Baker Bus Service and Teamsters Local 48, No. 78-A-05, affirming 78-UD-17; Affirmed, CV-78-702; Affirmed, 416 A.2d 727 (Me. 1980). STATE OF MAINE MAINE LABOR RELATIONS BOARD MLRB No. 78-A-05 [Issued: October 6, 1978] _____________________ ) BAKER BUS SERVICE ) ) REPORT OF APPELLATE REVIEW OF and ) ) UNIT DETERMINATION HEARING TEAMSTERS LOCAL UNION) NO. 48 ) _____________________) This case originally came to the Maine Labor Relations Board ("Board") by way of a Petition for Appropriate Unit Determination filed December 28, 1977 by Richard R. Peluso, International Trustee, Teamsters Local Union No. 48. By its Petition, Teamsters Local Union No. 48 ("Local No. 48") seeks formation of a proposed bargain- ing unit composed of the Bus Drivers and Bus Driver Aides employed by Baker Bus Serv- ice in its "Augusta District." On February 22, 1978, a hearing examiner for the Board conducted a unit determina- ion hearing on the matter, pursuant to 26 M.R.S.A. 966. At the hearing, counsel for Baker Bus Service submitted a Motion to Dismiss the Petition for Appropriate Unit Determination on the ground that Baker Bus Service is not a "public employer" with- in the meaning of Section 962(7) of the Municipal Public Employees Labor Relations Act, 26 M.R.S.A. 961, et seq. ("Act"), and therefore is not subject to the Board's jurisdiction. Section 962(7) of the Act provides in pertinent part that: "'Public employer' means any officer, board, commission, council, committee or other persons or body acting on behalf of any municipality or town or any subdivision thereof or of any school . . . district . . ." The parties agreed at the commencement of the hearing before the hearing examin- er that the question of the Board's jurisdiction over Baker Bus Service was a thres- hold issue which should be addressed prior to a hearing on the substance of Local No. 48's Petition. The hearing examiner consequently proceeded to take evidence on the issue of the Board's jurisdiction. At the conclusion of the hearing, the par- ties agreed to file briefs on the jurisdictional issue. All briefs before the hear- ing examiner were filed by March 31, 1978. On April 28, 1978, the hearing examiner issued a Unit Determination Report on the matter. In the Report, the hearing examiner found that the City of Augusta Board of Education had subcontracted its school bus operation to Baker Bus Service in August, 1977. In light of the facts surrounding Baker Bus Service's operation of the school bus system for the Board of Education, the hearing examiner concluded that Baker Bus Service was a person or body acting on behalf of a municipality or a subdivision thereof or of a school district within the meaning of Section 962(7) of the Act. The hearing examiner consequently found that Baker Bus Service was a "public employer" subject to the Board's jurisdiction. Counsel for Baker Bus Service on May 12, 1978 filed with the Board pursuant to 26 M.R.S.A. 968(4) a notice of appeal of the April 28, 1978 Unit Determination Report. The appeal was heard by the Board on July 11, 1978 in Augusta, Maine, Chair- man Edward H. Keith presiding, with Michael Schoonjans, Employee Representative, arid Kenneth T. Winters, Alternate Employer Representative. [-1-] ____________________________________________________________________________________ Present at the hearing for Baker Bus Service were: William F. Hufnagel, Esquire Attorney for Baker Bus Service Ernest P. Hewett, Jr. Witness and President, Baker Bus Service Present at the hearing for Teamsters Local Union No. 48 were: Jonathan G. Axelrod, Esquire Attorney for Local No. 48 Robert L. Maier Assistant to the International Trustee, Local No. 48 Bernadette Bonenfant Witness and Secretary, Local No. 48 Udo Cyr Witness and School Bus Driver, Baker Bus Service Raymond R. Martin Witness and School Bus Driver, Baker Bus Service At the conclusion of the hearing, the parties agreed to file legal briefs arguing the issue of the Board's jurisdiction in this matter. All briefs were filed by September 5, 1978, and the Board proceeded to deliberate over the case at a conference held in Bangor, Maine on September 7, 1978. I After reviewing the record developed at the July 11, 1978 hearing and the April 28, 1978 Unit Determination Report, the Board finds that: 1. By agreement dated August 19, 1977, the term of which is to run to August 31, 1982, the Augusta, Maine Board of Education ("Board of Education") subcontracted its school bus operation to Baker Bus Service, a privately owned business corporation organized under the laws of the State of Maine. Besides operating the school bus transportation system for the Board of Education, Baker Bus Service provides school bus transportation services for the Town of Winthrop, Maine, and also operates a bus charter business. 2. Under the terms of the August 19, 1977 agreement, Baker Pus Service leased 24 school buses for the term of the agreement from the Board of Education for a total of $1.00. The Board of Education is required to provide all other buses needed to perform the transportation services required by the agreement, with a minimum of two new buses to be provided each school year except for the 1977-78 school year. Printed on the sides of the buses provided by the Board of Education are the words "City of Augusta School Department," while the words "Baker Bus Service, East Winthrop, Maine" appear on the sides of Baker Bus Service's own buses. 3. As provided in the agreement, Baker Bus Service submits to the Board of Education on the first and fifteenth days of each month a statement detailing the number of miles traveled in performance of the agreement and, in regard to co- curricular and field trips, the number of hours of driver "wait-time." The Board of Education then pays Baker Bus Service a flat rate per mile and per hour of driver "wait-time," as specified in Exhibit A of the agreement. -2- ____________________________________________________________________________________ 4. Paragraph (4) of the August 19, 1977 agreement provides that "[t]he Board shall have the right to modify bus routes, to eliminate a bus route, or to combine bus routes, with appropriate notice to the Contractor. The Board shall also have the right to change any school time schedule." 5. Paragraph (6) of the agreement states that all buses provided by the Board of Education "shall be used only for services to the Board unless other- wise indicated by the Board . . . In no event shall these buses be used for anyone other than the Board or the City of Augusta." 6. Paragraph (7) of the agreement provides that the Board of Education is responsible for complying with any Federal or State regulations requiring that additional equipment for the buses be provided or that modifications be made in existsing equipment. 7. Paragraph (8) of the agreement provides that Baker Bus Service is re- sponsible for the costs of providing the transportation services required by the agreement, with the exception of furnishing the buses, installing radios in the buses, and providing insurance coverage. Such responsibility includes providing the bus drivers, operating and maintaining the buses, maintaining the bus radios, and parking the buses. 8. Paragraph (11) of the agreement states that Baker Bus Service will supply the Board of Education with copies of the school bus drivers' licenses and copies of the drivers' annual physical reports. Paragraph (12) of the agreement provides that Baker Bus Service will make character references for the school bus drivers available to the Board of Education at the Board's request, while paragraph (14) of the agreement requires that Baker Bus Service notify the Board of Education of the names of new drivers and the date of birth of the drivers for insurance pur- poses. 9. Paragraph (15) of the agreement provides that Baker Bus Service is re- sponsible for the hiring and firing of school bus personnel. According to the testimony of the President of Baker Bus Service at the July 11, 1978 hearing, the Board of Education has veto power over the hiring of any school bus driver. 10. Baker Bus Service sets the salaries of the school bus personnel, and is responsible for preparing the payroll, which is drawn upon Baker Bus Service's checking account. Baker Bus Service pays workmen's compensation insurance and group insurance for the school bus personnel. 11. Paragraphs (19) and (20) of the agreement provide, respectively, that the Board of Education has the right to audit the mileage records of Baker Bus Service at any reasonable time and to inspect any bus at any reasonable time. 12. Paragraph (24) of the agreement provides that the Board of Education will supply all gasoline required to carry out the provisions of the agreement. The gasoline is supplied to Baker Bus Service at the pumps of the City of Augusta's City Garage. 13. Paragraph (27) of the agreement provides that the Board of Education will reimburse Baker Bus Service for any registration and excise taxes which Baker Bus Service pays for any of the leased buses. The buses are registered in the name of "City of Augusta, Lessor" and "Baker Bus Service, Lessee." -3- ____________________________________________________________________________________ 14. Paragraph (29) of the agreement provides that the Board of Education will supply a parking lot for storage of the buses, and that Baker Bus Service may move a small building on the lot. The buses are stored in a City of Augusta parking lot above the City Garage. Baker Bus Service's office on the parking lot was constructed free-of-charge by vocational students. The expenses for main- taining the lot and the office are borne by Baker Bus Service. 15. Paragraph (33) of the agreement states that the Board of Education shall assume the costs of installing radios in the buses and of purchasing and maintain- ing appropriate comprehensive and collision insurance coverage on each bus. The stations on the radios installed in the buses are located in the City Garage, in the Superintendent of School's office and automobile, in Baker Bus Service's office at the parking lot, in the Baker Bus Service transportation foreman's auto- mobile, and in a police vehicle. 16. Paragraph (34) of the agreement states that the Board of Education will add Baker Bus Service to the Board of Education's liability insurance policy cover- ing the buses. The addition of Baker Bus Service as an insured under the insurance policy has not caused the premiums for the liability insurance to increase. 17. Upon being awarded the subcontract to operate the school bus system, Baker Bus Service hired approximately 21 school bus drivers. Approximately 18 of these drivers were former school bus drivers for the Board of Education. The supervisor which Baker Bus Service hired for the school bus operation was formerly the Board of Education's transportation foreman for its school bus system. 18. School bus drivers are involved in the disciplining of students who misbehave on the buses. The drivers issue such students misconduct forms, which must be returned to the driver with a parent's signature. If the student persists in his or her misbehavior, the driver may, depending upon the seriousness of the misbehavior, suspend the student's bus privileges for several days, or, after con- sultation with the principal of the student's school, suspend the student's bus privileges for an extended period of time. II This case presents this Board with its first opportunity to interpret the phrase "acting on behalf of" contained in 26 M.R.S.A. 962(7). To the best of our knowledge, there exists no legislative history to assist us in our interpre- tation. Both parties to this case have argued on brief that a plausible interpre- tation of the phrase is that an agency relationship is required to be shown in order to establish that a person or body is "acting on behalf of" a municipality or a school district. If, on the other hand, such person or body is shown to be an independent contractor for the municipality or school district, then the person or body would not be "acting on behalf of" the municipality or school district. We believe that such an interpretation of the phrase has considerable merit. If a person or body is an agent of the municipality or school district, then the person or employer should be a "public employer" within the meaning of the Act. To hold otherwise would create a loophole in the Act which we believe that the Legislature did not intend. It would he a relatively simple matter in many cases -4- ____________________________________________________________________________________ for a municipality or school district to subcontract various of its operations to a private entity while maintaining control over the operation. If the private entity was not considered to be "acting on behalf of" the public employer within the meaning of 26 M.R.S.A. 962(7), then the public employer would have available a simple means for depriving its employees of the rights and protections provided in the Act. If, however, the private entity is an independent contractor over which the public employer does not exercise control, then we believe in light of the lan- guage contained in Section 962(7) that the Legislature did not intend that the entity be considered a "public employer" subject to the provisions of the Act. After carefully considering the matter, we agree with the parties' contentions on brief, and hold that in determining whether a person or body is "acting on behalf of" a public employer within the meaning of 26 M.R.S.A. 962(7), this Board should apply general agency principles, cf. N.L.R.B. v. United Insurance Co., 390 U.S. 254, 256, 258 (1968). III The principal issue which we must decide in this appeal thus becomes whether Baker Bus Service is an agent or an independent contractor for the Board of Educa- tion. After carefully considering the total factual context of this case in light of the pertinent agency principles, we are of the opinion, for the reasons discussed below, that an agency relationship exists between Baker Bus Service and the Board of Education. We accordingly must affirm the hearing examiner's April 28, 1978 Unit Determination Report finding that Baker Bus Service is a "public employer" within the meaning of 26 M.R.S.A. 962(7). We wish to make clear, however, that a private entity which subcontracts to perform an operation for a public employer will be considered "acting on behalf of" the public employer only when there is an agency relationship between the entity and the public employer. In addition, we consider only that portion of Baker Bus Service's business which is involved in the transpor- tation of students for the Augusta Board of Education to be subject to the Munici- pal Public Employees Labor Relations Act. All other of Baker Bus Service's opera- tions are not at the present time subject to this Board's jurisdiction. IV In Desfosses v. Notis, 333 A.2d 83, 86 (Me. 1975), the Court held that "Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." As for the term "independent contractor," the Court in Murray's Case, 130 Me. 181, 184, 154 A.352, 353 (1931), quoting with approval from other cases, stated that " 'An independent contractor is one who carries on an independent business, and in the line of his business is employed to do a job of work, and in doing it does not act under the direction and control of his employer, but determines for himself in what manner the work shall be done.'" (Citations omitted) -5- ____________________________________________________________________________________ The right of control over the work to be performed thus is the critical factor distinguishing an agent from an independent contractor, cf. Poulette v. Herbert C. Haynes, Inc., 347 A.2d 596, 599 (Me. 1975). It is not necessary that the employer have the right to control every detail of the work in order for the entity performing the work to be, as a matter of law, the agent of the employer, see, e.g., Frenyea, v. Maine Steel Products Co., 132 Me. 271, 275, 170 A.5l5, 516-517 (1934). Among the factors to be considered in determining whether an agency relationship exists, as set forth by the Court in Murray's Case, supra, 130 Me. at 186, 154 A. at 3514, are: "(1) the existence of a contract for the performance by a person of a certain piece or kind of work at a fixed price; (2) independent nature of his business or his distinct call- ing; (3) his employment of assistants with the right to super- vise their activities; (4) his obligation to furnish neces- sary tools, supplies, and materials; (5) his right to control the progress of the work except as to final results; (6) the time for which the workman is employed; (7) the method of payment, whether by time or by job; (8) whether the work is part of the regular business of the employer." The fact of agency is established by proof of such facts or circumstances from which agency can be reasonably and logically inferred, Lunge v. Abbott, 114 Me. 177, 179, 95 A. 942, 943 (1915). After carefully reviewing the facts and circumstances of the present case, we are of the opinion that Baker Bus Service is an agent of the Board of Education in fact and as a matter of law. The August 19, 1977 agreement, which appears in the record as Respondent's Exhibit A, clearly demonstrates both that the Board of Edu- cation consented that Baker Bus Service act on its behalf in operating the school bus system, and that Baker Bus Service consented so to act. It also is apparent from the record that the Board of Education retains a substantial degree of control over the operation of the school bus system. Such control is shown in part by the following facts: the Board of Education has supplied and must for the duration of the agreement supply at minimal cost to Baker Bus Service all buses required to perform the transportation services; the buses supplied by the Board of Education may be used only for services to the Board of Education; the Board of Education is responsible for complying with any Federal and State regulations requiring additional or modified equipment on the buses; the Board of Education retains veto power over the hiring of any school bus driver; the Board of Education supplies all gasoline required to operate the bus system; the Board of Education pays the registration and excise taxes on the buses; the Board of Education provides the parking lot for storage of the buses; and the Board of Education is responsible for purchasing and maintain- ing comprehensive, collision, and liability insurance coverage for the school bus operation. Baker Bus Service thus was not obligated to furnish any of the necessary equip- ment, supplies, or materials when it subcontracted to operate the school bus system. We think it significant that Baker Bus Service was at best required to make only a minimal capital investment when it agreed to operate the system. Such minimal invest- ment indicates that Baker Bus Service is not carrying on an independent business in operating the Augusta school bus system. In addition, although Baker Bus Service has the right to hire the school bus drivers, the credentials of such drivers are -6- ____________________________________________________________________________________ subject to the review of the Board of Education, which retains the right to veto the hiring of any driver. Moreover, it is questionable whether Baker Bus Service has the right to control its performance of the agreement, inasmuch as it appears that any instructions given by the Board of Education regarding performance of the agreement will have to be obeyed by Baker Bus Service. It thus appears that little independent judgment is exercised by Baker Bus Service in its performance of the agreement. Finally, operation of the school bus system has been a part of the regular business of the Board of Education. Prior to August, 1977, the school bus system was operated by the Board of Education for a number of years. In our opinion, all of the above indicia of control on the part of the Board of Education constitute facts and circumstances from which the fact of agency can reasonably be inferred, Lunge v. Abbott, supra, 114 Me. at 181, 95 A. at 944. We consequently conclude that Baker Bus Service is a "public employer" subject to this Board's jurisdiction because it is a person or body acting on behalf of the Board of Education within the meaning of 26 M.R.S.A. 962(7). In finding that Baker Bus Service is acting on behalf of the Board of Educa- tion, we wish to indicate clearly that there are several facts which we believe not to be significant in establishing the agency relationship. First, we do not find that the facts that the Board of Education has the right to modify, eliminate or combine bus routes; that Board of Education employees may participate in the dis- ciplining of unruly students; or that the bus drivers frequently communicate with the Superintendent of Schools or other City of Augusta employees over the bus radios are significant as indicia of control retained by the Board of Education. We think that a board of education, after it has subcontracted its school bus operation, may continue to perform such functions as setting bus routes, disciplining students, and communicating with bus drivers regarding road conditions, accidents, etc., so that it may meet its responsibility for insuring the maximum safety of its students. We do not think that performance of such duties should be considered to be indicia of board of education control for purposes of establishing an agency relationship. Second, we do not consider the fact that the supervisor and a majority of the bus drivers hired by Baker Bus Service were former employees of the Board of Educa- tion to be significant in establishing the agency relationship. Since there is no evidence that the Board of Education required Baker Bus Service to hire the former Board of Education employees, we do not infer that the Board of Education retained substantial control over the operation through the hiring of its former employees. We also wish to reiterate that the mere act of subcontracting a job from a public employer to a private entity is by no means conclusive in establishing that the private entity is a public employer under 26 M.R.S.A. 962(7). Only when an agency relationship is shown to exist will the private entity be found to be a "public employer" under Section 962(7). Finally, only that portion of Baker Bus Service's business which is involved in operating the school bus system for the City of Augusta Board of Education is subject to the provisions of the Municipal Public Employees Labor Relations Act. We consider only that portion of Baker Bus Service's business in this Report, and there exists at the present time no justification for holding that Baker Bus Serv- ice is a public employer with regard to any other of its operations. -7- ____________________________________________________________________________________ Having found that Baker Bus Service is a public employer within the meaning of 26 M.R.S.A. 962(7) to the extent that it operates the school bus system for the Board of Education, we must affirm the hearing examiner's April 28, 1978 Unit Determination Report. We accordingly direct that the appeal entered by counsel for Baker Bus Service on May 12, 1978 be and hereby is DENIED. Dated at Augusta, Maine this 6th day of October, 1978. MAINE LABOR RELATIONS BOARD /s/______________________________ Edward H. Keith, Chairman /s/______________________________ Michael Schoonjans, Employee Representative /s/______________________________ Kenneth T. Winters, Alternate Employer Representative -8- ____________________________________________________________________________________