Trailways Commuter Transit, Inc.

National Labor Relations Board - Board Decisions

Jul 10, 1987

284 N.L.R.B. 935 (N.L.R.B. 1987)

TRAILWAYS COMMUTER TRANSIT 935
Trailways Commuter Transit, Inc. and Amalgamated
Transit Union, AFL-CIO, CLC, Local Division
1338, Petitioner. Case 16-RC-8824
10 July 1987
DECISION AND REVIEW AND ORDER
REMANDING
BY CHAIRMAN DOTSON AND MEMBERS
JOHANSEN AND STEPHENS
On 11 April 1986 the Regional Director for
Region 16 issued a Decision and Order concluding
that under the criteria of National Transportation
Service, 240 NLRB 565 (1979), the Board was pre-
cluded from asserting jurisdiction over Trailways
Commuter Transit, Inc. (the Employer). The
Dallas Area Rapid Transit Authority (the Author-
ity) was found to be a political subdivision within
the meaning of Section 2(2) of the Act and there-
fore exempt from the jurisdiction of the Board, and
the Employer was found to share the Authority's
exemption. By Order dated 8 July 1986, the Board
granted Petitioner's Request for Review and re-
manded this matter to the Regional Director for
further consideration in light of the decisions in
Res-Care, 280 NLRB 670 (1986), and Long Stretch
Youth Home, 280 NLRB 678 (1986), both which
clarified the National Transportation Service test.
The parties filed briefs in light of the remand.
On g September 1986 the Regional Director
issued a Supplemental Decision and Order reaffirm-
ing his previous findings and conclusions. Address-
ing the issue on remand, the Regional Director
concluded that control of employee wages and
other benefits is more closely allied to that found in
Res-Care rather than in Long Stretch.
Pursuant to Rule 102.67 of the Board's Rules and
Regulations, Petitioner filed a timely request for
review of the Regional Director's Supplemental
Decision, which the Board granted by mailgram
order dated 22 December 1986.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
We conclude, contrary to the Regional Director,
that jurisdiction should be asserted. Although the
exempt entity with whom the Employer has con-
tracted monitors the Employer's performance, we
find that such monitoring consists largely of oper-
ational controls and is not so restrictive to preclude
the Employer from engaging in meaningful collec-
tive bargaining. It is the Employer, not the exempt
entity, that has ultimate control over the compensa-
tion and labor relations of its employees.
In Res-Care, supra, and Long Stretch, supra, the
Board reaffirmed its reliance on the principles set
284 NLRB No. 103
forth in National Transportation Service, supra, with
clarifications. The test enunciated in National
Transportation, after a determination that an em-
ployer itself meets the definition of an "employer"
in Section 2(2) of the Act, is simply whether an
employer retains sufficient control over the em-
ployment conditions of its employees to engaged in
"effective" or "meaningful" bargaining with a
labor organization. In Res-Care, the Board stated
that it would closely examine, on case-by-case
basis, the control over essential terms and condi-
tions of employment retained by an employer and
the scope and degree of control exercised by the
exempt entity over an employer's labor relations.
More specifically, the Board held that when an em-
ployer "lacks the ultimate authority to determine
primary terms and conditions of employment, such
as wage and benefit levels, it lacks the ability to
engage in the necessary 'give and take' which is a
central requirement of good-faith bargaining and
which makes bargaining meaningful."1
The Employer contends that the facts in this
case are nearly identical to those in Res-Care.
Thus, proposed budgets were submitted to the Au-
thority as part of bids; the Employer submitted
proposed wage-and-benefit levels that became the
basis for the contract prices and for compensation
levels; and the Authority states that it must ap-
prove any wage modifications or employment
policy changes that the Employer might request.
The Petitioner, on the other hand, contends that
the Employer has plenary control over day-to-day
operations, subject only to the Authority's right to
determine the nature of the service provided and to
engage in basic contractual compliance oversight.
Indeed, the Petitioner argues that the Authority
does no more than rubber stamp the Employer's
proposals and actions.
Following a public referendum establishing the
Authority, requests for proposals were issued, first
for express bus service—later covered by the
DART I contract—and subsequently for suburban
crosstown service—later covered by the DART II
contract. Trailways Corporation established a sub-
sidiary corporation, the Employer, to respond to
the bids and ultimately to provide the contract
services. The Employer receives all its funding
from the Authority contracts, which provide for
startup phases and two separate phases in the pro-
vision of services. During a startup phase, expenses
incurred are directly reimbursable on approval by
the Authority. The second phase begins on the
completion of the startup phase, when the contract
becomes operational. During this second phase, the
1 280 NLRB 670 (1986)
936 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Employer receives one-twelfth of the total budg-
eted amount each month. The contracts provide
for the payment of specific dollar amounts at given
intervals for specific operations. The payments
cover all budgeted expenses, including the Employ-
er's profit on the contract. The DART I contract
is fully operational, but the commencement of one
portion of operations under the DART II contract
was delayed by the Authority and, at the time of
the hearing, was not yet revenue producing.
The budget format used by the bidders, includ-
ing the Employer, was dictated by the Authority.
The budget prepared by the Employer was at-
tached to their bid proposal and the level of serv-
ice to be provided was set forth by the Authority.
To an extent, therefore, the number of employees
is determined by the level of service. The contracts
provide that the Authority can set all the routes,
hours, and frequency of transit service and can
monitor contract performance. The contracts also
reference a right of the Authority to "approve" op-
erating policies and practices.
The record shows that the Employer submitted
projected line item budgets with total figures that
became part of the contract prices. The wage were
determined by the Employer and Trailways per-
sonnel and were not dictated by the Authority.
With regard to the nature of the compensation
paid, the contracts provided for simple, fixed-fee
compensation which is not tied to actual costs
except in the nonrevenue producing startup phase
of services. No provision in either contract permits
the Authority to modify the required monthly pay-
ment to the Employer if actual expenditures are
less than those projected in the budget. Neither
contract requires the Employer to submit, nor has
the Employer in practice provided to the Author-
ity, vouchers detailing individual costs, except as
pertaining to the expenditures during a DART II
startup phase.
When asked about payment to the Employer,
Authority Representative Chisholm testified as fol-
lows:
Q. With respect, then, to the payroll for
drivers [for revenue service], that's a lump sum
payment; is that correct?
A. All right. To the best of my knowledge it
would be included in the lump sum payment
to Trailways.
Invoices detailing payroll costs were submitted
only in the startup period of a DART II phase.
With respect to changes in the level of compensa-
tion, the record indicates that the Employer pro-
posed a changed in the drivers' starting salaries.
Chisholm stated that the Authority did not disap-
prove the Trailways proposal.
Q. Then, what role did DART play in the
decision to change the starting salaries of the
DART I drivers?
A. My recollection is that we were ap-
proached in our weekly meeting that this was
something that Trailways wanted propose, and
we basically did not disapprove it.
With respect to a reduction in DART II drivers'
starting salaries, Chisholm testified:
Q. Okay, And when—Did TCT present a
proposal to you that they would like to de-
crease the starting wage?
• A. I believe it was. . . I'm not sure it was a
formal proposal. As is typical of the way
we've been interacting, it was a matter of dis-
cussion and basically held up to see if we had
any problem with it. We indicated we had
none.
Q. Did TCT explain to you why they
wanted to do it?
A. I don't recall an explanation in detail, but
that would be consistent with our normal op-
erating relationship.
With respect to altering fringe benefits, the
record indicates that only one discussion tran-
spired. The Employer proposed that drivers and
their families be allowed to travel for free on all
buses in the Authority's service area. 2 The Author-
ity approved free travel only for the drivers them-
selves. Also regarding fringe benefits, according to
Vice President Holland, the Employer could alter
the fringe benefit package by choosing a different
insurance carrier or by altering the coverage, with-
out any compensation implications.
Safety and training programs were developed
solely by the Employer and Trailways personnel.
Chisholm stated that the programs were reviewed
prior to implementation. However, it appears that
the Authority did no more than request a detailed
statement describing the phases of the programs.
With regard to the employee Rules and Directives
Handbook, the Authority requested one change
concerning the "miss-out" policy, an attendance
policy, and the Employer complied with this re-
quest. The handbook contains many of the employ-
ees' terms and conditions of employment, such as
seniority, job-bidding, rate selection, uniforms, holi-
day pay, vacations, attendance, outside employ-
ment, performance standards, insurance, layoff and
recall, and probationary period. No other modifica-
tions were requested by the Authority.
2 The transcript refers to free travel on Trailways buses, but we
assume from the context that travel on the buses m this area is what was
meant In any event, the difference between the two possible meanings
does not affect our resolution of the ultimate issue.
TRAILWAYS COMMUTER TRANSIT

937
There was testimony that weekly meetings occur
between the Employer's management and Author-
ity officials. According to Holland, Acting General
Manager Cromer and Chisholm, the meetings con-
cern the Employer's contractual performance.
There is also some degree of contact between
Authority representatives and the Employer's driv-
ers. Willie Rucker, one such representative, comes
into contact with drivers and has given them limit-
ed instructions. Specifically, he has requested that
drivers at transfer centers move their buses closer
to the curb and has requested that they wait at the
centers in order to accommodate passengers arriv-
ing on late buses.
The Employer controls route assignments and
the method through which drivers are assigned po-
sitions on the seniority rosters. Daily assignments
are made by the Employer's supervisory personnel.
The Employer's personnel approve drivers' leaves
of absence and vacations. Internal grievances are
handled by the Employer with no appeal to the
Authority. There have been only one or two in-
stances in which a driver has gone to the Author-
ity directly with a complaint. Control over disci-
pline is also vested in the Employer. The Authority
is involved to the extent that it serves as a clearing
house for public complaints, and the Authority can
direct that a driver be removed from contact with
the public. In practice, the Authority finds out
about most disciplinary action after it has occurred.
Authority personnel are not involved in the re-
cruitment process and the Employer makes all
hiring decisions. The Employer is restricted only
by minimum qualifications set forth in the con-
tracts. For reasons not explained in the record, the
Authority orally rejected the Employer's request
for money to hire three additional supervisors.
The Employer argues that this case should be
controlled by our decision in Res-Care. In Res-
Care, supra, the exempt entity, the Department of
Labor (IDOL), approved minimum-maximum wage
ranges as well as specific levels of various employ-
ee benefits. The employer could not set initial
wages or grant wage raises higher than the ap-
proved maximum and could not provide greater
benefits than those contained in the approved bene-
fit package. DOL's total cost of the employer's
contract included the wage levels proposed by the
employer and approved in advance by DOL. Any
attempt by Res-Care to pay wages or benefits
above the previously approved maximum would
result in a determination of a "disallowable cost"
and a reduction of Res-Care's payment by DOL
under their contract.
The Employer notes factual similarities between
the present situation and that in Res-Care, including
the fact that proposed budgets with wage-and-ben-
efit levels were submitted to the Authority, and
these budgets—at least with respect to the DART
II operation—became the basis for the contract
price and compensation paid to the Employer by
the Authority.
The Employer further contends that the Author-
ity has the ability to approve or disapprove em-
ployment policies and any changes (including
changes in compensation), nothing an absence even
in Res-Care of the DOL's ever having disapproved
a proposed employment policy or a proposed
change to an employment policy. It points to three
instances of the Authority's having disapproved
proposals as evidence of its control over the Em-
ployer's labor relations: (1) The Authority's insist-
ence on a change in the miss-out policy in the
Handbook before it would give its approval of the
Handbook; (2) The Authority's rejection of the
Employer's proposal that spouses and children of
its drivers receive passes for free transportation on
the bus system; and (3) The Authority's rejection
of the Employer's proposal for money to add three
additional supervisors.
We agree that some factual similarities exist be-
tween the instant case and Res-Care. There are
also, however, significant distinctions that lead to
the conclusion that the Employer here maintains
sufficient control over its compensation and labor
relations to engage in meaningful collective bar-
gaining. In the instant case, neither contract per-
mits the Authority to "disallow" costs in excess of
budget line items. Instead, the Employer receives
montly payments based on the total projected
budgets. Unlike the DOL in Res-Care, the Author-
ity cannot specifically limit employee compensation
expenditures. The Authority can only place an ef-
fective ceiling on such expenditures through the
contract terms limiting the Employer's total pay-
ment, which is a product of the projected budget
developed by the Employer. The only changes to
the contracts, necessitated by alterations in the
level of service desired by the Authority, have in-
volved amendments to the total compensation paid
to the Employer. The Authority, then, does not
have "the discretion to approve or disapprove spe-
cific salary or benefit levels." Long Stretch, supra,
fn. 12. The Authority has not required the Employ-
er's policies to be in a specific form, and the Au-
thority has done no more than request detailed
statements describing the phases of the Employer's
safety and training programs.
Thus, based on these facts, we find that the
Authority's involvement simply does not rise to the
level of control which resulted in the Board's deci-
sion not to assert jurisdiction in Res-Care. The ac-
938 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
tions and rights of the Authority do not rise to a
level which impinges on the day-to-day operations
of the Employer or on the Employer's control of
labor relations. Like the employer in Long Stretch,
the Employer here "largely determines for itself'
what its compensation and personnel policies will
be. The contracts do not specify that wages or ben-
efits paid to drivers are subject to Authority ap-
proval. The Authority engages in basic contractual
compliance oversight, without crossing over the
line that would establish the Authority as depriving
the Employer of sufficient control over the essen-
tial terms and conditions of employment of its em-
ployees to preclude it from engaging in meaningful
bargaining. Thus, the Authority's review of the
Employer's policies and practices does not disable
the Employer from bargaining over terms and con-
ditions of employment. See Rustman Bus Co., 282
NLRB 152 (1986), and ARA Services, 283 NLRB
602 (1987). The incidents allegedly showing Au-
thority control are minor and are not sufficient to
establish the Authority as having ultimate control
over the Employer, especially when viewed in
light of the overall independence the Employer ex-
ercises over its labor relations. Accordingly, we
fmd that the Regional Director erred in failing to
assert jurisdiction over the Employer in accord
with the standards set forth in National Transporta-
tion Service, as affirmed in Res-Care and Long
Stretch.3
ORDER4
The Regional Director's Supplemental Decision
and Order is reversed and the case is remanded for
further appropriate action.
Chairman Dotson, dissenting.
Contrary to my colleagues, I would affirm the
Regional Director's supplemental decision not to
assert jurisdiction over the Employer based on the
principles set forth in Res-Care, 280 NLRB 670
(1986), and Long Stretch Youth Home, 280 NLRB
678 (1986).
The Employer provides transportation services
pursuant to contracts with the Dallas Area Rapid
3 Member Stephens agrees that it is proper to assert junsdichon over
the Employer under the standards set forth in the majority opinions in
Res-Care, 280 NLRB 670 (1986), and Long Stretch Youth Home, 280
NLRB 678 (1986). He concurs ni the result here, however, on the basis
of his concurring and dissenting opinion in Res-Care, 280 NLRB 670.
4 Inasmuch as the Regional Director declined to assert jurisdiction
over the Employer, he did not reach the issues involving the determina-
tion of an appropriate unit for the Employer's employees, We shall there-
fore remand the case to the Regional Director for further appropriate
action.
Transit Authority (the Authority), an entity exempt
from the Act's jurisdiction. Based on the facts of
this case as set forth by the majority, I disagree
with my colleagues' interpretation of the Authori-
ty's involvement and their view that the actions
and rights of the Authority do not rise to a level
which establish the Authority as having ultimate
control over the primary terms and conditions of
employment.
As I indicated in my dissent in Long Stretch, it is
the exempt entity's real possession of the authority
to review, approve, and disapprove salary, benefits,
and personnel policies that warrants declining juris-
diction. In this case, as the majority states, "the
contracts . . reference a right of the Authority to
'approve' operating policies and practices." How-
ever, the facts go on to reveal more than actual
possession of such authority. The Authority has ac-
tually exercised its right by approving the follow-
ing: the Employer's proposed change in drivers'
starting salaries; the Employer-developed safety
and training programs; and the majority of items in
the employee Rules and Directives Handbook.
Moreover, the Authority exercised its right to dis-
approve by rejecting the Employer's fringe benefit
proposal of free transportation for employee
spouses and children, by rejecting the Employer's
request for money to add supervisors; and by insist-
ing on , a change in the miss-out policy in the em-
ployee Handbook. I do not find such exercise of
control to be "minor" Nor do I find it to be "basic
contractual compliance oversight."
Finally, although I agree that the contract does
not specifically allow the Authority to limit em-
ployee compensation, the contract does set a mini-
mum wage level by requiring the Employer to pay
no less than the local prevailing rate paid by other
public transportation service operators. Additional-
ly, the budget proposal submitted to the Authority
contained line items designating drivers' wages.
The approved budget contained specific wage rates
and, as demonstrated in the instance of the Em-
ployer's proposed change in drivers' starting sala-
ries, changes in those rates required, Authority ap-
proval. Moreover, the Authority could arguably
reject a proposed annual budget in its entirety be-
cause of labor costs.'
Accordingly, I find the foregoing sufficient to es-
tablish the Authority as having ultimate control
over these terms and conditions of employment.
Thus, I would not assert the Board's jurisdiction
over this Employer.
1 See my dissent in Long Stretch, supra