Trailways Commuter Transit, Inc.

TRAILWAYS COMMUTER TRANSIT 935 Trailways Commuter Transit, Inc. and Amalgamated Transit Union, AFL-CIO, CLC, Local Division 1338, Petitioner. Case 16-RC-8824 10 July 1987 DECISION AND REVIEW AND ORDER REMANDING BY CHAIRMAN DOTSON AND MEMBERS JOHANSEN AND STEPHENS On 11 April 1986 the Regional Director for Region 16 issued a Decision and Order concluding that under the criteria of National Transportation Service, 240 NLRB 565 (1979), the Board was pre- cluded from asserting jurisdiction over Trailways Commuter Transit, Inc. (the Employer). The Dallas Area Rapid Transit Authority (the Author- ity) was found to be a political subdivision within the meaning of Section 2(2) of the Act and there- fore exempt from the jurisdiction of the Board, and the Employer was found to share the Authority's exemption. By Order dated 8 July 1986, the Board granted Petitioner's Request for Review and re- manded this matter to the Regional Director for further consideration in light of the decisions in Res-Care, 280 NLRB 670 (1986), and Long Stretch Youth Home, 280 NLRB 678 (1986), both which clarified the National Transportation Service test. The parties filed briefs in light of the remand. On g September 1986 the Regional Director issued a Supplemental Decision and Order reaffirm- ing his previous findings and conclusions. Address- ing the issue on remand, the Regional Director concluded that control of employee wages and other benefits is more closely allied to that found in Res-Care rather than in Long Stretch. Pursuant to Rule 102.67 of the Board's Rules and Regulations, Petitioner filed a timely request for review of the Regional Director's Supplemental Decision, which the Board granted by mailgram order dated 22 December 1986. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. We conclude, contrary to the Regional Director, that jurisdiction should be asserted. Although the exempt entity with whom the Employer has con- tracted monitors the Employer's performance, we find that such monitoring consists largely of oper- ational controls and is not so restrictive to preclude the Employer from engaging in meaningful collec- tive bargaining. It is the Employer, not the exempt entity, that has ultimate control over the compensa- tion and labor relations of its employees. In Res-Care, supra, and Long Stretch, supra, the Board reaffirmed its reliance on the principles set 284 NLRB No. 103 forth in National Transportation Service, supra, with clarifications. The test enunciated in National Transportation, after a determination that an em- ployer itself meets the definition of an "employer" in Section 2(2) of the Act, is simply whether an employer retains sufficient control over the em- ployment conditions of its employees to engaged in "effective" or "meaningful" bargaining with a labor organization. In Res-Care, the Board stated that it would closely examine, on case-by-case basis, the control over essential terms and condi- tions of employment retained by an employer and the scope and degree of control exercised by the exempt entity over an employer's labor relations. More specifically, the Board held that when an em- ployer "lacks the ultimate authority to determine primary terms and conditions of employment, such as wage and benefit levels, it lacks the ability to engage in the necessary 'give and take' which is a central requirement of good-faith bargaining and which makes bargaining meaningful."1 The Employer contends that the facts in this case are nearly identical to those in Res-Care. Thus, proposed budgets were submitted to the Au- thority as part of bids; the Employer submitted proposed wage-and-benefit levels that became the basis for the contract prices and for compensation levels; and the Authority states that it must ap- prove any wage modifications or employment policy changes that the Employer might request. The Petitioner, on the other hand, contends that the Employer has plenary control over day-to-day operations, subject only to the Authority's right to determine the nature of the service provided and to engage in basic contractual compliance oversight. Indeed, the Petitioner argues that the Authority does no more than rubber stamp the Employer's proposals and actions. Following a public referendum establishing the Authority, requests for proposals were issued, first for express bus service—later covered by the DART I contract—and subsequently for suburban crosstown service—later covered by the DART II contract. Trailways Corporation established a sub- sidiary corporation, the Employer, to respond to the bids and ultimately to provide the contract services. The Employer receives all its funding from the Authority contracts, which provide for startup phases and two separate phases in the pro- vision of services. During a startup phase, expenses incurred are directly reimbursable on approval by the Authority. The second phase begins on the completion of the startup phase, when the contract becomes operational. During this second phase, the 1 280 NLRB 670 (1986) 936 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Employer receives one-twelfth of the total budg- eted amount each month. The contracts provide for the payment of specific dollar amounts at given intervals for specific operations. The payments cover all budgeted expenses, including the Employ- er's profit on the contract. The DART I contract is fully operational, but the commencement of one portion of operations under the DART II contract was delayed by the Authority and, at the time of the hearing, was not yet revenue producing. The budget format used by the bidders, includ- ing the Employer, was dictated by the Authority. The budget prepared by the Employer was at- tached to their bid proposal and the level of serv- ice to be provided was set forth by the Authority. To an extent, therefore, the number of employees is determined by the level of service. The contracts provide that the Authority can set all the routes, hours, and frequency of transit service and can monitor contract performance. The contracts also reference a right of the Authority to "approve" op- erating policies and practices. The record shows that the Employer submitted projected line item budgets with total figures that became part of the contract prices. The wage were determined by the Employer and Trailways per- sonnel and were not dictated by the Authority. With regard to the nature of the compensation paid, the contracts provided for simple, fixed-fee compensation which is not tied to actual costs except in the nonrevenue producing startup phase of services. No provision in either contract permits the Authority to modify the required monthly pay- ment to the Employer if actual expenditures are less than those projected in the budget. Neither contract requires the Employer to submit, nor has the Employer in practice provided to the Author- ity, vouchers detailing individual costs, except as pertaining to the expenditures during a DART II startup phase. When asked about payment to the Employer, Authority Representative Chisholm testified as fol- lows: Q. With respect, then, to the payroll for drivers [for revenue service], that's a lump sum payment; is that correct? A. All right. To the best of my knowledge it would be included in the lump sum payment to Trailways. Invoices detailing payroll costs were submitted only in the startup period of a DART II phase. With respect to changes in the level of compensa- tion, the record indicates that the Employer pro- posed a changed in the drivers' starting salaries. Chisholm stated that the Authority did not disap- prove the Trailways proposal. Q. Then, what role did DART play in the decision to change the starting salaries of the DART I drivers? A. My recollection is that we were ap- proached in our weekly meeting that this was something that Trailways wanted propose, and we basically did not disapprove it. With respect to a reduction in DART II drivers' starting salaries, Chisholm testified: Q. Okay, And when—Did TCT present a proposal to you that they would like to de- crease the starting wage? • A. I believe it was. . . I'm not sure it was a formal proposal. As is typical of the way we've been interacting, it was a matter of dis- cussion and basically held up to see if we had any problem with it. We indicated we had none. Q. Did TCT explain to you why they wanted to do it? A. I don't recall an explanation in detail, but that would be consistent with our normal op- erating relationship. With respect to altering fringe benefits, the record indicates that only one discussion tran- spired. The Employer proposed that drivers and their families be allowed to travel for free on all buses in the Authority's service area. 2 The Author- ity approved free travel only for the drivers them- selves. Also regarding fringe benefits, according to Vice President Holland, the Employer could alter the fringe benefit package by choosing a different insurance carrier or by altering the coverage, with- out any compensation implications. Safety and training programs were developed solely by the Employer and Trailways personnel. Chisholm stated that the programs were reviewed prior to implementation. However, it appears that the Authority did no more than request a detailed statement describing the phases of the programs. With regard to the employee Rules and Directives Handbook, the Authority requested one change concerning the "miss-out" policy, an attendance policy, and the Employer complied with this re- quest. The handbook contains many of the employ- ees' terms and conditions of employment, such as seniority, job-bidding, rate selection, uniforms, holi- day pay, vacations, attendance, outside employ- ment, performance standards, insurance, layoff and recall, and probationary period. No other modifica- tions were requested by the Authority. 2 The transcript refers to free travel on Trailways buses, but we assume from the context that travel on the buses m this area is what was meant In any event, the difference between the two possible meanings does not affect our resolution of the ultimate issue. TRAILWAYS COMMUTER TRANSIT 937 There was testimony that weekly meetings occur between the Employer's management and Author- ity officials. According to Holland, Acting General Manager Cromer and Chisholm, the meetings con- cern the Employer's contractual performance. There is also some degree of contact between Authority representatives and the Employer's driv- ers. Willie Rucker, one such representative, comes into contact with drivers and has given them limit- ed instructions. Specifically, he has requested that drivers at transfer centers move their buses closer to the curb and has requested that they wait at the centers in order to accommodate passengers arriv- ing on late buses. The Employer controls route assignments and the method through which drivers are assigned po- sitions on the seniority rosters. Daily assignments are made by the Employer's supervisory personnel. The Employer's personnel approve drivers' leaves of absence and vacations. Internal grievances are handled by the Employer with no appeal to the Authority. There have been only one or two in- stances in which a driver has gone to the Author- ity directly with a complaint. Control over disci- pline is also vested in the Employer. The Authority is involved to the extent that it serves as a clearing house for public complaints, and the Authority can direct that a driver be removed from contact with the public. In practice, the Authority finds out about most disciplinary action after it has occurred. Authority personnel are not involved in the re- cruitment process and the Employer makes all hiring decisions. The Employer is restricted only by minimum qualifications set forth in the con- tracts. For reasons not explained in the record, the Authority orally rejected the Employer's request for money to hire three additional supervisors. The Employer argues that this case should be controlled by our decision in Res-Care. In Res- Care, supra, the exempt entity, the Department of Labor (IDOL), approved minimum-maximum wage ranges as well as specific levels of various employ- ee benefits. The employer could not set initial wages or grant wage raises higher than the ap- proved maximum and could not provide greater benefits than those contained in the approved bene- fit package. DOL's total cost of the employer's contract included the wage levels proposed by the employer and approved in advance by DOL. Any attempt by Res-Care to pay wages or benefits above the previously approved maximum would result in a determination of a "disallowable cost" and a reduction of Res-Care's payment by DOL under their contract. The Employer notes factual similarities between the present situation and that in Res-Care, including the fact that proposed budgets with wage-and-ben- efit levels were submitted to the Authority, and these budgets—at least with respect to the DART II operation—became the basis for the contract price and compensation paid to the Employer by the Authority. The Employer further contends that the Author- ity has the ability to approve or disapprove em- ployment policies and any changes (including changes in compensation), nothing an absence even in Res-Care of the DOL's ever having disapproved a proposed employment policy or a proposed change to an employment policy. It points to three instances of the Authority's having disapproved proposals as evidence of its control over the Em- ployer's labor relations: (1) The Authority's insist- ence on a change in the miss-out policy in the Handbook before it would give its approval of the Handbook; (2) The Authority's rejection of the Employer's proposal that spouses and children of its drivers receive passes for free transportation on the bus system; and (3) The Authority's rejection of the Employer's proposal for money to add three additional supervisors. We agree that some factual similarities exist be- tween the instant case and Res-Care. There are also, however, significant distinctions that lead to the conclusion that the Employer here maintains sufficient control over its compensation and labor relations to engage in meaningful collective bar- gaining. In the instant case, neither contract per- mits the Authority to "disallow" costs in excess of budget line items. Instead, the Employer receives montly payments based on the total projected budgets. Unlike the DOL in Res-Care, the Author- ity cannot specifically limit employee compensation expenditures. The Authority can only place an ef- fective ceiling on such expenditures through the contract terms limiting the Employer's total pay- ment, which is a product of the projected budget developed by the Employer. The only changes to the contracts, necessitated by alterations in the level of service desired by the Authority, have in- volved amendments to the total compensation paid to the Employer. The Authority, then, does not have "the discretion to approve or disapprove spe- cific salary or benefit levels." Long Stretch, supra, fn. 12. The Authority has not required the Employ- er's policies to be in a specific form, and the Au- thority has done no more than request detailed statements describing the phases of the Employer's safety and training programs. Thus, based on these facts, we find that the Authority's involvement simply does not rise to the level of control which resulted in the Board's deci- sion not to assert jurisdiction in Res-Care. The ac- 938 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD tions and rights of the Authority do not rise to a level which impinges on the day-to-day operations of the Employer or on the Employer's control of labor relations. Like the employer in Long Stretch, the Employer here "largely determines for itself' what its compensation and personnel policies will be. The contracts do not specify that wages or ben- efits paid to drivers are subject to Authority ap- proval. The Authority engages in basic contractual compliance oversight, without crossing over the line that would establish the Authority as depriving the Employer of sufficient control over the essen- tial terms and conditions of employment of its em- ployees to preclude it from engaging in meaningful bargaining. Thus, the Authority's review of the Employer's policies and practices does not disable the Employer from bargaining over terms and con- ditions of employment. See Rustman Bus Co., 282 NLRB 152 (1986), and ARA Services, 283 NLRB 602 (1987). The incidents allegedly showing Au- thority control are minor and are not sufficient to establish the Authority as having ultimate control over the Employer, especially when viewed in light of the overall independence the Employer ex- ercises over its labor relations. Accordingly, we fmd that the Regional Director erred in failing to assert jurisdiction over the Employer in accord with the standards set forth in National Transporta- tion Service, as affirmed in Res-Care and Long Stretch.3 ORDER4 The Regional Director's Supplemental Decision and Order is reversed and the case is remanded for further appropriate action. Chairman Dotson, dissenting. Contrary to my colleagues, I would affirm the Regional Director's supplemental decision not to assert jurisdiction over the Employer based on the principles set forth in Res-Care, 280 NLRB 670 (1986), and Long Stretch Youth Home, 280 NLRB 678 (1986). The Employer provides transportation services pursuant to contracts with the Dallas Area Rapid 3 Member Stephens agrees that it is proper to assert junsdichon over the Employer under the standards set forth in the majority opinions in Res-Care, 280 NLRB 670 (1986), and Long Stretch Youth Home, 280 NLRB 678 (1986). He concurs ni the result here, however, on the basis of his concurring and dissenting opinion in Res-Care, 280 NLRB 670. 4 Inasmuch as the Regional Director declined to assert jurisdiction over the Employer, he did not reach the issues involving the determina- tion of an appropriate unit for the Employer's employees, We shall there- fore remand the case to the Regional Director for further appropriate action. Transit Authority (the Authority), an entity exempt from the Act's jurisdiction. Based on the facts of this case as set forth by the majority, I disagree with my colleagues' interpretation of the Authori- ty's involvement and their view that the actions and rights of the Authority do not rise to a level which establish the Authority as having ultimate control over the primary terms and conditions of employment. As I indicated in my dissent in Long Stretch, it is the exempt entity's real possession of the authority to review, approve, and disapprove salary, benefits, and personnel policies that warrants declining juris- diction. In this case, as the majority states, "the contracts . . reference a right of the Authority to 'approve' operating policies and practices." How- ever, the facts go on to reveal more than actual possession of such authority. The Authority has ac- tually exercised its right by approving the follow- ing: the Employer's proposed change in drivers' starting salaries; the Employer-developed safety and training programs; and the majority of items in the employee Rules and Directives Handbook. Moreover, the Authority exercised its right to dis- approve by rejecting the Employer's fringe benefit proposal of free transportation for employee spouses and children, by rejecting the Employer's request for money to add supervisors; and by insist- ing on , a change in the miss-out policy in the em- ployee Handbook. I do not find such exercise of control to be "minor" Nor do I find it to be "basic contractual compliance oversight." Finally, although I agree that the contract does not specifically allow the Authority to limit em- ployee compensation, the contract does set a mini- mum wage level by requiring the Employer to pay no less than the local prevailing rate paid by other public transportation service operators. Additional- ly, the budget proposal submitted to the Authority contained line items designating drivers' wages. The approved budget contained specific wage rates and, as demonstrated in the instance of the Em- ployer's proposed change in drivers' starting sala- ries, changes in those rates required, Authority ap- proval. Moreover, the Authority could arguably reject a proposed annual budget in its entirety be- cause of labor costs.' Accordingly, I find the foregoing sufficient to es- tablish the Authority as having ultimate control over these terms and conditions of employment. Thus, I would not assert the Board's jurisdiction over this Employer. 1 See my dissent in Long Stretch, supra