Ara Services, Inc.

National Labor Relations Board - Board Decisions

Apr 10, 1987

283 N.L.R.B. 602 (N.L.R.B. 1987)

602 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ARA Services, Inc: and= Communications Workers of
America; AFL-CIO, Petitioner: Case 16-RC-
8811
10 April 1987
DECISION ON REVIEW AND ORDER
REMANDING
BY CHAIRMAN DOTSON AND MEMBERS
JOHANSEN AND BABSON
On 12 November 1985 the Regional Director for
Region 16 issued a Decision and Order in this pro-
ceeding in which he dismissed the instant petition
based on his fording that jurisdiction should not be
asserted over the Employer under the test set forth
in National Transportation Service, 240 NLRB 565
(1979). In so doing, the Regional Director found
that the relationship between the Employer and the
Stephen F. Austin University,' a nonprofit educa-
tional institution operated by the State of Texas
and exempt from the Board's jurisdiction, was such
that the Employer did not exercise sufficient con-
trol over its employees' wages, hours, and working
conditions to enable it to engage in meaningful bar-
gaining with a labor organization.
In accordance with Section 102.67 of the Board's
Rules and Regulations, the Petitioner filed a timely
request for review of the Regional Director's deci-
sion, and a motion to remand and reopen the
record for newly discovered evidence. The Board
granted the Petitioner's request for review by un-
published order dated 24 March 1986,2 and held in
abeyance the Petitioner's motion to remand and
reopen.
On 30 June the Board remanded the instant case
to the Regional Director for further consideration
consistent with its recently issued decisions in Res-
Care, Inc.3 and Long Stretch Youth Home,4 includ-
ing, if necessary, a reopening of the record.5 On 22
August, after the parties were afforded an opportu-
nity to submit briefs on the issue, the Acting Re-
gional Director issued a Supplemental Decision
and Order reaffirming the findings and conclusions
of the 12 November 1985 decision that jurisdiction
should not be asserted over the Employer.
Thereafter, on 12 September, the Petitioner filed
a timely request for review, contending that the
Acting Regional Director erred in concluding that
a Hereinafter referred to as "the University."
2 All dates are in 1986 unless otherwise noted.
6 280 NLRB 670 (1986) (Member Stephens concurring and dissenting).
280 NLRB 678 (1986) (Chairman Dotson dissenting , Member Ste-
phens concurring).
b The Petitioner's motion to remand and reopen was referred to the
Regional Director in the Board's remand . Both the Petitioner and the
Employer subsequently notified the Region that they did not desire a re-
opening of the hearing , and both filed supplemental briefs which were
considered by the Acting Regional Director
the control retained by the exempt entity, over the
essential terms and conditions of the Employer's
employees is the type of direct economic control
that precludes collective bargaining. By : unpub-
lished order dated 28 November, the Boards grant-
ed the Petitioner's request for review.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
The Board has reviewed the entire record in this
proceeding with respect to the issues under review
and makes the following findings. In December
1984, the University was advised that state appro-
priations were going to be reduced, and it began
looking for ways to increase revenue and reduce
costs. It was determined that by contracting out
food services formerly provided by the University
itself (including the operation of two cafeterias, a
catering service, and a banquet hall), a substantial
savings would be realized. Bids were solicited and
bidders were interviewed by a food service com-
mittee consisting of University administrators, fac-
ulty, and students.
The choice was narrowed to two companies, in-
cluding the Employer, and these bidders were in-
formed that certain benefits must be included in the
bids as a result of a consent decree entered into be-
tween the University and members of a Federal
class action suit alleging that the University violat-
ed Title VII of the Civil Rights Act of 1964.7 Most
of the food service workers were included as mem-
bers of the class. To satisfy the University's obliga-
tions under the consent decree, the University re-
quired the bidders to agree to offer employment to
all the then-current University food service em-
ployees at salaries equal to or greater than those
they were receiving from the University, to at-
tempt to accomplish any reduction in current staff
by attrition rather than layoff, and to offer current
employees a benefit package specified by the Uni-
versity. It was explicitly acknowledged, however,
that the successful bidder would possess the right
to terminate any employee for cause.
The benefit package mandated by the University
included the same benefits (holidays, sick leave,
and vacation policies) the University had provided,
as well as the payment of a fixed percentage of
Social Security taxes for all employees working in
excess of 20 hours per week, the contribution of up
to $85 per month to each employee's health and
life insurance plan (coverage comparable to the
University's plan), and the offer of a retirement
6 Chairman Dotson and Members Johansen , Babson, and Stephens.
7 Annie Al. Carpenter v. Stephen F. Austin State University, Civil Action
No. TY-74-214-CA (ED. Tex.), consent decree filed 28 April 1984.
283 NLRB No. 89
ARA SERVICES
program similar to that of the Teachers Retirement
System of Texas, 'with payment of a specified per-
centage of the cost of such a program for each em-
ployee into an independently supervised retirement
plan. The University also required that the success-
ful bidder carry workers' compensation insurance
and stated amounts of public liability and property
damage insurance.
The University and the Employer executed a
letter of agreement on 11 July 1985, and the Em-
ployer took over the University's food service op-
erations in August 1985. At the time of the hearing
in this case (October 1985), a formal contract be-
tween the parties was in effect, but had' not yet
been executed. The University specifies • the hours
of operation for the cafeterias and requires that cer-
tain types and quality of food be served. In addi-
tion, it reserves the right to approve or disapprove
the Employer's -selection of a food service manag-
er, and the record shows that the University took
an active role in interviewing applicants for that
position, rejecting at least three before Douglas
Goade was selected. In addition, the Employer uti-
lizes University offices, telephones, appliances, and
kitchen utensils; does not pay rent for any of the
facilities; and requires that its employees adhere to
the University's general employment rules and per-
sonal conduct rules.
The Acting Regional Director, after applying
Res-Care and Long Stretch, concluded that "the
control of employee wages and other benefits is
more closely allied to that present in Res-Care than
Long Stretch." Thus, he affirmed the previous order
dismissing the petition. Contrary to the Acting Re-
gional Director, we find that it would effectuate
the purposes and policies of the Act to assert juris-
diction over the Employer.
In Res-Care, the Board reaffirmed the basic two-
fold inquiry enunciated in National Transportation
Service,8 for determining when assertion of jurisdic-
tion over an employer providing services to or for
an exempt entity is appropriate. Further, the Board
stated that henceforth it would examine not only
the control over essential terms and conditions re-
tained by the employer, but also the scope and,
degree of control exercised by the exempt entity
over the employer's labor relations, to determine
whether the employer is capable of engaging in
meaningful collective bargaining.
The Board concluded in Res-Care that it was the
exempt entity (the Department of Labor) that, in
8 In National Transportation Service, the Board majority stated that the
inquiry is "whether the employer itself meets the definition of `employer'
in Section 2 ( 2 ) of the Act and , if so ... whether the employer has suffi-
cient control over the employment conditions of its employees to enable
it to bargain with a labor organization as their representative." 240
NLRB at 565.
603
every,sense, retained the ultimate discretion for set-
ting wage and benefit levels; thus, the exempt
entity effectively precluded the employer from en-
gaging in collective bargaining . Although the em-
ployer initially set the wage and benefit levels for
each job classification in its operating budget, the
Board noted that the budget required approval by
the exempt entity and, once approved, became the
basis for the contract price. In addition, the em-
ployer was required to obtain approval from the
exempt entity of the wage ranges to be paid to the
employer's employees, including a maximum for
each classification, and the substantive terms of
several employee benefits. The contract specifically
provided that any proposed changes in the ap-
proved wage ranges or fringe benefit plans had to
be submitted to the exempt entity for approval,
along with any proposed changes in the staff man-
ning table, labor grade schedule, or salary sched-
ule.
In the instant case, the Acting Regional Director
found that the University controls the base wages
and benefits of all ex-University employees em-
ployed by the Employer, but that it does not exer-
cise similar controls over new hires. However, he
found no indication that the Employer will be in a
position to hire new employees or to raise wages
and fringe benefits of its current employees above
the level mandated by the University. Thus, he
noted that the food service operations were
overstaffed when the Employer initiated its oper-
ations, and , therefore, there were no existing plans
to hire new employees in the foreseeable future. He
also noted that the base wages set by the Universi-
ty were higher than similar industry wages in the
geographical area. Accordingly, he concluded that
the Employer does not sufficiently control the em-
ployment conditions of its employees to enable it to
engage in meaningful bargaining.
We disagree with the Acting Regional Director's
conclusion. As the record clearly shows, there are
no line-by-line budgetary controls imposed upon
the Employer by the University, and there are no
limitations or controls upon any expenditures by
the Employer. Moreover,, the circumstances under
which the Employer agreed to offer employment
to all then-current food service employees (at
wages equal to or better than their current wages),
as well as the "one-time only" benefit package it
agreed to offer them, in no way prevents the Em-
ployer from exercising its discretion in these areas
in the future, as both the Employer's food service
manager and the University's general counsel testi-
fied. Thus, the initial wages and all amounts specif-
ically set forth in the benefit 'package are ""mini-
mums," not maximums, and no one disputes that
604 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the Employer is free to pay more than the mini-
mum, wage mandated by the parties ' agreement to
ex-University employees or to any new employees
it may hire, to add additional holidays and other
benefits, or to offer other retirement options. Fur-
ther, we note that although the Acting Regional-
Director speculated that the Employer most likely
will not be in a position to hire any new employees
for some time, the record contains testimony indi-
cating that the Employer already may have done
so.
In this case, we find that the exempt entity does
not exercise such control over the Employer's
labor relations policies as would oust the Employer
of the final say over decisions affecting the "core
group of `basic bargaining subjects,"' and thereby
prohibit meaningful bargaining . Res-Care, _ supra,
slip op. at 12. Unlike the situation in Res-Care, min-
imum guidelines mandated by the University in
order to comply with the consent decree are
merely that-"guidelines." The Employer is free to
determine for itself any increases in wages and/or
benefits - afforded ex-University employees , so long
as they satisfy the specified minimums , and may es-
tablish and modify wages and benefits paid to its
other employees without any limitations whatso-
ever. It is clear that these initial limitations imposed
by the University on the Employer are designed to
ensure that , the obligations agreed to by the Uni-
versity in- the consent decree are, met, even' though
it has chosen to contract out the food service oper-
ation_
Based on the above , we find- that the - minimum
guidelines imposed by the University do not affect
the Employer's ultimate discretion over wage and
benefit levels . Long Stretch Youth Home, supra, slip
op. at 11 . Indeed, the limitations imposed by the
minimum guidelines constitute an even lesser con-
straint on the Employer's ability to engage, in
meaningful collective bargaining than was present
in Long Stretch . We therefore conclude that the
Employer retains substantial control over all eco-
nomic matters which are central to the employer-
employee relationship and which enable it to
engage in meaningful collective bargaining, and
that it will effectuate the purposes of the Act to
assert jurisdiction herein. Accordingly, the -Acting,
Regional Director's Supplemental Decision and
Order is reversed, and we shall reinstate the peti-
tion and remand the proceeding to the Regional
Director for further appropriate action. -
ORDER
The petition in Case 16-RC-8811 is - reinstated
and remanded to the Regional Director for appro-
priate action.