No two of those agencies, either on a local, State or Federal
basis, spend any amount of time talking to any of the other 53
about how they can consolidate what they are doing and take that
paper and regulatory burden off of the business. That is costing us
I didn't mean to get into this kmd of a repartee, but I want to
convey the depth of my feeling on this issue and the seriousness
with which many of us are trying to look at these issues, because
it is killing the economy, it is killing job growth and jobs in this
If I've got a choice between a small business in my district get-
ting involved with your Agency or a small business in my district
actually hiring some people and creating jobs and creating opportu-
nities for people, I will go with the opportunities.
Mr. Gould. Congressman, I hope that you would tell the small
businesses in your district that this rule will help them. This will
lessen the burden that is being imposed upon them. There is no re-
quirement to file any kind of report. There is no requirement to re-
port to us.
The reason that I asked the Chairman, that I told him that I
wanted to spread the message about this proposed rule to people
was that they — so that they would know that they don't have to,
as they have to under the existing system, employ high-priced
counsel, that they don't have to go through red tape and vague cri-
Mr. LoNGLEY. Mr. Chairman
Mr. Gould [continuing], as they do under the existing system.
I would hope. Congressman, that you would make that known to
the businesses in your district so that they can know that there is
somebody in Washington who is concerned about lessening the bur-
den on small business. That is what this rule is about, Mr. Con-
Mr. LoNGLEY. If I could just add without taking any more time.
Chairman Talent. Briefly, if you wouldn't mind, because we
have other people waiting.
Mr. LoNGLEY. As you know, we all have an obligation to follow
the law. I respect the fact that you are attempting to advise people
of what their role is under the law.
But from my standpoint, if you are doing that, asserting that
process with respect to businesses that have or shouldn't have
any — over which you should have little or no jurisdiction, that it
would be far better if you define clearly who is covered and who
isn't so that they don't even have to worry about whether they un-
derstand it or not and you don't have to worry about the cost and
the expense of trying to find them.
So thank you, Mr. Chairman. I appreciate your candor.
Mr. Gould. Thank you. Congressman.
Chairman Talent. I thank the gentleman for his questions, and
we are going to now — ^Mr. Luther informs mo that he does not
mind if Mr. Skelton goes ahead of him. It certainly won't come out
of Mr. Luther's time. So, I will recognize the gentleman from Mis-
souri for questions. I'm waiting to ask my questions until the other
Members are finished.
Mr. Skelton. Mr. Chairman, I will be brief and I might mention
probably that I am in the middle of another hearing as ranking
member on another subject, I mean. So, I appreciate your indul-
Chairman Talent. I know exactly what that hearing is and I
hope I can get there myself.
Mr. Skelton. Mr. Gould, it's interesting to note your comments
Mr. Gould. I'm a lawyer myself. Congressman, and some of my
best friends are lawyers.
Mr. Skelton. Let this small-town country lawyer ask you a
question. I suppose, boiled down to its bottom line, the question
would probably be, "So what?"
It appears that some are saying that this proposed rule would
make it easier for unions to sign up new members. The Nation is
low-wage service industries. Your testimony says it merely codifies
existing law and there is no change. At least that's — I assume
that's your testimony.
Mr. Gould. It is my testimony.
Mr. Skelton. My bottom-line question is: What difference does
this proposed rule make in the whole scheme of things?
Mr. Gould. The difference it makes is this, Congressman, that
under the existing system the board, through adjudication, doesn't
tell you, first of all, what these criteria that it's using in resolving
this issue really mean.
In one case, the second facility may be less than a mile away.
In another case, it may be 20 miles away. In the case where it's
less than a mile away and you would think that there would be a
community of interest of employees, the board may find just one
In the case where it's more than 20 miles away, the board may
come to the opposite conclusion. There is no clear, understandable,
definable rule that exists so that people know what their rights
and obligations are.
So as the result of that, one must retain counsel because it's kind
of a crap-shoot, because counsel comes to the small businessman
and says, "Look, if you want a unit consisting of five different fa-
cilities, maybe I can get it for you. Because no one really knows
what the board will do."
So the premium is placed upon wasteful litigation because we are
not speaking clearly in an understandable fashion to the average
person, let alone the member of the Labor Bar.
As I have said to the Chairman in my response to his questions,
some of the criteria that we refer to in these decisions we don't in
fact even use in resolving these cases. The Court of Appeals for the
Seventh Circuit has recently lamented that single location deci-
sions seem to be impossible to reconcile. That's the Court of Ap-
peals for the Seventh Circuit speaking.
They are impossible to reconcile. They are impossible for lawyers,
let alone average people who are not lawyers, to understand. It
seems to me that if we are going to do our iob here in Washington,
we must speak in a clear and understandable manner so that peo-
ple don't have to resort to unnecessary litigation, so that people
don't have to go through hearings which involve thousands of pages
and hundreds of exhibits, so that the little guy, the employer, the
small employer and the average employee, doesn't have to have im-
posed upon him or her this burden and so that the taxpayers. Con -
gressman, don't have to pay for this as well.
I think that this rule will prove to be a very substantial improve-
ment once it's in place and once it's accepted, once we arrive at a
final rule, upon our current way of doing business, which is to rely
I am a lawyer and you are a lawyer and lawyers can do very
many valuable — perform many valuable services. The role that
lawyers play in this situation is not one that serves the public
good, the public interest.
Mr. Skelton. Mr. Chairman, I thank you and I also thank Mr.
Luther and I will yield back.
Mr. Gould. Thank you. Congressman.
Chairman Talent. I thank the gentlemen. Mr. Luther, if he re-
turns, I'll certainly give him the opportunity to ask questions. No
questions from the gentlemen?
I have some questions then I want to get into. Mr. Gould, again
I appreciate your being here. Let me say as a preliminary matter
that I understand that this rule is tentative and I certainly will say
that in everything I have read from the board and in every per-
sonal statement you have made, you have emphasized that fact.
So this is a rule in the process of being developed. So, it's not
final. The process, the reason for this process, is so that the board
can consider input from various parties. I know that you are ac-
tively doing that and appreciate that.
Mr. Gould. That was the purpose of my response to your cor-
respondence. Congressman, that I wanted to — I want to get the
most input that I can from all parties, as I said, including yourself
and all the other Congressmen and Congresswomen who are here
Chairman Talent. To follow up with something Mr. Longley
said — and I thought the two of you were a little bit talking past
each other — the point he was making is that the average business
person, and especially this average small business person, is sub-
ject to so many different schemes of regulation that the idea that
they are aware of this process going on and have the opportunity
to comment is simply not the reality in most cases.
Now, I understand there is really nothing you can do about that.
I mean, you can't stop doing your job because not everybody in the
country is aware of it. But that was the point that he was making,
that it is just not feasible to expect the average small business per-
son to be aware of it.
Let me also say that in response to a statement, just like a sen-
tence that you said that I have never suggested that you or any-
body on the board was making a decision here based on political
considerations. That is not something that has come from this side
of this exchange.
I koow that you are an independent Agency and you are making
the decisions based on what you think is best for the law. Now, let
me just say with regard to the appropriateness of this hearing and
at this time, this is the Subcommittee of the Small Business Com-
mittee on Regulations and Paperwork.
When I see a rule or regulation, whether it's in development or
has been promulgated, which I think has the potential to hurt or
disrupt small businesses or their employees, it is really the job of
this Subcommittee to investigate, just as it is your job to try and
refine labor law in the proper direction.
I would rather do that. You and I had a little difference of opin-
ion about this, which we kept as — I think we've kept this whole
matter on a very cordial level. I would rather do that while the rule
is being developed, rather than try and do it afterwards.
We had a hearing on a rule that OSHA had promulgated regard-
ing false standards. As I think due in no small part to that hear-
ing, they ended up reconsidering the rule and engaging in nego-
tiated rulemaking and coming up with, I think, a better result.
I just thought it would be better to do this while the rule was
in process, rather than necessarily doing it afterwards. That's the
reason why we're having this hearing now.
Let me get into the areas of my concerns. Now, I want to estab-
lish something up front. The proposed rule would not permit con-
sideration as such of centralization of labor relations or functional
integration of the various facilities.
Now, I know your view that it would de facto allow that in the
consideration of other kinds of things, in fact as proxies. But as
such, evidence of those things, centralization of labor relations or
functional integration, would not be admissible if the rule as pro-
posed were promulgated. I mean, isn't that correct?
Mr. Gould. No, Congressman. As I have indicated to you pre-
viously, it is not correct. On the issue of centralization, we have
specifically addressed that by addressing the issue of local auton-
We have done that through requiring that a supervisor be
present, a supervisor within the meaning of Section 2, Subsection
11. Now, let me say that maybe that is not the way for us to go.
Maybe there's another way to go.
One of the things that concern me personally was that there
might be, and I think somebody in one of the statements has al-
luded to this, a lot of litigation about what's a supervisor within
the meaning of the act. So, maybe this is not the way to go.
But we have not done a good job defining with precision what de-
gree of authority must be in the hands of local people through our
Chairman Talent. Let me just
Mr. Gould. So, we are trying to address and do address this
issue of centralization. As I nave said to you before on the issue
of functional integration, if you look at the board cases as they are
decided, I think what you've got to do and what we have to do in
life often is look past the rubric and look at the real decision. Look
at what it is that we are in fact doing.
I want to eliminate misleading rubrics. I think that we are doing
that through this rule. We are
Chairman Talent. Well, let me get into it just a second though,
Mr. Gould. Sure.
Chairman Talent [continuing], in a real-life situation, I mean,
if I was at a hearing on unit appropriateness and I made a offer
of proof, as I say, I stipulated that there was a supervisor, as I
would have to if there was a statutory supervisor present in the fa-
cility, I stipulated that.
But then want to go offer evidence that as regards wages, fringe
benefits, determination about holidays — a whole host of things re-
garding labor relations — that those were decided centrally and
were not within the control of the supervisor present at the facility,
under the rule that offer of proof would be rejected, wouldn't it, be-
cause it is not relevant to the consideration of the rule, wouldn't
Mr. Gould. I don't
Chairman TAiJi:NT. I mean, if it wouldn't be rejected then vou are
not saving any transcript time. If you're going to say all this evi-
dence is going to come in anyway under a different — under the
question of supervisor autonomy — then you are not saving any time
or transcript pages. I mean, the hearing officer would have to reject
the offer of proof, wouldn't he?
Mr. Gould. Well, I would assume that any fact or evidence about
any non-material fact in the rule would be rejected. On the other
hand, I can't sit here today and conceive in advance of every twist
Chairman Talent. I understand.
Mr. Gould [continuing], that evidence would take and what
would constitute extraordinary circumstances.
But I would assume on the face of it that evidence about
nonmaterial factors would be rejected.
Chairman Talent. Sure. I understand that smart lawyers like
you and me in this field would instantly try and get around the
rule if they thought that their clients were advantaged.
But I think we made the point that, as such, in considerations
going to centralization of labor relations or functional integration
that are not relevant to the factors cited in the rule, like, for exam-
ple, supervisory status, would be immaterial under the rule and
would not be admissible.
That's why you expect the hearings would be shorter and you
would save — ^you would save time. Now
Mr. Gould. Yes, sir. I must say in connection with your most re-
cent comment that of course the board and the courts have fre-
quently pointed to the fact that if you use centralization in some
other way that many people can react and say, "All right, if this
is a way of getting the kind of unit that I want, I don't want a sin-
gle facility. I'll cnange everything. I'll centralize wages, hours,
fringe benefits." So it's the potential for manipulation.
Chairman Talent. I'm going to the question of whether the rule
will have the effect of changing board law in the past. I have
warned some of the people in the audience that, although I know
you're trying and I'm trying to avoid this becoming like an ex-
change between two old labor lawyers, it may become that.
So if everybody can try and hang on by their fingernails and fol-
low, we'll do the best we can. I was reading the testimony of this
for this case, and some of the comments that have been submitted.
Without doing a lot of independent research, the chain res-
taurants comments suggested that there were some 60-odd pub-
lished cases relating to this. I presume that they got on Lexus or
did the — in the last 15 years, of which something like 32 or 33 of
them had decided that a single facility unit was inappropriate, was
in the layman's term, unworkable for those concepts.
Without trying to read all 33, I had 8 or 9 of them pulled out
and I read them. This is one of the things that concerns me, Mr.
Chairman, because I don't see how you can engage in a fair reading
of those cases without saying that the questions of centralization
of labor relations and functional integration of the enterprise were
very important to the board's decisions in those cases.
Now, not that they didn't consider other things, but were very
important. Frankly, I think it's accusing those board members of
a disingenuousness that they did not have to suggest that this was
just a rubric or, as you said, a misleading rubric. Now, let me
Mr. Gould. Well, I want to say, if I could, Mr. Chairman, on that
particular point, that as I have said in my earlier remarks regard-
ing the restaurant industry and this single facility issue generally,
a number of the decisions that you get in between about 1982,
1986, and 1987 are going to constitute and aberration.
Because we did have a very peculiar period in history. There are
a couple of other decisions, prominent decisions involving fast food
restaurants in the early 1970's that Chairman Miller, who was ap-
pointed by President Nixon, had a very different view of this issue
as it relates to some industry.
So I do want to qualify my remarks and to say to you that some
of our decisions in the midl980's and the very early 1970's are an
exception to the general proposition that I have asserted.
Chairman Talent. Well, let me — and again, without — I'm not
going to go through all of these. I'll just say that in every one that
I read, from all different parts of the — or times, dealt very signifi-
cantly with those two issues. I'm going to read for the record some
statements by the board.
Again, I'm not saying that the board didn't consider it. Let me
do this, and then you can comment, if you would, Mr. Chairman.
Mr. Gould. Surely.
Chairman Talent. The board did not consider other things, al-
though there were some of these cases where basically it just went
off on these issues and not other ones. But let me read them to you.
One of them is from 1968, Star Market Company, which is a gro-
cery store, not a chain restaurant, in which the board said: In our
recent decision in Hague Drug Company, Incorporated — this is
1968 — we restated our general approach to the questions of units
in retail chain operations and emphasize that we will adhere to our
policy of finding a single store to be a presumptively appropriate
unit, but that such presumption might be overcome as where it was
shown that the day-to-day interests of employees in the particular
store had merged with those of employees of other stores.
Thus, factors of significance in this connection were pointed out
as being whether or not the employees performed their day-to-day
work under the immediate supervision of a local store manager
who was involved in rating employee performance or in performing
a significant portion of the hiring and firing of the employees and
is personally involved with the daily matters which make up for
their grievances and routine problems.
For as we indicated there, it is in this framework that the com-
munity of interest of the employees in a single store takes on sig-
nificance. From 1973, in a unanimous decision with Chairman Mil-
ler, members Fanning and Jenkins, this is not a chain restaurant
The board said: In so concluding, concluding that a single unit
would be inappropriate, we rely specially on the fact that both
plants are highly integrated and engage in manufacture, assembly
and distribution of various disposable filter media, and that, not-
withstanding an 18-mile geographic separation, both plants have
the same plant manager and personnel manager who divide their
time between the plants and administer a common operational and
labor relations policy.
From 1984, which would be in the era that you mention: We dis-
agree with the regional director and find that the involvement and
control demonstrated by Eastman restricts the authority of these
store managers considerably more than the regional director's deci-
sion would indicate.
As the board noted in Petrie Stores Corp., the lack of the individ-
ual store manager autonomy may compel a finding that the single
store unit sought by the petitioner is inappropriate, particularly
where there is a high degree of centralization of administration and
Moreover, if the interests of the employees of a single store may
be shown to have been effectively merged into a more comprehen-
sive unit so that the store has lost its individual identity, the pre-
sumptive appropriateness of a single store unit is rebutted.
Finally, Stern's Department Store, a panel — as far as I can tell,
a two-member panel — evidently you were short on the board at the
time, but consisting of vou, Mr. Chairman, and Mr. Devaney, said
as a statement of the Board law: There is a well-established pre-
sumption in favor of a single location unit, which the parties seek-
ing to overcome may rebut by a showing of functional integration
so substantial as to negate the separate identity of the single facil-
Now, I'm going to presume that you were not engaging in a — and
you said this, I didn't — a misleading rubric when you stated the
board's law was that a party seeking to overcome the presumption
may rebut it by a showing of functional integration so substantial
as to negate the separate identity of the single facility unit.
I'm not going to read, but I will have entered into the record the
comments of former chairman, member Stevens. When this — and
I'm almost done — who said at the time that the proposed notice of
proposed rulemaking was issued, that in his opinion there was a
substantial line of board cases and doctrine going off on the issue
of centralization of labor relations and that the proposed rule was
not simply a minor administrative change but was an overruling
sub silentio of whole line of doctrine.
Well, let me make one other point to you that of course a super-
visor may — a person may be a statutory supervisor, which you said
in your statement before was a proxy. Whether a supervisor was
present was a proxy for determining whether there was centraliza-
tion control of labor relations.
But as you know, a manager can be a statutory supervisor while
actually having relatively little control over the labor policies of the
enterprise. So, we're going to have to vote in a minute, but I want
to give you a chance to comment before. Then you can add your
comments when we come back.
Go right ahead.
Mr. Gould. Thank you, Mr. Chairman. I think that the point I
would like to make about some of the cases you refer to is that the
board has never precluded a single location unit solely because
there exists some centralized control of labor relations.
The board long ago noted the significance of local autonomy in
single location cases and has historically relied on the retention of
local control, not the degree of centralized authority. This was set
forth in the decision that one of the cases you referred to referred
That is the Hague Drug Control decision. That is 169 NLRB 877.
That's the approach that the board has followed through adjudica-
tion in the main and that's the test supported with 50 years of
Now, I realize that there have been flip-flops and that some of
the cases that you refer to show those flip-flops. That's what we
want to get away from, Mr. Chairman. We want to get away from
one board coming along appointed by one President, and they say,
"Oh, these criteria mean this."
Another group comes in and they say, "Oh, no, it means this."
Nobody is served by that. I think that the point has been made
that we must have stability. Indeed, we must have stability.
This rule is designed to promote stability that will not depend
upon varying applications of the same criteria, depending upon
who is chairman of the board or a member of the board today and
who is the chairman of the board or member of the board tomor-
Chairman Talent. I think that — excuse me.
Mr. Gould. Surely.
Chairman Talent. Mr. Chairman, if I can just — see, I think that
makes my point. Because what you're saying is that there have
been flip-flops in the past. In the name of stability, under your rule
from now on, it's only going to be flop. Do you see what I mean?
There won't be any more flips. You're not going to have the
chance to argue, even where it would have been relevant to board
panels in the past from boards appointed by both administrations.
I have to point out to you to point out these factors.
A whole line of cases, which everybody has to agree have not
been entirely consistent, are going to be eliminated under your
rule. Yet you're saying — I don't know how you can say on the basis
of that that the rule doesn't contemplate any change in the law.
Mr. Gould. Well, I would say that the — to adopt your use of my