Seattle Opera v. National Labor Relations Board

*773RANDOLPH, Circuit Judge,

dissenting:

This is an important case to volunteers throughout the country and to the organizations they assist. By one estimate, more than 109 million Americans in 1998 freely gave their time and energy to help in the arts and humanities, in education, health, youth development, environment, and so forth. See Independent SectoR, The New NONPROFIT Almanao in Brief 16 (2001). Some volunteers receive nominal payments to defray their expenses. Now the National Labor Relations Board, at the instigation of a union representing regular employees, has decided that volunteers are also “employees” and are entitled to bargain collectively over wages, hours and working conditions. The rule of “law” embedded in the Board’s decision is this: if volunteers are paid a flat amount to reimburse them for expenses, the payment is “wages” and the volunteers become “employees.” In my view, the Board’s decision is arbitrary and ridiculous. The majority opinion only compounds the Board’s errors. I therefore dissent.

The Seattle Opera is a non-profit organization, nearly forty years old, specializing in the operas of Richard Wagner. On infrequent occasions the Opera needs more choristers for a production than its 86 regular choristers and their alternates. To fill the gap, the Opera draws , on a contingent of volunteers — the “auxiliary chorister volunteers,” as they are known. These are individuals, trained in voice, who volunteer their services to the Opera. If they pass the audition, they are added to the list of some 200 auxiliary choristers. When and if the Opera calls upon them, they are free to decline without consequence. If they agree to volunteer for a production, they of course must show up for evening rehearsals and for the performances, and sing in tune and in unison. For their efforts, each volunteer chorister is invited to the Opera’s end-of-the-season “volunteers party”; they receive a “Volunteer Dress Rehearsal Pass”; and — critical to the Board’s thinking — they are paid a flat amount of $214 after the last performance as reimbursement for travel and parking expenses.

A rose is a rose and under the definition in the National Labor Relations Act, an “employee” is an “employee.” 29 U.S.C. § 152(3). To break the circle, the Board holds that volunteers are not “employees.” See WBAI Pacifica Found., 328 N.L.R.B. No. 179, 1999 WL 676522 (Aug. 26, 1999). The WBAI decision should have led the Board to declare that the auxiliary choristers were not employees. To “work for hire,” the Board ruled in WBAI, “is to receive compensation for labor or services.” Id. at *4. The Supreme Court, quoting with approval a House Committee report, said much the same: “An ‘employee,’ according to all standard dictionaries, according to the law as the courts have stated it, and according to the universal understanding of almost everyone ... means someone who works for another for hire.” Allied Chem. & Alkali Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 167, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971). By no stretch are the auxiliary choristers being paid for their services, or are they working “in return for financial or other compensation.” Maj. op. at 762 (emphasis added). The most telling fact is the amount they receive.

On average, an auxiliary chorister is expected to attend 7 music rehearsals (each lasting for 3 hours), 7 stage rehearsals (each lasting for 4 hours), and 8 performances (about 3 1/2 hours in length). In other words, if the $214 were wages rather than reimbursement for expenses the auxiliary choristers were making the grand sum of $2.78 per hour. The Regional Director, after making the same calculations, had it right — “the amount received is trivi*774al”; it represents “only an amount sufficient to let an individual roughly break even with out-of-pocket expenses” and is probably not enough to accomplish even that; “the ‘economic reality’ is that nobody can be functioning as an auxiliary primarily for immediate financial gain.”

The Board rejected the Regional Director’s analysis for this reason: “to find individuals not to be employees because they are compensated at less than the minimum wage, or because their compensation is less than a living wage, contravenes the stated principles of the Act.” Seattle Opera Ass’n, 331 N.L.R.B. No. 148, 2000 WL 1224905, at *3 (Aug. 24, 2000). Of course this assumes the very issue— that the $214 represents compensation rather than a reimbursement for expenses. And exactly what “principles of the Act” does the Board have in mind? There is of course no principle that volunteers have .a right to bargain collectively over wages. Volunteers are not paid wages. But to take the Board’s logic, one might as well say that because volunteers receive no compensation for their labor, that is all the more reason “the principles of the Act” give them a right to bargain collectively for some compensation. At any rate, the Board’s “reasoning” — I hesitate to call it that — flatly contradicts the leading case of Walling v. Portland Terminal Co., 330 U.S. 148, 67 S.Ct. 639, 91 L.Ed. 809 (1947), on which the Regional Director relied. In Walling, a railroad gave training to prospective brakemen and paid successful trainees retroactively at the rate of $4 per day for their training period (this translates into roughly $32 per day in current dollars). The Court held that despite the payment, the trainees were not “employees” subject to the minimum wage law because they were not being compensated for work performed. In language that applies equally to the auxiliary choristers and other volunteers throughout the country, the Court refused to sweep within the law “each person who, without promise or expectation of compensation, but solely for his personal purpose or pleasure worked in activities carried on by other persons either for pleasure or profit.” 330 U.S. at 152, 67 S.Ct. 639.1

Rather than simply assuming that the $214 represented wages, the Board should have tested its thesis through elementary mathematics. The parking lots near the Opera House are coin operated (so no receipts are given). For a rehearsal or performance, parking would cost about $4. Given the average number of rehearsals and performances (22), this amounts to $88 in parking fees. Under the collective bargaining agreement the Opera reimburses some union members for transportation expenses at the rate of 31 cents per mile. For auxiliary choristers driving from their home to the Opera House and back for all 22 rehearsals and performances, this comes to the handsome total of $2.86 per trip ($214 less $88 divided by 44). At 31 cents per mile, these volunteers will receive full reimbursement for their travel expenses only if they live or have a day job within 9.2 miles of the Opera House.2 *775Maybe the phantom of the opera did not have commuting expenses but in modern society most everyone else does.3

Not content with the Board’s own irrationalities, the majority makes up one of its own. It supposes that an auxiliary chorister might walk to all rehearsals and performances, and thus incur no travel expenses. Maj. op. at 768. What is the point? That because someone walks to the Opera Hall, every auxiliary chorister does? Or is it that because a chorister or two might get to the Opera Hall without driving, all auxiliary choristers must be singing for wages? The majority also is impressed with the fact that none of the auxiliary choristers are required to submit expense reports or receipts. Maj. op. at 763-64. The Board was too. It propounded the following non sequitur: “auxiliaries ... are not required to submit receipts or expense reports, and they receive remuneration in the amount of $214 at the end of a production whether or not they incur costs. Therefore we find the auxiliaries’ remuneration to be compensation for their work.” Seattle Opera Ass’n, 381 N.L.R.B. No. 148, 2000 WL 1224905, at *3- Where does the “Therefore” come from? There is no rule of labor law, at least none the Board or anyone else has identified, holding that unless payments to defray expenses are preceded by an expense report and receipts, the payments must be wages. The Opera’s witnesses testified that the $214 represented an approximation of expenses. Flat reimbursement payments are fairly common. (Consider the per diem payment many employees receive when they are on official travel, a payment not considered wages even if the employee did not incur equivalent expenses. See, e.g., Berry v. Excel Group, Inc., 288 F.3d 252 (5th Cir.2002).) Flat payments save on the bookkeeping and are fair to those who are freely giving up their time. Congress recognized as much when it amended the Fair Labor Standards Act.4 As the Senate report stated, “a volunteer crossing guard does not become an ‘employee’ because he or she receives a uniform allowance and/or travel expenses.” S.Rep. No. 99-159, at 14 (1985), U.S.Code Cong. & Admin.News 1985, 651 at 662. The short of the matter is that the $214 paid to the auxiliary choristers is consistent with reimbursement of expenses; it is entirely inconsistent with wages.

The Board’s analysis is flawed in many other respects. I will mention just a few. In applying the common law definition of employee, as the Board does in these *776cases, see NLRB v. Town & Country Elec., Inc., 516 U.S. 85, 94, 116 S.Ct. 450, 133 L.Ed.2d 371 (1995), it should have taken into account the tax treatment of the auxiliary choristers’ $214. See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 324, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992), quoting Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989). The Opera’s officials testified without contradiction that the auxiliary choristers are not on the 'payroll and that no taxes of any sort are withheld from their $214. If these payments were in fact wages, as the Board supposed, the Opera — and the auxiliary choristers — were violating the federal tax laws and probably state laws as well. I am not willing to assume any such thing and I do not think the Board had any business doing so either.5

The Board and the majority find it significant in determining whether the auxiliary choristers are employees rather than volunteers that the Opera “has the power or right to control and direct the person in the material details of how such work is to be performed.” Maj. op. at 762. This is outright silly. Are we to suppose that volunteer firefighters or volunteer rescue workers become “employees” because the fire chief or the head of the rescue squad directs them? As to this case, the Board seems to have forgotten that we are dealing with a choir. Auxiliary choristers join other singers to perform musical works. I can imagine no more collective enterprise. Everyone has to sing at the same time. Unlike a supernumerary (a non-singing extra) — who could miss a performance without much effect — missing singers affect the balance of the choir between the various voice parts. Rehearsal cannot be done *777independently. Choir members need to know not only the notes and the words, but they must also blend their voices together into a single sound. We all pronounce a’s and e’s a little differently from one another. In this context it is therefore nothing but irrational to treat control and direction as a feature distinguishing a volunteer from an “employee.”

The Opera has never treated its auxiliary choristers as anything but volunteers, and they have never viewed themselves otherwise. Their very title is revealing. Most are familiar with the ladies auxiliary, as one type of volunteer group used to be called. The Opera gives each such chorister an “Auxiliary Chorister Volunteer Handbook.” At the end of the season, in addition to an invitation to the volunteers party, each auxiliary chorister receives a letter from the Opera’s director thanking them for their “contributions” and stating that none of the Opera’s achievements would have been possible “without the undying support of Seattle Opera Volunteers.”

According to the Board this was all a charade. The Opera paid its auxiliary choristers at less than the minimum wage, in violation of the Fair Labor Standards Act. - It did not withhold taxes from their “paychecks,” in violation of the federal tax laws. It engaged in phony transactions, pretending to reimburse the auxiliary choristers for expenses, while actually compensating them for their work. It called the auxiliaries volunteers when they were really employees. And by not treating them as employees, the Seattle Opera violated the National Labor Relations Act. Everyone was deluded thinks the Board, everyone that is except the Board itself. The plain truth is the opposite. Something has gone terribly wrong in this case. Courts review Board decisions to correct such aberrations. Too bad we did not perform that function today. What fate awaits this precedent must now depend upon the inevitable petition for rehearing en banc.

. The majority dismisses the Supreme Court's decision in Portland Terminal on the ground that it arose under the Fair Labor Standards Act. Maj. op. at 763 n.4. But the Board's WBAI opinion relied on the treatment of volunteers under the Fair Labor Standards Act and found no evidence that the individuals there would be considered "employees.” WBAI, 328 N.L.R.B. No. 179, ' 1999 WL 676522, at *5 n. 3. Yet in this case, the Board disregarded the Regional Director’s de-cisión that the auxiliary choristers were not employees, in part on the basis that he relied on the Fair Labor Standards Act. See Seattle Opera Ass’n, 331 N.L.R.B. No. 148, 2000 WL 1224905, at *3 n. 4.

. The majority states that for "all the Board knew ... all of the auxiliaries” — that is, all 200 of them — “lived within 9.2 miles of the opera house.” Maj. op. at 763 n.8. The absurdity of this supposition is probably why *775the Board did not indulge in it. The majority seems to forget that the Opera was charged with committing unfair labor practices. The burden was on the Board's general counsel to prove those charges, see 29 U.S.C. § 160(c), a burden which could not be carried without proving that the auxiliary choristers were "employees” under the Act. Any evidentiary gap therefore militated in favor of the Opera.

. The majority says that the Board did not have to consider the computations I have set forth in the text because "the Board has no obligation to weigh evidence not presented to it.” Maj. op. at 762 n.8. But the computations represent reasoning from evidence already in the record, and it is reasoning that is missing from the Board's decision.

. Under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., which defines "employee” in much the same manner as the National Labor Relations Act, a volunteer at a public agency does not become an employee merely because the person is paid "expenses, reasonable benefits, or a nominal fee.” 29 U.S.C. § 203(e)(4). This is true whether the volunteer submits receipts for expenses or receives instead the “approximate" amount of those costs. 29 C.F.R. § 553.106(b). One can distinguish between volunteers and employees under the Fair Labor Standards Act only "by examining the total amount of payments made (expenses, benefits, fees) in the context of the economic realities of the particular situation.” 29 C.F.R. § 553.106(f). This is precisely what the Board refused to do.

. The majority thinks "the tax treatment of the payments is of little analytical significance,” citing some court of appeals opinions. Maj. op. at 765 n.8. But the Supreme Court in Nationwide, 503 U.S. at 324-25, 112 S.Ct. 1344, decided after the court of appeals decisions the majority mentions, held that in "determining whether a hired party is an employee under the general common law of agency, we consider ... the tax treatment of the hired party." (Italics added.) See also Community for Creative Non-Violence v. Reid, 490 U.S. 730, 753, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989) (relying on the purported employer’s failure to deduct taxes as a factor indicating that the individual was not an employee). The Court in Nationwide also pointed out that in the past, when the NLRB twice deviated from the common law definition of employee, "Congress amended the statute so construed to demonstrate that the usual common-law principles were the keys to meaning.” Id. at 324-25, 112 S.Ct. 1344. See also Willmar Elec. Serv., Inc. v. NLRB, 968 F.2d 1327, 1329 (D.C.Cir.1992).

In response to this dissent, the majority claims the Opera "waived” any argument about tax withholding. Maj. op. at 763. n.8. This is unfair to the Opera, and to its counsel, and it is quite wrong. The Opera made the tax argument in its brief not once but three times. The Board never even suggested "waiver” because it knew, better than the majority, that the argument had indeed been preserved and presented. On the basis of ample testimony about the subject in the agency proceedings, the Opera argued to us: "The Seattle Opera does not consider the travel reimbursement to be wages and no taxes are withheld.” Brief for Petitioner at 17. It emphasized the point again, arguing that "such reimbursement is not considered wages” because "no taxes are withheld,” id. at 22; see also id. at 27. It was in light of these arguments that the subject naturally came up in oral argument.

Furthermore, the Board could hardly have been surprised that the matter of tax withholding would be discussed. Not only did the Opera argue the point, but also the Regional Director, in determining that the Opera treated the "auxiliaries as volunteers,” relied on the fact that "[n]o withholding is taken” out of the $214. While the majority believes the record contains "no evidence” on the subject of tax withholding, maj. op. at 765 n.8, the evidence is there for all to see, as is the Regional Director’s factual finding directly on point, a finding the Board never upset.