Opinion
F079908
09-21-2021
COUNTY OF KERN et al., Petitioners, v. PUBLIC EMPLOYMENT RELATIONS BOARD, Respondent SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 521, Real Party in Interest.
Liebert Cassidy Whitmore, Adrianna E. Guzman, Kevin J. Chicas; Kern County Hospital Authority and Karen S. Barnes for Petitioners. J. Felix De La Torre, Wendi L. Ross, Sara T. Kang, Camille K. Binon for Respondent. Weinberg, Roger & Rosenfeld, Matthew J. Gauger, Kerianne R. Steele and Xochitl A. Lopez for Real Party in Interest.
NOT TO BE PUBLISHED
PERB Dec. No. 2659-M, Case No. LA-CE-1084-M
ORIGINAL PROCEEDINGS; petition for writ of extraordinary relief.
Liebert Cassidy Whitmore, Adrianna E. Guzman, Kevin J. Chicas; Kern County Hospital Authority and Karen S. Barnes for Petitioners.
J. Felix De La Torre, Wendi L. Ross, Sara T. Kang, Camille K. Binon for Respondent.
Weinberg, Roger & Rosenfeld, Matthew J. Gauger, Kerianne R. Steele and Xochitl A. Lopez for Real Party in Interest.
OPINION
FRANSON, Acting P. J.
In this case, we review a decision of the Public Employment Relations Board (the Board) which held that the County of Kern (the County) and Kern County Hospital Authority (the Hospital Authority) (together respondents) violated their duty under the Meyers-Milias-Brown Act (the MMBA) to meet and confer with the Service Employees International Union Local 521 (the Union) when respondents, in operating Kern Medical Center facilities, unilaterally subcontracted the staffing of medical assistant positions at two newly-opened outpatient clinics on Stockdale Highway without notifying or seeking to bargain with the Union concerning that action.
Since they were respondents in the proceedings before the Board, for consistency we retain that designation on appeal. We granted review of the Board's decision following respondents' petition for a writ of extraordinary relief. (Gov. Code, § 3509.5.)
The MMBA, which governs labor-management relations between public agencies and public employees at the local government level, is codified at Government Code section 3500, et seq. Further statutory references are to the Government Code, unless otherwise specified.
Meeting and conferring under the MMBA is also referred to herein as bargaining or providing an opportunity to bargain.
In challenging the Board's ruling, respondents contend the Board failed to apply an essential element of the legal test developed by the California Supreme Court for determining whether a management action is within the scope of representation for purposes of the MMBA. Specifically, respondents contend the Board failed to ascertain whether the management action in question had “ ‘a significant and adverse effect on the wages, hours, or working conditions of the bargaining-unit employees.' ” (Claremont Police Officers Assn. v. City of Claremont (2006) 39 Cal.4th 623, 638 (Claremont).) The issue is important because unless such a significant and adverse effect on bargaining unit employees is indicated, “there is no duty to meet and confer.” (Ibid.) Respondents' position is that the Board improperly bypassed this essential threshold inquiry and simply proceeded to apply a balancing test. In addition, respondents contend no substantial evidence existed to support certain foundational findings necessary to an unfair labor practice determination.
By their separate briefs, the Board and the Union each dispute respondents' claims of error and urge that we defer to the Board's expertise. Moreover, the Board maintains it did adequately consider the elements of the applicable legal standard on the scope of representation (including whether the action had an adverse effect on bargaining unit employees) and argues substantial evidence supported its factual findings on that and other matters.
Based on our review, we conclude for reasons more fully explained below that respondents' legal and factual challenges to the Board's decision are not adequately established on the present record and fall short of clearly demonstrating grounds for reversal in this case. Accordingly, we affirm the decision of the Board on narrow grounds.
The Board's decision that is the subject of our review was issued by the Board as Service Employees International Union Local 521 v. County of Kern & Kern County Hospital Authority (2019) PERB Dec. No. 2659-M.
FACTS AND PROCEDURAL HISTORY
Kern Medical Center and the Parties
Kern Medical Center is a public hospital in east Bakersfield within Kern County; it is open 24 hours a day, seven days a week, and is a level II trauma center. It provides both inpatient and outpatient care, specialty services, and medical care for the local inmate population. It is also the designated public hospital for Kern County; as such, it is the safety net hospital assigned to provide medical care for indigents and individuals with socioeconomic challenges for all of Kern County. Kern Medical Center includes the main hospital facility along with several outpatient clinics.
In the past, Kern Medical Center was operated by the County. The hospital struggled with unstable finances for many years, and by one estimate it was losing millions of dollars each month. To help bring financial stability to Kern Medical Center, the County Board of Supervisors, during Fall 2013, engaged in discussions with Russell Judd, who at the time was CEO of Mercy Hospitals in Bakersfield, on how to improve Kern Medical Center and provide it with leadership services needed to turn around the financial problems. Judd and the County discussed the option of transitioning the ownership and operation of Kern Medical Center to a hospital authority.
The idea gained support and reached the Legislature. On September 26, 2014, Assembly Bill No. 2546 was signed into law, which adopted the Kern County Hospital Authority Act authorizing the County to “establish by ordinance the Kern County Hospital Authority.” The legislation was codified at Health and Safety Code section 101852, et seq. Under the new law, once the creation of the Hospital Authority was implemented by the County Board of Supervisors, the County would be transitioning Kern Medical Center employees from employment with the County to become employees of the Hospital Authority, and further, the Hospital Authority as the successor public agency/employer would be required to continue to recognize the exclusive employee representative of each bargaining unit and would be bound by any existing memorandum of understanding (or MOU) concerning such union-represented employees. (Health & Saf. Code, § 101853.1, subds. (c), (d).)
The Act was so named in subdivision (a) of section 101852 of the Health and Safety Code.
In enacting the Kern County Hospital Authority Act, the Legislature expressly recognized that “in a new era of health care delivery, it is necessary to pursue approaches that transition beyond acute care-centric orientations[;]” and that “[t]he ongoing evolution of the health care environment requires public entities providing or arranging health care services to pursue innovative health care delivery models that proactively improve the quality of patient care services and patient experience, efficiently and effectively increase access to needed health care services across the care continuum, provide services in a patient-centered manner, and moderate the rate of growth of health care expenditures.” (Health & Saf. Code, § 101852, subd. (b)(2), (3).) The legislation acknowledged that such measures were needed concerning the operation and viability of Kern Medical Center, and it authorized the creation by the County Board of Supervisors of the Hospital Authority as a local public entity or political subdivision to facilitate such purposes. (Health & Saf. Code, §§ 101852, subd. (b)(4), (5), 101853, subd. (a).)
After the passage of the Kern County Hospital Authority Act, the County Board of Supervisors adopted ordinance No. A-356 on October 6, 2015, which formally created the Hospital Authority. The Hospital Authority was thereby established as a distinct public entity to operate and manage Kern Medical Center, including all its facilities, the acute care hospital, and outpatient clinics. (See Ord. No. A-365; Health & Saf. Code, § 101853.) It was understood the Hospital Authority was given the mission of improving Kern Medical Center's flexibility, responsiveness and innovation, not only for the purpose of expanding services and access to medical care for the broader community, but also to provide initiatives or ventures that would help “support the hospital financially.”
On July 1, 2016, the County employees working at Kern Medical Center and its licensed clinics transitioned to the Hospital Authority, at which point they ceased being County employees and became Hospital Authority employees. The transitioned employees retained their existing or equivalent classifications and job descriptions, as well as the salary, benefits and other terms and conditions of employment. Under the terms of the Kern County Hospital Authority Act (see Health & Saf. Code, § 101853.1, subd. (d)) and county ordinance No. A-356, the existing MOU for union-represented employees remained in effect for a period of 24 months or through the express term of the MOU, whichever was longer, unless modified by agreement.
As will be seen, the timeframe of the relevant events and actions discussed here took place both before and after the County transferred control of its medical facilities and employees to its successor, the Hospital Authority. It is undisputed that both the County and the Hospital Authority are public agencies for purposes of the MMBA and come under the Board's jurisdiction. For convenience, our discussion of the issues largely treats the respondents together or jointly, which was also the approach used in the Board's decision.
The Union, i.e., Service Employee's International Union Local 521, is an employee organization within the meaning of Government Code section 3501, subdivision (a). Finally, PERB is the state board empowered by the Legislature to adjudicate unfair labor practice claims under the MMBA and other public employment relations statutes. (Boling v. Public Employment Relations Bd. (2018) 5 Cal.5th 898, 911.)
The MOU
The Union represents six bargaining units of employees working at Kern Medical Center, and one of the bargaining units (designated as “Trades/Crafts/Labor”) includes the classification of medical assistant. On or about March 15, 2016, the Union and the County entered into a single MOU for all six of the Kern Medical Center bargaining units. The MOU had an effective period of March 28, 2015, through August 27, 2017. Article 2, section 9, of the MOU expressly related to contracted services, and stated as follows: “A. The County shall meet and confer with the Union prior to contracting out for services where represented employees in bargaining units 1-6 currently provide those services, provided the County is required by law to do so. [¶] B. The County and [the Union] agree that the County is permitted to contract out the remote maintenance, landscaping, and custodial services at (1) the Lost Hills Paramount/ Wonderful Park and (2) the buildings and facilities in North Kern.”
At this point, the employees had not yet become employees of the Hospital Authority. That would happen in July 2016. As previously noted, Hospital Authority was obliged to honor the MOU after it took over the management of the Kern Medical Center facilities and employees.
Kern Medical Center Includes Outpatient Clinics
In addition to the hospital facility, Kern Medical Center includes outpatient clinics, one of which is located at the hospital campus and several others are at remote sites. The outpatient clinics are of two varieties, licensed and exempt, which operate under different rules. The licensed clinics are subject to many of the same stringent requirements as Kern Medical Center hospital, including infection control reports, logs, hallway widths, and must have a registered nurse (RN) on site to supervise clinic staff. In contrast, the exempt clinics do not need to have an RN on staff or follow the other strict requirements of licensed clinics. Instead, they can be run more like traditional doctors' offices, with the physicians themselves running the clinic staffed with medical assistants or other staff that would report to the physicians. The licensed clinics included the Sagebrush clinic on Columbus Street, the Lerdo clinic serving the correctional facility, and a clinic situated on campus at Kern Medical Center. All three of these clinics have used employees represented by the Union, including medical assistants
The two Stockdale clinics were exempt clinics, opened in 2016 at 9300 Stockdale Highway, Bakersfield, in suites 100 and 300. The Stockdale clinics included physicians with specialties such as urology, urogynecology, gynecology, neurosurgery, orthopedic services, podiatry and general surgery. A management decision was made by respondents not to use Union-represented hospital staff for the two Stockdale clinics, but rather to subcontract out the staffing thereof through an entity known as CBCC. The Union was not provided advance notice of this decision nor given an opportunity to meet and confer with the County and/or Hospital Authority.
The full name of the subcontracting company was Comprehensive Blood and Cancer Center (or CBCC), which provided administrative, managerial and operations services and staffing.
Reasons for Decision to Open and Subcontract Staff at Stockdale Clinics
As reflected in the testimony given at the administrative hearing, respondents opened the Stockdale outpatient clinics for several reasons, among which were the following: (1) to expand available services to the community, including to the west side of Bakersfield; (2) to provide enhanced convenience for patients; and (3) to expand the growth of ambulatory or outpatient services. Additionally, by providing an environment more like a private practice setting with convenient location and amenities, as opposed to the stereotypical county clinics, it would create a more attractive place for patients with private insurance. It was also observed that health insurers are more willing to have ambulatory procedures performed in an outpatient setting because it is generally less expensive. Thus, along with the other reasons for establishing the Stockdale clinics was the fact that such clinics would likely result in increased income and profitability for Kern Medical Center.
Testimony was also provided on the rationale for respondents' decision to subcontract the staffing of the Stockdale clinics and use outside personnel rather than existing Kern Medical Center and/or bargaining unit staff. Rene Villanueva, who works for Meridian Healthcare Partners, a firm that provided management and consulting services regarding the operation of Kern Medical Center, was responsible during that time for ambulatory care-that is, for the outpatient clinics of Kern Medical Center. Villanueva testified that in early 2016, “we were still dealing with the County's Personnel Department” which had “huge hurdles” including that it could take weeks if not months to hire anyone through their cumbersome recruiting process. Also, Villanueva noted that experienced medical assistants did not typically apply to come to work for Kern Medical Center. Therefore, the best alternative in starting the Stockdale clinics was to use CBCC to “help us with our recruitment and staffing, ” and that “worked out very well.” Moreover, there was a sense of urgency to hire staff quickly without delay because “we were running out of space” so “we had to open more facilities, additional facilities to accommodate our patient volumes.” Villanueva also testified that the various classifications of the union-represented employees at Kern Medical Center, including medical assistants, were too narrow and limited in their job descriptions to perform the tasks that were needed; i.e., the new clinics would require experienced staff who could perform a wide array of functions and responsibilities in order to assist the doctors and help administer the office and interact with patients.
Alton Scott Thygerson provided additional testimony on this subject. He likewise worked for the management consulting firm, Meridian Healthcare Partners, to assist in managing the operations of Kern Medical Center. Thygerson's position was chief strategy officer, and his primary area of responsibility was the development of new operational initiatives and business opportunities for Kern Medical Center. Thygerson was involved with the Stockdale clinics and the staffing of those clinics through CBCC, a subcontractor. Thygerson emphasized how different the Stockdale clinics were, as exempt outpatient clinics, from normal hospital operations or standard county clinics. He noted the Stockdale clinics resembled the setting of a private physician's practice and were geared toward seeing patients quickly and efficiently. He stated that the existing hospital personnel at Kern Medical Center already “had existing jobs to do” at the hospital, the performance of which was needed every day, and it would have been a challenge to hire new staff to replace them at the hospital if they were transferred over to the Stockdale clinics. That is, if hospital staff were used, “[w]e would have to backfill” those positions, which made no sense. Thus, these new locations needed new staff, and “we needed to get those [clinics] going quickly, ” since the Kern Medical Center was full and out of space.
Moreover, according to Thygerson's testimony, since it was all new staff at a new location, the work being performed at the Stockdale clinics through the outside subcontractor (i) was not work that was formerly performed by employees represented by the Union, (ii) would not result in any Union-represented employees being laid off, (iii) would not diminish the hours or overtime opportunities of Union-represented employees, and (iv) would not result in any change to the benefits received by Union-represented employees. During cross-examination, Thygerson admitted that by using CBCC subcontracted staff, the Kern Medical Center was saving money on wages and benefits in comparison to using Union-represented personnel.
Other Clinics
We briefly mention two other exempt outpatient clinics of Kern Medical Center that were alluded to by the parties. One is the 34th Street clinic, which included what were known as the “Reach” and “Grow” clinics. The 34th Street clinic provided services to medically fragile patients who had no strong relationship with a regular physician and might otherwise seek medical care in an emergency room. The administrative law judge found that as to the issues of staffing and the nature of the current work being conducted at the 34th Street clinic, there was a lack of clear or competent evidence. Along the same lines, the staffing situation at another exempt clinic known as the Truxton Avenue clinic (a facility including family practice, internal medicine and some medical subspecialities) was found by the Board to be similarly unclear or uncertain with respect to the nature of the employment of medical assistants. Moreover, it was undisputed that the Union was never provided notice and opportunity to bargain concerning the use of subcontracted staff, if any, at the Truxton Avenue clinic.
In summary, although both the 34th Street and Truxton Avenue clinics were briefly alluded to in Villanueva's testimony as “CBCC facilities, ” presumably meaning that subcontracting of staff was involved at those clinics, there was found to be a lack of any clear, specific or competent evidence on the question of whether those clinics involved the subcontracting of medical assistants. That assessment of the evidence by the Board and the administrative law judge appears to be correct. In any event, whether for this reason or others, the primary focus of the proceedings below was on the Stockdale clinics.
There was also some mention of a clinic at suite 200 in the Stockdale Highway facility, but that location had not yet opened and no decision had been made about staffing.
The Union's Charge and the Board's Complaint Filed
On April 21, 2016, the Union filed an unfair practice charge against respondents with the Board, alleging that respondents unilaterally subcontracted work that would ordinarily be performed by represented bargaining units without providing the Union with notice and an opportunity to bargain on that decision. Subsequently, amended charges were filed by the Union. The second amended charge by the Union included specific allegations that respondents unilaterally hired subcontractors at suites 100 and 300 at 9300 Stockdale Highway; that is, at the Stockdale clinics. The employee classifications that respondents allegedly subcontracted out at the Stockdale clinics without notice to the Union or an opportunity to bargain purportedly included the following: central supply assistants, hospital staff nurses, medical assistants, nurse practitioners, vocational nurses, surgical technicians, patient care technicians, office services specialists and physicians' assistants. The subcontracting allegedly represented a change of policy or practice on respondents' part, undertaken without meeting and conferring with the Union. Respondents' actions allegedly constituted an unfair practice under the provisions of the MMBA.
In response to the charges filed by the Union, respondents provided a formal written response to the Board. Respondents' position was there was no failure to bargain because, among other reasons, when an entity such as the County or the Hospital Authority opens a new facility, it is permitted to hire outside employees to staff the new facility as long as there is no adverse effect on bargaining unit employees. Respondents further alleged that the subcontracted positions at the Stockdale clinics were not shown to be within the type of work and/or scope of duties exclusively performed by any of the bargaining-unit employee classifications.
On March 27, 2017, the Board's Office of the General Counsel issued a complaint alleging that respondents engaged in an unlawful unilateral policy change in violation of the MMBA by failing to provide the Union with notice and an opportunity to bargain before using subcontracted labor at the Stockdale clinics for the following eight classifications: central supply assistants, hospital staff nurses, medical assistants, nurse practitioners, vocational nurses, surgical technicians, patient care technicians, and office services specialists. On April 17, 2017, respondents filed their answer denying that the conduct alleged by the Board constituted a violation of the MMBA.
Administrative Hearing
An administrative hearing was held on February 22 and 23, 2018, before Administrative Law Judge Eric Cu (the ALJ), at a Regional Office of the Board. At the conclusion of the evidence, and after allowing closing briefs to be filed, the ALJ ultimately found that the Union failed to prove any violation of the MMBA as to seven of the eight bargaining unit classifications. However, the ALJ found that the Union did prevail in showing one violation: Namely, that respondents had subcontracted medical assistant work at suites 100 and 300 of the Stockdale clinics that would ordinarily be performed by the Union's medical assistant classification, without providing the Union with advance notice and an opportunity to bargain. In finding a violation, the ALJ primarily considered whether respondents had (i) replaced bargaining unit employees (i.e., medical assistants) with those of a subcontractor to perform substantially the same services under similar circumstances, and (ii) whether the decision was motivated substantially by potential savings in labor costs. The ALJ found in the affirmative (i.e., in favor of the Union's position) on both these factors. Accordingly, the ALJ found that the issues were within the scope of representation and respondents' failure to meet and confer violated the MMBA.
The Board's Decision
On July 23, 2018, respondents sought review by the Board of the ALJ's findings and conclusions by filing a statement of exceptions to the Board. On August 6, 2019, the Board affirmed the ALJ's decision and adopted it as its own decision, while also adding some further analysis. The Board's decision on the case was issued and reported as Service Employees International Union Local 521 v. County of Kern & Kern County Hospital Authority, PERB Decision No. 2659-M.
In its decision, the Board agreed with the ALJ that when respondents began using “contract medical assistants to staff the clinics in Suites 100 and 300, without notifying Local 521 or giving the union an opportunity to bargain, [r]espondents at least implemented a new policy, and/or applied existing policy in a new way.” Because there clearly was a change of policy, the Board noted “the primary dispute is whether [r]espondents' decision to contract out for medical assistants at the new clinics was within the scope of representation.” The Board then discussed the scope of representation issue at length. The Board began by summarizing the three categories of managerial decisions, each having its own implications for the scope of representation. The California Supreme Court precedent relied upon by the Board in formulating the three categories of managerial decisions was International Assn. of Fire Fighters, Local 188 v. Public Employment Relations Bd. (2011) 51 Cal.4th 259 (Richmond Firefighters), a case involving the City of Richmond's decision to lay-off some of its firefighters as a result of a budget crisis.
As background, we reiterate here the statement by the California Supreme Court in Richmond Firefighters of the three categories of management decisions and the impact of each on the scope of representation: “In the first category are decisions that ‘have only an indirect or attenuated impact on the employment relationship' and thus are not mandatory subjects of bargaining. [Citation.] Examples of decisions in this category are ‘choice of advertising and promotion, product type and design, and financing arrangements.' [Citation.] [¶] In the second category are decisions directly defining the employment relationship, such as wages, workplace rules, and order of succession of layoffs and recalls. Decisions in this second category are always mandatory subjects of bargaining. [Citation.] [¶] In the third category are management 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.' [Citation.] Bargaining is not required for decisions in this category if they do not raise an issue that is ‘amenable to resolution through the bargaining process' [citation], although the employer is normally required to bargain about the results or effects of such decisions [citation]. To determine whether a particular decision in this third category is within the scope of representation, the [U.S.] high court prescribed a balancing test, under which ‘in view of an employer's need for unencumbered decision-making, bargaining over management decisions that have a substantial impact on the continued availability of employment should be required only if the benefit, for labor-management relations and the collective bargaining process, outweighs the burden placed on the conduct of the business.' ” (Richmond Firefighters, supra, 51 Cal.4th at pp. 272-273, relying on and quoting First National Maintenance Corp. v. NLRB (1981) 452 U.S. 666, 676-680.)
In the Board's decision in the present case, it appears to have concluded that respondents' decision to use subcontracted medical assistants came within the third category; accordingly, it proceeded to apply the balancing test indicated in Richmond Firefighters. In doing so, the Board found the issues of concern to respondents in the hiring process (i.e., the need for recruiting qualified individuals and being able to hire staff quickly) were amenable to bargaining, as was the concern to reduce labor costs. Additionally, the Board found that respondents hired the subcontracted medical assistants, not as part of a fundamental change of direction in the scope of the enterprise of Kern Medical Center, but simply to perform substantially the same types of job duties that bargaining unit medical assistants performed elsewhere within Kern Medical Center. Further, the fact that use of subcontracted medical assistants at these new clinic locations would not presently displace bargaining unit employees was held by the Board to be insufficient to overcome respondents' duty to bargain under the circumstances, citing two federal cases in support-i.e., Mi Pueblo Foods (2014) 360 NLRB 1097 and Overnite Transportation Co. (2000) 330 NLRB 1275. The Board generally observed in a footnote that there is ordinarily an actual or potential diminution of union work through subcontracting, which “not only withdraws wages and hours associated with the contracted-out work from the unit, but also weakens the collective strength of employees in the unit, which in turn undermines their collective ability to effectively deal with the employer.” In the end, because the Board found under the balancing test that the issues at stake were bargainable, it concluded that respondents' actions violated the MMBA. Consequently, the Board affirmed the decision of the ALJ.
Respondents Petition for Review
Respondents thereafter petitioned to this court for relief, and, on April 29, 2020, we issued a writ of review, agreeing to review this matter. Respondents challenge the Board's decision on several grounds, including that the Board failed to apply the correct legal test or standard on the issue of whether respondents' action was within the scope of representation. On the scope of representation issue, respondents contend the Board failed to determine whether the management action undertaken by respondents had a significant and adverse effect on the wages, hours, or working conditions of the bargaining-unit employees, which was an essential threshold inquiry set forth in the California Supreme Court's Claremont case, i.e., Claremont, supra, 39 Cal.4th 623, 638. In opposition, the Board's position is that it properly harmonized the Claremont and Richmond Firefighters decisions, and that in any event it did consider the adverse effect on the bargaining unit employees. We consider this question and other contentions raised by respondents in our discussion below.
DISCUSSION
STANDARD OF REVIEW
In Boling v. Public Employment Relations Bd., supra, 5 Cal.5th at page 911, the California Supreme Court recently summarized the Board's (or PERB's) agency authority and our standard of review of its decisions: “PERB is the agency empowered by the Legislature to adjudicate unfair labor practice claims under the MMBA and six other public employment relations statutes. [Citations.] It is settled that ‘[c]ourts generally defer to PERB's construction of labor law provisions within its jurisdiction. [Citations.] “…PERB is ‘one of those agencies presumably equipped or informed by experience to deal with a specialized field of knowledge, whose findings within that field carry the authority of an expertness which courts do not possess and therefore must respect.' [Citation.]” [Citation.] We follow PERB's interpretation unless it is clearly erroneous. (Ibid.)' [Citation.] As noted in Cumero v. Public Employment Relations Bd. (1989) 49 Cal.3d 575, 586, interpretation of a public employee labor relations statute ‘ “falls squarely within PERB's legislatively designated field of expertise, ”' dealing with public agency labor relations. Even so, courts retain final authority to ‘ “state the true meaning of the statute.”' [Citation.] A hybrid approach to review in this narrow area maintains the court's ultimate interpretive authority while acknowledging the agency's administrative expertise.” (Boling v. Public Employment Relations Bd., supra, 5 Cal.5th at pp. 911-912.)
“The standard of review for PERB's factual findings is established by statute. ‘The findings of the board with respect to questions of fact, including ultimate facts, if supported by substantial evidence on the record considered as a whole, shall be conclusive.' (§ 3509.5, subd. (b).) As we have long recognized, the Legislature is free to specify that certain administrative determinations are subject to substantial evidence review instead of independent review. [Citation.] Accordingly, in reviewing PERB's findings, ‘ “we do not reweigh the evidence. If there is a plausible basis for the Board's factual decisions, we are not concerned that contrary findings may seem to us equally reasonable, or even more so. [Citations.] We will uphold the Board's decision if it is supported by substantial evidence on the whole record.”' [Citations.]” (Boling v. Public Employment Relations Bd., supra, 5 Cal.5th at p. 912.)
II. THE STANDARD FOR DETERMINING THE SCOPE OF REPRESENTATION UNDER THE MMBA
A key issue in the Board's determination that there was a violation of the duty to meet and confer under the MMBA is whether the action taken by respondents to subcontract medical assistants at the Stockdale clinics was within the scope of representation. Indeed, the statutory duty under the MMBA to meet and confer is “limited to matters falling within the ‘scope of representation.' ” (Claremont, supra, 39 Cal.4th at p. 630.) As we have noted, respondents' position is that the Board failed to apply the correct legal standard for deciding the scope of representation issue. In order to adequately assess that argument, we must first clearly identify what the correct standard is. Thus, the initial question is simply this: what was the correct legal test or standard for determining scope of representation under the MMBA? This requires consideration of three key California Supreme Court cases relating to scope of representation under the MMBA, including: (i) Building Material & Construction Teamsters Union v. Farrell (1986) 41 Cal.3d 651 (Building Material), (ii) Claremont, supra, 39 Cal.4th 623, and (iii) Richmond Firefighters, supra, 51 Cal.4th 259.
A. Claremont Summarizes MMBA and Articulates the Three-Part Test Which Includes Requirement of Significant and Adverse Effect
We begin with Claremont, because-as will be seen-it is the case which formulates the clearest expression of a legal test or standard to be used in deciding what matters come within the scope of representation under the MMBA.
Claremont first highlights the statutory wording of the MMBA relating to scope of representation: “Section 3504 defines ‘scope of representation' to include ‘all matters relating to employment conditions and employer-employee relations, including, but not limited to, wages, hours, and other terms and conditions of employment, except, however, that the scope of representation shall not include consideration of the merits, necessity, or organization of any service or activity provided by law or executive order.' (Italics added.) The definition of ‘scope of representation' and its exceptions are ‘arguably vague' and ‘overlapping.' [Citation.] … [¶] Courts have interpreted ‘wages, hours, and other terms and conditions of employment,' …to include the transfer of bargaining unit work to non-unit employees [citations]; mandatory drug testing of employees [citation]; work shift changes [citation]; and the adopting of a disciplinary rule prohibiting use of city facilities for personal use [citation]. Notwithstanding section 3504's broad language, to require an employer to bargain, its action or policy must have ‘a significant and adverse effect on the wages, hours, or working conditions of the bargaining unit employees.' ” (Claremont, supra, 39 Cal.4th at p. 631 [quoting Building Material, supra, 41 Cal.3d at p. 660 on the prerequisite of a significant and adverse effect on bargaining unit employees].)
However, as further explained in Claremont, the second clause of section 3504 of the MMBA sets forth limiting language on the scope of representation and the duty to bargain: “Even if an employer's action or policy has a significant and adverse effect on the bargaining unit's wages, hours, and working conditions, the employer may be excepted from bargaining requirements under the ‘merits, necessity, or organization' language of section 3504. [Citation.] This exclusionary language … was intended to ‘forestall any expansion of the language of “wages, hours and working conditions” to include more general managerial policy decisions.' [Citations.] ‘Federal and California decisions both recognize the right of employers to make unconstrained decisions when fundamental management or policy choices are involved.' [Citations.] [¶] Such fundamental managerial or policy decisions include changing the policy regarding a police officer's use of deadly force [citations], permitting a member of the citizen's police review commission to attend police department hearings regarding citizen complaints and sending a department member to review commission meetings [Citation], and, in the context of private labor relations, closing a plant for economic reasons. [Citation.]” (Claremont, supra, 39 Cal.4th at pp. 631-632.) On the other hand, even if a decision falls within the purview of a fundamental management policy decision, the effects and/or the details of how to implement that decision is a separate consideration and may be subject to bargaining. (Id. at pp. 635-637.) In other words, “there is a distinction between an employer's fundamental managerial or policy decision and the implementation of that decision.” (Id. at p. 628.) For example, “although ‘an employer has the right unilaterally to decide a layoff is necessary, he must bargain about such matters as the timing of the layoffs and the number and identity of employees affected.' ” (Id. at p. 634.)
To determine whether an employer's steps to implement a fundamental managerial or policy decision is subject to the meet-and-confer requirement of the MMBA (§ 3505), Claremont held that the balancing test set forth in Building Material would apply. (Claremont, supra, 39 Cal.4th at pp. 628, 636.) Under that balancing test, “ ‘[i]f an action is taken pursuant to a fundamental managerial or policy decision, it is within the scope of representation only if the employer's need for unencumbered decisionmaking in managing its operations is outweighed by the benefit to employer-employee relations of bargaining about the action in question.' ” (Claremont, supra, at p. 636, quoting Building Material, supra, 41 Cal.3d at p. 660.) Claremont noted that this balancing test taken from Building Material “properly considers the competing interests while furthering the MMBA's neutral purpose to ‘promote communication between public employers and employees and to improve personnel management.' ” (Claremont, supra, at p. 637.)
Importantly, Claremont then proceeded to summarize the essence of the scope of representation analysis under the MMBA by articulating the following generally applicable three-part test: “In summary, we apply a three-part inquiry. First, we ask whether the management action has ‘a significant and adverse effect on the wages, hours, or working conditions of the bargaining-unit employees.' [Citation.] If not, there is no duty to meet and confer. [Citations.] Second, we ask whether the significant and adverse effect arises from the implementation of a fundamental managerial or policy decision. If not, then, as in Building Material, the meet-and-confer requirement applies. [Citation.] Third, if both factors are present-if an action taken to implement a fundamental managerial or policy decision has a significant and adverse effect on the wages, hours, or working conditions of the employees-we apply a balancing test. The action ‘is within the scope of representation only if the employer's need for unencumbered decision-making in managing its operations is outweighed by the benefit to employer-employee relations of bargaining about the action in question.' [Citation.] In balancing the interests to determine whether parties must meet and confer over a certain matter (§ 3505), a court may also consider whether the ‘transactional cost of the bargaining process outweighs its value.' ” (Claremont, supra, 39 Cal.4th at p. 638.) We would point out that the authority referenced by Claremont in support of each part of the three-part test was almost exclusively the Building Material case, making it clear the three-part test was largely a restatement or distillation of principles recognized in that earlier case.
The court in Claremont next applied the above standard to the City of Claremont's decision to implement a study on racial profiling which required its police officers to fill out a form after each traffic stop. Because this action would result in only a de minimis impact on working conditions, would add no significant time to the officers' usual reporting requirements, and since no decision had been made about how the information would be used, there was no significant and adverse effect. Therefore, it was held that the City of Claremont was not required to meet and confer before implementing the study. (Claremont, supra, 39 Cal.4th at pp. 638-639.)
B. Building Material Case Had Previously Highlighted the Requirement of a Significant and Adverse Effect on Bargaining Unit Employees
As noted, Claremont's three-part test restated or reformulated principles that were, for the most part, recognized in the earlier Building Material case-a case which we now consider.
In Building Material, supra, 41 Cal.3d 651, the City and County of San Francisco (the city) unilaterally eliminated bargaining unit positions and reassigned the duties of those positions to employees outside the bargaining unit. (Id. at pp. 655, 660, 668.) That is, new workers were hired to undertake the same work as had been performed by the members of the union, and to perform that work under similar conditions. (Id. at p. 660.) The Supreme Court held the city was required to meet and confer with the union because the city's action had both a significant and adverse effect on the bargaining unit's wages, hours, and working conditions, and did not involve a fundamental management decision. (Id. at pp. 659-660, 662.) The Supreme Court observed that the permanent transfer of existing work away from (or out of) the bargaining unit to newly-hired employees outside the bargaining unit would have a “significant” effect on wages, hours and working conditions of bargaining unit employees. (Id. at p. 659.) However, the court stated that in addition to having a significant effect, the action must also have created an adverse effect on the bargaining unit employees for the duty to bargain to arise. (Ibid.)
In discussing the question of whether the necessary “adverse” effect on bargaining unit employees had been shown, Building Material surveyed the subject matter at some length, interspersing various federal and state precedents. Because it gives helpful overview to concepts that may potentially relate to the issues before us, we recite a considerable portion of that discussion hereinbelow. The court in Building Material explained as follows concerning the required element of an adverse effect on the bargaining unit employees:
“It is clear that a bargaining unit is adversely affected when a work transfer results in layoffs or the failure to rehire bargaining-unit workers who would have otherwise been rehired. [Citations.] Adverse effects, however, have also been found when bargaining-unit employees have lost the opportunity to perform overtime or other types of highly paid work [Citations], or even when the laid-off employees have been rehired at similar jobs but the bargaining unit itself was reduced in size. [Citation.] [¶] … [¶]
“In the leading case of Fibreboard Corp. v. Labor Board [(1964)] 379 U.S. 203, a factory employer unilaterally contracted out maintenance work that had previously been performed by union employees. This action resulted in laying off the former maintenance workers. The court held that ‘the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment' was a statutory subject of collective bargaining. [Citation.] [¶] …[¶] California cases have also recognized that the transfer of bargaining-unit work to nonbargaining-unit employees is a proper subject for negotiation. [Citations.] In Dublin Professional Fire Fighters, Local 1885 v. Valley Community Services Dist. [(1975) 45 Cal.App.3d] at page 119, a public employer unilaterally adopted a new policy requiring the use of temporary employees for overtime work, effectively depriving the regular employees of their customary priority in seeking such work. Because the workload and compensation of the regular employees were affected, the court held that section 3505 required the community service district to meet and confer with employee representatives before the new policy could be implemented. (Ibid.)
“Defendants seek to distinguish Dublin by claiming that plaintiff has not alleged or proven that the decisions herein had any effect on matters within the scope of representation. The facts are otherwise. First, Metaxas, a member of plaintiff's bargaining unit, lost his part-time job because of defendants' decision to reassign bargaining unit work outside the unit. The fact that he was offered a full-time position elsewhere does not mean he was not significantly affected. The job offered was at a different location, involved different work hours, and would have required him to quit a lucrative part-time position, thereby reducing his overall weekly earnings. Second, the actions also had an effect on the bargaining unit itself, because one and one-half bargaining-unit positions were eliminated from the … budget.
“The cases have established that the bargaining unit can be adversely affected without any immediate adverse effect on any particular employee within that unit. In International Union, U.A. A & A. Imp. Wkrs. v. NLRB, supra, 381 F.2d 265, 266, an employer eliminated six automobile driver positions by subcontracting out for those services. Although each employee was given a similar job in the same plant, ‘the change had an adverse impact on the bargaining unit since it diminished by six the whole number of jobs performed by its members.' (Ibid.) [¶] Similarly, in Office and Professional Emp. Int. U. Local 425 v. NLRB, supra, 419 F.2d 314, 321, a group of office workers were periodically assigned auditing work, which was more highly paid than their regular duties. The employer unilaterally created two positions for full-time auditors that were not to be included in the office workers' bargaining unit. Although these two positions were filled by volunteers from the ranks of the office workers and no layoffs resulted from this action, the court found that the union had suffered an adverse impact from the job reclassification. The court explained, ‘The Union lost an element of work carrying higher pay and opportunity for experience and advancement; and it received no guarantee that future auditors would be taken from the unit.' (Ibid.)
“Here, defendants' actions adversely affected an individual employee and the bargaining unit as a whole. Under these circumstances it is clear that defendants' actions constituted [a] … violation of their duty to bargain under the MMBA.” (Building Material, supra, pp. 659-662.)
Finally, having found that the action taken by the employer caused an adverse effect, the court in Building Material considered the argument that there was no duty to bargain because the city's decision to transfer work outside the bargaining unit fell within the fundamental managerial policy exception to the MMBA. In the context of framing its discussion on that issue, Building Material set forth a balancing test-alluded to hereinabove in our discussion of Claremont-which would be applicable if the action was taken pursuant to a fundamental managerial or policy decision. (Building Material, supra, 41 Cal.3d at pp. 660, 663.) However, the court held the “decision to reorganize certain work duties was hardly ‘fundamental.' ” (Id. at p. 664.) “It had little, if any, effect on public services” and primarily impacted the wages, hours, and working conditions of the employees in question; thus, the exception did not apply and such matters were within the scope of representation. (Id. at p. 664.)
Building Material further noted: “Decisions to close a plant or to reduce the size of an entire workforce, however, are of a different order from a plan to transfer work duties between various employees. The former directly affect the amount of work that can be accomplished or the nature and extent of the services that can be provided, and are therefore ‘fundamental management' decisions. The decision to transfer bargaining-unit work to nonunit employees in this case had no effect on the services provided by the hospital, but directly affected the wages, hours, and working conditions of the hospital employees. Thus, the work transfer was a suitable subject for bargaining.” (Id. at pp. 663-664.)
C. Building Material and Claremont Both Included the Requirement of a Significant and Adverse Effect on Bargaining Unit Employees
What is clear from our synopsis of both Building Material and Claremont is the following rule: In order for an action to come within the scope of representation under the MMBA, it must have had a significant and adverse effect on the bargaining unit employees. In the three-part test set forth in Claremont, the first inquiry is “whether the management action has ‘a significant and adverse effect on the wages, hours, or working conditions of the bargaining-unit employees.' [Citation.] If not, there is no duty to meet and confer.” (Claremont, supra, 39 Cal.4th at p. 638.) As Building Material put it, “[f]or an action by an employer to fall within the scope of representation, and thus be subject to the mandatory bargaining requirements of the MMBA, it must have a significant effect on the ‘wages, hours, and other terms and conditions of employment' of the bargaining-unit employees” (Building Material, supra, 41 Cal.3d at p. 659) and also have “adversely affect[ed]” the same. (Id. at p. 659-660, italics added.) The Building Material decision also discussed at length the type of management actions that have been deemed to create an adverse effect, as outlined above, and it was clear from that discussion the adverse effects element had to be factually substantiated. As Building Material further stated: “Even when the action of an employer has a significant and adverse effect on the wages, hours, or working conditions of the bargaining-unit employees, the employer may yet be excepted from the duty to bargain under the ‘merits, necessity, or organization' language of section 3504. If an action is taken pursuant to a fundamental managerial or policy decision, it is within the scope of representation only if the employer's need for unencumbered decisionmaking in managing its operations is outweighed by the benefit to employer-employee relations of bargaining about the action in question.” (Id. at p. 660.)
Thus, in both Claremont and Building Material, the legal test or standard for determining whether an employer's action is within the scope of representation under the MMBA includes, as an essential element, that the employer's action had a significant and adverse effect on the bargaining unit employees. It is also the first inquiry of the test, because only if a significant and adverse effect is found to exist would there be any occasion or warrant for applying the balancing test concerning fundamental managerial decisions. To reiterate: “First, we ask whether the management action has ‘a significant and adverse effect on the wages, hours, or working conditions of the bargaining-unit employees.' [Citation.] If not, there is no duty to meet and confer.” (Claremont, supra, 39 Cal.4th at p. 638, italics added.)
D. The Richmond Firefighters Case Did Not Change the Legal Test or Standard, But Did Simplify its Application in Certain Instances
In Richmond Firefighters, supra, 51 Cal.4th 259, a case involving the City of Richmond's (the city's) decision that for economic reasons during a budget crisis, it needed to lay off 18 of its firefighters, the court addressed whether (or the extent to which) the city was required to bargain under MMBA concerning the layoffs. (Id. at pp. 264-265, 271.) The Supreme Court ultimately held that the city was not required to meet and confer with the union before making its initial decision, but it did have a duty to bargain with respect to the implementation or effects of the layoff decision, including the number and identity of the employees to be laid off, and the timing of the layoffs. (Id. at pp. 264-265, 276-277.)
In the course of its evaluation of whether the city's layoff decision and/or its implementation were within the scope of representation and hence a mandatory subject of bargaining under the MMBA, Richmond Firefighters noted that in resolving any ambiguities or uncertainties in the MMBA's definition of scope of representation, “this court has looked to federal precedents” for guidance. (Richmond Firefighters, supra, 51 Cal.4th at p. 272.) The Supreme Court explained: “This court has noted that the first key phrase in the MMBA's definition of scope of representation-‘wages, hours, and other terms and conditions of employment' (§ 3504)-was copied verbatim from the federal NLRA (see 29 U.S.C. § 158(d)), while the other key phrase-‘merits, necessity, or organization of any service' (§ 3504)-was intended to incorporate the ‘ “general managerial policy”' exception developed by federal courts to determine the scope of representation under the NLRA.” (Id. at p. 272.)
Along these lines, the court in Richmond Firefighters found it helpful to consider, as a starting point for its analysis, the three broad “categories” or types of management decisions identified by the U.S. Supreme Court in First National, supra, 452 U.S. 666, 677. Richmond Firefighters summarized the three categories referred to in First National as follows: “In relation to mandatory subjects of bargaining under the federal NLRA, the United States Supreme Court has identified three categories of management decisions. [Citation.] In the first category are decisions that ‘have only an indirect and attenuated impact on the employment relationship' and thus are not mandatory subjects of bargaining. [Citation.] Examples of decisions in this category are ‘choice of advertising and promotion, product type and design, and financing arrangements.' [Citation.] [¶] In the second category are decisions directly defining the employment relationship, such as wages, workplace rules, and the order of succession of layoffs and recalls. Decisions in this second category are always mandatory subjects of bargaining. [Citation.] [¶] In the third category are management 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.' [Citation.] Bargaining is not required for decisions in this category if they do not raise an issue that is ‘amenable to resolution through the bargaining process' [citation], although the employer is normally required to bargain about the results or effects of such decisions [citation]. To determine whether a particular decision in this third category is within the scope of representation, the high court prescribed a balancing test, under which ‘in view of an employer's need for unencumbered decisionmaking, bargaining over management decisions that have a substantial impact on the continued availability of employment should be required only if the benefit, for labor-management relations and the collective-bargaining process, outweighs the burden placed on the conduct of the business.' ” (Richmond Firefighters, supra, 51 Cal.4th at p. 272-273.)
Richmond Firefighters then discussed how federal labor law decisions have applied the above balancing test in layoff cases. “Applying this balancing test to layoff decisions, federal courts have held that bargaining is required when the layoffs result from an employer's decision to reassign bargaining unit work to independent contractors or to managers. [Citations.] On the other hand, federal courts do not require bargaining when layoffs result from profitability considerations that are independent of labor costs. [Citation], or from a management decision to shut down all or part of a business [Citation.] When layoffs are motivated primarily by a desire to reduce labor costs, but are not the result of a decision to change the nature or scope of the enterprise, and do not involve reassigning bargaining unit work to non-bargaining-unit workers, federal courts require bargaining over the timing of the layoffs and the number and identity of the affected employees, but not necessarily over the layoff decision itself. [Citations.] The United States Supreme Court has said that a conflict resulting from an employer's desire to reduce labor costs is ‘peculiarly suitable for resolution within the collective bargaining framework' under the NLRA.” (Richmond Firefighters, supra, 51 Cal.4th at p. 273.)
Richmond Firefighters observed that “[t]hese federal decisions interpreting the federal NLRA have generally been followed by California courts construing California's MMBA.” (Richmond Firefighters, supra, 51 Cal.4th at p. 272.) That is, in layoff cases, California courts have applied a similar balancing test: “Under the MMBA, the scope of a public employer's duty to bargain in regard to a layoff decision is generally determined by application of a balancing test that requires a local public entity employer to meet and confer ‘only if the employer's need for unencumbered decisionmaking in managing its operations is outweighed by the benefit to employer-employee relations of bargaining about the action in question.' (Building Material, supra, 41 Cal.3d 651, 660.) Applying that test, California courts have determined that, under California's MMBA as under the federal NLRA, an employer's decision to eliminate bargaining unit jobs by reassigning the work to nonunit employees is a matter within the scope of representation and thus a mandatory subject of bargaining.” (Richmond Firefighters, supra, 51 Cal.4th at p. 274.) Moreover, in regard to layoffs, it has long been the rule “that under the MMBA a local public entity may unilaterally decide that financial necessity requires some employee layoffs, although the entity must bargain over the implementation of that decision and its effects on the remaining employees.” (Id. at p. 276, reaffirming Fire Fighters Union v. City of Vallejo (1974) 12 Cal.3d 608.) In reaffirming the rule of the Vallejo case, Richmond Firefighters concluded as follows: “Under the MMBA, a local public entity that is faced with a decline in revenues or other financial adversity may unilaterally decide to lay off some of its employees to reduce its labor costs. In this situation, a public employer must, however, give its employees an opportunity to bargain over the implementation of the decision, including the number of employees to be laid off, and the timing of the layoffs, as well as the effects of the layoffs on the workload and safety of the remaining employees.” (Richmond Firefighters, supra, at p. 277.)
Having set forth the reasoning and analysis of Richmond Firefighters, we note there is no indication in that decision that the legal test or standard set forth in Claremont and Building Material had been overturned or repudiated. However, what is clear is that Richmond Firefighters did not explicitly consider or mention the first prong of the three-part test set forth in Claremont-namely, whether there was a significant and adverse effect on bargaining unit employees. Instead, in Richmond Firefighters, the court proceeded directly to the applicable balancing test indicated by both federal and California authorities concerning layoff cases. In light of the approach used by the court in Richmond Firefighters, the question arises: how may that approach be reconciled with Claremont's three-part test? We address that question below.
E. Harmonizing Richmond Firefighters and Claremont
We believe the two cases may be harmonized by observing that Richmond Firefighters utilized the three categories of management decisions (taken from First National) as a convenient template for recognizing that employee layoffs were within the type of management decision that would require application of the balancing test. In other words, there was no need to ritualistically go through the full three-part test when dealing with a decision by a public employer to make and implement layoffs-which on the face of it was clearly the type of management decision in the third category that would directly and negatively impact employment in the bargaining unit, since jobs were going to be eliminated. That is, because layoffs were plainly a fundamental managerial decision that “directly affect[s] employment … [by] eliminating jobs, ” there was no question that the balancing test must be applied. (Richmond Firefighters, supra, 51 Cal.4th at p. 273.) So understood, that ruling is entirely consistent with Claremont's third prong of its three-part test, which states: “Third, if both factors are present-if an action taken to implement a fundamental managerial or policy decision has a significant and adverse effect on wages, hours, or working conditions of the employees-we apply a balancing test.” (Claremont, supra, 39 Cal.4th at p. 638.) The main difference is that, in Richmond Firefighters, the court's analysis of the scope of representation question dispensed with separately resolving whether or not there was a significant and adverse effect because, as highlighted by the third category recited from First National, there clearly was such an effect in the context of a management decision to implement layoffs.
If this means that in layoff cases, it is appropriate to proceed directly to a balancing test to decide on the scope of representation, what about other types of cases? Because Richmond Firefighters did not disapprove Claremont, the latter remains good law. Consequently, we believe that in instances where the existence of an adverse impact on the bargaining unit or employment is (unlike layoffs) not clear or self-evident, but rather is reasonably debatable under the circumstances, the proper standard remains the entire three-part test set forth in Claremont.
In conclusion, then, and in answer to our initial query: the correct legal test or standard for whether a matter is within the scope of representation for purposes of the MMBA is the three-part test set forth in Claremont, with the caveat that Claremont must be viewed in conjunction with-and has been qualified by-Richmond Firefighters. Under the Richmond Firefighters approach, there would be no need to consider the first element of Claremont's three-part test (i.e., the existence of a significant and adverse effect) for a management decision coming within the third category where, as with layoffs, the action on its face would have a direct and adverse impact on employment. That is, in the latter types of management decisions, the Board may proceed directly to apply the balancing test.
Having discerned the nature and parameters of the overall legal standard, we next determine whether the Board failed to follow it.
III. THE RECORD DOES NOT CLEARLY ESTABLISH THE BOARD FAILED TO APPLY THE CORRECT LEGAL STANDARD
In essence, respondents' position is that its management decision to subcontract medical assistant positions at the Stockdale clinics had no effect on existing bargaining unit employees, or at most, any adverse effect on bargaining unit employees was such that it required the Board's factual resolution. To put it another way, the effect-if any- on the bargaining unit was not clear or inevitable, but was uncertain or debatable under the facts of this case, and therefore needed to be adjudicated at the outset by the Board as required by Claremont. Under such circumstances, respondents maintain that this was manifestly a situation in which the full three-part test of Claremont had to be followed by the Board-including the threshold requirement to ascertain from the facts and circumstances whether the employer's action would have a significant and adverse effect on bargaining unit employees. In contrast, the Board's position is that this case appropriately fits within the third category of management decisions identified in Richmond Firefighters, apparently because of a presupposition or assumption on the Board's part that any subcontracting of positions that potentially could have been filled by bargaining unit employees would have an adverse effect on the bargaining unit. Thus, in the Board's view, the proper approach was to proceed directly to the balancing test under Richmond Firefighters. However, the Board argues alternatively that, in any event, it did adequately address Claremont's significant-and-adverse-effect element within the course of its written decision.
While respondents have arguably made a strong case for their position that the Board had to separately consider and resolve the issue of whether the subcontracting decision had a significant and adverse effect on bargaining unit employees pursuant to the Claremont standard, for the reasons explained below we stop short of so concluding at this time.
In our review of the entire record, we believe the Board's alternative argument is correct. Even assuming the Board was required under Claremont to separately consider and decide whether there was a significant and adverse effect on bargaining unit employees, it adequately did so in this case. We elect to resolve this matter on that narrow alternative ground. The Board's written decision engaged in considerable discussion of how and why subcontracting of the type that occurred here would, in fact, adversely affect the bargaining unit. In that regard, the Board's reasoning included its observation that such “an ‘actual or potential' diminution of union work through subcontracting not only withdraws wages and hours associated with the contracted-out work from the unit, but also weakens the collective strength of employees in the unit, which in turn undermines their collective ability to effectively deal with the employer.” The ALJ findings affirmed by the Board had made this same point, holding that respondents' argument of a lack of any adverse effect on the bargaining unit was unpersuasive. While such general observations and discussion by the Board would arguably not be enough to meet the first prong of the Claremont test, we find that there was substantial evidence in the record regarding whether the subcontracting decision resulted in a significant and adverse impact on the bargaining unit. On that precise issue, the Union organizer, Pete Rodriquez, provided specific testimony at the administrative hearing which explained that, under the circumstances, respondents' subcontracting decision would likely result in the loss of potential promotional, overtime or seniority opportunities for the bargaining unit members.
We understand this element to be fact-intensive, based on the circumstances of a particular case, and not a matter resolved based on generalizations.
Based on the foregoing, we are unable to conclude on this record that the Board clearly failed to follow or apply the Claremont standard in the present case. Rather, for the reasons indicated above, the Board sufficiently considered and addressed the significant-and-adverse-effects element of Claremont. Again, we note there was substantial evidence in the record on the precise matter at issue. Therefore, respondents' contention that the Board committed reversible error by bypassing an essential element of the Claremont standard falls short.
In light of this conclusion, we have no need to consider or address the validity of other distinct aspects or grounds for the Board's multifaceted decision that the subject subcontracting came within the scope of representation. For example, in the course of weighing various factors in the balancing test, the Board's decision referred to two NLRB federal holdings (e.g., Mi Pueblo Foods, supra, 360 NLRB 1097, 1098; Overnight Transportation Co., supra, 330 NLRB 1275, 1276), which were apparently cited as support for the Board's adoption of a broad presumption that even where use of subcontracted personnel in a new facility would not replace any existing bargaining unit employees' jobs, diminish their hours or benefits, or reduce the bargaining unit's size, an adverse effect on the bargaining unit may nonetheless always be presumed to exist whenever the new work carried out by the subcontracted personnel potentially could have been done by bargaining unit workers who perform similar tasks. In view of our conclusion above, which has resolved respondents' particular challenge on other more-narrow grounds, we have no need to address whether the Board has accurately portrayed the basic holdings of the above NLRB cases, or, if so, whether they are inconsistent with the construction given the MMBA by the California Supreme Court.
IV. OTHER CHALLENGES TO THE BOARD'S DECISION ARE WITHOUT MERIT OR NOT ADEQUATELY ESTABLISHED
Respondents have raised several other alleged errors on the part of the Board, which we briefly consider here. First, respondents contend the Board erroneously determined that their decision to subcontract medical assistants at the Stockdale clinics constituted an “unlawful unilateral change” of an existing policy. Under the Board's precedent, to establish an unlawful unilateral change (i.e., one that was made without required bargaining), a charging party must establish: (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. (City of Davis (2016) PERB Dec. No. 2494-M, p. 18, citing Fairfield-Suisun Unified School District (2012) PERB Dec. No. 2262, p. 9.) A change in policy can be found if the record reveals any of the following: (i) a newly created policy or enforcement of existing policy in a new way; (ii) changes in established past practice; or (3) changes to the parties' written agreement. (County of Kern (2018) PERB Dec. No. 2615-M, p. 5.)
Here, substantial evidence in the record reflected that medical assistants in the bargaining unit had been previously assigned to other outpatient clinics of Kern Medical Center. Thus, by deciding to subcontract private medical assistants at the Stockdale clinics rather than using public or bargaining unit employees, respondents were apparently undertaking a new policy or practice, or applying an existing policy in a new way, with respect to the staffing of medical assistants at their outpatient clinics. The Board so found, and we conclude that finding was supported by substantial evidence. Respondents argue that there is no evidence of a prior policy for the staffing of exempt clinics with bargaining unit medical assistants. We find the purported distinction as to the exempt clinics to be unpersuasive for two reasons. First, there appears to have been a lack of clear and competent evidence to establish the manner of staffing of medical assistants at the other exempt clinics such as Truxton and the 34th Street clinics; and second, there was not sufficient evidence to establish that this different type of clinic environment would in any material or substantial way change the nature of the duties performed by subcontracted medical assistants
A related finding by the Board on this issue was that the subcontracted medical assistants performed substantially the same duties as were traditionally performed by bargaining unit medical assistants under similar conditions. This too was supported by substantial evidence. The testimony and exhibits at the administrative hearing indicated that both the subcontracted and the bargaining-unit medical assistants perform substantially the same basic tasks and responsibilities, including answering phones, escorting patients to exam rooms, taking patient vital signs, collecting other patient data, verifying medications, assisting medical providers during outpatient procedures, cleaning instruments, ordering and stocking supplies, organizing medical records, and performing other clerical duties. Further, there was testimony that in both cases the medical assistant work is performed under similar conditions; that is, in an outpatient or ambulatory setting akin to a physician's office.
As we have noted, in reviewing the Board's factual findings, “ ‘ “we do not reweigh the evidence. If there is a plausible basis for the Board's factual decisions, we are not concerned that contrary findings may seem to us equally reasonable, or even more so. [Citations.] We will uphold the Board's decision if it is supported by substantial evidence on the whole record.”' ” (Boling v. Public Employment Relations Bd., supra, 5 Cal.5th at p. 912.) We do so here.
Respondents further argue they were unfairly prejudiced by the proceedings before the Board because the Union's second amended charge and the Board's administrative complaint both included an allegation that the jobs carried out by the subcontracted medical assistants were “exclusively” performed by the medical assistant classification in the bargaining unit. Because the Board ultimately resolved the issues before it based in part on findings that the subcontracted medical assistants were performing work that was substantially the same as the medical assistants in the bargaining unit (i.e., not necessarily performed “exclusively”) respondents argue they were misled on the theory of the case against it. We find respondents argument based on the use of the word “exclusively” in the pleadings to be unpersuasive. As the ALJ correctly observed, “the complaint, at its core, alleges that work historically done by the unenumerated bargaining unit positions was instead assigned to outside contractors in the new clinics.” The Board echoed the same sentiment, looking to substance over form, and concluding that the “Complaint as a whole was not misleading.” Further, as the Board pointed out based on its assessment of the testimony at the administrative hearing, “there was no prejudice, as the parties litigated the subcontracting questions that lie at the heart of the case.” The fact that respondents' accurately understood the nature of the case against it was further confirmed by respondents' closing brief before the ALJ, which argued crucial issues which relate to subcontracting and which conceded that “the instant case involves contracting out, as opposed to transferring of bargaining unit work.” As aptly summarized by the Board in its brief before this court, “[t]he suggestion that [respondents] were somehow unfairly surprised or prejudiced ignores the fact that the entire unfair practice case concerned the subcontracting of work.” For all these reasons, we reject respondents' contentions premised on the pleading. (See Cal. Code Regs., tit. 8, §§ 32645 & 32640(a) [Board's agent may “disregard any error or defect in the complaint that does not substantially affect the rights of the parties”].)
Additionally, respondents continue to insist that the subcontracting decision was a fundamental management decision that changed the scope and direction of its enterprise, and therefore came within the managerial exception to bargaining. (Claremont, supra., 39 Cal.4th at pp. 635-637.) However, that argument appears to conflate the initial management decision to open new outpatient clinics in delivering medical services to the community with the details of the implementation of that decision. The decision by respondents to staff the newly-established Stockdale clinics with subcontracted medical assistants would constitute an implementation decision, and therefore that aspect of the decision was clearly not within the managerial exemption from bargaining. (Id. at p. 635. )
Finally, respondents argue the Board erred by arbitrarily failing to follow its own precedent on the interpretation of the scope of representation under the MMBA, citing in particular Trustees of the California State University (2006) PERB Decision No. 1839-H (CSU San Marcos). In CSU San Marcos, the Board held for various reasons that a decision to create an auxiliary corporation, which contracted to hire non-bargaining unit employees to manage a student housing project, was not negotiable. (CSU San Marcos, supra, p. 11.) Respondents argue that CSU San Marcos established a principle that if an employer is opening a new facility and does not lay off any existing bargaining unit employees due to its subcontracting, there is no duty to bargain concerning the subcontracting. As the Board points out, however, that case involved unusual facts, including a clause in the parties' collective bargaining agreement which explicitly waived the right to bargain subcontracting decisions, provided there were no layoffs. (Id. at p. 8.) In the present matter, the Board expressly distinguished CSU San Marcos, including on the ground that there was a contractual waiver of the right to bargain in CSU San Marcos. Since that would appear to be an adequate basis to distinguish that precedent, we conclude that respondents have failed to demonstrate any departure therefrom on the part of the Board.
For all the foregoing reasons, we conclude on the instant record that respondents have failed to clearly demonstrate a reversible error on the part of the Board.
DISPOSITION
The Board's decision is affirmed.
WE CONCUR: MEEHAN, J., SNAUFFER, J.