                     United States Court of Appeals
                             FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 97-4057
                                    ___________
National Labor Relations Board,     *
                                    *
            Petitioner,             * On Petition for Enforcement of an
                                    * Order of The National Labor
   v.                               * Relations Board.
                                    *
Young Women’s Christian Association *
of Metropolitan St. Louis,          *
                                    *
            Respondent.             *

                                    ___________

                              Submitted: May 11, 1998
                                  Filed: September 13, 1999
                                   ___________

Before BOWMAN,1 Chief Judge, HEANEY and HANSEN, Circuit Judges.
                              ___________

HANSEN, Circuit Judge.

        The National Labor Relations Board (NLRB) petitions this court for enforcement
of its order requiring the Young Women’s Christian Association of Metropolitan St.
Louis (YWCA) to bargain with the Service Employees International Union (Union), the
elected representative of YWCA’s Head Start employees. The YWCA, a private, not-


      1
       The Honorable Pasco M. Bowman stepped down as Chief Judge of the United
States Court of Appeals for the Eighth Circuit at the end of the day on April 23, 1999.
He has been succeeded by the Honorable Roger L. Wollman.
for-profit corporation that administers the federal Head Start program in the St. Louis
County area, argues that the NLRB lacks jurisdiction over it because the federal
government maintains such pervasive control over the terms and conditions of the
employment of its Head Start employees that the YWCA is prevented from engaging
in meaningful collective bargaining. We disagree and grant enforcement of the
NLRB’s order.

                                           I.

       The YWCA provides educational and social services to the St. Louis area
community. Since 1991, the YWCA has administered the federal Head Start program
in the St. Louis area pursuant to and in compliance with the Head Start Act, 42 U.S.C.
§§ 9831-9852a (1994). The purpose of the Head Start program is to provide the
“effective delivery of comprehensive health, educational, nutritional, social and other
services to economically disadvantaged children and their families.” 42 U.S.C. §
9831(a). The Secretary of Health and Human Services is charged with the
administration of the Head Start program. The statute requires the Secretary to
establish regulations governing the entities like the YWCA that administer the Head
Start program, and to conduct mandatory reviews of these entities. See id. § 9836a(c).
As outlined below, these regulations extensively govern and control the YWCA’s
operation of the Head Start program in St. Louis.

       Federal regulations govern the preparation of the initial application submitted by
an agency seeking a federal grant to operate a Head Start program. In its initial
application, the YWCA was required to provide detailed information concerning its
enrollment, the number of classes, the type of sessions to be conducted, and the hours
and days to be worked by the staff. (J. A. at 31-34, 669-729.) The application includes
detailed budget information concerning salaries, benefits, travel, equipment, supplies,
construction and other expenses. (Id. at 669-729.) The YWCA was required to set
forth positions and job classifications of its personnel, along with respective salaries

                                           -2-
and wages. (Id. at 33-34, 699-729.) The initial application is subject to changes
mandated by the government concerning the operation of the Head Start program. The
Secretary mandated numerous changes in the YWCA’s grant request, including
changes in staff positions, salaries, and benefits. (Id. at 35-46, 730-81.) The
government also establishes Head Start job classifications, imposes student-teacher
ratios, and dictates how many employees may be hired to fill those positions. (Id. at
51-52.)

       The Head Start program is funded by the federal government on an annual basis,
and the amount of funding for a particular Head Start agency may increase, decrease,
or be nonexistent for any given year. Such funding changes obviously impact the
salaries and benefits that the YWCA may provide to its Head Start staff. Once the
government awards a grant to a Head Start agency, the agency may not deviate from
the specifications outlined in the application, absent governmental approval. Such
prohibited deviations include changes in staffing, salaries, benefit levels, work
schedules, and job classifications.

       The government extensively regulates the compensation packages of Head Start
staff members. The government mandates the salary range and job duties for Head
Start program personnel. The Secretary establishes minimum and maximum salaries
that the YWCA must pay its Head Start program employees. See 42 U.S.C. § 9848.
When the YWCA applied for its grant to administer the Head Start program, the
government mandated changes in the proposed salary ranges, including significant
decreases for some positions. (J.A. at 44-46, 749-54.) The government also sets the
benefit levels for Head Start personnel. For example, the YWCA was required to
increase its medical care coverage for all employees from a fifty percent copayment
level to an eighty percent level. (Id. at 37-38, 733, 740-41.) The government also
regulates and restricts the payment of overtime to Head Start staff. (Id. at 625.) The
Secretary mandates the job responsibilities and duties of Head Start personnel,
including specifying the number of visits teachers must make to students’ homes. (Id.

                                         -3-
at 51, 68.) Federal law also proscribes the training each Head Start employee must be
provided. (Id. at 58-59.)

        The day-to-day working conditions of the Head Start staff are also governed in
large part by government control. Government regulations provide a limited number
of options through which Head Start services may be provided to children and families.
45 C.F.R. §§ 1306.31-.35 (1997). The YWCA has been approved by the federal
government to operate both a full year, part day program and a full year, full day
program. Under the full year, full day program, teachers are in the classroom with the
children for a full day, five days a week. (J.A. at 60.) Under the full year, part day
option, teachers are in the classroom with the children for only four days a week. (Id.)
The YWCA is not allowed to deviate from these options to accommodate changes in
staff scheduling unless such deviations are approved by the Secretary. (Id.) The
YWCA’s ability to grant vacation time and sick leave is also affected by governmental
regulations proscribing student-teacher ratios and the number of days the program must
be in session. (J.A. at 52.) The government also mandates how and when breaks for
classroom staff are given, and regulations go so far as to dictate and control the
physical arrangement of classrooms. (Id. at 66-68, 486-551.) Federal regulations also
grant parents the absolute right to observe classroom sessions and to volunteer in the
classroom, notwithstanding any objections from teachers or other Head Start staff. (Id.
at 486-551.)

       The government also restricts the YWCA’s discretion in hiring and firing
individuals for Head Start staff positions. Pursuant to the statute, the Secretary
establishes the qualifications of each Head Start position through federal regulations.
See 42 U.S.C. § 9843a(c)(1). The YWCA’s Head Start staff hiring decisions must be
approved by the government-mandated Policy Council. (J.A. at 62, 250.) The Policy
Council is a group of individuals, fifty percent of whom are parents of children enrolled
in the local Head Start program, and fifty percent of whom are other members of the
local community selected and approved by the parents of enrolled children. (Id. at 62-

                                           -4-
63, 233-58.) It exists entirely independent of the YWCA. The Policy Council must
also approve all Head Start staff terminations, and the Council has vetoed the YWCA’s
attempt to fire at least one Head Start staffer in the past. (Id. at 65.) All personnel
policy changes, including changes in work schedule and employee benefits, and the
content of any grievance procedure, must be approved by the Policy Council. (Id. at
64-65, 250.) The Policy Council also must approve the YWCA’s grant applications
and any subsequent changes to the budget proposed by the YWCA. (Id. 63-64.) The
government imposed Policy Council has substantial authority over those traditional
subject areas where collective bargaining would normally operate to determine terms
and conditions of employment.

       Prior to 1997, the YWCA’s Head Start employees were not represented by the
Union. On January 6, 1997, the Union filed a representation petition with the NLRB
seeking to represent a bargaining unit of “[a]ll full-time and regular part-time teaching
assistants, nutrition aides, teachers, family service workers, health clerks and family
literacy supervisors” of the Head Start program employed by the YWCA. (J.A. at 1.)
This unit includes approximately 85 employees. The NLRB’s regional director held
a hearing on the representation petition on January 22, 1997. The YWCA claimed that
the NLRB did not have jurisdiction over the YWCA in its administration of the Head
Start program because of the extensive governmental control over its employees’ terms
and conditions of employment. The regional director rejected the YWCA’s claim and
ruled that the NLRB had jurisdiction over the YWCA. On February 13, 1997, the
YWCA filed a request for review of the regional director’s decision with the NLRB,
contending that the NLRB lacked jurisdiction over the YWCA. The NLRB summarily
denied the YWCA’s request for review on a 2-1 vote, with member Higgins dissenting
and indicating he would grant review on the jurisdictional issue.

      On February 28, 1997, the employees voted 52 to 29 in favor of being
represented by the Union. The NLRB certified the Union as the exclusive collective
bargaining representative of the employees in March 1997. Following this certification,

                                           -5-
the YWCA refused to recognize and bargain with the Union, again claiming that the
NLRB lacked jurisdiction over its administration of the Head Start program. The
Union then filed an unfair labor practices charge, and later an amended charge, with the
NLRB, claiming that the YWCA violated section 8(a)(1) and (5) of the National Labor
Relations Act (the Act), 29 U.S.C. § 158(a)(1) and (5), by refusing to bargain. On
September 11, 1997, the NLRB ruled that it had jurisdiction over the YWCA and that
the YWCA had violated section 8(a)(1) and (5) of the Act by refusing to bargain. See
Young Women’s Christian Ass’n, 324 NLRB No. 64 (1997). The NLRB ordered the
YWCA to bargain with the Union. Id. The NLRB seeks enforcement of this order.

                                          II.

      The YWCA’s only argument against enforcement of the NLRB’s order is that
the NLRB lacks jurisdiction over it. The YWCA argues that because the federal
government maintains such pervasive control over the Head Start program employees’
terms and conditions of employment, the YWCA is prevented from engaging in
meaningful collective bargaining. The YWCA claims that its inability to engage in
meaningful collective bargaining frustrates the purposes and policies underlying the Act
and prevents the YWCA from being subject to the jurisdiction of the NLRB.

       We will enforce the NLRB’s order if the NLRB has “correctly applied the law
and its factual findings are supported by substantial evidence on the record as a whole,
even if we might have reached a different decision had the matter been before us de
novo.” Pace Indus., Inc. v. NLRB, 118 F.3d 585, 590 (8th Cir. 1997) (internal
quotations omitted), cert. denied, 118 S. Ct. 1299 (1998). The NLRB has “broad
authority to construe provisions of the Act,” and we will defer to NLRB decisions that
are “not irrational or inconsistent with the Act.” NLRB v. Financial Inst. Employees,
475 U.S. 192, 202 (1986). However, such deference “‘cannot be allowed to slip into
a judicial inertia which results in the unauthorized assumption . . . of major policy


                                          -6-
decisions properly made by Congress.’” Id. (quoting American Ship Building Co. v.
NLRB, 380 U.S. 300, 318 (1965)) (alteration in original).

        Section 2(2) of the Act provides in relevant part that “[t]he term ‘employer’
includes any person acting as an agent of an employer, directly or indirectly, but shall
not include the United States or any wholly owned Government corporation, or any
Federal Reserve Bank, or any State or political subdivision thereof.” 29 U.S.C. §
152(2). The Act grants the NLRB discretion to decline jurisdiction over any labor
dispute where, in its opinion, “the effect of such labor dispute on commerce is not
sufficiently substantial to warrant the exercise of its jurisdiction.” Id. § 164(c)(1). The
NLRB has the initial responsibility for determining who is an employer for purposes
of the Act, and we must accept the NLRB’s determination “if it has a reasonable basis
in the evidence and is not inconsistent with the law.” NLRB v. E.C. Atkins & Co., 331
U.S. 398, 403 (1947).

        Over the past two decades, the NLRB has changed the standard it uses to
determine whether it will assert jurisdiction over a private company that contracts with
a governmental entity exempt from the Act. At one time, the NLRB used the so-called
“intimate connection” test in which it declined to assert jurisdiction over a private
employer that performed functions that were intimately related to traditional
government functions of the exempt entity. See Rural Fire Protection Co., 216 NLRB
584 (1975). The NLRB later abandoned the intimate connection test and replaced it
with the “control test” articulated in National Transportation Service, 240 NLRB 565
(1979). The control test required the NLRB to determine whether a private employer
retained sufficient control over the employment conditions of its employees to enable
the private employer to engage in effective or meaningful collective bargaining with a
labor organization. If such meaningful bargaining could not take place, then the NLRB
would decline to assert jurisdiction over the private employer. This test was clarified
by the NLRB in Res-Care, Inc., 280 NLRB 670 (1986), in which the NLRB explained
that it would examine both whether the private employer retained control over the

                                            -7-
“essential terms and conditions of employment” and whether the private employer
retained control over those areas of “an employer’s labor relations” that are sufficiently
important for meaningful collective bargaining. 280 NLRB at 672-74. Most recently,
in Management Training Corporation, 317 NLRB 1355 (1995), the NLRB abandoned
the control test and announced that it would assert jurisdiction over a private employer
subject to control by an exempt governmental entity if the private employer meets the
definition of employer under the Act and satisfies the applicable monetary jurisdictional
standards. Thus, the NLRB now no longer examines whether a private employer is
able to engage in effective or meaningful collective bargaining when asserting
jurisdiction.

       In this case, the NLRB ruled that the YWCA met the definition of employer
under the Act and that it satisfied the applicable monetary jurisdictional standards.
Thus, the NLRB asserted jurisdiction over the YWCA. In urging us to enforce its
order, the NLRB first claims that the YWCA qualifies as an “employer” as that term
is defined in the Act. See 29 U.S.C. § 152(2). Second, the NLRB argues it properly
exercised its discretion under the Act in promulgating the Management Training rule,
and that it correctly applied the rule in asserting jurisdiction over the YWCA. In
making its second argument, the NLRB relies heavily upon three recent decisions of
the Fourth, Sixth, and Tenth Circuits upholding the NLRB’s discretion to exercise
jurisdiction over private employers pursuant to the Management Training rule. See
Aramark Corp. v. NLRB, 179 F.3d 872 (10th Cir. 1999) (en banc); Pikeville United
Methodist Hosp. v. NLRB, 109 F.3d 1146 (6th Cir.), cert. denied, 118 S. Ct. 557
(1997); Teledyne Econ. Dev. v. NLRB, 108 F.3d 56 (4th Cir. 1997).

       In Teledyne, the Fourth Circuit rejected the government contractor’s argument
that the NLRB is bound by section 2(2) of the Act “to extend the governmental
exemption to private employers where an exempt governmental entity effectively
controls the basic terms of employment.” 108 F.3d at 58. The court held that the
Management Training rule is a valid exercise of the NLRB’s discretion under the plain

                                           -8-
language of the Act because section 2(2) does not compel the NLRB to recognize such
an exemption. Id. at 59. The court next rejected the contractor’s argument that the
Management Training rule should be struck down because it is inconsistent with the
polices underlying the Act, including the possibility of effective collective bargaining
over the terms and conditions of employment. Id. at 60. The Fourth Circuit reasoned
that “Congress has left this particular judgment to the [NLRB’s] discretion,” and that
the NLRB had exercised that discretion in a rational manner. Id.

       Similar to Teledyne, in Pikeville United Methodist Hospital, the Sixth Circuit
rejected a private hospital’s argument that the NLRB was without authority to abandon
the control test articulated in Res-Care. 109 F.3d at 1152. The court held that the plain
language of section 2(2) allowed the NLRB to adopt the Management Training rule and
its application of the rule to assert jurisdiction over the hospital was a proper exercise
of the NLRB’s discretion under the Act. Id. at 152-53. The court cited Teledyne in
support of its holding that the control test articulated in Res-Care was not statutorily
required by section 2(2). Id. at 153.

       In Aramark, the Tenth Circuit en banc, following Teledyne and Pikeville,
overruled its prior line of authority and held that the plain meaning of Section 2(2)
permitted the Board to exercise jurisdiction over a government contractor without
regard to whether or not the government contractor had sufficient control over its labor
relations to enable it to bargain effectively with a labor union. See 179 F.3d at 878.

       We find ourselves in agreement with the opinions of our sister circuits on the
issue of whether or not the Board can assert jurisdiction over an employer without
regard to whether or not the employer's control over its ability to collectively bargain
is hampered or impeded by the employer's operating agreement with the government.
The statute is plain. As the Fourth Circuit held in Teledyne,




                                           -9-
             By its terms, section 2(2) exempts only government entities
             or wholly owned government corporations from its coverage
             - not private entities acting as contractors for the
             government.

                    ....

             Congress could not have intended to compel the Board to
             decline jurisdiction over private employers based upon
             constraints that their government contracts might impose
             upon the collective bargaining process. If it had so
             intended, it would have exempted private contractors as well
             as government entities from the Act.

108 F.3d at 59.

       We also agree with the Tenth Circuit's assessment that the Board has broad
discretion to determine whether or not it will exercise its statutory jurisdiction in a
particular case under § 14(c)(1) of the Act, 29 U.S.C. § 164(c)(1), and that the "Board's
consistent view that government contractors fall outside of § 2(2)'s political subdivision
exemption and inside that provision's definition of employer is 'entitled to great
respect.'" Aramark, 179 F.3d at 879 (quoting NLRB v. National Gas Utility Dist., 402
U.S. 600, 605 (1971)). Accordingly, we hold that the Board acted within its authority
when it abandoned the control test of Res-Care and announced in Management
Training its new intent to look only at the plain jurisdictional requirements of the
statute.

     Under the Act, an employer is required to bargain in good faith with its
employees’ representative. 29 U.S.C. § 158(a)(5). This requirement includes the
obligation to “confer in good faith with respect to wages, hours, and other terms and
conditions of employment.” Id. § 158(d). Because the duty to bargain in good faith
extends to each and every subject embraced within this statutory phrase, it is an unfair


                                           -10-
labor practice for an employer to refuse to bargain about such subjects. NLRB v. Katz,
369 U.S. 736, 742-43 (1962). An employer must also come to the bargaining table
with the authority to consummate a deal, or risk penalties for its failure to do so. See
Cablevision Indus., 283 NLRB 22 (1987). This is because it has long been understood
that “the purpose of collective bargaining is to produce an agreement and not merely
to engage in talk for the sake of going through the motions.” Herbert Harvey, Inc. v.
NLRB, 424 F.2d 770, 775 (D.C. Cir. 1969). The YWCA argues that it simply does not
have the control over employment terms and conditions that is necessary to be able to
come to the bargaining table with the authority to produce an agreement, and that the
entities that do have that necessary and fundamental control--the federal government
acting through the Department of Health and Human Services and its regulatory
creation, the independent Policy Council--cannot be forced to the bargaining table.

        The YWCA also argues that existing Eighth Circuit precedent requires the
NLRB to consider whether or not an employer is so restrained by its government
contract that it is not able to bargain effectively with a labor organization, and that in
this circuit it is an abuse of discretion for the Board to assert its jurisdiction when the
employer is so restrained. See Mayflower Contract Servs., Inc. v. NLRB, 982 F.2d
1221 (8th Cir. 1993). In Mayflower, a private, for profit bus company provided
contract transit bus services to a nonprofit California corporation, which in turn
provided transportation services for the elderly and the disabled in particular. See id.
at 1222. The nonprofit corporation was funded by a joint municipal venture (composed
of four California cities) and the federal government. When the private bus company's
drivers, dispatchers, and mechanics formed a union, which the NLRB recognized, the
bus company refused to bargain with the union, claiming its bargaining hands were tied
by its contract with the exempt governmental subdivisions. Citing as examples a
Supreme Court case and two other Eighth Circuit cases where a similar assertion had
been advanced, our court stated, "If Mayflower has in fact effectively been deprived
of that power [to bargain effectively] by its contract with the two exempt entities, then
it would be an abuse of discretion for the NLRB to assert jurisdiction over Mayflower's

                                           -11-
labor relations with its employees." Id. at 1223. The court discussed at some length
the NLRB's Res-Care case, and also cited to the NLRB's National Transportation case,
and ultimately determined that the bus company was not so restricted by its contract,
and enforced the NLRB's order requiring the private bus company to bargain with the
union. Our court also held that review of the NLRB's assertion of jurisdiction was
"fact-intensive" and had to be done on a case-by-case basis. Id.

        Our pre-1995 government contractor cases, including Mayflower, St. Jude Indus.
Park Bd. v. NLRB, 760 F.2d 223 (8th Cir. 1985), and NLRB v. St. Louis
Comprehensive Neighborhood Health Center, Inc., 633 F.2d 1268 (8th Cir. 1980),
which indicated that the Board could abuse its discretion by exercising its jurisdiction
over employers who could not effectively bargain because of the contractual constraints
imposed by exempt governmental entities were all premised on the Board's then
existing control test. The Board's abandonment of the control test in Management
Training, a change we have now held the Board is permitted to make, and one which
we are obligated to observe and apply, is a supervening event which, in our view,
means that our prior cases no longer control the issues in this case. We also agree with
the Fourth and Tenth Circuits that the Supreme Court did not incorporate the control
test into the Act in its decision in NLRB v. E.C. Atkins & Co., 313 U.S. 398 (1947).
See Teledyne, 108 F.3d at 59 n.2, and Aramark, 179 F.3d at 879-80. Consequently,
we see no need to determine whether the Board abused its discretion in this case by
exercising its jurisdiction over the YWCA.

                                          III.

      Accordingly, we grant enforcement of the Board's order.




                                          -12-
A true copy.

      Attest:

               CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                              -13-
