Southwest Ambulance Of California, Inc.

SOUTHWEST AMBULANCE OF CALIFORNIA 125 Southwest Ambulance of California, Inc. and San Dieguito Paramedic Association, Petitioner. Case 21-RC-18284 June 15, 1989 DECISION ON REVIEW AND ORDER BY MEMBERS JOHANSEN , CRACRAFT, AND HIGGINS On September 27, 1988, the Acting Regional Di- rector for Region 21 issued a Decision and Direc- tion of Election in which he found , inter alia, that Southwest Ambulance of California, Inc. (the Em- ployer) is an employer under Section 2(2) of the Act and capable of collective bargaining under the test set forth in Res-Care, Inc., 280 NLRB 670 (1986). The Employer filed a timely request for review and supporting brief on this issue. On Octo- ber 31 , 1988, the Board granted the request for review. Thereafter, the Employer filed a brief. The Board, by a three-member panel, has consid- ered the entire record in this case with respect to the issue under review and finds that, due to the Employer's relationship with the county of San Diego, the Employer does not have sufficient con- trol over the employment conditions of its employ- ees to enable it to bargain with a labor organization as their representative. Thus, following the guide- lines of Res-Care, we will not assert jurisdiction over the Employer. The Employer has a contract with the county of San Diego to provide ambulance services for County Service Area (CSA) 17. The Employer's contract is a fixed-price contract, awarded after the Employer submits a bid consisting of a proposed budget, including a management fee representing the Employer's profit. The Acting Regional Direc- tor found that money in the Employer's budget, which is divided into personnel and nonpersonnel items, can be shifted from one area to another without the county's permission. Further, the Em- ployer can seek more money from the county to cover deficits. Finally, the county has no control over the Employer's personnel policies and proce- dures other than the basic requirement that em- ployees be licensed paramedics with 1 year's expe- rience. Relying on Old Dominion Security, 289 NLRB 81 (1988), and Long Stretch Youth Home, 280 NLRB 678 (1986), the Acting Regional Direc- tor concluded that the Employer retains sufficient control over labor relations to engage in meaning- ful bargaining because there is only a ceiling on the total budget rather than specific limits on employee wages and fringe benefits. Accordingly, he deter- mined that the Board should assert jurisdiction in this case. We disagree for the reasons that follow. The Employer's line-by-line operating budget is part of its contract with the county. The anticipat- ed costs of operating the ambulance service and the Employer's profit (a line item in the budget) equals the contract price. The Employer's personnel costs listed in the contract are payroll and wages, pay- roll taxes, employee insurance , workmen's compen- sation, and retirement.' Certain nonpersonnel budget items, i.e., uniforms, safety supplies, build- ing rent, and medical supplies, are line items on the budget, but the county will only pay actual invoice costs on these items up to the budgeted level. Non- personnel costs that are paid at the budgeted level regardless of actual cost include building utilities, training, depreciation, ambulance maintenance, office supplies, insurance, administrative overhead, and management fees. The management fees line item, representing the Employer's profit, is $5250 out of a budget total of $525,454 for the contract running from July 1, 1988 , through June 30, 1989. Although there was testimony at the hearing that indicated that theoretically county approval is not required for the Employer to move money from one line item to another, in practice the Employer appears to have little or no flexibility regarding the personnel costs of the current budget. The record establishes that personnel costs, which represent 76.6 percent of the budget, P are largely beyond the Employer's control.3 Further, as noted above, cer- tain nonpersonnel costs are reimbursed to the Em- ployer based on actual invoices or the approved budget line item, whichever is lower. Thus, there is no possibility of shifting funds to employee wages or benefits from these line items . Regarding the re- maining nonpersonnel line items , the record does not support a showing of any significant source of funds that the Employer could shift to personnel items without compromising the level of service it has contracted to provide. Though the Acting Regional Director concluded that the Employer could seek more money from the county to cover additional needs, the record evidence establishes the improbability of such an occurrence. The record contains no evidence of the county agreeing to cover a budgetary shortfall. Moreover, during the negotiations with the county for the current contract, the Employer proposed a I Although the Employer currently has no retirement program, it has been putting the retirement moneys in an escrow account while it searches for an appropriate retirement program 2 In prior contracts, the Employer 's personnel costs comprised 72 per- cent and 88 4 percent of the total budget 9 "Salaries and wages," the largest personnel line item in the budget, is based on actual wages and salaries to be paid for each employee position the Employer must fill to have a full working complement. Other person- nel line items, e.g., payroll taxes and workers' compensation insurance, flow from the wages and salaries or are, similarly , beyond the Employ- er's control. 295 NLRB No. 21 126 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 12-percent increase in wages. The county agreed only to a 3.6 percent wage increase , which is what is provided for in the current contract. Moreover, due to a clerical error, the county granted the wage increase based on a sum that is $36,000 lower than actual wages. When the Employer requested the wage increase be computed on the actual wage costs, the county refused.4 Although the Employer almost exclusively con- trols its personnel policies and procedures, we con- clude that the level of wages and benefits is set by the county in approving the budget on which the contract price is based . As noted above, the county actually rejected an Employer-proposed wage in- crease for its newest contract and substituted one of its own choosing. Further, the Employer's county-approved budget leaves it insufficient room to move funds from one line item to another, al- though in theory it possesses that authority .5 Final- ly, the Employer has no demonstrated source of income other than the set-price contract with the Employer. 6 Accordingly, it has no means of cover- ing the cost of wages and benefits above the level set in its contract with the county. In Res-Care, supra, the Board reaffirmed the basic twofold inquiry enunciated in National Trans- portation Service? for determining when to assert ju- risdiction over an employer providing services to or for an exempt entity. The Board stated that 4 Instead, the county agreed to allow the Employer to retain half of all fees collected for services provided to patients living outside CSA 17. Previously, the county received 100 percent of such fees. 5 The county has no obligation to pay the Employer anything above the contract price. In fact, it can reduce funding for the Employer's serv- ice during the contract period because the contract provides that the county can terminate or reduce the agreement . In the event the county reduces funding, the parties meet to renegotiate the contract based on the reduced level of funding. 6 The income derived from splitting with the county fees from users of the service who reside outside CSA 17 is to make up for a $36,000 budg- etary shortfall caused by a clerical error that the county refused in its sole discretion to rectify . There is no evidence to show that these fees might generate enough income for the Employer to recoup the $36,000 loss or to obtain a pool of income over and above the $36,000 loss. 7In National Transportation Service, 240 NLRB 565 (1979), the Board majority stated that the inquiry is "whether the employer itself meets the definition of 'employer' in Section 2(2) of the Act and, if so . . . whether the employer has sufficient control over the employment conditions of its employees to enable it to bargain with a labor organization as their repre- sentative." meaningful bargaining is not possible if an employ- er does not retain control over its employees' eco- nomic terms and conditions of employment. Res- Care, supra at 674. See also Community Transit Services, 290 NLRB 1167, 1170 fn. 5 (1988). In PHP Healthcare, 285 NLRB 182 (1987), the Board declined to assert jurisdiction on the basis that the exempt entity in that case set minimum and maximum salaries, set limits on percentage wage increases, and played a significant role in per- sonnel practices of the employer. In PHP Health- care, the Board's decision not to assert jurisdiction was based on the employer's lack of control of eco- nomics rather than the exempt entity's control of noneconomic terms and conditions of employment. Like the exempt entities in PHP Healthcare and in Res-Care, the county of San Diego effectively con- trols all the economic terms and conditions of em- ployment, although the county exerts almost no control over the Employer's personnel policies and procedures. We find that PHP Healthcare controls the instant case.8 Accordingly, we will decline to assert jurisdiction. ORDER It is ordered that the petition for election in this case is dismissed. MEMBER HIGGINS, dissenting. I would affirm the decision of the Acting Re- gional Director. In my view the record supports the conclusion of the Acting Regional Director that this employer retains sufficient control over employee terms and conditions of employment to assure meaningful collective bargaining. a Old Dominion Security, supra, relied on by the Acting Regional Di- rector, is distinguishable. Old Dominion Security involved an employer providing security services for the U.S. Navy pursuant to the Service Contract Act of 1965, as amended, 41 U S.C. § 351. In that case, the con- tract with the Navy only provided for minimum wage and fringe benefit levels There was no evidence the Navy would disallow expenditures for higher wages and fringe benefits arrived at through collective bargaining. The Board noted , in deciding to assert jurisdiction, that a collectively bargained rate would "almost certainly" be incorporated into the next fiscal year's allowance under the Service Contract Act Id. at 81-82. In this case, the exempt entity sets the exact wage and benefit levels and has, in fact, denied the Employer's request for higher wages.