Decision 2868M – * * * JUDICIAL APPEAL PENDING * * * El Camino Healthcare District, El Camino Hospital, and Silicon Valley Medical Development, LLC

The MMBA expansively defines a covered “public agency” to include “every governmental subdivision, every district, every public and quasi-public corporation, every public agency and public service corporation and every town, city, county, city and county and municipal corporation, whether incorporated or not and whether chartered or not.” (MMBA, § 3501(c).) PERB interprets “governmental subdivisions” covered under MMBA section 3501(c) to correspond to “political subdivisions” excluded from the NLRA under 29 United States Code section 152(2). (National Labor Relations Bd. v. Natural Gas Utility Dist. of Hawkins County, Tenn. (1971) 402 U.S. 600; Central Contra Costa Transit Authority (2012) PERB Decision No. 2263-M, p. 25; El Camino Hospital District (2009) PERB Decision No. 2033-M, pp. 17-18.) (pp. 25-26.)

The Board determined that Silicon Valley Medical Development, LLC (SVMD), a single-member limited liability corporation wholly owned by El Camino Hospital (ECH), a “governmental subdivision” under MMBA section 3501(c), is an MMBA-covered employer. PERB interprets “governmental subdivisions” covered under MMBA section 3501(c) to correspond to “political subdivisions” excluded from the NLRA under 29 United States Code section 152(2). (National Labor Relations Bd. v. Natural Gas Utility Dist. of Hawkins County, Tenn. (1971) 402 U.S. 600 (Hawkins County); Central Contra Costa Transit Authority (2012) PERB Decision No. 2263-M, p. 25 (Transit Authority); El Camino Hospital District (2009) PERB Decision No. 2033-M, pp. 17-18.) Hawkins County held that a private or quasi-private entity qualifies as a political subdivision if it is either: “(1) created directly by the State, so as to constitute a department or administrative arm of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate.” (Hawkins County, supra, 402 U.S. at pp. 604-605.) The Board found that SVMD qualifies as a political subdivision under the second Hawkins County category. To reach this conclusion, PERB analyzed facts relevant to this inquiry under three main headings: “Public Purpose,” “Public Funding,” and “Public Control.” (Workforce Investment Board (2014) PERB Order No. Ad-418-M, pp. 24-26 (WIB).) (pp. 25-27.) SVMD is subject to public control, an often-vital factor in deciding whether an entity is administered by individuals who are responsible to public officials or voters. If public officials have authority to decide who fills a majority of seats on an entity’s governing board, that means the entity is administered by individuals who are responsible to public officials or the general electorate. (Transit Authority, supra, PERB Decision No. 2263-M, p. 24; accord WIB, supra, PERB Order No. 418-M, pp. 8, 11, 13-14, 18, 25-28, & 30-31, and adopting administrative determination at pp. 2 & 4.) SVMD’s leaders are ultimately responsible to El Camino Hospital District officials, and in addition, its leaders are responsible to ECH, which is a public agency for MMBA purposes. (pp. 27-31.) Moreover, SVMD has received significant public funding, and its goals fall squarely within the District’s public purposes. For these reasons, the Board determined SVMD falls within the second Hawkins County category and is a “governmental subdivision” within the meaning of MMBA section 3501(c). (pp. 31-34.)

The Board determined that Silicon Valley Medical Development, LLC (SVMD), a single-member limited liability corporation wholly owned by El Camino Hospital (ECH), a “governmental subdivision” under MMBA section 3501(c), is an MMBA-covered employer. PERB interprets “governmental subdivisions” covered under MMBA section 3501(c) to correspond to “political subdivisions” excluded from the NLRA under 29 United States Code section 152(2). (National Labor Relations Bd. v. Natural Gas Utility Dist. of Hawkins County, Tenn. (1971) 402 U.S. 600 (Hawkins County); Central Contra Costa Transit Authority (2012) PERB Decision No. 2263-M, p. 25 (Transit Authority); El Camino Hospital District (2009) PERB Decision No. 2033-M, pp. 17-18.) Hawkins County held that a private or quasi-private entity qualifies as a political subdivision if it is either: “(1) created directly by the State, so as to constitute a department or administrative arm of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate.” (Hawkins County, supra, 402 U.S. at pp. 604-605.) The Board found that SVMD qualifies as a political subdivision under the second Hawkins County category. To reach this conclusion, PERB analyzed facts relevant to this inquiry under three main headings: “Public Purpose,” “Public Funding,” and “Public Control.” (Workforce Investment Board (2014) PERB Order No. Ad-418-M, pp. 24-26 (WIB).) (pp. 25-27.) SVMD is subject to public control, an often-vital factor in deciding whether an entity is administered by individuals who are responsible to public officials or voters. If public officials have authority to decide who fills a majority of seats on an entity’s governing board, that means the entity is administered by individuals who are responsible to public officials or the general electorate. (Transit Authority, supra, PERB Decision No. 2263-M, p. 24; accord WIB, supra, PERB Order No. 418-M, pp. 8, 11, 13-14, 18, 25-28, & 30-31, and adopting administrative determination at pp. 2 & 4.) SVMD’s leaders are ultimately responsible to El Camino Hospital District officials, and in addition, its leaders are responsible to ECH, which is a public agency for MMBA purposes. (pp. 27-31.) Moreover, SVMD has received significant public funding, and its goals fall squarely within the District’s public purposes. For these reasons, the Board determined SVMD falls within the second Hawkins County category and is a “governmental subdivision” within the meaning of MMBA section 3501(c). (pp. 31-34.)

A single-employer or joint-employer finding neither expands nor contracts the entities under PERB’s jurisdiction. (County of Ventura (2018) PERB Decision No. 2600-M, pp. 41-43.) PERB does not gain jurisdiction over an entity merely because it is part of a single-employer relationship with a PERB-covered entity. (Id. at p. 40.) Thus, when a single-employer or joint-employer relationship exists, PERB asserts jurisdiction only over those entities in the relationship that otherwise fall under PERB jurisdiction. (Id. at pp. 39-43.) (p. 37.)

PERB applies a modified version of the successorship doctrine developed by federal courts and the NLRB under the NLRA. (County of Santa Clara (2019) PERB Decision No. 2670-M, p. 20.) An employer is a legal successor to a predecessor entity, and must therefore recognize and bargain with a union that exclusively represented employees of the predecessor entity, if: (1) more than half of the putative successor’s employees in a relevant bargaining unit previously worked for the predecessor; (2) there is substantial continuity of operations between the putative successor and the predecessor; and (3) the unit at issue is or can be an appropriate unit within the successor employer’s unit structure. (Id. at pp. 20-32.) While this test is akin to that which the NLRB applies, PERB does not necessarily apply each element in the same manner as the NLRB. (See, e.g., id. at pp. 27-32 [deviating from NLRB precedent as to the third successorship element where successor proved that the predecessor’s bargaining unit should properly be merged into successor’s existing, larger, exclusively represented unit, and the union representing the successor’s larger unit was willing to augment it with the newly merged employees].) (p. 48.)

The circumstances in which a successor employer takes over determines whether the employer has the right to set initial terms and conditions of employment that differ from those that previously applied (in which case the updated terms become the status quo pending negotiations). Specifically, a successor employer has the right to set new initial terms unless it is already “perfectly clear” that the employer plans to hire enough of the predecessor’s employees to make it evident that the union’s majority status will continue. (See First Student, Inc. v. National Labor Relations Bd. (D.C. Cir. 2019) 935 F.3d 604, 608-610 [discussing the “perfectly clear” rule as applied in the private sector].) The Board clarified that for employers under PERB jurisdiction: While an entity taking over a predecessor’s operation can lawfully announce new initial terms if it is not in the “perfectly clear” category, by the same token if the overall circumstances thereafter shift sufficiently that the employer becomes a “perfectly clear” successor, at that point it has a duty to bargain in good faith to impasse or agreement before making any further changes. (pp. 49-50.)

Multiple entities have a joint-employer relationship if each entity has at least a partial right to control certain employment conditions or direct the manner and method in which work is performed. (County of Ventura (2018) PERB Decision No. 2600-M, pp. 28-29.) In assessing a single-employer claim, in contrast, PERB looks at four factors: (1) functional integration of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership or common financial control. (Id. at p. 18.) Single employer status does not require the presence of all four factors. (Ibid.) PERB’s inquiry considers not only how many factors are present, but also to what extent they are present. (Id. at p. 19.) The four factors assist PERB in analyzing the practical realities to determine whether requiring bargaining on a single-employer basis will foster fair and effective collective bargaining by bringing to the table the parties who are able to work out difficult issues and foster harmonious labor relations. (Id. at pp. 22, 25 & fn. 29.) (pp. 35-36.)

Entities in a single-employer relationship must bargain over all terms and conditions of employment, while those in a joint employer relationship must bargain only over terms they control or partially control. (County of Ventura (2018) PERB Decision No. 2600-M, p. 33.) Neither a joint-employer relationship nor a single-employer relationship reflects a formal merger of separate entities. (Id. at pp. 40-41.) Rather, each is a legal construct for collective bargaining purposes. (Id. at pp. 40-43.) Such a construct has legal significance only for the purpose of representation and collective bargaining. (Id. at pp. 41-42 & 49.) (pp. 36-37.)

A single-employer or joint-employer finding neither expands nor contracts the entities under PERB’s jurisdiction. (County of Ventura (2018) PERB Decision No. 2600-M, pp. 41-43.) PERB does not gain jurisdiction over an entity merely because it is part of a single-employer relationship with a PERB-covered entity. (Id. at p. 40.) Thus, when a single-employer or joint-employer relationship exists, PERB asserts jurisdiction only over those entities in the relationship that otherwise fall under PERB jurisdiction. (Id. at pp. 39-43.) (p. 37.)

In assessing a single employer claim, integrated provision of services and use of a common business name are significant factors. (County of Ventura (2018) PERB Decision No. 2600-M, pp. 19-20 & 42-43 (Ventura); California Virtual Academies (2016) PERB Decision No. 2484, pp. 67 & 70.) The Board found strong evidence of functional integration where El Camino Hospital (ECH), a governmental subdivision, created Silicon Valley Medical Development, LLC (SVMD) to effectuate the public hospital District’s purposes and invested heavily in SVMD’s success. Moreover, at the time of the dispute, SVMD’s Board of Managers and top leaders were ECH officials. SVMD’s President continued to serve at ECH’s pleasure and to report to ECH’s CEO. ECH had approval power over SVMD’s annual budget as part of ECH’s consolidated budget. Thus, while SVMD developed and administered its own proposed budget, ECH had full authority whether to approve that budget. Because the District not only owned ECH but exclusively relied on ECH to carry out the District’s entire mission, the integration extended to the District as well. (pp. 38-40.) The Board explained that centralized control of labor relations does not necessarily depend on centralized authority over day-to-day matters, as “devolved management structures are common even when there is only one entity involved in managing a public enterprise.” (Ventura, supra, at pp. 21-22.) The Board balanced ECH’s overarching control over SVMD via SVMD’s Board of Managers and SVMD’s President and Vice President of Human Resources, as well as its authority whether to approve SVMD’s budget, against certain of the parties’ factual stipulations, and concluded that the centralized control of labor relations factor weighed at least slightly against the single-employer conclusion. (pp. 40-44.) On the other hand, the evidence weighed in favor of finding common management. Common management can be found even in the presence of a dispersed management structure (Ventura, supra, PERB Decision No. 2600-M, p. 24), which is consistent with the Board’s conclusion here. (p. 44.) Strong evidence of common ownership and financial control existed between the District, which owns ECH, which in turn owns SVMD. ECH provided SVMD substantial funding, without which it would not exist. ECH has full authority whether to approve SVMD’s budget, and SVMD’s profits and losses are allocated to ECH and SVMD’s financial performance appears as a specific line item in ECH’s reports. The facts do not point to an arm’s length business agreement. Balancing the above factors, the Board concluded that the District, ECH, and SVMD are parties to a single-employer relationship. (pp. 45-46.)

The complaint allegation that an employer’s new solicitation and distribution policy interferes with protected union and employee rights is independent of any other claim. (State of California (State Water Resources Control Board) (2022) PERB Decision No. 2830-S, p. 10 & fn. 10 [if a charge or complaint alleges interference based upon the same conduct giving rise to another claim, the interference claim is independent if it can be established without the other claim being established].) (p. 55.)

An access rule is unlawful if, on either a facial or as applied basis, it singles out protected conduct or speech, as compared to non-protected activities or speech. (County of Tulare (2020) PERB Decision No. 2697-M, pp. 18-19.) Even if a rule is nondiscriminatory, it must allow an exclusive representative reasonable access to employer property to communicate with bargaining unit employees, distribute literature, investigate workplace conditions, and assess contractual and statutory compliance. (County of San Joaquin (2021) PERB Decision No. 2775-M, pp. 26-39.) The employer bears the burden of proving that a restriction on access to its premises is: (1) necessary for safe or efficient operations; and (2) narrowly drawn to avoid overbroad, unnecessary interference with protected rights. (Id. at pp. 26-27.) These principles apply irrespective of whether the person seeking access is a bargaining unit member or a union representative who does not work for the employer. (Id. at p. 27.) (p. 55.)

Employer’s policy that prohibits “[t]he solicitation of employees by employee union representatives and non-employee union organizers during an employee’s work time and/or in patient care areas at any time,” and also broadly prohibits non-employees from soliciting “membership in, or participation on behalf of any social, fraternal, political, religious or other organization” and distributing literature on employer’s premises at any time, are overbroad and therefore unlawful. First, the restriction against non-employee access is so broad that it could reasonably be interpreted to encompass union staff. Second, the rule’s categorical prohibition against distributing literature on employer premises at any time is incompatible with the MMBA, as it extends to distribution in non-patient care areas during non-work time. (pp. 56-57.)

An access rule is unlawful if, on either a facial or as applied basis, it singles out protected conduct or speech, as compared to non-protected activities or speech. (County of Tulare (2020) PERB Decision No. 2697-M, pp. 18-19.) Even if a rule is nondiscriminatory, it must allow an exclusive representative reasonable access to employer property to communicate with bargaining unit employees, distribute literature, investigate workplace conditions, and assess contractual and statutory compliance. (County of San Joaquin (2021) PERB Decision No. 2775-M, pp. 26-39.) The employer bears the burden of proving that a restriction on access to its premises is: (1) necessary for safe or efficient operations; and (2) narrowly drawn to avoid overbroad, unnecessary interference with protected rights. (Id. at pp. 26-27.) These principles apply irrespective of whether the person seeking access is a bargaining unit member or a union representative who does not work for the employer. (Id. at p. 27.) (p. 55.)

Employer’s policy that prohibits “[t]he solicitation of employees by employee union representatives and non-employee union organizers during an employee’s work time and/or in patient care areas at any time,” and also broadly prohibits non-employees from soliciting “membership in, or participation on behalf of any social, fraternal, political, religious or other organization” and distributing literature on employer’s premises at any time, are overbroad and therefore unlawful. First, the restriction against non-employee access is so broad that it could reasonably be interpreted to encompass union staff. Second, the rule’s categorical prohibition against distributing literature on employer premises at any time is incompatible with the MMBA, as it extends to distribution in non-patient care areas during non-work time. (pp. 56-57.)

An employer typically does not afford reasonable access if it infringes on an employee’s ability to engage in protected activity either in a nonwork area or during a nonwork time. (County of Tulare (2020) PERB Decision No. 2697-M, p. 20.) For this reason, any employer rule must clearly allow protected activity in nonwork areas and nonwork time. (Ibid. [employers must refrain from overbroad restrictions such as those that apply “during the workday,” without differentiating between times an employee is working and times an employee is taking a break]; see also Superior Court v. Public Employment Relations Bd. (2018) 30 Cal.App.5th 158, 195-197 [rule prohibiting protected activities in “working areas” was unlawfully overbroad because it could be interpreted as categorical ban on all such activities anywhere on employer’s premises].) Even if a workplace includes sensitive areas focused on acute patient care, the employer must narrowly tailor its rules and afford access to the fullest degree possible given its unique constraints. (County of San Joaquin (2021) PERB Decision No. 2775-M, pp. 28, 33-34, 38-39; County of Riverside (2012) PERB Decision No. 2233-M, p. 9 (Riverside); Regents of the University of California, University of California at Los Angeles Medical Center (1983) PERB Decision No. 329-H, p. 10 (UCLA).) A hospital’s non-discriminatory restriction on non-business solicitation and distribution is presumptively valid if it covers only immediate patient care areas. (Regents of the University of California (2018) PERB Decision No. 2616-H, p. 11; Riverside, supra, PERB Decision No. 2233-M, p. 9.) But a hospital must normally allow both employee and non-employee union representatives to traverse patient care areas if necessary to reach areas where PERB precedent allows non-business activities. (Riverside, supra, PERB Decision No. 2233-M, pp. 9 & 11; UCLA, supra, PERB Decision No. 329-H, pp. 9-10, 14, 16-17.) (pp. 55-56.)

The Prohibition on Public Employers Deterring or Discouraging Union Membership (PEDD) applies to employers subject to any of California’s public sector labor relations statutes, including the MMBA. (PEDD, § 3552(c).) (pp. 4, fn. 5.) The PEDD governs an employer’s obligations before disseminating a mass communication concerning exclusively represented employees’ right to join or support an employee organization or to refrain from doing so. (PEDD, § 3553(b).) Specifically, before doing so the employer must meet and confer with the exclusive representative on the content of the communication. (Ibid.) If the parties do not reach agreement and the employer still chooses to disseminate the communication, then the exclusive representative has the right to draft its own communication and have the employer disseminate the two communications together. (Id., § 3553(c).) PERB broadly construes the word “support,” as used in section 3553(b), to refer to any form of support, whether financial or non-financial. (Regents of the University of California (2022) PERB Decision No. 2835-H, pp. 14-15 & p. 17, fn. 10.) (pp. 58-59.)

Multiple entities have a joint-employer relationship if each entity has at least a partial right to control certain employment conditions or direct the manner and method in which work is performed. (County of Ventura (2018) PERB Decision No. 2600-M, pp. 28-29.) Under the single-employer doctrine, in contrast, PERB looks at four factors: (1) functional integration of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership or common financial control. (Id. at p. 18.) Single employer status does not require the presence of all four factors. (Ibid.) PERB’s inquiry considers not only how many factors are present, but also to what extent they are present. (Id. at p. 19.) In assessing a single-employer claim, integrated provision of services and use of a common business name are significant factors. (Id. at pp. 19-20 & 42-43.) The four factors assist PERB in analyzing the practical realities to determine whether requiring bargaining on a single-employer basis will foster fair and effective collective bargaining by bringing to the table the parties who are able to work out difficult issues and foster harmonious labor relations. (Id. at pp. 22, 25 & fn. 29.) (pp. 35-36.) Entities in a single-employer relationship must bargain over all terms and conditions of employment, while those in a joint employer relationship must bargain only over terms they control or partially control. (Id. at p. 33.) Neither a joint-employer relationship nor a single-employer relationship reflects a formal merger of separate entities. (Id. at pp. 40-41.) Rather, each is a legal construct for collective bargaining purposes. (Id. at pp. 40-43.) Such a construct has legal significance only for the purpose of representation and collective bargaining. (Id. at pp. 41-42 & 49.) (pp. 36-37.) A single-employer or joint-employer finding neither expands nor contracts the entities under PERB’s jurisdiction. (Id. at pp. 41-43.) Thus, when a single-employer or joint-employer relationship exists, PERB asserts jurisdiction only over those entities in the relationship that otherwise fall under PERB jurisdiction. (Id. at pp. 39-43.) (p. 37.)

An employer typically need not bargain over its decision to change employees’ reporting location but must provide adequate notice and opportunity to bargain over the decision’s effects. (Rio Hondo Community College District (2013) PERB Decision No. 2313, pp. 18-19.) (p. 57.)

Even when an employer has no obligation to bargain over a decision, it must provide notice and an opportunity to meet and confer over any reasonably foreseeable effects the decision may have on matters within the scope of representation. (County of Santa Clara (2021) PERB Decision No. 2799-M, pp. 24-25.) An employer normally may not implement the decision while effects bargaining continues and instead must wait until the parties have reached agreement or impasse over the negotiable effects of the decision. (Id. at p. 25.) The employer violates its duty to bargain if it fails to provide adequate advance notice, and in such circumstances the union need not ask to bargain effects as a prerequisite to filing an unfair practice charge. (Ibid.) However, where an employer does provide adequate notice, the union must request to bargain any reasonably foreseeable effects on negotiable matters. (Ibid.) The union’s request to bargain need not be formalistic or burdensome, nor anticipate every imaginable effect a proposed change may have, but rather must only identify negotiable areas of impact, thereby placing the employer on notice that it believes the employer’s proposed decision would affect one or more negotiable topics. (Ibid.) (pp. 57-58.)

Employer violated its duty to bargain effects of decision to change work location when exclusive representative first learned of the unilateral change after its implementation. (See City of Sacramento (2013) PERB Decision No. 2351-M, pp. 39-40 [when the exclusive representative first learns of a unilateral change after its implementation, “the ‘notice’ is nothing more than ‘notice’ of a fait accompli and the question of waiver never arises”].) (p. 58.)

Solicitation and distribution policies are a mandatory subject of bargaining. (Regents of the University of California (2012) PERB Decision No. 2300-H, pp. 20-27.) (p. 54.)

In Contra Costa Community College District (2019) PERB Decision No. 2652, the Board cited Total Security Management (2016) 364 NLRB 1532 (Total Security) with approval. In Total Security, the NLRB held that an employer has a duty to bargain with a union before unilaterally disciplining an employee, where the employer is imposing the discipline based on an exercise of discretion rather than pursuant to preexisting standards of conduct. (Total Security, supra, 364 NLRB at p. 1532.) Such an issue, the NLRB explained, typically arises after a union is first certified or recognized, but before a contract is in place. (Ibid.) The NLRB concluded that an employer must provide its employees’ bargaining representative notice and the opportunity to bargain before exercising its discretion to impose serious discipline on individual employees, absent an agreement with the union providing for a process, such as a grievance-arbitration system, to address such disputes. (Ibid.) The Board, however, declined to consider whether Total Security might apply in a successorship context where the record did not demonstrate whether the acquired clinics had any existing disciplinary policies or practices before two employees were terminated, and, if so, what they were. (pp. 53-54.)

Dress codes are a mandatory subject of bargaining. (p. 52.)

Dress codes are a mandatory subject of bargaining. (p. 52.)

While union’s unfair practice charge and post-hearing briefs argue that employees at the acquired clinics belong in the existing unit, OGC neither dismissed that allegation nor included it in the complaint. The union was therefore within its rights to move to amend the complaint to add such an allegation, but it did not do so. PERB expressed no opinion on this allegation, as it does not meet PERB’s standard for unalleged violations. (Superior Court v. Public Employment Relations Bd. (2018) 30 Cal.App.5th 158, 192-193 [to pursue unalleged claim, charging party must show the claim falls within the limitations period and relates to the same course of conduct at issue in the complaint, and that respondent had adequate notice and opportunity to defend against the claim, including an opportunity to examine witnesses and present documents].) (p. 49, fn. 30.)

The parties introduced into evidence multiple web pages from Respondents’ various websites. To the extent the Board cited web pages the parties did not introduce, including more updated versions of the same web pages introduced into evidence, the Board took administrative notice of those web pages (State of California (California Correctional Health Care Services) (2022) PERB Decision No. 2823-S, p. 8, and the statements on which the Board relied are admissible admissions (Oxnard Union High School District (2022) PERB Decision No. 2803, p. 23, fn. 11.) (pp. 8-9, fn. 8.)

To remedy an effects bargaining obligation, PERB generally directs the offending employer to provide back pay from the first date that employees began to experience harm until the earliest of: (1) the date the parties reach an agreement, typically as part of complying with PERB’s effects bargaining order; (2) the date the parties reach a good faith final impasse, including exhaustion of any required or agreed upon post-impasse procedures; or (3) the date the union fails to pursue effects negotiations in good faith. PERB ordered employer to reimburse extra costs incurred in material part because of unilateral change in work location, with make-whole relief retroactive to the first date of harm and continuing until the earliest of: (a) the date the parties reach an agreement on the effects of the work relocation; (b) the date the parties reach a good faith impasse as to such effects, including exhaustion in good faith any impasse resolution procedures that may be required or agreed upon; or (c) the date the union waives its right to bargain by failing to request negotiations, or fails to bargain in good faith. (p. 62.)