International Association Of Firefighters, Afl-Cio

FIREFIGHTERS 1025 International Association of Firefighters, AFL-CIO and Betty Ann Morrison Case 5-CA-18553 February 10, 1989 DECISION AND ORDER REMANDING PROCEEDING BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On January 29, 1988, Administrative Law Judge Norman Zankel issued the attached decision, rec ommending that the Board decline to assert juris- diction over the Respondent, as the Employer of individuals performing work in the federally funded Open Learning Fire Service Program (OLFSP), based on the principles of Res-Care Inc, 280 NLRB 670 (1986) Thereafter, the General Counsel filed exceptions and a supporting brief, and the Respondent and the Charging Party filed cross-exceptions, supporting briefs, and answering briefs The National Labor Relations Board has delegat- ed its authority in this proceeding to a three member panel The Board has considered the judge's decision and the record in light of the exceptions and briefs and concludes, contrary to the judge, that the Re- spondent has failed to establish, as required by Res- Care, that it did not have the final say over the wages and fringe benefits of the OLFSP employ- ees We therefore find it appropriate to assert juris- diction with respect to these employees of the Re- spondent, as further explained below, and we shall accordingly remand this proceeding to Judge Zankel for a full determination on the merits of the complaint allegations The Respondent, an unincorporated association, is a labor organization engaged in the business of representing professional, public sector firefighters in collective bargaining with employers throughout the United States and Canada The Respondent's International headquarters in Washington, D C, houses its top officers and support staff and all indi- viduals employed in the Respondent's federally funded programs, including OLFSP The Respondent's sponsorship of OLFSP, a pro- gram designed to enable firefighters to earn college credits and a degree through independent study without classroom attendance, originated in 1977 when the National Fire Academy, a division of the U S Department of Commerce, awarded the Re- spondent a grant to conduct a 1 year feasibility study of such a program for fire service personnel The Respondent hired Betty Jo Mayeske, then a professor and director of the University of Mary- land's Open University Program, to conduct the study In 1979, the Respondent, on receiving an ad- ditional grant to develop and administer the pro- gram, retained Mayeske as the project administra- tor In 1980, Mayeske became the project director and began interviewing and hiring employees to staff OLFSP OLFSP employed between four and six employees from 1980 until November 1986, when the Respondent's sponsorship of the program ended In preparation for each annual Cooperative Agreement between the Respondent and the Fed eral agency under which the program operated, Mayeske and other members of the OLFSP staff prepared a draft proposal for review and approval by Respondent President Gannon for submission to the Federal agency, most recently the Federal Emergency Management Agency (FEMA) i The draft contained detailed program tasks and objec tives and an accompanying line-itemized budget for the next program year Every proposal included specific job classifications, with resumes and sala- ries of the personnel in those classifications,2 fringe benefits, and all operational expenses, including the Respondent's monthly rental charges for office space The Respondent, in its preparation of salary and fringe benefits proposals, was not required to comply with any federally prescribed wage mini- mum, maximum, or range 3 In fact, the Respond ent's primary objective in proposing wages and fringe benefits for the OLFSP director and staff was to align them with those of the Respondent's other department heads and similarly situated em ployees Accordingly, all figures and formulas used in the submissions to FEMA were supplied by the Respondent's accounting department On submission of the annual program and budget, the Respondent and representatives of FEMA met and negotiated the terms of a Coopera tive Agreement, which, in turn, outlined the scope of the program and fixed the budgetary line items for 1 year Any subsequent amendments to the agreement required renegotiation with, or written consent by, FEMA, except that the Respondent re tamed discretion to shift up to 5 percent of the ' The annual funding process remained unchanged until about 1982 the grant form of funding was replaced by an Assistance Award keyed to the terms of a Cooperative Agreement between the Respondent and FEMA 2 FEMA did not exercise any authority over OLFSP s employees but merely reviewed their resumes to assure that they were qualified to per form the programs requirements 8 FEMA s guidelines with respect to wages and benefits are contained in Circular A-122 entitled Cost Principles for Nonprofit Organza Lions published by the Federal Government s Office of Management and Budget Circular A-122 provides for a determination by the con tracting Federal agency whether total compensation to individual em ployees is reasonable for the services rendered and conforms to the estab fished policy of the organization [i e the Respondent] consistently ap plied to both Government and non Government activities 292 NLRB No 114 1026 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD total budget from one line item to another without FEMA's approval I FEMA designated a project officer to monitor program performance, and an as- sistance officer to assure compliance with the line item budget by reviewing OLFSP's monthly re quests for disbursements 5 FEMA retained the right to suspend or terminate the Cooperative Agreements for cause (i e , if the Respondent failed to comply with the agreements) The evidence as to other labor relations matters shows that the Respondent maintained complete control over the hiring, discipline, work related complaint handling, and general terms and condi- tions of OLFSP personnel and the day to day OLFSP operations The Respondent's efforts to treat OLFSP personnel no differently from its other employees is reflected in a number of memo- randa by President Gannon, such as one directing an increase in OLFSP staff salaries "no greater than the recent increases granted to the unionized employees "6 Although FEMA's usual practice was to adopt and incorporate the Respondent's compensation proposal into the Cooperative Agreement, testimo ny revealed, inter alia, that in 1981 the parties agreed to cut $17,600 from the OLFSP salary pro- posal This was accomplished, however, by elimi- nating the support coordinator position, and creat- ing a different position with administrative qualifi- cations A new employee was hired to fill this ad ministrative position In 1986, OLFSP requested an amendment to the contract that it had proposed and agreed on when it discovered a shortfall of more than $18,000 in salanes because of figures or formulas provided by the Respondent's accounting department The ensuing renegotiation produced an increase in the Respondent's overhead rate and ex tended the term to 13 rather than 12 months 7 The judge found that FEMA exercised the final say over OLFSP's salary and wages, relying on FEMA's authority to reject OLFSP's compensa- tion proposals under the initial, "reasonableness" test in Circular A-122 (see fn 3, above), and its ability to effectively fix the line item salary limits for OLFSP personnel following negotiations 8 He therefore concluded that "meaningful bargaining [by the Respondent] is not possible," citing PHP Healthcare Corp, 285 NLRB 182, 184 (1987), and Res Care, supra at 674 We disagree First, we find that the Respondent has not car reed its burden of showing that it is not free to set the wages, fringe benefits, and other terms and conditions of the OLFSP employees 9 Rather, it is apparent from the evidence as to the practice be- tween the parties that FEMA did not exercise the final say over wages and benefits The evidence demonstrates that in practice FEMA required the Respondent to formulate wage and benefit propos- als, and essentially accepted the Respondent's pro posed compensation without change, in no case de- claring it to be unreasonable 10 In addition, we ob- serve that the Respondent's efforts to achieve com parability in OLFSP's wages and benefits with those of its other employees fell squarely within the second test set forth in Circular A-122 In any event, even if the Respondent were to be unsuc cessful in having FEMA reimburse it for wages and benefits collectively bargained, it could bargain for additional language in the collective bargaining agreement to protect it from the consequences of such an event See Dynaelectron Corp, 286 NLRB 302, 303 (1987) In Community Interactions-Bucks County,11 the Board asserted jurisdiction where it concluded that the employer retained sufficient authority to engage in meaningful bargaining based on its dis cretion to fix salaries within the approximately 100- percent differential between the suggested mini mum and the absolute maximum of the exempt en- tity's salary range, and the employer's authority to shift up to 5 percent of the cost of any budget item from one line item to another without approval by the exempt entity The Board found that these fac tors distinguished that case from Res-Care and PHP, supra (See discussion in Community Interac tions, supra at 1031 ) In the present case, the Respondent's consistent ability to implement its annual proposals on the set * As the recurring total annual budget vaned from $300 000 to in excess of $600 000 5 percent equated to from $ 15 000 to more than $30000 5 All disbursements of funds under the Assistance Award were made directly to the Respondent who in turn paid OLFSP salaries and other expenses 6 A handwritten note appended by Gannon to the memo concerning the proposed wage increase stated that the increase should be given if it is permissable [sic] thru the grant r Mayeske s amendment request to FEMA advised that the Respondent had said that salanes will not be paid if this situation is not rectified Mayeske also informed Gannon by letter that the amendment request contained the highest proper figure should negotiations bung about a lower figure 9 The judge also relied on the Respondent s statements set forth in fns 6 and 7 above as demonstrating the Respondents deferential attitude to wards FEMA s ultimate authority over compensation as well as its abso lute reliance on FEMA for funding We do not find the foregoing evidence to be probative regarding the determination of who has final say over compensation because the Re spondent s position would likely be the same whether the funding source were a private contractor or an exempt one 9 See Wollf Trap Foundation 287 NLRB 1040 1049 (1988) citing NLRB v Austin Developmental Center 606 F 2d 785 789 (7th Cir 1979) 1° The elimination of the support coordinator position in 1981 was due to a staffing change not a finding that the compensation level of this po sition was unreasonable 11 288 NLRB 1029 (1988) FIREFIGHTERS 1027 ting of wages and fringe benefits during contract negotiations, and its retention of unlimited discre tion to shift up to 5 percent of the total budget among the various fixed line items makes this case more like Community Interactions-County than either Res-Care or PHP Moreover, we note that the OLFSP employees enjoyed working conditions almost identical to those of the Respondent's other employees, including office clerical employees rep resented by a labor organization, whereas the em- ployees at issue in PHP were subject to the control of two separate Government agencies and had working conditions virtually indistinguishable from those of their coworkers employed by the exempt Government entity In these circumstances we conclude that the Re- spondent had sufficient authority over the compen- sation and conditions of employment of the OLFSP employees to engage in meaningful bar- gaining with them, 12 and we therefore conclude that it is appropriate to assert jurisdiction over the Respondent as the employer of these employees We shall therefore remand this proceeding to Ad ministrative Law Judge Norman Zankel for a full determination of the merits of the unfair labor practice allegations contained in the complaint ORDER It is ordered that this proceeding is remanded to Administrative Law Judge Norman Zankel for the purpose of making specific findings of fact, conclu- sions of law, credibility determinations, and recom mendations as to whether the Respondent has en- gaged in the unfair labor practices alleged in the complaint IT IS FURTHER ORDERED that the judge shall pre- pare and serve on the parties a supplemental deci- sion setting forth his findings of fact, conclusions of law, resolutions of credibility, and recommenda tions with respect to the unfair labor practices al- leged Copies of that supplemental decision shall be served on all parties after which the provisions of Section 102 46 of the Board's Rules and Regula- tions shall be applicable CHAIRMAN STEPHENS, concurring I concur in the result here pursuant to the views set forth in my concurring and dissenting opinion in Res-Care Inc, 280 NLRB 670 (1986) In my view, even apart from the extent of its control over employees' wages and benefits, the Respondent is capable of meaningful collective bargaining in view 12 We find it unnecessary in light of our determination to address the General Counsel s and the Charging Party s contention that the Respond ent s alleged attempt to induce OLFSP employees to form a labor organs zation should preclude it from interposing its jurisdictional defense in this case of its broad discretion concerning employee evalua tions, promotions, discipline, grievance procedures, and other significant labor relations matters However, recognizing that the majority opinion in Res-Care is the controlling Board law, I agree that the assertion of jurisdiction here is consistent with the standards established in that decision Sharon Effatt Howard Esq, for the General Counsel Thomas A Woodley Esq (Mulholland & Hickey), of Washington, D C, for the Respondent Kathleen A Murray Esq (Berns Axelrod & Osborne P C) of Washington, D C, for the Charging Party DECISION NORMAN ZANKEL Administrative Law Judge This case was tried before me on September 16-18 and Sep tember 29-October 1, 1987, in Washington, D C The proceeding evolved froth an unfair labor practice charge filed by Betty Ann Morrison on 15 December 1986 i The charge was amended on March 30, 1987 A com plaint and notice of hearing issued on April 28, 1987 against International Association of Firefighters, AFL- CIO (Respondent) The complaint alleged, in substance, that Respondent, as an employer, violated Section 8(a)(1), (2), and (3) of the National Labor Relations Act (the Act), by having unlawfully assisted in the formation of a labor organization to represent certain of its employ ees and soliciting those employees to join that organiza tion by discnminatonly terminating the employment of Charging Party Morrison, David Martin and Shivanna King because they did not join and because they concer tedly sought legal counseling regarding their rights, and by discriminatorily terminating the employment of Su pervisor Betty Jo Mayeske The complaint was amended at the hearing to allege that Respondent also independ ently violated Section 8(a)(1) of the Act by unlawfully interrogating its employees Respondent's timely answer in effect asserts that the National Labor Relations Board (the Board) should not assert jurisdiction to resolve the unfair labor practice al legations Respondent claims it is not an employer of any of the alleged discriminatees or any individual allegedly unlawfully interrogated Instead Respondent contends its labor relations policy applicable to all the alleged discri minatees is controlled by the Federal Emergency Man agement Agency (FEMA), an agency of the United States Government, to such an extent that Respondent is precluded from engaging in effective collective bargain mg relative to the alleged discriminatees Respondent also denies it engaged in any of the alleged unfair labor practices On the entire record, including my observation of the demeanor of the witnesses, and after consideration of the briefs filed by the Board s counsel for the General Coun sel, and by counsel for Respondent and for the Charging Party I make the following i All dates hereafter are in 1986 unless otherwise stated 1028 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD FINDINGS AND CONCLUSIONS I JURISDICTION Respondent an unincorporated association, is a labor organization with an office and principal place of buss ness in the District of Columbia There, and elsewhere, it is engaged in the business of representing employees re garding wages, hours, and other terms and conditions of employment in collective bargaining with various em ployers across the United States Respondent collected and received dues and initiation fees in excess of $50 000 during the 12 months immediately before complaint issu ance from its local unions located outside the District of Columbia As reported above Respondent denies it is an employ er within the Act s definition of any of the alleged discri minatees Each of these individuals had been employed in the Open Learning Fire Service Program (OLFSP) until its termination on November 30 with cessation of Federal funding However, Respondent does admit it is an employer engaged in commerce within the meaning of the Act for the limited purpose of conferring general jurisdiction over it in this case 2 Based on the above, I find that Respondent, at all ma tenal times, has been an employer engaged in commerce within the meaning of Section 2(2) (6), and (7) of the Act II THE PRINCIPAL ISSUE Should the Board assert its statutory jurisdiction over Respondent as the employer of OLFSP personnel who work under the terms of a Federal grant?3 I shall recommend that the Board decline to assert ju nsdiction based on the principles of Res Care Inc 280 NLRB 670 (1986) 4 III THE FACTS All issues framed in the amended complaint were thor oughly litigated I shall describe only the evidence, and pertinent argument based on it which I consider relevant and probative to the principal jurisdictional issue I find the material facts germane to that issue are substantially undisputed They are based in large part on documenta ry evidence Omitted material is deemed irrelevant su perfluous, or of no probative value 2 See Tr 9 LL 14 through Tr 12 L 5 3 My introductory remarks reflect the existence of several issues other than the one set forth They all deal with whether Respondent actually engaged in the unlawful conduct ascribed to it I find no useful purpose would be served in enumerating or resolving each such issue because of my conclusion the Board should not assert jurisdiction * In Res Care the Board reaffirmed the basic test set forth in National Transportation Service 240 NLRB 565 (1979) for deciding whether to assert jurisdiction over an employer that provides services to or for an entity exempt from the Act s application No party in the instant case challenges the exempt status of FEMA the grantor of Federal funds with which Respondent operated the program on which this case focuses That test will be described and applied as clarified in Res Care and its progeny in the Analysis section of this decision A Background 1 Respondents operational structure Respondents membership is composed of professional public sector firefighters employed in the United States and Canada An international constitution and bylaws govern Respondents internal affairs Respondents fund ing for its operations as an international labor organiza tion is derived from the monthly dues received from its individual members John A Gannon is, and has been at all material times, Respondents president Gannon is chief executive offi cer He has general oversight authority of Respondent s activities Alfred K Whitehead is Respondents secre tary treasurer He is responsible for the funds entrusted to Respondent Whitehead also directs Respondent s membership and accounting activities Respondent s Washington D C headquarters office is departmentalized It houses the president's and secretary treasurers offices, together with four departmental of fices Those departments are education research and labor issues, government affairs, and occupational health and safety An individual undisputedly a member of Re spondent s managerial hierarchy runs each of these de partments Each department head is compensated from dues money in Respondents treasury In addition, at all material times Respondents head quarters office housed individuals who worked on pro grams funded by Federal grants OLFSP was one such program OLFSP was funded through an Assistance Award issued by FEMA The terms and conditions of OLFSP were contained in a Cooperative Agreement between Respondent and FEMA 5 2 OLFSP-in general In 1977, Respondent requested and received, a Feder al grant to conduct a 1 year study to implement a con gressional mandate that a new National Academy for Fire Prevention and Control develop and administer a college program of correspondence courses for fire service personnel The National Fire Academy then a division of the U S Department of Commerce awarded the moneys for Respondents study Respondent retained Mayeske then a professor at University of Maryland and director of the University's Open University Program to conduct that study The results were promising In 1978 Respondent was awarded another Federal grant The grant s purpose was to enable Respondent to implement the higher education program The program would allow firefighters to earn college credits and de grees through independent study without classroom at tendance OLFSP became the programs designation at that time Mayeske became project director Mayeske staffed OLFSP She interviewed and hired Charging Party Morrison in 1980, alleged discriminatee King in 1981 and alleged discnminatee Martin in 1985 s Each of the alleged discriminatees including uncontested Supervisor Mayeske had worked exclusively in OLFSP Their allegedly discnmina tory terminations resulted from Respondents decision to withdraw from sponsorship and operation of OLFSP FIREFIGHTERS 1029 Mayeske told each of these individuals that OLFSP was federally funded for a 1 year duration 3 Operation of OLFSP Respondent submitted proposals for grant moneys an nually to FEMA and its predecessor agency and the grants of funds were awarded on that basis Typically, it was Mayeske and other members of the OLFSP staff who prepared those proposals Each pro posal contained explicit description of program tasks and objectives a precise line item budget for specific job classifications, salaries of personnel who worked in those classifications, fringe benefits, and operational expenses such as supplies and equipment postage, telephone pho tocopying, and travel costs The proposal set forth the monthly rent that OLFSP paid to Respondent for office space Also, each proposal contained resumes of the indi viduals who were intended to occupy the job classifica tions established in the proposal Mayeske routinely submitted each proposal to Re spondent s president Gannon for his review and approv al Gannon regularly made efforts to maintain equality of economic benefits between OLFSP personnel and other individuals who worked in Respondents headquarters lo cation 6 Respondent and FEMA engaged in negotiations after each annual proposal had been submitted All aspects of the proposal were potential subjects for negotiations FEMA is empowered to accept, reject or request modification to the OLFSP proposals J P McNeill, FEMA s associate director, testified these three choices were open to FEMA FEMA s project officer, E J Kaplan testified this authority extended to all monetary benefits and operational expenses, but not to Respond ent s personnel practices, FEMA auditor B Beverage testified the authority extended to indirect costs and Mayeske testified that FEMA exercised both the author ity to accept and request modifications to Respondent s proposals throughout the years she participated in the negotiations with FEMA FEMA s approval of each proposal resulted in issu ance of an Assistance Award This award authorized funding FEMA's approval also resulted in Respondent and FEMA entering into a so called Cooperative Agree ment This agreement contained extensive terms and con ditions of OLFSP s operations for the contract year B OLFSP Operations in Practice Respondent had to follow certain procedural require ments to ensure its compliance with the Cooperative Agreements FEMA employed a project officer and an assistance officer to oversee OLFSP The project officer reviewed and monitored OLFSP task performance The assistance officer had authority to negotiate, administer, and otherwise implement all business matters of the Cooperative Agreements 6 The record shows how Gannon did this in July 1985 See G C Exh 13 1 shall elaborate on this matter within my description of the way OLFSP operated in practice (See sec III B below) 7 Specific instances of such negotiations appear below in sec III B The Cooperative Agreements explicitly provided should any changes to the scope, budget, schedule or any other terms of the Agreement become necessary only the [assistance officer] shall have authority to amend the Cooperative Agreement (Emphasis added) (GC Exh 3 p 5) FEMA retained the right to suspend or terminate the Cooperative Agreements The Agreements could be ter minated for cause on an apparent unilateral decision by the Assistance Officer that Respondent failed to comply with the Agreement, or by the parties agreement that continuation of the project is no longer mutually benefi cial (R Exh 2 p 11 ) FEMA was required to pay only for allowable costs (R Exh 2, p 3 par 5) The guidelines for deter mination of such costs are contained in Circular A 122 entitled Cost Principles for Nonprofit Organizations This circular is published by the Federal Government s Office of Management and Budget (OMB) The OMB circular provides that costs are allowable if they are reasonable Reasonableness is determined by the contracting Federal agency in the instant case, FEMA The OMB circular also defines the limits of reason ableness for compensation for personal services (R Exh 8) Compensation costs are allowable to the extent that total compensation to individual employees is reasona ble for the services rendered and conforms to the estab lished policy of the organization [Respondent) consistent ly applied to both Government and Non government ac tivities Charging Party implicitly argues (Br p 28) that in effect, FEMA had only minimal exercisable judg ment regarding salaries of OLFSP personnel because the OMB circular declared that the standard of reasonable ness was a comparison between the proposed OLFSP compensation to that earned by Respondents other em ployees who were similarly situated I disagree The applicable quoted language of the OMB circular requires FEMA to make two determinations First, that the compensation is reasonable and, second, is in con formity with Respondents established policy which has universal application Thus contrary to the Charging Party I conclude the second phrase of the quoted mate nal neither modifies nor explains the standard of reason ableness or detracts from FEMA s responsibility and au thority to make the ultimate judgment This conclusion is buttressed by the manner in which FEMA actually exer cised its authority to effect modifications in line item budgets contained in Respondents fiscal years 1981 and 1986 proposals Respondent reduced the OLFSP budget for 1981 after negotiations with FEMA That reduction involved elimina tion of one job Support Coordinator and some reductions in other line items 8 Regarding the 1986 proposal, Mayeske testified that FEMA exacted their pound of flesh' during negotia tions Mayeske's comment referred to Respondent s yielding to FEMA's request for a Cooperative Agree ment of a 13 month duration instead of the customary 12 months The longer agreement was to be performed 8 See R Exh 58 1030 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD without FEMA providing additional funding. In return, FEMA agreed to increase Respondent's overhead rate from 11.7 to 15 percent. Even so, the agreed-on over- head rate comprised a reduction from the 18-percent rate which was contained in Respondent's 1986 proposal. Also, Respondent was required to make certain changes in the work to be performed by OLFSP in fiscal year 1986. The Cooperative Agreements authorized audits of OLFSP. FEMA conducted such a financial audit in Feb- ruary-March 1986. FEMA submitted a written report to Respondent. (R. Exh. 19.) That report showed FEMA uncovered more than $173,000 questionable or disallowa- ble costs. In part, the audit report shows Respondent had no documentation to support $63,560 of $119,749 claimed as fringe benefit costs. The audit report contained recommendations. In rele- vant part, recommendation 2 (R. Exh. 19, p. 6) shows that FEMA has authority to take action to recoup the $63,560 in questionable fringe benefit costs. FEMA exercised recurring control over OLFSP ex- penditures. Respondent submitted monthly or bimonthly requests to FEMA for disbursement of grant moneys. These funds were to pay salaries and fringe benefits to OLFSP personnel and for other OLFSP expenses. FEMA monitored each such request for funds to assure it complied with OLFSP's line-item budget contained in the applicable Cooperative Agreement. As earlier reported, FEMA's written consent was needed to amend a Cooperative Agreement. Nonetheless, Respondent possessed authority to transfer funds among different lines in the budget. Respondent's authority to make such transfers was limited by the Cooperative Agreements to 5 percent of the budget. Transfers in excess of that limit were subject to the requirement that FEMA provide prior approval. In early September 1986, Respondent experienced a shortfall of $18,204 in salaries. The shortfall resulted from a miscalculation of OLFSP's November 1985-No- vember 1986 budget. Mayeske wrote FEMA's assistance officer on September 12, concerning the shortfall (G.C. Exh. 27, R. Exh. 13). The letter requested an amendment to the 1985-1986 Cooperative Agreement in the line-item sums for salaries and fringe benefits of specific OLFSP personnel. Mayeske's September 12 letter asking for an increase in funds for salaries and fringe benefits also advised FEMA that Respondent indicated "that salaries will not be paid if this situation is not rectified." Clearly, the re- quest for shortfall relief demonstrates Respondent's reli- ance on FEMA for the salaries and fringes of OLFSP personnel. Also, I consider the request tends to support the conclusion that FEMA's incorporation of such line items into the Cooperative Agreement effectively made those line items Respondent's budget and salary limits for OLFSP.9 This situation, in my view, supports the con- 9 Mayeske herself conceded this point. She testified that FEMA's ap- proval of the budget proposals constituted OLFSP's "fixed line item budget" for the fiscal year covered by the Cooperative Agreement, except for the provision that permitted Respondent to make 5-percent ad- justments. (Tr. 343.) clusion that it is FEMA that retains the final say over OLFSP wages and fringe benefits. If Respondent re- tained such control, it presumably could have underwrit- ten the shortfall. Instead, Mayeske's letter, a copy of which was sent to Respondent's president, Gannon, without his repudiation, reflects payment of the OLFSP salaries and wages was conditioned on FEMA's agree- ment to amend the previously approved budget. Mayeske wrote Gannon on September 19 to explain the background of the shortfall and her September 12 re- quest that FEMA amend the budget (G.C. Exh. 28, R. Exh. 14). In relevant part, Mayeske wrote Gannon that the requested budget amendment contains a request for "the highest proper figure should negotiations bring about a lower figure." I conclude the quoted phrase fur- ther depicts Respondent's reliance on FEMA. I perceive no reason for Respondent to request funds in excess of actual needs if it ultimately controlled salaries and bene- fits. Such a request gave Respondent latitude in its nego- tiations with FEMA. Manifestly, the need for this bar- gaining tool detracts from the claim that Respondent had ultimate control over OLFSP personnel costs. In October 1984, Gannon wrote Mayeske a meinoran- dum which bears on the degree to which Respondent controlled OLFSP wages and salaries (R. Exh. 32). Gannon quoted a paragraph from a FEMA October 1, 1984 memorandum. The quoted paragraph reflects that no Government funds will be paid to Respondent unless Congress appropriates the money. (The FEMA memo- randum apparently was referring to the fact that the Federal Government was then operating on short-term continuing congressional resolutions.) Further, Gannon's memorandum advised "that the [Respondent] will not be obligated in the event that the Government does not appropriate the funds. The balance of [the 1983-1984 OLFSP] budget should be sufficient to carry you for a few weeks. However, . . . when that money is expended [OLFSP] is shut down." (Emphasis added.)' ° In a similar vein, the OLFSP 1985-1986 Cooperative Agreement (R. Exh. 2) explicitly was conditioned on the availability of congressionally appropriated funds under a continuing resolution. In combination, I conclude Gannon's October 1984 memorandum and FEMA's limitation of financial liabil- ity in the 1985-1986 award shows FEMA's assertion of ultimate authority and control over OLFSP wages and fringe benefits and that Respondent recognized and yielded to that authority. In short, I conclude these doc- uments tend to show that payment of OLFSP wages and salaries, and indeed the very program itself, were wholly dependent on FEMA and its ability and willingness to agree to, and disburse, those funds. I have considered and evaluated the evidence present- ed on the General Counsel's and the Charging Party's behalf to demonstrate Respondent had final say over OLFSP salaries and fringe benefits and could engage in effective collective bargaining. I have included in this 10 The italicized words reflect Respondent's reliance on FEMA for OLFSP financial support. FIREFIGHTERS 1031 process the facts that FEMA did not hire any of the in dividuals including Mayeske, who worked in OLFSP each individual who worked in OLFSP was approved by Respondents president and was told he or she would be working for Respondent, Respondent was listed as the employer on paychecks of OLFSP personnel and also on their income tax withholding forms, health insurance and unemployment compensation papers, Respondent's accounting department handled all the books and main tamed the leave records of OLFSP, Respondents gener al personnel policy regarding hours of work, attendance and leave, office rules and procedures, discipline and resolution of work related complaints applied equally to OLFSP personnel regarding persons whose status as Re spondent s employees is undisputed I have also considered other factors such as (a) The contention that Respondent set the salary level for OLFSP employees and dictated that OLFSP person nel salaries should be equal to those received by Re spondent s employees in comparable positions Documen tary evidence (G C Exh 13) was produced to prove this contention Gannon wrote then OLFSP associate direc tor on July 9, 1985, that Respondents budget proposal for the OLFSP budget should make Mayeske s salary equal to Respondents other Department Direc tors and that other OLFSP staff members should re ceive salary increases no greater than' recent wage in creases granted Respondents unionized clerical person nel Mayeske responded to Gannon s salary directives on July 16, 1985 (R Exh 22, G C Exh 13, p 2) Mayeske s memorandum advised Gannon that the budget has been changed per [his] order Gannon then added a handwritten comment to Mayeske s July 16 memoran dum Gannon s remarks are noteworthy He wrote in relevant part that his July 9 salary instructions should be carried out "if it is permissable [sic] thru the grant' I consider Gannon s deference to the grant terms an equivocation regarding Respondents claim to final au thonty over OLFSP wages and fringe benefits His July 9 directive clearly was conditional Gannon explicitly made it subject to its feasibility under the terms of FEMA s contractual responsibilities and obligations under the Cooperative Agreement Overall Gannon s handwritten remarks virtually acknowledge the penulti mate character of Respondents asserted salary and fringe benefit control over OLFSP and its personnel (b) The testimony of Apprenticeship Program Direc tor J B Higgins "I Higgins testified in part, that if the Apprenticeship Program personnel had been represented for collective bargaining purposes Respondent could have bargained with their representatives Nonetheless, Higgins acknowledged such bargaining results would have to be incorporated into Respondent's proposals for the Apprentice Program grant As such FEMA (the Federal agency which awarded the apprenticeship grant) would review the proposals under the standards of rea ii Respondent operated an Apprenticeship Program with Federal grant funds That program terminated December 31 1986 No unfair labor practice allegations regarding the Apprenticeship Program are con tamed in the complaint before me sonableness set forth in OMB Circular A-122 Thus I conclude FEMA's review of proposals and subsequent negotiating process with Respondent renders this part of Higgins testimony too self serving to be a reliable ele ment to sustain the General Counsels contention that Respondent could engage in effective collective bargain ing with representatives of personnel working under the Federal grants awarded by FEMA (c) The variety of witnesses who testified that Re spondent s wage proposals were considered sacrosanct as long as within the realm of reason More than one witness proffered by the General Counsel so testified I find that testimony contrary to Mayeske s own testimo ny She testified that FEMA sought, and achieved, a change in job title from evaluator to administrative as sistant, together with a concomitant change in salary from $38,000-$40,000 to $25,000 during its 1985 negotia tions with Respondent for renewal of OLFSP Moreover OMB Circular A-122 belies any suggestion that the testimony under consideration is anything more than the personal opinion of the witness who gave it Specifically the OMB circular provides that if a grant cost is unallowable, Government payment would not be allowed solely on the basis such costs constitute per sonal compensation (See R Exh 8) This provision plainly makes Respondents OLFSP salary proposals vul nerable to FEMA attack and alteration The OMB circular provides similar strictures on the allowance of fringe benefit costs For purposes of the in stant case, that circular vests ultimate authority in ap proval of these benefits in FEMA (d) The testimony of B R Pinnger former FEMA project officer for OLFSP, presented by the General Counsel to show that Respondents 1983 OLFSP budget proposals were nonnegotiable and that the 1985 negotia tions between Respondent and FEMA were subject to Respondent President Gannon s ultimate approval A December 1983 intraagency FEMA memorandum shows that Respondent and OLFSP staff are insistent that $300 000 had been committed to support OLFSP instead of the $270,000 actually budgeted That memo randum shows FEMA adjusted its budget to add the $30 000 deficiency Presumably, the fact the deficiency was added to the budget demonstrates the accuracy of Respondent s claim to Pinnger I reject this conclusion The record clearly shows that Respondents adamant po sition was based on negotiations Gannon had with a FEMA official other than Piringer and before Pinnger became involved In any event the record contains a multitude of evidence (already described) that readily dispels any notion that OLFSP salaries and fringe bene fits were not negotiable between Respondent and FEMA Concerning the contention that Gannon had final ac ceptance authority regarding the 1985 negotiations, refer ence is made to a November 12, 1985 memorandum gen erated by Pinnger (G C Exh 93) In relevant part that memorandum states that the result of the November 1985 negotiations between Respondent and FEMA were ac ceptable to Gannon but that Gannon was not `complete ly pleased with the negotiated overhead rate (It was 1032 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD these negotiations that resulted in FEMA s rejection of Respondents requested 18 percent rate) Any implication that the results of contract negotia tions needed to be acceptable" to Gannon as a condi tion precedent to consummation of a Cooperative Agree ment for OLFSP in November 1985 is a blatant distor tion I have earlier described a variety of changes re quired by FEMA during those negotiations In the total context of those negotiations, I conclude that Gannon s acceptance of their result simply was a ministerial act which does not diminish the impact of other indicia of final authority vested in FEMA to approve OLFSP budgets, including salaries and fringe benefits to be paid to that programs personnel 1V ANALYSIS All parties agree that resolution of the jurisdictional issue is governed by the Board s holding in Res Care, supra Respondent contends that FEMA controls its labor relations policy to such a degree that Respondent is precluded from effective collective bargaining con cerning OLFSP personnel The General Counsel and the Charging Party claim FEMA's involvement with OLFSP was limited to review the programmatic aspects of OLFSP and did not extend to its labor relations to the degree, which requires application of Res Care As indicated in section II, supra, the National Trans portation case enunciated the Board s standard for asser tion of its jurisdiction in cases such as the one at bar That standard requires a two pronged inquiry first whether an entity meets the definition of an employer in Section 2(2) of the Act and if so, whether the em ployer retains sufficient control over the employment conditions of its employees to enable it to engage in of fective or meaningful collective bargaining regarding them To decide whether an employer is capable of engaging in meaningful collective bargaining the Board in Res Care held it would examine the scope and degree of control exercised by the exempt entity over the employ er s labor relations in addition to the control over essen tial terms and conditions of employment retained by the employer In Res Care the Board held that an employer does not have the ability to engage in meaningful collec tive bargaining if it does not possess the ultimate author ity to determine primary terms and conditions of em ployment such as wage and benefit levels In Res Care the Board declined to assert jurisdiction over the em ployer of personnel working for it under a contract with the U S Department of Labor The Board first applied Res Care on the very day it decided that case Thus 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 of the subject employees to permit it to engage in meaningful collective bargain Ing Long Stretch operated a residential facility for teen age boys under license by the State of Maryland Social Services Administration Long Stretch claimed it shared Maryland's exemption from Board jurisdiction The Board, applying its Res Care, principles, disagreed The General Counsel and the Charging Party have cited a number of cases in which application of Res Care resulted in assertion of Board jurisdiction These cases are Rustman Bus Co, 282 NLRB 152 (1986), Dickinson Iron Agency, 283 NLRB 1029 (1987), ARA Services, 283 NLRB 602 (1987), Trailways Commuter Transit, 284 NLRB 935 (1987), Community Living, 285 NLRB 372 (1987), Princeton Health Care Center, 285 NLRB 1016 (1987), Dynaelectron Corp, 286 NLRB 302 (1987), and Specialized Living Center, 286 NLRB 511 (1987) I find critical and material distinctions in each of the General Counsel s and the Charging Party s cases Rust man Bus contained absolutely no evidence that the exempt entities with which Rustman contracted to per form transportation services in any way possessed or ex ercised control over compensation or benefit levels of Rustman s employees The fact that the exempt entities could ask for a driver s removal from a particular run or use on a specific contract did not, in my view, impair Rustman s ability to engage in effective collective bar gaining Dickinson Iron is not cogent precedent for the instant case There, the Board simply affirmed Judge Michael 0 Millers conclusion that there was no merit to the em ployer s claim the Board lacked jurisdiction Judge Mil ler s finding clearly was based on the employer's failure to support its contentions with evidence Thus, the judge wrote (id at 1030) [T]here is no record evidence con ceming any control over essential terms and conditions of employment' by any of the governmental agencies that fund [Dickinson Iron s] operations ARA Services was an independent contractor of Uni versity Food Services Contrary to the instant case, ARA operated without line item budget controls and no limitations were placed on its expenditures by the exempt entity Also, in ARA the contractual wages were mini mum not maximums and ARA was free to pay more than the mandated wage The instant record shows that no such thing could happen without prior FEMA ap proval Trailways Commuter contracted with the Dallas Area Rapid Transit Authority an entity found exempt from Board jurisdiction, to provide bus services The Board asserted jurisdiction placing principal reliance on the fact that the transit authority did not have the power to disallow costs in excess of the line item budget This factor the Board reasoned showed that the transit au thonty could not specifically limit expenditures from em ployee compensation In the instant case, there is ample evidence that FEMA can disallow excessive compensa tion costs and negotiate their maximum before awarding the Cooperative Agreements Community Living, which provided residential and re habilitative support services for an exempt agency of Washington State, was able to set specific salary levels for unit employees and exceed the state budgeted salary percentages without state restriction or approval and salaries and employee benefits were established by Com munity Living s board of directors without tate approval or involvement The instant factual setting clearly is dif ferent FIREFIGHTERS Princeton Memorial Hospital is factually remote from the instant case First, there was no evidence that the exempt entity assertedly in control of labor relations, compensation and benefits actually was an exempt entity Even assuming the entity was exempt , the Board noted (a) there was scant evidence that entity exercised any control over Princeton and (b) the day to-day control of labor relations was not vested in the respondent-employ er Instead, such control remained with a management company with whom respondent employer had contract ed to operate its business In Dynaelectron, unlike the instant case, there were no restrictions on maximum wages and benefits and the em ployer did not need approval of the exempt agency to alter the employee benefit package as long as those bene fits were maintained at prescribed minimums In the in stant case, FEMA clearly governed the maximum that Respondent could pay to OLFSP personnel In Specialized Living Center, the employer could, and did, unilaterally establish wage rates without involve ment of the exempt entity Fringe benefits were totally in the employer's discretion There was no evidence that the exempt entity set maximum wage rates The employ er could pay higher wage rates than allocated, but would not be reimbursed Compensation budgets were devel oped from annual cost reports submitted by the employ er These reports were audited by the exempt entity and then became the budget 2 years later I find the degree of control exercised by the exempt entity in Specialized Living Center, considerably more perfunctory and minis tenal than in the instant case Here FEMA was com paratively more intimately involved in approval of com pensation packages for the Cooperative Agreements FEMA exercised persuasive authority over the contents of those agreements and the terms of the Assistance Awards, in general In contrast, Respondent cited a case which I find most nearly approximates the factual setting of the instant case Thus, I find PHP Healthcare Corp 285 NLRB 182 (1987) convincing precedent for disposition of the in stant case Factually, PHP is strikingly similar to the case at bar In turn the facts of both cases are virtually identi cal to Res Care In all three cases the employing entities were under contract with an agency of the United States Government the contracts were awarded based on pro posals submitted to the Federal agency those proposals included line item budgets covering compensation (in cluding fringe benefits) costs job classifications and the specific identity of people who would hold them Travel and per diem costs and all other expenses necessary to conduct the proposed program were also included In Res Care PHP, and the instant case the exempt agency reviewed the proposals Negotiations ensued Oc casionally, changes were made by the proposing employ er both to the proposed tasks and even to the requested budgets In each case, the agreements reached resulted in a contractual award Most importantly in each case the approved wage and benefit line items effectively became the projects budget after the exempt entity made its award Those budgets could not be exceeded without au thorization and approval from the exempt entity 1033 The exempt agencies paid only for allowable costs Those costs were the sums approved by the exempt entity after negotiations on the proposed budgets submit ted by the employing entity The instant record shows that changes in the maximum amounts FEMA will reim burse Respondent for employee compensation (and other previously approved costs) can be achieved only by FEMA's assent derived from renegotiation Applying the Res Care principles, as the Board did in PHP, to the instant case leads me to conclude that the record shows it was FEMA, not Respondent, that had final say over the OLFSP compensation levels The teaching of PHP militates the conclusion that jurisdiction over Respondent, as employer of OLFSP personnel, should not be asserted to decide the merits of the instant unfair labor practice allegations I have assessed Respondents demonstrated control over hiring, discipline, work related complaint handling, and general terms and conditions of OLFSP personnel Those matters are important But if an employer does not have the final say on the entire package of employee compensation, i e, wages and fringe benefits, meaningful bargaining is not possible ' (PHP, 285 NLRB 182, 184, Res Care, 280 NLRB 670, 674 The factors relied on by counsel for the General Counsel and the Charging Party were present in PHP but did not govern the Board s dis position of that case On balance, I conclude the totality of evidence shows that Respondent retained and exercised control of the day to day OLFSP operations However, I find the countervailing evidence more persuasive indicators of the critical inquiry about which entity had ultimate au thonty in OLFSP salaries and fringe benefits On the above findings and conclusions and on the entire record in the case, I make the following CONCLUSIONS OF LAW 1 International Association of Firefighters AFL-CIO is an employer engaged in commerce within the meaning of Section 2(2) (6) and (7) of the Act 2 The facts in this case warrant the Board to decline to assert jurisdiction over Respondent as employer of OLFSP personnel 12 Accordingly I issue the following recommended 13 ORDER Jurisdiction is not asserted over International Associa tion of Firefighters, AFL-CIO as an employer of Open Learning Fire Service Program personnel and the pro ceeding is remanded to the Regional Director for Region 5 of the Board for action consistent with this Order 12 If the Board adopts this conclusion of law or if no exceptions are filed I find it appropriate to remand the case to the Regional Director for withdrawal of the complaint 1 3 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