PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BALTIMORE GOODWILL INDUSTRIES,

INCORPORATED,

Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD,

No. 96-1632

Respondent,

BALTIMORE REGIONAL JOINT BOARD,

UNION OF NEEDLETRADES, INDUSTRIAL

AND TEXTILE EMPLOYEES, AFL-CIO,

Intervenor.

NATIONAL LABOR RELATIONS BOARD,

Petitioner,

v.

No. 96-1757

BALTIMORE GOODWILL INDUSTRIES,

INCORPORATED,

Respondent.

On Petition for Review and Cross-application

for Enforcement of an Order of the

National Labor Relations Board.

(5-CA-26024)

Argued: June 2, 1997

Decided: January 13, 1998

Before RUSSELL and HAMILTON, Circuit Judges, and

HOWARD, United States District Judge for the

Eastern District of North Carolina, sitting by designation.
Reversed by published opinion. Judge Russell wrote the opinion, in

which Judge Hamilton and Judge Howard joined.

_________________________________________________________________

COUNSEL

ARGUED: Patrick John Stewart, VENABLE, BAETJER, HOWARD

& CIVILETTI, L.L.P., Washington, D.C., for Petitioner. John Emad

Arbab, NATIONAL LABOR RELATIONS BOARD, Washington,

D.C., for Respondent. ON BRIEF: John C. Hardwick, Jr., VENABLE, BAETJER, HOWARD & CIVILETTI, L.L.P., Washington,

D.C., for Petitioner. Frederick L. Feinstein, General Counsel, Linda

Sher, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, Peter Winkler, Supervisory Attorney,

NATIONAL LABOR RELATIONS BOARD, Washington, D.C., for

Respondent.

_________________________________________________________________

OPINION

PER CURIAM:

The Baltimore Goodwill Industries, Inc. ["Goodwill"] petitions for

review of the decision and order of the National Labor Relations

Board ["Board"] finding that Goodwill engaged in unfair labor practices in violation § 8(a)(1), (5) of the National Labor Relations Act

["the Act"], 29 U.S.C. § 158(a)(1), (5) (1994), by refusing to bargain

with the Board-certified unit. The Board filed a cross-application for

enforcement of its order. Goodwill contends that the Board's finding

that severely disabled individuals in Goodwill's custodial work services program are "employees" within the meaning of the Act is not

supported by substantial evidence in the record and departs from prior

Board precedent. Concluding that the Board's findings are not supported by substantial evidence, we grant Goodwill's petition for

review, reverse the Board's order, and deny the Board's crossapplication for enforcement.

Goodwill is a nonprofit Maryland corporation that administers several charitable programs, including a commercial services program.

 2
Through Goodwill's commercial services program, some participants

receive training by working on governmental contracts awarded to

Goodwill pursuant to the Javits-Wagner-O'Day Act["JWODA"], 41

U.S.C.A. §§ 46-48c (West 1994 & Supp. 1997). 1 The Union filed a

petition seeking to represent a bargaining unit comprised of disabled

and non-disabled employees in Goodwill's commercial services program performing custodial work pursuant to a JWODA contract

between Goodwill and the Social Security Administration. Goodwill

opposed the inclusion of the severely disabled individuals in the bargaining unit on the basis that the disabled employees were not "employees" as defined by the Act. After a representation hearing, the

Board issued a decision and direction of election finding that the disabled individuals were "employees" within the meaning of the Act.

Goodwill requested a review of the Board's decision, which the

Board denied. The Board held an election and because the majority

of the employees voted for the Union, the Board certified the Union

as the exclusive bargaining representative of the employees.2 Despite

the certification, Goodwill failed to recognize the bargaining unit. The

Board found that Goodwill's refusal to bargain violated § 8(a)(1), (5)

of the Act. Goodwill petitions this court to review and set aside the

Board's order, and the Board cross-petitions for enforcement of its

order.

The Board applies a case by case analysis in determining whether

individuals are "employees" as defined by the Act. See Davis Mem'l

Goodwill Indus. v. NLRB, 108 F.3d 406, 410 (D.C. Cir. 1997) (recog-

_________________________________________________________________

1 For Goodwill to qualify for a contract under the JWODA, seventyfive percent of the workforce performing the contract services must be

severely disabled. A severely disabled individual is a person other than

a blind person who has a severe physical or mental impairment which so

limits the person's functional capabilities that the individual is unable to

engage in normal competitive employment over an extended period of

time. See 41 U.S.C. § 48b(2).

2 Specifically, the Board certified "all full-time and regular part-time

janitorial and custodian employees, including cleaners, waxers, buffers

and strippers employed by the Employer at the Woodlawn Social Security Complex, operations and annex buildings, located in Baltimore,

Maryland, but excluding all other employees, guards and supervisors as

defined in the Act."

 3
nizing that case by case approach is applied to determination of

employee status because "in the rehabilitation setting the employer

may . . . safeguard employee interests more effectively than a union")

(citing Goodwill Indus. of S. Cal., 231 N.L.R.B. 536, 537-38 (1977)).

The Board determines whether the characteristics of a program are

typical of industrial settings, indicating that the individuals are "employees" under the Act, or whether the program characteristics are

primarily rehabilitative and atypical compared with private industrial

settings, indicating that the individuals are not"employees" as defined

by the Act.3 See Davis, 108 F.3d at 410 (quoting Goodwill Indus. of

Denver, 304 N.L.R.B. 764, 765 (1991)).

This court accords due deference to the factual findings of the

Board, and will uphold the Board's findings if they are supported by

substantial evidence in the record as a whole, see Universal Camera

Corp. v. NLRB, 340 U.S. 474, 488 (1951); Flack v. Cohen, 413 F.2d

278, 279 (4th Cir. 1969). The Board in this case found that the working conditions of Goodwill's severely disabled workers at the

Woodlawn Social Security Complex ["facility"] were typically industrial and thus that the disabled workers were "employees" under the

Act. In making this determination, the Board evaluated the following

five aspects of the employment relationship: discipline, competitive

placement, productivity standards, counseling, and other terms and

conditions of employment. Specifically, the Board found Goodwill

disciplined the disabled employees and non-disabled employees

within the bargaining unit similarly and that the characteristics of the

bargaining unit's workforce reflect long-term employment for

employees, without an emphasis on competitive placement. Further,

the Board found that Goodwill subjected disabled employees to productivity standards, provided only limited counseling, and offered

working conditions similar to those found in private industrial settings.

_________________________________________________________________

3 An employee under the Act is a worker not expressly exempted. See

29 U.S.C. § 152(3) (1994). Although there is no statutory exemption that

specifically applies to disabled workers, the Board's case law provides

that an individual whose working conditions are"primarily rehabilitative" does not qualify as an "employee" under the Act. See Davis, 108

F.3d at 409 n.3 (citing Goodwill Indus. of Denver, 304 N.L.R.B. 764,

765 (1991)).

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We find that substantial evidence in the record as a whole does not

support the Board's finding that the severely disabled workers in the

bargaining unit were "employees" as defined by the Act. See Davis,

108 F.3d at 413. First, in concluding that Goodwill disciplined the

disabled employees and non-disabled employees within the bargaining unit similarly, the Board found that Goodwill uses productivity

standards to discipline employees, and relied on the testimony of two

witnesses who claimed that they were disciplined without counseling.

See id. at 411. We determine, however, that substantial evidence in

the record establishes that Goodwill disciplined its disabled employees in a rehabilitative manner, different from the way it disciplined its

non-disabled employees. See id. The record reflects that Goodwill

uses productivity standards to assess the rehabilitative needs of the

disabled workers in the program, and when Goodwill transfers a

worker to a rehabilitation facility, Goodwill is attempting to meet the

employee's rehabilitative needs and is not disciplining the employee.

See id. at 411-12. Further, the record reveals that Goodwill contradicted the witnesses' testimony that they were disciplined without

counseling with evidence of frequent meetings between the witnesses

and the counselors.

Next, the Board concluded that Goodwill operates as a permanent

employer because seventy percent of the individuals in the bargaining

unit worked at Goodwill for more than two years and that Goodwill

does not accord competitive placements to employees. See id. at 410-

11. We find that the mere fact that a number of severely disabled

employees participate in the program for several years does not

negate the program's rehabilitative character. See id. The record

reveals that, despite the number of employees who have worked at the

facility for two years or more, a significant number of employees

work for a short time at the facility and then are placed in the competitive job market, evidencing the rehabilitative nature of the program.

The Board found that the productivity standards applied to disabled

employees were characteristic of a typical industrial setting. See id.

at 411-12. Specifically, the Board based its conclusion on the fact that

Goodwill does not employ disabled employees at the facility until

they can perform sixty percent of the work that a non-disabled

employee can perform. The Board also relied on evidence that Goodwill transfers disabled employees who cannot reach their production

 5
goal and on the fact that there is no trainer at the facility. The record,

however, reveals that Goodwill's productivity standards are consistent

with a rehabilitative work environment: Goodwill implements an initial minimum productivity standard for entry into the program as a

means of measuring the disabled employee's progress toward a competitive work rate; Goodwill transfers and does not discharge employees who fall below the minimum productivity standard; and, while

Goodwill does not provide trainers at the facility to teach custodial

skills, Goodwill offers training emphasizing other areas, such as time

management and interpersonal relations. See id. 

Next, the Board concluded that the counseling offered by Goodwill

was not evidence of a rehabilitative work setting. The Board based its

determination on the fact that the counseling is not mandatory and

that the record did not show whether the counseling was a significant

part of the disabled employee's work day. We find, however that substantial evidence in the record reveals that the counseling offered by

Goodwill is indicative of a rehabilitative work environment. See id.

at 412. Goodwill employs two full time counselors who are available

at the facility and who spend eighty percent of their time counseling

workers and actively monitoring the progress of the disabled individuals.

Last, the Board concluded that Goodwill offers many of the same

terms and conditions of employment to disabled and non-disabled

workers. For example, the Board found that the disabled workers

work a full work week, punch a time clock, are eligible for health

insurance, and receive sick leave pay. However, we determine that the

Board's finding does not undermine the significant differences in

treatment that evidence the rehabilitative aspects of Goodwill's program. See id. at 410.

We conclude that substantial evidence in the record reveals that the

characteristics of Goodwill's commercial services program are the

same as those that the Board "previously used to declare handicapped

workers to be in a primarily rehabilitative relationship" in Goodwill

Indus. of Denver, 304 N.L.R.B. 764, 765 (1991), and Goodwill Indus.

of Tidewaters, 304 N.L.R.B. 767, 768-69 (1991). Davis, 108 F.3d at

413 (1991) (finding primarily rehabilitative relationship where Goodwill disciplined disabled workers differently, competitively placed

 6
disabled workers, set minimum productivity standards, offered counseling and training). We find that the Board did not adequately distinguish this case from its precedent, and we decline to remand the case

to the Board for further findings.

In sum, we determine that the Board incorrectly granted summary

judgment based upon its finding that Goodwill's refusal to bargain

with the certified unit constituted an unfair labor practice because

substantial evidence establishes that the severely disabled employees

in the unit were not employees under the Act, and therefore, the

Board erred in certifying the Union as the bargaining unit for the

employees. Accordingly, we grant Goodwill's petition for review,

reverse the Board's order, and deny the Board's cross-petition for

enforcement.

REVERSED

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