U.S. Corrections Corp.

National Labor Relations Board - Board Decisions

Aug 27, 1991

304 N.L.R.B. 934 (N.L.R.B. 1991)

934
304 NLRB No. 120
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 On May 14, 1990, the Union filed a petition under Sec. 9(a) of the Na-
tional Labor Relations Act seeking to represent a unit of approximately 55 cor-
rectional officers, whom the parties have stipulated are guards. A hearing was
held on June 12 and 18, 1990, before Hearing Officer Donald A. Becher. Pur-
suant to Sec. 102.67 of the National Labor Relations Board Rules and Regula-
tions, and by direction of the Regional Director for Region 9, this case was
transferred to the National Labor Relations Board for decision. Thereafter, the
Employer and the Petitioner each filed a brief in support of its position.
The Board has delegated its authority in this proceeding to a three-member
panel.
2 The Employer is a Kentucky corporation engaged in the operation of pri-
vate correctional facilities, including the Marion Adjustment Center, in Marion
County, Kentucky, at issue here. The parties stipulated that during the preced-
ing year, a representative period, the Employer received in excess of $50,000
from an entity which itself transacts over $50,000 worth of business across
state lines. We find that the Employer is engaged in commerce within the
meaning of the Act. The parties also stipulated that the Union is a labor orga-
nization within the meaning of the Act.
3 In submitting its bid for the contract, the Employer specified a per diem
amount, which it calculated based on budgeted amounts for all costs associated
with the operation of the facility, including food, medical care, utilities, insur-
ance, and labor.
4 ‘‘Privatization of Prisons,’’ Kentucky Revised Statutes 197.500 et seq. The
1985 contract was pursuant to a statute allowing for the private operation of
community residential centers. According to the Employer’s vice president,
Michael Montgomery, the enabling statute now controls all the Employer’s op-
erations.
5 The Corrections Cabinet has two employees stationed at MAC: a clerical
employee and a contract administrator/parole officer. The latter monitors all
operations to ensure compliance with the contract and is in daily telephone
contact with the Corrections Cabinet.
6 According to Vice President Michael Montgomery, with the exception of
the organization chart and job qualifications and descriptions, the Employer re-
tains its original personnel policies.
7 Apparently, the Corrections Cabinet submitted its comments on some of
the policies (although not on any of the personnel policies).
8 The Corrections Cabinet may discuss aspects of a proposal with the Em-
ployer prior to approval and negotiate with the Employer for the modification
of the proposal to take care of any problems.
9 In addition, on one of the three occasions that the Employer changed
health insurance carriers, the change was approved after the fact because of
time exigencies. However, Vice President Montgomery testified that on per-
sonnel matters this informal procedure would not be followed.
10 As noted below, the Corrections Cabinet has denied a request by the Em-
ployer to reduce staffing. The Corrections Cabinet denied another request to
permit the correctional officers to carry firearms when transporting medium
and maximum security passengers to other facilities. In addition, on learning
that the Employer was allowing its correctional officers to carry night sticks,
the Corrections Cabinet directed this practice to stop immediately.
U.S. Corrections Corporation and International
Union, United Plant Guard Workers of Amer-
ica (UPWA), Petitioner. Case 9–RC–15704
August 27, 1991
DECISION AND DIRECTION OF ELECTION
BY MEMBERS CRACRAFT, DEVANEY, AND OVIATT
The key issues in this case are: (1) whether the em-
ployer, a private corporation which operates a mini-
mum security correctional facility for the Common-
wealth of Kentucky, meets the standards of Res-Care,
Inc., 280 NLRB 670 (1986), for the assertion of juris-
diction; and, if so, (2) whether the Board should de-
cline to assert jurisdiction as a matter of policy.1
The Board has reviewed the rulings of the hearing
officer made at the hearing and finds that they are free
from prejudicial error. They are affirmed.
On the entire record in this case, the Board finds:
The facts are as follows. On December 11, 1985, the
Commonwealth of Kentucky (also referred to as the
State), awarded the Employer2 a 3-year contract for the
operation of a 200-bed minimum security correctional
facility—the Marion Adjustment Facility (MAC). This
contract provided a per diem amount to be paid to the
Employer for each inmate.3 The contract contained two
1-year options, both of which were exercised. In 1988,
the Employer was awarded a second contract by Ken-
tucky expanding the number of beds to 450. This was
later increased to 500 beds.
Enabling legislation permitting Kentucky to contract
out the operation of its prisons to private providers was
enacted on June 15, 1988.4 The legislation specifies fi-
nancial and personnel requirements. It provides that an
annual budget be submitted and that personnel have
the same qualifications and training as the staff in
similar positions in facilities operated by the Correc-
tions Cabinet, the State agency which oversees all cor-
rectional facilities.5 The legislation also specifies (at
sec. 197.525(1)) that in any provision ‘‘which requires
the private provider or adult correctional facility to es-
tablish or implement a policy or procedure governing
a particular activity or duty, the cabinet shall first ap-
prove the policy or procedure before it shall become
effective.’’
Within 60 days after the execution of the initial con-
tract, the Employer was required to submit to the State
a manual setting forth all its policies and procedures.
This was to include a written personnel policy, with
copies to be given to the employees, specifying at least
15 topics, including an organization chart, benefits, the
base for determining salaries, and disciplinary proce-
dures. As part of its response, the Employer submitted
a personnel handbook (employee handbook), which in-
cluded a description of benefits.6 The Corrections Cab-
inet approved the entire policy and procedure manual.7
Douglas Sapp, commissioner of the Department of
Community Services and Facilities of the Corrections
Cabinet, testified that no quantified standards are used
to assess any wage or benefit proposal but he considers
the impact on quality and morale of the employees, as
well as on overall efficiency and effectiveness of the
operation. For example, he said, the State has an inter-
est in maintaining a minimal number of holidays,
would be concerned that paying only minimum wages
would adversely affect the quality of the staff, and, on
the other hand, that paying the correctional officers
$40,000 per year might adversely affect funds nec-
essary in other areas.
The Employer constantly reviews its policies and,
when it wants to change a policy, it requests approval
by the Corrections Cabinet.8 Some approvals on minor
matters are granted orally.9 The record disclosed only
a few instances where the Corrections Cabinet has dis-
approved employer proposals.10
935U.S. CORRECTIONS CORP.
11 No maximums are specified.
12 In addition, the statute (at sec. 197.510(28)) provides that ‘‘[t]he cabinet
shall generally observe and monitor the operations of the adult correctional fa-
cility at least once per week.’’ As noted above, the Corrections Cabinet has
an onsite contract monitor stationed at MAC.
13 The statute, at sec. 197.510(16), also requires that ‘‘[p]ersonnel selection
and assignments shall be based on merit,’’ but no evidence was presented that
the Corrections Cabinet reviews hires to determine whether the Employer
made the best choice among candidates. The Employee Handbook, however,
states that ‘‘[w]hile all available criteria will be considered for promotions and
job reclassifications, merit through job performance shall be the most impor-
tant criteria.’’
14 Although the Employer’s vice president Montgomery claimed that the
contract administrator could challenge an Employer’s hire for any reason, no
evidence was offered that any hire had ever been challenged except for failing
to meet the minimum qualifications or to pass the background security check.
15 The Employer has requested a variance at least twice. Neither instance
involved a correctional officer.
16 Sapp said that the Corrections Cabinet’s two most recent contracts re-
quired state-conducted training but he did not specify whether these were con-
tracts for the MAC facility.
17 Montgomery also testified that the Employer could impose higher quali-
fications than the State, subject to Corrections Cabinet approval.
18 For instance, the position of ‘‘unit manager’’ has been added. However,
no evidence was presented of any changes in the qualifications for correctional
officer.
19 On November 13, 1987, Sapp denied a request by the Employer to reduce
staffing. He also ordered the Employer to remedy the current understaffing by
three correctional officers which he considered in violation of the contract.
The Employer’s current policy statement on ‘‘Per-
sonnel Salaries,’’ dated June 27, 1988, sets forth the
annual base salary structure for seven classifications,
one of which is ‘‘correction officer’’ (at $11,500).11
The statement provides ‘‘[t]he President of U.S. Cor-
rections Corporation may, without notice, change the
schedule to reflect a higher wage salary.’’ According
to the Employer’s vice president, Montgomery, it was
the Employer’s decision to give the correctional offi-
cers a 5-percent increase for the first 5 years (not sub-
mitted to the State), and then an annual percentage in-
crease identical to the increase in the contract amount
received from the State.
The statute and contract require periodic inspections
conducted by two departments of the Corrections Cabi-
net to determine compliance with their provisions.12
The Department of Community Services conducts 1-
day inspections which include a semiannual on-site in-
spection and an annual review of all policies and pro-
cedures. The Department of Adult Institutions conducts
a more extensive semiannual, 3-day inspection pri-
marily focused on security but also addressing some
personnel matters such as employee staffing and hir-
ing.
The Corrections Cabinet may veto the hire of a new
employee if he does not meet the minimum qualifica-
tions or pass the background security checks required
by the statute and contract.13 The Corrections Cabinet
rejected a candidate for director of MAC early in 1990
because he did not satisfy the statutory educational re-
quirements. In addition, the contract administrator has
effectively challenged the hiring of persons who failed
to pass the background check required by the statute.14
The Employer may seek variances for underqualified
persons, subject to the approval of the personnel man-
ager of the Corrections Cabinet.15
In addition, no state official sits on the Employer’s
board of directors nor does the State have the authority
to select any corporate officers. However, as noted
above, the Corrections Cabinet has authority to reject
the selection of managers, including the director, who
do not meet the statutory and contractual requirements.
Further, the correctional officers are not deputized and,
unlike the State’s correctional officers, do not have
peace officer authority.
The 1985 contract provided for correctional officer
training either directly through the Corrections Cabinet
or according to a curriculum approved by that agency.
For the first 1-1/2 years of the contract, the Employer
opted for training conducted by the Corrections Cabi-
net. After that, the Employer conducted its own train-
ing as approved by the Corrections Cabinet. However,
the week of the instant hearing, the Corrections Cabi-
net informed the Employer that in the future the State
would resume all training.16
Both statute and contract require the Employer to
maintain written job descriptions and qualifications. As
noted above, job qualifications must correspond with
those in adult correctional facilities operated by the
Corrections Cabinet and are inspected by that agen-
cy.17 Any proposed change must be submitted to the
Corrections Cabinet for approval.18
Pursuant to both statute and contract provisions, the
Employer is required to provide 24-hour-per-day, 7-
day-per-week staffing, and that staffing must ‘‘be ade-
quate to insure close inmate surveillance and mainte-
nance of security.’’ In addition, the contract provides
specific staffing levels, subject to change only on the
approval of the Corrections Cabinet.19 The Employer
is, accordingly, required to submit to the Corrections
Cabinet for approval shift rosters setting forth the shift
hours and number of employees, including their posi-
tions and posts, per shift. These rosters are reviewed
during inspections.
The Employer argues that under Res-Care, supra,
and Long Stretch Youth Homes, 280 NLRB 678
(1986), it does not possess sufficient control over ei-
ther essential terms and conditions of employment or
labor relations generally to engage in meaningful bar-
gaining. Therefore, it contends the Board should de-
cline to assert jurisdiction.
In Res-Care and Long Stretch, the Board reaffirmed
and refined the principles set forth in National Trans-
portation Service, 240 NLRB 565 (1979), for deter-
mining whether to assert jurisdiction over an employer
providing services to or for an exempt entity. Under
National Transportation Service, supra, once it is deter-
mined that an employer meets the definition of ‘‘em-
ployer’’ in Section 2(b) of the Act the inquiry is
936 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
20 The Employer cites, inter alia, Hialeah Race Course, 125 NLRB 388
(1959), noting that part of the Board’s rationale for declining jurisdiction over
the horseracing industry was that it is subject to detailed state regulation which
could be extended to include labor relations. The Employer argues that a simi-
lar level of state regulation exists here.
21 See Res-Care, supra at 674. But see Community Transit Services, 290
NLRB 1167, 1169–1170 (1988) (even where state strictly controlled wages,
meaningful bargaining was not precluded on other terms and conditions).
22 Cf. Res-Care, supra, where the salary schedule set minimum and maxi-
mum wage rates for each labor grade and wage increases were limited to 10
percent.
23 See Career Systems Development Corp., 301 NLRB 367 (1991), in which
the Board asserted jurisdiction over an employer that retained, inter alia, sub-
stantial discretion over wages and benefits ‘‘as illustrated by the instances of
state approval of increased funds for salaries and fringes without requiring in-
formation as to the distribution of the additional funds.’’ The Board distin-
guished this from the State’s ‘‘final, practical say over wages and benefits’’
in Res-Care (e.g., where ranges, with maximums, were specified). The Board
further stated that the employer need not be free of all constraints for mean-
ingful bargaining and in distinguishing Res-Care ‘‘[t]he difference between the
degree of controls is critical.’’ Id. The Board concluded that a State’s general
oversight as to whether salaries consume too much of a budget did not pre-
clude bargaining. This contrasts with the cases the Employer cites, PHP
Healthcare Corp., 285 NLRB 182, 185 (1987), and Correctional Medical Sys-
tems, 289 NLRB 810 (1988), in which jurisdiction was declined where the
States, respectively, directly controlled minimum, maximum, and steps on
compensation, or wage ranges, benefits levels, and the total budget.
24 Cf. Correctional Medical Systems, supra at 811–813 (1988), in which ju-
risdiction was declined although the warden did not exercise his authority to
veto changes in the employer’s personnel manual. However, the employer’s
bid had to include the line-item budget for fringe benefit costs per hour for
each job classification. See also R. W. Harmon & Sons, Inc., 297 NLRB 562,
563 (1990), in which an employer was found not to have relinquished control
where the review by the exempt entity is routine.
We, therefore, find unconvincing our dissenting colleague’s reliance on
Ohio Inns, 205 NLRB 528 (1973). In that case, the State actually exercised
such extensive control over aspects of labor relations that the Board found it
to be a joint employer with the employees’ immediate employer; and the
Board relied not only on contract language, but also on evidence at the hearing
(not fully described) regarding a requirement that collective-bargaining agree-
whether the employer retains sufficient control over the
employment conditions of its employees to engage in
meaningful and effective bargaining with a union. In
Res-Care, the Board complemented this inquiry by
also requiring an examination of the amount of control
which is exercised by the exempt entity over the em-
ployer, particularly in the areas of wages and fringe
benefits. In Res-Care, the Board concluded the exempt
entity retained the ultimate discretion for setting wage
and benefit levels, thus precluding the employer from
meaningful bargaining. In contrast, the Board in Long
Stretch asserted jurisdiction because, although the com-
pensation system to the employer in that case effec-
tively imposed a ceiling on its operating budget, there
were no specific limits on employee compensation,
i.e., the employer was free to pay either more or less
than what the exempt entity suggested in its cost
guidelines.
The Employer argues that the instant facts are closer
to those in Res-Care than those in Long Stretch. Thus,
it argues that the per diem pay to the Employer for
each inmate is the same as a cost-plus-fixed fee
amount broken down to a daily rate per inmate. It fur-
ther argues that because the salary and benefit levels
are set by the contract, the Employer has no authority
to change them unilaterally and that the State has ulti-
mate approval authority over all polices and proce-
dures, thereby precluding all meaningful bargaining.
The Employer, in its brief, further contends that the
Board should decline jurisdiction because the Employ-
er’s operations are essentially local in nature and that
any labor dispute is unlikely to disrupt interstate com-
merce.21 It asserts ‘‘[T]he only real effect of a labor
dispute, albeit significant, would be the disruption of
the Commonwealth’s ability to carry out a function of
vital interest only to itself and its citizens.’’
The Union contends that the facts are closer to those
in Long Stretch than those in Res-Care. The Union ar-
gues that the Employer has the final say on wages and
benefits because, although the State requires it to have
personnel policies on at least 15 topics, the Employer
formulates the contents of these policies, including the
wage structure.
On the policy issue, the Union argues that Commis-
sioner Sapp testified that the MAC inmates are not a
danger to the community. The Union also argues that
it represents units of guards at nuclear power plants
across the country which present a much greater issue
of public safety than that posed here.
The first question is whether the Employer retains
sufficient control over the terms and conditions of em-
ployment to engage in meaningful bargaining. We con-
clude that the Employer has retained this level of con-
trol.
Of prime significance is the control exercised over
wages and benefits.21 It is true that the State exercises
approval authority over the Employer’s wages and ben-
efits proposals. However, not only has the State ap-
proved the proposals without modification but also the
salary policy it has approved leaves the Employer dis-
cretion in determining the level of wages. Thus, the
salary policy provides only a base salary for each clas-
sification, which base the Employer is given discretion
‘‘without notice’’ to increase. In addition, the policy
allows the Employer to determine annual increases,
which it has done, without the State’s specific ap-
proval.22
Also, although the Employer submits a line-item
budget each year, the line-items are no more specific
than the cumulative total of ‘‘salaries’’ and ‘‘personnel
costs/benefits,’’ respectively, for the whole facility.
Further, according to the State, any concern it has rel-
ative to the level of wages and benefits is no more
specific than its concern with the overall morale and
general efficiency of operations. These factors indicate
that the Employer could effectively bargain about
wages and benefits without disrupting its contractual
relationship with the State.23
While the State has authority to approve all policies
and procedures, this authority has largely been exer-
cised in a general oversight manner.24 The personnel
937U.S. CORRECTIONS CORP.
ments had be approved by the State before they could become ‘‘effective.’’
Id. at 528–529.
25 See Correctional Medical Systems, 299 NLRB 654, 656 (1990), in which
the Board found that where the state control is exercised largely for security
reasons, the employer may still retain sufficient control to bargain meaning-
fully. The Board also noted that per-inmate compensation is an indicia of em-
ployer control. Id. at 656.
26 Soy City Bus Services, 249 NLRB 1169, 1170 (1980).
27 Hialeah Race Course, supra at 390–391. See also NLRB Rules and Regu-
lations, Sec. 103.3.
28 Supra at 390.
29 Ibid.
30 Fn. 2, above.
31 The Employer’s vice president, Montgomery testified that ‘‘about the only
criteria’’ are that the inmates cannot be convicted of sex offenses and must
be within 4 years of either their initial hearing before the parole board or the
end of their sentence. He stated that Kentucky prefers ‘‘there not be crimes
of violence in their record but we have a good number of those.’’ This in-
cludes inmates convicted of assault. Montgomery, however, did not dispute
Sapp’s assertion that the inmates placed in the Employer’s facility are not a
danger to the public.
32 See NLRB v. E. C. Atkins & Co., 331 U.S. 398 (1947) (jurisdiction upheld
over plant guards in defense plant who were civilian auxiliaries to the military
police); and Old Dominion Security, 289 NLRB 81 (1988), and Champlain Se-
curity Services, 243 NLRB 755 (1979) (security services provided for the
United States Coast Guard and U.S. Navy, respectively).
We note that the Board has recently asserted jurisdiction over a juvenile
correctional facility although without specifically addressing the policy issue.
Career Systems Development Corp., supra. It has also, after applying the Res-
Care factors to two employers providing medical services to correctional fa-
cilities, respectively asserted and declined to assert jurisdiction. Correctional
Medical Systems, 299 NLRB 654 (1990); Correctional Medical Systems, supra,
289 NLRB 810 (1988).
policies submitted for the original contract were ap-
proved without comment and these policies with lim-
ited exceptions have not been revised. Further, the
State’s monitoring of compliance with the statute and
contract is limited to whether the Employer’s person-
nel actions are in compliance with the contract and do
not amount to independent assessments of the person-
nel actions. New hires are reviewed to make sure that
the employees have passed background security checks
and meet minimal qualifications. However, there is no
evidence that they were reviewed as to whether the
Employer made the best choice among candidates.5
These factors also indicate that the Employer could ef-
fectively bargain about personnel matters without the
State’s authority precluding the Employer and the
Union from reaching agreements.
In sum, after examining the degree of control exer-
cised by the Employer as well as by the Common-
wealth of Kentucky over the Employer’s labor rela-
tions, we conclude that the record amply demonstrates
that the Employer retains sufficient control over its
employees’ terms and conditions of employment to en-
gage in meaningful bargaining.
Next, we address whether the Board should decline
to assert jurisdiction over a minimum security facility
as a matter of policy. First, we reject the Employer’s
contention that jurisdiction should be declined because
the Employer’s operations are essentially local in na-
ture, like horseracing. Consistent with its approach an-
nounced in National Transportation, supra, the Board
has rejected the local-in-character test as a viable
standard for jurisdictional purposes.26 In addition, the
reasons the Board in its discretion declined to assert
jurisdiction over horseracing were specific to that in-
dustry.27 Section 14(c)(1) requires that the Board assert
jurisdiction where it would have asserted jurisdiction
under the standard prevailing on August 1, 1959. How-
ever, as the Board noted in Hialeah Race Course,28
because of the Board’s policy of not asserting jurisdic-
tion over horseracing, it had no jurisdictional standard
for horseracing on August 1, 1959.29 This is not true
for nonretail employers, such as the Employer, and the
Employer has met the applicable monetary standard for
asserting jurisdiction.30
Second, there is an insufficient basis to decline to
assert jurisdiction on the basis of public safety. Com-
missioner Sapp, the state official responsible for over-
seeing the contract with the Employer, testified that the
inmates are not a danger to the public.31 MAC has no
guard towers, perimeter fences, or any other type of
perimeter control device. The only ‘‘perimeter’’ con-
trols are the patrolling correctional officers, who do
not carry weapons of any kind and are not peace offi-
cers with any power to arrest. The correctional officers
closely supervise the inmates, take frequent censuses,
and regularly search inmates and their belongings. The
inmates are controlled by the sanctions of losing their
minimum security status and thereby being transferred
to a higher security facility, loss of ‘‘good time’’ for
parole purposes, and loss of parole. Based on the
above, the record does not show that concerns with
public safety warrant declining to assert jurisdiction. In
addition, the Union correctly notes that the Board has
asserted jurisdiction over other employers where secu-
rity concerns exist.32
Based on the foregoing, we find that no policy con-
cern with public safety warrants our declining to assert
jurisdiction over the Employer.
In view of the foregoing, we shall direct an election
by secret ballot in the following unit found appropriate
for the purposes of collective bargaining within the
meaning of Section 9(b) of the Act:
All full-time and part-time correction officers em-
ployed at the Employer’s Marion Adjustment
Center at St. Mary, Kentucky, but excluding all
office clerical employees, health care employees,
social service employees, maintenance employees,
food service employees, teachers, instructors, unit
managers, sergeants, deputy director, business
manager, professionals, and all other supervisors
as defined in the the National Labor Relations
Act, as amended.
[Direction of Election omitted from publication.]
938 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 Compare Correctional Medical Systems, 299 NLRB 654 (1990), where I
joined three other Board members in asserting jurisdiction over the employer.
2 See also my dissents in Career Systems Development Corp., 301 NLRB
434 (1991); and R. W. Harmon & Sons, 297 NLRB 562 (1990).
MEMBER DEVANEY, dissenting.
Contrary to my colleagues, I would decline to assert
jurisdiction over the Employer in this case. The Board
stated in Res-Care, Inc., 280 NLRB 670, 674 (1986),
that ‘‘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 [footnote omitted].’’ I conclude that the
contract between the Employer and the Commonwealth
of Kentucky substantially restricts this Employer’s dis-
cretion with respect to employees’ terms and condi-
tions of employment and, therefore, precludes the Em-
ployer from engaging in meaningful collective bargain-
ing with the Petitioner.
The record shows that the Employer has a contract
with the Commonwealth of Kentucky to operate a min-
imum security correctional facility known as the Mar-
ion Adjustment Center in St. Mary, Kentucky. The
Employer has operated the prison since January 1986
on 117 acres of land that formerly served as a college
site. There are presently about 500 inmates at the cor-
rectional facility and the Commonwealth reimburses
the Employer on a per diem basis for each inmate
housed there.
The Employer has approximately 115 employees at
the prison, including about 55 correction officers. The
facility has no guard towers or any other type of pe-
rimeter control device. The patrolling correction offi-
cers, who carry no weapons of any kind, are the only
‘‘perimeter’’ control that exists for the minimum secu-
rity prisoners. The Petitioner seeks to represent all the
Employer’s full-time and part-time corrections officers
who are defined as guards by Section 9(b)(3) of the
Act.
The Corrections Cabinet is the state agency which
oversees the Employer’s contract with the Common-
wealth. There is a probation officer employed by the
Corrections Cabinet who works at the Marion prison
site and who reports any problems with operations
there to higher officials based at the state capital in
Frankfort, Kentucky. The Corrections Cabinet has to
approve all the Employer’s operating procedures and
policies. Further, the Employer annually submits a
line-item budget which the Corrections Cabinet must
approve. Although the Employer’s capacity to set wage
ranges and initial salaries for employees is governed
only by the applicable minimum wage law, the Correc-
tions Cabinet exercises approval authority over the
Employer’s cumulative total of salaries and benefits
which are two separate line items in the annual budget.
The record shows that, aside from certain annual wage
increases provided for in the Employer’s original con-
tract that the Commonwealth has previously endorsed,
the Corrections Cabinet must approve any changes in
employees’ economic terms and conditions of employ-
ment that the Employer confers during the fiscal year.
Based on the authority of the Corrections Cabinet to
approve cumulative wages and benefits for the Em-
ployer’s employees, as well as any adjustments to
them that the Employer subsequently makes, I con-
clude that the Employer does not retain the final au-
thority over the critical areas of wages and fringe ben-
efits. Thus, I find that the Employer in this case clearly
lacks the discretion necessary to engage in meaningful
collective bargaining. This is not, therefore, a case in
which the employer retains nearly total control over
employee compensation.1 In this situation, by contrast,
it is the Corrections Cabinet, the governmental entity,
which maintains control over virtually every action the
Employer takes in operating the correctional facility.
Moreover, my colleagues have failed to establish that
the Corrections Cabinet’s approval authority over eco-
nomic items is merely a formality. The evidence
shows, in fact, that in several cases the Corrections
Cabinet has mandated changes in the Employer’s oper-
ations when they differed from designated procedures.
Additionally, I emphasize that the Corrections Cabi-
net’s approval authority over the Employer’s general
policies and procedures necessarily requires that any
negotiation or collective-bargaining agreement that the
Employer might enter into covering its corrections of-
ficers be subject to the Commonwealth’s ratification.
When a governmental entity exempt from the Board’s
jurisdiction has the right of disapproval over a collec-
tive-bargaining agreement entered into by an employer,
the Board will not assert jurisdiction over the Em-
ployer in that context. See Res-Care, Inc., supra at 674
fn. 22; Ohio Inns, 205 NLRB 528, 529 at fn. 3 (1973).
Because its contract with the Commonwealth places
substantial limitations on the Employer’s capacity to
determine any terms and conditions of employment,
and particularly those economic in nature, for the em-
ployees that the Petitioner seeks to represent here, I
conclude that it would not effectuate the purposes and
policies of the Act to assert jurisdiction over the Em-
ployer.2 Accordingly, I would reverse the Regional Di-
rector’s Decision and Direction of Election and dismiss
the petition.