Community Interactions--Bucks County, Inc. 1

National Labor Relations Board - Board Decisions

May 18, 1988

288 N.L.R.B. 1029 (N.L.R.B. 1988)

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 By unpublished order dated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.