General Electric Co.

National Labor Relations Board - Board Decisions

May 10, 1950

89 N.L.R.B. 1247 (N.L.R.B. 1950)

In the Matter of GENERAL ELECTRIC COMPANY, KADLEC HOSPITAL,
EMPLOYER and BUILDING SERVICE EMPLOYEES INTERNATIONAL
UNION, LOCAL No. 201, A. F. OF L., PETITIONER
Case No. 19-RC-400.-Decided May 10, 1950
DECISION
AND
DIRECTION OF ELECTION
Upon a petition duly filed, a hearing was held before Howard A.
McIntyre, hearing officer. The hearing officer's rulings made at the
hearing are free from prejudicial error and are hereby affirmed.
Upon the entire record in this case, the Board finds :
1. General Electric Company operates the Hanford Works, Rich-
land, Washington, under contract with the United States Government,
acting through the Atomic Energy Commission. The Employer man-
ufactures plutonium at the Hanford Works, using materials, supplies,,
and equipment, title to which vests in the United States Government,
pursuant to the terms of the contract, at the same time and place as
it vests in the Employer. The contract provides for reimbursement
by the Government of all costs incurred by the Employer in the opera-
tion of the Works, plus a fixed fee of $11
Among the Employer's obligations under its contract with the
Atomic Energy Commission is responsibility for management and
operation of Kadlec Hospital, located in the village of Richland,
Washington. The hospital is part of the Employer's Medical Divi-
sion at the Hanford Works, and is operated for the most part in the
same manner as other hospitals. Its professional and technical staff
administers medications, performs surgery, operates X-ray and lab=
oratory equipment, and generally cares for the sick and injured. Its
nonprofessional staff performs the usual. housekeeping functions of a
hospital: General Electric employees, employees of its subcontractors
and of the Atomic Energy Commission, members of their families,
I The record does not disclose whether the dollar fee is paid annually or is for the full
contract term. In either event, it may fairly be presumed that the fee is a° nominal one,
and is "paid" for the sole purpose of establishing the existence of legal consideration-
89 NLRB No. 149.
1247
1248 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
and in emergencies, other persons, are admitted. At the present time
there are no other hospitals in the area, although one is being built
at Pasco, Washington, 12 miles from Richland.
The hospital's revenues have not in the past equaled its expenses.
The loss is considered part of the cost of operating the Hanford
Works, and the Employer is reimbursed for this, as for all other
costs contemplated under its contract with the Atomic Energy Com-
mission. If in any year the hospital's revenues were more than its
cost of operations, the excess would revert to the Government, and not
to the Employer.
It is General Electric's contention that, as to its operation of Kadlee
Hospital, it is not an "employer," being excluded from coverage under
the amended Act by the following language of Section 2 (2)
(2) The term "employer" ... shall not include . . . any
corporation or association operating a hospital, if no part of the
net earnings inures to the benefit of any private shareholder or
individual .. .
Before the quoted language was added by the 1947 amendments, the
Board had held that hospitals were included within the definition of
"employer" without regard to the fact that they were charitable insti-
tutions operated "not for profit." 2
The exemption as it now appears was offered by Senator Tydings
as an amendment to S. 1126. His purpose in offering it, he stated, was
to help a great number of hospitals which were having very difficult
times, and would enable them to keep their doors open. The Joint
Conference adopted the Senate's hospital exemption rather than the
broader exemption of additional types of institutions which had been
contained in the House Bill, H. R. 3020.3 The House Conference
Report stated that the other nonprofit organizations listed in H. R.
3020 were not specifically excluded by the Bill as it emerged from con-
ference, because only in connection with their purely commercial
2 Central Dispensary and Emergency Hospital , 40 NLRB 1011 ; 44 NLRB 533. See also
50 NLRB 393; enfd. 145 F. 2d 852 (App. D. C. 1944) ; cert. den., 324 U. S. 847.
The term "non-profit" or "not for profit" is used in this decision as an abbreviated
expression of the concept expressed in Section 2 (2) that a hospital is exempted if no
part of Its net earnings inure to the benefit of any private shareholder or Individual. A
not-for-profit hospital , in this sense , may therefore show . an excess of Income over expenses
without losing its exempted status, so long as it pays no monetary dividends to, or bestows
no other benefits on, private shareholders.
The definition of "employer" In H. R . 3020 read , in part, as follows :
(2) The term "employer" . . . shall not include . . . any corporation , community
chest, fund or foundation organized and operated exclusively for religious , charitable,
scientific , literary or educational purposes , or for the prevention of cruelty to children
or animals , no part of the net earnings of which inures to the benefit of any private
shareholder or individual , and no substantial part of the activities of which is carrying
on propaganda , or otherwise attempting to influence legislation.
GENER'AL ELECTRIC COMPANY 1249
activities had the Board itself considered them to affect interstate
commerce.4
The exclusionary language proposed in H. R. 3020 (set out herein
in footnote 3) is identical, except for the introductory clauses, to that
used to exempt similar institutions from Federal income tax and the
two Federal payroll taxes.5 It is well established that these provi-
sions exempt only nonprofit corporations, etc., which are organized
and operated exclusively for the stated purposes. Thus in the case of
corporations operating hospitals, they are exempted from the Federal
payroll taxes as charitable institutions only if they are "non-profit,"
and engage exclusively in such activities.e
The Employer's Kadlec Hospital is not organized and operated
exclusively for charitable purposes on a nonprofit basis. It is an
integral part of General Electric with no separate legal identity of its
own. The Atomic Energy Commission considers operation of. this
hospital to be a necessary function of its contractor, General Electric,
at the Hanford Works, and whatever public benefit the village of
Richland, Washington, derives from operation of this hospital is
merely incidental. If the language quoted above of H. R. 3020 had
become law, it is clear that Kadlec Hospital could not have been
exempted from the Act's coverage. The language of the hospital
exemption in Section 2 (2) has obvious similarities to the exemptions
in H. R. 3020 and in the Federal payroll tax statute. They all
require, for example, that the operations be conducted "not for profit."
General Electric contends in effect that it is the hospital which must
be so operated under Section 2 (2), and that it has met that require-
ment.. We are satisfied, however, that a more reasonable interpreta-
tion of the clause is that it is the corporation operating the hospital
that must operate on a not-for-profit basis. We believe that the
amendment intended to add to the Senate Bill an exemption, designed
to accomplish for hospitals alone, what the exemption clause of H. R.
3020 accomplished for a wider class of institutions which were per-
forming certain desirable services on a not-for-profit basis. If that
were not so, it would follow from a strictly literal interpretation of
4 This is a fair statement of the Board's policy under the Wagner Act. Christian Board
of Publications , 13 NLRB 534; American. Medical Association, 39 NLRB 385; Polish Na-
tional Alliance, 42 NLRB 1375.
The payroll tax exemptions appear in the Federal Unemployment Tax Act (Chapter
9, Subchapter C of the Internal Revenue Code ) and In the Federal Insurance Contributions
Act (Chapter 9, Subchapter A).
6 Intercity Hospital Association v. Squire, 56 Fed. Supp. 472 (1944). See also 40 Op.
Atty. Gen. 287 (Nov. 1943), in which the Attorney General advised the Federal Security
Administrator to adopt an interpretation In accord with that of the Bureau of Internal
Revenue that employment by a nonprofit hospital is excluded from application of the Social
Security Act.
1250 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Section 2 (2) that any corporation or association operating a nonprofit
hospital is exempt from coverage under the Act, even when, as in the
case of General Electric, the hospital is a relatively minute part of its
total industrial operations. But it is obvious that Section 2 (2) was
never intended by Congress to exempt all of General Electric's com-
mercial and industrial operations simply because its Medical Division
at the Hanford Works operates a hospital, and a literal interpretation
of Section 2 (2) must be rejected as absurd. We can find no warrant,
either in the language of Section 2 (2) or in the legislative history, for
our dissenting colleague's construction of the section to exempt from
the Act industrial corporations only insofar as their operation of non-
profit hospitals is concerned. The clause is most reasonably inter-
preted as meaning that it is General Electric's operations as a whole
that determine whether Kadlec Hospital is to be exempted. As Gen-
eral Electric Company clearly is organized for profit, it follows that
in its operation of Kadlec Hospital it is not excepted from the defini-
tion of "employer" within the meaning of the Act.
The Employer also contends that the operations of Kadlec Hospital
do not affect interstate commerce. The record discloses that the Em-
ployer annually purchases supplies and equipment for the use of the
hospital, which are worth in excess of $120,000. From 60 to 70 per-
cent of these purchases originate outside the State of Washington.
The substantial amount of these out-of-State purchases might in itself
be sufficient to justify the assertion of jurisdiction. A further im-
portant factor, however, impelling the assertion of jurisdiction in this
case, is the integration of Kadlec Hospital with General Electric's
activities as the prime contractor for the Atomic Energy Commission
at the Hanford Works. This is the only hospital which is practically
available to the employees of General Electric and its subcontractors
at the Hanford Works. A stoppage of work at the hospital, by cutting
down the medical care. available to the employees, would affect the
efficient performance of the important work done there by General
Electric and its subcontractors.'
We find, therefore, that the Employer is engaged in commerce within
the meaning of the National Labor Relations Act.
'' Inland Steel Company , 67 NLRB 1053; Elk Horn Coal - Corporation, 64 NLRB 1563;,
Consolidated Coal Company , 63 NLRB 169. These cases hold that activities , otherwise
purely local in character, affect interstate commerce where the activity is part of an indus-
trial or mining firm which is itself engaged in commerce . See also , Lee E. Stine d/b/a
Fairchild Cafeteria, 87 NLRB 667, which holds that an independent contractor operating
a cafeteria in a large industrial plant is engaged in commerce.
That operation of an atomic energy installation affects commerce is well established.
General Electric Company, Henforil Works, 86 NLRB 1316; Monsanto Chemical Company,
Clinton Laboratories, 76 NLRB 767.
GENER'AL ELECTRIC COMPANY 1251
2. The labor organization involved claims to represent certain em-
ployees of the Employer.
3. A question affecting commerce exists concerning the representa-
tion of employees of the Employer within the meaning of Section 9,
(c) (1) and Section 2 (6) and (7) of the Act.
4. The appropriate unit :
The Petitioner requests a unit of all hospital employees, excluding
doctors, registered nurses, all other professional employees, techni-
cians, office and clerical employees, watchmen, and supervisors. The.
Employer agrees that this unit would be appropriate if nurses' aides
and orderlies-alnbulaalce drivers were excluded. The Employer con-
tends that nurses' aides and orderlies have no community of interest
with other nonprofessional and' nontechnical employees, who compose
the unit sought, because their duties are confined to the direct care of
patients, while the cooks, kitchen workers, janitors, etc., have no direct
patient care responsibility. Nurses' aides and orderlies are super-
vised by the registered nurses, while the other employees are respon-
sible to the supervisors in charge of their respective housekeeping
functions, such as cleaning, linen supply, and kitchen. The hospital
employs 119 registered nurses whose primary concern is patient care.
They administer the treatments and medications prescribed by the
doctors, assist at operations, and keep the patients' charts. There are
no student or practical nurses employed at the hospital. The 28
nurses' aides and 6 orderlies employed at the hospital are not licensed
nor required to have any specialized training. The training they re-
ceive at the hospital may qualify them to take the practical nurses'
examination offered by the State of Washington, but not to become a
registered nurse, as that requires a course of study at an accredited
institution. Their duties are to serve and remove trays, take tempera-
ture readings, answer call lights, feed patients, assist convalescents in
walking, clean patients' rooms and bedside equipment, and assist nurses.
in bathing patients. It is obvious from this description that their
responsibility for patients' care is extremely limited. Their wage
rates and working conditions do not differ substantially from those
of other nontechnical and nonprofessional personnel. We are satis
fied that their interests are more clearly allied with the employees in
the unit than they are with the registered nurses. We find therefore
that the following employees constitute a unit appropriate for the
purposes of collective bargaining within the meaning of Section 9 (b)
of the Act :
All employees at the Employer's Kadlec Hospital, Hanford Works,
Richland, Washington, including nurses' aides and orderlies-ambulance
drivers, but excluding doctors, registered nurses, other professional
889227-51-vol. 89----80
1252 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
employees , technicians , office and clerical employees , watchmen, and
supervisors.
DIRECTION OF ELECTION
As part of the investigation to ascertain representatives for the
purposes of collective bargaining with the Employer , an election by
secret ballot shall be conducted as early as possible, but not later
than 30 days from the date of this Direction , under the direction and
supervision of the Regional Director for the Region in which this
case was heard , and subject to Sections 203.61 and 203.62 of National
Labor Relations Board Rules and Regulations , among the employees
in the unit found appropriate in paragraph numbered 4, above, who
were employed during the payroll period immediately preceding the
date of this Direction of Election , including employees who did not
work during said payroll period because they were ill or on vacation
or temporarily laid off, but excluding those employees who have
since quit or been discharged for cause and have not been rehired or
reinstated prior to the date of the election , and also excluding
employees on strike who are not entitled to reinstatement , to deter-
mine whether or not they desire to be represented , for purposes of
collective bargaining , by Building Service Employees International
Union, Local No. 201, A. F. of L.
CHAIRMAN HERZOG dissenting :
The majority relies for its conclusion that Kadlec Hospital does
not come within the exemption granted certain hospitals by Section
2 (2) on an interpretation of that section which I believe unwar-
ranted. My colleagues ' view is that a hospital is exempted only if
the corporation or association which operates it is itself operated on
a nonprofit basis. It reaches that conclusion by comparing the hos-
pital exemption as enacted with the exclusionary language contained
in H. R . 3020, and deciding that Kadlec Hospital should not be ex-
empted under the former because it would not have been exempted
under the latter. In my opinion , we should decide this case without
reference to what might have been , and only on the basis of the lan-
guage that the Congress saw fit to enact , in the light of its disclosed
intent at the time.
Congress clearly intended to confer a supposed advantage upon
nonprofit hospitals , as institutions devoted to the public good, by al-
lowing them to bargain or not to bargain collectively with their em-
ployees, free from direction by this Board. As the wording of the
hospital exemption permits adoption of an interpretation consistent
with that legislative intent, as disclosed by the debate on the Tyd-
ings amendment , I would dismiss this petition.