terminology — that the flips have really been an aberration, that we
did have a number of very unusual things happening at the board
in the midl980's, and that one of the things was a departure from
the approach that I referred to.
It is true that Chairman Miller articulated an approach to this
issue which is different from the 50 years of precedent that I have
alluded to. Yes, I think that stability and clarity and adherence to
precedent is an important thing.
If the statutory supervisor issue, to take that example, isn't a
good way to resolve it, we want to hear from you and everybody
as to what is a good way to resolve it. You see, we have — the Court
of Appeals for the Ninth Circuit in one of our cases said, well, 8
percent or 10 percent interchange of employees is exceedingly low.
Well, they didn't say it was. We haven't said, "Well, what isn't
exceedingly low?" Do I have to roll the dice? Do I have to hire a
lawyer? Do I have to engage in a crap-shoot every time one of these
issues comes up?
Why can't we resolve these matters and avoid this system which
is really operated as kind of a medieval priesthood. Why can't we
avoid all of this gobbledygook and speak simply and clearly? And
if we're through our proposed rule not devising the right flop, then
you, Mr. Chairman, please tell us.
Members of the public, please tell us what it is that we should
be doing in connection with answering these issues. I'm not saying
that they are simple. I'm not saying that this proposed rule is
24
right. I'm not saying that I, as you pointed out, haven't contributed
to this confusion.
But it is confusion and it is misleading. I apolo^ze for contribut-
ing through signing that opinion to this confusion. I think your
point is well-taken in that connection, Mr. Chairman.
Chairman Talent. Well, we're now having encroaching upon us
the confusing schedule of the Congress. So, what we're going to
have to do, I think, is adjourn for a few minutes while we go vote.
Mr. Chairman, if you could stick around a while longer.
Mr. Gould. Sure.
Chairman Talent. I have a few more questions. We'll reconvene
right after the vote back here. All right?
Mr. Gould. Thank you, sir.
Chairman Talent. Everybody can take a break.
[Recess.]
Chairman Talent. One of the few advantages of not having very
many Members attend is that it is easy to recongregate once you
have had to go vote. Let me reconvene the hearing. I was in the
middle of some questions for the chairman. I do appreciate your
willingness to be around. I hope we can wrap up your part of this
in a few minutes.
I want to say now before I forget that I am going to hold the
record open for Members who want to submit statements or you,
Mr. Chairman, if you want to submit something in addition. I'll
hold it open — ^hold the record open for about 10 days — not about,
we'll hold it open for 10 days.
Mr. Chairman, let me do a couple of things. One, I want to read
into the record very briefly, not the whole thing, but the statements
of Chairman Stevens, which were part of his comments when the
notice of proposed rulemaking was issued.
It goes to this question of whether we are changing the law and,
therefore, the results in a significant number of cases. He said: The
inevitable consequence of the proposed rule is to overrule sub
silentio the foregoing cases insofar as they hold that centralized
control over labor relations is a material element.
Notwithstanding implications to the contrary, the application of
the proposed rule to similar cases in the future will likely result
in the single facility presumptions not being rebutted.
This is not a modest administrative change. It is a significant,
substantive change in well-settled law. Also, from the case of Car-
ibbean Restaurants, Inc., which was a case in which Chairman
McCullough sat, I'm just going to note for the record that he con-
sidered at great length the hi^ly integrated nature of the employ-
er's operations and indeed the question of whether labor relations
were centralized in control.
In fact, as I read the case, it went oflF on that issue. I'm just going
to emphasize again to you, Mr. Chairman, that as I read a lot of
these cases, they go off on that issue.
I might suggest that if you haven't done so — and I don't know
whether you have or not — you might want to pull those cases that
are cited by some of the commentators on the rule and see whether
you think that they would come out differently.
Now let me go to a different point. It's related to it, but it's a
concern that I have in the course of this. I'll go to the whole eflfi-
25
ciency question, and it will lead into the next line of questions. I'm
going to try and be reasonably brief in doing this.
The statements submitted by the — again, the chain restaurants
indicate they have a graph, which I'll be happy to send over to the
board, published decisions. These are published decisions regarding
the appropriateness of single- versus multi -facility bargaining
units.
The graph pretty clearly indicates that the number of those deci-
sions is going down as the years go by, and in fact that from 1985
through 1990, there were only 11. From 1990 through 1994, there
were only 11, and then in 1995 there were zero out of, I think you
estimated before about 900 published decisions of the board.
Now, I will grant you that the unpublished decisions, there are
a lot of unpublished decisions of the board. But wouldn't this sug-
gest to you that this area of the law is not a great burden on your
caseload when you had no published decisions in 1995 relating to
it?
Mr. Gould. Let me say two things, Mr. Chairman. One is, it
would suggest to me that the single-unit presumption is through
the adjudication process being decided usually in favor of the sin-
gle — single facility, the single-facility presumption.
This is an issue which recurs and continues to come to us. We
can only justify publishing cases in the main where there is some
new issue, where we haven't been dealing with the case time and
time again.
I know personally, I can tell you that there are a number of cases
in my 2 years on the board that have come to me involving this
issue. The overwhelming number of them we don't publish.
I just want to say something with regard to your comment about
Chairman Stevens. That is, I think the best indication of what
Chairman Stevens really thinks about this issue is in his written
decisions prior to the time that this issue arose and became ulti-
mately, if I can read according to what the press tells me, a con-
troversial matter.
In Red Lobster, the Red Lobster decision, 300 NLRB 124, Chair-
man Stevens and members Craig, Kraft and Devaney, in dealing
with the case where the unions sought 1 of 13 restaurants in the
Detroit area and the union sought to represent employees in sepa-
rate units of two area locations.
In finding that these units were appropriate, the ones that the—
the single-facihty units the union, sought, the board, with Chair-
man Stevens signing the opinion, said, "In agreement with the re-
gional director, we conclude that the evidence presented by the em-
ployer fails to overcome the presumption that the requested single-
location units are appropriate.
"In support of this conclusion, we find that the general managers
of the two restaurants in question retain a meaningful amount of
autonomy and that the evidence concerning employee interchange
is not sufficient to require broader units than those requested."
Now, again, I think that — and I would have to go back and look
at the opinion of Chairman McCullough said, before responding to
that. Because it's not something that I ve looked at recently.
Chairman Talent. Sure. I want to recognize, I'm not expecting —
I was reading those for the record and to make a general point. I'm
26
not expecting you to distinguish in any detailed way these cases
which — I only read them last night. Otherwise, I would have let
you know.
Mr. Gould. Some of them can't be distinguished, Mr. Chairman,
That's one of my basic points here, that we've got to create some
more certainty in order to avoid wasteful litigation. Some of
the
Chairman Talent. Well, if they can't be distinguished, then
aren't you, as member Stevens said, effectively overruling them
with this rule?
Mr. Gould. Well, there are — I'm sure that Chairman Stevens
can point to some cases which are there which could be said to be,
as he put it, a sub silentio reversal.
I think the essential point that I want to make you though is,
that if you look at the entire 50 years of history, the abiding theme
in these cases is that the three criteria that we have focused upon,
geographical separation, employee interchange, and local autonomy
are the critical decisions.
You can find anything over those 50 — ^you can find cases over
those 50-year decisions which are an aberration which will — and I
think that what Chairman Stevens found in the document that you
refer to is, quite frankly, an aberration.
I think his opinion in 1990, before this issue came before the
board, reflects his thinking and the thinking of the board. I might
say that, although I refer to the 1980's, it's interesting to note that
Chairman Dodson in a case called Essenbach-Boysa, 268 NLRB 77,
1984, in this case the board pointed out that managerial respon-
sibility is split between Essenbach, the executive, the president,
and the two managers employed at each store.
In addition to spending 3 days a week at each store, Essenbach
calls the managers at the store when he is not present. Essenbach
makes the major managerial decisions concerning the restaurants
and decides the number of people to be hired.
Essenbach, the president, central — on a central basis, sets pay
rates, overall terms and conditions of employment. The Board
Chairman Dodson said that although he reserves for himself many
management prerogatives, he necessarily must leave many of the
day-to-day decisions concerning the restaurants of his managers —
concerning the restaurants to his managers.
These managers interview and hire employees, grant time off
and resolve problems. It thus appears that the employees at this
one facility, the Milwaukee restaurant, have a separate community
of interest.
Now, these are the opinions which reflect the broad thrust of 50
years of precedent. I think that there are the occasional decisions
which come up, which depart from this broad theme.
What I have presented to you and what this rule for criteria —
this rule focuses upon — represents what we have come back to time
and time again as a basis for deciding these cases.
Chairman Talent. Again, that's precisely the point. You just
read the factors in that case Chairman Dodson thought significant
that would not have been material and would not have been admis-
sible in a hearing based on the proposed rule once it was estab-
lished that a statutory supervisor was present.
27
A person could be a statutory supervisor without exercising the
attributes that you just mentioned. I mean, it seems to me, Mr.
Chairman, you are making the point that the board time and again
has gone off on issues relating to centralization of labor relations
that simply are not necessarily admissible as part of a determina-
tion of whether somebody is a statutory supervisor.
Mr. Gould. Well, if we look at the issue
Chairman Talent. Which is the only thing that would be mate-
rial under your rubric.
Mr. Gould. If we look at the factors, the items which Chairman
Dodson found to be appropriate in the Essenbach decision, they are
the kinds of problems that a supervisor, as defined in Section 2,
Subsection 11, would deal with. You couldn't be a supervisor unless
you have responsibility for the matters that Chairman Dodson re-
ferred to.
Chairman Talent. You don't need that wide range of responsibil-
ity though, do you, to be a supervisor? Isn't it enough, for example,
just to direct the work force without having control over those
kinds of day-to-day decisions?
Mr. Gould. You don't need to deal with all of the issues that
were dealt with here. Yes, that's correct.
Chairman Talent. A couple of other points. You mentioned that
even under the rule everybody would have a right to a hearing. I
certainly agree with you that there would be a hearing on the unit
question.
But would you not agree with me that under the proposed rule
very substantial amounts of evidence that in the past would have
been admissible as relevant to the board's decision would not be
admissible?
So that, in effect, yes, you have a hearing, but you can't intro-
duce evidence. I mean, in other words, it's like you're saying before,
you're saving money because people don't have to hire lawyers. But
isn't that because they basically just lose? I mean, you don't hire
a lawyer, but you lose.
The whole point you're making about the increased efficiency of
the rule means that substantial amounts of evidence that the board
had considered to be relevant before are no longer even going to be
admissible.
Mr. Gould. Well, the evidence that would be placed if an em-
ployer wanted to rebut geographical separation and local autonomy
that would be introduced would be relating to interchange, al-
though again — employee interchange.
Although again, the employee — the employer could, and I know
that Chairman Stevens and others have referred derisively to this
language as simply hire a calculator, a statistician, and tell them
in advance which side of the numbers they're going to be on.
You wouldn't have a situation where the Court of Appeals for the
Ninth Circuit said this is exceedingly low and we said this is ex-
ceedingly low and not know what is satisfactory. You would know
where you are.
I think, Mr. Chairman, I hope you would join me in supporting
the proposition that that really, particularly in today's litigious en-
vironment, and I know that many of your colleagues are concerned
28
about the amount of litigation taking place in our society. That
would be a good thing.
Chairman Talent. Mr. Chairman, let me say to you that I have
been encouraged by your statements at the hearing that you re-
main, and as far as you know, I suppose the rest of the board mem-
bers remain very flexible as to what factors might be eventually
adopted in a new rule.
You're the expert on these things. You certainly are in a better
position to determine whether some rule could be fashioned that
would achieve both clarity and fairness and would in fact not
change board law.
In fact, it sounds to me like you don't — at least that you are not
initiating this rulemaking with the intent of changing board law.
So, it may be possible by perhaps adding a couple of factors or
changing how you define some to eliminate some of the concerns
I've had if, at the end of the day, you end up perhaps agreeing with
some of them.
It's certainly going to be, from the standpoint of administrative
action, your purview and not mine. I am trying to point them out
at this hearing and the concerns that I had. Let me raise another
concern that I ve got with you. I don't know what you're planning
to do about this.
But let me just outline a scenario that would be of some concern
to me. In my judgment, if the courts on appeal of this rule believe
that it changes substantially the parameters of board law and re-
sults — would result in different results and on significant number
of cases, and you have promulgated the rule on the assumption
that it won't, it is going to be very vulnerable to judicial challenge.
Now, I am asking a hypothetical, the premise of which I know
you would deny. But there's a point to it. So, there is an aspect to
this that you can address. If that is the case, then you may end
up with exactly the opposite of what you're seeking.
Because if I were a litigant and I thought, and the board hands
down this rule, and I know the decision regarding appropriateness
is going to be made pursuant to the rule, I would be encouraged
to make offers of proof regarding things like centralization of labor
relations and functional integration even if I felt that under the old
law I wouldn't win on that.
Because if I make the offer of proof and eventually, years from
now, the courts end up reversing and remanding the rule, then my
case is going to have to be reopened. Then we will have the situa-
tion that Ms. Velazquez raised, which I certainly agree happens out
there, where an employer simply from his perspective postponed
the evil day when he has to bargain with the union that has legiti-
mately organized his unit.
So how have you thought about that at all, how you might han-
dle this so that you don't have a situation where a couple of years
down the road if the courts end up dumping the rule that you've
got a whole lot of cases that have to be reopened? Are you going
to hold cases pending litigation? Or is it just simply premature to
consider this?
Mr. Gould. Well, we haven't addressed that issue. Perhaps that
is an issue that we, as a board, should address. We have not con-
sidered that, Mr. Chairman.
29
Chairman Talent. I would just simply say think about that con-
text. Because there's a lot of people here who believe. Mr. Skelton
said that what's the point of all this?
It's clearly, I think, the interest is such that there is a lot of peo-
ple who are involved in business or in labor law who believe that
this is going to have a practical impact other than administrative
efficiency on what they do.
Now, maybe they are all wrong. But if they're not all wrong and
they prove to the courts that, then it seems to me we're in a situa-
tion where we have a rule that's in some danger. Because, of
course, the courts will defer to your expertise, assuming that you
are exercising it with regard.
If you simply don't — ^decline to consider something because you
don't think it's relevant and the court finds that it is, that's the
kind of situation where a rule gets overturned. I don't want these
cases, and I know you don't, that you see you have to go back and
reconsider a bunch of rules.
One other point I want to get to because it particularly impli-
cates this Subcommittee, the Regulatory Flexibility Act. Now, my
understanding is, the board has not done a reg flex analysis. Is
that correct? Tell me and then tell me why you haven't done it.
Mr. Gould. Yes, sir. Section 605 of the Regulatory Flexibility Act
provides that a flexibility analysis need not accompany a notice of
proposed rulemaking providing that the head of the Agency cer-
tifies that the rule will not have a significant impact on a substan-
tial number of small entities.
As I've indicated, this will have an economic benefit, if anything,
for small business because it will make them less reliant upon liti-
gation. The statute also says that compliance or noncompliance
with the Regulatory Flexibility Analysis shall not be the subject of
a review.
One of the leading opinions on this is written by Justice — or
Judge, as he was then — Scalia, Thompson against Clark, which
have upheld this principle. I would say additionally that we don't
believe that the effects of our rule are susceptible to the kind of sci-
entific dollar amount study that are normally contained in a Regu-
latory Flexibility Analysis.
But, of course, again I want to say that we are very anxious to
hear from small business, as well as all business, on what their
view of the impact of this rule is.
Chairman Talent. Well, let me just suggest that even if you be-
lieve the rule would have a beneficial aspect to small business, as
I understand its implementation of the Reg Flex Law, you are sup-
posed to conduct the analysis even in those circumstances that
Congressional Record, when the bill was passed.
I'm sorry Mr. Skelton isn't here because I know he is veiy inter-
ested in this, how this law operates. Indicates that: "Agencies may
undertake initiatives which would directly benefit such small enti-
ties. Thus, the term significant economic impact is neutral with re-
spect to whether such impact is beneficial or adverse."
The statute was designed not only to avoid harm to small enti-
ties, but also to promote the growth and well-being of such entities.
You may want to consider that.
23-316 96-2
30
Mr. Gould. I might just say also, Mr. Chairman, that the finding
that we arrived at here in this situation the Regulatory — the flexi-
bility analysis was not required is consistent with the approach
that we employed in acute health care, which was where the Su-
preme Court upheld our rulemaking initiative.
Chairman Talent. Well, in part, I am advocating for the act, be-
cause one of the reasons why we unanimously pass out of this Sub-
committee and to the floor a law putting some judicial review into
regulatory flex analysis is that too many agencies were just being
perfunctory with regard to it.
I'm not suggesting the board is doing that. Certainly you haven't
passed enough rules to be an offender in this kind of thing. But,
on behalf of the Small Business Committee, let me suggest that
really, there is a very strong bipartisan consensus on behalf of
agencies doing this.
I would hope that you would reconsider. One other point I want
to make, now, we talked about published decisions. We don't know
how many unpublished decisions the board has made with regard
to this issue. Isn't that correct? We just don't know?
Mr. Gould. That's correct. I did conduct a review of the 1994 de-
cisions, but we don't know the total. As I indicated, I think I indi-
cated to you why we don't know.
Chairman Talent. Right.
Mr. Gould. We don't have
Chairman Talent. Resources.
Mr. Gould [continuing], a retrieval system.
Chairman Talent. There simply is no empirical evidence, other
than subjective opinions on the part of people working at the board,
who certainly are in a position to have informed, subjective opin-
ions.
But there isn't any objective evidence about how much of the
board's resources or litigant resources are spent on this cases,
whether that is increasing over time or declining over time. I
mean, isn't that correct?
Mr. Gould. Well, we know that the issue is a recurring one, not-
withstanding the fact that the doctrine has been well settled for
more than 3 decades.
Chairman TALENT. Right. But we don't have any objective evi-
dence about whether the resources you're expending on this are in-
creasing or decreasing over time. That's what I'm asking.
Mr. Gould. We don't know whether they are increasing or de-
creasing. All that we do know is that these issues come to us with
a fair amount of frequency.
Chairman TALENT. I thank you for your patience. Ms. Velazquez,
have you more questions?
Ms. Velazquez. I just would like to ask one question to Mr.
Gould.
Mr. Chairman, do you feel that this rule in any way is sacrificing
businesses in the name of stability?
Mr. Gould. I'm sorry, I missed the first part of your question.
Ms. Velazquez. If you feel that in any way this rule is sacrific-
ing businesses in the name of stability.
Mr. Gould. Not at all. I think that this is promoting the inter-
ests of business, particularly small business. I say this, not only be-
31
cause of the fact that the existing system is imprecise and not ad-
vising the small businessman or woman about where they stand,
but also because we look at so many criteria.
Nobody knows by looking at the criteria, most of which we dis-
regard in fact, what we're going to rely upon. Nobody knows where
they stand. It is the fact that we make these decisions based upon,
as we say so frequently, all of the circumstances.
That is really, truly arbitrary and imposes a burden upon busi-
ness. That's why I think that this rule, this proposed rule, the ap-
proach that we're taking will lessen the burden upon interest and
enhance the competitiveness of American industry, and be fair to
both employer and employee.
Ms. Velazquez. Thank you, Mr. Chairman.
Chairman Talent. I thank the gentle lady, and again, I want to
thank you for your patience, Mr. Chairman. You have indulged me
greatly, and I appreciate that. The opportunity to discuss these
kinds of issues with an authority such as yourself brings back the
old days when I did this on a routine basis.
So, I do appreciate the opportunity. I think this is a very impor-
tant issue about which there has been a lot of interest. Again, I
want to thank you for being here.
Mr. Gould. Thank you, Mr. Chairman. It's a pleasure to see you