Community Interactions--Bucks County, Inc. 1

COMMUNITY INTERACTIONS—BUCKS COUNTY 1029 Community Interactions—Bucks County, Inc. 1 and District 1199C, National Union of Hospital and Health Care Employees, Division of RWDSU, AFL-CIO, Petitioner. Case 4-RC-15206 May 18, 1988 DECISION ON REVIEW AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT Upon a petition duly filed on November 19, 1982, under Section 9(c) of the National Labor Re- lations Act, a hearing was held before a hearing of- ficer of the National Labor Relations Board. Fol- lowing the hearing, on March 29, 1983, the Re- gional Director for Region 4 transferred this pro- ceeding to the Board pursuant to Section 102.67 of the Board's Rules and Regulations for a decision on the issue of the Board's jurisdiction over the Employer. On August 11, 1986, the Board remand- ed the proceeding to the Regional Director for consideration of the jurisdictional issue and reopen- ing of the record, if necessary, in light of the Board's decisions in Res-Care, Inc., 280 NLRB 670 (1986), and Long Stretch Youth Horne, 280 NLRB 678 (1986). In response to the Regional Director's request, the parties declined to have the record re- opened and they were subsequently permitted to file supplemental briefs addressing the jurisdictional issue. On February 25, 1987„ the Regional Director issued a decision and order dismissing the instant petition pursuant to his conclusion that the pur- poses of the Act would not be effectuated by the assertion of jurisdiction in this proceeding. 2 Subse- quently, in accordance with Section 102.67 of the Board's Rules and Regulations, the Petitioner filed a timely request for review of the Regional Direc- tor's decision, contending that the Board should assert jurisdiction. By unpublished order dated April 8, 1987, the Board granted the request for review. The Employer filed a brief on review. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the entire record in this case and concludes, in disagreement with the Regional Director, that it is appropriate for the Board to assert jurisdiction over the Employer. The Employer is a nonprofit Pennsylvania cor- poration under contract with the Mental Health/- Mental Retardation department (MHMR) of Bucks 1 The name of the Employer appears as amended at the hearing 2 The Regional Director did not determine certain unit issues raised by the parties in view of his dismissal of the petition. County, Pennsylvania, to operate community resi- dential and habilitation services for mentally retard- ed persons. The Employer's residential program consists of several community-living-arrangement facilities that provide long-term care and a respite care residential service that provides short-term care. The Employer also operates a habilitation center, providing training and sheltered-employ- ment situations, and consultation services for its cli- ents participating in the residential programs in the county. The Petitioner seeks to represent certain employees in the Employer's residential program. Services for mentally retarded persons are man- dated by the Pennsylvania Mental Health/Mental Retardation Act of 1966. State funds are allocated to the Pennsylvania Department of Public Welfare (DPW), the state agency administering the statute. DPW disburses the funds to county governments, which in turn, through each county's department of mental health/mental retardation, contract with private operators for statutory services, including residential, habilitative, training, and consultative programs. The Employer is one of these private contractors, operating since 1977 under annual con- tracts with MHMR. Government funding makes up 98 percent of the Employer's annual revenue of ap- proximately $2 million, with the remaining 2 per- cent contributed through private fundraising efforts and client payments.3 In preparation for each contract, the Employer annually submits detailed, budget information for MHMR's review. In addition, MHMR performs an onsite audit of the Employer's costs and expenses to determine whether it is in compliance with state and county regulations. Subsequently the Employer meets with representatives of MHMR to review the budget information and MHMR's onsite find- ings and, based on that review, MHMR approves a line-item budget for the Employer for the upcom- ing contract year. As part of the budget-review process, the Em- ployer submits to MHMR a listing of the wages it proposes to pay each individnal in each employ- ment position in its facilities over the course of the contract year. The Employer determines its wage proposals in accordance with the "Modified Classi- fication Review-Program Funded Agencies" (MCR). The DPW developed the MCR for use by the county mental health/mental retardation de- partments and their private contractors. The MCR sets out job classifications, with basic employment qualifications, for various mental health/mental re- 3 Individual client payments are determined by the State and county; these payments reduce dollar for dollar the amount of state funds dis- bursed to the Employer. 288 NLRB No. 115 1030 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD tardation services, and it states a "prevailing mini- mum" and an "absolute maximum" salary for each classification. The absolute maximum salary is roughly 100 percent more than the prevailing mini- mum salary in each MCR classification. The Em- ployer can, and does in some circumstances, pay employees below the MCR's prevailing minimum salary. MHMR will disapprove a proposed salary, hdwever, that exceeds the MCR's absolute maxi- mum. In practice, such disapproval has occurred only once, in the Employer's initial year of oper- ation, when the suggested salary of its president was rejected as excessive. Since that time, accord- ing to the president's testimony, the Employer has kept all its proposed salaries below the stated maxi- mum and, within that discretionary limit, the Em- ployer's wage proposals have been approved. Also during the budget process, MHMR reviews the benefits that the Employer affords its employ- ees, e.g., vacation and holiday entitlements, retire- ment benefits, and life and health insurance. 4 The Employer sets the amounts it pays in benefits with reference to maximum limits established by DPW. MHMR reviews the Employer's benefit levels with respect to each employee; while the Employer may provide less than the maximum, MHMR will disap- prove benefit amounts exceeding the maximum limits. The Employer's staffing costs, including wages and benefits, ultimately appear as one line item in its proposed budget. Once the budget review proc- ess is completed and MHMR approves an actual budget, the Employer as a general rule cannot change the annual budget costs without the specific approval of MHMR. The Employer can, however, shift up to 5 percent of the cost of a particular budget item to another budget item without the agency's approval. The Employer is paid under the contract based on monthly invoices it submits to MHMR. If funds are left over at the end of the contract year, the Employer may be allowed to retain a portion for use in the upcoming year and the rest is transferred back to MHMR. With regard to other personnel matters, the Em- ployer interviews and hires its employees without the participation of MHMR. Pursuant to its hiring practices, the Employer developed its own job de- scriptions, with reference to the basic job qualifica- tions set out in the MCR as "boilerplate guidelines" for hiring. The Employer's employment qualifica- tions often exceed the MCR's minimum require- ments. 4 Although the record lacks detail, it is apparent that the Employer itself chooses the types of benefits it will provide with reference to state employee benefits as a basic guideline. The Employer evaluates employees itself, and it determines whether they receive promotions, raises, and merit increases. MHMR takes an inter- est in new employees' progress during their 90-day probationary period and it may make recommenda- tions to the Employer in this regard. The Employ- er, however, performs an independent evaluation of probationary employees at the end of the probation period. The Employer normally conducts its own investigations and makes its own determinations concerning employee discipline, including possible suspension and discharge, even in instances where such an investigation is initiated by an MHMR rec- ommendation. In the particular matter of alleged abuse of clients by employees, the Employer is sub- ject to rules promulgated by DPW, and it may place significant weight on a disciplinary recom- mendation by MHIVIR concerning client abuse, al- though it still conducts an independent investiga- tion. The Employer formulates its own personnel poli- cies and publishes them in its policy manual. In ini- tially determining its policies and developing the manual, the Employer referred to personnel prac- tices for state employees as a minimum guideline. MHMR reviewed the manual for conformance with the State's employment practices and ap- proved it. The Employer's benefits package, dis- cussed above, is set out in the policy manual. The manual also states the Employer's policies concern- ing, inter alia, attendance; voluntary and involun- tary termination, including specific causes for dis- charge; outside employment; various grounds for leaves of absence; and specific, enumerated work rules with a cumulative penalty-point system. The manual also establishes a two-step employee griev- ance procedure. Although the Employer's presi- dent testified, without substantiating evidence, that an employee might appeal a rejected grievance to MHMR, the manual's grievance procedure clearly indicates that the Employer makes the final and binding determination of the merits of a griev- ance.5 The operation of the Employer's facilities is sub- ject to a detailed set of regulations promulgated by DPW to ensure the execution of the State's pur- poses and policies in providing services for the mentally retarded. Both DPW and MHMR per- form frequent inspections to determine compliance with these regulations. Thus, the Employer must meet requirements concerning, inter alia, client rec- ordkeeping, the protection of clients' essential rights, the cleanliness of facilities, residential com- fort, fire safety, the health of residential clients and 5 See Res-Care, above at 674 fn 17, addressing similar circumstances. COMMUNITY INTERACTIONS—BUCKS COUNTY 1031 the Employer's staff, and proper nutrition. In addi- tion, the size of the Employer's employee comple- ment may be affected by M[HMR's determination of client/staff ratios, which the agency establishes pursuant to its responsibility to develop programs to meet the needs of each client. In the Regional Director's view, the record es- tablished that DPW and MHMR sharply limit the Employer's authority and discretion concerning employees' wages and benefits, staffing, job qualifi- cations, employee performance and discipline, and other terms and conditions ci employment. In light of Res-Care, Inc., supra, he concluded that the Em- ployer's control over these matters was insufficient to permit it to engage in meaningful collective bar- gaining and, accordingly, he declined to assert ju- risdiction. In its request for review, the Petitioner disputes the Regional Director's findings, contending that the Employer in fact has broad discretion to bar- gain over wages and benefits within the parameters set by DPW and MHMR, and that it is free to fi- nance from private sources any wages and benefits that exceed DPW's maximum limits. The Petitioner further contends that in other labor relations con- cerns the Employer is unrestrained by Government regulation and thus is free to bargain collectively. The Petitioner urges that the Board assert jurisdic- tion over the Employer pursuant to its decision in Long Stretch Youth Home, supra. In opposing the Petitioner's request for review and in its brief filed after the Board granted review, the Employer contends that DPW's estab- lishment of absolute maximum levels that limit the Employer's wage and benefit proposals, MHMR's approval of the Employer's wages and benefits in the budget process, and its right to disapprove changes in wages and benefits during the contract term, as well as the exempt entities' control over other labor relations matters and operations, all in- dicate that the Board should not assert jurisdiction pursuant to the test in Res-Care. The Employer also contends that a theoretical ability to increase wages and benefits from an employer's own funds is not a factor that the Board considers under Res- Care. In Res-Care, we reaffirmed and refined the test of National Transportation Service, 240 NLRB 565 (1979), for determining whether to assert jurisdic- tion over an employer providing services to or for an entity exempt from jurisdiction under Section 2(2) of the Act. We stated that the determination whether such an employer is capable of meaningful collective bargaining, and thus whether to assert jurisdiction, will depend not only on the control re- tained by the employer over essential terms and conditions of employment, i.e., the "final say" con- cerning employees' wages and benefits, but also on the scope and degree of control over the employ- er's labor relations exercised by the exempt entity. Res-Care, at 678, 681. We declined to assert juris- diction in that case because the exempt entity main- tained strict, direct authority over its funding of wages and benefits by its approval of wage ranges, benefit levels, and wage and benefit amounts in the employer's proposed line-item budget, and by its retention of the right to disapprove any subsequent changes in employee compensation. Ibid. 8 In con- trast, we asserted jurisdiction over the employer in Long Stretch because the exempt entity there did not tie its funding of the employer directly to the employer's proposed wages and benefits, and it re- quired only that the employer meet mimimum standards for the wages and benefits it chose to pay its employees. Ibid. In this case, it is apparent that the exempt enti- ties' control over essential terms and conditions of employment bears some similarity to the circum- stances in Res-Care. Thus, MHMR approves the wages and benefits for individual employees pro- posed by the Employer during the annual budget process and, once the line-item budget is approved, the Employer generally cannot increase or other- wise change its budget costs, including those for wages and benefits, without MEIMR's specific ap- proval.7 In addition, the record shows that DPW sets maximum limits for wages and benefits to which the Employer adheres in determining its compensa- tion proposals; in the budget process, MHMR will reject proposals that exceed the maximum levels. In this regard, in Res-Care we noted in dicta that an exempt entity's establishment of wage and bene- fit standards that limit at the outset an employer's ability to determine employee compensation indi- cates a control over essential economic terms of employment that precludes meaningful bargaining. Id. at 673 and fn. 14.8 6 See also PHP Healthcare Corp., 285 NLRB 182 (1987), in which we refrained from asserting Jurisdiction because of the exempt entity's ap- proval of the employer's wage and benefit levels in the budget process and its subsequent authority to disapprove changes in these areas. 7 We note in passing that a theoretical ability to augment employee compensation from the Employer's own funds does not affect our analy- sis See Res-Care at fn. 21. In any event, virtually all-98 percent—of the Employer's funding is provided by DPW and MHMR. Of the remaining 2 percent, a part is based on Government-determined client contributions that reduce dollar for dollar the State's funding and thus do not consti- tute an additional source of revenue available to the Employer. Aside from client contributions, a presumably insubstantial amount is derived from the Employer's private fundraising efforts. 8 The employer in Res-Care was not limited by such standards in making its initial wage and benefit determinations 1032 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD There are significant factors in the circumstances here, however, that establish that the control that is retained by the Employer over wages and bene- fits is sufficient to contribute effectively to the process of collective bargaining. First, while we recognize that the Employer is limited by DPW's maximum wage and benefit levels in determining its proposals for presentation to MHMR, the record indicates that this limitation leaves the Em- ployer with a notable measure of discretion. The MCR sets out a suggested minimum and an abso- lute maximum salary for various job classifications; in each of the classifications, including those that relate to the Employer's residential facilities, the difference between the suggested minimum salary and the absolute maximum is approximately 100 percent. Thus, in making its wage determinations, the Employer, which is not barred from paying less than the suggested minimum salary, can pay virtu- ally double the minimum amount without exceed- ing the absolute maximum salary. Further, while the record is not as detailed with respect to the DPW-imposed maximum limits on employee bene- fits, it is apparent that the Employer similarly has a measure of control in determining benefit amounts for its employees within the maximum limits. In our view, these factors afford the Employer a degree of authority over wages and benefits that makes them amenable to the collective-bargaining process. In addition, while the Employer as a general matter cannot change the approved budget amounts for employee compensation during the contract year without the further approval of MHMR, it can shift from one line item to another up to 5 percent of the cost of any budget item, in- cluding wages and benefits, without MHMR ap- proval. Although it is limited, this ability to shift costs, which was not available to the employer in Res-Care, provides the Employer with additional discretion concerning wages and benefits. This cost-shifting discretion is supportive of the collec- tive-bargaining process since budgeted appropria- tions can be shifted to an extent to cover collec- tively bargained increases in wages and benefits. In light of these factors, we find that neither DPW nor MHMR has the kind of "final say" over the determination of employee wages and benefits which, in itself, would cause us to decline jurisdic- tion. Accordingly, we view as especially significant the Employer's possession of relatively broad dis- cretion concerning other labor relations matters. The Employer interviews and hires employees in- dependently, and in this regard it developed its own job descriptions using the MCR's "boiler- plate" employment qualifications merely as a start- ing point. 9 The Employer performs its own em- ployee evaluations and independently determines promotions and raises for its employees. In matters of employee discipline, the Employer conducts its own investigations and determines the necessary extent of discipline, up to and including dis- charge." Other personnel policies, as set out in its policy manual, 1 ' establish that the Employer has broad authority in other important areas of em- ployee relations, e.g., choice of employee benefits, specific grounds for discharge, various matters in- volving leave from employment, work rules and appropriate penalties for their violation, and bind- ing grievance procedures. All of these matters, clearly within the Employer's control, provide sub- jects for meaningful collective bargaining. We find that DPW and MHMR do not have the "final say" over the compensation of the Employ- er's employees, and that the Employer's discretion, although subject to maximums, in determining its employees' wages and benefits, combined with its broad, independent authority in other significant labor relations areas, demonstrate that it retains suf- ficient control over its employees' terms and condi- tions of employment to engage in meaningful col- lective bargaining." Therefore we conclude that it will effectuate the purposes and policies of the Act to assert jurisdiction in this proceeding. According- ly, we reverse the Regional Director's Decision and Order and reinstate the petition. ORDER The petition in Case 4-RC-15206 is reinstated and the proceeding is remanded to the Regional Director for further appropriate action. CHAIRMAN STEPHENS, concurring. I concur in the result here pursuant to the views set forth in my concurring and dissenting opinion 9 The Employer's reliance on the MCR job qualifications and the fact that its staff size may be affected by the client/staff ratios set by MHMR constitute minimum constraints that do not significantly limit the Em- ployer's ability to participate in meaningful collective bargaining. Long Stretch, above at 681 1° The special disciplinary limitations placed on the Employer pursu- ant to DPW rules and MHMR's recommendations in the particular area of client abuse do not in themselves preclude the assertion of jurisdiction. See, e g, Dynaelectron Corp., 286 NLRB 302, 306 (1987); Rustrnan Bus Co., 282 NLRB 152 (1986). " That the Employer relied on state personnel practices as a minimum guideline in developing its policies and submitted the policy manual for review by MHMR for conformance with state practices does not indicate that the exempt entities exert substantial control over the Employer's policies See Long Stretch, at supra 678, 681. 12 We do not give any weight in our analysis to the exempt entities' regulation of the Employer's facilities in operational matters apart from labor relations, e g., client records, cleanliness, clients' rights, safety, health, and nutrition Government control in such areas does not impede the Employer's ability to bargain over its employees' terms and condi- tions of employment. See, e.g , Dynaelectron Corp, above at 306, Long Stretch, above at 682 fn 15; Res-Care, above at 674 fn. 22. COMMUNITY INTERACTIONS—BUCKS COUNTY 1033 in Res-Care, Inc., 280 NLRB 670 (1986). Thus, aside from the extent of its control over employees' wages and benefits, the Employer is capable of meaningful collective bargaining in view of its broad discretion concerning employee evaluations, promotions, discipline, grievance procedures, and other significant labor relations matters. Recognizing that the majority opinion in Res- Care is the controlling Board law, I agree, howev- er, that the assertion of jurisdiction here is consist- ent with the standards established in that decision.