International Association Of Firefighters, Afl-Cio

National Labor Relations Board - Board Decisions

Feb 10, 1989

292 N.L.R.B. 1025 (N.L.R.B. 1989)

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
expenses6
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