Capping a tumultuous session, the 88th Minnesota legislature, on the final day of the 2013 session, passed a bill, S.F. 778, which was long sought by labor unions because it would give them the right to organize private family child care providers and home health care providers who work independently in their own businesses.

In 2012, Democratic-Farmer-Labor Governor Mark Dayton made a similar effort when he issued an executive order requiring that any independent child care or home health care provider who received state funds be included in a potential statewide bargaining unit and be afforded the opportunity to vote to be represented by an exclusive bargaining agent. In a June 2012 order, a Ramsey County district judge permanently enjoined this executive order and ruled that the governor had exceeded his authority under the Minnesota Constitution. The court found that the executive order crossed the line of the separation of powers doctrine and suggested that only the legislature could take this action. In its very next session, the legislature took that action.

Overview

The Family Child Care Providers Representation Act, which was approved by the legislature on May 20, 2013, became effective when it was signed by Governor Dayton on May 24, 2013. The law is aimed specifically at independent business persons who provide child care services often in their own homes and who receive state funds to subsidize such services. Similarly, the law extends the right to organize and be represented by an exclusive bargaining agent to “individual providers” of “direct support services,” which are defined as “nonprofessional long-term services to the elderly or persons with a disability.” These individuals are sometimes referred to as “personal care attendants” or “PCAs.”

In an apparent effort to avoid the preemptive force of the National Labor Relations Act and the jurisdiction of the National Labor Relations Board, which exclusively governs labor relations in the private sector, the law designates these family child care providers and individual providers of direct support services as “executive branch state employees employed by the commissioner of management and budget.” This designation brings the workers within the ambit of the Minnesota Public Employee Labor Relations Act (PELRA), chapter 179A of Minnesota Statutes. The law also states that these individuals are not to be deemed state employees for any other purpose, including coverage under the state’s Tort Claims Act.

Election to Choose and Exclusive Representative

Procedurally, in order to effectuate the rights of these care providers to organize, the state Bureau of Mediation Services (BMS) is directed to compile by July 1, 2013, and update on a monthly basis thereafter, a list of all the names and addresses of family child care providers. Beginning on July 1, 2013, if an “employee organization” (i.e., union) shows to the commissioner of the BMS that at least 500 family child care providers support representation, then within seven days the BMS will provide to such organization the most recent list of actively registered family child care providers and a subsequent monthly list upon request for an additional three months. The list would also be made publicly available at that time. Then, the BMS is authorized to conduct a secret ballot election only by mail ballot if the employee organization seeking to represent them has established that at least 30 percent of the appropriate unit wishes to be represented by the petitioner. If a majority of ballots cast in the election are in favor of representation by the employee organization, the BMS is authorized to certify the employee organization as the majority exclusive representative.

If an exclusive representative is certified by the BMS, collective bargaining with the state of Minnesota follows. The new law provides for “interest arbitration” in the event that the parties cannot agree on terms of an agreement. Also, the family child care providers and independent providers of direct support services are prohibited from engaging in a strike.

The Devil is in the Details—Part I: Family Child Care Providers

The first part of the law deals with the representation of “family child care providers.” Essentially, these individuals provide either licensed or unlicensed legal child care services and receive child care financial assistance from the state of Minnesota to subsidize such services. The full definition is a bit more complicated than that, but these individuals typically operate day care businesses in their own homes and have no employees or perhaps are assisted on a part-time basis by a family member, relative, or neighbor. Notably, this portion of the law does not expressly distinguish between independent business operators and employees, but it seems to be the intent of the law (as it is expressly so in the case of home health care workers) that they not be employees of a company or individual.

Receipt of State Aid is the Hook for Limited “State Employee” Status

To accomplish the goal of providing collective bargaining rights to these persons, the law deems themby virtue of their receipt of state aidto be “executive branch state employees employed by the commissioner of management and budget.” They are considered to be state employees solely for purposes of representation rights under PELRA and for no other purpose. Both full-time and part-time family child care providers may participate in the selection of a bargaining representative, but the bill also provides that they shall not have the right to strike, classifying them as “essential” employees under PELRA similar to police officers and firefighters.

Oversight and administration of this unique representation process is given to the commissioner of the BMS, who is directed to compile and maintain a list of names and addresses of all family child care providers as defined in the law. This list must be compiled by July 1, 2013 and updated on a monthly basis.

The procedure from this point follows the familiar election procedure under PELRA. The employee organization must file with the BMS a petition stating that at least 30 percent of the individuals in the appropriate bargaining unit desire its representation. The bill provides for a single, appropriate bargaining unit: a statewide unit of all family child care providers. Eligible voters will be those family child care providers on the list that was compiled most recently preceding the filing of the election petition. Presumably, the election procedure will follow the existing procedures under PELRA in which a petitioning labor union must secure a majority of the valid ballots cast in the election. Under S.F. 778, however, the election will be conducted only by mail ballot.

If the petitioning employee organization wins the election it will receive a certification from the BMS as the exclusive representative. The State of Minnesota, through the governor or his designee, is then required to meet and negotiate in good faith regarding “grievance issues, child care assistance reimbursement rates under chapter 119B, and terms and conditions of service,” which is defined in existing PELRA section 179A.03, subd. 19.

Finally, S.F. 778 provides that it shall not be construed to interfere with parental rights to select or deselect family child care providers or the ability of family child care providers to establish the rates they charge to parents. Nor is the new law intended to restrict the right or obligation of any state agency to communicate or meet with any citizen or organization concerning family child care legislation, regulation, or policy. Finally, the new law states expressly that it does not affect the rights and responsibilities of family child care providers under federal law. The law also states that membership status in an employee organization shall not affect the eligibility of a family child care provider to receive payments or serve a child who receives payments under chapter 119B.

S.F. 778 achieved final passage on May 20, 2013 and provides that most of its provisions become effective the day following final enactment. Governor Dayton signed the law on May 24, 2013 and the law became effective at that time. One provision of the law, which would prohibit the use of early learning scholarship funds for the payment of union dues, was set to take effect the day following final enactment of S.F. 481, which was not enacted. The law contains a “sunset” provision stating that it will expire on June 30, 2017 if an exclusive representative has not been certified by that date, subject to the completion of the processing of any then-pending petition.

Part II: “Individual Providers of Direct Support Services”

The second part of S. F. 778 deals with the rights of “individual providers of direct support services.” The bill establishes a new section 256B .0711 of Minnesota statutes entitled “Quality Self-Directed Services Workforce.” The law is aimed at recipients of financial support funded in whole or in part by the state of Minnesota, including the Community First Services and Supports program, the Consumer Directed Community Supports services, and extended state plan personal care assistance services available under programs established pursuant to home and community-based service waivers authorized under the federal Social Security Act.

The law defines “direct support services” as the following:

personal care assistance services covered by medical assistance . . . ; assistance with activities of daily living . . . ; and other similar, in-home, nonprofessional long-term services and supports provided to an elderly person or person with a disability by their employee or the employee of their representative to meet such person’s daily living needs and ensure that such person may adequately function in the person’s home and have safe access to the community.

The “participant” means the person who receives direct support services through a covered program. The “participant’s representative” means the participant’s legal guardian or an individual having the authority and responsibility to act on behalf of a participant with respect to the provision of direct support services through a covered program. Somewhat incongruously, the law seems to consider these individuals to be employees both of the client and the state of Minnesota.

And “individual provider” is defined as “an individual selected by and working under the direction of a participant in a covered program, or a participant’s representative, to provide direct support services to the participant, but does not include an employee of a provider agency, subject to the agency’s direction and control commensurate with agency employee status.” Essentially, individual providers are those persons who either are independent business persons or freelancers who provide in-home health care or personal assistance services to the elderly or the disabled. Excluded from the scope of the law are persons who are employed by licensed agencies that provide their own employees to clients.

Thus, accordingly, licensed home health care companies and their employees remain largely unaffected by this new law. However, because in-home health care workers provide services to their own, private patients, it may be the case that they will still be eligible to be represented by an employee representative with respect to their own customers.

The Commissioner of the BMS is given similar responsibilities and oversight with respect to his or her individual providers as he or she has been given with respect to Family Child Care Providers, with certain exceptions. Unlike the situation with Family Child Care Providers, a list of all individual providers is to be created and maintained by the Commissioner of the Minnesota Department of Human Services (DHS). The Commissioner of the DHS is granted authority to establish for all individual providers “compensation rates, payment terms and practices, and any benefit terms, provided that these rates and terms may permit individual provider variations based on traditional and relevant factors otherwise permitted by law.” Essentially, the DHS Commissioner is authorized to set the terms and conditions of employment of the individual providers in the same way that an employer would act with respect to its employees.

The DHS Commissioner is directed by the new law to compile and maintain a list of the names and addresses of all individual providers who have been paid for providing direct support services to participants within the previous six months. This list must be created no later than September 1, 2013 and must be updated on a monthly basis thereafter. The list must be provided to other parties, including the BMS to enable it to perform its duties under PELRA.

The same election procedures described above with respect to family child care providers under PELRA will apply to individual providers. However, beginning January 1, 2014, if an exclusive representative has been certified for individual providers, the DHS Commissioner must require that any fiscal support, fiscal intermediary, financial management, or similar entities providing payroll assistance services with respect to individual providers effectuated on behalf of the state “shall make all needed deductions on behalf of the state of dues checkoff amounts or fair share fees for exclusive representatives” under PELRA. In addition, all contracts with entities for the provision of payroll-related services must include this requirement. Essentially, the law provides for a statutorily-mandated “dues checkoff.”

Summary and Analysis

The Minnesota law is both unprecedented as a piece of labor law legislation and at the same time reflective of similar efforts in other states. Labor unions have long sought to represent such workers, but they are difficult to organize because they often work alone or freelance for their own private patients. Sometimes, they are relatives of the person to whom they render care. The position of labor unions is that these individuals would benefit from representation because they lack bargaining power and need a representative to represent their interests before the government agencies that fund most or all of their services.

The approach taken in Minnesota, however, is likely to lead to court challenges on several grounds. First, there is the obvious objection that family child care workers and “independent providers” are not state employees in any real sense. In this regard, what is the basis for granting them only limited rights as state employees? If the receipt of government funds or even a government-issued license is sufficient to for an individual to qualify as a state employee, could any state government contractor and its employees be deemed state employees as well? Could plumbers, electricians or lawyers be deemed state employees?

Second, the law appears to intrude into what is essentially a private sector labor relations matter. If there exists a true employer-employee relationship, then these workers are subject to the National Labor Relations Act, which would preempt state laws of this type. If these individuals are independent contractors, then they would be outside the scope of federal labor law, and they would likewise appear to be outside the scope of PELRA.

Finally, there is the issue of whether the employee representative that may become certified to represent these individuals (and that is a long ways off) can be truly independent or whether it would be, essentially, an employer-dominated union.  Stay tuned—two legal challenges to the statute already have been filed in federal court.

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