Community Living

312 COMMUNITY LIVING Community Living and United Food and Commercial Workers International Union, Local 1439, AFL-CIO. Cases 19-CA-16546 and 19-CA- 16724 11 August 1987 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBER JOHANSEN AND BABSON On 17 September 1984 Administrative Law Judge Russell L. Stevens issued the attached origi- nal decision. The Respondent filed exceptions and a supporting brief. The General Counsel filed an answering brief and a motion to strike certain ex- ceptions, and the Respondent filed a reply to the motion. On 24 July 1986 the Board, by a three-member panel, remanded this proceeding for further consid- eration consistent with Res-Care, Inc., 280 NLRB 670 (1986), and Long Stretch Youth Home, 280 NLRB 678 (1986). On 17 December 1986 Administrative Law Judge Earldean V.S. Robbins issued the attached supplemental decision The Respondent filed excep- tions and a supporting brief and the General Coun- sel filed an answering brief. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision, the sup- plemental decision, and the record in light of the exceptions and briefs i and has decided to affirm the judge's rulings, findings, and conclusions and to adopt Judge Stevens' recommended Order.2 ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge in the original decision in this proceeding and orders that the Respondent, Community Living, Yakima, Washington, its officers, agents, ' Subsequent to the issuance of the original judge's decision in this pro- ceeding, the General Counsel filed a motion to strike certain attachments to and related argument in the Respondent's brief in support of excep- tions To the extent that this motion remains outstanding in light of ex- ceptions to the supplemental decision, we grant the motion to strike on the grounds that the documents are not part of the record and are irrele- vant to the issues presented here 2 Backpay obligations resulting from the Respondent's unlawful unilat- eral changes in the collective-bargaining agreement shall be computed as prescribed in Ogle Protection Service, 183 NLRB 682 (1982), rather than by the formula prescribed in the remedy section of the initial judge's de- cision In accordance with our decision in New Horizons for the Retarded, 283 NLRB 1173 (1987), interest on and after I January 1987 will be comput- ed at the "short-term Federal rate" for the underpayment of taxes as set out in the 1986 amendment to 26 U S C § 6621 Interest on amounts ac- crued prior to I January 1987 shall be computed in accordance with Flor- ida Steel Corp, 231 NLRB 651 (1977) successors, and assigns, shall take the action set forth in the Order. CHAIRMAN DOTSON, dissenting. The Respondent in this proceeding is a nonprofit charitable corporation providing residential and re- habilitative support services for a small number of developmentally disabled persons within the State of Washington. For reasons previously stated, I would not assert jurisdiction over such an essential- ly local service unless it has been demonstrated that operations like the Respondent's as a particular class have a substantial impact on interstate com- merce. See my dissenting opinions in Salvation Army of Massachusetts, 271 NLRB 195 (1984), and Alan Short Center, 267 NLRB 886 (1983). As no such showing has been made here I would not ex- ercise jurisdiction over this employer. Catherine M. Roth, Esq., for the General Counsel Gary Lofland, Esq. (Wilson & Lofland), of Yakima, Wash- ington, for the Respondent. Allen D. Roberts, Administrative Assistant, of Spokane, Washington, for the Union DECISION STATEMENT OF THE CASE RUSSELL L STEVENS, Administrative Law Judge. This case was tried in Yakima, Washington, on July 31, 1984.1 The charge in Case 19-CA-16546 was filed February 23 by United Food and Commercial Workers International Union, Local 1439, AFL-CIO (Union). The charge in Case 19-CA-16724 was filed by the Union May 3. By order dated June 12, the Regional Director of Region 19, National Labor Relations Board (Board), consolidated the two cases and issued a consolidated complaint The complaint alleges that Community Living (Respondent) violated Section 8(a)(5) and (1) of the National Labor Relations Act (Act). All parties were given full opportunity to participate, to introduce relevant evidence, to examine and cross-ex- amine witnesses, to argue orally, and to file briefs. A brief, which has been carefully considered, was filed on behalf of the General Counsel No brief was received from Respondent's counsel. On the entire record, and from my observation of the witnesses and their demeanor, I make the following FINDINGS OF FACT I JURISDICTION Respondent is a nonprofit Washington corporation, with office and places of business in Yakima, Washing- ton, where it is engaged in operating residential facilities that provide tenant support systems and rehabilitative training for physically handicapped and mentally retard- ed persons i All dates hereinafter are within 1984, unless otherwise stated 285 NLRB No. 47 COMMUNITY LIVING In its answer to the complaint, Respondent denied the Board's jurisdiction and denied jurisdictional monetary allegations. On July 8, 1982, the Regional Director of Region 19 issued a supplemental decision and direction of election in Case 19-RC-10464, involving the same parties as those involved in the controversy herein. The supple- mental decision was based on a hearing held pursuant to remand by the Board, following an earlier hearing held April 2, 1982, and an earlier decision and direction of election issued by the Regional Director of Region 19 on April 15, 1982. At the supplemental hearing on April 15, 1982, the sole issue was the Board's jurisdiction over Re- spondent. The Regional Director based his supplemental decision of jurisdiction on National Transportation Serv- ices,2 and Respondent argued that the Board lacked juris- diction over it because Respondent's operations are over- seen by the State of Washington to such a degree that Respondent retains insufficient control over its employ- ment conditions to bargain effectively with a labor orga- nization covering unit employees The Regional Director's supplemental decision dis- cussed at length the nature of Respondent's operations, and the extent of control of those operations by the State of Washington The Regional Director concluded: The Board will not decline jurisdiction over an Employer which appears to maintain close ties to an exempt governmental entity solely because of that relationship. National Transportation Services, Inc., supra. It will, instead, resolve such jurisdiction- al questions by first determining whether the em- ployer meets the Section 2(2) definition of "employ- er" and, if it does, by then determining whether the involved employer maintains sufficient control over unit employment conditions and labor relations poli- cies to permit collective bargaining National Trans- portation Services, Inc., supra; D. T. Watson Home for Crippled Children, 242 NLRB No. 187 (1979). See also, R. W. Harmon & Sons, Inc., 250 NLRB No. 25 (1980). Applying the above-noted principles to the in- stant case, I first note that it is undisputed that the Employer is not an exempt governmental subdivi- sion. Indeed, the Employer's contracts with the DSHS specify that the Employer is a contractor and an agent or employer of the state Further, it is clear from the entire record before me that the Em- ployer retains substantial day-to-day control over labor relations and unit employees' conditions of employment to permit effective collective bargain- ing. Thus, the Employer maintains and exercises control over the hiring, discharge, rates of pay, ben- efits, grievances, and other working conditions of unit employees without any direct state involve- ment. While the state does earmark a minimum per- centage of its funds for the salaries and benefits of employees engaged in direct service jobs, the Em- ployer is free to set specific salary levels for unit employees and to exceed the earmark percentage 2 240 NLRB 565 (1979) 313 without state restriction or approval. In addition, the above-mentioned WAC regulations concerning employee qualifications are already exceeded by the Employer and, in any event, do not provide the state any appreciable control over the Employer's day-to-day hiring or personnel decisions. I find like- wise, that none of the other above-cited DSHS con- tract terms or WAC provisions deprive the Em- ployer of significant control over either its labor re- lations policies or the working conditions of unit employees. Such relations tend to reflect the state's concern with the nature of the services it has pur- chased from the Employer rather than with the em- ployment terms and conditions of unit personnel. See generally, K.A.L. Leasing, Inc., 254 NLRB No. 154 (1980); K.A.L. Leasing, Inc., 240 NLRB 892 (1979); D. T. Watson Home for Crippled Children, supra. Based on the above, and the record as a whole, I find that the Board's holding in National Transporta- tion Company, Inc, supra, dictates assertion of juris- diction herein. Accordingly, I reaffirm my April 15, 1982 finding that the Employer is within the Board's jurisdiction 3 Respondent appealed the Regional Director's supple- mental decision to the Board and, on August 11, 1982, the Board stated: Re Community Living, 19-RC-10464. Employer's Request For Review of Regional Director's Supple- mental Decision and Direction of Election is hereby denied as it raises no substantial issues warranting review. By direction of the Board: Dated, August 11, 1982 Robert Volger, Acting Exec Sec'y NLRB WSH DC Neither National Transportation Services, supra, nor the Board's decision of August 11, 1982, involving Respond- ents has been disturbed. Therefore, those cases control this issue and it is found that, at all times material herein, Respondent has been an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act, and a health care institution within the meaning of Section 2(14) of the Act. iI. THE LABOR ORGANIZATION INVOLVED United Food and Commercial Workers International Union, Local 1439, AFL-CIO is, and at all times materi- al herein has been, a labor organization within the mean- ing of Section 2(5) of the Act. a As noted at trial, there have been some changes since the date of the supplemental decision in Respondent's contract with the State of Wash- ington However, none of those changes alter the legal principles on which the supplemental decision was grounded 314 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD III. THE ALLEGED UNFAIR LABOR PRACTICES A. Background4 On September 15, 1982, pursuant to the Regional Di- rector's direction of election noted above, the Union was certified as the exclusive collective-bargaining represent- ative of Respondent's employees5 in the following appro- priate unit: All employees of the Employer at its facility locat- ed at 303 West Chestnut Street, Yakima, Washing- ton, excluding the executive director , assistant exec- utive director, program directors, assistant program directors, bookkeepers, office clerical employees, guards and supervisors as defined by the Act. The parties commenced negotiations , and throughout all their discussions, Respondent pled poverty and resisted the Union's wage and benefit proposals. On July 19, 1983, the Union notified Respondent's attorney that be- cause Respondent pled poverty, "we are going to exer- cise our legal right to audit Community Living to better determine their financial status." After some delay,6 an audit was conducted by the Union in mid -September 1983. A contract thereafter was agreed on by the nego- tiators, and it was ratified by the unit employees on No- vember 9, 1983 . On January 16, Respondent's attorney wrote a letter to Allen Roberts, the Union's administra- tive assistant: Although I told you during our recent conversa- tion that I had previously written you a letter re- garding Community Living's Board of Directors meeting, it appears that I was in error and have not done so. As you are aware, and we have previously discussed, the Board of Directors met Monday, Jan- uary 9, 1984. The result of the meeting was that the Board of Directors have rejected the contract. That rejection was based on, (1) there is currently a $38,000 deficit of Community Living, and its does not appear that there are currently funds or a way in which that deficit can be corrected; (2) DSHS has recently retroactively changed the manner in which agencies like Community Living will be compensated for the services they provide, that change was retroactive and directly affected the costs which could be allocated to tennat [sic] sup- port; (3) these changes were caused by the consider- able length of time from our last meeting until the date both the Union met to ratify the proposals and the Employer's Board of Directors was able to meet. I would appreciate your ideas on how to pro- ceed, whether its requesting the services of a media- tor or attempting to get together for further discus- sion. 4 This background summary is based on credited testimony and evi- dence not in dispute The unit contains approximately 16 employees This delay is found to be of no probative value so far as the issues are concerned. On February 6, without prior notice to or without bar- gaining with the Union, Respondent unilaterally imple- mented the following changes in wages, 'hours, and working conditions of unit employees , effective February l: i. Reduced the monthly expense allowance. ii. Eliminated the cashing out of annual leave. iii. Eliminated free coffee. iv. Eliminated holiday pay when employees not scheduled to work. v. Eliminated three (3) paid holidays. vi. Reduced annual leave from twelve to ten days a year. vii. Reduced annual leave hours that can be accu- mulated from 136 to 80. viii. Eliminated carrying over of annual leave. ix. Reduced wages. x. Required employees contribution for medical benefits. On March 8, Respondent's attorney wrote a letter to Roberts, apologizing for what he stated was his inadvert- ent oversight in offering to bargain about the changes, and then offering to bargain about the changes . Roberts answered Respondent on March 26, offered to bargain without waiving the Union 's rights concerning Respond- ent's having failed to bargain, and said a request for bar- gaining information would follow . On April 5, Roberts wrote a letter to Respondent's attorney requesting the following bargaining information: 1. Annual corporation audits for the operational years ending December 31, 1981 , 1982, and 1983; 2. Copies of contracts with the State of Washing- ton to provide client services for the years of 1982 and 1983; 3. Form 990 for the years 1982 and 1983; 4. Copies of current Blue Cross plan booklets; 5. Current premium rates for employees and/or dependents; 6. Copy of the contract with Blue Cross for pro- viding of benefits; 7. A breakdown of corporate administration sala- ries and benefits; and 8. A breakdown of non-staff-related expenses. Respondent sent some of the requested information to the Union, but has not, to date, sent the information re- quested in items 1, 2, 3, and 4 listed above. B. Duty to Bargain Much trial time was devoted by Respondent to ex- plaining its contracts with the State of Washington and the dire financial status it was in at all times over the past several years. Those facts are not new, nor were they unknown by the Union and Respondent at all rele- vant times. However, those facts are irrelevant to the issues. The question is whether Respondent instituted changes in existing wages, hours, and working conditions of employees without notice to, or bargaining with, the Union. Respondent admittedly did just that. Moreover, COMMUNITY LIVING 315 Respondent knew that in so doing an unfair labor prac- tice charge thereby may be generated . Respondent's memorandum to employees dated February 77 stated, inter alia: rely on outdated information in formulating its contract proposals. Respondent violated Section 8(a)(5) and (1) of the Act relative to this issue, as alleged in the complaint. The Board has chosen to immediately implement a reduction in corporation expenditures package rather than cease operation , although the Board is most cognizant that an Unfair Labor Practice will most likely be filed against the corporation for changing previously established working conditions. Respondent contends that the State unilaterally changed its contract with Respondent , thereby making wage and benefit changes necessary , but that is beside the point Respondent knew at least by December 14, 1983, that changes were being considered ," and changes were discussed by Respondent 's board of directors on January 9 . The changes were implemented February 6, effective February 1, without any prior notice to the Union Respondent had ample time between December 14, 1983, or January 9 to discuss proposed changes with the Union , but it did not do so . Respondent's letter of January 16 certainly did not satisfy Respondent's duty to bargain about proposed changes-it merely relates prob- lems with the State contract , and asks the Union "how to proceed ."9 No warning was given that substantial changes in employees' wages, benefits, and other work- ing conditions were going to be unilaterally implement- ed. Possible changes in the state contract are quite differ- ent from possible changes in employees ' working condi- tions. The former may result in the latter, but if so, Re- spondent had the legal duty to bargain about that fact with the Union, in absence of implementation 10 Respondent violated Section 8(a)(5) and ( 1) of the Act as alleged. i t C. Requested Information The information requested by the Union clearly is rele- vant to its bargaining position and to the contention of Respondent that it could not afford certain wages and benefits, and did not have more than nominal control of its affairs under state contracts, past and present. Re- spondent pleaded poverty and state control The Union was fully justified in asking for proof of those facts, through annual audits, state contracts , insurance agree- ments, and tax reports . Respondent furnished some infor- mation , but because Respondent contended that changes in its state contracts caused it to change employees' working conditions, the Union was entitled to past and present information for comparison purposes As found in Rybolt Heater Co ,12 the Union cannot be required to T Jt Exh 14 8 Jt Exh 10 9 C & S Industries, 158 NLRB 454 (1966) See also Aeronca, Inc, 253 NLRB 261 (1980) to The fact that changes in working conditions were made by Re- spondent in the absence of a bargaining impasse , is not in dispute 11 Seattle-First National Bank v NLRB, 638 F 2d 1221 (9th Cir 1981), Bedford Farmers Co, 259 NLRB 1226 (1982) 12 165 NLRB 331 (1967) IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES ON COMMERCE The activities of Respondent set forth in section III, above, occurring in connection with Respondent's oper- ations described in section I, above , have a close, inti- mate, and substantial relationship to trade , traffic, and commerce among the several States and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. CONCLUSIONS OF LAW 1 Respondent Community Living is an employer en- gaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act, and a health care institution within the meaning of Section 2(14) of the Act. 2. United Food and Commercial Workers International Union, Local 1439, AFL-CIO is a labor organization within the meaning of Section 2 (5) of the Act. 3. At all times material the Union has been the exclu- sive collective-bargaining representative for Respond- ent's employees in the following unit: All employees of the Employer at its facility locat- ed at 303 West Chestnut Street, Yakima, Washing- ton, excluding the executive director, assistant exec- utive director, program directors, assistant program directors, bookkeepers, office clerical employees, guards and supervisors as defined by the Act. 4. Respondent violated Section 8(a)(5) and ( 1) of the Act by unilaterally implementing changes in wages, hours, and other working conditions of Respondent's em- ployees in the above-described unit , without prior notice to, or bargaining with, the Union. 5. Respondent violated Section 8(a)(5) and ( 1) of the Act by refusing to furnish to the Union, on the latter's request, information reasonably necessary for, and re- quired by, the Union in its bargaining efforts on behalf of Respondent's unit employees. THE REMEDY Having found that Respondent has engaged in unfair labor practices, it is recommended that Respondent be ordered to cease and desist therefrom , and to take certain affirmative action designed to effectuate the policies of the Act. It is recommended that Respondent be ordered to make whole all unit employees for any losses they may have incurred as a result of Respondent's unilateral changes in employees' wages, hours, and other working conditions as described above, with interest, as set forth in F. W. Woolworth Co., 90 NLRB 289 (1950); Florida Steel Corp., 231 NLRB 651 (1977); see generally Isis Plumbing Co., 138 NLRB 716 (1962), and to furnish to 316 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD the Union the information it requested, as described above. 13 On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed14 ORDER The Respondent, Community Living, Yakima, Wash- ington, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Violating Section 8(a)(5) and (1) of the Act by uni- laterally implementing changes in wages, hours, and other working conditions of its employees in the appro- priate unit described above, without prior notice to, or bargaining with, the Union. (b) Violating Section 8(a)(5) and (1) of the Act by re- fusing to furnish to the Union, on the latter's request, in- formation reasonably necessary for, and required by, the Union in its bargaining efforts on behalf of Respondent's unit employees. (c) In any like or related manner interfering with, re- straining , or coercing employees in the exercise of rights guaranteed them in Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Make whole all unit employees for any losses they may have incurred as a result of Respondent's unilateral changes in employees' wages, hours, and other working conditions, as described above, with interest as provided in the remedy section of this decision. (b) Furnish to the Union information requested by it, as described above. (c) Rescind changes in wages, hours, and working conditions of employees in the appropriate unit imple- mented without notice to, or bargaining with, the Union, if any such rescission is requested by the Union. (d) Preserve and make available to the Board and its agents, for examination and copying, all payroll records, social security payment records, timecards, personnel records and reports and all other records necessary to analyze and determine the amount of backpay due under the terms of this Order. (e) Post at place of business in Yakima, Washington, copies of the attached notice marked "Appendix 1115 Copies of the notice, on forms provided by the Regional Director for Region 19, after being signed by the Re- spondent's authorized representative, shall be posted by the Respondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respond- 13 NLRB v Allied Products Corp, 629 F 2d 1167 (6th Cir 1980), Michi- gan Consolidated Gas Co, 261 NLRB 555 (1982) 14 If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec 102 48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses 15 If this Order is enforced by a judgment of a United States court of appeals, the words in the notice reading "Posted by Order of the Nation- al Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board " ent to ensure that the notices are not altered, defaced, or covered by any other material. (f) Notify the Regional Director in writing within 20 days from the date of this Order what steps Respondent has taken to comply. APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government After a hearing in which all sides had an opportunity to present evidence, the National Labor Relations Board has found that we violated the National Labor Relations Act and has ordered us to post and abide by this notice. WE WILL NOT violate Section 8(a)(5) and (1) of the Act by unilaterally implementing changes in wages, hours, and other working conditions of our employees in the appropriate unit, without prior notice to, or bargain- ing with, the Union. WE WILL NOT violate Section 8(a)(5) and (1) of the Act by refusing to furnish to the Union, on the latter's request, information reasonably necessary for, and re- quired by, the Union in its bargaining efforts on behalf of Respondent's unit employees. WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees in the exercise of rights guaranteed them in Section 7 of the Act. WE WILL make whole all unit employees for any losses they may have incurred as a result of our unilater- al changes in employees' wages, hours, and other work- ing conditions, with interest. WE WILL furnish to the Union information requested by it. WE WILL rescind all changes in wages, hours, and working conditions of employees in the appropriate unit implemented without notice to, or bargaining with, the Union, if so requested by the Union. COMMUNITY LIVING Catherine M. Roth, Esq., for the General Counsel. Gary Lofland, Esq. (Wilson & Lofland), of Yakima, Wash- ington, for the Respondent. Tom McLane, of Spokane, Washington , for the Union. SUPPLEMENTAL DECISION STATEMENT OF THE CASE EARLDEAN V.S ROBBINS, Administrative Law Judge. On 17 September 1984 Administrative Law Judge Rus- sell L. Stevens issued his decision in this matter The Re- spondent filed exceptions and a supporting brief. The General Counsel filed an answering brief and a motion to strike certain exceptions, and the Respondent filed a reply to the motion. Thereafter, on 24 July 1986, the Board issued an order remanding the above-captioned proceeding to Judge Stevens, COMMUNITY LIVING 317 for further consideration consistent with the deci- sion and orders in Res-Care, Inc. [280 NLRB 670 (1986)] and Long Stretch Youth Home, Inc. [280 NLRB 678 (1986)], including, if necessary, a re- opening of the record on the jurisdictional issue. Thereafter, the Judge is instructed to issue a supple- mental decision, including findings of fact with credibility resolutions,' conclusions of law, and a recommended order, consistent with this remand order On 11 August 1986, Deputy Chief Administrative Law Judge William J. Pannier III issued an Order to Show Cause why, in light of the retirement of Judge Stevens, another administrative law judge should not be designat- ed to conduct any necessary supplemental proceedings. Subsequently, in the absence of any cause shown, I was designated to conduct whatever proceedings may be nec- essary to comply with the order remanding this matter. On 6 August 1986 the General Counsel submitted a supplemental brief in which she urged that the jurisdic- tional issue had been fully litigated by the parties and thus no further hearing was necessary On 8 September 1986, during a conference call in which counsel for all parties participated, counsel for the General Counsel and counsel for Charging Party indicated their position that no further hearing or briefs were necessary. Counsel for Respondent requested additional time to take a position and agreed to state his position in writing by 15 Septem- ber 1986 as to the necessity for further hearing and/or briefs in this matter. Such position having not been re- ceived, on 18 September 1986, I issued an Order to Show Cause why a supplemental decision should not issue in this matter without affording the parties an op- portunity for further hearing or to file additional briefs. In the absence of any cause shown, and it appearing that the jurisdictional issue was fully litigated by the parties, the supplemental decision is based on the evidence ad- duced in the hearing with Judge Stevens, which includ- ed, as part of the record, the transcripts and exhibits in the undeilying representation case hearings On the entire record, and after due consideration of the briefs filed by the parties, I make the following FINDINGS OF FACT In his decision, Judge Stevens found that the Board had jurisdiction over Respondent's operations. In so doing, he concluded that the jurisdictional issue was con- trolled by National Transportation Services, 240 NLRB 565 (1979), and relied on the Regional Director's supple- mental decision in the underlying representation cases, in which the Regional Director concluded: The Board will not decline jurisdiction over an Employer which appears to maintain close ties to an exempt governmental entity solely because of that relationship National Transportation Services, Inc , supra. It will, instead, resolve such jurisdiction- al questions by first determining whether the em- ployer meets the Section 2(2) definition of "employ- ' The facts relied on are undisputed er" and, if it does, by then determining whether the involved employer maintains sufficient control over unit employment conditions and labor relations poli- cies to permit collective bargaining National Trans- portation Services, Inc., supra; D. T. Watson Home for Crippled Children, 242 NLRB No 187 (1979). See also, R. W. Harmon & Sons, Inc., 250 NLRB No. 25 (1980). Applying the above-noted principles to the in- stant case, I first note that it is undisputed that the Employer is not an exempt governmental subdivi- sion Indeed, the Employer's contracts with the DSHS specify that the Employer is a contractor and an agent or employer of the state Further, it is clear from the entire record before me that the Em- ployer retains substantial day-to-day control over labor relations and unit employees' conditions of employment to permit effective collective bargain- ing. Thus, the Employer maintains and exercises control over the hiring, discharge, rates of pay, ben- efits, grievances, and other working conditions of unit employees without any direct state involve- ment. While the state does earmark a minimum per- centage of its funds for the salaries and benefits of employees engaged in direct service jobs, the Em- ployer is free to set specific salary levels for unit employees and to exceed the earmark percentage without state restriction or approval. In addition, the above-mentioned WAC regulations concerning employee qualifications are already exceeded by the Employer and, in any event, do not provide the state any appreciable control over the Employer's day-to-day hiring or personnel decisions. I find like- wise, that none of the other above-cited DSHS con- tract terms or WAC provisions deprive the Em- ployer of significant control over either its labor re- lations policies or the working conditions of unit employees. Such regulations tend to reflect the state's concern with the nature of the services it has purchased from the Employer rather than with the employment terms and conditions of unit personnel. See generally, K.A.L. Leasing, Inc., 254 NLRB No. 154 (1980); K.A.L. Leasing, Inc., 240 NLRB 892 (1979); D. T. Watson Home for Crippled Children, supra. Based on the above, and the record as a whole, I find that the Board's holding in National Transporta- tion Company, Inc., supra, dictates assertion of juris- diction herein. Accordingly, I reaffirm my April 15, 1982 finding that the Employer is within the Board's jurisdiction. On 24 June 1986 the Board issued its decision and order in Res-Care, Inc., supra. In that case, in asserting jurisdiction over Res-Care, the Regional Director had found, under National Transportation, supra, that despite certain control by U S Department of Labor over Res- Care's labor relations, Res-Care retained sufficient au- thority over its employees' terms and conditions of em- ployment that meaningful bargaining was not precluded. On review, the Board decided to reaffirm the basic test set forth in National Transportation for determining 318 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD whether assertion of jurisdiction over an employer pro- viding services to or for an exempt entity is warranted; but further concluded that, in applying that test, it would "examine closely not only the control over essential terms and conditions of employment retained by the em- ployer, but also the scope and degree of control exer- cised by the exempt entity over the employer's labor re- lations, to determine whether the employer in issue is ca- pable of engaging in meaningful collective bargaining." Applying this test to Res-Care, the Board concluded that the employer, who operated a job core center pursu- ant to a contract with the Department of Labor, did not have sufficient discretion in setting wages and benefits to engage in meaningful bargaining . There, the Department of Labor (DOL) approved minimum, maximum wage ranges and specific levels of employee benefits. The em- ployer could not provide greater benefits than those ap- proved by DOL nor could it set initial wages or grant a wage increase higher than the approved maximum. The total cost of the contract, embodied in the contract price, included the wage levels proposed by the employer and approved in advance by the DOL. Thus, DOL exercised ultimate discretion over basic economic terms, and any attempt by the employer to pay wages or benefits above the approved maximum would result in a determination of "disallowable cost" and a reduction of payments under the contract. Accordingly, notwithstanding that the employer was responsible for hiring, firing, promo- tions, demotions, transfers, and had final authority over grievances, the Board held that if an employer does not have the final say on the entire package of employee compensation, i.e., wages and fringe benefits, the em- ployer lacks the ability to engage in the necessary give- and-take, which is a central requirement of good-faith bargaining, and thus the employer does not possess suffi- cient control over the employment conditions of its em- ployees to enable it to engage in meaningful collective bargaining with the labor organization. Accordingly, the Board concluded it would not effectuate the purposes and policies of the Act to assert jurisdiction. On that same day, in Long Stretch Youth Home, 280 NLRB 678 (1986), the Board concluded that Long Stretch retained sufficient control over economic terms and conditions of employment essential to meaningful bargaining. In distinguishing between the circumstances in that case and the circumstances in Res-Care, the Board concluded that although, with its initial license applica- tion, Long Stretch submitted for the exempt agency's (MSSA) approval minimum, maximum salary ranges and other personnel policies, MSSA did not maintain strict standards for the content of those policies. Rather, MSSA's minimum and maximum salary ranges were merely guidelines and agency review of other benefits was primarily designed to ensure that Long Stretch grant certain benefits to its employees and not to deter- mine the content or level of those benefits. Thus, the Board concluded, MSSA did not exercise a level of con- trol over wages and other benefits that would preclude meaningful collective bargaining. The second distinction found by the Board between Res-Care and Long Stretch is that in Long Stretch the wage and benefit levels approved by the agency were not directly tied to funding. Thus, although Long Stretch submitted a proposed operating budget that included fig- ures representing total salaries and certain employee ben- efits, it could and did vary significantly from actual income and expenses for the year. Also, the computation of the compensation received by Long Stretch from the State was not determined by the budget as it'was in Res- Care, where the total salaries and benefits were one com- ponent of the employer's operating costs, and the total of the operating costs plus a fixed fee became the contract price on approval of the employer's bid. Rather, Long Stretch's budget was only the first, step in the process by which MSSA computed Long Stretch's compensation and this funding was not tied directly to Long Stretch's proposed expenditures for wages and benefits, but includ- ed consideration of the proposed budgets of other child care facilities, and in the final analysis was based on the agency's allotment from the state legislature. MSSA had little or no control over the setting of salaries, the con- tent of the benefits provided, or the content of other per- sonnel policies so long as Long Stretch satisfied mini- mum standards and qualifications. Accordingly, the Board concluded that Long Stretch retained substantial control over economic matters central to the employer- employee relationship. Further, the Board found that MSSA's control over Long Stretch's hiring firing was limited to the require- ment that Long Stretch fill certain job classifications and that employees meet certain minimum qualifications that did not significantly limit Long Stretch's ability to engage in meaningful bargaining. Also, the minimum em- ployment conditions imposed by MSSA for child care workers was primarily designed to ensure that those em- ployees remain able to provide the facility's residents with adequate supervision and care. Thus, the agency did not actually set the hours for child care workers, but only required that they have regularly scheduled hours and at least 1 day off per week. The Board concluded that these minimal restrictions did not disable Long Stretch from bargaining over terms and conditions of employment; and in all the circumstances found that Long Stretch retained sufficient control over the essen- tial terms and conditions of employment of its employees to enable it to engage in meaningful collective bargaining with the labor organization. The situation herein more nearly approximates the cir- cumstances in Long Stretch than it does that in Res-Care. Thus, as in Long Stretch, the State's funding of Respond- ent is not tied directly to Respondent's proposed expend- itures for wages and benefits. Respondent's contract with the Washington State Department of Social and Health Services (DSHS), to provide residential support services and rehabilitative training for physically handicapped and mentally retarded persons, specifically provides that Respondent is a contractor and neither Respondent nor its employees are agents or employees of the State. All individual clients serviced by Respondent are referred by DSHS. However, Respondent is not required to accept all such referrals. The Washington State Administrative Code (WAC) gives DSHS the authority to monitor a contractor's op- COMMUNITY LIVING 319 erations through a review and evaluation procedure de- signed to ensure proper standards of operation and that the tenant's needs, interests, and welfare are served. However, if deficiencies in contract compliance are dis- covered, a contract is not immediately terminated. Rather the contractor is given a reasonable opportunity, working with DSHS, to correct these deficiencies. As was the situation in Long Stretch, DSHS sets no specific limits on employee wages and benefits. Rather, it requires only that a certain minimum percentage of Re- spondent's total reimbursement be expended for salaries and benefits fo employees providing direct services to in- dividual clients.2 Respondent is free to, and does, com- pensate employees at a level in excess of this minimum. Salaries and benefits are set by Respondent's board of directors without state restriction or approval. Similarly, the board of directors establishes all other personnel poli- cies without direct state involvement and is the final step in the employee grievance procedure. The State is not represented on the Board of directors nor does it have input into, or approval over, the selection of board mem- bers. All hiring, terminations, and initial disciplinary de- cisions are handled by Respondent's supervisors without direct state involvement. State restrictions on hiring and firing and other personnel policies are limited to a prohi- bition against invidious discrimination against employees; and the requirements that employees be annually evaluat- ed in writing, that Respondent provide certain minimum hours of in-service employee training, maintain written 2 See Long Stretch, supra at fn 14, in which the Board stated 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 expendi- tures, 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 personnel policies and practices, and that employees be at least 18 years old, demonstrate capacity to be an ap- propriate role model, and exhibit mature behavior and the ability to make independent judgments. These mini- mal limitations, as those in Long Stretch,3 on Respond- ent's authority to hire and fire employees and to set con- ditions of employment, clearly do not significantly limit Respondent's ability to engage in meaningful bargaining. Based on the foregoing, I find after a consideration of the degree of control exercised by Respondent, as well as by DSHS, over Respondent's labor relations, that Re- spondent "retains sufficient control over the essential terms and conditions of employment of its employees to enable it to engage in meaningful collective bargaining with a labor organization " Long Stretch, supra. Accord- ingly, I find that at all times material, Respondent has been an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. Conclusions Based on the foregoing, and on the entire record, I conclude that the Conclusions of Law, Remedy, and Order set forth in Judge Stevens' original decision here are appropriate and supported by the record. According- ly, I recommend that the Board adopt the Order. See Long Stretch, supra at fn 7, which states 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 educa- tion 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 I day off per week (2 days per week for workers on 24-hour duty) Food serv- ice employees are required to meet mandatory standards for food preparation and sanitation must be provided with continuing in-serv- ice training, and their work assignments and dietary schedules must he written and posted