STATE OF WASHINGTON BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION
In the matter of the petition of:
TEAMSTERS UNION LOCAL 599	CASE 7413-E-88-1268
Involving certain employees of:	DECISION 3314 - PECB
TACOMA SCHOOL DISTRICT	ORDER FOR REMAND

Hafer, Price, Rinehart and Schwerin, by Lawrence Schwerin, Attorney at Law, appeared for the union. Kathleen Phair Barnard, Attorney at Law, of the same firm, joined on the brief.

Kane, Vandeberg, Hartinger & Walker, by William A. Coats, Attorney at Law, appeared for the Tacoma School District. Clifford D. Foster, Attorney at Law, of the same firm, joined on the brief. Susan Schreurs, Tacoma School District Legal Advisor, also appeared at the hearing.

Al Koons, Area Operations Manager and Frank Roberts, Contract Manager, appeared for Mayflower Contract Services.

Teamsters, Warehouse, Automotive, Food, Public Employees, Driver Sales and Special Services Union, Local 599, filed a petition for investigation of a question concerning representation with the Public Employment Relations Commission on May 25, 1988, involving certain school bus drivers and mechanics employed in the transportation of students of the Tacoma School District. The union initially asserted that the Tacoma School District was the "sole employer" of the petitioned-for employees. The Tacoma School District responded that the petitioned-for employees were actually employed by Mayflower Contract Services, Inc. (Mayflower).

A pre-hearing conference was held on November 16, 1988, by Hearing Officer Martha M. Nicoloff and Executive Director Marvin L. Schurke. A statement of results of pre-hearing conference was issued on December 2, 1988, which identified the issues in dispute as: (1) The identification of the employer; (2) whether drivers and mechanics should be included in the same bargaining unit; (3) whether any unit could be appropriate in the absence of inclusion of drivers represented by IUOE, Local 286; (4) certain eligibility issues; and (5) the procedure to be followed.[1]

A hearing was conducted on March 15 and 16, 1989, before Hearing Officer Katrina I. Boedecker. At the hearing, the parties stipulated that the issues should be bifurcated, such that the issue concerning the identification of the employer should be determined first, and that rulings on the remaining issues should be made after further hearing.[2] Local 599 and the Tacoma School District submitted post-hearing briefs. Mayflower did not submit a post-hearing brief.

BACKGROUND

The Tacoma School District (Tacoma) operates educational programs in and around Tacoma, Washington. Some of the students in Tacoma's Kindergarten through the 12th grade (K-12) program are transported to and from school by bus. The State of Washington provides funds to local school districts for the transportation of students. RCW 28A.24.055; Chapter 392-141 WAC. Paul Plumis is the director of transportation services for Tacoma. His duties are to coordinate the delivery of transportation services for Tacoma K-12 students who require transportation to and from their school programs.

The Tacoma School District has its own fleet of approximately 53 school buses. Tacoma operates 42 school bus routes for special education students from throughout the geographical area served. In addition, Tacoma operates three school bus routes for students who attend regular K-12 educational programs but live in the northeast portion of the geographical area. Those routes serve approximately 2000 students, or about one-sixth of the Tacoma School District students who ride buses to and from school. The Tacoma School District has recognized and bargained with International Union of Operating Engineers, Local 286, as the exclusive bargaining representative of the bus drivers employed in those operations.

Approximately 4000 students, or about one-third of the Tacoma School District students who ride to and from school by bus, use Pierce Transit, paying regular fares for that service.[3]

The Tacoma School District has contracted with private firms to provide school bus transportation for the remaining approximately one-half of the Tacoma School District students who ride to and from school by bus.

The Tacoma/Laidlaw Contract

For a period from 1984 to June of 1988, Tacoma contracted for school bus services with Laidlaw Transit.[4] The June 24, 1983 bid specifications consisted of 30 typewritten pages, plus 5 pages of addenda. The bidder questionnaire included an inquiry concerning the bidder's hiring procedures. Once the bid was awarded, the bid specification became the contract between Tacoma and Laidlaw. The provisions of that contract included designation of a representative by the school district, reservation of a right of the school district to approve the number of buses and all bus routes, reservation of a right of the school district to require changes of bus driver assignments, a requirement that Laidlaw use a two-way radio system supplied by the school district, a requirement for annual evaluations of bus drivers, specification of employee discipline for failure to attend safety meetings, employee wages at $7.25 per hour, employee sick leave benefits, employee medical insurance, employee dental insurance, and discipline of students to standards set by the school district. The contract provided for escalation of rates at 85% of the annual increase in the consumer price index during the term of the contract.

While Laidlaw was providing school bus transportation for Tacoma students, Local 599 was the exclusive bargaining representative of the employees.[5] No official of the Tacoma School District was present at the bargaining table, but Laidlaw took the position that wage rates for the employees were established by the Tacoma/Laidlaw contract, and were already programmed through the 1987-88 school year. Laidlaw informed the union that the next opportunity to negotiate any improvements in wage rates would have to be at the expiration date of the contract between Tacoma and Laidlaw. Consistent with that bargaining position, the wage rates were set by the collective bargaining agreement at a maximum of $7.25 per hour, with annual increases at 85% of the annual increase in the consumer price index during the five-year term. Sick leave and employee medical and dental insurance were provided on the basis specified in the bid specification.

Other provisions of the collective bargaining agreement between Laidlaw and Local 599 that are of interest here are a procedure for seniority bidding of all driver routes in August of each year, provision for rebidding (on five days notice) of vacancies on new or existing routes having a scheduled time of three hours or more, and provision for promotion of drivers for vacancies on routes having a scheduled time of less than three hours. The contract had a nominal expiration date of August 31, 1988, but was subject to being reopened in the event the Tacoma School District announced a bid date for school bus transportation prior to that time.

While the Tacoma/Laidlaw contract was in effect,[6] Tacoma saw fit to exercise its authority to require the dismissal of a bus driver. A grievance was processed to arbitration in one such case, resulting in an arbitration award overturning the discharge. Although the record lacks details, it appears that Tacoma may have met one such situation by prohibiting Laidlaw from assigning the employee to any Tacoma work.

While the Tacoma/Laidlaw contract was in effect, Tacoma also saw fit to communicate directly, from time to time, with the "Laidlaw" bus drivers. An April 17, 1986 "Inter-Office Memorandum" directed to "Laidlaw Drivers" and addressing the subject of "safety" was prepared by "Paul Plumis, Director of Transportation" on Tacoma School District letterhead. That document specifically invited the "Laidlaw Drivers" to contact Plumis directly, to discuss employee concerns. A December 5, 1986 "Inter-Office Memorandum" prepared by the "District Transportation Office" on Tacoma School District letterhead and directed to "Laidlaw Drivers" specified "Snow Route Procedures".

The Tacoma/Mayflower "Bus" Contract

During February, 1988, the Tacoma School District invited bids for pupil transportation services for a five-year period commencing September 1, 1988. The bid specifications consisted of 47 typewritten pages, with two pages of addenda. The 1988 bid specifications called for interpretation requests to be submitted 10 days in advance of the bid-opening date, and for any interpretations made to be issued as addenda to all potential bidders. Tacoma officials held a pre-bid conference February 18, 1988. Bids were initially due on March 1, but that date was later changed to March 7, 1988.

Like the 1983 bid specification, the 1988 document called for the designation of an "authorized district representative". Provision for implementation of the school district's student discipline program was also carried forward from the Tacoma/Laidlaw contract. Provisions concerning use of Tacoma-provided radios by bus drivers were similar, although not identical, to those contained in the Tacoma/Laidlaw contract.

The 1988 bid specifications continued to reserve a right of the school district to approve all bus routes, but the school district's control over bus driver assignments was substantially increased. Plumis testified in this proceeding that the Tacoma School District had experienced operational difficulties as a result of drivers bidding on routes throughout the school year, and that the school district distinctly desired to tighten its control of mid-year route bidding.

The 1988 bid specification continued to reserve the right of the school district to require dismissal "from the District service" of any person or driver who, in the opinion of the superintendent or his/her designated representative, is not qualified to operate or aid in the driving of a school bus. Tacoma imposed a new requirement that the successful bidder refrain from entering into any agreement or arrangement which would hinder the contractor's authority to discharge employees.

The 1988 bid specification again probed, generally, into the bidder's hiring practices. Tacoma's 1988 bid specifications required, however, that the successful bidder hire "a significant percentage of drivers who have driven District #10 students the previous year."

The 1988 bid specifications established a "minimum" wage rate of $6.45 per hour, and established employee insurance benefits. A section titled: "Computation of Payment for Services" contained a provision for annual rate escalation at 85% of the annual change of the Consumer Price Index, generally similar to the "escalation" provisions of the Tacoma/Laidlaw contract.

The 1988 bid specification contained a provision titled "independent contractor", as follows:

15.       INDEPENDENT CONTRACTOR: The parties to any resulting Contract agree that the Contractor is an independent Contractor responsible to furnish transportation services pursuant to the Contract and neither Contractor nor any agent, officer, or employee of the Contractor shall be held or deemed to be in any way an employee, agent, officer, official, or servant of the District. None of the benefits provided by the District to its employees are available from the District to the employees, agents, or servants of the Contractor. The Contractor will be solely and entirely responsible for his/her acts and for the acts of his/her agents, officers, employees, servants, and subcontractors during the performance of that Contract.

The 1983 bid specification had contained a provision which was worded differently, but was to the same effect.

A bid was submitted by Dorsey Bus Service, Inc., of Corvallis, Oregon. The bid questionnaire identified Dorsey as a subsidiary of Mayflower Contract Services, Inc., of Shawnee Mission, Kansas. The bid was actually developed by a Mayflower vice-president in Kansas, taking into consideration the costs for lease of property, the price of commodities, the type of equipment that would have to be brought in or purchased to fulfill the obligations of the contract, the $6.45 minimum wage required by the bid specification, and the minimum health insurance benefits required by the bid specification.

Mayflower's bid was for a base rate of $82.75. The contract had been awarded to Laidlaw in 1983 at a base rate of $82.96. Laidlaw's base rate had grown, according to a February 22, 1988 addendum to the 1988 bid specification, to $89.67, representing an 8.09% increase after four annual rate adjustments.

The bid was awarded to Mayflower during March of 1988, and the bid specifications became the contract between Tacoma and Mayflower. Upon being awarded the bid, Mayflower official Albert Koons, who is based in Oregon, became its area manager for operations.[7] Frank Roberts was hired to be the on-site contract manager in Tacoma. Mayflower leased a facility in Tacoma, separate from the Tacoma School District property. Also based there are Assistant Manager Robert Joyce; Dispatcher James Southern and a clerk, Becky Marcan. It is undisputed that all of those people are employed by Mayflower.

In the spring of 1988, when it became clear that Laidlaw would no longer be the contractor for the school bus operations, the Tacoma School District became concerned that Laidlaw drivers were seeking other employment because of the uncertainty as to whether they would have a position with the new contractor. Tacoma believed that it would be difficult, if not impossible, to hire drivers for the month or two remaining in the 1987-88 school year, without a secure position. Plumis then sent a letter directly to each Laidlaw driver, on Tacoma School District letterhead, as follows:

Attached please find a copy of a letter to all of you regarding an information meetings to be held on Thursday, April 28, 1988. [sic] Please plan to attend one of the meetings so that you may better understand the policies and proposals of Dorsey/Mayflower.

As indicated every one [sic] will be considered for employment. In my conversations with the Dorsey/Mayflower management, we agree that it is to everyone's mutual advantage to consider for hiring, all those individuals who have demonstrated skills as driver, mechanics and office staff. Obviously what is necessary in an employee is a positive work attitude and a good attendance record, that is low absentee and tardy rates, other requirements and conditions will be discussed at the meeting. Again, plan to attend and bring your questions with you.

Attached to that memorandum was a copy of an April 15, 1988 letter on "Dorsey Bus Inc. / Mayflower Contract Services" letterhead, signed by Koons and addressed "To all Laidlaw/Tacoma employees", wherein the employees were invited to attend one of two meetings scheduled for April 28, 1989.

The April 28 meeting between Mayflower and the Laidlaw drivers was held on Tacoma School District property. Mayflower's employment policies, benefits and wage structure were discussed. The employees were told that everyone would be considered for employment, and that no one's wages would be cut. They were also told that the health and dental package provided for them would comply with the minimum bid specifications.

Mayflower interviewed applicants May 17, 18 and 19, 1988, at a private facility. Koons, Roberts and a person from the Mayflower office in Corvallis, Oregon, conducted the interviews. The applicants were given a document entitled "Mayflower Contract Services Company Plan for Tacoma Drivers" which read:

Wage Scale

7.83

6.75

6.45

BENEFITS

1.         All qualified drivers hired will be given their current seniority. This will be based on continuous employment.

2.         Attendance Bonus - $10.00 every pay period - for showing up every day and not tardy. Pay periods are every other Friday.

3.         Longevity Bonus - $50.00 paid at the end of every school year. They may be absent 5 times (with reasonable excuse) and still qualify.

4.         Paid safety meetings at $3.50 per hour.

5.         All training will be paid at $3.50 per hour.

6.         Christmas Party - $7.00 per person, company paid.

7.         Safety Jacket - No preventable or industrial accidents in a school year.

8.         Medical and Dental Plans - cost share - majority paid by the company.

9.         Driver Pride Program - Incentive program based on accident free days.

The $7.83 maximum wage rate offered by Mayflower at that time appears to have been the maximum rate being paid to "Laidlaw" drivers under the collective bargaining agreement between Laidlaw and Local 599.

Approximately 56 drivers were interviewed. Roberts determined that 43 drivers should be offered employment with Mayflower, and those persons were guaranteed the same route to drive as they had with Laidlaw. Each applicant submitted his/her date of hire with Laidlaw and current salary, and Koons' superiors at Mayflower assigned a wage rate to each applicant.[8]

Mayflower commenced operations in Tacoma on or about September 1, 1988. The buses used were registered on "exempt" licenses in the name of Tacoma School District as the lessee, with Mayflower as lessor through financing arrangements with a bank.[9] The exempt licence limits the use of the buses strictly to Tacoma School District operations and certain other tax exempt uses, such as fire runs during the summertime for the U.S. Forest Service. At the time of the hearing, Mayflower was in the process of applying for charter authority in Washington, which would allow it to operate other revenue services, using buses that were not registered to the Tacoma School District.[10]

A document on Mayflower letterhead dated September 1, 1988 and addressed to "all Tacoma Drivers" contained an explanation of the medical insurance program offered them by Mayflower. The opening paragraph read:

Mayflower Contract Services, Inc. is pleased to offer Tacoma drivers a medical/dental program. This program is provided in accordance with Addendum No. 1 to the Tacoma School District's Bid Specifications for providing pupil transportation services. The district awarded the transportation contract based on the lowest reasonable bid.

That insurance program is different from the benefits package provided by Mayflower to its other employees.

Mayflower originally contracted to provide bus service on 79 routes, and it had 90 to 95 drivers at the beginning of the 1988-1989 school year. The starting and ending times established by Tacoma for the student school day have a major impact on the drivers' work shifts, and the vast majority of those routes were carried over from the Laidlaw operation. With the consent of Tacoma, Roberts brought in a new mapping system to assist drivers in following the bus routes. Mayflower established that 15 minutes would be added for cleaning time at the beginning and end of each driver shift.

The primary communications with the drivers in day-to-day operations appear to be between the drivers and the Mayflower dispatcher. Mayflower promulgated the instructions to drivers concerning snow routes and school closures due to weather. If the Mayflower dispatcher receives a report that there has been a bus accident, calls would be placed to "911", if necessary, then to a Mayflower supervisor, and then to Plumis.

Plumis reviews reports on bus ridership as part of his responsibility to insure that the transportation system is operating efficiently. He can request the contract manager to combine or eliminate routes to balance rider loads. Plumis has never had a requested route change denied by Mayflower.[11] After the beginning of the 1988-89 school year, Plumis received concerns from the principals of two elementary schools in the northeast area of the school district. Buses were arriving at one school approximately 40 minutes before the first bell and imposing a hardship on building personnel to provide supervision of those students after they arrived at the school. At the second school, primary age students were being dismissed from school early to meet afternoon bus schedules, and so were not leaving school with their older brothers and sisters who attended that same school. Plumis met with the principals involved and developed new routes that required changes of the starting and ending times at the schools. An assistant superintendent of the Tacoma School District approved the plan, and it was implemented. The new plan added 30 to 45 minutes per day to 3 routes driven by members of the Operating Engineers bargaining unit. One Mayflower route was eliminated and the time on another Mayflower route was increased. All of the buses served the same schools, both before and after the route change, and all of them continued to transport kindergarten through eighth grade students. The Mayflower dispatcher protested, because the school year had already started and the change would require rearranging other routes to give the affected Mayflower drivers hours comparable to the hours they lost due to the deletion of these particular routes. Nevertheless, the routes were consolidated. In all, changes worked out between Mayflower and Plumis after the start of the 1988-89 school year led to the addition of five routes to the services provided by Mayflower.

The record is replete with confusion regarding the division and/or exercise of authority between Tacoma and Mayflower with respect to discipline of students. Apparently, Washington statutes require school districts to have rules concerning student conduct on buses. Tacoma has issued a set of regulations governing student conduct. Tacoma ordered the drivers to discontinue use of a "Notice of Bus Misconduct" form which Mayflower had instructed them to use for student discipline problems, and replaced that form with one entitled "Tacoma School District #10 School Bus Incident Report." There is some indication of direct interaction between Tacoma administrators and the petitioned-for bus drivers in the area of driver-student relations.[12]

Mayflower has established personnel policies in a number of areas, including: Leaves of absence; drug and alcohol screening; a 90-day probationary period; a grievance procedure; personnel files; and seniority credit for drivers rehired or transferred from part-time to full-time status. Mayflower instituted a retirement plan for the bus drivers. Tacoma does not get involved in the evaluations of the drivers. Training meetings are, however, conducted by Mayflower on Tacoma property.

By the time of the hearing, Mayflower had received approximately 100 complaints regarding bus drivers from Tacoma administrators, parents or fellow drivers. Mayflower conducts its own investigations, but informs Plumis of its actions regarding complaints forwarded to it by Tacoma.[13] Before discharging a driver, Roberts would review the matter with Koons, and they would contact the Mayflower headquarters in Kansas, for approval.

Tacoma notifies Mayflower five to ten days in advance of field trips and other extra work opportunities for drivers. The drivers are allowed to bid for such work on a rotation basis. Mayflower is notified of changes, additions or deletions on a daily basis.

POSITIONS OF THE PARTIES

The union argues that the Tacoma School District exerts final control over basic terms and conditions of employment for the petitioned-for bus drivers, and that the school district is "an employer" of those employees for the purposes of collective bargaining under Chapter 41.56 RCW. The union urges that Tacoma is the entity which retains the ultimate and predominant control necessary to the ability to bargain effectively and that the Commission may exercise its jurisdiction over the Tacoma School District.

The Tacoma School District contends that Mayflower is the sole employer of the bus drivers in question. It asserts that any order requiring collective bargaining between the school district and Mayflower's employees would be meaningless, because no evidence exists that any formal or implied contract exists that would require Mayflower to "pass through" the results of such an agreement to Mayflower's employees. Tacoma argues that it does not have a significant element of control over the employment practices of Mayflower. It alleges that there is a bona fide business relationship between Tacoma and Mayflower, under which Tacoma simply purchases transportation services from an independent contractor under bid specifications that merely prescribe the levels and quality of the service it desires to procure. In the alternative, Tacoma argues that if Mayflower is not the "sole employer" of the bus drivers, then Tacoma and Mayflower are "joint employers". It follows, according to Tacoma, that a finding of a "joint employer" relationship would require dismissal of the petition, because the Commission lacks jurisdiction over Mayflower, as a private corporation who would be an indispensable party to any joint collective bargaining.

Mayflower Contract Services, Inc. did not submit legal argument.

DISCUSSION

Applicable Legal Principles

The Public Employees' Collective Bargaining Act, Chapter 41.56 RCW, defines "public employer" in broad terms, as follows:

"Public employer" means any officer, board, commission, council, or other person or body acting on behalf of any public body governed by this chapter as designated by RCW 41.56-.020, or any subdivision of such public body.

RCW 41.56.030(1).

The statute applies to a broad range of entities:

This chapter shall apply to any county or municipal corporation, or any political subdivision of the state of Washington except as otherwise provided by RCW 54.04.170, 54.04-.180, and chapters 41.59, 47.64, and 53.18 RCW. The Washington state patrol shall be considered a public employer of state patrol officers appointed under RCW 43.43.020.

RCW 41.56.020.

The Supreme Court has given a liberal interpretation to the statute, extending its coverage to a wide variety of types of entities that are not specifically listed, but which fall within the generic terms of the statute. Roza Irrigation District v. State, 80 Wn.2d 633 (1972).

School districts organized and operated pursuant to Title 28A RCW fall within the class of "municipal corporations and political subdivisions". There is no doubt that the Tacoma School District, as an entity, is covered by Chapter 41.56 RCW and subject to the jurisdiction of the Commission.[14]

This case deals with a claim that the petitioned-for employees have an employment relationship with the Tacoma School District, as well as with the entity providing services to Tacoma under contract. Employment relationships commonly pair an "employee" with one individual or entity as "employer", but situations do exist where one "employee" actually has employment relationships with two or more individuals or entities occupying the "employer" role. As was observed in Sno-Isle Vocational Skills Center, Decision 841 (EDUC, 1980):

For collective bargaining to have any reasonable prospect for success, collective bargaining units must be structured and bargaining representatives certified so as to create relationships between employees and the employer having real authority over their wages, hours and working conditions.

Thus, the Commission and the Washington courts have applied principles similar to the "right of control" test set forth by the National Labor Relations Board (NLRB) in National Transportation Service, 240 NLRB 565 (1979), when determining the actual employer(s) of particular employees.

The bid specifications promulgated by Tacoma (and hence both the Tacoma/Laidlaw and Tacoma/Mayflower "bus" contracts) attempt to specify that the contractors are "independent contractors", but such self-serving language does not exclude the actual arrangements from scrutiny by the Commission in this case. Chapter 41.56 RCW does not expressly exclude "independent contractors" from its coverage. The Commission has implied that it would recognize at least some arms-length contracts between public employers and third parties, however. In North Mason School District, Decision 2428-A (PECB, 1986), the Commission footnoted:

We are inclined to believe that the "acting on behalf of" language of RCW 41.56.030 does not encompass every independent contractor of a public employer. We reserve the question of whether it encompasses contractors who are not truly "independent contractors", or contractors who perform essential or traditional governmental functions. The "right of control" test … is similar to the determination of independent contractor status. Restatement of Agency 3d, Sec. 2(3) states:

An independent contractor is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to this physical conduct in the performance of the undertaking.

Conversely, a person is not an independent contractor if control is retained as to how the job is to be done.

In most situations, the allocation of authority is a question of fact, to be gleaned from contracts and other evidence of the relationships between the parties.

The North Mason case, supra, arose out of a contract for school bus services, and thus has certain superficial similarities to the instant case. The Commission recognized that the transportation of students was a governmental function, funded by the state of Washington and delegated to school districts. It found that the North Mason School District had retained extensive, final control over all significant aspects of the wages, hours and working conditions of the employees. Laidlaw played a relatively insignificant role, and the Commission ruled that the school district was the sole employer of the transportation employees in question in that case. Although Laidlaw may have been an employer in a limited sense, its role in the context of Chapter 41.56 RCW was not significant, and it was not deemed to be a necessary party to collective bargaining. Thus, where two or more individuals or entities have some role on the employer side of the employment relationship, but one of them maintains virtually total control of the basic bargaining subjects, the bargaining obligation attaches to the dominant employer, and the other individuals or entities then fall into the category of a "person or body acting on behalf of" the dominant employer.

In Zvlstra v. Piva, 85 Wn.2d 743 (1975), employees working for the juvenile court of Pierce County were paid by the county (a "public employer" covered by Chapter 41.56 RCW), but were subject to the control of the state judicial system (which is not covered by any collective bargaining law) for other aspects of their employment. A relatively straightforward approach is taken under the state law in dealing with such "dual employers" situations. Evidencing a purpose to preserve a maximum right of the employees to organize under Chapter 41.56 RCW, and to preserve a maximum scope of collective bargaining for them, the Supreme Court held in Zylstra that the juvenile court employees could organize to bargain wages and wage-related benefits with Pierce County, even though they had no collective bargaining rights vis-a-vis the superior court judges who controlled other aspects of their employment. Those same principles were applied in Grant County, Decision 2233-A (PECB, 1986),[15] and in Thurston County Fire District 9, Decision 461 (PECB, 1978).[16]

Examination of the bid specifications in evidence is of key importance in the instant case.[17]

Application to the Facts of This Case

The parties stipulated to hold over a unit determination issue concerning the inclusion of mechanics in the same bargaining unit with the bus drivers, but they have placed a copy of a separate Tacoma/Mayflower "vehicle maintenance" contract into evidence.[18] While no final ruling can be made regarding the mechanics, examination of that document yields the distinct impression that, under the language used by the Commission in North Mason, supra, Mayflower contracts with Tacoma "to do something" for Tacoma but "is not controlled by the other nor subject to the other's right of control with respect to the physical conduct in the performance of the undertaking". There is no indication of any intrusion by Tacoma into the operation of the vehicle maintenance facility or into the employment relationships of the persons employed in that facility.

By contrast to the impression left by examination of the Tacoma/-Mayflower "vehicle maintenance" contract, detailed examination of the Tacoma/Mayflower "bus" contract discloses several areas where the contractual relationship between the Tacoma School District and Mayflower can be regarded as "arms length", but several other areas where Tacoma has exercised rights of control over the employment relationships of the persons employed in the contracted school bus operations.

Also in distinct contrast to the situation under the Tacoma/Mayflower "bus" contract, there is no indication of any intrusion by Tacoma into the operation of Pierce Transit buses which transport Tacoma students to and from school, or into the employment relationships of the persons who drive those buses.

Designated Representative -

Number of Routes -

Approval of Routes -

Snow Procedures -

The parties devoted much energy to the authority retained by Tacoma over Mayflower. The issue before the Commission is whether those reservations of authority are in keeping with a role of Tacoma as a purchaser of services, or are an exercise of "control" as an employer of the employees providing the services.

It is not particularly bothersome that Tacoma has established the outlines of the task for its contractors, or that it has put Paul Plumis in place to assure that the job gets done according to its specifications. The Tacoma School District has responsibility under Chapter 28A.24 RCW for the transportation of students. The owner of a new building does not become the employer of construction employees working on the job merely by hiring an architect to draw up a set of plans for the building, or because the architect appears on the building site to verify that the contractor's employees have erected the structure according to the plans.

Tacoma's control over bus routes does intrude somewhat into the ability of a contractor to establish or negotiate routes that maximize employee work hours or eliminate split shifts, but those intrusions must be considered in the context of the task to be accomplished. School bus operations are secondary to, and in support of, the educational program of the school district. Students are not free to come and go as they please, but travel in conjunction with school day start and dismissal times set by the school district in compliance with state "basic education" requirements. The school bus operates to transport the student from his or her residence to the proper school, so that the existence of any particular point-to-point movement is entirely dependent on the locations of particular students' residences and school programs. The school district is in a position to know who is in need of transportation, and the points between which they are to be moved. As the purchaser of services, the school district is also in a position to specify terms, such as what is "close enough" for bus stops in students' residential areas and what is the maximum time that students are to be in transit. These considerations are inherent in school bus operations, and seemingly would exist even if the school district merely issued lists of "point-to-point" travel orders to a contractor and left routes entirely to the contractor under established time and distance standards. The record does not support a conclusion that the general authority retained by Tacoma concerning bus routes has been used to exercise control over the employees involved, or that it is inherently inconsistent with the existence of an arms-length contractual relationship between Tacoma and Mayflower.

The possibility of loss of work due to "snow days" must also be viewed in the context of the task to be accomplished. Authority is vested in the superintendent of schools to close schools or to modify start and dismissal times in the event of inclement weather. There is clearly no reason for the school bus to operate if the students are not to go to school. Such "snow days" must be made up in order to preserve the 180-day student school year required by state law, so the effect on employees in the petitioned-for bargaining unit is generally a delay, rather than a loss, of employment opportunity.

Two-Way Radios -

Student Discipline -

Also explainable within the context of school bus operations are the seeming intrusions by Tacoma into the areas of radio communications and student discipline. The record does not sustain a conclusion that these provisions of the bid specifications are inconsistent with the existence of an arms-length contractual relationship between Mayflower and Tacoma.

Tacoma's ongoing insistence on having its own radios installed in the contractor's bus fleet does seem, at first glance, to be an avenue for Tacoma to exercise direct control over the drivers, but Tacoma's contractual zeal for a direct communications link was not matched with evidence of actual use of that system. In fact, virtually all references in the record included the Mayflower dispatcher in the chain of communications.

The evidence establishes that the school district has responsibility under state law for the discipline of students riding on school buses. Its direct and indirect dealings with drivers on student discipline issues are explainable in that context.

Hiring and Transition of Employees -

Tacoma injects itself into the contractor's "hiring" process to a limited degree, inquiring about the bidder's hiring procedures in the bidder questionnaire. Although not conclusive standing by itself, such an inquiry indicates that Tacoma intended to take an interest in contractor affairs that was somewhat inconsistent with the "independent contractor" language included in that bid specification.

Tacoma's intrusion into the employment relationships of its contractor became significantly more substantial when it included the following provision in the 1988 bid specifications:

7.         BUS        DRIVERS:

• • •

e.         In order to provide continuity of service, it is desirable that the Contractor employ a significant percentage of drivers who have driven District #10 students the previous year. …

Hiring of new employees is a basic right of an employer. See, Kitsap County Fire District 7, Decision 2872-A (PECB, 1988), where the Commission affirmed the decision of an Examiner holding that pre-employment minimum qualifications were not even a subject for collective bargaining. For the purposes of the instant case, the requirement imposing the existing workforce on a new contractor is clearly inconsistent with an "independent contractor" relationship. The quoted language shows a purpose on the part of Tacoma to control the most basic aspect of the employment relationship.

The Tacoma School District's April 18, 1988 letter to the then-Laidlaw employees furthered the intrusion into their employment relationships, reassuring them that they would be considered for employment by Mayflower. Again, Mayflower was deprived of the right to control selection of its workforce. Although Tacoma has attempted to cast this as a situation in which it was motivated by a desire to protect its interests as the ultimate purchaser of services, the effect was to reduce the independence of Mayflower "as to how the job is to be done". North Mason, supra.

Driver Transfers -

Tacoma's 1983 bid specification requirement that drivers were subject to involuntary transfer between routes "whenever the best interests of the District … or student may be served" must be regarded as having been a significant intrusion into the employment relationships of "Laidlaw" employees. Assignment and transfer rights based upon seniority or other criteria are clearly a subject for bargaining between an employer and the exclusive bargaining representative of its employees.

It is clear from the testimony that Tacoma was unhappy with the exercise by employees of seniority rights to improve their lot by changing route assignments during a semester. In the 1988 bid specifications, Tacoma sought to impose its will on its contractor and, inherently, on the employees, by the following terms:

7.         BUS DRIVERS:

a.         It is the intent of these specifications that the same driver and vehicle shall be assigned to each route for each semester. If a vacancy occurs during the semester, a new driver will be assigned the vehicle and route as no reassignment of drivers or vehicles should occur during the semester. The District retains the right to require drivers to be transferred between routes whenever the best interest of the District students or driver may be served. (emphasis supplied)

…

g.         Recognizing that stability within any work force is paramount to maintaining quality service, the District reserves the right to assign or if necessary re-assign route work to/from a route in order to increase any route with minimum hours. (emphasis supplied)

Mayflower is thus precluded by its contract with Tacoma from proposing or accepting a seniority bidding scheme to obtain a settlement in collective bargaining with the petitioned-for employees. Further, Mayflower finds itself subject to a form of authority concerning "routes" that goes beyond scheduling of who is to be transported to where, and goes directly to the wages and hours of the employees who are performing that work.

Employee Discipline and Discharge -

There is an inference available from the record that Tacoma was displeased with the results of at least one grievance processed by Local 599 concerning an employee discharge that occurred during the Tacoma/Laidlaw era, and that Tacoma used secondary means to accomplish its desired ends in that case. It appears that Tacoma sought to leave nothing to chance or arbitrator discretion when it wrote the 1988 bid specifications:

8.         PERSONNEL: … The responsibility for hiring and discharging personnel in respect to all of the foregoing shall rest entirely upon the Contractor, and the Contractor agrees that it shall enter into no agreement or arrangement with any employee, person, group or organization which will, in any way, interfere with the Contractor's responsibility to comply with this requirement. The Contractor further agrees that the Superintendent and his/her Designated Representative shall have the right to require dismissal from the District service any person or driver who, in the opinion of the Superintendent or his/her Designated Representative, is not qualified to operate or aid in the driving of a school bus as set forth in this paragraph or paragraph 7 herein. (Emphasis supplied)

Job security is one of the most fundamental concerns of the employment relationship, and is clearly a mandatory subject of collective bargaining. If there was ever any doubt, the provisions of the 1988 bid specifications make it absolutely clear that it was Tacoma's intention to intrude on the employment relationships at issue in this case.

Employee Benefits -

Tacoma included a requirement in the bid specifications that a certain level of medical insurance benefits be provided by the successful bidder to the employees. The February 22, 1988 "Addendum No. 1" to the bid specification stated:

[A]ll regular drivers will receive a fringe benefit package. As a minimum, this package must equal 14% (excluding all payroll taxes) of the employees gross pay and include basic medical and dental coverage. Contractor agrees to pay majority share of such coverage with the driver contributing the balance.

It is not necessary to speculate about whether this provision was well-intended, it is a major encroachment into the employment relationship of the petitioned-for employees.

When Mayflower announced the insurance plan to the drivers hired for the Tacoma operation, it acknowledged that the school district had required such a plan. In fact, the plan provided by Mayflower is different from the plan which Mayflower offers to its employees in other situations.

There is no state or federal law which requires any particular level of "fringe benefits" provided by an employer, and such matters are clearly mandatory subjects of collective bargaining. The bid specifications preclude Mayflower from abandoning fringe benefits in favor of higher wage rates, just as it would preclude employees from bargaining for medical insurance without dental coverage or for insurance premiums fully paid by the employer.

Wages -

The truly independent contractor sets or negotiates the wages of its employees based upon what the market will bear, subject only to meeting the minimum wage set by the federal Fair Labor Standards Act or any applicable state minimum wage law. In this case, Mayflower is not free to act independently. The 1988 bid specification/contract provides:

Addendum No. 1

• • •

The contractor agrees that no driver employed by the contractor shall operate a school bus for any purpose in the performance of and during any part of this contract at an hourly rate less than $6.45 per hour. …

Thus, the bottom end of the wage scale is established by Tacoma for work done under the Tacoma/Mayflower contract.

Confirming that Mayflower has been influenced by the "minimum" imposed by Tacoma, the record shows that Mayflower uses a $3.50 or $3.85 wage rate for other work when it is acting on its own.

The $7.83 rate offered by Mayflower represented an 8% improvement over the $7.25 wage rate established by the 1983 bid specification and, as noted above, appears to have been the maximum rate being paid to "Laidlaw" drivers under the collective bargaining agreement between Laidlaw and Local 599. An 8% increase of wage rates (based on a formula built on 85% of the consumer price index) over the life of the Tacoma/Laidlaw contract matches almost precisely with the 8.09% escalation of basic bus rates over the same period under a similar formula. When Tacoma issued the 1988 bid specifications with a $6.45 rate, it appears to have had the effect of undercutting the rates then being paid by Laidlaw. The new minimum wage was only 82.4% of the top rate then being paid by Laidlaw, and was only 88.9% of the wage rate called for in the 1983 bid specification.

The record indicates that Mayflower actually computed its bid on the basis of the $6.45 wage rate specified in the 1988 bid specification, and its bid can be interpreted as reflecting a substantially lower labor cost. Mayflower's bid price was only 92.3% of Laidlaw's 1987-88 rate, and was only 99.7% of the price that Laidlaw had bid five years earlier. Tacoma's specification of a "minimum" wage rate has thus intruded into the employment relationship, distorting the "market" and virtually guaranteeing the demise of Laidlaw as the contractor just at the point where Laidlaw had indicated some willingness to discuss wage improvements with the petitioned-for employees.

The conclusion is inescapable that Tacoma School District has retained rights of control over basic bargaining subjects of wages, hours and working conditions of the petitioned-for employees. Under the Supreme Court's Zylstra policy of giving the broadest possible application to the Public Employees' Collective Bargaining Act, it is concluded that the Commission must assert jurisdiction in this case over the Tacoma School District as an employer of the petitioned-for employees, and that further proceedings are warranted to resolve the remaining issues in this case.

Specifically rejected is the NLRB's policy of refusing to assert any jurisdiction where rights of control of the employment relationship are divided between an employer otherwise covered by the NLRA and an employer that is exempt from the NLRA. Such a result creates a gap in coverage, leaving the affected employees with no statutory bargaining rights, and is directly contrary to the policy enunciated by the Supreme Court in Zylstra, supra.

Also rejected, on the basis of this record, is the notion that Tacoma and Mayflower are somehow "joint" employers, so that Mayflower is a necessary party to any collective bargaining. "Joint employer" relationships have been touched upon in several Commission decisions, but remain a difficult concept.

In Lewis County, Decision 644 (PECB, 1979), the Commission[19] dealt with the question of identifying the employer of employees working in the offices of various county elected officials. After setting forth the definition of "public employer" from RCW 41.56.030(1), the Commission stated:

The fact that the county employees work for different elected officials is immaterial. While the employees of one such official might constitute an appropriate unit, bargaining units are not fragmented into units within units. The differing requirements of assignments under the various elected officials can be accommodated easily by appropriate consultation and adaptation of procedures within the employer.

Thus, the county as a whole -- the "political subdivision of the state of Washington" under RCW 41.56.020 -- was found to be the employer of the employees, notwithstanding the roles of separately elected officials. If there were "joint employers" there, they were obligated to get together behind the scenes and come to the bargaining table with one voice in dealing with the union representing the employees.

In Sno-Isle Vocational Skills Center, Decision 841 (EDUC, 1980), it was observed:

In this case, Mukilteo School District No. 6 serves in a dual capacity (1) as one of the nine equal participants in the Administrative Council of the Skills Center, and (2) as a functionary providing administrative services, for compensation, to the Skills Center. … It is not in a position in either role to independently engage in meaningful collective bargaining with an employee organization representing employees of the Skills Center.

Again, the participating "employers" were obligated to get together and come to the bargaining table with one voice in dealing with the union representing the employees. When they did speak, they spoke as one employer, almost as if a separate legal entity had been created.[20]

Importantly, the record here does not establish that Tacoma and Mayflower get together and work out how the employment relationship will be conducted. Tacoma simply reserves (and exercises) certain absolute authority, much like the county governments in Zylstra and Grant County, supra, and the fire district in Thurston County Fire District 9, supra, controlled certain aspects of the employment relationship. Tacoma must bargain those matters under Chapter 41.56 RCW. On the record made here, for example, Tacoma could certainly bargain the "transition of employees" provisions to be included in future bid specifications, it could bargain concerning assignment and transfer of employees, it could bargain concerning arbitrator review of discipline and/or discharge of employees, it could bargain concerning employee benefits to be provided currently or to be included in future bid specifications, and it could bargain wages to be paid currently or to be included in future bid specifications. To the extent that Mayflower would be acting at the behest of Tacoma in those areas, or any others where Tacoma exercises "right of control" now or in the future, it would lack "independent contractor" status and would be no more than a "person or body acting on behalf of" Tacoma.

There are some areas of the employment relationship that Mayflower does appear to control without intrusion or influence by Tacoma. Among those are day-to-day supervision, investigation of complaints, its own discipline of employees, safety training, safety jackets, attendance bonus payments, longevity bonus payments, a Christmas party, a "Driver Pride Program", evaluations,[21] and leave policy.[22] The intrusions by the Tacoma School District have been, and are, so extensive as to preclude a finding, however, that Mayflower is the sole employer under the holdings of Zylstra and North Mason, supra.

FINDINGS OF FACT

1.                  Tacoma School District is a school district of the state of Washington, operated pursuant to Title 28A RCW, which provides a number of educational services, including bus transportation to and from school, for students within its boundaries.

2.                  Mayflower Contract Services is a private entity, headquartered in the state of Kansas, which provides school transportation services under contracts with various school districts.

3.                  The Tacoma School District has entered into a contractual relationship with Mayflower Contract Services, to provide certain school bus transportation services to its students. The relationship between the school district and Mayflower was established through the terms of a "bid specification" that detailed several areas wherein the Tacoma School District retained or exercised control over the employment relationships of the workforce providing services under the contract. Among the areas affected are the ability of the Tacoma School District to modify bus routes and schedules to adjust minimum employee driving time, employee wages, employee insurance benefits, employee rights concerning "bidding" and assignment of work during the school year, employee job security rights, and the processing of grievances concerning employee discipline or discharge.

4.                  On May 25, 1988, Teamsters Union Local 599 filed a petition with the Public Employment Relations Commission, seeking investigation of a question concerning representation involving the employees providing school transportation services under the contract between the Tacoma School District and Mayflower.

5.                  Tacoma School District exercises rights of control as employer in regard to at least some mandatory subjects of bargaining affecting the petitioned-for employees. Mayflower Contract Services acts, if at all, as an agent or other person or body acting on behalf of the Tacoma School District with respect to such matters.

CONCLUSIONS OF LAW

1.                  The Public Employment Relations Commission has jurisdiction in this matter pursuant to Chapter 41.56 RCW.

2.                  Tacoma School District is a public employer, within the meaning of RCW 41.56.030(1), of employees providing school transportation services under the contract between Tacoma School District and Mayflower Contract Services.

ORDER

The matter is remanded for further proceedings pursuant to Chapter 391-25 WAC, to resolve the remaining issues raised in connection with this petition for question concerning representation.

DATED at Olympia, Washington, this 16th day of October, 1989.

PUBLIC EMPLOYMENT RELATIONS COMMISSION

[SIGNED]

MARVIN L. SCHURKE, Executive Director

This Order may be appealed by filing a petition for review with the Commission pursuant to WAC 391-25-390(1)