Long Stretch Youth Home, Inc.

678 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Long Stretch Youth Home, Inc. and Maryland State Employees Council 92, AFSCME, AFL-CIO, Petitioner. Case 5-RC-12013 24 June 1986 DECISION ON REVIEW AND DIRECTION BY CHAIRMAN DOTSON AND MEMBERS DENNIS, JOHANSEN, BABSON, AND STEPHENS On 17 August 1983 the Regional Director for Region 5 issued a Decision and Direction of Elec- tion in this proceeding, in which he asserted juris- diction over the Employer, Long Stretch Youth Home, Inc. (Long Stretch), under National Trans- portation Service, 240 NLRB 565 (1979), finding that Long Stretch exercises sufficient control over wages, hours, and conditions of employment to enable it to bargain with a labor organization as a representative of its employees. Thereafter, in ac- cordance with Section 102.67 of the National Labor Relations Board Rules and Regulations, Long Stretch filed a timely request for review of the Regional Director's decision, contending that the Regional Director erred in asserting jurisdic- tion. The Board granted Long Stretch's request for review. Pursuant to the Board's procedures, an election was conducted on 15 September 1983, and the ballots were impounded pending the Board's Decision on Review.I The Board has considered the entire record in this case with respect to the issues under review. Long Stretch contends that because it performs an essential state function which local school districts would otherwise be required to provide, and be- cause the Maryland Social Services Administration closely monitors and controls its operations, includ- ing many aspects of its employment conditions, Long Stretch shares the State's exemption from Board jurisdiction under Section 2(2) of the Act. Long Stretch also contends that because it is a non- profit institution whose activities are primarily non- commercial and intimately connected with its char- itable purpose, the Board should exercise its discre- tion not to assert jurisdiction. We reject both con- tentions and affirm the Regional Director' s asser- tion of jurisdiction over Long Stretch. Long Stretch, incorporated in the State of Mary- land as a nonprofit corporation, has been licensed since 1975 by the Maryland Social Services Ad- i The parties stipulated at the hearing that the appropriate unit would include all Long Stretch employees at its Frostburg, Maryland location, excluding managers, guards, and supervisors as defined in the Act ministration (MSSA) as a child care institution.2 It operates a residential facility for teenage boys, pro- viding medical services, education, social services, and room and board. Residents are referred to Long Stretch from MSSA and from the Maryland Department of Juvenile Services. Generally, the boys come from homes found unfit for rearing chil- dren, or are students who have been expelled from the public school system. MSSA regulations governing the licensing of child care institutions in the State of Maryland3 re- quire them to be incorporated in the State and to possess a certain organizational structure composed of a board of directors and a paid administrator. Pursuant to these regulations, in order to obtain a license, Long Stretch was required to submit an ap- plication including, inter alia, a list of its staff posi- tions and qualifications, a proposed operating budget for the current year, and its personnel poli- cies. Long Stretch must submit its proposed operat- ing budget annually, setting forth its projected income and expenses and showing how the sums will be allocated among four program areas: medi- cal services, education, social services, and room and board. The proposed budget is tentative: Long Stretch submitted a budget of $747,286 in total gross revenues for 1982. Actual gross revenues were $322,347, roughly half the proposed figure. Long Stretch Administrator William Platter testi- fied that actual revenues for 1983 were anticipated to be substantially less than in his proposed budget. The agency reviews the proposed budget, and re- views the manner in which Long Stretch proposes to allocate income among its various functions and services. Each year the agency combines the pro- posed budget for Long Stretch with the proposed budgets of the other 49 licensed child care institu- tions in Maryland to prepare its own budget, which is submitted to the Maryland General Assembly. Based on the amount of funding approved by the legislature, the agency determines the amount it will pay for each child referred to Long Stretch. Nearly all Long Stretch's actual gross income is derived from these per-child payments. Employee salaries are set by Long Stretch. Al- though MSSA looks at salaries when reviewing the annual budget, MSSA has no control over the amount actually paid employees. MSSA does issue cost guidelines, suggesting minimum and maximum salary ranges for each job classification. A licensee may, however, pay more than the maximum and 2 Prior to 1972, the Employer's property was a family-owned farm that provided recreation and a summer camp for youth From 1972 to 1975, the Employer operated as an unlicensed foster home for children 8 Md Admin Code Tit 7, subtit 2, ch 13, §§ 01- 07, 10, 14, and 18- 21 280 NLRB No. 79 LONG STRETCH YOUTH HOME less than the minimum. The agency's licensing pro- gram specalist Carolyn Blogman testified, "I have no control over what [the salary] is" and "an ad- ministrator can pay his social worker $18,000 or some may pay them $13,000." The agency also has a nonmandatory policy that a licensed institution should not spend more than 65 percent of its gross operating budget for salaries, or more than 15 percent of its cash flow for rent. This policy is not a requirement, however, and is not enforced as such. If a facility has a salary schedule that is "grossly unfair," Blogman testified that she would discuss it with the facility's adminis- trator, and if the administrator offered a plausible explanation for the disparity, the agency would accept it. Blogman testified further that such a situ- ation had never arisen, but that if an administrator justified paying one child care worker twice as much as another because the administrator consid- ered the first twice as good as the second, she would accept the explanation. No definition of "grossly unfair" appears in the record. Although Long Stretch is required to submit its proposed budget annually, it is required to submit its personnel policies only when it initially applies for a license and at license reevaluation, which must by regulation occur at least every 5 years but which may occur more frequently. Long Stretch largely determines what its personnel policies will be. Long Stretch determines vacation and leave policies and has its own health plan, which is dif- ferent from that used for state employees. Long Stretch has discretion to determine layoffs and fur- loughs-without notifying MSSA. Long Stretch sets work schedules, some of which it arrives at through negotiations with employees. MSSA re- views and approves these personnel policies, which include salary ranges and hours, and vacation, sick leave, and retirement policies.4 With regard to the purpose of this agency review, Blogman testified that the agency requires only that Long Stretch have personnel policies, and that certain items such as vacation must be included, but these policies do not have to be in a special form. She also testified that the agency may question certain sections of Long Stretch's personnel policies, and agency per- sonnel may sit down with Long Stretch's adminis- trator to work out any disagreements. The agency does not, however, maintain strict standards that determine the content of Long Stretch's personnel policies, beyond certain minimum qualifications for some of the staff and a minimum number of days 4 The regulations do not require an institution to have a grievance pro- cedure or a retirement plan, but only require that any such policies it may have be submitted for review Long Stretch, in fact, does not have a retirement plan 679 off for child care workers.5 Long Stretch occasion- ally changes its personnel policies; such changes need not be submitted to the agency for approval at the time they are made. Blogman testified that Long Stretch is required to inform the agency of "program changes" each year, and that the agency would expect Long Stretch to submit major changes in employee benefits as "program changes" for the agency's approval.6 Blogman, who is responsible for monitoring 25 MSSA licens- ees, including Long Stretch, testified that she had never had occasion to disapprove a licensee's per- sonnel policies. MSSA regulations require Long Stretch to have certain staff positions, including child care workers, in sufficient numbers to serve the children at the facility: social workers, a physician, a dentist, a food service director (who may or may not be a di- etician), clerical staff, and housekeeping, food serv- ice, and maintenance employees. The agency's cost guidelines suggest a ratio of 1 social worker for every 20 residents at the facility. If Long Stretch were to experience a dramatic reduction in staff and refuse to correct the situation at the agency's request, the agency could suspend referrals of chil- dren or suspend the license. The agency can also require Long Stretch to fill particular staff posi- tions in order to meet agency-imposed needs. At the time of the hearing, Long Stretch was in the process of hiring a social worker as required by the agency. MSSA has no control over who is hired by Long Stretch, but does review each hiring deci- sion to assure compliance with the agency's mini- mum qualification.' The agency can veto the hiring of an employee who does not meet minimum qualifications. The agency has no control over firing except insofar as the employee has failed to meet the minimum qualifications or has been found guilty of child abuse.8 a As required by MSSA regulations See fn 7 infra fi For example, this official testified hypothetically that if the agency had initially approved a Long Stretch policy that employees were to re- ceive 2 weeks of vacation annually , and if Long Stretch later decided that employees were to receive no vacation time, the agency would expect this decision to be submitted as a "program change " r The regulations impose minimum qualifications for certain staff, as well as some minimum employment conditions Child care workers must be at least 21 years of age and must have a high school education. Long Stretch must provide continuing in-service training and supervision for child care workers Child care workers must have regularly scheduled hours, and are required to take at least 1 day off per week (2 days per week for workers on 24-hour duty) Food service employees are required to meet mandatory standards for food preparation and sanitation, must be provided with continuing in-service training, and their work assignments and dietary schedules must be written and posted a At the time of the hearing, Long Stretch was subject to special statu- tory requirements with regard to child abuse State law required employ- ees of child care institutions to report any and all incidents of suspected child abuse occurring at their place of employment , even those commit- ted by fellow employees Md Ann Code art 27, § 35A ( repealed 1984) Continued 680 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Long Stretch also operates, pursuant to its status as a child care institution, a learning center which provides both academic and vocational training for the residents.9 The curricula for such programs are established by the Maryland Department of Educa- tion, which has supplied Long Stretch with various teaching equipment owned by the State, and a full- time teacher paid by the State to operate the equip- ment. MSSA regulations provide that teachers em- ployed by Long Stretch should possess the same credentials and qualifications required of teachers in public schools. Long Stretch is required to employ a principal, who must have at least a mas- ter's degree in school administration. MSSA is empowered to investigate Long Stretch with regard to violations of any of its licensing standards and regulations. If Long Stretch fails at any time to meet the prescribed standards and reg- ulations, the agency consults with Long Stretch's administrator and suggests changes to bring Long Stretch into compliance. If compliance is not ob- tained, the agency is empowered to suspend Long Stretch's license for not more than 1 year, or to permanently revoke the license. There is nothing in the record, however, to indicate that any attempt has ever been made to invoke this authority. Indeed, the regulations provide that if MSSA has doubt about the continuing eligibility of an institu- tion for license, the agency must allow the licensee a reasonable opportunity to determine a course of action. The regulations require the agency to engage in continuing review of its licensees' compliance with licensing standards, by examining records, observ- ing employees' direct work with children, and by periodic evaluation of the program and services. Long Stretch's administrator testified that the agency generally inspects his facility twice a year, and that the agency examines employee personnel files, among other records. The Department of Ju- venile Services also visits Long Stretch once a year to monitor its placement of children. Long Stretch relies on Ming Quong Children's Center, 210 NLRB 899 (1974), for the proposition that we should decline to assert jurisdiction be- cause it is a nonprofit institution whose activities are primarily noncommercial in nature and inti- In addition, the agency maintained and circulated to all child care institu- tions a list of individuals convicted of child abuse On one occasion prior to its being licensed as a child care institution , Long Stretch suspended, at the request of the State Department of Juvenile Services, one of its child care workers who had been suspected of child abuse 9 Long Stretch has been attempting to obtain accreditation by the State Department of Education . To assist Long Stretch in this effort, the State installed at Long Stretch's facility refrigeration equipment owned by the State in order for Long Stretch to meet state food -storage require- ments At the time of the hearing, however, Long Stretch still lacked a gymnasium and a library, both required for accreditation mately connected with the charitable purposes of the institution. The Board overruled Ming Quong in St. Aloysius Home, 224 NLRB 1344 (1976), involv- ing a child care and education center very similar in purpose to the Long Stretch facility. In St. Alo- ysius Home, the Board held that the only basis for declining jurisdiction over a charitable institution is a finding that its activities do not have a sufficient impact on interstate commerce to warrant the exer- cise of the Board's jurisdiction.10 The Board re- cently reaffirmed this conclusion,1 and we see no reason to depart from it here. Long Stretch also argues that it shares the State's exemption from NLRB jurisdiction under Section 2(2) of the Act, either because it performs a government function or because its operations are closely monitored and controlled by MSSA. In our decision in Res-Care, Inc., 280 NLRB 670, issued this day, we reaffirmed the basic test enunci- ated in National Transportation Service, supra, 240 NLRB 565, for determining when assertion of ju- risdiction over an employer providing services to or for an exempt entity is appropriate. National Transportation rejected the "intimate connection" test, which entailed an analysis of the relationship of the services provided by an employer to the purposes of the exempt entity. Our reaffirmance of National Transportation today compels a rejection of Long Stretch's argument that the educational services it provides make it an adjunct to the Maryland public school system. In essence, Long Stretch urges us to decline to assert jurisdiction because it is providing education- al services which the State's public school system would otherwise be obligated to provide, since a part of Long Stretch's program is an educational program for its residents, some of whom have been formally expelled from public schools. Long Stretch would thus have us return to the approach taken in Overbrook School for the Blind, 213 NLRB 511 (1974); and Pennsylvania School for the Deaf, 213 NLRB 513 (1974), in which the Board declined to assert jurisdiction on the grounds that the em- ployers were "adjuncts" to the state public school systems, and that their operations were essentially "local in nature," with little effect on interstate 10 Id. at 1345 l i Volunteers of America, 272 NLRB 173 (1984), enfd 777 F 2d 1386 (9th Cir 1985) The courts of appeals have uniformly upheld the Board's enlargement of its jurisdiction in St Aloysius Home to encompass nonprofit charitable employers See NLRB v. St Mary's Home, 690 F 2d 1062 (4th Cir 1982), NLRB v Salvation Army of Massachusetts, 763 F 2d 1 (1st Cir 1985), NLRB v. Lighthouse for the Blind of Houston, 696 F 2d 399 (5th Cir 1983), NLRB v Southeast Assn for Retarded Citizens, 666 F 2d 428 (9th Cir 1982); NLRB v. St Louis Christian Home, 663 F 2d 60 (8th Cir 1981), NLRB v Kent County Assn for Retarded Citizens, 590 F 2d 19 (1st Cir 1978) LONG STRETCH YOUTH HOME commerce. Those decisions were subsequently overruled, however, in D. T Watson Home for Crippled Children, 242 NLRB 1368, 1370 (1979). As the Board explained in Wordsworth Academy, 262 NLRB 438, 440 (1982): The adjunct test, which examines the relation- ship between the employer and the exempt entity, is nothing more than the intimate con- nection test reborn, and the same reasons which persuaded us in National Transportation to reject that test compel a similar result for the adjunct test. Because we have reaffirmed our intention not to base our jurisdictional decisions on the relationship between the functions of the exempt entity and those of the private employer, we decline Long Stretch's invitation to revive the "adjunct to the public school system" test. National Transportation held that the single ap- propriate standard in determining whether we should assert jurisdiction over an employer with ties to an exempt entity is whether the employer has sufficient control over the employment condi- tions of its employees to enable it to bargain effec- tively with a labor organization. In Res-Care, supra, we further explained that this determination should be based on an analysis of the degree of control exercised by the exempt entity over the employer's labor relations, as well as the control retained by the employer. We held that when an employer lacks the ultimate authority to determine primary terms and conditions of employ- ment, he lacks the ability to engage in the neces- sary "give and take" which is a central requirement of good-faith bargaining and which makes bargain- ing meaningful. Id. at 674. When, as in Res-Care, the exempt entity retains the ultimate discretion to set wage and benefit levels, meaningful bargaining cannot be achieved and jurisdiction should not be exercised. Having examined the record, we find that, unlike the employer in Res-Care, Long Stretch does retain sufficient control over economic terms and condi- tions of employment essential to meaningful bar- gaining. In Res-Care, we held that the employer, who op- erated a job corps center pursuant to a contract with the United States Department of Labor (DOL), did not have sufficient discretion in setting wages and benefits to engage in meaningful bar- gaining. In that case, DOL approved minimum- maximum wage ranges, as well as specific levels of various employee benefits. The employer could not set initial wages or grant a wage increase higher than the approved maximum, and could not pro- 681 vide greater benefits than those contained in the approved benefit package. The exempt entity thus exercised ultimate discretion over basic economic terms. DOL's total cost of the contract, embodied in the contract price, included the wage levels pro- posed by the employer and approved in advance by the exempt entity. Any attempt by Res-Care to pay wages or benefits above the approved maxi- mums would result in a determination of "dis- allowable cost," and a reduction of Res-Care's pay- ment under the contract. By contrast, in this case, MSSA does not exer- cise ultimate discretion over wage and benefit levels. Although Long Stretch does submit, for agency approval, with its initial license application, minimum-maximum salary ranges, as well as other personnel policies it may have, the agency does not maintain strict standards for the content of those policies, and Long Stretch largely determines for itself what those salaries and other policies will be. MSSA's minimum and maximum salary ranges are merely guidelines, as is the "policy" suggesting a percentage limit of Long Stretch's budget for sala- ries. Long Stretch need not obtain prior agency ap- proval for changes in personnel policies. Although Licensing Program Specialist Blogman testified that the agency might initiate an investigation if an employer were paying "grossly unfair" salaries, this phrase is not defined and has not been applied. Moreover, the record shows that the agency would accept plausible explanations for "grossly unfair" salaries. The agency's review of other benefits is primarily designed to ensure that Long Stretch grants certain benefits to its employees, and not to determine the content or level of those benefits. These facts do not show that MSSA exercises a level of control over wages and other benefits that would preclude meaningful collective bargaining.12 The second distinction between the control over wages and benefits here, as compared to Res-Care, is that in this case the wage and benefit levels ap- proved by the agency are not directly tied to fund- ing. Although Long Stretch submits a proposed operating budget for agency review and approval each year, the proposed salary ranges and benefit levels are not submitted with the budget; they are submitted with the initial license application and at reevaluation, as part of its "personnel policies." The budget submitted by Long Stretch is only a 18 Contrary to the dissent's contention, we do not rely on the fact that the licensing agency has never "exercised" its ultimate authority to disap- prove Long Stretch's proposed wages or benefits Rather, we rely on the fact that the agency's authority is in reality limited to suggesting salary guidelines and ensuring certain benefits are provided, and does not in- clude the discretion to approve or disapprove specific salary or benefit levels 682 DECISIONS OF NATIONAL LABOR RELATIONS BOARD proposed operating budget. Although this budget in- cludes figures representing total salaries, and totals for certain employee benefits , it can and does vary significantly from actual income and expenses for the year. In addition, the computation of the compensation received by Long Stretch from the State is not de- termined by the budget, as it was in Res-Care. In Res-Care, the total salaries and benefits were one component of the employer's operating costs, and the total of the operating cost plus a fixed fee became the contract price upon approval of the employer's bid. DOL was able to control the amounts that it paid the employer for wages or benefits by "disallowing" labor costs that exceeded the limits set in the salary schedule and fringe ben- efit package approved by DOL. Long Stretch's proposed budget, on the other hand, is only the first step in the process by which the agency computes Long Stretch 's compensation. MSSA prepares its own budget request, which it submits to the state legislature, based on the pro- posed budgets of all 50 child care facilities in the State. The agency determines the per-resident amount it pays Long Stretch after the agency re- ceives its allotment from the state legislature.' s The State's funding of Long Stretch is not tied di- rectly to proposed expenditures for wages and ben- efits- 14 The State has little or no control over the setting of salaries, the content of the benefits pro- vided, or the content of other personnel policies, so long as Long Stretch satisfies minimum standards and qualifications. Accordingly, Long Stretch re- tains substantial control over economic matters which are central to the employer-employee rela- tionship. MSSA does exercise some control over Long Stretch's hiring and firing, but this is limited to the requirement that Long Stretch fill certain job clas- sifications, and that employees meet certain mini- mum qualifications for these positions. These mini- mal limitations on Long Stretch 's authority to hire 13 This system of compensation is similar to that used by the Pennsyl- vania Department of Education in D. T. Watson Home for Crippled Chil- dren, 242 NLRB 1368 (1979), except that in Watson there was also a statutorily established maximum on per-student payments In asserting ju- risdiction in Watson, the Board also noted the remote effect of the em- ployer's proposed expenditures on the employer's funding Id at 1369. " Courts have held that employers do not lack the freedom to bargain effectively over wages and benefits simply because they are subject to budgetary limitations because of their dependence on public funds. In the absence of specific limits on employee compensation expenditures, such as were present in Res-Care, the fact that the government entity places an effective ceiling on such expenditures by limiting the private employer's total budget is not the type of control over labor relations that would cause us to decline to assert jurisdiction See Truman Medical Center v NLRB, 641 F.2d 570, 574 (8th Cir. 1981), NLRB v Austin Developmental Center, 606 F.2d 785, 789 fn. 8 (7th Cir 1979) and fire employees do not significantly limit its ability to engage in meaningful bargaining.) r The minimum employment conditions imposed by the agency for child care workers are primarily designed to ensure that these employees remain able to provide the facility's residents with ade- quate supervision and care . The agency does not actually set the hours for child care workers. It only requires that they have regularly scheduled hours and that they have at least 1 day off per week. These minimal restrictions do not disable Long Stretch from bargaining over terms and con- ditions of employment. Based on the foregoing , we find, after closely ex- amining the degree of control exercised by Long Stretch, as well as by the State of Maryland, over Long Stretch's labor relations, that Long Stretch retains sufficient control over the essential torn and conditions of employment of its employees tb enable it to engage in meaningful collective bar- gaining with a labor organization . Accordingly, we conclude that it will effectuate the purposes and policies of the Act to assert jurisdiction herein. DIRECTION The Regional Director for Region 5 is directed to open and count the impounded ballots, to issue a tally of ballots, and to take further appropriate action in accord with this decision and the Nation- al Labor Relations Board Rules and Regulations. MEMBER STEPHENS, concurring. I concur in the result. See my concurring and dissenting opinion in Res-Care, Inc., 280 NLRB 670, issued this day. CHAIRMAN DOTSON , dissenting. The Employer in this proceeding is a nonprofit, charitable institution. As I have stated previously, I would return to the policy of Ming Quong Chil- dren's Center, 210 NLRB 899 (1974), and decline to assert jurisdiction over such an institution unless it has been demonstrated that operations like the Em- ployer's as a particular class have a massive impact on interstate commerce . See my dissenting opinions in Salvation Army of Massachusetts, 271 NLRB 195 rs See NLRB v. E. C. Atkins & Co, 331 U.S 398, 413-414 (1947), R. W. Harmon & Sons v NLRB, 664 F.2d 248, 251 (10th Cir 1981) Nor do we give any weight to the State's control of certain operational aspects of Long Stretch To the extent , for example, that MSSA sets school curriculum, enforces child abuse legislation , and conducts a gener- al review of the allocation of resources among the four service areas pro- vided by Long Stretch, MSSA is monitoring the provision of services under its licensing program , not limiting in any substantive way the dis- cretion retained by Long Stretch over its own labor relations . Res-Care, supra, 674 fn 22, see Denver Volunteers of America v NLRB, 732 F 2d 769, 774 (10th Cir 1984), Golden Day Schools v NLRB, 644 F 2d 834, 836 (9th Cir 1981) I LONG STRETCH YOUTH HOME (1984), and Alan Short Center, 267 NLRB 886 (1983). As no such showing has been made here, I would not exercise jurisdiction over this Employer. Even if the Employer were not a nonprofit, charitable institution, I would not assert jurisdic- tion because I find that the ultimate authority for determining primary terms and conditions of its employees' employment belongs to the Maryland Social Services Administration (MSSA), a Govern- ment entity exempt from the Act's jurisdiction. In this regard, I disagree with my colleagues' inter- pretation of the MSSA's review authority and their view that jurisdiction can be asserted in accord with the standard set out today in Res-Care, Inc., 280 NLRB 670. As fully described in the majority opinion, Long Stretch must comply with various MSSA regula- tions and review procedures affecting its labor rela- tions policy in order to obtain and maintain its op- erating license. In applying for the license, Long Stretch had to submit for MSSA approval a list of all staff positions and qualifications, some of which are mandated by MSSA regulations. It also submit- ted for approval all its personnel policies, including those for salaries, hours of work, vacation, sick leave, and retirement. Resubmission of the entire salary/benefit package for MSSA approval must occur at least every 5 years. In the interim, Long Stretch must present major changes in employee benefits for approval within the year they are made. Long Stretch can hire whom it chooses, subject to MSSA's qualifications requirements. MSSA can and has, however, ordered Long Stretch to fill a personnel vacancy. Although the Employer deter- mines the exact salaries it will pay its employees, MSSA prescribes minimum and maximum salary guidelines and recommends that a maximum of 65 percent of a licensee's budget be allocated to sala- ries. These are discretionary guidelines, but signifi- cant deviations may be cause for MSSA investiga- tion. Long Stretch must submit a proposed annual line-item budget for MSSA approval. The agency approves or rejects the tentative budget as a whole. If approved, the budget is incorporated with those of other licensees in MSSA's funding request to the Maryland General Assembly. The amount of fund- ing actually approved determines MSSA's per- child payments to licensed operations. Most of Long's Stretch's gross revenues come from these payments. MSSA regularly conducts semiannual inspections of the Employer's operations. These inspections in- clude examination of employee personnel files. The agency also has the authority to investigate any 683 suspected violations of its licensing standards and regulations. The ultimate agency sanction against licensee noncompliance is suspension or revocation of the operating license. In Res-Care, supra, the Board has today carefully clarified its National Transportation test for deter- mining whether to assert jurisdiction over an em- ployer with close ties to an exempt government entity. We have emphasized there the need for a sufficient case-by-case analysis of the relative im- portance of the scope or degree of control exer- cised by the exempt entity versus the control re- tained by the private employer. We have decided to decline to assert jurisdiction over Res-Care be- cause it lacked the "ultimate authority to determine primary terms and conditions of employment, such as wage and benefit levels." Id. at 674. Unfortunately, the majority in this case has im- mediately beclouded the Res-Care "clarification" by asserting jurisdiction over Long Stretch because it retains "sufficient control over economic terms and conditions of employment essential to meaning- ful bargaining." The majority bases this conclusion on two perceived distinctions between Long Stretch and Res-Care. First, Long Stretch has greater freedom to set initial wages and benefits in advance of the exempt MSSA's review, and MSSA has not "exercised" the ultimate authority to disap- prove any wage/benefit actions upon subsequent review. Second, MSSA's budget review and ap- proval process does not directly determine Long Stretch's specific wage and benefit allocations. I find the foregoing distinctions to be insignifi- cant. I agree that MSSA does not use the budget mechanism as a primary means of controlling li- censees' labor relations, although it arguably could reject a proposed annual budget in its entirety be- cause of labor costs. The lack of direct budgetary control is just one factor to be considered in assess- ing the relationship between an employer and an exempt entity, however. Independent of the budget process, MSSA indisputedly possesses the ultimate authority to review, approve, and disapprove virtu- ally all of Long Stretch's salary, benefit, and per- sonnel policies. Contrary to the implications of the majority's reference to MSSA's past failure to exer- cise this authority, it is the mere real possession of such comprehensive ultimate labor relations control by an exempt entity that warrants declining juris- diction. MSSA has, in fact, consistently exercised this control by approving Long Stretch 's policies. That MSSA has not exercised this same authority by disagreeing with Long Stretch's labor relations policies in the past certainly does not guarantee that it will not do so in the future. The point is that whether approving or disapproving Long Stretch's 684 DECISIONS OF NATIONAL LABOR RELATIONS BOARD employment conditions upon review, it is MSSA massive impact on interstate commerce, and its calling the shots. labor relations policies are subject to the ultimate In accord with the foregoing, I would not assert authority of a state government agency. Conse- the Board's jurisdiction over the Employer here. quently, I would dismiss the representation peti- Its nonprofit charitable operations have no proven tion.