Old Dominion Security, Inc.

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 81 Old Dominion Security, Inc. and International partment of Labor (DOL) in a wage determination. Union of Security Officers, Petitioner. Case 21- 41 U.S.C. § 351(a)(1), (2); see Dynaelectron Corp., RC-17828 286 NLRB 303 (1987). In Dynaelectron, we con- June 14, 1988 DECISION ON REVIEW AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On December 16, 1986, the Regional Director issued a Decision and Order in which she declined to assert jurisdiction over the Employer under the test set forth in Res-Care, Inc., 280 NLRB 670 (1986), and Long Stretch Youth Home, 280 NLRB 678 (1986), and dismissed the instant petition. In ac- cordance with Section 102.67 of the Board's Rules and Regulations, the Petitioner filed a timely re- quest for review of the Regional Director's deci- sion, in which the Petitioner contended that the Board should assert jurisdiction. By unpublished order dated April 8, 1987, the Board granted the request for review. Both parties filed briefs on review. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. We have considered the entire record in this case, and conclude, for the reasons set forth below, that it is appropriate to assert jurisdiction herein. I. The Employer is engaged in providing security services for the U.S. Navy at the Naval Ocean Sys- tems Center (NOSC), a secure military installation at Point Loma, California. The current contract be- tween the Employer and the Navy is a 1-year, fixed-price contract, with the option to renew an- nually for a total duration not to exceed 3 years. Petitioner seeks to represent the Employer's se- curity guards employed at NOSC; the proposed unit consists of approximately 80 guards. The Re- gional Director concluded that under Res-Care, Inc., above, and Long Stretch Youth Home, above, the Board should not assert jurisdiction over the Employer, finding that the Navy determines the employees' initial wage rate and benefits, and exer- cises a significant degree of control over day-to- day labor relations. The Employer is a contractor subject to the terms of the Service Contract Act of 1965, as amended, 41 U.S.C. § 351. Under that statute, every contractor performing services for the Fed- eral Government must provide its service employ- ees wages and benefits which, at a minimum, meet the compensation levels prevailing in the locality for wages and benefits, as established by the De- cluded that the Service Contract Act in itself does not bar meaningful bargaining. The statute pro- vides for substitution of collectively bargained wages and benefits for the prevailing compensation rates set forth in wage determinations. Id. at 303. Thus, as a service contractor, the Employer must compensate its employees at a minimum in accord- ance with the levels established by the DOL. Here, the wage determination requires that the Employ- er's class I guards, who are those guards in train- ing, receive a minimum wage of $3.85 an hour, and that class II guards, who are all other guards, re- ceive a minimum of $5.49 an hour. The wage de- termination also requires that the Employer pro- vide fringe benefits valued. In at a minimum of 32 cents per hour, $12.80 per week, or $55.46 per month.' In addition, the wage determination re- quires that employees receive vacation and eight paid holidays each year. The Navy specifies the number of guard posts that must be manned, sets the daily and annual hours for each post, and sets staffing levels for each post. The Employer in its bid proposed an hourly rate for each of the approximately 20 guard posts; the contract's fixed price is based on the hourly rate for each post multiplied by the number of annual hours at each post. The hourly rate in- cludes labor costs, overhead, and profit. The record does not show what percentage of the hourly rate is allocated to each category. The contract with the Navy does not prohibit payment of wages higher than those established by the wage determination, although here the Em- ployer pays the employees the wages specified as minimums in the wage determination. The only limitation on the Employer is a requirement to obtain Navy approval before granting overtime above a certain amount. Similarly, there is no limi- tation or ceiling on the benefits that are paid, and as long as the Employer provides compensation for benefits valued at the minimum rate, the Employer may provide these benefits in any form it chooses. Here, the Employer has chosen to provide mone- tary compensation in lieu of actual benefits. Fur- 1 The Service Contract Act requires that a contract set forth , "for in- formation only," the compensation paid Federal employees who perform services comparable to that performed by the service contractor's em- ployees. See 41 U S.C. § 351(aX5) The wage determination's minimum wage standard in this can is the same as the wage rates paid Federal em- ployees performing comparable work. The equivalent Federal employees would receive health and insurance benefits valued at 5 . 1 percent of the hourly rate and retirement benefits of 7 percent of the hourly rate, but, contrary to the Regional Director's finding, these amounts do not corre- spond to those specified in the wage determination for fringe benefits 289 NLRB No. 18 82 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD thermore, the contract includes a price adjustment clause such that if the DOL revises the wage deter- mination to require a wage increase , the contract price is adjusted. With respect to operational functions , the Em- ployer must staff three shifts in accordance with hours set by the Navy . The Employer has the au- thority to hire , discipline, and terminate . The Navy requires that all guards have a minimum of 20 hours of training and that, among other qualifica- tions, they possess firearm permits and be licensed in California as guards . On hiring an employee, the Employer submits documentation to the Navy to demonstrate that the employee meets minimum qualifications . Employees also must receive a secu- rity clearance and observe security directives; em- ployees who are deemed security risks are subject to termination . Employees also must follow certain Navy rules and regulations , including a dress code. The Navy establishes guards' qualifications and the specific training for each post, but the Employer's shift supervisors assign particular guards to the var- ious posts based on individual employees' qualifica- tions. The Navy issues orders for each post that dictate procedures that guards must follow , but the Employer's supervisors direct the guards in their duties. The Navy inspects on a random basis the work of the Employer's guards and, in addition, audits the Employer's overall contract performance on an annual basis . The Navy has made oral and written complaints to the Employer regarding poor em- ployee performance or rule infractions witnessed during these inspections, along with requests for corrective action or discipline . The Employer has complied with such suggestions or requests for dis- cipline to ensure contract renewal; under the con- tract, the Employer must maintain appropriate standards. II. In Res-Care, the Board refined the basic test for whether an employer shares a governmental enti- ty's exemption from the Act that was set forth in National Transportation Service, 240 NLRB 565 (1979). The Board explained in Res-Care that the decision whether to assert jurisdiction will be based on the extent of control retained by the employer over essential terms and conditions of employment as well as on the degree of control exercised by the exempt entity over labor relations . In essence, juris- diction is asserted if the employer has the "final say on the entire package of employee compensation, i.e., wages and fringe benefits .. .." Res-Care, supra at 674. The exempt entity in Res-Care placed direct limits on employee compensation, which precluded bargaining by the employer over economic terms and conditions of employment . There, the salary ranges and benefits were subject to DOL approval. The proposed cost of wages and benefits and other items plus a fixed fee became the contract price, once the exempt entity accepted the bid; the con- tract set forth minimum and maximum wages and benefits . Thereafter, the employer could not change employee compensation without the exempt entity's approval . The exempt entity could disallow payment of wages that were higher than the ap- proved maximum , and it issued payments on a monthly basis on review of vouchers submitted by the employer for expenses . By contrast, the Board asserted jurisdiction in Long Stretch because the exempt entity did not place specific limits on ex- penditures for employee compensation . Rather, it placed only a ceiling on the employer's total budget. Id. at 673 fn. 14. Limits that existed in Res-Care are not present here. The guards here receive the minimum wage and minimum monetary value for benefits set forth in the wage determination. The contract lists the total costs for each guard post and the total of these quantities becomes the basis for the contract price. Although the contract price is affected by the staffing levels set by the Navy as well as by the number of hours required for each post , the Em- ployer sets the proposed wages and benefits, sub- ject to the standards of the Service Contract Act. There is no evidence that the Navy would disallow expenditures or decrease payments if the Employ- er, as a result of a collective-bargaining agreement, paid employees more or extended greater benefits than the amounts required in the wage determina- tion . Indeed, under the Service Contract Act, the collectively bargained rate almost certainly would be incorporated into the next fiscal year 's wage de- termination. See 41 U.S.C. § 351 (a)(1), (2). See also Dynaelectron Corp., at 303 . Moreover, unlike Res- Care, the exempt entity here does not require sub- mission of the Employer's personnel policies for review. Although the DOL's wage determination here corresponds to the actual wage rates paid by the Employer, the Employer is not prohibited from compensating its employees at more than the mini- mum levels set by the DOL. The Employer is not subject to specific limits on employee compensation expenditures, except to provide the minimum re- quired by the operation of the Service Contract Act. Unlike Res-Care, the contract here does not specify wage ranges and, as noted above, with regard to benefits, the Employer is limited only by OLD DOMINION SECURITY 83 the requirement to provide the minimum level of benefits. III. Finally, the Employer contends that the Navy exercise control over labor-management relations and that thus the Employer is a joint employer with the Navy and shares the Navy's statutory ex- emption. We find that the control exercised neither limits bargaining nor indicates that there is a joint employer relationship.2 The Navy sets minimum qualifications, requires security clearances, and ad- herence to a dress code, establishes shifts, and specifies duties for the various posts. The Navy also monitors employee performance, specifies post operating procedures, approves overtime above a particular limit, and suggests disciplinary measures when appropriate. However, the operational con- trols in force here ensure contract compliance and maintenance of security measures at a secure facili- ty. They do not limit the Employer's ability to bar- gain . See Trailways Commuter Transit, 284 NLRB 935 (1987); Rustman Bus Co., 282 NLRB 152 (1986); Long Stretch, supra at 682 fn. 15; Res-Care, supra at 674 fn. 22; see also Champlain Security Services, 243 NLRB 755 (1979); Atlas Guard Service, 2 As the Board indicated in Res-Care, supra at 673, fns 12 and 14, however, its consideration of whether to assert jurisdiction in this type of case does not focus on whether there is a joint employer relationship be- tween the employer and the governmental entity 237 NLRB 1067 (1978). The exempt entity's in- spection of the Employer's operations does not limit bargaining over employee compensation. The Employer's employees are subject to Navy regula- tions and directives, and the Navy may request that the Employer discharge personnel, but the Em- ployer is responsible for hiring, assignment and di- rection of work, discipline, and termination. In Dynaelection, we stated that the "Navy's contrac- tual right to request dismissal of an employee in the event of misconduct or for security reasons does not, alone, preclude the assertion of jurisdiction over the Employer." Id. In sum, we find that the Employer retains suffi- cient control over its employees' terms and condi- tions of employment to engage in meaningful col- lective bargaining, and that its contract with the Navy does not limit the Employer's ultimate dis- cretion over wage and benefit levels. See ARA Services, 283 NLRB 602, 603 (1987); Long Stretch, supra at 680. We therefore conclude that it will ef- fectuate the purposes and policies of the Act to assert jurisdiction over the Employer. Accordingly, we reverse the Regional Director's Decision and Order, and reinstate the petition. ORDER The petition in Case 21-RC-17828 is reinstated and remanded to the Regional Director for further appropriate action.