Osco Drug, Inc.

National Labor Relations Board - Board Decisions

Jun 7, 1989

294 N.L.R.B. 779 (N.L.R.B. 1989)

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