em-
ployer here has access to funds in the incentive pay pool
which gives it discretion and flexibility in determining the
actual wage rates of each employee. Thus, the Employer ap-
pears to have appreciable flexibility in determining the com-
pensation of its employees by virtue of the funds in the in-
centive fund pool. The Board has held that the mere speci-
fication of minimum wage rates in a contract is not sufficient
to show an Employer is unable to bargain with a labor orga-
nization regarding wages. Long Stretch Youth Home, supra;
Dynaelectron, supra.
Moreover, the contract provides that the Employer will ac-
cord employees various fringe benefits, with a total contribu-
tion of $1.84 an hour. However, the contract does not specify
what benefits the Employer must provide. As long as bene-
fits valued at the total rate are maintained, the Employer is
free to alter the mix of benefits. Although the contract pro-
vides for vacation, sick leave, and paid holiday benefits,
600 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
there is no showing that the Employer cannot alter the re-
spective amounts of these benefits as long as the overall cost
of benefits remains the same. Even assuming that the Em-
ployer is not free to change the respective amounts of vaca-
tion, sick leave, or holiday benefits, the Board held on simi-
lar facts, in Dynaelectron Corporation, supra, that an em-
ployer was able to engage in meaningful bargaining with re-
gard to benefits when the employer had a choice of other
benefits to provide.
The record also establishes that the Employer maintains
control over its personnel or labor policies including the hir-
ing, termination, evaluation of employees’ job performance,
selection of employees for merit wage increases, and the
issuance of an employee handbook setting forth personnel
and employment policies.
I note that the Service Contract Act, in itself, does not bar
meaningful collective bargaining. On its face, the Service
Contract Act contemplates collective bargaining and provides
for the consideration of collectively-bargained wages and
benefits in the DOL wage determinations that are factors in
the government contracts. Dynaelectron, supra, Ebon Re-
search Systems, supra. I further note that the Employer has
the burden of showing that it is so restricted by its contract
with the Government that it cannot engage in meaningful
collective bargaining with a labor organization. Ebon Re-
search Systems, supra.
In sum, I find on this record that the Employer has not
met its burden of demonstrating that it lacks sufficient auton-
omy to engage in meaningful bargaining; but, rather that the
Employer retains sufficient control over the wages, benefits,
and labor policies of the employees in the petitioned-for unit
to enable it to bargain with a labor organization in a mean-
ingful manner and that it is, therefore, appropriate for the
Board to assert jurisdiction in this matter.