Michigan Advisory Opinions March 05, 1981: AGO 5858 (March 5, 1981)

Michigan Attorney General Opinions

1981.

AGO 5858.

You have requested my opinion as to whether the change in the organizational structure in the Employment Relations Commission (MERC) by the Director of Labor in General Departmental Order 1976-1 violates the labor mediation act, (fn1) the public employment relations act, (fn2) the Executive Organization Act of 1965, (fn3) or any of them singularly. The change in structure to which you refer was established in General Departmental Orders 1976-1 and 1976-5, which were issued by the Director of Labor on July 1, 1976. This structure was modified slightly in General Departmental Order 1978-1, which was issued on November 1, 1978 and which supersedes and rescinds GDO 1976-1. The pertinent aspects of these Orders will be discussed infra.

In order to answer your question, it is necessary to consider the history of MERC and the statutes it administers.

1939 PA 176, supra, created the Labor Mediation Board (fn4) and vested it with jurisdiction to mediate labor disputes in the private sector of employment. The three Board members were available for discussion and consultation with mediators and also engaged directly in mediation, when the Governor directed or the assigned mediator requested that they do so. Amendments to 1939 PA 176, supra, contained in 1947 PA 318 vested the Board with authority to determine private-sector bargaining units after consultation with the parties. (fn5) Pursuant to this authority, mediators would consult with the parties, and, in cases in which consent could not be obtained, a hearing would be held and the Board would determine the appropriate bargaining unit. This authority initiated the Board's adjudicatory responsibilities, which were to be greatly augmented in 1965.

1947 PA 336, supra, vested the Board with jurisdiction to mediate grievances filed by public-sector employees or any public official in charge of such employees. In Garden City School District v Labor Mediation Board, 358 Mich 258, 263; 99 NW2d 485, 488 (1959), the Supreme Court broadly defined 'grievance' to include 'salary and other conditions of employment.' In keeping with the Court's interpretation, a form of collective bargaining evolved in the public sector, with the Board acting in a mediatory capacity.

In 1965 the Legislature, pursuant to Const 1963, art 4, Sec. 48, enacted 1965 PA 379, supra, and also enacted corresponding amendments to 1939 PA 176, supra, contained in 1965 PA 282. To the Board's existing authority to mediate in both the private and public sectors and to determine appropriate bargaining units in the private sector, the Legislature added the authority to adjudicate public-sector representation cases and to adjudicate public-and private-sector cases involving unfair-labor-practice charges. Thus emerged a dual set of Board responsibilities in both the private and public sectors: the authority to mediate labor disputes and the authority to adjudicate representation cases and unfair-labor-practice cases. Acknowledging the duality of the Board's responsibilities, the Legislature, in identical language in 1939 PA 176, supra, Sec. 23(k); (fn6) MCLA 423.23(k); MSA 17.454(25)(k), and 1965 PA 379, supra, Sec. 16(j); MCLA 423.216(j); MSA 17.455(16)(j), also provided:

'The labor relations and mediation functions of this act shall be separately administered by the board.'

In keeping with these provisions, the Board in 1965 established a Labor Relations Division, to assist in discharging its adjudicatory responsibilities, and a Mediation Division, to assist in discharging its mediatory responsibilities.

Pursuant to Const 1963, art 5, Sec. 2, the Legislature enacted 1965 PA 380, supra, Sec. 381, which transferred the Labor Mediation Board by a Type I transfer to the Department of Labor, one of the nineteen principal departments provided by 1965 PA 380, supra, Sec. 4. This transfer resulted in the assumption by the Department of Labor of the budgetary function for the Board's operations, but the Board continued to exercise its mediatory and adjudicatory functions exactly as it had prior to the anactment of 1965 PA 380, supra. Board members continued to oversee, and on occasion participate in, the mediation of labor disputes and also continued to adjudicate representation and unfair-labor-practice cases.

In General Departmental Orders 1976-1 and 1976-5, the Director of Labor effected structural changes in the Department of Labor. (fn7) His authority to do so is contained in and limited by 1965 PA 380, supra, Sec. 7(a), which provides:

'Except as provided by law or within this act, the head of each principal department with the approval of the governor is authorized to establish the internal organization of his department and allocate and reallocate duties and functions to promote economic and efficient administration and operation of the department. No substantive function vested by law in any officer or agency within the principal department shall be removed from the jurisdiction of such officer or agency under the provisions of this section.' (Emphasis added.)

GDO 1976-1 established nine units with bureau status within the Department of Labor. One such unit was the Bureau of Employment Relations, headed by a director who reported to the Chief Deputy Director of Labor. GDO 1978-1 modified this structure, with the Director of the Bureau of Employment Relations reporting to the Deputy Director for Regulatory Administration.

GDO 1976-5 relates exclusively to the Bureau of Employment Relations, its organization, its functions and responsibilities, and its relationship to MERC and the Department of Labor. This Order retains the two-division structure established by the Board in 1965, as provided by the statutes, and also retains unchanged the distribution of statutory responsibilities between those divisions.

The Labor Relations Division consists of the administrative law judges, hearings reporters, elections officers, and clericals. Continuing the practice adopted by the Board in 1965, the administrative law judges conduct evidentiary hearings in both representation cases and unfair-labor-practice cases. The hearings reporters record and transcribe the hearings. Based upon the record made before an administrative law judge, the Commissioners of MERC adjudicate. In representation cases, the Commissioners either direct an election or dismiss the petition. If the Commissioners direct an election, an elections officer conducts it. In unfair-labor-practice cases, the administrative law judge, in accordance with 1939 PA 176, supra, Sec. 23(2)(b) and 1965 PA 379, supra, Sec. 16(b), prepares a proposed report and recommended order. If the parties do not timely file exceptions, the Commissioners, in accordance with 1939 PA 176, Sec. 23(2)(b), supra, and 1965 PA 379, Sec. 16(b), supra, adopt the recommended order as the order of the Commission. If the parties timely file exceptions to the administrative law judge's report and recommended order, the Commissioners review the record and, based upon the preponderance of the testimony taken, issue an order either dismissing the complaint or remedying the violation.

The employees in the Labor Relations Division are subject to supervision by the Director of the Bureau of Employment Relations and, in turn, by the Deputy Director for Regulatory Administration and the Director of Labor. The Bureau of Employment Relations Director prepares service ratings for all employees, approves all travel expense vouchers, assigns all new cases for hearing and for elections as ordered, and monitors the case output of each employee. The notable exception to the Bureau of Employment Relations Director's supervisory authority occurs with respect to the administrative law judges. The Director of the Bureau of Employment Relations has no authority to direct the content of their decisions or recommended orders. The Director of Labor and the Deputy Director for Regulatory Administration also lack that authority.

The Mediation Division consists of labor mediators and clericals based at each of MERC's three offices. Mediators are also stationed at four additional locations around the state. The employees of this Division are primarily engaged in the mediation of labor disputes. Their duties also include the conducting of 'last offer' elections prior to strikes. On occasion, mediators are assigned by the Director of the Bureau of Employment Relations to conduct representation elections, normally the responsibility of the Labor Relations Division's elections officers, when in that Director's judgment efficiency is served thereby.

The employees in the Mediation Division are subject to supervision by the Director of the Bureau of Employment Relations and, in turn, by the Deputy Director for Regulatory Administration and the Director of Labor. The Bureau of Employment Relations Director prepares service ratings for all employees, approves all travel expense vouchers, assigns mediators, and monitors the activity of the mediators as reported by them.

Having traced MERC's historical evolution, including the change in structure effected by the Director of Labor in 1976, it must be determined whether the present structure is in accordance with law.

'Type I transfer' was defined in 1965 PA 380, supra, Sec. 3(a) as follows:

'Under this act, a type I transfer means the transferring intact of an existing department, board, commission or agency to a principal department established by this act. When any board, commission, or other agency is transferred to a principal department under a type I transfer, that board, commission or agency shall be administered under the supervision of that principal department. Any board, commission or other agency granted a type I transfer shall exercise its prescribed statutory powers, duties and functions of rule-making, licensing and registration including the prescription of rules, rates, regulations and standards, and adjudication independently of the head of the department. Under a type I transfer all budgeting, procurement and related management functions of any transferred board, agency or commission shall be performed under the direction and supervision of the head of the principal department.'

OAG, 1965-1966, No 4479, p 209, 215 (March 9, 1966), discussed and construed the Type I transfer of existing boards, offices, commissions, and agencies to a principal department as follows:

'By way of summary, a Type I transfer under the Executive organization act of 1965 places the board, office, commission or agency intact within the principal department to which it has been transferred. Under the Act each board, office, commission or agency having a Type I transfer is subject to having its policy determinations and its functions administered under the supervision of the principal department head except those policy determinations and functions which may be exercised independently within the authority of the third sentence of Section 3(a) of the Act. The statutory powers, duties and functions which may be exercised independently of the department head pursuant to the legislative directive of the third sentence of Section 3(a) of the Act are retained and may be performed by the transferred agency without interference or supervision by the head of the department. This is but to say that within these categorical areas, the Type I agency acts independently of the department head and it necessarily follows that the head of the department is freed from responsibility for such independent action.'

Implicit in your question is a determination of which, if any, of MERC's statutory powers, duties, and functions are to be administered under the supervision of the principal department head and which, if any, of MERC's statutory powers, duties, and functions are to be exercised independently, within the authority of the third sentence of 1965 PA 380, Sec. 3(a), supra.

OAG, 1965-1966, No 4479, supra, p 214, states:

'The foregoing analysis clearly demonstrates that at least three distinct and separate powers, duties and functions are involved by the provisions of the third sentence of Section 3(a). These are rule-making, a quasi legislative function, the regulatory, administrative and ministerial functions as they relate to the enumerated categories, and the adjudicatory or quasi judicial function.' (Footnotes omitted.)

Consistent with this analysis, it is clear that MERC's rule-making authority (fn8) shall be exercised independently of the principal department head. It is also clear that the authority to adjudicate (fn9) is also to exercised independently. Whether MERC's mediatory responsibilities are to be independently exercised requires a determination of whether they are 'regulatory, administrative and ministerial functions' in the categories enumerated, that is, 'rule-making, licensing and registration including the prescription of rules, rates, regulations and standards, and adjudication ' (fn10) MCLA 16.103(a); MSA 3.29(3)(a). In this regard, it is necessary to consider the salient characteristics of the enumerated categories and of mediation. Rule-making, licensing and registration including the prescription of rules, rates, regulations and standards, and adjudication all involve determinations by an agency. These determinations have the force and effect of law and are binding on those affected. Mediation, on the other hand, does not involve a determination by MERC. Rather, it is a process by which disputant parties are aided by MERC in achieving a settlement of their dispute. That settlement is not imposed by MERC. (fn11) Because of this significant difference, I find that MERC's statutory mediatory responsibilities are not contained within the enumeration in the third sentence of 1965 PA 380, Sec. 3(a), supra, so that these responsibilities are not excepted and reserved from the supervisory grant to the principal department head appearing in the second sentence of that section.

Having concluded above that MERC's rule-making and adjudicatory duties are to be undertaken independently of the Director of Labor but that MERC's mediatory duties are to be administered under the supervision of that Director, it remains to determine whether the organizational structure under which MERC is administered is in accordance with law.

Under the organizational structure set forth in GDO 1976-1, the Commissioners of MERC retain their statutory authority to make rules and to adjudicate. Those aspects of the operation of the Labor Relations Division which involve the activities of the administrative law judges in facilitation of adjudication (fn12) are performed for the Commissioners independently of the Director of the Bureau of Employment Relations and independently of the Director of Labor. Those aspects of the adjudication-related operation of the Labor Relations Division which are supervised by the Director of the Bureau of Employment Relations are the so-called housekeeping functions, (fn13) as described in OAG, 1965-1966, No 4479, supra, p 214. As such, the fourth sentence of 1965 PA 380, Sec. 3(a), supra, controls. (fn14)

The Commissioners of MERC also retain their statutory authority to mediate labor disputes, on an elective basis. The administration of the Mediation Division, however, is subject to the supervision of the Director of Labor, through the Deputy Director for Regulatory Administration and the Director of the Bureau of Employment Relations. Supervision by the Director of Labor over the performance of the substantive function of mediation by MERC does not constitute the removal of such function from the jurisdiction of MERC. Thus, there is no violation of 1965 PA 380, Sec. 7(a), supra.

Thus, it must be concluded that the structural changes effected by the Director of Labor in General Departmental Orders 1976-1, 1976-5, and 1978-1 are in keeping with the independent exercise of MERC's rule-making and adjudicatory functions. I further conclude that these changes provide for the exercise of MERC's mediatory function under the supervision of the Director of Labor. Because the Commissioners of MERC retain administrative authority over MERC's adjudicatory function and the Director of Labor exercises administrative authority over MERC's mediatory function, I also conclude that MERC's labor relations and mediation functions are separately administered, as required by 1939 PA 176, Sec. 23(2)(j), supra, and 1965 PA 379, Sec. 16(j), supra.

It is, therefore, my opinion that the organizational arrangement under which the Michigan Employment Relations Commission is administered does not conflict with 1939 PA 176, supra, 1965 PA 379, supra, or 1965 PA 380, supra.

Frank J. Kelley

Attorney General

1. 1939 PA 176, as amended; MCLA 423.1 et seq; MSA 17.454(1) et seq.

2. 1965 PA 379, as amended; MCLA 423.201 et seq; MSA 17.455(1) et seq.

3. 1965 PA 380, as amended; MCLA 16.101 et seq; MSA 3.29(1) et seq.

4. The name was changed to Employment Relations Commission by 1976 PA 17.

5. 1939 PA 176, supra, Sec. 9e.

6. Subsection (k) was redesignated subsection (2)(j) by 1976 PA 17, and 'board' was changed to 'commission' therein.

7. 1965 PA 380, supra, Sec. 376 provides that the Director of Labor is the head of the Department of Labor.

8. See 1939 PA 176, supra, Secs. 7, 9a, and 29 and 1965 PA 379, supra, Sec. 14.

9. With respect to representation cases, see 1939 PA 176, supra, Secs. 9e, 27, 28, and 29 and 1965 PA 379, supra, Secs. 12, 13, and 14. With respect to unfair-labor-practice cases, see 1939 PA 176, supra, Sec. 23 and 1965 PA 379, supra, Sec. 16.

10. In addition to 1939 PA 176, supra, and 1965 PA 379, supra, MERC also administers the acts providing compulsory arbitration of labor disputes in police and fire departments (1969 PA 312, as amended; MCLA 423.231 et seq; MSA 17.455(31) et seq) and in the state police department (1980 PA 17; MCLA 423.271 et seq; MSA 17.455(81) et seq). The compulsory arbitration acts are both supplementary to 1965 PA 379, supra. 1969 PA 312, supra, Sec. 14 and 1980 PA 17, supra, Sec. 15.

11. 'the commission shall take such steps as it may deem expedient to effect a voluntary, amicable, and expeditious adjustment and settlement of the differences and issues between employer and employees which have precipitated or culminated in or threatened to precipitate or culminate in the labor dispute. ' (Emphasis added.) 1939 PA 176, supra, Sec. 10(1).

12. The conduct of hearings and the preparation of proposed reports and recommended orders.

13. The personnel and budget related matters discussed in the first paragraph on p 5.

14. 'Under a type I transfer all budgeting, procurement and related management functions of any transferred board, agency or commission shall be performed under the direction and supervision of the head of the principal department.' 1965 PA 380, Sec. 3(a), supra.