298 N.L.R.B. 434 (N.L.R.B. 1990)

Cardinal Mccloskey Children'S And Family Services

National Labor Relations Board - Board DecisionsMay 4, 1990

298 N.L.R.B. 434 (N.L.R.B. 1990)

434 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Cardinal McCloskey Children 's and Family Serv- ices ' and District Council 1707, Community & Social Service Agency Employees Union, Peti- tioner. Church on the Hill AME Zion Family Day Care Career Program2 and District Council 1707, Community & Social Service Agency Employees Union, Petitioner. East Side Settlement House Family Day Care and District Council 1707, Community & Social Service Agency Employees Union , Petitioner. Rena Day Care Centers , Inc. and District Council 1707, Community & Social Service Agency Em- ployees Union , Petitioner. Tremont Monterey Family Day Center and District Council 1707, Community & Social Service Agency Employees Union , Petitioner. University Settlement Family Day Care and District Council 1707, Community & Social Service Agency Employees Union , Petitioner. Metropolitan Assistance (Victim Services/Travelers Aide) Corp.3 and District Council 1707, Com- munity & Social Service Agency Employees Union, Petitioner. Silver Lake Lodge Family Day Care Center and District Council 1707, Community & Social Service Agency Employees Union, Petitioner. Malcolm X Day Care Center and District Council 1707, Community & Social Service Agency Em- ployees Union , Petitioner. Blanche Community Progress and District Council 1707, Community & Social Service Agency Em- ployees Union, Petitioner. Alpha Kappa Alpha Sorority Epsilon Pi Omega Chapter Day Care Center, Inc.4 and District Council 1707, Community & Social Service Agency Employees Union, Petitioner .5 Cases 2- RC-20393, 2-RC-20395, 2-RC-20396, 2-RC- 20397, 2-RC-20398, 2-RC-20403, 2-RC- 20405, 2-RC-20406, 2-RC-20407, and 2-RC- 20408 May 4, 1990 DECISION ON REVIEW AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS CRACRAFT AND DEVANEY On July 31, 1989, the Regional Director for Region ssued a Decision and Direction of Election in which he found that individuals who provide day care in their homes under the supervision of the day care centers named in the caption are em- ployees of the centers and not, as the centers con- tend, independent contractors. On September 15, the centers filed a request for review, which was granted on September 25.6 The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The day care centers are nonprofit corporations that are engaged in the specialized care and custo- dy of children. Each center contracts with the New York City Department of Social Services, Human Resources Administration (HRA), to pro- vide day care services to families that are eligible for publicly funded services. Those services are provided both by the centers, through their own teachers and aides, and by family day care (FDC) providers (the providers) in their own homes. The providers are recruited by the centers, who inter- view and screen prospective providers to deter- mine whether they and their homes are likely to qualify for the necessary license to provide FDC. Those who are deemed likely to qualify are then referred to the licensing agency, the Agency for Child Development (ACD), also a part of HRA, for an independent investigation. Those who, pur- suant to ACD's investigation, are accepted and li- censed are then assigned FDC children by the cen- ters, according to the number of children (not to exceed six) for whom they are licensed. Center personnel monitor the providers and their homes closely to ensure that they are in compliance with ACD's regulations and guidelines. Center person- nel also make detailed suggestions to providers concerning ways of providing day care services more effectively. Providers are paid "stipends" by i The name of the Employer appears as amended at the hearing. z The name of the Employer appears as amended at the hearing. a The name of the Employer appears as amended at the hearing 4 The name of the Employer appears as amended at the hearing Also, the caption in the Decision and Direction of Election inadvertently said "Absalom" rather than "Epsilon." We have corrected the error. 5 At the hearing, Case 2-RC-20404, Queensbndge-Astoria Child De- velopment Center, was severed from the remaining cases and the petition withdrawn. 6 The Regional Director also found that it was proper for the Board to assert jurisdiction over the day care centers. No party has requested review of that finding. 298 NLRB No. 55 CARDINAL MCCLOSKEY SERVICES the centers for their services, which are based on the number of children served and a daily rate per child; the stipend rate is determined by ACD. Pro- viders are also reimbursed by the centers for the cost of meals served to FDC children; the reim- bursement rate is set by the United States Depart- ment of Agriculture (USDA). Funds for stipends come from ACD, and funds for meal reimburse- ment come from USDA. The issue before us is whether the providers are employees of the centers, as the Regional Director found, or independent contractors, as the centers contend. We have carefully reviewed the record and we find, contrary to the Regional Director, that -the providers are independent contractors.7 Accordingly, we shall dismiss the petition. In determining whether individuals are employ- ees or independent contractors, the Board applies the common law of agency. NLRB v. United Insur- ance Co., 390 U.S. 254, 256 (1968). The most im- portant of the principles of agency is the "right of control" test: Where the one for whom the services are per- formed retains the right to control the manner and means by which the result is to be accom- plished, the relationship is one of employment; while, on the other hand, where control is re- served only as to the result sought, the rela- tionship is that of an independent contractor. The resolution of this question depends on the facts of each case, and no one factor is deter- minative. Air Transit, 271 NLRB 1108, 1110 (1984), citing News Syndicate Co., 164 NLRB 422, 423-424 (1967). Enforcement of laws or government regula- tions, however, is not considered control over the "manner and means" by which results are accom- plished, because such enforcement is, in reality, su- pervision by the government, not by the "employ- er." Air Transit, above, 271 NLRB at 1110-1111, citing Seafarers Local 777 (Yellow Cab) v. NLRB, 603 F.2d 862, 875 (D.C. Cir. 1978); Don Bass Trucking, 275 NLRB 1172, 1174 (1985); Precision Bulk Transport, 279 NLRB 437 (1986).8 Applying these principles to the facts in the record before us, we find, as did the Regional Di- rector, that numerous factors indicate that the pro- ' Under Sec. 2(3) of the Act, independent contractors are not consid- ered employees, and thus are not entitled to the protection of the Act s As the' court of appeals noted in Yellow Cab, 603 F.2d at 875: Government regulations constitute supervision not by the employ- er but by the state. Thus, to the extent that the government regula- tion of a particular occupation is more extensive, the control by a putative employer becomes less extensive because the employer cannot evade the law either and in requiring compliance with the law he is not controlling the driver It is the law that controls the driver. [Fn. omitted.] 435 viders are independent contractors. Thus, providers must be licensed by ACD to be eligible to receive FDC children. A provider may decline to accept the maximum number of children for whom she is licensed by ACD, or even the full number referred to her by the centers. Providers can-take vacations or other time off without first receiving permission from the centers. The providers give child care in their own homes, thereby furnishing their own workplaces. Any hazardous conditions in a provid- er's home must be eliminated at the provider's ex- pense, and any expense arising from breakage of or damage to a provider's property caused by FDC children must also be borne by the provider. Pro- viders pay the costs of all their own utilities. Pro- viders are paid "stipends" based on the number of FDC children cared for, and are reimbursed for the costs of meals served to the children; no deduc- tions, for taxes or otherwise, are made from the sti- pend checks. Providers are not afforded paid vaca- tions or sick leave, and except for 11 paid holidays, liability insurance coverage (paid for by the city) and medical insurance (for some providers, also paid for by the city), providers receive no fringe benefits. Providers are free to earn extra income by taking in children either before or after the hours during which they care for FDC children. The centers cannot discipline providers for infractions of ACD regulations or center policies. (They can, however, instruct providers that they are not in conformance with ACD requirements; if a provider does not take steps to comply, the center can make appropriate notations in the provider's file, which is reviewed by ACD at least once a year when the time comes for the provider's license to be re- newed. Also, if a condition exists that would pose a serious hazard to FDC children, the center can remove the children from the home.) However, as the Regional Director also found, there are numerous factors that suggest that the providers are employees of the centers. Thus, pro- viders' homes must be open to FDC children be- tween 8 a.m. and 6 p.m., Monday through Friday, except for 11 specified holidays. During those hours, providers may care only for FDC children and their own and may not work for other employ- ers; they may not accept children from other sources, and, indeed, are forbidden to have "unau- thorized" children or other visitors in their homes when caring for FDC children. Providers may not subcontract their child care duties, or employ others to assist them. Items of required safety equipment, as well as toys, games, and other child care-related equipment, are furnished by the cen- ters. Corporal punishment is prohibited. Although providers may decline to accept certain children, 436 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD they may not do so for discriminatory reasons. The centers provide periodic training workshops for the providers, which the latter are required to attend.9 Personnel from the centers monitor the providers' operations closely and frequently, to ensure that the providers, are in compliance with all pertinent policies, regulations, and guidelines. To that end, the providers are required to make and post sched- ules of daily activities and menus. Center personnel make extensive suggestions concerning ways in which the providers can operate more effectively, and at least one center furnishes its providers with a detailed development chart for each child, to assist the providers in monitoring the children's growth and development. Providers also are re- quired to keep records of the attendance of FDC children and of meals served to them; failure to keep such records can result in a provider's not being reimbursed. Many documents in the centers' files refer to the "employment" of providers, and to the providers as "employees." 10 Providers ap- parently do not have formal contracts with the centers, and there is no time limit on the relation- ship between a provider and a center (assuming the provider's license is renewed annually by ACD).' 1 As the Regional Director observed, the manner in which the providers furnish child care service is pervasively and meticulously supervised and con- trolled by the centers. However, as he also conced- ed; virtually all of that supervision and control is exercised pursuant to ACD regulations and guide- lines. Thus, it is ACD that sets the providers' re- quired hours of operation; prohibits them from ac- bepting non-FDC children or other visitors during those hours; forbids subcontracting or the hiring of assistants; prohibits corporal punishment; requires providers to post schedules and menus and to keep records of attendance and meals served; requires providers to attend all training sessions , even those not sponsored by ACD itself; sets safety standards for provider homes and determines what safety equipment must be present; requires the centers to inspect each provider home at least once a month; requires monthly fire drills by each provider; and forbids providers to reject FDC children for dis- criminatory reasons. Moreover, it is ACD that determines the size of the providers' stipends and the number of paid holidays.' 2 Indeed, although the providers receive their stipend checks from the centers, the stipends are paid from ACD's funds.' 3 Likewise, such in- surance coverage as the providers receive is fur- nished by HRA. And although the centers have discretion over the kinds of equipment (other than safety equipment) and supplies with which they furnish the providers, ACD reimburses the centers for the cost of those materials. In effect, everything the providers receive as a result of their participa- tion in the FDC program comes from the city, either directly, as in the case of insurance cover- age, or indirectly, as with compensation and equip- ment. The centers function merely as conduits for the latter two categories.14 The Regional Director found, notwithstanding all the foregoing, that the centers exercise perva- sive control over the providers that significantly exceeds the governmental regulations. We disagree. The Regional Director stressed that the centers make many more home visits, including unan- nounced visits, than are required by ACD, and that the centers, although not required to do so by reg- ulation, make alternative arrangements for the care of FDC children in the event of a provider's illness or vacation. Unlike the Regional Director, we give little, if any, weight to those factors. To the extent the centers engage in such activities not required by the city, they are imposing additional require- ments on themselves, not on the providers. No matter how often the centers' personnel monitor the providers' homes, they are still checking for the same things-safety conditions, schedules, menus, etc. (all of which are required by ACD); 9 Some of the centers require providers to attend meetings of day care center personnel . However, the record indicates that the centers have no effective means of enforcing this requirement. 10 Three providers for one of the centers testified that the center's FDC coordinator had referred to them as employees The coordinator, however, denied having made any such reference. 11 There are other factors that might be thought of as evidence of em- ployee status, but that, on closer examination, do not point unambiguous- ly in, that direction . Thus, the centers recruit new providers, decide how many children (and which children ) to assign to individual providers, and can decline to assign any children to a provider notwithstanding that the provider has a valid license from ACD. Each of these factors, however, is as consistent with a finding of independent contractor status as with one of employee status. Even an employer of independent contractors has to find individuals to do the work , can decide which, and how much, work to contract out to each contractor; and can refuse to continue to deal with even a qualified contractor We therefore find that none of these factors is probative of either employee or independent contractor status 12 The reimbursement rate for meals served is set by USDA. 13 The centers compute the stipend due each provider on the basis of the ACD-established rate per child and the number of children having been cared for (as reported by the providers in their attendance records). Similarly, the centers compute the amounts by which the providers are reimbursed for the cost of meals served , according to the rates estab- lished by USDA and the providers' accounts of the number of children fed. The centers pay the providers by check The centers' role in these matters appears, however, to be purely ministerial , the record does not indicate that the centers have any discretion over the amounts disbursed 14 In light of the foregoing , the Regional Director 's finding that the mdicia of entrepreneurial activity are lacking loses much of its force. The absence of opportunity for profit or "proprietary interest " in their jobs on the par( of the providers is the direct result of the pervasive control over the providers exercised by the city, not independently by the centers. In any event, the absence of a proprietary interest , or the assumption of en- trepreneurial risk, on the part of the providers does not compel a finding that they are employees See Thomson Newspapers, 273 NLRB 350, 352 (1984). CARDINAL MCCLOSKEY SERVICES 437 the providers are not required to meet higher standards merely because the centers monitor them more frequently. The centers' making alternative arrangements for the care of FDC children when the providers are ill or absent actually relieves the providers of a chore they might otherwise have to perform themselves. It is not evidence of control by the centers over the providers' operations. The Regional Director also cited the fact that providers must adhere to daily activity schedules developed by the centers, and that, even though the providers may modify the schedules to suit their particular needs, any major deviation would elicit negative comment and corrective suggestions from center personnel. The record, however, does not support the Regional Director's finding that the providers must follow schedules developed by the centers. Although the testimony regarding schedules is not unambiguous, it appears to us that providers are required by ACD to maintain a daily activity schedule of meals, naps , and play, includ- ing at least 1 hour of outside play for each 4 hours in the provider's care. ACD requires that part of each day be devoted to talking with, playing with, and offering physical comfort to the children, but leaves the arrangement of activities up to the pro- vider.1 S ACD states that activities that have been suggested by center personnel fulfill its require- ments; it also advises that excessive television view- ing is harmful to children. Many (perhaps all) of the centers do furnish providers with sample sched- ules, and some providers apparently follow those sample schedules closely. The record, however, in- dicates that failure to follow a sample schedule would have repercussions only if the provider omitted an activity mandated by ACD. Providers can make up their own schedules, and can deter- mine which activities to include, as long as they stay within ACD guidelines. 16 And even if a pro- vider failed to comply with ACD guidelines, the center could only write up the infraction and report it to ACD, which would take it into consid- eration when the provider's license was being con- sidered for renewal. On the basis of the foregoing, we find, contrary to the Regional Director, that the centers do not exert authority over the provid- ers' schedules beyond ensuring that the schedules conform to ACD guidelines. 15 One of the centers has issued a document for providers entitled "A Schedule Is a Personal Thing," which begins by announcing that "There is no right or wrong schedule for Family Day Care as long as the sched- ule works for you and the children ." The statement also emphasizes the desirability of flexibility, as well as routine, in an activity schedule. 16 Similarly, although the centers provide sample menus, the providers may determine which foods to serve, as long as they comply with USDA guidelines. The Regional Director also found that some of the centers have formulated rules regarding per- sons to whom providers may release FDC chil- dren, procedures for emergencies, and notification of the center when a provider leaves home for any appreciable length of time . We note, however, that ACD also has guidelines concerning those matters, and it appears that the centers' rules merely incor- porate and flesh out the general requirements im- posed by ACD. On the basis of all the foregoing, then, we reject the Regional Director's finding that the centers exert authority over the providers that exceeds in any meaningful way the controls im- posed by ACD regulations. Rosemount Center, 248 NLRB 1322 (1980), is dis- tinguishable from this case. In Rosemount, the Board found that "family home mothers," who provided in-home day care services much as do the providers in this case, were statutory employees and not independent contractors. In Rosemount, however, most of the controls exerted over the family home mothers apparently were imposed by the employer independently of any governmental regulations (although the mothers also were re- quired to comply with those regulations). 17 In the case before us, by contrast, we have found that the centers do not impose any controls over the manner in which the providers operate that mean- ingfully exceed the requirements contained in ACD regulations and guidelines. In summary, we have found that many of the factors in this case indicate that the providers are not employees of the centers, but independent con- tractors. And although, as the Regional Director found, there are ' other factors that, under other cir- cumstances , would be indicative of employee status, nearly all of them are the result of govern- mental regulation, not of supervision by the centers independent of such regulation. Apart from the fac- tors deriving from ACD regulation, the great ma- jority of the factors present support a finding of in- dependent contractor status. Moreover, because the centers' supervision of the providers is effectively limited to ensuring that ACD's requirements are met, the record does not indicate that the centers themselves control the manner and means of the providers' operations. See, e.g., Air Transit, above, 271 NLRB at 1'110-1111. Thus,, the critical "right of control" test, applied to the facts of this case, does not support a finding of employee status, at 1h E g., the employer determined the mothers' compensation levels and hours of operation , required them to attend training sessions, furnished them with supplies, and allowed them to accept only four children even though they were licensed for five. 438 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD least vis-a-vis the centers. Is We therefore reverse the relationship of the providers to the centers is the Regional Director's finding that the providers that of independent contractors. Accordingly, we are employees of the centers. We find, instead, that shall dismiss,the petitions. 18 It is not necessary for us to consider whether the providers are em- ORDER ployees of the city of New York. Accordingly, we do not reach that The petitions are dismissed.issue.