R W Harmon & Sons, Inc

National Labor Relations Board - Board DecisionsJan 29, 1990

297 N.L.R.B. 562 (N.L.R.B. 1990)

562 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD R W Harmon & Sons, Inc and United Food and Commercial Workers, Local Union 576 Pen tioner Case 17-RC-9815 January 29, 1990 DECISION ON REVIEW AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS CRACRAFT AND DEVANEY On April 30, 1986, the Regional Director for Region 17 issued a Decision and Direction of Elec tion in this proceeding, in which he concluded that the Board should assert jurisdiction over the Em ployer In reaching his conclusion, the Regional Director found that the Employer retained control "over most terms and conditions of employment" and was therefore capable of engaging in meaning- ful collective bargaining with the representative of its employees He further noted that although the Employer had entered into a contract with the In- dependence, Missouri School District (School Dis tnct), a governmental entity exempt from the Board s jurisdiction, that appeared to grant the School District control 'of meaningful elements underlying collective bargaining, that control was uncertain because the contract was not then in effect In accordance with Section 102 67 of the Board's Rules and Regulations, the Employer filed a timely request for review of the Regional Direc tor's Decision On May 30, 1986, the Board grant ed the Employer's request for review On June 30, 1986, the Board issued an Order remanding this proceeding to the Regional 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), with instructions to reopen the record if necessary, and to issue a Sup plemental Decision, if appropriate On October 8, 1986 after the record was re- opened and a supplemental hearing was held, the Regional Director issued the attached Supplemen- tal Decision and Order in which he dismissed the instant petition The Regional Director found that paragraph 17 of the contract in effect between the Employer and the School District granted the School District sufficient control, which the School District had exercised, over the Employer's labor relations to make meaningful collective bar gaining impossible under the test set forth in Res- Care, supra Thereafter, the Petitioner filed a timely request for review of the Regional Director s Supplemental Decision, which the Board granted by mailgram order dated January 14, 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 Contrary to the Regional Director, we find that the Employer retains sufficient control over the employment conditions of its employees to engage in meaningful collective bargaining Ac cordingly, we conclude that it will effectuate the purposes and policies of the Act to assert junsdic tion over the Employer Briefly, the evidence establishes that the Em ployer and the School District entered into a con tract on February 12, 1986, 1 whereby the Employ er would provide transportation services for three successive school years This agreement followed the School District's acceptance of a bid that the Employer had submitted Although the Employer had calculated its bid by including, inter aim, the cost of expected dnver rates, the bid submitted did not delineate any wage rates Following acceptance of the bid, the Employer s area general manager did discuss the Employer's wage structure, bonus payments, and safety program with the School Dis tnct's transportation director The area general manager testified that the transportation director seemed "pleased ' The Employer alone, however, determines the drivers' wages This determination is usually made in the spring prior to the beginning of the school year As the Employer makes this de- termination for only the following school year, the Employer's area general manager also testified that the Employer had not calculated the wage rates for the final 2 years of the 3 year contract (the 1987- 1988 and 1988-1989 school years) Paragraph 17 of the contract between the Em ployer and the School District states that the Em ployer "shall not negotiate or enter into any agree ment or arrangement with or on behalf of drivers or other personnel without the written approval" of the School District Pursuant to this paragraph the Employer on August 29 submitted for the School District s approval a list of drivers, copies of the drivers physical examinations, pay schedules for the 1986-1987 school year, and a copy of the Employer s employee policy handbook When the Employer began providing school bus transporta tion services for the School District on September 2, the School District had not yet approved the materials submitted by the Employer The School District issued its approval on September 16 In Res-Care, supra, and Long Stretch Youth Home, supra, the Board reaffirmed the test enunci ated in National Transportation Service, 240 NLRB 'Au dates hereafter are in 1986 297 NLRB No 81 R W HARMON & SONS 563 565 (1979), for determining when assertion of juris- diction over an employer providing services for or to an exempt entity is appropriate The Board ex- plained that the decision whether to assert jurisdic- tion focuses on the extent of control retained by the employer over essential terms and conditions of employment as well as on the degree of control ex- ercised by the exempt entity over the employer's labor relations In essence, the Board will assert ju- risdiction if the employer has the "final say on the entire package of employee compensation, a e, wages and fringe benefits " Res-Care, 280 NLRB at 674 An employer seeking to avoid the Board's exercise of jurisdiction carnes the burden of showing that it is not free to set the wages, fringe benefits, and other terms and conditions of employment for its employees Firefighters, 292 NLRB 1025, 1026 (1989) The Board declined to assert jurisdiction over the employer in Res-Care because the exempt entity retained the ultimate dis- cretion over the basic economic terms Once the exempt entity had contracted with the employer by approving a proposal that specified wage levels and fringe benefits, the employer could not alter those wage levels and benefits without the exempt entity's approval By contrast, the Board asserted jurisdiction in Long Stretch because the exempt entity did not dictate specific limits on expenditures for erriployee compensation We find that like the employer in Long Stretch Youth Home, the Employer here has the "final say" over the terms of compensation for its employees Unlike the employer in Res-Care, the Employer here has not submitted a bid that specifies wage levels and benefits The contract between the Em- ployer and the School Distnct neither specifies wage levels to be paid by the Employer, nor pro- hibits the 'Employer from altenng those levels once they have been set Furthermore, the contractual language does not state that the exempt entity has the right to disapprove the pay schedules estab- lished by the Employer Consequently, we find that the contractual relationship between the Em- ployer and the School District is similar to that be- tween bus company employers and exempt entities in other cases in which we have asserted jurisdic- tion See, e g, Robinson Bus Service, 292 NLRB 70 (1988), Rustman Bus Go, 282 NLRB 152 (1986) See also R W Harmon & Sons v NLRB, 664 F 2d 248, 251 (10th Cir 1981) ("Since [the employer] controls wages and benefitsâ€”the bread and butter issues of collective bargainingâ€”it can engage in meaningful bargaining) " Nonetheless, the Regional Director and our dis- senting colleague find that the Employer does not retain the authonty to set employee compensation because paragraph 17 of the contract grants the School District the right to approve the Employ- er's negotiation or entry into any agreement with the drivers Thus, they conclude that as the Em- ployer has submitted its pay schedules for approval pursuant to this contractual clause, and as the School District has exercised its contractual right of approval, the Employer would be unable to engage in meaningful bargaining with a labor orga- nization over such economic terms We cannot agree that this clause requires that the Board not assert its jurisdiction over the Employer Initially, we observe that Davis, the Employer's general counsel for labor relations, testified that paragraph 17 was included at the insistence of the School District, which wanted the right to approve drivers because of its concern with liability result- ing from dnvers' negligence Thus, the approval process is primarily designed to limit the School District's potential liability from lawsuits, and not to determine the level or content of compensation paid to the employees See Long Stretch Youth Home, 280 NLRB at 681 We further note that the Employer did not submit the pay schedules until after the contract was in operation and that the School District did not issue its approval until after the Employer began providing service Moreover, there is no evidence that the School Distnct's review and approval of the materials was anything other than routine Accordingly, we find that the approval process engaged in by the School District does not constitute the type of control necessary to establish that the Employer has relinquished the au- thority to determine its employees' wages and other terms of employment We are also not convinced by our dissenting col- league's argument that the Board should decline ju- risdiction because paragraph 17 of the contract grants the School District the right of approval over any collective-bargaining agreement entered into by the Employer Although the clause speaks of a grant of approval for negotiating or entering into an agreement, it does not expressly require ap- proval of every term of the agreement In light of the School District's reason for including para- graph 17 in the contract, as well as the other fac- tors discussed above indicating that the School District's control does not extend to wages and benefits, we cannot conclude that paragraph 17's language mandates School District approval of all terms of collective-bargaining agreements 2 2 In view of the foregoing, we find unconvincing our dissenting col- league's reliance on Ohio Inns, 205 NLRB 528 (1973) In that case the State actually exercised such extensive control over aspects of labor rela- tions that the Board found It to be a joint employer with the employees Continued 564 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD In sum, we find that the Employer has not met its burden of showing that it is not free to set the wages, benefits, and other terms and conditions of employment for its employees We conclude that the Employer therefore retains sufficient control over the essential terms and conditions of employ- ment of its employees to enable it to engage in meaningful collective bargaining Accordingly, the Regional Director's Supplemental Decision and Order is reversed and we shall reinstate the peti- tion and remand to the Regional Director for fur- ther appropriate action ORDER The petition in Case 17-RC-9815 is reinstated and remanded to the Regional Director for appro- priate action MEMBER DEVANEY, dissenting Contrary to my colleagues, I would affirm the Regional Director's Supplemental Decision and Order because I believe that on the basis of the record before us, it will not effectuate the purposes and policies of the Act to assert jurisdiction over this Employer In Res-Care, Inc , 280 NLRB 670, 674 (1986), the Board stated that "if an employer does not have the final say on the entire package of employee compensation, i e, wages and fringe ben- efits, meaningful bargaining is not possible [foot- note omitted] " Paragraph 17 of the contract be- tween the Employer and the exempt governmental entity, the School District, states that the Employ- er "shall not negotiate or enter into any agreement or arrangement with or on behalf of drivers or other personnel without the written approval or the School District Pursuant to this contractual provision, the Employer submitted for the School District's approval the drivers' pay schedules for the then forthcoming school year The School Dis- trict thereafter issued its wntten approval In my view, an employer's payment of wages to employees in exchange for their services constitutes an agreement with its employees Thus, paragraph 17 of the contract required the Employer's submis- sion of the pay scales to the School District Indeed, if the Employer had not complied with this requirement, paragraph 17 further provides that the School District would be authorized to terminate the contract I also note that the School District exercised its contractual rights by issuing the writ- ten approval In light of this evidence, and in the absence of countervailing evidence establishing that Immediate employer, and the Board relied not only on contract language, but also on evidence at the hearing (not fully described) regarding a re- quirement that collective-bargaining agreements had to be approved by the State before they could become effective Id at 528-529 the School District does not retain the authority to approve the drivers' wages in practice,' I agree with the Regional Director that the Employer does not have the final say on the entire package of its employees' compensation Although my colleagues find that the contractual relationship between the Employer and the School District is similar to that between school bus companies and exempt entities in other cases in which the Board has asserted ju- risdiction, those cases did not involve an exempt entity's right to approve the employees' wages Furthermore, my colleagues' reliance on the ab- sence of evidence that the School District's approv- al was not routine does not aid their case The Em- ployer has met its burden of establishing that it does not retain the ultimate discretion over the payment of wages by showing that the contract re- quired it to submit the pay scales for approval and that the exempt entity exercised that right of ap- proval The Union could have rebutted this show- ing by introducing evidence indicating that the ap- proval process was routine or a sham As noted above, however, no such countervailing evidence was presented Furthermore, I find that the above-quoted lan- guage of paragraph 17 on its face necessarily re- quires that any negotiation of or entering into a collective-bargaining agreement by the Employer concerning its drivers be subject to the School Dis- trict's written approval When a governmental entity exempt from the Board's jurisdiction has the right of disapproval over a collective-bargaining agreement entered into by an employer, the Board will not assert its junsdiction over that employer See Ohio Inns, 205 NLRB 528 (1973), Res-Care, Inc. 280 NLRB at 674 fn 22 As the Board stated in Ohio Inns, 205 NLRB at 529 fn 3 When parties are subject to our junsdiction, certain rights and obligations attach, and we must have the authority to enforce those rights and obligations For example, when parties ne- gotiate to the point of agreement, we have the authority to require that they reduce their agreement to writing, execute it, and thence- forward implement it But when, as here, the State of Ohio has the power to disapprove of any collective agreement, any attempt on our part to enforce our law, in the event of such a disapproval, would create an irresolvable con- frontation between Federal and state authority '1 find that the evidence indicating that the School District did not issue its wntten approval until approximately 2 weeks after the Employ- er's drivers began transporting the school children is insufficient to estab- lish that the School District does not possess actual authority to disap- prove the drivers wage schedules R W HARMON & SONS 565 I find that the Board's reasoning in Ohio Inns fully applies here Therefore, as the School District has the power to disapprove of any negotiations or agreement entered into by the Employer with or on behalf of its employees, I conclude that it would not effectuate the purpose and policies of the Act to assert jurisdiction herein Accordingly, I would affirm the Regional Director's Supplemental Deci. sion and Order and dismiss the petition SUPPLEMENTAL DECISION AND ORDER Upon a petition duly filed under Section 9(c) of the National Labor Relations Act, as amended, a supplemen- tal hearing was held before a hearing officer of the Na- tional Labor Relations Board Pursuant to the provisions of Section 3(b) of the Act, the Board has delegated its authority in this proceeding to the [Regional Director for Region 17] Upon the entire record in this proceeding, the under- signed finds 1 The hearing officer's rulings made at the hearing are free from prejudicial error and are hereby affirmed 2 The Employer is engaged in commerce within the meaning of the Act 3 The labor organization involved claims to represent certain employees of the Employer 4 No question affecting commerce exists concerning the representation of certain employees of the Employer within the meaning of Section 9(c)(1) and Section 2(6) and (7) of the Act, for the following reasons On April 30, 1986, a Decision and Direction of Elec- tion issued in the above-captioned case, following a hear- ing held on April 3, 1986 The issue in that hearing was whether the Board should assert jurisdiction over the in- stant Employer when considering the then pending con- tract between the Employer and the School District of the City of Independence, Missouri, a political subdivi- sion of the State of Missouri exempt from the Board's ju- risdiction While recognizing that this pending contract appeared to grant the School District "control of mean- ingful elements underlying collective bargaining," the Regional Director concluded that the Employer current- ly controlled most terms and conditions of employment and that any exercise of control by tthe School District was "a matter of speculation" Accordingly, the Region- al Director found that the Board should assert jurisdic- tion over the Employer and directed an election On May 30, 1986, the Board granted the Employer's Request for Review of the Regional Director's Decision and Direction of Election On June 30, 1986, the Board remanded the case for further consideration of jurisdic- tional issue consistent with Long Stretch Youth Home, Inc , 280 NLRB 678 (1986), and Res-Care, Inc , 280 NLRB 670 (1986) On July 24, 1986, the Regional Direc- tor issued an Order to Show Cause why the record in the case should be reopened and/or why the Regional Director should not issue a Supplemental Decision in due course Thereafter, the record reopened and a hear- ing was held on September 22, 1986 On February 12, 1986, the Employer contracted with the School District to provide school bus transportation services for three successive school years, beginning with the 1986-1987 school year This contract is now in oper- ation Pursuant to paragraph 17 of this contract, the Em- ployer submitted to the School District by a letter dated August 29, 1986, a list of drivers, copies of physical ex- aminations of these drivers, pay schedules for the 1986- 1987 school year and a copy of the Employer's employee policy handbook for approval by the School District The School District Issued its approval on September 16, 1986 The Employer began providing school bus trans- portation services to the School District on September 2, 1986 The School District is requiring the Employer to update the list of drivers with supporting information on a monthly basis The record discloses that the School District did not reject any drivers submitted for approv- al, did not request further information on any drivers, and did not seek to change any pay rates or personnel policies for the drivers There was discussion between the Employer and the School District concerning pay rates and personnel policies prior to the time the Em- ployer submitted them for approval The amount of compensation for the Employer's driv- ers is included in a base bid amount which reflects type of bus and route Wages are not delineated in this bid and the bid computation includes such things as route mileage, expected driver rates, number of hours per day the driver and bus are out, and the age of the equipment required The School District awarded its contract for the current school year as well as the school years 1987- 1988 and 1988-1989 based on bid amounts of each year The Employer has not yet calculated its wages for the final two years of the contract The Employer normally announces its wages for the upcoming school year in the spring of the year, specifically the last school month of the current year The Employer considers the actual op- erating costs of the buses including miles traveled, hours out per day, drivers' wages, maintenance costs and acci- dent rates There is evidence the Employer discussed with the School District the plans of the Employer to change certain wage structures and institute a bonus plan In Res-Care, Inc. supra, and Long Stretch Youth Home, Inc. supra, the Board reaffirmed the basic test for deter- mining whether to assert jurisdiction over an employer providing services to or for an exempt entity as set forth in National Transportation Service, 240 NLRB 565 (1979) Thus, the Board seeks to determine whether the employ- er has retained sufficient control over the employment conditions of its employees to engage in effective or meaningful bargaining with a labor organization In Res- Care, the Board explained that the determination of as to whether effective or meaningful bargaining with a labor organization can take place should be based on an analy- sis of the degree of control exercised by the exempt entity over the employer's labor relations, as well as the control retained by the employer Thus, if an employer does not have the final say on the entire package of em- ployee compensation, i e, wages and fringe benefits, meaningful bargaining is not possible Res-Care, supra at 674 Here, article 17 of the contract between the Em- ployer and the School District specifically provides that e 566 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD the Employer "shall not negotiate or enter into any agreement or arrange with or on behalf of the drivers â€¢ . . without wirtten approval" of the School District This article further provides for the right of approval by the School District of "the employment of any driver" together with the right "to direct the removal of any driver." Pursuant to this article, the Employer sought and received from the School District approval of its drivers, its wage schedule for the upcoming year, and its personnel policies. In these circumstances, the School District has retained, as well as exercised, sufficient con- trol over the Employer's labor relations to make mean- ingful bargaining not possible under the Res-Care test. Accordingly, the instant petition is hereby dismissed. ORDER IT IS HEREBY ORDERED that the petition filed herein be, and it hereby is, dismissed.