[Federal Register Volume 71, Number 41 (Thursday, March 2, 2006)]
[Notices]
[Pages 10709-10714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-2989]


-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employment and Training Administration

[TA-W-53,648]


International Business Machines Corporation Tulsa, OK; Notice of 
Negative Determination on Remand

    The United States Court of International Trade (USCIT) remanded to 
the Department of Labor (Department or DOL) for further investigation 
Former Employees of International Business Machines Corporation v. 
Elaine Chao, U.S. Secretary of Labor, No. 04-00079. In accordance with 
Section 223 of the Trade Act of 1974, as amended (19 U.S.C. 2273), the 
Department of Labor herein presents the results of the remand 
investigation regarding certification of eligibility to apply for 
worker adjustment assistance.

[[Page 10710]]

    The group eligibility requirements for directly-impacted (primary) 
workers under Section 222(a) the Trade Act of 1974, as amended, can be 
satisfied in either of two ways:

I. Section (a)(2)(A) All of the Following Must Be Satisfied

    A. A significant number or proportion of the workers in such 
workers' firm, or an appropriate subdivision of the firm, have become 
totally or partially separated, or are threatened to become totally or 
partially separated;
    B. The sales or production, or both, of such firm or subdivision 
have decreased absolutely; and
    C. Increased imports of articles like or directly competitive with 
articles produced by such firm or subdivision have contributed 
importantly to such workers' separation or threat of separation and to 
the decline in sales or production of such firm or subdivision; or

II. Section (a)(2)(B) Both of the Following Must Be Satisfied

    A. A significant number or proportion of the workers in such 
workers' firm, or an appropriate subdivision of the firm, have become 
totally or partially separated, or are threatened to become totally or 
partially separated;
    B. There has been a shift in production by such workers' firm or 
subdivision to a foreign country of articles like or directly 
competitive with articles which are produced by such firm or 
subdivision; and
    C. One of the following must be satisfied:
    1. The country to which the workers' firm has shifted production of 
the articles is a party to a free trade agreement with the United 
States;
    2. The country to which the workers' firm has shifted production of 
the articles is a beneficiary country under the Andean Trade Preference 
Act, African Growth and Opportunity Act, or the Caribbean Basin 
Economic Recovery Act; or
    3. There has been or is likely to be an increase in imports of 
articles that are like or directly competitive with articles which are 
or were produced by such firm or subdivision.
    The initial investigation to determine the eligibility of workers 
of the subject firm to apply for Trade Adjustment Assistance (TAA) was 
initiated on November 26, 2003 in response to a petition filed by a 
group of three workers. In an attachment to the original petition, 
petitioner Brenda Betts stated that International Business Machines 
Corporation (IBM) was transferring the accounting services performed at 
the subject facility to India and that ``Indians had been training at 
the [Tulsa] center all summer.'' (AR at 3). In addition, she included 
two news articles indicating IBM was exploring transferring more white 
collar jobs overseas (AR at 8-12), as well as her layoff notice from 
IBM, which indicates that the ``resource action'' (layoffs) were ``due 
to the need to rebalance skills, eliminate redundancies and deliver 
greater efficiencies.'' (AR at 7; see also AR at 16 and SAR at 361). 
The Department's initial negative determination regarding the former 
IBM employees was issued on December 2, 2003 and published in the 
Federal Register on January 16, 2004. 69 FR 2622. The Department based 
that determination on finding that the workers did not produce an 
article within the meaning of Section 222 of the Trade Act of 1974. 
Rather, the workers had provided accounting services. AR at 31.
    On February 6, 2004, the petitioners requested administrative 
reconsideration of the negative determination of their eligibility to 
apply for TAA. In that request, the petitioners stated that ``these are 
jobs performing work for British Petroleum [BP] and have been covered 
under the NAFTA/TRA act since 1999;'' that BP was shifting production 
of oil to foreign sources; and that BP ``has approved moving this 
accounting work to Bangalore, India and that ``about 250 [IBM 
accounting] jobs have already been moved to India.'' AR at 32.
    By letter dated February 11, 2004, the petitioners also appealed 
the original negative determination with the USCIT. By the time DOL 
learned of the CIT appeal, the reconsideration investigation was well 
underway. Concerned with the procedural complexity of a situation in 
which petitioners had appealed while administrative review had not been 
completed, the Department requested a voluntary remand so that the 
Department could issue its decision on the request for reconsideration. 
On March 30, 2004, the CIT granted the Department's request. DOL 
promptly issued its negative determination on the request for 
reconsideration, on March 31, 2004. The notice of negative 
determination was published in the Federal Register on April 16, 2003 
(67 FR 20644). The negative determination was based on DOL's findings 
that the workers' firm did not produce an article within the meaning of 
Section 222 of the Trade Act and that the workers did not provide 
services in direct support of an affiliated TAA certified firm.
    On May 14, 2004, the Department filed its second consent motion for 
voluntary remand, so that DOL could re-assess the eligibility of the 
petitioning worker group in light of the Department's revised service 
worker policy. Prior to April 2004, DOL certified petitioning service 
workers only where they had supported production at an affiliated TAA 
certified facility. Under the revised policy, workers who supported 
production at a TAA certifiable \1\ facility would be eligible for TAA 
benefits.
---------------------------------------------------------------------------

    \1\ The use of the term ``certifiable'' broadens the set of 
circumstances under which petitions from workers whose work supports 
the production of a trade-impacted article would be granted. In 
particular, the production workers whose activity is supported by 
affiliated support workers do not, themselves, have to be 
certifiable. Rather, the Department determines the support workers' 
eligibility using the sales, production, and import numbers for the 
article in question and the employment numbers for the support 
workers. Thus, the article produced could be trade-impacted, yet the 
production workers not certifiable, where the production workers did 
not experience an employment decline, while workers who supported 
production could be certified if it was established that increased 
imports of the article in question contributed importantly to their 
separation from employment.
---------------------------------------------------------------------------

    Therefore, the second voluntary remand investigation focused on 
establishing whether the subject worker group supported production at 
an affiliated certifiable production facility. The Department issued a 
negative determination on remand, on August 2, 2004. The notice was 
published in the Federal Register on August 10, 2004 (69 FR 48527) (SAR 
263-269). The determination was based on findings that the workers at 
the subject facility did not produce or support the production of an 
article by IBM and were not under the control of BP. Therefore, the 
Department concluded that the work performed by the former IBM 
employees could not be considered as in support of production at a BP 
facility.
    On December 2, 2005, the CIT remanded this proceeding with 
instructions for additional investigation and analysis and directed 
that the Department complete the remand process within 60 days, by 
February 6, 2006. This remand determination is submitted in compliance 
with those directives.
    The CIT concluded that the then-existing record supported the 
conclusion that the separated workers were controlled by BP. Opinion at 
29-31. Accordingly, the Court directed the Department to reevaluate the 
existing record and to conduct such additional investigation ``as is 
necessary to fully develop the evidentiary record * * *.''

[[Page 10711]]

Opinion at 42. In particular, the Court instructed DOL to ``consider 
whether--in light BP's continued presence there--the Accounting 
Facility may constitute an `appropriate subdivision' of BP * * *.'' 
Opinion at 54, n. 53.
    Further, the Court directed DOL to ``explain, inter alia, both its 
policy and its practice concerning ``control'' as a criterion for 
certification of leased workers'' (Opinion at 28 n.18) and to ``clearly 
articulate and apply a standard for `control' that is consistent with 
this opinion (clarifying and updating that set forth in its new Leased 
Worker Policy).'' Opinion at 43. Further, the Court directed DOL to 
``explain the origins of and legal bases for'' the criteria used to 
determine the former employees' eligibility for benefits. Opinion at 
62. The Court's instructions have been addressed, as set forth 
below.\2\
---------------------------------------------------------------------------

    \2\ The Department has revised its leased worker policy so that 
DOL no longer maintains that the former IBM employees can be 
certified only if they are employed at a BP production facility. 
Accordingly, the CIT's direction for the Department to explain or 
justify its former position is moot. Opinion at 51-52, 54.
---------------------------------------------------------------------------

    In order to determine who exercised operational control over the 
workers of IBM's Tulsa Accounting Center, the Department reviewed the 
existing record and requested additional information from IBM, BP, and 
the petitioners regarding the day to day business activities of the 
workers of the IBM Tulsa facility. Opinion at 42, 58. To that end, DOL 
promptly sent out a series of questionnaires, following up as necessary 
through e-mail and by telephone. For example, the Department issued its 
first set of questions to BP and IBM on December 12, 2005 and received 
the first responses on December 19 and December 20, respectively. As 
documented in the SAR, DOL obtained cooperation from multiple IBM and 
BP officials, whose responsibilities and access to pertinent 
information made them sufficiently informed to be proper sources for 
the investigation. SAR 742, 761-764, 846.
    Further, DOL obtained a copy of the contract (SAR at 396-439) 
between BP and Pricewaterhouse Coopers (PwC) (which IBM replaced when 
it acquired PwC in 2002), which included the Service Level Agreement/
Operating Level Agreement (SLA) as ``Schedule 1''. Opinion at 58, SAR 
at 440-719.\3\ In order to determine who exercised actual, operational 
control over the separated IBM workers, DOL used the text of these 
documents as a starting point, not the endpoint, for its inquiries.
---------------------------------------------------------------------------

    \3\ DOL also obtained a copy of IBM's Annual Report for 2003 
(SAR at 270-395), which documented the manner in which IBM 
``rebalanced'' its staffing after acquiring PwC. SAR at 360-361 and 
377. That information corroborates the other record evidence which 
indicates that the staffing reductions at IBM's Tulsa Accounting 
Center had nothing to do with BP.
---------------------------------------------------------------------------

    The Court has referred to record evidence that ``casts some doubt 
on IBM's motivation [AR 8-11 and 32].'' Opinion at 36. In light of the 
Court's concern, the Department took steps to verify all input received 
from any one of the information sources by forwarding it to the other 
sources for review and comment. AR at 32. Consistent with the spirit of 
the CIT Opinion (at 63), the former IBM employees were kept fully 
informed and accorded every possible opportunity to participate in the 
remand investigation. SAR at 851-1000. Through these means, the 
Department sought to develop a true understanding of the ``real-world'' 
relationship between the former IBM employees, IBM management, and BP 
employees/management. DOL's efforts have been exhaustively documented 
in the SAR. Fully mindful of the remedial purposes of the Trade Act, 
the Department has carefully reviewed all record evidence in preparing 
its remand determination. Based on IBM's and BP's consistent 
cooperation and responsiveness to the Department's inquiries and 
careful review of the materials provided, DOL has determined that the 
information received from BP and IBM is credible and worthy of 
reliance.
    As a preliminary matter, DOL recognizes that the petitioners, but 
not necessarily all former IBM employees at the Tulsa facility, had 
been BP employees prior to being outsourced to PwC in 2000 and that the 
outsourcing did not result in changes to their work assignments. DOL 
further understands that IBM's acquisition of PwC had no impact on the 
petitioners' work assignments. In addition, DOL recognizes that, in 
1999, the Department certified accountants formerly employed by BP in 
Tulsa as eligible for TAA because their work had been performed in 
support of trade-impacted production activity at BP facilities.
    The Department can understand the former IBM employees' frustration 
and concerns about the fact that workers doing similar work for BP were 
certified in 1999. However, there are two critical differences between 
the situation in 1999 and that in 2003. First, the passage of time can 
change the basis for the employer's personnel decisions. The reasons 
that led to the layoffs in 1999 are simply different from those present 
in 2003. Thus, even if plaintiffs were deemed to be under BP's control, 
they could not be certified. Second, there is the simple fact of the 
outsourcing. These IBM workers, unlike their colleagues from 1999, are 
not employees of BP. They are employees of IBM. While that fact does 
not irrevocably exclude them from coverage (the ``control'' analysis 
below will address that issue) the reality of the change in employer 
cannot be ignored. Outsourcing changes the nature of the relationship 
between a worker and his former employer. Benefits that workers would 
have been entitled to receive from their old employer are often lost. 
For example, the plaintiffs would not be entitled to claim benefits 
under BP's health insurance program. By the same measure, it would be 
reasonable to conclude that entitlement to TAA benefits would not 
follow the outsourced PwC/IBM workers if their new employer controlled 
their work and if their new employer was not producing an article.
    In any case, DOL has made every effort to explore whether the 
plaintiffs were under the operational control of BP as the first step 
if determining if they are entitled to certification. As documented 
through the contract (SAR at 396-439) and other record evidence, the 
outsourcing that occurred in 2000 did result in the shift of 
operational control from BP to PwC/IBM. For example, contract Article 
XII, section 12.1, General Responsibilities for PwC Employees, states, 
in pertinent part: [Business Confidential] SAR at 425. Further, 
[Business Confidential] SAR at 426. Further, the SLA consistently 
provides [Business Confidential] SAR at 442,453,521-525. [Business 
Confidential] SAR at 442,453,521-525. [Business Confidential] SAR at 
526.
    Such conditions are consistent with a client (BP)-service provider 
(PwC/IBM) relationship. The uncontested fact that the petitioners 
provided services for BP after they were outsourced (SAR at 956, 998) 
does not necessarily mean that those workers were still, in effect, BP 
employees or under BP's control. In any service provider-client 
relationship, some degree of oversight and direction is exercised by 
the client. Thus, the client's exercise of some control does not 
establish that a ``client'' shares or has exclusive operational control 
over workers employed by an unaffiliated service provider, for the 
purposes of TAA certification. The following answer in IBM's response 
to the fifth set of questions submitted by the Department captures 
IBM's understanding of the relationship between BP and the IBM 
employees:
    [Business Confidential] SAR at 790.
    In addition, as a practical matter, the BP accountants certified 
for TAA benefits in 1999 and the IBM accountants who were denied 
benefits

[[Page 10712]]

in 2003 were in fundamentally different situations. As direct employees 
of BP, the BP accountants were indisputably eligible because their work 
supported their employer's production of trade-impacted articles during 
the relevant period. Determining the eligibility of the IBM 
accountants, on the other hand, is a far more complicated matter.\4\ 
For the former IBM employees to be found eligible, the Department must 
be able to establish that ``client'' BP, not ``employer'' IBM, 
exercised effective operational control over the workers' performance 
of their duties. In essence, DOL must determine whether the outsourcing 
of BP workers effectively transferred control over those workers to 
PwC/IBM.
---------------------------------------------------------------------------

    \4\ [Business Confidential] SAR at 761.
---------------------------------------------------------------------------

    The Department will therefore focus on articulating and applying 
objective criteria for determining whether BP has exercised operational 
control over the former IBM workers. Opinion at 28. In the process of 
developing the criteria for review, the Department has reviewed the 
leased worker policy articulated in DOL's January 24, 2004 memorandum. 
Based on that review, the Department has determined that it is 
appropriate to revise that policy, as an interim response to the issues 
raised in this proceeding, so that DOL policy more fully reflects 
potential real-world situations. The Department retains the discretion 
to further revise this policy, so that the subject of ``operational 
control'' can continue to receive close scrutiny as DOL undertakes 
rulemaking to update the regulations implementing the eligibility 
requirements of the Trade Act. Given the time constraints imposed by 
the mandated remand period, this remand determination constitutes the 
``public document'' (Opinion at 43) through which the Department 
announces its updated ``leased worker policy.''
    Further, in response to the CIT's remand instructions (Opinion at 
28, n. 18); the Department has re-evaluated the significance of ``the 
existence of a standard contract between the contractor firm and the 
subject firm which should be considered sufficient evidence to prove 
the existence of a joint employer relationship.'' Id. (citing the 
January 24, 2004 memorandum at SAR 261). Given the Department's focus 
on ascertaining operational, rather than formal, control, DOL has 
determined that the existence of a contract between the employer (such 
as a staffing agency, leasing agency or contractor) of a worker group 
and a producing firm is not an essential prerequisite for the 
Department to determine that the workers in question are, in effect, 
joint employees or leased workers of the producing firm. The presence 
or absence of a contract would simply be one element, albeit an 
important one, in the Department's analysis. While a contract, where 
one exists, may provide strong evidence about the intended nature of 
the employment relationship between two firms, the Department will also 
review the operational conditions in which workers of an independent 
firm perform their functions for a producing firm. In all situations, 
however, for certification, workers must still have been engaged in 
activities related to production of an article produced by a firm.
    In developing the criteria for determining whether a worker is an 
employee or an independent contractor, DOL referred to pertinent case 
law; to the Internal Revenue Code (26 U.S.C. Sec.  3121(d)); to Revenue 
Ruling 87-41; and to Restatement (Second) of Agency Sec.  2, Master; 
Servant; Independent Contractor and Sec.  220, Definition of Servant 
(1958). The Department found the case law related to the ``economic 
realities'' test particularly useful. For example, the Supreme Court, 
held in Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318, 323-
324 (1992) (a case arising under the Employee Retirement Income 
Security Act):

    In determining whether a hired party is an employee under the 
general common law of agency, we consider the hiring party's right 
to control the manner and means by which the product is 
accomplished. Among the other factors relevant to this inquiry are 
the skill required; the source of the instrumentalities and tools; 
the location of the work; the duration of the relationship between 
the parties; whether the hiring party has the right to assign 
additional projects to the hired party; the extent of the hired 
party's discretion over when and how long to work; the method of 
payment; the hired party's role in hiring and paying assistants; 
whether the work is part of the regular business of the hiring 
party; whether the hiring party is in business; the provision of 
employee benefits; and the tax treatment of the hired party.

Id. (additional citations omitted).

    Based on its review of relevant law, the Department has developed 
seven criteria that will be applied to determine the extent to which a 
worker group engaged in activities related to the production of an 
article by a producing firm is under the operational control of the 
producing firm. The body of law involving joint employment or 
independent contractor status is complex and difficult to apply. The 
Department has sought to distill that body of law into some basic 
principles, thus creating a test that is useable within the short 
statutory timeframes that govern TAA investigations. Applying the 
criteria to the record evidence, DOL has sought to determine what 
constitute the ``practical realities'' (Opinion at 40, n. 33) of the 
relationship between the former IBM workers and BP.

The Seven Criteria Are as Follows

    1. Whether the subject workers were on-site or off-site of a 
facility of a production firm.
    2. Whether the subject workers performed tasks that were part of 
the producing firm's core business functions, as opposed to 
independent, discrete projects that were not part of the producing 
firm's core business functions.
    3. Whether the production firm has the discretion to hire, fire and 
discipline subject workers.
    4. Whether the production firm exercises the authority to supervise 
the subject workers' daily work activities, including assigning and 
managing work, and determining how, where, and when the work of 
individual workers takes place. Factors such as the hours of work, the 
selection of work, and the manner in which the work is to be performed 
by each individual are relevant.
    5. Whether the services of the worker group have been offered on 
the open market (e.g., do workers of the subject group perform work 
that supports other clients?).
    6. Whether the production firm has been responsible for 
establishing wage rates and the payment of salaries to individual 
workers of the subject worker group.
    7. Whether the production firm has provided skills training to 
subject workers.

None of these factors is dispositive. The Department will look at such 
evidence as there is that goes to all these factors and will determine 
whether, on balance, the evidence supports a level of control by the 
producing firm that demonstrates that the workers of the contractor or 
secondary firm are, in fact, leased workers or joint employees of both 
firms. The Department recognizes that there may be cases in which 
evidence of every one of the criteria is not available.

    1. The former IBM workers were off-site of any facility of the 
producing firm.
    While the leased worker policy articulated in the January 24, 2004 
memorandum addressed only on-site leased workers, DOL has determined 
that there may be circumstances where off-site leased workers, as well 
as on-site leased workers, who provide support for production at a 
trade-impacted facility can satisfy the ``operational control''

[[Page 10713]]

criteria to be eligible for TAA benefits. The Department recognizes 
that co-location, while an important consideration when determining 
whether subject workers are controlled by a producing firm (Opinion at 
45, 48-49), is not the conclusive factor.
    DOL considers co-location to create a strong presumption of 
control, so long as the workers are not engaged in activities 
completely unrelated to the work of the facility, such as selling 
extraneous items (e.g., food) on-site and so long as other evidence 
does not demonstrate that the workers worked independently of the 
producing firm.
    In the present case, the former IBM employees were not located at a 
BP facility of any kind. The fact that IBM employees worked in the same 
location as they had when employed by BP and that BP maintained staff 
(e.g., the BP Treasury unit) at the same street address where the 
former IBM employees had worked did not constitute co-location, because 
the IBM and BP facilities were completely separate, both physically 
(they were in different parts of the building) and functionally (for 
example, they had different telephone, computer and e-mail service). 
The information received from BP and IBM was consistent in that 
respect. SAR at 722, 742, 780, 791, 812, 834, 843). For example, 
[Business Confidential] SAR at 734. See also BP response. SAR at 843.
    2. The former IBM workers performed tasks that were not part of 
BP's core business functions.
    While undeniably important, the accounting services performed by 
the workers in question are not part of BP's core business activities 
of oil and gas exploration and production, petroleum refining and 
marketing, and petrochemicals production, and are exactly the kind of 
non-core activities that many production firms have successfully 
outsourced or have performed by independent firms. SAR at 1003, 1009. 
[Business Confidential] (SAR at 1005) \5\
---------------------------------------------------------------------------

    \5\ [Business Confidential] (SAR at 1017).
---------------------------------------------------------------------------

    3. BP had no discretion to hire, fire or discipline the IBM 
workers.
    The discretion to hire, fire and discipline workers is a strong 
indicator of the level of control exercised by a producing firm on the 
employees of another firm. This finding, which does not appear to be a 
matter of contention, is extensively documented. For example, [Business 
Confidential] SAR at 723.
    4. BP did not exercise the authority to supervise IBM workers' 
daily activities during the relevant period.
    BP did not manage the individual IBM employees' work, nor did BP 
determine how, where, and when the work of individual workers took 
place. Moreover, the investigation confirmed that while IBM personnel 
did interact with BP personnel to some degree, that interaction was 
limited and not managerial in nature. As is normal in a service 
provider-client relationship, BP outlined the work requirements, and 
IBM decided, when, where, and who would do the work.
    For example, [Business Confidential] SAR at 735.
    [Business Confidential] SAR at 844. (emphasis added).
    The Department followed up on every asserted instance of BP having 
exercised operational control over the former IBM employees. For 
example, [Business Confidential] SAR at 923. DOL communicated Ms. 
McAdoo's statement to IBM and BP. SAR at 789, 843. [Business 
Confidential] SAR at 789. [Business Confidential] SAR at 843. Once 
again, in any service provider-client relationship there must be some 
degree of interaction and oversight on the part of the client, but this 
does not necessarily constitute ``operational control.''
    The former IBM employers were, in turn, informed of the IBM and BP 
responses to Ms. McAdoo's statement. SAR at 979, 985. Further, DOL 
relayed a follow-up question, requesting, for example, more specific 
information about the ``type of directions Twyla McAdoo received from 
Steve Funk?'' The employees responded:
    [Business Confidential] SAR at 998.
    In addition, DOL did consider the other examples of ``control'' 
provided by the former IBM workers. SAR at 998. Those examples were, as 
follows:
    [Business Confidential] SAR at 998-999. [Business Confidential] SAR 
at 442, 453, 521-525.
    See also SAR at 843.
    Further, the apparent fact that [Business Confidential]
    A client would naturally wish to inform a service provider of the 
information needed for the service provider's personnel to do their 
jobs. The client would also, understandably, want to be kept informed 
of the activities of the service personnel. Thus, [Business 
Confidential] Those factors could just as easily be present where the 
relationship was that of client and independent service-provider.
    Further, the following question/response illustrates the extent to 
which BP's perception of the relationship differs from that presented 
by the former IBM employees:
    [Business Confidential] SAR at 844.
    Taken as a whole, the record evidence substantiates that, while 
there was interaction between BP personnel and the IBM personnel under 
the contract in question, the BP role was not supervisory or managerial 
in nature. Rather, the dealings between BP and IBM personnel were 
typical of what one might expect in a service provider-client 
relationship.
    The former IBM employees have stated that they were expressly 
required by BP to affirmatively hold themselves out as ``doing business 
for BP'' as evidence of an agency relationship between BP and IBM and, 
accordingly, evidence that BP controlled the IBM workers in question. 
SAR at 140. In fact, in response to a DOL question, BP stated: 
[Business Confidential] SAR at 844.
    [Business Confidential] SAR at 852.
    Thus, the fact that the workers in question were specifically 
required to clarify to the parties they did business with that they 
were IBM employees is further evidence of a distinct service provider-
client relationship. Moreover, the fact that IBM management had to 
address the problem of IBM employees describing themselves as BP 
employees by instituting this requirement is evidence that, while the 
workers (specifically the ones outsourced from BP) may have felt close 
ties to BP, both BP and IBM sought to make it clear that they worked 
for IBM and not BP.
    Also cited as evidence of BP control of the workers is the 
petitioner's assertion that the subject facility was ``a `shared' 
facility, with BP maintaining a physical presence there even after the 
`outsourcing,' '' including a treasury and main frame computer (Order 
at 30). According to both IBM and BP officials, however, the Tulsa 
facility was not shared. While there were some BP employees and a BP 
Treasury office (as well as offices for other un-affiliated firms) in 
the same building as the IBM workers, the BP office was located on a 
separate floor, had separate phone and e-mail systems from the IBM 
offices, and was not there for the purpose of controlling the IBM 
workers. SAR at 843.
    For example, BP has stated:
    [Business Confidential] SAR at 843.\6\
---------------------------------------------------------------------------

    \6\ [Business Confidential].
---------------------------------------------------------------------------

    [Business Confidential] SAR at 734. IBM further clarified this 
point where it stated: [Business Confidential] SAR at 789.
    5. The services performed by IBM workers were performed for clients 
other than BP.
    This fact does not appear to be in contention, and is another 
strong

[[Page 10714]]

indicator that IBM, and not BP, controlled the workers in question. 
While the petitioners themselves may have worked only for BP, this is 
not the case for the entire worker group.
    IBM has stated [Business Confidential] SAR at 761. See also SAR at 
723, 790.
    6. BP was not responsible for establishing wage rates or paying 
salaries to individual IBM workers.
    This issue does not appear to be a matter of contention. The 
petitioners have indicated that PwC/IBM, not BP, set their wage rates 
and paid their salaries, once they were outsourced. SAR at 913. 
Therefore, the evidence generated for evaluation of this criterion 
indicates that BP did not exercise operational control over the former 
IBM employees.
    7. BP did not provide skills training to the workers of IBM.
    This finding, which has been corroborated by both IBM and BP 
officials, is another strong indicator that IBM controlled the workers 
in question. [Business Confidential]
    Moreover, there is evidence that PwC/IBM provided training to the 
outsourced Tulsa employees, both to ensure both that they maintained 
the ability to perform the duties they had previously handled for BP 
and to help them acquire new skills for career development within their 
new firm. The ``Pricewaterhouse Coopers Questions and Answers for 
Outsourcing'' (SAR at 69) states:
    [Business Confidential] (Id.) (emphasis in original).
    Further, as instructed by the Court, DOL did consider the fact that 
the former IBM employees had been employed by BP, performing the same 
tasks as they subsequently performed for PwC/IBM after being 
outsourced. Opinion at 43, n. 38. While the situation presented is 
superficially similar to that presented in Former Employees of 
Pittsburgh Logistics Systems, Inc. v. USDOL, 27 ITRD 2125, 2003 WL 
716272 *10 (February 28, 2003) (See SAR at 945), the IBM petitioners 
were not part of a subdivision that was ``integrated into the [BP] 
corporate structure'' (Id.) and did not report ``directly to [BP] 
employees on all operational matters.'' (Id.) Further, BP personnel did 
not manage ``all job tasks, direct[] which employees could work at 
specific locations and specifically relocate[] the [IBM] subdivision 
along with certain [BP] facilities * * * to [BP's] facilities, 
evaluate[] [IBM] employee job performance, and advise[] which [IBM] 
employees should receive merit salary increases.'' Id.\7\
---------------------------------------------------------------------------

    \7\ The Department has considered the issue of whether to 
characterize employee leasing firms as appropriate subdivisions of 
the producing firm. The Department believes that this mode of 
analysis does violence to the separate nature of independent 
corporations. This case is an excellent example. No one can 
reasonably suggest that IBM and BP are legally related. The 
Department believes its new leased worker policy, using an 
operational control analysis, arrives at the same result without 
doing violence to corporate legal formalities.
---------------------------------------------------------------------------

    Further, the situation of the petitioners in Former Employees of 
Wackenhut Corp. v. USDOL, Ct. No. 02-00758, is not precedent as it was 
decided under the former leased worker policy, which looked only at 
whether there was a contract and whether the workers were on-site.

Conclusion

    After careful consideration of the record evidence, particularly 
that developed through the remand investigation, and the applicable 
Department policy, I affirm the original notice of negative 
determination of eligibility for trade adjustment assistance on the 
part of workers and former workers of International Business Machines 
Corporation, Tulsa, Oklahoma. Signed at Washington, DC this 6th day of 
February, 2006.

Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. E6-2989 Filed 3-1-06; 8:45 am]
BILLING CODE 4510-30-P