Osco Drug, Inc.

OSCO DRUG Osco Drug, Inc. and Truck Drivers, Oil Drivers, Filling Station and Platform Workers' Union Local No. 705, an affiliate of the International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America, AFL-CIO. Case 13-CA-26560 June 7, 1989 DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND DEVANEY On December 5, 1988, Administrative Law Judge Wallace H. Nations issued the attached deci- sion. The Respondent, the General Counsel, and the Charging Party filed exceptions and supporting briefs. The Respondent filed an answering brief to the exceptions filed by the General Counsel and the Charging Party. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, i and conclusions and to adopt the recommended Order. ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and dismisses the complaint. ' As we agree with the judge's finding that the Respondent is not a joint-employer with George McNeil Teaming Company and dismiss the complaint on that basis, we find it unnecessary to pass on the judge's findings concerning the Respondent's other defense Douchan Pouritch, Esq., for the General Counsel. Harry Sangerman, Esq., of Chicago, Illinois, for the Re- spondent. Lisa B. Moss, Esq., of Chicago, Illinois, for the Respond- ent. Daniel Zeiser, Esq., for the Party in Interest DECISION STATEMENT OF THE CASE WALLACE H. NATIONS, Administrative Law Judge. Based on a charge filed on January 12, 1987, by Truck Drivers, Oil Drivers, Filling Station and Platform Work- ers' Union, Local No. 705, an affiliate of the Internation- al Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO (Union), the Region- al Director for Region 13 issued a complaint on March 23, 1988, alleging that Osco Drug, Inc. (Osco or Re- spondent) violated Section 8(a)(5) of the National Labor Relations Act (Act) by refusing to bargain with the Union as the coemployer of drivers employed by Re- spondent and George McNeil Teaming Company 779 (McNeil). Both Respondent and McNeil as party-in-inter- est filed answers. Hearing was held in Chicago, Illinois, on August 29- 31, 1988. Briefs were received from the parties on or about October 28, 1988. Based on the entire record, including my observation of the demeanor of the witnesses, and after consideration of the briefs, I make the following FINDINGS OF FACT 1. JURISDICTION The Respondent is an Illinois corporation engaged in the operation of retail drugstores with, as pertinent, an office and place of business in Elk Grove Village, Illi- nois. Respondent admits the jurisdictional allegations of the complaint, and I find that the Respondent is now, and has been at all times material to this proceeding, an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. McNeil is an Illinois corporation with an office and place of business in Downers Grove, Illinois, and at all times material has been engaged in the intrastate transportation of freight. II. LABOR ORGANIZATION INVOLVED It is admitted and I find that the Union is, and has been at all times material , a labor organization within the meaning of Section 2(5) of the Act. III. ALLEGED UNFAIR LABOR PRACTICES A. Statement of Issues From 1971 to 1986, Respondent was party to a con- tract with McNeil, which provided for McNeil to pro- vide Osco with a carriage fleet and drivers for its Chica- go area local shipping needs. In October 1986, Osco gave notice to McNeil of its decision to terminate their contract as of December 5, 1986 . Osco announced that Central States Trucking Co. had been awarded its car- riage contract effective December 8, 1986 Approximately 12 McNeil employees, who had worked on a steady basis for the Osco account (Osco- McNeil drivers), were immediately affected by Osco's decision In effect, these employees, members of the Union, were terminated or reduced to casual driver status as McNeil had no other account that needed driv- ers at that time. This case arises from the Union 's contention that Re- spondent, together with McNeil , are the `joint em- ployer"of the Osco/McNeil drivers. The Union and the General Counsel further contend that Osco , as a joint employer , was obliged to, but did not, bargain over its decision to subcontract union bargaining unit work to Central States Trucking Co., which resulted in the termi- nation of the Osco/McNeil drivers Respondent contends that the only relationship between it and McNeil was that of a shipper and carrier pursuant to contract. It as- serts that no joint employer relationship existed with re- spect to the Osco/McNeil drivers and thus, it had no duty to bargain with the Union over its decision to ter- minate its contract with McNeil and award it to Central 294 NLRB No. 64 780 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD States Trucking Co. It further contends that if it is found to be a joint employer of the affected drivers, its actions did not violate the Act because of due-process consider- ations, its decision to cancel the McNeil contract did not turn on labor costs, the Union waived its right to request bargaining, the McNeil/Osco drivers do not constitute an appropriate bargaining unit, and, alternatively, it did satisfy any bargaining obligation it may have had. Therefore, the primary issue for determination is whether Osco was a joint employer with McNeil of the Osco drivers. If that issue is decided in favor of the Union, the further question arises whether Osco violated Section 8(a)(5) of the Act by failing to bargain with the Union concerning its decision to terminate the Osco- McNeil contract. B. Relationship Between Osco and McNeil's Drivers 1. Contractual relationship Osco operates approximately 450 retail stores in 23 States. To supply these stores, Osco utilizes four types of trucking fleets for the movement of freight from its dis- tribution center. Its private fleet of trucks services 125 stores in the Midwest. An irregular fleet of common car- rier owner/operators is used to service the intermountain region in the West. A combination of rail and contract carriers is used to ship goods to 50 stores in the Boston area. Finally, a contract carriage fleet services 142 stores in the Chicago area. This latter fleet is the one at issue in this case. Since 1971, Osco had used the services of McNeil for the carriage of Osco goods and supplies. The basic terms of the contract between Osco and McNeil did not change over the years, except that the rates charged by McNeil for its services were revised periodically and were contained in schedule B to the contract. Many of the provisions of this contract are deemed by me to be important in light of the cases relied on by the parties. Therefore, the relevant provisions of the contract are set out below: 1. CARRIER agrees to provide SHIPPER a dedicat- ed transportation service to be exclusively used by SHIPPER for the distribution of its products and mer- chandise to and from points and places within the State of Illinois at such time, on such schedules and to such destinations as may from time to time be designated by SHIPPER but subject to the provisions of this agreement and the limitations of the neces- sary operating authority. 2. CARRIER shall use, in the performance of this agreement, only vehicles which are in good condi- tion and repair. All expenses arising from the own- ership, use, maintenance and operation of vehicles used in the performance of this agreement shall be for the sole account of the CARRIER, it being ex- pressly agreed that this agreement is a contract for carriage and not a lease of any vehicles used in its performance. 4. CARRIER shall have sole and exclusive control over the manner in which it or its employees per- form the transportation service and CARRIER shall have the right to engage and employ such individ- uals as it may deem necessary in connection there- with, it being understood and agreed that such indi- viduals shall be considered employees Of CARRIER and shall be subject to employment, discharge, dis- cipline and control solely and exclusively by CARRI- ER. The relationship between the parties hereto shall at all times be that of independent contractors and such status shall govern all relations between CARRIER, SHIPPER, and any third parties . . . . 5. CARRIER shall carry automobile public liability and property damage insurance on the vehicles in the amount of $1,000,000 Combined Single Limit. The insurance policy providing the foregoing cov- erage shall be written by a reputable insurance com- pany authorized to transact business in the State of Illinois, shall name Shipper as an additional insured, and shall provide that the insurance company issu- ing such policy shall notify both the CARRIER and the SHIPPER of any cancellation thereof at least ten days prior thereto .. . 6. CARRIER shall be responsible for any loss or damage to any property or merchandise of SHIPPER tendered to it for shipment hereunder while such property or merchandise is in CARRIER's possession: provided, however, that CARRIER shall not be re- sponsible for loss or damage to property or mer- chandise resulting from SHIPPERS loading of CARRI- ER'S trailers, hidden damage, or other loss or damage shown not to have been caused by the neg- ligence of CARRIER or its employees. In any event, CARRIER'S liability to SHIPPER for loss or damage shall not exceed SHIPPER'S cost of the property or merchandise involved. 7. CARRIER covenants and agrees to indemnify, save, hold harmless and defend SHIPPER from and against any and all claims for loss, damage or injury and from or against any suits, actions and legal pro- ceedings brought against SHIPPER for or on account of any loss or damage to the tangible property of third parties, or for or on account of any injuries re- ceived or sustained by any person or persons in- cluding employees of SHIPPER in any manner, caused by, incident to or growing out of any act or omission of CARRIER and its employees in perform- ing any services under this Agreement. 8. SHIPPER agrees to pay, and CARRIER to accept, as full payment for the transportation services ren- dered, the rates and charges provided for such serv- ices indicated in Schedule B which is attached hereto and made a part hereof. The parties under- stand that CARRIER's cost of driver labor as provid- ed in CARRIER'S applicable collective bargaining agreement represents a substantial portion of its ag- gregate costs of providing the transportation service and they therefore agree that such service shall always be rendered subject to the terms and condi- tions of such labor agreement and that the service charges specified hereunder shall be automatically increased retroactively to reflect any rise in the cost of such labor required under such labor agreement or by operation of law. The parties further agree OSCO DRUG that if CARRIER'S combined costs of providing the transportation service other than cost of driver labor) are increased by five percent (5%) or more, the parties will, upon written request, immediately commence good faith bargaining for the purpose of establishing an appropriate adjustment to the service charges; all said adjustments shall be retroactive to the date of said written notice. The contract remained in force from year to year, sub- ject to the right of termination by either party at any time on not less than 30 days' written notice. There was no common ownership between Osco and McNeil and their relationship was strictly that of shipper/carrier. McNeil provided contract carrier services to various accounts in addition to Osco. McNeil employed approxi- mately 40 drivers, each of whom was included on a master seniority list according to his McNeil seniority. The terms and conditions of employment for McNeil drivers were governed by successive 3-year master col- lective-bargaining agreements signed by McNeil and the Union. McNeil drivers who serviced a particular ac- count, such as Osco or Montgomery Ward , would also be governed by an addendum bargained by McNeil and the Union relating to that specific account . Osco never participated in McNeil's labor negotiations with the Union, and the Union never requested that Osco partici- pate in those negotiations. 2. Employment , supervision , and discipline McNeil hired and fired its own drivers without any in- volvement from Osco . McNeil required prospective em- ployees to fill out McNeil application forms, pass physi- cals mandated by the U.S. Department of Transporta- tion, and pass a driving test. Discipline of McNeil drivers was handled by McNeil, subject to possible grievances filed by the Union ; Osco had no right to discipline any of the drivers servicing its account or to participate in any grievance proceeding concerning McNeil drivers. When McNeil received complaints from a customer, such as Osco, concerning one of its drivers, McNeil would investigate the matter and take appropriate action. If a customer asked McNeil to remove a particular driver from servicing its account , McNeil would do so. Osco has, itself made such requests For example, Osco produced a series of communications in which it com- plained to McNeil about certain McNeil drivers assigned to its account . In one of these communications, Osco re- quested that drivers Wayne Smolin and Bob Pabst be re- moved from working at the Osco account as either bid- ders for regular positions or as extras because of their productivity records, absenteeism, and poor working habits. Pabst was removed by McNeil from the Osco ac- count and Smolin declined to rebid on the Osco account. Smolin filed a grievance against McNeil in 1986 protest- ing that he was not permitted to work on the 1986 ac- count. The grievance was denied , and the decision of the joint grievance committee noted that 1986 was a custom- er of McNeil and that "there is no contract between Local 705 and Osco Drug." No other action was taken against Smolin beyond removing him from the Osco ac- count and Smolin continued to work for other McNeil 781 accounts . In a letter dated May 14, 1986, Edie Cibario, Osco's city fleet coordinator, requested that McNeil driver Richard Mead be removed from the Osco account because of poor productivity , a negative attitude, and poor service to the stores . McNeil removed Mead from the Osco account on May 16, 1986 . McNeil/Osco driver John Payne testified he was disciplined by Osco person- nel. Payne had repeatedly and impatiently rung the bell at the entrance of an Osco store at which he was making a delivery. The store manager came out and rebuked him. Later, Payne was warned by Osco Transportation Manager Louis Rymarcsuk that he would not be allowed to work for Osco if there were a repetition of this type of incident. McNeil operated a terminal at 4500 West 44th Place in Chicago, where it had a garage and offices and where it stores its extra equipment McNeil serviced accounts such as Osco, Montgomery Ward , American Can Co., Copper and Brass Sales, Inc , CNA Insurance , and the Segerdahl Corporation . Most of McNeil's accounts were "steady houses," which meant that when McNeil ob- tained the account, it agreed to employ the drivers that had been servicing the account. Osco, however, was not a steadyhouse . Therefore, with the exception of some steady house drivers, McNeil drivers could use their McNeil seniority to bid into driving for the Osco ac- count. Driver bids for open accounts such as Osco took place in May of each year, and those drivers whose bids were successful could then work full time for the Osco ac- count until it was rebid the following year. Pursuant to the agreement between McNeil and the Union , the bids were good for 1 year, and drivers who bid into a job could not be bumped by drivers who were laid off from another account during that year. Drivers who worked for the steady houses could not be bumped because their jobs were not subject to bidding However , if a vacancy occurred or a new position was created , other McNeil drivers could use their seniority to secure those positions. McNeil and the Union agreed that steady house drivers would have a separate seniority list for their particular account, in addition to being on the McNeil master se- niority list. However, apparently some drivers working for steady houses could use their McNeil seniority to bid into open houses such as Osco if they wished. There is some ambiguity in the record as to the right of regular drivers at steady houses to bid into open accounts, al- though the clearest evidence suggests that they could not so bid. McNeil drivers who did not work for a steady house or who did not bid into an open account such as Osco worked "off the corner." Corner work, also known as "extra board " work, involved filling in for drivers who were sick or on vacation, or working as extra drivers during peak times. Drivers working off the corner gener- ally did not have enough seniority to bid into an account as a full-time driver. Every year McNeil sent Osco a list of drivers who had used their seniority to bid into the Osco account. Be- cause of this bidding 'procedure, the drivers servicing Osco changed every year The bid drivers would be the 782 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD regular drivers for Osco for the following year. Osco typically used nine regular drivers each day, plus two or three regular extra drivers who might work all but a few weeks in the year. Osco called McNeil every day to place an order for the number of drivers it would need the next day, based on the load plan and deliveries scheduled by Osco City Fleet Coordinator Edie Cibano. McNeil supplied the extra drivers from its "corner" list, with the most senior drivers getting the first avail- able assignments that were offered by McNeil dispatch- ers: The extra drivers would pick up their tractors at the McNeil terminal, and the McNeil dispatcher would send them to pick up a trailer at Osco. The Osco dispatcher would provide the extra driver with a driver's daily log and dispatch record, paysheet for recording hours worked, and the bill of lading for the goods to be deliv- ered. After picking up the trailer at Osco, the driver would deliver to the stores, drop the trailer back at Osco, and return the, tractor to McNeil. Drivers would go through these same procedures when they worked off the corner for other accounts, such as Montgomery Ward. Drivers who bid into the Osco account as regular drivers would report to Osco each day and would obtain from Osco a driver's daily logsheet, paysheet, bill of lading, and the keys to the tractors. The drivers would then hook up to the trailers and make deliveries to the stores. Osco did not tell the drivers what routes to take to the stores. Normally, two of the drivers who bid for the Osco account would be spotters-drivers who moved trailers around on the premises while remaining in contact with the Osco dispatcher by CB radio. Spot- ters spent most of the day on Osco premises, unlike driv- ers making deliveries who would only be at Osco's Elk Grove Village facility to pick up trailers and papers. In 1986, there were 12 or 13 McNeil drivers working regu- larly at Osco. Two of these drivers worked as spotters and approximately three were regular extra drivers. The tractors used by McNeil drivers were owned and maintained by McNeil and were fueled at a Leaseway Transportation garage. Leaseway is the parent corpora- tion of McNeil. Eighty-five percent of the trailers used for the Osco account were leased from and maintained by McNeil. Osco leased the remaining 15 percent of the trailers from Livco Trailer Leasing. McNeil's charges to Osco for its services were broken down into equipment rates and driver labor rates. For example, McNeil's schedule B, effective January 1, 1986, set weekly fixed charges for nine tractors and two spot- ter tractors, with an additional charge per mile (or per hour for the spotters). There was also a weekly fixed charge for 20 trailers. Extra tractors or trailers were charged at a daily rate. The driver labor rate was set at $24.92 per hour, with a rate of $26.25 for overtime hours. The driver labor rates included all fringe benefits and costs, such as vacation, holiday, FICA, and unem- ployment. The labor rate also included a markup to cover overhead and provide a profit. The Union's collective-bargaining agreement with McNeil called for a 40-hour workweek, 8 a.m. to 5 p.m., with an hour off for lunch. Any driver starting work prior to 8 a.m. or working after 5 p.m. was entitled to overtime. The collective-bargaining agreement did not provide for any coffeebreaks. Drivers working for the Osco account would start at staggered times because some stores wanted deliveries earlier than others. Pursu- ant to McNeil guidelines , the more senior drivers were entitled to take the earlier deliveries, so the Osco dis- patcher gave out the loads based on the driver seniority as determined by the McNeil seniority list. The first driver to return from a delivery would get the next load out. The Osco dispatcher had no authority to depart from that system of assigning loads to the McNeil driv- ers, and had no authority to hire, fire, or discipline driv- ers, or make company policy. Numerous directives issued from Osco to the McNeil/Osco drivers instructing them as to how they should perform their work. The dates of these directives ranged from October 28, 1983, to November 20, 1986. Inter alia, these directives to drivers included instructions on securing tractors and trailers and turning in keys, re- porting delays encountered in making deliveries to stores, and the markings that were to be inscribed on boxes of specialty items drivers were sent to stores to pick up. The McNeil drivers' paychecks were issued by McNeil, after the drivers turned in their weekly pay- sheets to the Osco dispatcher. Their vacations, holidays, compensation, and overtime were determined by the col- lective-bargaining agreement between McNeil and the Union. If a driver could not report to work the next day or wanted a day off, he would contact McNeil. Vacation requests were also made to McNeil. On several occasions a driver asked the Osco dispatcher if he could leave a few hours early for personal reasons; the dispatcher agreed as it did not matter to Osco which drivers pulled a run as long as the run was covered. 3. Miscellaneous indicia of employee status The Osco employees who worked at the Osco ware- house had different terms and conditions of employment from those of the McNeil drivers . McNeil drivers were covered by the union pension plan and health and wel- fare plan, whereas Osco production employees at the warehouse were represented by United Food and Com- mercial Workers Local 881 and were covered by differ- ent fringe benefit funds. Unlike the McNeil drivers, the Osco production employees punched a timeclock and had different lunch and break periods, as determined by their collective-bargaining agreement with the UFCW. Drivers did not participate in Osco's stock purchase plan. Starting in the early 1980s, Osco restricted drivers to the drivers' room next to the Osco dispatch office- drivers no longer were allowed to use the cafeteria at Osco's warehouse facility in Elk Grove Village or to walk around the Osco building. McNeil/Osco driver John Payne testified that when he started working at Osco, officials of Osco told him that he could take two 15-minute coffeebreaks and that he would be paid an hour at time and a half if he did not take a lunchbreak . This variance from the collective-bar- gaining agreement was evidently at the option of the drivers. Payne also stated that he was allowed to take his OSCO DRUG coffeebreaks in Osco's Pratt Avenue cafeteria for Osco employees when he was a spotter in 1985 and 1986. Payne testified that there were often Osco officials in the cafeteria when he took his coffeebreaks . Payne testified that the Osco/McNeil drivers were allowed a 50-percent discount by Osco on film processing and that Osco dis- patchers told McNeil/Osco drivers that work uniforms and jackets were available to them at 50-percent discount and that the drivers could have the Osco logo on their uniforms. One or more drivers availed themselves of this offer. Payne also testified that in the 1970s Harold Malloy, the Osco superintendent of the warehouse, told the McNeil/Osco drivers and also the employees of Osco that they could put in a bid at any price they wanted for Osco company cars, which were being sold. One McNeil/Osco driver successfully bid for one of these cars . At unspecified times, the drivers were able to purchase various items either from the warehouse or company stores at employee discounts. Osco employees who worked at the warehouse and at Osco stores had an employee discount for all purchases. McNeil drivers who worked for the Osco account were not entitled to such a discount according to company policy. As noted above, drivers testified to receiving cer- tain discounts from Osco on specific items and a spotter testified that he took breaks in the Osco cafeteria. These instances, though allowed, were in violation of Osco's of- ficial policy No McNeil driver ever filed a workmen's compensa- tion claim against Osco, asserting that Osco was his em- ployer. In fact, in November 1986, a McNeil driver sued Osco's parent company for negligence that allegedly oc- curred while he was servicing the Osco account In his complaint, the driver alleged that he was an employee of McNeil Some of McNeil's accounts were governed by a three- party collective-bargaining agreement and addendum that was signed by the Union, McNeil, and the McNeil customer. Osco never entered such an agreement with McNeil and the Union. McNeil kept personnel files for its drivers at its Down- ers Grove office. During an audit by the Department of Transportation (DOT) in 1981 , Osco was cited for failing to maintain a driver qualification file for city drivers, as required by Federal regulations DOT said such a file was necessary, even though McNeil was a contract carri- er for Osco DOT gave Osco 24 hours to procure the drivers' applications for employment, their physical exams, and their licenses. Osco requested and obtained those records from McNeil. McNeil drivers filled out the drivers' daily log and dis- patch record for Osco so that Osco could comply with DOT regulations by keeping track of drivers hours to see that they did not exceed 15 hours per day, 60 hours per week. Osco would reconcile the drivers' paysheets with daily logs and with the tractor mileage, and at the end of each week Osco would send the paysheets to McNeil . McNeil would then send an invoice to Osco, based in part on the paysheets . Osco never issued pay- checks to McNeil drivers, even to correct errors. Pursuant to DOT requirements , McNeil drivers also filled out accident reports if they were involved in acci- 783 dents when servicing the Osco account . Similarly, McNeil drivers filled out vehicle inspection reports for the McNeil tractors and trailers, as required by DOT. The vehicle inspection report forms were prepared by Leaseway Transportation, the parent company of McNeil, and were filled out for both McNeil and Osco. Because the McNeil drivers, rather than Osco, were the experts on trailers, the drivers filled out a trailer inspec- tion report when they picked up trailers that Osco leased from LiVco. Based on the information from the driver's daily logs, Osco prepared and sent to McNeil a monthly productivi- ty report. This report informed McNeil of the perform- ance of McNeil drivers, and included information such as driver attendance, number of cartons delivered, and number of hours delayed at stores . In May 1986, Osco asked McNeil to inform the drivers assigned to the Osco account that Osco was discontinuing the longstanding driver productivity award program whereby $25 and $100 Jewel/Osco gift certificates had been given periodi- cally to the most productive drivers. McNeil drivers were never disciplined for low productivity; although as noted earlier, Osco requested successfully that McNeil cease providing certain named drivers because of, among other reasons, low productivity. Osco publishes for its employees a magazine entitled, "Osco People." The issue dated December 23, 1983, under the heading "Osco Drivers" had the photographs of 10 McNeil/Osco drivers The "Osco People" issue dated June 29, 1989, had an article entitled "Osco re- wards 1983's Top Drivers ." The article stated that "[T]he 1983 winners of the driver productivity awards were Allen Blanch, city fleet, and LaVere Sell, country Fleet. Both drivers received $ 100 Jewel/Osco gift certifi- cates for their efforts." Blanch was an McNeil/Osco driver. C. Osco Relationship with McNeil Beginning in 1984 , Osco requested relief from McNeil on certain items in the Osco/McNeil contract governing their shipper/carrier relationship . For example, on April 3, 1984, Lou Rymarcsuk, Osco's manager of traffic and transportation, sent a letter to Anthony Zakrzehski at McNeil asking if McNeil drivers could be assigned to overlapping 4-day workweeks of up to 15 hours per day, instead of the current Monday through Friday work- week. Such a flexible workweek would eliminate double time payments on holiday weeks and would allow the power equipment needs to be reduced by two tractors. It would allow 10 drivers to operate with 8 tractors at a potential cost savings of $1000 per year . Osco also was interested in using flexible starting times so that overtime would not have to be paid just because a driver started before 8 a.m. or worked after 5 p.m. By letter of May 24, 1984, Rymarcsuk complained to McNeil that the absence of a steady house status for drivers assigned to the Osco account resulted in the as- signment of drivers who were - unfamiliar with the Osco account, causing Osco's operating expenses to skyrocket. Thus, Osco asked McNeil to eliminate the annual bidding into the Osco account and to assign certain drivers to the 784 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD account who were already familiar with Osco. Osco warned that it would seek a steady house account through another contract carrier, if necessary By letters sent to McNeil from October 1984 through May 1985, Osco emphasized that it needed steady drivers and a 60-hour/7-day workweek. Because McNeil's con- tract with the Union expired March 31, 1985, Osco asked McNeil about the current status of McNeil's union con- tract talks and of Osco's requests for relief from McNeil. By letter dated August 13, 1985, Rymarcsuk wrote to Mauri Ferraro at Leaseway Transportation attaching a newspaper article which indicated that a wage freeze ,had been reached between the Union and local carriers. Rymaresuk asked whether Osco's request for flexibility had been submitted to the Union. Rymarcsuk also indi- cated that the operating costs of the contract fleet were no longer competitive and that Osco would like to dis- cuss a potential wage rollback with McNeil. At a September 16, 1985 meeting between Osco and McNeil, the parties discussed certain open issues, such as the 4-day workweek with overtime after 10 hours, flexi- ble starting times, a wage reduction, reductions in holi- days and vacations, and the current status of certain equipment. Donald Staniszewski, the branch manager of McNeil, responded to Osco by letter of September 17, 1985, in which he stated that although he would meet with the Union in the hope of obtaining substantial re- ductions, at present McNeil needed a 10-percent increase in its labor and equipment rates. He indicated that McNeil could only afford to operate at its current rates until the end of the year. This was the first written re- sponse that Osco ever had received from McNeil con- cerning its various needs for relief. Peter Bonnema, McNeil's terminal manager in Chica- go, was aware of Osco's demands in 1984 and 1985 for flexibility and wage relief, and he knew that McNeil would need to seek relief from the Union during negotia- tions in 1985. In 1984, Bonnema contacted Union Busi- ness Agent Ed Coco to discuss McNeil's concerns over the Osco account and McNeil's need for concessions in order to keep its customer Coco never got back to Bon- nema regarding the requests. While Bonnema was nego- tiating with Union Representatives Coco, Jim Colgan, and John Navigato for the new McNeil/union contract in 1985, he constantly raised these issues Dan Ligurotis, the secretary/treasurer of the Union, was not present at those negotiations during which all of McNeil's accounts were discussed. During the negotiations, which began in April 1985, Bonnema told the Union that McNeil was going to lose the Osco account if Osco could not obtain some relief. Rymarcsuk at Osco had informed Bonnema that Osco would look to other contractors for competitive bids if McNeil would not grant the flexibility and wage relief that Osco needed. Consequently, Bonnema and Don Staniszewski from McNeil met with the Osco drivers in November 1985 regarding a pay cut of 10 percent, in- forming them that without a pay cut McNeil would lose the Osco account because Osco was seeking other bids. The drivers met directly with McNeil because the Union said it was entirely up to the drivers. The drivers were split on the issue, and two of them-John Payne and Bob Schullo-asked if they could talk to Rymarcsuk. Ry- marcsuk met with the two drivers and confirmed that Osco needed a cut in costs. He also informed them that three or four trucking companies were bidding on the account, including Central States. Rymarcsuk told the drivers that McNeil might lose the account even if they agreed to a 10-percent cut, but that maybe they could get a job with the company that obtained the account. Payne and Schullo then went back to the other Osco drivers and informed them of Rymarcsuk's comments All the Osco drivers then had another meeting with Bon- nema and Staniszewski. At that meeting on November 27, 1985, the drivers signed an agreement with McNeil in which they accepted a 10-percent straight-time pay cut only when working for the Osco account, and a vacation week of 45 straight time hours. Osco was not a party to that agreement. Driver John Payne had spoken with Union Representative James Colgan about the conces- sions, and Colgan confirmed that the decision was up to each driver. After the wage reduction agreement was reached, driver James Strem filed a grievance claiming that as an extra driver he should have received the wage rate under the Local 705 general agreement, rather than under the addendum, which reflected the wage conces- sion. McNeil lost that grievance and had to pay the extra drivers the higher wage. Osco played no part in that grievance, which was later settled between the Union and McNeil. Although the drivers agreed to give McNeil a 10-per- cent wage cut, Osco did not benefit from that cut. McNeil's proposal to Osco for rates effective January 1, 1986, called for a straight time labor rate of $24.92 per hour, which was a reduction of only 3 cents from the rate of $24.95 per hour that had been in effect during 1985. McNeil did not pass the wage concession on to Osco. Overall, McNeil's rates to' Osco probably in- creased because of increased vehicle expenses. Neither did Osco receive the flexible workweek or steady house concessions that it had sought from McNeil Rymarcsuk informed McNeil that its bid was an embarrassment and that Osco would proceed to obtain competitive bids. Osco invited McNeil to submit another bid, but McNeil's numbers were too high. In the meantime , however, Osco had to accept McNeil's new rates until it could obtain competitive bids from other contract carriers. All during 1986 the drivers were aware that Osco was taking bids from other companies. The drivers were con- cerned that McNeil might lose the Osco account even after they had made the wage concessions to McNeil. When Rymarcsuk informed McNeil's Bonnema that Osco was seeking bids from other carriers, Bonnema,in- formed Union Business Agent Jim Colgan of that fact in January or February 1986, and asked for another meet- ing with the drivers to see if McNeil could obtain addi- tional concessions. This second meeting between McNeil and the drivers took place around March 1986. Although Colgan was invited, he did not show up. At the March 1986 meeting, Bonnema discussed further concessions with the drivers, but they were not very receptive and no further concessions were granted. OSCO DRUG On February 19, 1986, Rymarcsuk put together a doc- ument ,that analyzed the bids Osco had received from five contract carriers-McNeil; Carmichael Leasing; Central States Trucking; Niedert/Fleet Carriers; and Remlo Transportation. All five carriers had union con- tracts, and three of them had contracts with Local 705. At this point no decision had been made regarding which carrier to use and McNeil still had a chance to retain the account. On May 1, 1986, Rymarcsuk prepared a cost compari- son between Central States, Remlo Transportation, and McNeil, which showed that when all equipment and labor costs were considered, McNeil was approximately $5000 per week more expensive than Central States, and approximately $4000 per week more expensive than Remlo. It was not until September 29, 1986, that Osco and Central States entered into a Contract Truck Agree- ment. Central States was not the lowest bidder, but it of- fered experienced labor, a good management staff, good equipment, a 60-hour/7-day workweek, and a steady house. Central States could not take over the Osco ac- count until it acquired and financed the equipment it would need On October 25, 1986, Osco informed McNeil that it was terminating McNeil's services effective December 6, 1986. By letter of November 4, 1986, McNeil officially informed Dan Ligurotis, secretary/treasurer of the Union, of this fact. However, McNeil driver Thomas Nowik had known since August or early September 1986 that Osco and Central States were working on an agree- ment because Nowik's neighbor, an employee of Central States, had told him, erroneously, that Osco and Central States had already signed a contract. On November 5, 1986, at Ligurotis' request, Staniszewqki and Bonnema met with the drivers for the Osco account for the third time to discuss possible concessions concerning wages, overtime, and flexible workweeks so that McNeil could rebid the account and attempt to save the business. How- ever, after that meeting, the drivers voted to reject any further concessions. In November 1986, Thomas Walter, the director of labor relations and assistant general counsel for Osco, was contacted by Mike Keegan, a former employee of the Chicago Truck Drivers Union. Ligurotis thought Keegan might know someone at Osco who Ligurotis could talk to concerning Osco's decision to terminate its contract with McNeil. Walter agreed to meet with Li- gurotis and Keegan on November 11, 1986. At the meet- ing, Walter confirmed that McNeil would no longer be servicing the Osco account, and he said that he doubted McNeil could do anything to save the account at that point since Osco had signed an agreement with Central States. However, Walter encouraged Ligurotis to contact Fred Grane at Central States because it was not too late to see if the Osco work could be performed by Local 705 members. Ligurotis declined to contact Central States. Prior to this meeting with the Union, Osco never before had been contacted by Local 705 After the notice was issued that Osco was terminating the McNeil account, Maria Parent, an Osco employee, told drivers Robert Schullo and Thomas Nowik that she knew of three possible jobs with Osco's sister company, 785 Jewel Food. Parent obtained a Jewel Food application and offered to send it to Jewel for Schullo and Nowik. The decision to hire would be made by Jewel Food and Parent had no responsibilities with Jewel Food. Accord- ing to the drivers, Parent later told them that their appli- cations were not acted on because of legal ramifications. After the termination of the Osco/McNeil contract in December 1986, John Payne and Leo Roberson, two of the most senior drivers at McNeil, were only able to obtain casual or off-the-corner work at McNeil. While working at Osco in 1985 and 1986, Payne earned respec- tively $40,000 and $39,000 per year. Payne only earned $16,000 in 1987 and a little over $12,000 to date of hear- ing in 1988. After December 5, 1986, most of the other McNeil/Osco drivers were laid off. At the time of hear- ing, McNeil only employed five casual or off-the-corner drivers, including Payne and Roberson. As noted earlier, the McNeil/Osco drivers could not bump any of the full- time regular drivers at McNeil's steady hours. By 1986, McNeil had lost almost all of its other open accounts. D. Was Osco a Joint Employer of the McNeil/Osco Drivers The relationship between carrier and shipper has often required the Board to determine "which of two, or whether both, respondents control, in the capacity of employer, the labor relations of a given group of work- ers." NLRB v. Condensor Corp of America, 128 F.2d 67, 72 (3d Cir. 1942). The standard that has evolved for determining wheth- er a shipper and carrier are "joint employers" of the same group of employees is clearly stated in NLRB v. Browning-Ferris Industries, 691 F.2d 1117, 1124 (3d Cir 1982), enfg. 259 NLRB 148 ( 1981): [W]here two or more employers exert significant control over the same employees-where from the evidence it can be shown that they share or code- termine those matters governing essential terms and conditions of employment-they constitute "joint employers" within the meaning of the NLRA. Speaking to "essential terms and conditions of employ- ment," the Board has repeatedly held that there must be a showing that the employer meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction. Laerco Transportation & Warehouse, 269 NLRB 324 (1984). The General Counsel and the Union contend that Osco is a joint employer when its relationship to the McNeil/Osco drivers is judged by the above criteria, re- lying principally on the Board's holdings in American Air Filter, 258 NLRB 49 (1981), and W. W. Grainger, Inc., 286 NLRB 94 (1987), enf. denied 860 F.2d 244 (7th Cir. 1988). I disagree and find that both cases are distinguish- able in material respects. First, in both American Air Filter and Grainger, the primary employer was nothing more than a driver leasing company, which in effect leased drivers to lessees operating private carriage fleets. Both provided little if anything beyond a personnel serv- ice to the respondents in those cases. In the instant pro- ceeding, McNeil is in fact a truck line, providing con- 786 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD tract carrier service to a number of accounts, including Osco. Unlike the driver leasing companies, McNeil af- forded a relatively complete transportation service pro- viding power equipment , including maintenance, in addi- tion to drivers, and assumed financial responsibility for li- ability resulting from the provision of its services. It was able on a daily basis not only to meet the carrier needs of Osco for regular service, but could respond to re- quests for extra equipment and drivers precisely because it is a truck line, not just a personnel source. In the American Air Filter and Grainger cases, the con- tract between the parties vested significant control of the drivers' employment with the lessee of their services. For example, in Grainger, 286 NLRB 94, 95, the contract between Rentar (lessor) and Grainger (lessee), in material part, provides as follows: W. W. Grainger shall reserve the right to ap- prove the employment of each driver at the time of assignment to its service and thereafter have the right to require Rentar to remove any such driver and/or to substitute another driver or to transfer any driver to other work. W. W. Grainger shall control dispatch and direct the drivers and oversee the driver's day-by-day op- erations. W. W. Grainger shall specify the starting point and time, the destination point, and the route to be traveled in respect to each trip. W. W. Grainger shall determine when the drivers take their vacation periods. Drivers will report to W. W. Grainger for detailed instructions with regard to the operations of the vehicles and submit daily trip reports, trip logs and accident reports. No driver shall be required to work beyond hours spec- ified by the Motor Carriers Safety Regulations ap- plicable to private carriers as set forth in Depart- ment of Transportation, Interstate Commerce or State Regulations. Rentar shall not be liable to W. W. Grainger for loss or damage to W. W. Grainger property, nor shall it be liable to W. W. Grainger or to third persons for damage or injury to other persons or property. In American Air Filter, the involved contract imposed on the lessor of drivers the duty to furnish bonded quali- fied drivers on a cost-plus basis. The contract specifically reserved to the lessee the right to refuse or reject drivers referred to it, to dispatch the drivers, direct the loading and unloading of the product, select the routes, direct the drivers as to pickup and deliveries, and "exercise ex- clusive supervision and control over the entire operation of vehicles and drivers." Additionally, the lessee was obliged to pay other costs including tolls, weighing ex- penses, motels, telephone bills, and other justifiable road expenses, and to maintain insurance policies on vehicles provided for the drivers. In the instant proceeding, as can be seen from the con- tract provisions set forth above in this decision , signifi- cant differences exist between the McNeil/Osco relation- ship and that of the lessors/lessees in the cases relied on by the General Counsel and the Union. Some of these differences are as follows: (1) McNeil is a licensed motor carrier engaged in regu- lated intrastate commerce. (2) McNeil has sole and exclusive control over the hiring, performance, discharge, and discipline of its em- ployees pursuant to contract. (3) McNeil carried insurance to cover the involved op- eration and assumed the responsibility for loss and damage to goods being transported by it and for liability to third parties resulting from its employees' negligence. (4) Vacation scheduling was a matter between McNeil and the drivers. (5) Dispatching was controlled by McNeil driver se- niority, with Osco having no choice in the matter. The most senior McNeil driver had the option of taking the earliest runs . When drivers returned from a run, they were assigned the next available run. Osco's dispatching was routine and followed guidelines provided by McNeil-guidelines that the Osco dispatcher had no au- thority to deviate from. (6) Assignment to the Osco account was based on bid- ding under the McNeil seniority system,--over which Osco had no control. I find that the contractual agreement between McNeil and Osco does not support a finding of joint employer status as was the case in American Air Filter and W. W. Grainger. Looking next to the actual operation of the relation- ship between Osco and the McNeil/Osco drivers, I find other significant differences from the relationship shown to exist in the American Air Filter and Grainger cases. The administrative law judge found in American Air Filter, 258 NLRB at 50: As a practical matter, Transport's [lessor's] role was that of an employment or personnel service. It gave applicants road tests, had them fill out applica- tion forms, and then referred them to clients. It pro- vided no supervision after the drivers were so re- ferred and, in fact, had no further contact with its employees other than processing and mailing their weekly paychecks. In Grainger, the respondent exercised sole control over the drivers' schedules; dispatched all drivers, instructing them where to pick up loads, where to deliver them, and the routes to be followed. In the instant case, Osco dis- patched drivers according to their McNeil seniority, and necessarily instructed them where to pick up loads and where to deliver them. Such instructions would have to be given to any carrier. However, also as with any carri- er, the route to follow was left up to the carrier, as spec- ified in the parties' contract. As in Grainger and as would be the case with any pri- vate or contract carrier regardless of any other consider- ation, Osco kept records required to be filled out and kept by Federal and state regulations. The accident re- ports, driver logs, and vehicle inspection reports that McNeil drivers filled out for Osco were required by De- partment of Transportation (DOT) regulations. Similarly, DOT required Osco to maintain a driver's qualification file for each driver that serviced its account . Osco ob- tained the records for those files from McNeil, which OSCO DRUG kept personnel records for all of its drivers. Osco did not become a joint employer simply by complying with Fed- eral law. For example, in Seafarers Local 777 v. NLRB, 603 F.2d 862, 872-877 (D.C. Cir. 1979), the court dealt with the analogous "right of control" test for distinguishing be- tween employees and independent contractors under the Act. In holding that the individuals in question were in- dependent contractors the court stated (id. at 875). Government regulations constitute supervision not by the employer but by the state. Thus, to the extent that the Government regulation of a particu- lar occupation is more extensive, the control by a putative employer becomes less extensive because the employer cannot evade the law either and in re- quiring compliance with the law he is not control- ling the driver It is the law that controls the driver. In Precision Bulk Transport, 279 NLRB 437 (1986), the Board adopted the court's reasoning in Local 777 and held that government-imposed regulations in the trucking industry do not. constitute evidence of company control over drivers. See also International House v. NLRB, 676 F 2d 906, 914 (2d Cir. 1982) Osco was not involved in discipline of drivers. Any complaints or information that Osco provided to McNeil concerning the drivers was independently investigated and handled exclusively by McNeil. Osco never took part in any grievances filed with the Union by a driver servicing the Osco account. In fact, in one grievance de- cision, the Joint Grievance Committee stated that "if this grievant has any complaint in regard to Osco, he should not complain to the company, but he should immediately make his complaint to McNeil Trucking." It should also be noted that no attempt was made to claim joint em- ployer status in the grievance filed by driver Wayne Smolin complaining of Osco's request that he not service its account and McNeil's acquiescence in that request. Likewise, the Union did not claim joint employer status when the grievance of James Strem concerning whether the 1985 10 percent wage cut applied to extra drivers was processed. The hiring and firing of drivers was performed solely by McNeil. As noted earlier, drivers bid into Osco's ac- count based on McNeil seniority and the identity of the regular drivers on the Osco account accordingly varied from year to year. Although Osco could request that a driver be removed from its account and McNeil appar- ently followed those requests, Osco could not and did not engage in day-to-day discipline, and could not and did not fire, suspend, or otherwise discipline any McNeil/Osco driver. Drivers wanting a vacation or time off beyond a few hours at the end of the day had to re- quest it from McNeil. Paychecks were issued by McNeil. Although Osco would attempt to help a driver straighten out any paycheck errors by reviewing the time records filled out by the drivers, the actual corrections were made by McNeil. I believe this factual situation is materially different from American Air Filter and Grainger. In Grainger, the lessee referred individuals to the lessor for hire as private 787 fleet drivers; requested from the lessor by name tempo- rary replacement or extra coverage drivers, assigned se- niority to the private fleet drivers;, determined when drivers took their vacation; and requested that certain drivers be disciplined. These factors are not present to any appreciable degree in the instant case. Moreover, In Grainger, the lessee exercised effective -control over the total compensation received by the private fleet drivers through its review and approval of the drivers' trip cost reports. The lessee sometimes disallowed portions of the "bottom line time" claimed by a driver, thereby affecting the compensation received by the driver for that pay period. There is no showing in this record that Osco en- gaged in such a practice of disallowing portions of a driver's time and, thus, affecting his pay. The General Counsel argues that by scheduling its runs Osco affected overtime and thereby affected drivers' pay. I disagree. Osco set up its schedules based entirely on its need to get its merchandise to its stores to suit their marketing needs. The degree to which this, created overtime for drivers was dictated entirely by the McNeil/Union collective- bargaining agreement and the drivers' seniority Of the factors relied on by the Board in finding joint employer status in Grainger, 268 NLRB 94 (1987), only Osco's evaluation of driver performance and the infre- quent request to remove a driver from its account are present here to any significant degree. I agree with Osco's contention that it naturally exercised its right as a customer to complain when McNeil's employees did not provide satisfactory service to Osco Keeping track of the drivers' productivity was one way of making sure that Osco was getting good service from its carrier. In order to satisfy its customer, McNeil would remove driv- ers from the Osco account and assign them to other ac- counts if Osco was unhappy with their performance; no driver lost his job with McNeil or was disciplined be- cause of Osco's request that he no longer service the Osco account See H & W Motor Express, 271 NLRB 466 (1984). For the reasons discussed above, I find that the instant proceeding presents a different situation than faced the Board in either American Air Filter or Grainger and that those and similar cases do not compel a finding that Osco was a joint employer with McNeil of the McNeil/Osco drivers. The other evidence presented by the General Counsel in an attempt to show joint control by Osco is also found to be unpersuasive. There was evidence that Osco em- ployee Maria Parent attempted to help several McNeil drivers obtain jobs with Jewel Food after Osco terminat- ed the McNeil contract. Jewel Foods is a separate corpo- ration owned by the same parent corporation as Osco. I cannot find that Parent's personal attempt to do a favor for drivers has any significant bearing on the issue of Osco's alleged joint employer status. The gift certificates given to the most productive drivers were not of such magnitude to be anything other than mere gratuities. The drivers did not receive the standard employee discounts that Osco employees were entitled to on all purchases. Instead, the drivers testified about specific discounts they occasionally received on certain items and about a dis- 788 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD count on film processing Rymarcsuk testified that it vio- lated Osco policy to give drivers the film discounts and to allow the spotters to take breaks in the Osco cafeteria. Such occasional minor benefits do not suffice to make Osco a joint employer. See Chesapeake Foods, 287 NLRB 405 (1987). In conclusion on this issue, I note that the contract be- tween Osco and McNeil specifically created a shipper/carrier relationship that recognized McNeil's ex- clusive control over the manner in which its employees performed their services. The drivers were employees of McNeil and were "subject to employment, discharge, discipline and control solely and exclusively" by McNeil. The drivers, not Osco, determined the routes they would take to deliver to the stores. The drivers could bid in and out of the Osco account each year based on their McNeil seniority. When not working for the Osco ac- count, they would work for one of McNeil's other cus- tomers. Thus, Osco was faced with a shifting group of bid drivers and off-the-corner drivers who may or may not have been familiar with the Osco account. Far from exerting significant control over the drivers, Osco could not even obtain a steady house of drivers from McNeil. Instead of Osco dictating how the drivers would operate, the McNeil/Union collective-bargaining agreement dic- tated how Osco would operate. For example, in addition to not having a steady house, Osco could not use the flexible workweek and starting times it desired to reduce overtime and maximize the efficient use of equipment. Although one must be sympathetic to the drivers' cur- rent plight, it must also be noted that no one complained or alleged joint employer status when the McNeil drivers had a number of accounts to which their McNeil seniori- ty applied. The record is also silent on why joint em- ployer status was not alleged by the Union when McNeil began losing its other "open" accounts, waiting only for the loss-of the last significant such account, Osco. Given the facts which exist in this proceeding, I be- lieve the cases cited by Respondent demonstrate that the type of control necessary for a joint employer finding is absent in this case In TLI, Inc., 271 NLRB 798 (1984), enfd. 772 F.2d 894 (3d Cir. 1985), the shipper was found not to be a joint employer even though it interacted with the carrier's drivers regularly. The drivers reported to the shipper each day for delivery instructions and re- turned the trucks to the shipper each day. The shipped handled mechanical problems (unlike Osco) and kept the drivers' logs. The drivers only worked for the shipper's account; there had never been a transfer to another TLI job (again, unlike Osco). Yet, the Board concluded (id. at 794): Although Crown may have exercised some control over the drivers, Crown did not affect the terms and conditions of employment to such a degree that it may be deemed a -joint employer. The Crown foreman instructs the drivers as to which deliveries are to be made on a given day; however, the driv- ers themselves select their own assignments on a se- niority basis. The record indicates that Crown nei- ther hires nor fires the drivers and . . . Crown does not discipline the employees. See also Millcraft Paper Co, 270 NLRB 812 (1984); Chesapeake Foods, supra. For all the reasons set forth above, I find and con- clude that Osco is not a joint employer with McNeil of the McNeil/Osco drivers as alleged. E. Does Osco Have a Duty to Bargain with the Union Over its Decision to Terminate its Relationship with McNeil Having found that Osco was not a joint employer of the McNeil/Osco drivers, and no other theory being ad- vanced which would give rise to a bargaining obligation, I find that Osco was under no obligation to bargain with the Union over its decision to terminate its relationship with McNeil and, thus, has not violated the Act as al- leged. However, in the event that it is subsequently deter- mined that this finding is in error, I will address certain of Respondent's other defenses to the complaint allega- tions. In addition to its position that it was not a joint employer of the involved drivers, with which I agree, Osco contends that the Union has waived any right to bargain over the termination decision by not timely re- questing bargaining. I believe this defense also has merit. In NLRB v. Island Typographers, 705 F 2d 44 (2d Cir. 1983), the court held that a union waives its right to bar- gain over a change in working conditions where it re- ceives notice of the employer's proposed change but fails to request bargaining. In Island Typographers, the em- ployer for years utilized a "hot type" process. In 1976, the employer explained to employees that "cold type" equipment was necessary to remain competitive. The em- ployer then began to purchase cold type equipment, trained employees in the use of that equipment, and sub- sequently began to hire new employees skilled in the use of that equipment. At no time did the union.object to or request bargaining about the increasing use of the new technology. Ultimately, the company formally notified the union of its decision to change entirely from hot type to cold type. The court held that the union was charged with knowledge of trends in the industry and that it must have recognized, without being told specifically, that a complete change to cold type machinery was inevitable. As a result, the union had sufficient notice. Similarly, in the instant case, the Union was apprised well before September 1986 that McNeil faced the can- cellation of its contract. As early as 1984, Bonnema con- tacted Union Business Agent Ed Coco to discuss McNeil's concerns over the Osco account and McNeil's need for concessions in order to keep its customer. Coco never got back to Bonnema regarding those concerns. In April 1985, during contract negotiations with the Union attended by Bonnema, Coco, Jim Colgan, and John Na- vigato, Bonnema informed the Union that McNeil was going to lose the Osco account if McNeil could not grant the flexibility and wage concessions needed by Osco Although faced with this potential cancellation by Osco throughout 1984 and 1985, no request was made by the Union to bargain with Osco. The Union left it up to the drivers to decide whether they would grant concessions. In November 1985, Bon- OSCO DRUG nema and Staniszewski from McNeil met with the driv- ers to discuss a wage cut. At this meeting, McNeil in- formed the drivers that without a pay cut, McNeil would lose the Osco account because Osco was seeking competitive bids from other carriers. The drivers asked to talk with Rymarcsuk at Osco, who confirmed that a cut was needed. Rymarcsuk warned also that even with a pay cut McNeil might still lose the account. On No- vember 27, 1985, the drivers signed an agreement with McNeil granting a 10-percent wage cut for the drivers working on the Osco account. The evidence establishes that in early 1986, the drivers and the Union were aware that Osco was taking bids from competing carriers Bonnema specifically informed Union Business Agent Jim Colgan in January or Febru- ary 1986 that Osco was seeking other bids, and he asked Colgan if McNeil could have another meeting with the drivers to seek further concessions. Thus, a second meet- ing between McNeil and the drivers occurred around March 1986. Colgan was invited to attend, but he did not show up. Although McNeil pressed for more conces- sions, the drivers were not receptive. Driver Tom Nowik in the summer of 1986 heard from a friend at Central States that Osco and Central States were enter- ing into a contract However, it was not until September 29, 1986, that Osco entered into a binding contract with Central States. In spite of the explicit notice to the Union well prior to that date that McNeil was in danger of losing the Osco account, the Union did not seek to bargain with Osco over that issue. This failure to request bargaining was consistent with the Union's 15-year pattern of bargaining solely with McNeil and with Osco's position with re- spect to its alleged status as joint employer. The Union did not contact Osco until early November 1986. At a November 1986 meeting between Ligurotis and Walter, the Union for the first time asked what it could do to present cancellation of the McNeil contract The Union did not accept Walter's suggestion of contacting Central States to determine whether the work might be per- formed by Local 705 members and Osco refused to bar- gain over the issue I find that the Union received repeated notice that Osco was likely to terminate its contract with McNeil. I further find that such notice was not mere "conjecture or rumor" found to be insufficient notice by the Board and the courts. NLRB v. Rapid Bindery, 293 F.2d 170 (2d Cir. 1961). When both the Union and the affected drivers are told that Osco was unhappy, that concessions were necessary to keep the account, and, finally, that Osco was seeking bids from competing carriers, I can only be- lieve that the end of the McNeil/Osco relationship was clearly in sight. Moreover, in sharp contrast with the sit- uation facing the Board in Grainger, supra, the decision was not a fait accompli at the time such notice was given. Several months passed while Osco received and evaluated competitive bids before it decided to accept the Central States bid. At any time during this evaluation period, concessions or offers to negotiate concessions should have proven fruitful as the McNeil bid was one of the ones under consideration. 789 In conclusion, I find that when the Union finally re- quested bargaining the decision to terminate McNeil was final. However, I further find that for months preceding this final decision the Union made no request to bargain even though it had clear notice that McNeil was likely to lose the Osco account and that Osco was taking com- petitive bids. Under the circumstances presented, I find that the Union waived its right to request bargaining with Osco, even in the event Osco is found to be a joint employer See NLRB v. Spun-Jee Corp., 385 F.2d 379 (2d Cir. 1967). It is also difficult to not note the court's hold- ing on this point in W. W. Grainger, Inc. v. NLRB, 860 F.2d 244 (7th Cir. 1988), which was cited by the General Counsel and the Union for almost all other purposes. Osco further contends that it had no duty to bargain over its decision to terminate the McNeil relationship be- cause the decision was not a mandatory subject of bar- gaining as it did not turn on labor costs , citing First Na- tional Maintenance Corp. v. NLRB, 452 U.S. 666 (1981); Otis Elevator Co., 269 NLRB 891 (1984), Hawthorn Mel- lady, Inc., 275 NLRB 339 (1985). It argues that in De- cember 1985, because of increased overhead and markup for profit, McNeil proposed a 10-percent increase in its rates to Osco. When its drivers agreed to a 10-percent reduction in wages for the Osco account, McNeil failed to pass that decrease along to Osco. Thus, effective Janu- ary 1, 1986, McNeil's rates to Osco were actually higher because of equipment costs and because of McNeil's de- cision to apply the wage cut to their overhead expenses and profit margin. McNeil's bid was approximately $5000 per week more expensive than Central State's. Osco con- tends that though labor costs were a factor, its decision turned not upon McNeil's labor costs, but upon McNeil's decision to raise its rates in order to cover profit and overhead even in the face of lower wage rates. Osco's decision was not amenable to resolution through bargain- ing with the Union since McNeil had already demon- strated that concessions by the drivers would not benefit Osco with lower costs, but would simply be used to in- crease McNeil's profitability. I disagree with Osco's position on this defense. Its pri- mary concerns with McNeil were labor costs, a steady house, flexible workweek, and flexible starting times. All of these subjects are clearly amenable to the collective- bargaining process and all are clearly matters of labor costs The end result of Osco's requests for the flexible workweek and starting times was to continue its present mode of operation without the necessity of paying over- time. Therefore, I find that Osco's decision to terminate the McNeil agreement turned substantially on labor costs, though not necessarily on the usual cents or dol- lars per hour costs for regular time worked. Its argu- ments that McNeil would keep any negotiated conces- sions in the areas of concern do not stand scrutiny. Clearly, the flexible workweek and flexible starting times would have resulted in lower labor costs for Osco, but would have produced no additional income that McNeil could have kept even if it wanted Moreover, McNeil was obviously aware that it was losing the Osco account and would not have opposed the changes desired by 790 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Osco; indeed, it had championed these causes in the past in negotiations with the Union. Osco contends by way of a further defense that due process would bar the Union's right to request bargain- ing. To the extent that this argument is encompassed within its position on the Union's waiver of its right to bargaining by not timely requesting bargaining, I agree with Respondent. Beyond that, the defense does not have merit Osco also argues alternatively that its bargaining obli- gation, if any,, has been satisfied by the bargaining done by McNeil acting as its agent, citing the decision of the court in Grainger, supra. The record will not support a finding that McNeil was the agent of Osco for purposes of collective bargaining The court's holding in this record was predicated on a finding of a joint employer status, which is not present in this case. Lastly, Osco argues that the McNeil drivers who worked for the Osco account did not constitute an ap- propriate bargaining unit, asserting that because of past practice of bidding into the Osco account the only ap- propriate unit was one composed of all the drivers em- ployed by McNeil. The General Counsel takes the posi- tion that the record shows that Osco was the point em- ployer of only the regular drivers assigned to Osco and not of the extra or off the corner drivers He further points out that the regular drivers are readily identifiable as being the ones who signed an addendum to the collec- tive-bargaining agreement and took the 10-percent pay cut in 1985. He also notes that one of Osco's sources of dissatisfaction with McNeil was the inability to secure a steady house of drivers for its account, thereby at least inferring that Osco recognizes that there could easily exist an identifiable group of drivers for its account only. I agree with the General Counsel for the reasons he ad- vances' and additionally, because McNeil's closed house accounts, the accounts in which the shipper is also.a sig- natory to the collective-bargaining agreement between the union and McNeil, have not been shown to present any problems with a unit description. Moreover, the exact unit description can be reached by negotiation and agreement. The Respondent's request for attorney's fees and costs has been ruled on in the Order of the Chief Administra- tive Law' Judge, striking a portion of Respondent's answer. CONCLUSIONS OF LAW 1. Respondent is an employer engaged in commerce within the meaning - of Section 2(2), (6), and (7) of the Act. 2. The Union is a labor organization within the mean- ing of Section 2 (5) of the Act. 3. Respondent has not engaged in any of the unfair labor practices alleged in the complaint. On these findings of fact and conclusions'of law and on the entire record , I issue the following recommend- ed2 r' , ORDER The complaint is dismissed in its entirety. ' My agreement with the General Counsel on this point is of course predicated one a reversal of my finding that Osco is not Joint employer of the McNeil/Osco drivers 2 If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and, recommended Order shall, as provided in Sec 102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed v aived for all pur- poses