American Federation v. Labor Relations Bd.

• Decision Date: 06 October 2005
• Docket Number: No. 99074.,99074.
• Parties: AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, COUNCIL 31, Appellee, v. The Illinois STATE LABOR RELATIONS BOARD, State Panel, et al. (The Department of Central Management Services et al., Appellants).
• Court: Illinois Supreme Court

Page 479

839 N.E.2d 479

216 Ill.2d 569

AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, COUNCIL 31, Appellee, v. The Illinois STATE LABOR RELATIONS BOARD, State Panel, et al. (The Department of Central Management Services et al., Appellants).

No. 99074.

Supreme Court of Illinois.

October 6, 2005.

COPYRIGHT MATERIAL OMITTED

Lisa Madigan, Attorney General, Springfield (Gary Feinerman, Solicitor General, and Paul Racette, Assistant Attorney General, Chicago, of counsel), for appellant Department of Central Management Services.

Robert E. Arroyo, Brian D. McCarthy and Shannon M. Callahan, Chicago, and Edward M. Cherof and Jonathan J. Spitz, Atlanta, Georgia, all of Jackson Lewis, L.L.P., for appellant Wexford Health Sources, Inc.

Gilbert Feldman, of Cornfield & Feldman, Chicago, for appellee.

Justice FREEMAN delivered the opinion of the court:

This case arises from a decision of the Illinois State Labor Relations Board, State Panel (Board), dismissing a certification petition and a related unfair labor practice claim filed by the American Federation of State, County, and Municipal Employees, Council 31 (AFSCME). The appellate court, on administrative review, set aside the Board's decision. 351 Ill.App.3d 707, 286 Ill.Dec. 613, 814 N.E.2d 601. We granted leave to appeal (177 Ill.2d R. 315) and now reverse the judgment of the appellate court.

BACKGROUND

The Illinois Department of Corrections (DOC) is required by law to provide medical care to the inmates incarcerated in its facilities. By law, it may do so by contracting with private vendors. In choosing a vendor, the DOC requests bids which are ranked according to cost and other factors. The contract is awarded to the vendor whose bid is ultimately selected.

Pursuant to this process, the DOC has contracted with three private vendors to provide medical services at 34 correctional facilities. Wexford Health Sources, Inc. (Wexford), is one such vendor and provides medical services at 19 DOC facilities. Wexford is a private corporation based in Pennsylvania that employs health-care workers and assigns them to health-care facilities in 11 states, including units located in Illinois.

The contracts between the DOC and Wexford¹ identify Wexford as an independent contractor and provide that neither Wexford nor its employees are agents of the DOC. According to the contracts, Wexford is solely responsible for the negligent acts of its employees, and Wexford is to hold the DOC harmless from any suits or claims arising from the negligence or misconduct of Wexford employees. Under the terms of the contracts, the DOC prepays the contract amount to Wexford and then throughout the course of the year, Wexford and the DOC conduct a reconciliation process, making adjustments to the amount paid whenever necessary.

Pursuant to procedures under the National Labor Relations Act (29 U.S.C. § 151 et seq. (2000)), AFSCME became the exclusive bargaining representative of Wexford's bargaining unit employees in 1997. Subsequently, AFSCME and Wexford negotiated a collective-bargaining agreement covering most, but not all, of the Wexford employees.² Wexford employs approximately 375 individuals at the Illinois facilities it services, of which approximately 275 to 280 are members of AFSCME. The DOC was not represented at any of the negotiations, nor is it a party to the collective-bargaining agreement. The collective-bargaining agreement between AFSCME and Wexford outlines a grievance procedure for employees and addresses issues such as the appointment of Wexford employees to various DOC committees. The agreement also covers employees' hours of work, temporary assignments, seniority, layoff and recall, vacancies, leaves of absence, discipline, personnel files, evaluation, terminations, personal time off, wages, and benefits.

On November 27, 2000, AFSCME filed a representation/certification petition with the Board. In the petition, AFSCME noted that the DOC is a public employer under the Illinois Public Labor Relations Act (5 ILCS 315/1 et seq. (West 2000)). AFSCME sought to represent, under that Act, certain employees of Wexford, who work at the DOC facilities. AFSCME admitted that it already represented these same employees under the National Labor Relations Act, and that a collective-bargaining agreement existed between them. AFSCME contended, however, that the DOC was a joint employer of these employees. Also on that same date, AFSCME filed an unfair labor practice charge with the Board against Wexford, alleging that a registered nurse had been suspended by Wexford because of her position as a union officer. AFSCME sought rescission of the suspension and requested that the employee be made whole.

Wexford subsequently filed motions to intervene and to dismiss, arguing, inter alia, that the National Labor Relations Act preempted the Board's jurisdiction. The Illinois Department of Central Management Services (CMS), which represents the state in labor-related issues, also filed a motion to dismiss. CMS also argued, among other things, that federal preemption deprived the Board of jurisdiction.

The Board allowed Wexford's motion to intervene, but it denied both motions to dismiss based on federal preemption. The Board held that a hearing before one of its administrative law judges (ALJ) was necessary in order to determine whether the DOC is a joint employer of the employees involved. Further, the Board held that, if it determined that the DOC was a joint employer, the Board would then file a petition with the National Labor Relations Board asking whether the Board's assertion of jurisdiction would violate principles of federal preemption.

At the hearing, extensive testimony was offered by the parties regarding the degree of control which Wexford exercised over its employees. At the conclusion of the hearing, the ALJ issued a recommended decision and order. Based on the evidence, the ALJ found that the DOC did not control and was not involved in the recruiting or hiring of Wexford's employees. Nor does the DOC control Wexford employees' wages, benefits, paid time off, overtime, scheduling, and termination. Further, although Wexford employees are subject to the DOC's security regulations, the ALJ ruled that those regulations did not constitute "control" for purposes of imposing employer status on the DOC. In light of all of these factors, the ALJ concluded that the DOC was not a joint employer of the Wexford bargaining unit employees. The ALJ further reasoned that the state's presence at the bargaining table was not necessary to establish an effective bargaining relationship, noting that Wexford and AFSCME had entered into a collective-bargaining agreement under federal law. Accordingly, the ALJ recommended that the Board dismiss the representation/certification petition. Several weeks later, the Board's executive director dismissed the unfair labor practice charge regarding the registered nurse. The director believed that the clear implication of the ALJ's recommended order was that the Wexford employees were not public employees. The director maintained that if the Board concluded that the ALJ's recommended order did not resolve the issue of whether the nurse was a public employee, the charge should be set for a hearing.

AFSCME appealed the dismissal of the unfair labor practice charge to the Board, contending that the action was premature in that the Board might not accept the ALJ's recommended decision and order. AFSCME also filed exceptions to the ALJ's recommended decision. Wexford and CMS filed responses to those exceptions.

On August 12, 2002, the Board issued its decision and order, in which it agreed with the ALJ's recommendations. Specifically, the Board found that the DOC exercised "little meaningful control over any aspect of the employment of the Wexford bargaining unit employees," including hiring, instruction, evaluation, wages, benefits, and overall direction. Accordingly, the Board dismissed AFSCME's representation/certification petition and affirmed the Director's dismissal of the related unfair labor practice charge.

Thereafter, AFSCME filed a petition for direct administrative review of the Board's decision and order in the appellate court. The court set aside the Board's decision, concluding that the Board clearly erred in finding that the DOC was not a joint employer of the Wexford employees. According to the appellate court, the record evidence "demonstrates that the DOC possesses and exercises significant control over the supervision, retention, and discipline of Wexford employees. The Board's conclusion that the DOC's role is limited to oversight to ensure compliance with the vendor contract is not supported by the record * * *." 351 Ill.App.3d at 716, 286 Ill.Dec. 613, 814 N.E.2d 601. Rather, the court held that the DOC and Wexford were joint employers who share authority over the training, retention, daily direction, rules compliance, discipline, and discharge of employees. 351 Ill.App.3d at 717, 286 Ill.Dec. 613, 814 N.E.2d 601. CMS,³ on behalf of the DOC, thereafter petitioned this court for leave to appeal, which we allowed. See 177 Ill.2d R. 315. Additional pertinent facts will be discussed further in the context of our analysis of the issues.

ANALYSIS

As an initial matter, Wexford maintains in its brief that this matter has been preempted by federal law, specifically the National Labor Relations Act (National Act). Wexford points out that AFSCME, in this action, is attempting to organize a group of employees that it acknowledges is already covered by a collective-bargaining agreement negotiated under the National Act. Put another way, AFSCME seeks the right to bargain with two employers, a private company and a state governmental agency, under two different labor relations statutes with respect to one group of employees. As such, AFSCME is asking to be the employees' sole bargaining representative under our state labor relations...