Southwest Ambulance Of California, Inc.

National Labor Relations Board - Board Decisions

Jun 15, 1989

295 N.L.R.B. 125 (N.L.R.B. 1989)

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