City of Hamilton v. State Employment Relations Board

A. William Sweeney, J. The determinative inquiry in this appeal is whether .the transit workers in issue are “public employees” of the city of Hamilton pursuant to R.C. 4117.01(C). For the reasons that follow, we hold that the transit workers are public employees, and therefore we reverse the judgments of the courts below, and reinstate SERB’S determination. R.C. 4117.01(C) provides: “ ‘Public employee’ means any person holding a position by appointment or employment in the service of a public employer, including any person working pursuant to a contract between a public employer and a private employer and over whom the national labor relations board had declined jurisdiction on the basis that the involved employees are employees of a public employer[.] * * * ” The courts below strictly interpreted the foregoing language following the word “including” to mean that the NLRB must first decline jurisdiction over the [213] transit workers before they could be statutorily considered as public employees. We disagree with this strict construction, inasmuch as it ignores the liberal construction mandate of R.C. 4117.22.1 As the union correctly points out, the language in R.C. 4117.01(C) referring to the declination of NLRB jurisdiction is merely illustrative of who may be considered to be public employees for the purposes of collective bargaining. To adopt the lower courts’ interpretation would require us to change the words “and over whom” in the statutory provision to read “but only where.” In our view, the statutory provision simply relates one of many situations where SERB may determine certain employees to be public employees. Thus, the fact that the NLRB did not or has not declined jurisdiction over the transit workers in issue is not determinative of SERB’S jurisdiction in this case. Having determined that SERB jurisdiction is not precluded by R.C. 4117.01(C) in matters where the NLRB has not declined jurisdiction over employees working pursuant to a contract between a private and public employer, the question then turns to whether SERB was correct in finding that TMH was an agent of the city rather than an independent contractor. All parties agree that the “right to control” test is determinative of whether the instant transit employees are public employees of the city or simply employees of TMH. As this court held in paragraph two of the syllabus in Gillum v. Indus. Comm. (1943), 141 Ohio St. 373, 25 O.O. 531, 48 N.E.2d 234: “Whether one is an independent contractor or in service depends upon the facts of each case. The principal test applied to determine the character of the arrangement is that if the employer reserves the right to control the manner or means of doing the work, the relation created is that of master and servant, while if the manner or means of doing the work or job is left to one who is responsible to the employer only for the result, an independent contractor relationship is thereby created.” See, also, Natl. Transp. Serv., Inc. (1979), 240 N.L.R.B. 565, where it was stated that under the National Labor Relations Act the “right to control” test contemplates “whether the employer has sufficient control over the employment conditions of its employees to enable it to bargain with a labor organization as their representative.” Id. at 565. In reviewing the various indicia of control, or lack thereof, in the instant cause, the city and TMH submit that the management agreement between the two entities provides that TMH is the employer of the transit workers in issue and is [214] responsible for the day-to-day operation of the transit system. In addition, SERB found that paychecks to the transit workers are drawn on a payroll account in the name of TMH and signed by TMH’s general manager. On the other hand, as found by SERB, it readily appears that the city owns, controls and sets policy for the transit system, and that the contract between ATE and the city specifically categorizes operating expenses as an obligation of the city. The city provides all of the funding for the transit system, owns all the buses, designates the bus routes, and sets the amount of fares charged for bus rides. In addition, according to SERB, the general manager of TMH was selected with the approval of the city. Against this backdrop, the SERB opinion reviewed several aspects of the management contract and concluded: “It is unnecessary to look any further than the four corners of the contract to conclude that the City, and not TMH, is responsible for the payment of the employees’ wages and that the functions provided by TMH in carrying out such are only ministerial in nature. The conclusion that TMH is the employer in this case because it does the paperwork for deducting taxes and issues paychecks from an account bearing its name (one established with City revenue) is in parity with an argument that because a secretary or payroll clerk performs these same tasks, that person is thereby the employer.” In our view, SERB’s conclusion that the city is the public employer of the transit employees is amply supported by the evidence. The city has delegated ministerial duties to TMH through the device of a management contract, while maintaining its right to control the details of the transit system. Given the fact that the city has total control of TMH’s funding, we believe that TMH lacks the type of discretion to meaningfully bargain with the union in the collective bargaining context that a true employer would possess.2 Thus, we agree with SERB that it had the requisite jurisdiction to entertain the union’s request for recognition, since application of the “right to control” test indicates that the city of Hamilton is the employer of the transit workers, who are “public employees” pursuant to R.C. 4117.01(C). Our holding is further compelled by the standard that SERB’s findings are entitled to a presumption of correctness. See Ohio Historical Soc. v. State Emp. Relations Bd. (1993), 66 Ohio St.3d 466, 471, 613 N.E.2d 591, 595, citing Univ. of [215] Cincinnati v. Conrad (1980), 63 Ohio St.2d 108, 111-112, 17 O.O.3d 65, 67, 407 N.E.2d 1265, 1268. While the lower courts purportedly applied the “presumption of correctness” standard, we believe their decisions amounted to nothing more than a substitution of judgment for what SERB correctly found to be the employment relationship of the transit workers to the city of Hamilton under the management contract in issue. Therefore, based on the foregoing, we reverse the judgment of the court of appeals below, and reinstate the decision of SERB. Judgment accordingly. Douglas, Resnick and F.E. Sweeney, JJ., concur. Moyer, C.J., Wright and Pfeifer, JJ., dissent. Footnotes [1] R.C. 4117.22 provides: “Chapter 4117. of the Revised Code shall be construed liberally for the accomplishment of the purpose of promoting orderly and constructive relationships between all public employers and them employees.” [2] Our decision in this regard is similar to the reasoning of the National Labor Relations Board in Res-Care, Inc. (1986), 280 N.L.R.B. 670, 673: “ * * * if an employer does not have the final say on the entire package of employee compensation, i.e., wages and fringe benefits, meaningful bargaining is not possible.” See, also, PHP Healthcare Corp. (1987), 285 N.L.R.B. 182, 184.