Monday, June 22, 2009

Non-profit El Camino Hospital Subject to MMBA

El Camino Hospital District (2009) PERB Decision No. 2033-M (Issued on 5/29/09)

The facts in this case are fairly convoluted. However, it boils down to this. The El Camino Hospital (Hospital) is a nonprofit 501(c)(3) corporation. It’s sole shareholder is the El Camino Hospital District (District), which is a public entity. The hospital owns its building but the District owns the land the building sits on. The Hospital and District have separate budgets. However, the actual people who sit on the governing board of the Hospital also sit on the governing board of the District. SEIU submitted a petition to conduct an agency fee election at the Hospital. The Hospital refused to allow an election. This unfair practice charge followed. The primary issue was whether the Hospital was subject to the MMBA.

In its decision, PERB noted that the MMBA covers every “public agency” except those covered by other public sector labor relations statutes (e.g. EERA, HEERA, Dills, etc). In contrast, the NLRA expressly excludes from its coverage "any State or political subdivision thereof." (29 U.S.C. § 152(2).) Thus, broadly speaking, the MMBA covers those public agencies excluded by the NLRA. The test for determining whether an employer is a political subdivision, and therefore excluded from NLRB jurisdiction, is 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 the general electorate. (NLRB v. Natural Gas Utility District (1971) 402 U.S. 600.) Applying this test, PERB found that the Hospital was indeed a public entity subject to the MMBA.

Even if the Hospital is not a public entity, PERB held that it was still subject to the MMBA under the “single employer” doctrine. A single employer status exists where two nominally separate entities are actually part of a single integrated enterprise so that there is, in reality, only a single employer. (Public Transportation Services Corporation (2004) PERB Decision No. 1637-M. The Board looked to the following four factors to determine the existence of a single employer relationship: (1) functional integration of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership. Applying these factors, PERB found that the District and the Hospital could also be properly characterized as a single employer and subject to the MMBA under that doctrine.


1. To my knowledge, this is the first case where an entity organized as a non-profit 501(c)(3) corporation has been found to be a “public entity” under the MMBA.

2. Similar cases involving auxiliary organizations affiliated with a particular CSU or UC campus have arisen under HEERA. Most of those cases have concluded that the auxiliary organization—often times also a non-profit 501(c)(3) corporation—is not an employer under HEERA. (See Trustees of the California State University (2006) PERB Decision No. 1839-H (“CSU”).) CSU, at first blush, seems very similar to the facts here, in El Camino. There, CSU created a non-profit corporation to develop student housing because such an entity could obtain lower financing rates. There was some overlap in management, as CSU officers served on the corporation’s Board of Directors and its executive director was appointed by the CSU president. The corporation owned the student housing and the CSU owned the land. In that case, PERB held that the corporation was not subject to HEERA and that the corporation and CSU were not a “single employer.”

3. These 2 cases are very similar and probably represent the dividing line between single employer and separate entities, which shows that there is a still a fertile ground for litigation in this area. The evidence of a “single employer” is probably slightly better in El Camino since the management was identical and there really was no principled distinction between the two entities.

4. In addition, these 2 cases can also be distinguished because CSU arose under HEERA while El Camino involved the MMBA. The MMBA has a much broader definition of employer than HEERA, which only covers the CSU and UC. Thus, the question in CSU wasn't whether the corporation was a public entity, but whether it was an employer covered under HEERA. However, would the corporation in CSU be considered a public entity covered by the MMBA? That's an interesting question that didn't arise in CSU.