Decision 2659M – * * * JUDICIAL APPEAL PENDING * * * County of Kern and Kern County Hospital Authority

LA-CE-1084-M

Decision Date: August 6, 2019

Decision Type: PERB Decision

Description: County and County Hospital Authority (Respondents) excepted to a proposed decision finding that Respondents violated their duty to meet and confer in good faith when they unilaterally contracted with an outside company to provide services that had historically been performed by Respondents’ employees who were exclusively represented by Charging Party Union.

Disposition: The Board adopted the proposed decision, and clarified the following principle: Just as a union has no need to establish the employer’s motivation for subcontracting when the employer replaces existing bargaining unit employees with employees of an outside organization, the same is true when an employer opens new operations, if the nature of the subcontracted job duties is sufficiently similar to the duties that bargaining unit employees already perform for the employer. The Board also amended the proposed remedy to provide a deadline by which Respondents must restore the status quo.

View Full Text (PDF)

Decision Headnotes

602.00000 – EMPLOYER REFUSAL TO BARGAIN IN GOOD FAITH; UNILATERAL CHANGE (FOR NEGOT OF SPECIFIC SUBJECTS, SEE SEC 1000, SCOPE OF REPRESENTATION)
602.01000 – In General

An employer’s unilateral change violates the duty to bargain in good faith where: (1) the employer took action to change existing policy; (2) the policy change concerned a matter within the scope of representation; (3) the action was taken without giving the exclusive representative notice or opportunity to bargain over the change; and (4) the change has a generalized effect or continuing impact on terms and conditions of employment. In order to satisfy the first element, a charging party generally must show at least one of the following: (1) changes to the parties’ written agreements; (2) changes in established past practices; or (3) newly created policies, or application or enforcement of an existing policy in a new way. Where County and County Hospital Authority began using contract medical assistants to staff newly-opened clinics, without notifying the union or giving it an opportunity to bargain, County and County Hospital Authority at least implemented a new policy, and/or applied existing policy in a new way.

1000.00000 – SCOPE OF REPRESENTATION
1000.01000 – In General; Test for Subjects Not Specifically Enumerated

In determining whether a matter is within the scope of representation, the Board applies a framework initially deriving from the U.S. Supreme Court’s analysis in First National Maintenance Corporation v. NLRB (1981) 452 U.S. 666, 676-680 (First National Maintenance) and Richmond Firefighters. Under First National Maintenance, there are three categories of managerial decisions, each with its own implications for the scope of representation: (1) “‘decisions that “have only an indirect and attenuated impact on the employment relationship” and thus are not mandatory subjects of bargaining,’ such as advertising, product design, and financing; (2) ‘decisions directly defining the employment relationship, such as wages, workplace rules, and the order of succession of layoffs and recalls,’ which are ‘always mandatory subjects of bargaining’; and (3) ‘decisions that directly affect employment, such as eliminating jobs, but nonetheless may not be mandatory subjects of bargaining because they involve “a change in the scope and direction of the enterprise” or, in other words, the employer’s “retained freedom to manage its affairs unrelated to employment.’” (County of Orange (2018) PERB Decision No. 2594-M, p. 18, citing Richmond Firefighters, 51 Cal.4th at pp. 272-273.) In the closest cases—the third category of managerial decisions—PERB applies a balancing test, under which bargaining is required only if “the benefit, for labor-management relations and the collective-bargaining process, outweighs the burden placed on the conduct of the business.” (County of Orange, supra, PERB Decision No. 2594-M, p. 18, quoting Richmond Firefighters, supra, 51 Cal.4th at p. 273 and First National Maintenance, supra, 452 U.S. at p. 679.)

1000.00000 – SCOPE OF REPRESENTATION
1000.02026 – Contracting Out

PERB generally finds that subcontracting decisions are within the scope of bargaining. To prevail in showing that the Richmond Firefighters balancing test warrants finding a particular subcontracting decision to have been bargainable, a union generally must establish one of three circumstances: (1) the employer’s reasons for subcontracting included labor costs, personnel issues or other issues that are amenable to bargaining; (2) the subcontractors performed substantially the same duties as that traditionally or historically performed by unit employees, even absent evidence of the employer’s motivation; or (3) where the employer unilaterally alters the terms of a written policy or agreement, or applies such policy or agreement in a new way. While the union need only establish one viable theory to bring the employer’s subcontracting decision within the scope of bargaining, the Board found that the union prevailed under all three where the employer began using contract medical assistants to staff newly-opened clinics, without notifying the union or giving it an opportunity to bargain,

Just as a union has no need to establish the employer’s motivation for subcontracting when the employer replaces existing bargaining unit employees with employees of an outside organization, the same is true when an employer opens new operations, if the nature of the subcontracted job duties is sufficiently similar to the duties that bargaining unit employees already perform for the employer. (Mi Pueblo Foods (2014) 360 NLRB 1097, 1098-1099; Overnite Transportation Co. Overnite Transportation Co. (2000) 330 NLRB 1275, 1276, affd. in part, reversed in part mem. (3d Cir. 2000) 248 F.3d 1131.)

1000.00000 – SCOPE OF REPRESENTATION
1000.02137 – Subcontracting

PERB generally finds that subcontracting decisions are within the scope of bargaining. To prevail in showing that the Richmond Firefighters balancing test warrants finding a particular subcontracting decision to have been bargainable, a union generally must establish one of three circumstances: (1) the employer’s reasons for subcontracting included labor costs, personnel issues or other issues that are amenable to bargaining; (2) the subcontractors performed substantially the same duties as that traditionally or historically performed by unit employees, even absent evidence of the employer’s motivation; or (3) where the employer unilaterally alters the terms of a written policy or agreement, or applies such policy or agreement in a new way. While the union need only establish one viable theory to bring the employer’s subcontracting decision within the scope of bargaining, the Board found that the union prevailed under all three where the employer began using contract medical assistants to staff newly-opened clinics, without notifying the union or giving it an opportunity to bargain.

Just as a union has no need to establish the employer’s motivation for subcontracting when the employer replaces existing bargaining unit employees with employees of an outside organization, the same is true when an employer opens new operations, if the nature of the subcontracted job duties is sufficiently similar to the duties that bargaining unit employees already perform for the employer. (Mi Pueblo Foods (2014) 360 NLRB 1097, 1098-1099; Overnite Transportation Co. Overnite Transportation Co. (2000) 330 NLRB 1275, 1276, affd. in part, reversed in part mem. (3d Cir. 2000) 248 F.3d 1131.)

1201.00000 – REMEDIES FOR UNFAIR PRACTICES; REINSTATEMENT; BACKPAY BENEFITS
1201.01000 – In General

A properly designed remedial order seeks a restoration of the situation as nearly as possible to that which would have obtained but for the unfair labor practice. PERB’s standard remedy for an employer’s unlawful unilateral change therefore restores the prior status quo and provides make-whole relief—including back pay, lost benefits, and interest—to the extent necessary to remedy the respondent’s unlawful conduct. Restoring the parties and affected employees to their respective positions before the unlawful conduct occurred is critical to remedying unilateral change violations, because it prevents the employer from gaining a one-sided and unfair advantage in negotiations. The Board crafts make-whole remedies, including “back pay, front pay or other forms of compensation,” as necessary “to make injured parties and/or affected employees whole.” (Sonoma County Superior Court (2017) PERB Decision No. 2532-C, p. 40; see, e.g., Mt. San Antonio Community College Dist. v. PERB (1989) 210 Cal.App.3d 178, 184, fn. 3 [where respondent unilaterally changed employment terms, respondent ordered to pay “to the affected employees the difference in wages between that which they earned and that which they should have earned in the absence of the employer’s unilateral action, minus any mitigation”].)

To remedy a unilateral subcontracting violation, the Board ordered employer to cease and desist from unilaterally subcontracting bargaining unit work at newly-opened medical clinics and to rescind the unilaterally adopted subcontract for medical assistant services at those clinics. Because it can take time to rescind a contract, the Board looks for a reasonable deadline, and in the interim, extends make-whole relief, with interest, until employees cease accruing harm. Taking the contract’s provisions into account, the Board required termination of the contract within 30 days after Board’s decision no longer subject to appeal.

1201.00000 – REMEDIES FOR UNFAIR PRACTICES; REINSTATEMENT; BACKPAY BENEFITS
1201.03000 – Back Pay; Interest

The Board crafts make-whole remedies, including “back pay, front pay or other forms of compensation,” as necessary “to make injured parties and/or affected employees whole.” (Sonoma County Superior Court (2017) PERB Decision No. 2532-C, p. 40; see, e.g., Mt. San Antonio Community College Dist. v. PERB (1989) 210 Cal.App.3d 178, 184, fn. 3 [where respondent unilaterally changed employment terms, respondent ordered to pay “to the affected employees the difference in wages between that which they earned and that which they should have earned in the absence of the employer’s unilateral action, minus any mitigation”].)

When a public employer subcontracts operations in violation of a PERB-enforced statute, and the record shows that private sector subcontracted employees are harmed, PERB should order reasonably requested economic remedies tailored to make such employees whole. If the parties develop a sufficient record in compliance proceedings or otherwise, that remedy may include the difference in total compensation, including benefits, between subcontracted employees’ actual compensation and the compensation the public employer pays to comparable employees. Such an order is appropriate even though it necessarily involves approximation. (City of Pasadena (2014) PERB Order No. Ad-406-M, pp. 8, 13-14 & 26-27.) Doing so is generally preferable to “permitting the employer to evade liability because of uncertainty caused by the employer’s own unlawful conduct, and thus leaving an unfair practice unremedied. (Pasadena, supra, Order No. Ad-406-M, p. 26, emphasis in original.)