Jim Laurent, Director, Human Resources and Labor Relations ( ) Greg Failor, Labor Relations Manager ( )

Transcription

1 Page 1 of 10 MEMORANDUM TO: FROM: MAC Commissioners Jim Laurent, Director, Human Resources and Labor Relations ( ) Greg Failor, Labor Relations Manager ( ) SUBJECT: ANALYSIS OF SEIU, LOCAL 26 QUALITY SERVICE WAGE PROPOSAL DATE: June 8, 2015 As requested by the full commission at its last meeting, this memorandum provides an analysis of the SEIU s Quality Service wage proposal. SEIU s proposal as provided to MAC staff and Commissioners is attached. Covered Job Classifications SEIU s wage proposal applies to the following airport worker job classifications: Aircraft Cleaner (including lavatory/water services) Skycap Bag Porter Electric Cart Driver Unaccompanied Minor Services Wheelchair Attendant Retail/Concessions Employees All Occupations Rental Car Employees All Occupations Application Under SEIU s Quality Service wage proposal, required wages and benefits would be established for all employers that operate at MSP International Airport that employ individuals in the occupations listed above. The approach being proposed by SEIU for use at MSP appears to be similar to other prevailing wage requirements enacted by other governmental jurisdictions in that it establishes wage levels by job classification using a specific formula for calculating the wage level and, in fact, SEIU cites to the prevailing wage laws or ordinances of 14 jurisdictions as a justification for its proposal. The proposal, however, differs significantly from prevailing wage requirements in other governmental jurisdictions primarily in two areas. First, the proposal mandates that a private employer pay its employees prevailing wages and benefits when the government entity issuing the prevailing wage mandate, in this case the MAC, is not the recipient of the service being provided. Second, the calculation method used for determining the wage rate differs substantially

2 Page 2 of 10 from the method used under Minnesota s prevailing wage law and the prevailing wage laws or ordinances in other governmental jurisdictions. Staff believes the Quality Service wage initiative proposed by SEIU for these airport job classifications raises similar legal issues to those raised by the labor peace proposal advanced by SEIU last year---whether the application of prevailing wage to a particular work group or employer is preempted by federal law. Additional legal analysis would be required if the Commission decides to further examine a prevailing wage approach to set wage and benefit rates for the job classifications noted above. Prevailing wage requirements by job classification are generally mandated only when a government entity is a party to a construction or service contract or the primary recipient or beneficiary of services provided under contract. See chart below. For example, the Hennepin County and Ramsey County ordinances referenced in the SEIU proposal apply only when each county government itself is in the market to procure janitorial or security officer services under contract. The prevailing wage requirement is not imposed on private employers seeking such services in the county. GOVERNMENT SERVICE CONTRACTS-PREVALING WAGE REQUIREMENTS Federal Government Ramsey County, MN Hennepin County, MN Illinois New York New Jersey California Federal contracts for services purchased directly by federal agencies. List of covered services is found by locality in the Register of Wage Determinations Under the Service Contract Act. County contracts for janitorial, security and towing services. County contracts for janitorial and security services. State contracts for the following services: janitorial, window cleaning, building and grounds, site technician, natural resources, food and security. Contracts of public agencies which includes the state and its political subdivisions for building service work including such services as building maintenance, cleaner, gardener, porter, janitor, window cleaning, etc. State contracts for building services in buildings owned or leased by the state. Statute specifically excludes political subdivisions. Building services includes cleaning, security, window cleaning, trash hauling, etc. Public utility contracts for custodial or janitorial services.

3 Page 3 of 10 Massachusetts Washington St. Louis, MO Pittsburgh, PA Denver, CO Philadelphia, PA San Francisco, CA State contracts for the cleaning and maintenance of public buildings owned or leased by the state. Building service contracts entered into by the state, county, municipality or any political subdivision of the state. City contracts for service employees. Does not include contracts for administrative, executive or administrative services. Also includes contracts where the city leases property owned by the city. The lessee must agree to pay prevailing wages for any service contract related to the leased premises. City contracts for food and building services. Also covers building service, food service, hotel and grocery employees on projects that receive a city subsidy of more than $100,000. City contracts for public building services such as janitor, porter, window washer, cleaner, doorkeeper, etc. City contracts for building maintenance services including landscaping, janitorial, security, snow removal, elevators/escalators, etc. Contracts entered into by the city and County of San Francisco for janitorial services for city/county owned or leased buildings. Ordinance specifically excludes SFO Airport from this requirement. Calculation of Quality Service Wage Rate Under SEIU s written proposal that was distributed to the Commission at its May meeting, the Quality Wage for a job classification is to be determined from the following data sources: a. Bureau of Labor Statistics (BLS) Wage Survey b. Minnesota Department of Employment and Economic Development (DEED) Occupational Wage Survey c. Wage and Benefits in Local Collective Bargaining Agreements Like other prevailing wage laws, the SEIU proposal would require the calculation of an hourly wage rate and hourly benefit rate to determine the total prevailing wage rate or Quality Service wage.

4 Page 4 of 10 MAC staff met with representatives of SEIU on June 5 th to better understand and clarify how SEIU would calculate the prevailing wage under its proposal. SEIU views the job classes of aircraft cleaner, skycap, bag porter, electric cart driver, unaccompanied minor services employee and wheelchair attendant as fungible and essentially as one job class of airport service worker that would receive the same wage rate. The wage rate the SEIU considers to be the prevailing wage rate or Quality Service wage for an airport service worker is the wage rate established for General Cleaner in the SEIU labor agreement with the Minneapolis-St.Paul Contract Cleaners Association which, according to SEIU, covers approximately 10 aircraft cleaners that work for ABM under contract with Southwest Airlines and other building cleaners that work at MSP Airport. Under the SEIU proposal, full-time airport service workers would be paid $18.04 per hour ($14.62 per hour base wage plus fringe rate of $3.52 per hour) and part-time airport service workers $13.65 per hour ($13.10 base hourly wage rate plus fringe rate of $0.55 per hour). None of the jurisdictions cited by SEIU uses this methodology to calculate the prevailing wage rate for services. Under the prevailing wage approach used by these jurisdictions, the separate and distinct job classes of aircraft cleaner, skycap, bag porter, electric cart driver, unaccompanied minor services employee and wheelchair attendant would not be consolidated into one job class for purposes of determining a prevailing wage. A separate prevailing wage rate would be calculated for each of these separate job classes under the wage rate calculation methodology utilized by each jurisdiction. As the Minnesota Legislative Auditor noted its 2007 study of Minnesota s prevailing wage law, perhaps the most controversial aspect of any prevailing wage law is how the prevailing wage rate is calculated. At that time, the Legislative Auditor determined that state and federal governments primarily use the following methods for calculating the prevailing wage rate in the construction industry: Five states, including Minnesota, use only the mode to set their prevailing wage rates. Nine states use the majority/average method to set their prevailing wage rates. Two of these states adopt the federal Davis-Bacon method for calculating the prevailing wage based on a majority/average method. States that use the majority/average method use the mode to set the prevailing wage as long as the mode represents a majority of reported wages. If the mode does not represent the majority, these states use an average of reported rates. Five states use the minimum percentage/average method. The mode is used to set the prevailing wage rate if the mode represents a minimum percentage of reported rates (such as 30 percent), and use an average if it does not. Six states rely exclusively on collective bargaining agreements to set the prevailing wage rate. One state (Maine) uses the mode if it represents a majority of reported rates and, if not, it uses the median.

5 Page 5 of 10 Two states use the average rate without first considering the mode. The majority of jurisdictions that were cited by SEIU Local 26 in its proposal use a modal method to establish the prevailing wage rate--either the mode only method or the majority/average method discussed above. METHODS FOR CALCULATING PREVAILING WAGE--SERVICE CONTRACTS Federal Government Ramsey County, MN Hennepin County, MN Illinois New York New Jersey California Massachusetts Washington St. Louis, MO Pittsburgh, PA Denver, CO Philadelphia, PA San Francisco, CA Majority/average method is used. If there is not a single rate paid to more than 50% of the workers in a job classification, the Department of Labor relies on statistical measures of central tendency such as the median or average to determine the prevailing wage rate. Uses prevailing wage determined by state Department of Labor and Industry if there is a job match. If there is no job match with state prevailing wage survey collective bargaining agreement rate is used. Minnesota state law definition is used. Statute does not define calculation formula. Collective bargaining rate used if a match. Otherwise, rate is determined by Illinois Department of Labor. Statute does not define calculation formula. Rate determined by fiscal officer of the jurisdiction. Uses wage rate determined by the federal government under Services Contract Act. Mode is used. Statute does not define calculation formula. Rate is established by commissioner of state labor agency. Majority/average method used. Uses wage rate determined by the federal government under Services Contract Act. Uses wage rate determined under federal Services Contract Act or median wage rate of job classification, whichever is greater. Wage determinations made by federal government are used. Majority/average method used. May rely on wages determined under the federal Services Contract Act. Mode is used.

6 Page 6 of 10 Minnesota Prevailing Wage Approach Under Minnesota law, the prevailing wage rate for any given job is the mode or most frequently occurring wage rate for that job. The prevailing wage rate includes the base hourly wage rate, usual benefits and overtime for workers in a job class by geographic area. Under the approach used to calculate the prevailing wage in Minnesota state law, employers utilizing the jobs of aircraft cleaner/cabin service worker and airline passenger wheelchair attendant/pusher, for example, would be surveyed with respect to wages and benefits. These employers would be exclusively found at MSP International Airport. The prevailing wage rate is defined as the most frequently occurring (statistical mode) wage rate for the job. The results of the wage survey would likely show that the prevailing wage rate is the wage rate paid to the 400 aircraft cleaner/cabin service workers and the 122 airline passenger wheelchair attendants that work for Air Serv as the most frequently occurring wage rate for these two airport jobs. Quality Wage Rate Analysis By Job Classification Most employers would not agree that the job classes of aircraft cleaner, skycap, bag porter, electric cart driver, unaccompanied minor services employee and wheelchair attendant are fungible and constitute one job class for wage compensation purposes. As a result, and in the interest of thoroughness and neutrality, it is appropriate to examine how the Quality Service wage would be calculated by job classification. By way of example, this memorandum looks at the job classifications of Wheelchair Attendant and Aircraft Cleaner. Quality Wage Analysis for Job Class of Wheelchair Attendant SEIU s written proposal provides that the Quality Wage is to be determined from the following data sources: a. Bureau of Labor Statistics (BLS) Wage Survey b. Minnesota Department of Employment and Economic Development (DEED) Occupational Wage Survey c. Wage and Benefits in Local Collective Bargaining Agreements There is no exact match for the job classification of Airline Passenger Wheelchair Attendant in either the BLS wage survey or the DEED wage survey. Only two jobs in the survey are remotely related to the work of an airline passenger wheelchair attendant orderlies and personal care attendants---jobs that typically require as a part of their job duties the transport of patients by wheelchair. However, the occupations of orderly and personal care attendant are characterized by higher order, more complex work when compared to the job content and requirements of an airline passenger wheelchair attendant. Therefore, neither job is a good match for comparison to an airline passenger wheelchair attendant. The wage surveys for the job classification of personal care aid show the following hourly wage rate distribution:

7 Page 7 of 10 10% 25% Median Mean 75% 90% BLS Survey (May 2014) $9.54 $10.09 $10.99 $11.36 $12.27 $14.25 DEED Survey (1 st Qtr. 2015) $9.75 $10.31 $11.23 $11.61 $12.54 $14.56 In addition, there is a labor contract that covers nearly 27,000 personal care attendants that was recently negotiated between SEIU and the State of Minnesota. This contract is in effect between July 1, 2015 and June 30, The wage rate under this contract for personal care attendant is $10.75 per hour effective July 1, 2015 and $11.00 per hour effective July 1, The only benefit in the labor agreement covering personal care attendants is for paid time off (PTO). Each employee is entitled to accrue one hour of PTO for every fifty-two hours of work up to a maximum of 80 hours. The employee must work 600 hours to be eligible to use the PTO benefit. There are no other benefit provisions, such as employer provided health insurance, in the labor agreement. In the final analysis, because there is not a good job match in the labor market for airline passenger wheelchair attendant, a hierarchy of wages compensation philosophy would commonly be applied to determine the appropriate level of wage compensation for this position. An MSP wheelchair pusher s primary and almost exclusive job duty is to provide carriage to a passenger to the custody of airline personnel. The job duties of airline passenger wheelchair attendant are far less complex when compared to the job duties of a personal care attendant. As a result, the position of airline passenger wheelchair attendant arguably warrants a wage level below that of personal care attendant who has multiple and more complex job duties such as patient health protection, assistance with bathing/hygiene, transport of patients requiring immediate medical care, etc. This example illustrates the difficulty of establishing a prevailing wage rate under the SEIU methodology where there is not a good job match with the BLS and/or DEED surveys or a collective bargaining agreement. Staff would still be required to establish a prevailing wage rate for this and other occupations where the job match is problematic. What happens if there is a dispute? In other words, how is the MAC going to deal with challenges to how hourly wage and benefit rates are set for each occupation? Will the commission itself be involved in resolving these disputes? Quality Wage Rate Analysis for Job Class of Aircraft Cleaner/Cabin Service Worker There is no exact match for the job classification of Aircraft Cleaner/Cabin Service Worker in either the BLS wage survey or the DEED wage survey. There are two occupations, however, that yield a close match janitor and cleaners of vehicles and equipment. The wage surveys for the job classification of janitor show the following hourly wage rate distribution:

8 Page 8 of 10 10% 25% Median Mean 75% 90% BLS Survey (May 2014) $8.61 $10.00 $11.88 $12.90 $15.54 $18.47 DEED Survey (1 st Qtr. 2015) $8.80 $10.22 $12.14 $13.18 $15.88 $18.87 The wage surveys for the job classification of vehicle and equipment cleaner show the following hourly wage rate distribution: 10% 25% Median Mean 75% 90% BLS Survey (May 2014) $8.45 $9.75 $11.86 $12.49 $14.60 $17.78 DEED Survey (1 st Qtr. 2015) $8.59 $9.91 $12.06 $12.70 $14.84 $18.08 In addition, there is a labor contract between SEIU and ABM Janitorial that covers 10 workers performing aircraft cabin cleaning services under contract between ABM Janitorial and Southwest Airlines. The current wage rate for a full-time General Cleaner under this labor contract is $14.62 per hour. For a part-time cleaner the rate is $13.10 per hour. Using the methodology proposed by SEIU, the hourly wage rate that other airport employers would have to pay their aircraft cleaners would be the highest of the wage rates found in the BLS survey, DEED survey or an applicable labor contract. SEIU s written proposal did not specify which wage rate in the wage range in the BLS and DEED survey should be used. For purposes of this analysis, we compared the median and mean wage rates as measures of central tendency as determined by the BLS and DEED wage surveys with the SEIU labor contract rate. The mode is not calculated in the BLS and DEED occupational wage survey information. The highest wage rate that results from this comparison is the SEIU labor contract rate of $14.62 per hour for fulltime general cleaners and $13.10 per hour for part-time general cleaners. In addition, to determine the final prevailing wage rate under the SEIU proposal, the cost of benefits needs to be added. Hennepin County has determined that the fringe benefit rate for its 2014 janitorial services contracts for full-time employees is $3.42 per hour and $0.55 per hour for part-time cleaners, and this analysis borrows that calculation for illustrative purposes. As a result, under the SEIU proposal, companies employing aircraft cleaners/cabin service workers that are not currently covered by the SEIU contract would be required to pay the rate of $18.04 per hour ($14.62 per hour base wage plus fringe rate of $3.52 per hour) and part-time cabin cleaners $13.65 per hour ($13.10 base hourly wage rate plus fringe rate of $0.55 per hour). Benefit Analysis The DEED and BLS wage surveys do not provide information on the cost of benefits. As a result, we need to turn to other sources of information, primarily labor contracts, to price these benefits. Of course, the cost of benefits will vary from labor contract to labor contract depending on the extent of the benefit program provided under the labor agreement. Benefits may include

9 Page 9 of 10 such items as vacation, sick leave, health insurance, dental insurance, life insurance, short and/or long terms disability insurance, etc. The hourly benefit cost associated with the PTO benefit under the SEIU Personal Care Attendant labor agreement is less than $.50 per hour. As noted above, the fringe rate under the SEIU janitorial service contract is $3.42 per hour for a full-time employee and 55 cents per hour for a part-time cleaner. Another source of information on the cost of benefits is the fringe benefit rate required under the federal McNamara-O Hara Services Contract Act. The current health and welfare fringe rate in the Twin Cities metropolitan area for federally contracted services is $4.02 per hour. In addition, employees that provide services under contract to the federal government are entitled to 10 paid holidays and paid vacation starting at 2 weeks per year increasing to 4 weeks of vacation after 15 years of service. Comparison With Other Large Hub Airports No large hub airport in the United States has adopted a prevailing wage approach as advocated by SEIU for airline independent contractor employees and other airport workers not providing direct service to the airport operator. Rather, the airports have used a minimum wage standard as previously described in the staff memorandum and presentation the Commission received at its April meeting. Impact on Union Organization Efforts The terms and conditions of employment for low wage workers at MSP are likely to improve through representation by a labor union. One question to consider is whether any action by the Commission to mandate a substantially higher wage in comparison to the state-wide minimum wage would act as a disincentive for airport workers to organize into a labor union. The ability to organize workers of airline independent contractors into labor unions at MSP has been the topic of conversation at several commission meetings the past two years. This is a complex area of law that essentially boils down to whether workers of airline independent contractors are covered by the Railway Labor Act (RLA) or the National Labor Relations Act (NLRA). In simple terms, if the Railway Labor Act applies, the union must organize a company s workers on a nationwide or system-wide basis. As a result, organizing employees of these independent airline contractors is considerably more difficult under the RLA when compared to the NLRA. If the NLRA applies, the union can organize a company at one location (e.g. MSP International Airport) by presenting enough signed cards (at least 30%) from employees to demand an election with the regional office of the National Labor Relations Board (NLRB). There appears to be a shift to granting NLRA jurisdiction in these airline independent contractor cases. (See, Back on Course: NLRA Jurisdiction Over Airline Independent Contractors, Presentation to the American Bar Association Subcommittee on Practice and Procedure Under the NLRA, February 2014.)

10 Page 10 of 10 From the early 1990 s until 2012, the National Mediation Board found RLA jurisdiction in virtually all of the airline independent contractor cases it considered during this period. However, the National Mediation Board has recently found an absence of RLA jurisdiction in several airport contractor cases issued between 2012 through the present, including most notably with Airway Cleaners, LLC, which provides cleaning and maintenance services at various airports on the East Coast. (See, e.g., Airway Cleaners, LLC, 41 NMB 262 (2014)). Following NMB guidance in this area, the NLRB has found jurisdiction under the NLRA in the following situations: Aircraft cleaners at JFK that work for Airway Cleaners, LLC. Aircraft cleaners that work for Swissport at LaGuardia Airport. Aircraft cleaners at Philadelphia International Airport (PHL). SEIU Local 32BJ recently won a representation election at PHL and was certified by the NLRB on April 10, 2015 to represent aircraft cleaners working for Airway Cleaners, LLC. On May 22, 2015 the NLRB Regional Director in Tampa, Florida, ruled on a petition filed by SEIU Local 1996 and ordered an NLRA representation election for all wheelchair attendants employed by Prime Flight Aviation at San Juan s Luis Munoz Airport. Baggage handlers at Seattle-Tacoma International Airport that work for Baggage Airline Guest Services, Inc. These airline independent contractor cases are fact specific by locality and turn on the degree of airline control over the independent contractor. The National Mediation Board and NLRB look to several factors, including the extent of carrier control over the manner in which the independent contractor conducts its business, airline access to company records and operations, role in personnel decisions, degree of carrier supervision of the contractor s employees, whether employees are held out as carrier employees and airline control over employee training. One way to determine with absolute certainty whether airline independent contractor employees at MSP can be organized under the NLRA as opposed to the RLA is for a union to obtain enough signed cards from a company s employees at MSP to file a recognition petition seeking a representation election with the NLRB. If the employer opposed the petition on the grounds that the RLA applies, the NLRB would make a determination as to whether it has jurisdiction under the NLRA. THIS IS AN INFORMATIONAL ITEM ONLY; NO COMMISSION ACTION IS REQUESTED.