Thums Long Beach Co.

National Labor Relations Board - Board Decisions

Jun 15, 1989

295 N.L.R.B. 101 (N.L.R.B. 1989)

THUMS LONG BEACH CO. 101
Thums Long Beach Company and Inlandboatmen's
Union of the Pacific , Marine Division, Interna-
tional Longshoremen's and Warehousemen's
Union. Case 21-CA-24733
June 15, 1989
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
JOHANSEN AND CRACRAFr
On January 13, 1988, Administrative Law Judge
Richard D. Taplitz issued the attached decision.
The General Counsel filed exceptions and a sup-
porting brief, and the Respondent filed an answer-
ing brief to the General Counsel's exceptions.
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, and
conclusions 1 and to adopt the recommended
Order.
ORDER
The recommended Order of the administrative
law judge is adopted and the complaint is dis-
missed.
CHAIRMAN STEPHENS, concurring.
I concur with the majority's adoption of the
judge's alternative finding that the city's control
over the ability of the Respondent to subcontract
precludes it from bargaining with the Union over
the decision to subcontract.I Further, I find the
1 The complaint alleges that Thums violated Sec. 8(a)(5) and (1) by
failing to bargain with the Union representing its subcontractor 's (Pac-
tow's) marine employees before awarding a subcontract to a company
other than Pactow . Thums , of course , can only be found to have violated
the Act if it can be shown that it had an obligation to bargain with this
Union . If Pactow and Thums are not joint employers then Thums has no
obligation to bargain with the Union . If Thums and Pactow , however,
are joint employers , Thums may have an obligation to bargain unless, for
example, it can be shown that because of factors external to its relation-
ship with Pactow , Thums is precluded from meaningful collective bar-
gaining. In analyzing this case , the judge assumed that Thums and
Pactow were joint employers but found that Thums was precluded from
meaningful bargaining because of its relationship with the city of Long
Beach . He thus concluded that Thums was exempt from the Board's ju-
risdiction and dismissed the complaint In light of our adoption of the
judge's disposition of this case , we find it unnecessary to determine
whether, in fact, Thums and Pactow are joint employers and, further,
make no findings regarding the bargaining relationship between Pactow
and the Union
1 Unlike the majority , I find it unnecessary to resolve whether the Re-
spondent is subject to the Board 's jurisdiction However, I note that the
judge's analysis rests on the assumption that , if the city controls the terms
and conditions of employment of the Respondent 's own employees (those
whom it hires directly ), then the city must necessarily also control the
terms and conditions of employment of the marine transportation em-
ployees Even assuming, arguendo, that the city exerts such control over
the Respondent 's own employees , it does not follow that the city controls
the conditions of employment of the marine transportation employees In
Respondent and Pactow are not joint employers.
Thus, the Respondent is not obligated to bargain
with the Union about the decision to subcontract
or its effects.
The standard for determining joint employer
status under the Act is whether two separate enti-
ties share or coshare matters governing essential
terms and conditions of employment of a group of
employees. 2 To establish such status there must be
a showing that the employer meaningfully affects
matters relating to the employment relationship,
such as hiring, firing, discipline, supervision, and
direction.3 In the present case Pactow alone con-
trols the wages and all the economic benefits of the
marine transportation employees, and establishes
such terms of employment pursuant to the collec-
tive-bargaining agreement with the Union. The Re-
spondent has never been a party to any collective-
bargaining agreement or participated in any
manner in any negotiations with the Union. The
Union has never filed grievances against the Re-
spondent, and there is no evidence that the Re-
spondent has contributed to the resolution of griev-
ances on the Union's behalf.
All the hiring of the marine transportation em-
ployees is done exclusively by Pactow. In fact, in
1984 when Pactow was awarded the Respondent's
marine transportation contract, it specifically disre-
garded the advice of one of the Respondent's su-
pervisors to the effect that some of the previous
contractor's employees should not be hired. Termi-
nations are handled exclusively by Pactow, even
though the Respondent may exercise its right
under the contract to request that an employee be
removed from its vessel.4 Similarly, imposition of
discipline rests solely with Pactow and no marine
transportation employee has been directly disci-
plined by the Respondent. The Respondent has re-
quested that Pactow correct disciplinary problems;
however, it is Ralph Oxenrider, the Pactow marine
superintendent on site, who after an independent
investigation decides whether to impose the re-
quested discipline.
It is undisputed that the marine transportation
employees receive directions from the Respond-
ent's personnel. However, the nature of these in-
structions does not affect the terms and conditions
the instant case there is no showing of any control exercised by the city
over [he terms and conditions of employment of these employees, and
Pactow and the Union have successfully engaged in meaningful and ef-
fective bargaining without any interference from the city.
NLRB v Browning Ferris Industries, 691 F.2d 1117, 1124 (1982).
TLI, Inc., 271 NLRB 798 (1984)
4 The Respondent did not request the termination of any employee
during the 1984 Pactow contract The Respondent has exercised this pre-
rogative during the tenure of previous contractors . However , the ulti-
mate decision regarding the employee 's status was handled by the con-
tractor.
295 NLRB No. 18
102 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
of employment of these employees to a degree
warranting a finding of joint employer status. Al-
though the Respondent 's personnel inform Pactow
employees of minor maintenance needed by the
vessels, these directions are geared at ensuring
compliance with Pactow's duties under the terms
of the contract . Thus, the instructions documented
in the daily logsheets reflect instructions given by
the Respondent as to minor maintenance work re-
quired (such as cleaning barges, changing oil,
cleaning terminals on batteries , varnishing wood-
work , and changing ballast water ). These logsheets
are discussed daily by the Respondent with Oxen-
rider, but not with the Pactow crewmen.
Employees are not instructed as to the manner in
which the work is performed, but rather as to
which work needs to be completed . The Respond-
ent's personnel are not involved in supervising the
work of the individual employees and have never
evaluated their work or directed particular employ-
ees to do a particular task . Oxenrider who is on site
every day during the week, and on call 24 hours,
supervises the employees ' performance and serves
as the conduit for many of the instructions given
by the Respondent . Memos from the Respondent
relating to the marine transportation contract are
channeled through Oxenrider , who many times re-
writes the memos prior to giving them to Pactow
employees.
According to the terms of the contract, schedul-
ing of the Respondent 's vessels and their move-
ments is controlled exclusively by the Respondent.
However, Pactow alone prepares the crews ' sched-
ule and their boat assignment . Routinely, none of
the Respondent 's supervisors are aboard the Re-
spondent 's vessels that are manned exclusively by
the Pactow employees . All boats are in daily com-
munication with the Respondent's dispatcher, par-
ticularly the tugs, barges, and standby boats which
unlike the crewboats do not operate on a written
schedule . The dispatcher relays instructions as to
the vessels ' routes and cargo but does not direct
the crewmen on how to perform their duties.
The Respondent approves overtime slips. How-
ever, this approval reflects the Respondent's con-
cerns with Pactow 's billings, not with the work of
the particular employees . Pactow compensates its
employees for the overtime incurred , irrespective
of whether the Respondent approves the overtime
billing.
In sum , the supervision and direction exercised
by Respondent on a day-to-day basis is routine and
directed at policing the terms of the contract
agreement with Pactow.5 The above factors, con-
5 The facts here are distinguishable from those present in W. W.
Grainger, Inc., 286 NLRB 74 (1987 ), in which the Board recently found
sidered with Respondent 's lack of control over
wages and benefits, firing, and disciplinary author-
ity, constitutes insufficient control to support a
finding that Pactow and Respondent Thums are
joint employers. Therefore, the Respondent had no
obligation to bargain with the Union either with re-
spect to the decision to subcontract the work for-
merly done by the Pactow employees to another
subcontractor or the effects of that decision.
an employer to be a joint employer of its contractor's drivers , based on
the employer 's complete control over the drivers ' daily activities. In ad-
dition , the employer there effectively recommended discipline , evaluated
the work performance of drivers , determined vacation time , and had indi-
rect, but effective, control over the employees ' compensation.
Lana Hill Parke, Esq., for the General Counsel.
Gordon A . Letter and Allison R. Michael, Esqs. (Littler,
Mendelson, Fastiff & Tichy), of Los Angeles, Califor-
nia, for the Respondent.
William R . Forrester, of Wilmington , California , for the
Charging Party.
DECISION
STATEMENT OF THE CASE
RICHARD D. TAPLITZ, Administrative Law Judge.
This case was tried in Los Angeles, California , on Sep-
tember 29 and 30 and October 1, 2 , 14, 15, and 16, 1987.
The charge was filed on June 3, 1986 , by Inlandboat-
men's Union of the Pacific, Marine Division , Internation-
al Longshoremen 's and Warehousemen 's Union (the
Union or the Inlandboatmen 's Union). The complaint
issued on February 11, 1987, alleging that Thums Long
Beach Company (Respondent or Thums) violated Sec-
tion 8(a)(5) and (1) of the National Labor Relations Act.
Issues
1. Thums is the agent of the field contractor for the
city of Long Beach , California (the City), in the oper-
ation of certain oil fields owned in large part by the City
and the state of California in and around Long Beach
harbor . The work is performed by employees of Thums
and by subcontractors . The complaint alleges in sub-
stance that Thums was a joint employer with Pacific
Towboat and Salvage Company (PacTow), a subcontrac-
tor who provided - marine transportation services at the
Thums' location, and that Thums violated Section 8(a)(5)
of the Act by failing to bargain with the Union as the
representative of the employees of PacTow before an-
other subcontractor was awarded the subcontract for
that marine transportation work. The substitution of sub-
contractors resulted in the discharge of the PacTow
marine transportation employees . The threshold issue is
whether the relationship between the City (a municipal-
ity that is exempt from the jurisdiction of the Board
under Sec. 2(2) of the Act) and Thums was such that
Thums possessed "sufficient control over the employ-
ment conditions of its employees to enable it to engage
in meaningful collective bargaining" with the Union.
Under the guidelines set forth in Res-Care, Inc., 280
THUMS LONG BEACH CO.
NLRB 670 ( 1986),' the Board will not assert jurisdiction
(with respect to a bargaining obligation ) over an employ-
er unless that employer is able to engage in meaningful
collective bargaining.
2. If it is found that the Board should assert jurisdic-
tion , then a number of other issues are raised including:
a. Are Thums and PacTow joint employers?
b. Did the Union have to give some indication to
Thums prior to the award of the subcontract to the new
subcontractor that there was an obligation on the part of
Thums to have a collective -bargaining relationship with
the Union?
c. Whether the bidding procedure for subcontractors,
which had been in operation for many years , was the
continuation of an existing practice rather than a change
in a practice that required bargaining.
d. Whether the subcontracting in question involved an
entrepreneurial decision over which bargaining was not
required.
All parties were given full opportunity to participate,
to introduce evidence , to examine and cross-examine wit-
nesses, to argue orally , and to file briefs . Briefs, which
have been carefully considered , were filed on behalf of
the General Counsel and Thums.
On the entire record of the case and from my observa-
tion of the witnesses and their demeanor, I make the fol-
lowing
FINDINGS OF FACT
I. JURISDICTION
Thums is a Delaware corporation which is engaged in
oil drilling and production in and around the Long
Beach , California harbor. Thums annually purchases and
receives goods valued in excess of $50,000 from suppliers
located outside of California . Unless Thums is exempt
from the bargaining obligations of Section 8(a)(5) of the
Act because of its relationship with the city of Long
Beach , the Board would exert jurisdiction over it. The
details of that relationship are set forth below.
The Union is a labor organization within the meaning
of Section 2(5) of the Act.
II. THE ALLEGED UNFAIR LABOR PRACTICES
The Jurisdictional Issue-The Relationship Between
the State of California , the City of Long Beach and
Thums
Thums operates oil producing facilities in what is
known as the "Long Beach Unit ." That unit consists of
about 7000 acres along the beach and in the harbor of
the city of Long Beach, from which about 60,000 barrels
of oil are extracted daily . The Long Beach Unit is com-
posed of three subparts , which are Tract 1, Tract 2, and
a town lot.
1 That case involved a petition for an election in a representation case
and has application with regard to refusal -to-bargain allegations under
Sec. 8(a)(5) of the Act. There is no allegation in the complaint that
anyone was discharged to encourage or discourage membership in the
Union in violation of Sec . 8(a)(3) of the Act, and I have not addressed
that issue
103
Tract 1 is entirely under water and constitutes about
85 percent of the total unit resource . That tract in turn is
divided into shares in which various oil companies hold
certain interests . An interest in 80 percent of Tract 1 is
held by a group of five oil companies which jointly bid
successfully for that interest . Those companies are
Texaco, Humble (which is now named Exxon), Union
Oil of California , Socony Mobil Oil, and Shell. Thums is
an organization created by those oil companies and it
holds the oil companies ' 80-percent interest under an
agency arrangement . The City is the trustee of Tract 1
pursuant to a trust granted in 1911 by the state of Cali-
fornia, and California remains the beneficiary of that
grant.
The State of California owns Tract 2 in fee and has
bid out certain interests in that property. The bid was
won by Arco and that interest has since been transferred
to another holder.
The town lot represents about 10 percent of the total
unit resource and is owned by many parties, some of
whom have very small shares . There are about 65 par-
ticipants who have rights under leases or by reason of
ownership to develop oil well resources on that tract.
The City has ownership in fee of some of the lands in
the town lot and is therefore one of the participants in
the Long Beach Unit. In addition there are a large
number of parties who have very small interests in the
town lots.
Prior to 1962 the City had an ordinance prohibiting
drillings in lands that are presently within the Long
Beach Unit . That ordinance was the cause of litigation
between California and the City concerning the effect of
the 1911 trust on the border areas between the tidelands
and nontidelands in the Long Beach Unit . In 1964 the
litigation was resolved when the State Legislature passed
and the governor signed enabling legislation for the cre-
ation of the Long Beach Unit . The legislation provided
for a unitization program under which the Long Beach
Unit was to be operated as a single entity which included
the tideland tract that had been granted in trust to the
City, in addition to the town lots. The legislation, Chap-
ter 138 California Legislature 1964 First Extraordinary
Session , entitled "An act relating to the tidelands and
submerged lands granted by the State to the City of
Long Beach and the revenues therefrom," provides for
the development and operation of the oil and gas re-
serves under unitized oil operations by a single field con-
tractor under a contractors' agreement with the City as
trustee for the state of California . "Contractor 's agree-
ment" was defined, with certain limited exceptions, as in-
cluding any contract or other arrangement between the
City and any other person relating to oil and gas oper-
ations . In addition the legislation gave extensive author-
ity to the City over the operation, and specifically pro-
vided that "Day-to -day operations shall be the responsi-
bility of the field contractor acting under the direction
and control of the City."
Under the authority of the legislation , on November 1,
1964, the interested parties entered into a "Unit Agree-
ment" for the Long Beach Unit . The agreement provid-
ed that the city of Long Beach was to be the unit opera-
104 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
tor and reiterated the provisions of the legislation which
provided that day-to-day operations were the responsibil-
ity of the field contractor acting under the direction and
control of the unit operator. The agreement defined the
field contractor to mean , in part , any person who had
the responsibility for day-to -day operations , acting under
the direction and control of the City and the City as unit
operator.
On November 1, 1964 the interested parties entered
into a "Unit Operating Agreement" for the Long Beach
Unit which incorporated the Unit Agreement. The unit
operating agreement provided for the overall supervision
by the City as unit operator . The agreement also provid-
ed in part that the selection of employees used by the
unit operator or field contractor , their hours of labor and
their conditions of employment , and the supervision of
those employees were the responsibility of such employ-
er. It further provided that employees were the employ-
ees of the person who hired them and not of the partici-
pants to the agreement.
The successful bidder for the position of field contrac-
tor was a group of oil companies that are the parent or-
ganizations of Thums . The only question asked the bid-
ders in the bidding process was the net profit percentage
they would be willing to accept . Thums acted as the
agent for its parent companies in seeking the position of
field contractor. The bid that Thums made and that the
City, with the approval of the State, accepted was for
the City and the State to get a substantial part of the net
profits . Thums' reimbursement was to be part of the net
profits. 2
Thereafter the City, the parent companies of Thums,
and other interested parties entered into a "contractor's
agreement" for the Long Beach Unit which was to be
effective for 35 years. The agreement provided that the
field contractor would conduct day-to-day operations
under the direction and control of the City. Article 15 of
the contractor 's agreement , entitled "Field Contractor's
Employees," reads:
The selection of employees used by the Field
Contractor in conducting operations hereunder,
their hours of labor, their conditions of employ-
ment, and their supervision shall be the responsibil-
ity of the Field Contractor. A schedule of the
number of such employees and their salaries and
benefits must be approved by the City Manager,
and he shall give due regard to the requirements of
good oil field engineering and operating practices
and to the compensation and other benefits normal-
ly allowed to comparable employees by Field Con-
tractor and by other responsible Persons engaged in
comparable oil field operations.
2 Robert Buchanan , the corporate secretary of Thums , testified that the
Thums' parent companies received 4 .44 percent of the net profits "attrib-
utable to 80 -percent of Tract 1" and that those companies were the suc-
cessful bidders for that 80-percent interest. It is not clear from the record
what the exact arrangement was. However , it is apparent that the State
and the City have a very substantial financial stake in the Long Beach
Unit.
Thums acted as agent for its parent organizations,
which had been awarded the field contract , under an
agency agreement that had been entered into on April 1,
1965. Under the agency agreement Thums was to act as
agent for the field contractor with regard to the day-to-
day operation of the Long Beach Unit as directed by the
City. The agreement provided that Thums (referred to as
Thumsco in the agreement) was subject to the supervi-
sion , direction and control of the field contractor (the
parent companies) acting through its management com-
mittee . Article 8, section 8.1 of the agreement provided
that Thums was to submit to the management committee
an organizational chart and schedule showing the
number, classification , salaries and benefits of all employ-
ees that Thums proposed to hire and that such employ-
ees would be hired only with the written approval of the
management committee and the city manager of the
City. It provided that new employees would be thereaf-
ter hired only with similar prior approval. Article IV,
section 4.3 of the agreement provided that Thums was to
perform its duties in accordance with the determinations
or approvals given or imposed by the city manager. Spe-
cifically, it provided that Thums would not contract or
subcontract any delegated operations to third persons
without the prior written consent of the city manager as
might be required . By its terms the Agency Agreement
was to be effective only if approved by the City. The
City did approve the agreement.
Thums initially prepares a budget but that budget must
be approved by the City.
Beginning in 1965 the City and Thums began holding
meetings to work out procedures for obtaining services
and materials . Written procedures were in effect at times
material herein. Those procedures were set forth in doc-
uments dated June 15, 1984 and provided for certain bid-
ding procedures . The City is an active participant in
those bidding procedures. The City retains control with
regard to the awarding of bids and the bidding proce-
dure . Bids are awarded to the low bidder unless the City
notifies Thums to the contrary. The marine transporta-
tion contract , which is in issue in this case, is considered
a service contract that is subject to the bidding proce-
dure . Before a bid package is sent out , Thums always
consults with the City and the City has to approve the
bid request.
The city manager of the City has delegated his author-
ity with respect to the oversight of the operations to the
manager of the Department of Oil Properties of the City.
Two City officials credibly and without contradiction
testified as to the procedures followed by the City. One
was Leonard Brock , who was director of the Depart-
ment of Oil Properties for the City from February 1965
to November 1981 and the other was James Hemphill,
who was director of that department from October 1985
through February 1987. The findings below are based on
their testimony.
The City has a key role in determining the relationship
between Thums and Thums' employees. Part of the job
of the Department of Oil Properties for the City is to try
to keep expenses on the Thums' job down as much as
possible so as to optimize profits to the City and State in
THUMS LONG BEACH CO.
a way that is consistent with environmental concerns.
The City regularly reviews the job classifications of
Thums' employees to see that they remain within budget
limits and are within the overall structure for performing
sound oil field operations . From time to time Thums sub-
mits proposals for granting wage increases to Thums'
employees . Those proposals specify a range for employ-
ees of various classifications . The proposals are reviewed
by the City and part of that review consists of an indus-
try review. If the City determines the raises are appro-
priate, the request is approved , but that approval is not
granted automatically . At times approval has been denied
on the basis of the City's independent analysis . In 1986
Thums made a proposal that an increase be granted. The
City reviewed the proposal and decided that the industry
was in a severe downturn and that raises were inappro-
priate . If the City does approve a wage increase , that in-
crease is approved for a classification of employees and
the City does not decide which individual receives the
raise . Thums must submit to the City classifications for
its employees on a yearly basis . The City has final say as
to approval or disapproval of the classifications . All ben-
efits paid by Thums to its employees have to be ap-
proved by the City. Thus if Thums wants to establish a
holiday schedule, that has to be approved by the City. In
general the City has and exercises substantial control
over Thums' expenses . The City has an interest in con-
trolling those expenses because the net profit to the City
and the State is directly affected by those expenses.
The City also has a final say with regard to the con-
tractors on the job. It is the City who makes the decision
as to whether a contract , such as the one for marine
transportation services, should be bid or whether an ex-
isting contract should be extended . All the procedures
that are followed in connection with the competitive bid
process used by Thums are reviewed by the City and
must be approved by it.
Thums employs approximately 150 to 200 nonsupervi-
sory employees of its own , in addition to a number of
others if it is a joint employer with subcontractors.
Those employees it owns are , among others, roustabouts
who do basic manual work ; operators who work on
lines, valves, tanks, and other equipment relating to oil
wells; accountants ; warehouse workers and truckdrivers;
engineering department employees ; administrative em-
ployees; environmental department employees; and dis-
patchers . None of those employees are represented by a
union . Much of the work done on the Long Beach tract
is performed by employees of subcontractors. On any
given day there are about 100 subcontractors supplying
services and materials . About 20 of those subcontractors
provide substantial ongoing services . Many of the sub-
contractors do construction -type work and most of those
are unionized . Many other subcontractors service oil
wells and most of them are nonunion . The number of
subcontractors ' employees on the job varies at different
times from 125 to over 1000. Usually there are not more
than 300 or 350 employees of subcontractors.
One of the subcontractors was PacTow. PacTow had
the marine transportation contract for various periods of
time including the period from June 1, 1984, to May 31,
1986, and employed about 27 employees . On June 1,
105
1986 the marine transportation contract was awarded to
another company, Reidel International . PacTow dis-
charged its employees at that time and the successful
bidder, that already had its own employees , who were
represented by the Masters, Mates and Pilots Union, re-
fused to hire the former PacTow employees.3 Those
former PacTow employees were represented by the
Union. PacTow and the Union had a collective-bargain-
ing agreement dated May 31, 1984 , which was effective
from June 1, 1984, to May 31, 1986, and covered em-
ployees in a bargaining unit consisting of deckhands and
operators employed by PacTow on contract work serv-
icing the offshore drilling islands in the Port of Long
Beach for Thums . Thums was not a party to that agree-
ment . The complaint alleges in substance that Thums re-
fused to bargain in violation of Section 8(a)(5) of the Act
by contracting out the marine transportation work to the
successor subcontractor and by discharging PacTow's
employees without prior bargaining with the Inlandboat-
men's Union , which represented PacTow 's employees.
Analysis and Conclusions
The complaint alleges that Thums refused to bargain
in violation of Section 8(a)(5) of the Act . That section
makes it an unfair labor practice for an employer to
refuse to bargain collectively with the representative of
his employees . If the marine transportation employees
are not employees of Thums, Thums would have no ob-
ligation to bargain with the Union and the complaint
would have to be dismissed . The General Counsel con-
tends that Thums, as a joint employer with PacTow, is
an employer of those employees , and much of the testi-
mony in this case went to that issue . Though a serious
argument can be made on both sides of that issue , I shall
assume for the purpose of discussing jurisdiction that the
General Counsel has established that the marine trans-
portation employees are employees of Thums and that,
except for the jurisdictional question , Thums would have
to bargain with the Union with respect to the wages,
hours, and other terms and conditions of employment of
those employees as is required by Section 8(a)(5) and
Section 8(d) of the Act. Section 2(2) of the Act excludes
from the definition of "employer" "any State or political
subdivision thereof." The State of California and its po-
litical subdivision, the city of Long Beach, are therefore
exempt from coverage under the Act. Thums, in the
usual course of events, would be an employer within the
meaning of the Act and would be required to bargain
collectively with the representative of its employees
under Section 8(a)(5) of the Act. The issue presented
here is whether Thums' labor relations policies are con-
trolled to such a degree by the city of Long Beach that
effective collective bargaining is precluded and the
Board should decline to assert jurisdiction . The criteria
to be used in evaluating that issue are set forth in Res-
Care, Inc., 280 NLRB 670 (1986),4 in which jurisidiction
8 There is no allegation that the refusal to hire the former PacTow em-
ployees by Reidel was a violation of the Act
4 See also PHP Healthcare Corp., 285 NLRB 182 ( 1987).
106 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
was declined, and Long Stretch Youth Home, 280 NLRB
678 (1986),5 in which jurisdiction was asserted.
In Res-Care, Inc., supra, Res-Care operated a residen-
tial job core center under a contract with the United
States Department of Labor (DOL). Res-Care submitted
for the DOL's approval staff-manning tables , labor grade
schedule, salary schedule with wage ranges, personnel
policies and employee benefits . Any proposed changes in
approved wage ranges or fringe benefit plans had to be
submitted to DOL for approval as did any proposed
changes in staff-manning tables, labor grade schedule,
and salary schedule . Res-Care conducted its own hiring
but it was required to submit its selection criteria and
hiring procedure to DOL for approval and DOL had to
approve the hiring of the staff people and employees
who made at least $ 15,000 a year . In addition there were
other employee relations matters that had to be approved
by DOL. DOL was not obligated to reimburse Res-Care
for other than "allowable costs ." In addition , DOL exer-
cised pervasive operational control.
In Res-Care, Inc., supra, the Board overruled its deci-
sion in Singer Co., 240 NLRB 965 (1979) and reasserted,
with further amplification , the test set forth in National
Transportation Service, 240 NLRB 565 (1979). In Singer
the Board had held that an employer was not exempt
from jurisdiction because of its relations with a govern-
ment entity if the employer retained sufficient discretion
to permit good faith bargaining over substantial terms
and conditions of employment . In that case the Board
held that the employer could engage in meaningful bar-
gaining because it could negotiate with the union regard-
ing its bid proposals ; it was responsible for hiring , firing,
promotions , demotions and transfers ; and it established
terms and conditions of employment for its employees
subject to outer boundaries regarding wages and other
matters set by DOL. In reversing Singer, Res-Care held
that the Singer case assessed the extent of control re-
tained by the employer in isolation and did not place
weight on the "employer 's lack of a final say concerning
the primary economic aspects of its relationship with its
employees-the setting of wages and benefits-and un-
derstated the degree of economic control possessed by
DOL." In Res-Care the Board pointed out that DOL had
to "approve wage ranges, including a maximum wage for
each job classification , as well as the substantive terms of
several employee benefits , including sick leave pay, vaca-
tion accrual, and the number of paid holidays" and that
DOL approval was required before any changes were
made in approved wage and benefit levels . The Board
held (280 NLRB at 673):
In every sense, it is the DOL, not Res-Care, which
retains ultimate discretion for setting wage and ben-
efit levels of the job core center, and thus effective-
ly precludes Res-Care from engaging in meaningful
collective bargaining . [Footnote omitted.]
In overruling the Singer case and establishing new
standards , the Board in Res-Care, Inc. cited as a guide
5 See also Specialized Living Center, 286 NLRB 511 (1987 ); Dynaelec-
tron Corp., 286 NLRB 302 (1987); Community Living , 285 NLRB 312
( 1987); Trailways Commuter Transit, 284 NLRB 935 (1987).
the decisions of the Seventh and Tenth Circuit Courts of
Appeals in NLRB v. Chicago Youth Centers, 616 F.2d
1028 (7th Cir. 1980), and Memorial Hospital v. NLRB,
624 F.2d 177 (10th Cir. 1977).
In the NLRB v. Chicago Youth Centers case, the court
held that the exempt agency's pervasive control over the
labor relations of the private agency was such that any
bargaining the private agency conducted would in effect
be done on behalf of the exempt agency; that the exempt
agency was a joint employer with the private agency;
and that the private agency shared the exempt agency's
exemption under Section 2(2) of the Act. In Res-Care the
Board held: "We agree with the Seventh Circuit that the
setting of wage and benefit standards by the exempt
entity is a type of control over essential economic terms
of employment that precludes meaningful bargaining."
In Res-Care the Board cited with approval the Tenth
Circuit's decision in Memorial Hospital v. NLRB in
which jurisdiction was denied largely on the fact that the
exempt entity retained discretion to approve specific
wage and benefit levels. In referring to the circuit court
case, the Board said (280 NLRB at 673):
The employer submitted to the board of trustees, an
exempt political subdivision , semiannual reports re-
garding salary ranges for each job classification and
annual recommendations on wage rates and fringe
benefits for each position. The exempt entity ap-
proved the employer's proposed wage rates, fringe
benefits, and staffing levels. In addition, the employ-
er certified that it would not deviate from the au-
thorized wage and benefit ranges without the
exempt entity 's approval . Id. at 181. In these cir-
cumstances , the court found that the exempt entity
retained such control over employment relations
that the employer could not engage in meaningful
collective bargaining.
In PHP Healthcare Corp., 285 NLRB 182 (1987), the
Board reaffirmed the Res-Care standards, holding at 285
NLRB 184:
Although the Employer here retains some con-
trol over hiring , training , discipline , promotion
standards, and grievances, we held in Res-Care that
while other personnel-related issues are important,
"if an employer does not have the final say on the
entire package of employee compensation, i.e.,
wages and fringe benefits, meaningful bargaining is
not possible."
The fact that an exempt entity has some influence over.
the labor relations of a nonexempt employer does not
necessarily preclude a finding that jurisdiction should be
asserted over the nonexempt employer. The criteria to be
applied has been spelled out by the Board in Long Stretch
Youth Home, supra, and its progeny . 6 In that case, the
Board compared the situation in Res-Care, where the
exempt entity retained the ultimate discretion to set wage
and benefit levels, with the facts of Long Stretch Youth
See cases cited in fn 5.
THUMS LONG BEACH CO. 107
Home where the exempt entity did not exercise such ulti-
mate discretion . In Long Stretch the nonexempt employer
largely determined for itself what those salaries and
other policies would be. The exempt employer set mini-
mum and maximum salary ranges merely as guidelines
and Long Stretch did not need to obtain prior agency
approval for changes in personnel policies . In Long
Stretch , the Board held that the state had "little or no
control over the setting of salaries , the content of the
benefits provided, or the content of other personnel poli-
cies, so long as Long Stretch satisfies the minimum
standards and qualifications." The Board found that Long
Stretch retained substantial control over economic mat-
ters which were central to the employer-employee rela-
tionship.
In Dynaelectron Corp., 286 NLRB 302 (1987), the
Board summarized the differences between Res-Care and
Long Stretch, holding at 302:
The exempt entity in Res-Care placed direct
limits on employee compensation , and the employer
thus did not have the ability to bargain over eco-
nomic terms and conditions of employment . There,
the employer 's salary ranges , specified benefits, and
personnel policies were subject to DOL approval
and became part of the reimbursable costs under the
contract; the exempt entity retained discretion to
disapprove any proposed changes in wages, bene-
fits, or personnel policies. The Agency did not
merely set minimum standards; rather, it approved
wage ranges , which included a maximum wage for
each job classification.
In contrast to the employer in Res-Care, in Long
Stretch the employer was able to engage in mean-
ingful bargaining . Long Stretch held that a ceiling
on the employer's total budget, without specific
limits on employee compensation expeditures, does
not require declining jurisdiction . Id. The exempt
entity in Long Stretch reviewed the employer's pro-
posed budget and its allocation of revenues , suggest-
ed salary ranges for each job classification , and rec-
ommended that salaries comprise no more than a
certain percentage of the total budget . Beyond set-
ting minimum standards and qualifications , howev-
er, the exempt entity had little or no control over
wages and benefits.
The facts in the instant case are much closer to Res-
Care than they are to Long Stretch. As in Res-Care, the
city of Long Beach placed direct limits on employee
compensation and Thums thus did not have the ability to
bargain over economic terms and conditions of employ-
ment . Under Thums' agency agreement , which was ap-
proved by the city of Long Beach, Thums had to submit
to a management committee an organizational chart and
schedule showing the number of classifications , salaries,
and benefits of all employees that Thums proposed to
hire and such employees were to be hired only with the
written approval of the management committee and the
city manager of the city of Long Beach . New employees
were to be hired only with similar prior approval. Under
the "contractor 's agreement," to which the parent com-
panies of Thums and the City were parties "A schedule
of the number of such employees and their salaries and
benefits must be approved by the City Manager." Thums
prepared initial budgets but those budgets had to be ap-
proved by the city of Long Beach. In practice the city
of Long Beach has final say over all wage increases.
Thums can submit proposals for the granting of wage in-
creases but the city of Long Beach can and has rejected
such proposals . In 1986 Thums made a proposal for an
increase and the City rejected that proposal. The City
does not decide which employee within a job classifica-
tion gets a raise if a raise has been authorized but that
was the same situation which existed in Res-Care. The
City has the final say as to the approval or disapproval
of job classifications. All benefits paid by Thums to its
employees have to be approved by the City. The City
has such complete control over the wages and benefits of
Thums' employees that if the City were an employer
within the meaning of the Act it would have to be con-
sidered a joint employer with Thums NLRB v. Chicago
Youth Centers, supra.
Under the Singer case, supra, a serious argument could
be made that an employer should be required to bargain
over areas such as employee discipline even though an
exempt employer decided such matters as wage rates.
That no longer appears to be the law. However , even if
such limited bargaining were to be required , it would be
meaningless in the instant case . PacTow lost the marine
transportation contract, which was awarded to Reidel.
The primary issue here is whether Thums refused to bar-
gain with the Union representing PacTow's employees
concerning that change in subcontractor . However, final
decisions regarding such matters are made by the city of
Long Beach and not by Thums. The City has the final
say with regard to the subcontractors on the job. It is
the City who decides whether a subcontract, such as the
one for marine transportation services , should be bid or
whether an existing subcontract should be extended. All
bidding procedures must be approved by the City. The
City has the right to determine that a bid will not be ac-
cepted . In sum , it is the city of Long Beach , and not
Thums, which retains ultimate discretion with regard to
the bidding and awarding of the marine transportation
subcontract and therefore Thums is precluded from en-
gaging in meaningful collective bargaining about such
matters.
For the reasons set forth above, I find that Thums
does not possess sufficient control over the wages and
benefit levels of its employees to enable it to engage in
meaningful collective bargaining with a labor organiza-
tion. Accordingly, I find that it would not effectuate the
purposes and policies of the Act to assert jurisdiction and
I shall recommend dismissal of the complaint . Res-Care,
Inc., supra.
108 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
CONCLUSION OF LAW
The General Counsel has not established by a prepon-
derance of the credible evidence that the Board should
assert jurisdiction in this case.7
On these findings of fact and conclusions of law and
on the entire record , I issue the following recommend-
ed8
ORDER
The complaint is dismissed in its entirety.
7 This conclusion is based on the assumption that the General Counsel
is correct in asserting that the marine transportation employees are em-
ployees of Thums . If they are employees of Thums , there can be no
meaningful bargaining because the City and not Thums has "the ultimate
authority to determine primary terms and conditions of employment,
such as wage and benefit levels ...: . Res-Care , supra at 674 . If, on the
other hand , the marine transportation employees are not employees of
Thums , then Thums would have no obligation to bargain with the repre-
sentative of those employees . In either event the complaint must be dis-
missed.
8 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 waived for all pur-
poses.