Old Dominion Security, Inc.

National Labor Relations Board - Board Decisions

Jun 14, 1988

289 N.L.R.B. 81 (N.L.R.B. 1988)

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 By unpublished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