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Court of Appeal, First District, Division 2, California.



Decided: July 25, 1984

Donald L. Reidhaar, James N. Odle, Claudia Cate, Berkeley, for petitioner. Dennis M. Sullivan, Gen. Counsel, Jeffrey Sloan, Asst. Gen. Counsel, Sacramento, Marian Kennedy, Legal Counsel, Public Employment Relations Bd., New York City, for respondent. Franklin Silver, Beeson, Tayer & Silbert and Rosenthal & Leff, Inc., San Francisco, for real party in interest. Hassard, Bonnington, Rogers & Huber, David E. Willett, David L. Suddendorf, San Francisco, for amicus curiae California Medical Ass'n. James Severson, McCutchen, Doyle, Brown & Enersen, San Francisco, Carl W. Vogt, Joseph T. Small, Jr., Fulbright & Jaworski, Washington, D.C., for amicus curiae American Medical Colleges. Robert A. Bush, Taylor, Roth & Hunt, Los Angeles, for amicus curiae Joint Council of Interns & Residents. Wendy Ball McKenna, Oakland, for amicus curiae Union of American Physicians & Dentists.

Statement of the Case *

Petitioner, The Regents of the University of California (University) seeks a writ of review vacating a decision by the Public Employment Relations Board (PERB or the board) holding that medical housestaff participating in residency programs at clinics, institutes or hospitals owned or operated by the University are entitled to collective bargaining rights because they are employees within the meaning of the Higher Education Employer-Employee Relations Act (HEERA) (Gov.Code, §§ 3560–3599.) 1

Procedural History and Evidentiary Findings

In 1978, the California Legislature enacted HEERA, which became effective July 1, 1979, and which extended collective bargaining rights to employees of the University of California, Hastings College of the Law and the California State University.  (§ 3562, subd. (f).) 2

Two provisions of HEERA are of central significance to this appeal.   Subdivision (f) of section 3562 provides, in pertinent part, that “The board [PERB] may find [that] student employees whose employment is contingent on their status as students are employees only if the services they provide are unrelated to their educational objectives, or ․ those educational objectives are subordinate to the services they perform and ․ coverage under this chapter would further the purposes of this chapter.”

Subdivision (o ) of the same statute (§ 3562) defines the term “Professional employee” as “(1) Any employee engaged in work:  (i) predominately intellectual and varied in character as opposed to routine mental, manual, mechanical, or physical work;  (ii) involving the consistent exercise of discretion and judgment in its performance;  (iii) of such a character that the output produced or the result accomplished cannot be standardized in relation to a given period of time;  and (iv) requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study in an institution of higher learning or a hospital, as distinguished from a general academic education or from an apprenticeship or from training in the performance of routine mental, manual, or physical processes;  or [¶] (2) Any employee who:  (i) has completed the courses of specialized intellectual instruction and study described in clause (iv) of paragraph (1), and (ii) is performing related work under the supervision of a professional person to qualify himself to become a professional employee as defined in paragraph (1).”

Almost immediately after HEERA became effective on July 1, 1979, the University, apparently having concluded that housestaff participating in the University's post-graduate medical training programs were students rather than employees, ceased complying with the requests of housestaff that the University make payroll deductions for their dues in the Physicians National Housestaff Association (PNHA).

On July 20, 1979, PNHA responded by filing an unfair labor practice charge against the University, alleging violations of section 3571, subdivisions (a) and (b), and section 3585 of HEERA.   The gist of this charge was that the University had violated HEERA by refusing to comply with the mandate of section 3585 that an employer, upon the written authorization of an employee, deduct and remit to the employees' exclusive representative, or to the employee organization of the employee's choice, the dues or other fees of such organization.

A 10-day hearing before a PERB hearing officer ensued.   It was agreed by the parties that the terms “housestaff” or “house officers” included residents training for a medical specialty and “clinical fellows” training for a medical subspecialty.   The parties also stipulated that the issues before the hearing officer were (1) whether housestaff participating in residency programs at medical facilities owned or operated by the University were employees within the meaning of section 3562, subdivision (f), of HEERA, and (2) whether the University had violated HEERA by refusing to make payroll deductions on behalf of PNHA, and, if so, what remedy was appropriate.

At the conclusion of the hearing, the hearing officer made extensive and detailed findings of fact.   These findings, summarized as succinctly as possible, are as follows:  The University operates medical schools at five of its campuses:  Los Angeles (UCLA), San Diego (UCSD), San Francisco (UCSF), Irvine (UCI) and Davis (UCD).   At each of these medical schools, the University provides residency training programs in most medical specialty and subspecialty areas.   At all five campuses, the University operates hospitals at which medical students and housestaff can gain clinical experience.   In addition, many other hospitals, both public and private, are affiliated with the University's medical schools, which direct the programs of these hospitals.   Medical students and housestaff rotate through these hospitals.   All attending physicians at University and affiliated hospitals in which residents are trained hold medical school faculty appointments.   In the spring of 1979, approximately 4,500 housestaff were registered in the University's residency programs.   Approximately 2,000 of the participants in these residency programs were on the University payroll, and the others were paid by the affiliated institutions in which they served.

In order to participate in one of the University's residency programs, an applicant must have graduated from medical school, obtaining a Doctor of Medicine (M.D.) degree.   Such an individual is not qualified to practice medicine in California or in most other states without first serving at least one year in an approved residency program.   In California, it is then necessary to receive a physician's and surgeon's certificate from the Board of Medical Quality Assurance.

Most residency programs are between two and six years long, depending upon the particular medical specialty.   In the past, the first year of a residency program was called an “internship.”   However, the University offers no one-year internship program, and an individual in the first year of a residency is referred to as a “Resident I.”

When an individual successfully completes a residency, he does not receive a degree from the University, but does receive a certificate entitling him to take a specialty board examination leading to board certification in a particular field of medicine.   Such certification attests to the physician's competence in that field and is an important factor in hospital affiliation.   An analogous situation exists with clinical fellows, who become eligible for board certification in a subspecialty upon the successful completion of an appropriate residency program with the University.

To be eligible for board certification for a specialty or subspecialty, a resident must participate in a training program approved by the Liaison Committee on Graduate Medical Education (LCGME), which sets standards for residency programs and grants accreditation only to programs which meet those standards.

In order for residency programs to acquire LCGME approval, they must comply with the general requirements contained in a document which is published by the LCGME and which is entitled the “Essentials of Accredited Residencies” (hereafter The Essentials).   The Essentials provide, inter alia, that the activities of a hospital maintaining a residency program must be “conducted primarily for the welfare of the patient” and that “the educational program is supplementary to the primary purpose of the hospital, i.e., the care and management of patients ․”   The Essentials distinguish between the primary purpose of a hospital and a residency program, and they state that “professional education” is the primary purpose of residency programs.   The Essentials also provide that “supervised service to patients is an essential part of intern and resident training, and it benefits both trainee and patient.”   The Essentials require that a formal agreement be entered into between the hospital and the resident, setting forth the terms of the residency, including salary, living quarters, malpractice insurance, health insurance, hours of duty and the content of the educational phase of the residency.

Upon commencing a residency program, housestaff complete employment forms similar to those used for other University employees.   A house officer receives a University identification card which refers to him variously as a “student,” a “post M.D. trainee” or a “resident-intern.”   Housestaff pay no student fees or tuition, the latter having been waived by the University.

Housestaff are eligible for student financial assistance and loans and are also eligible for certification as students in order to qualify for G.I. loans through the Veterans Administration.

Housestaff receive an annual stipend which ranges from $15,100 for a first-year resident to $21,800 for a sixth-year resident.   Federal and state income taxes are withheld from these payments.

Housestaff receiving payroll checks from the University are also provided with medical insurance or other health coverage and are given vacation time and workers' compensation insurance.   However, the University makes no deductions for state unemployment benefits for housestaff, makes no social security payments on their behalf and does not include them within the University retirement system.

Residency programs consist of the two main components of clinical experience and didactic (or instructional) activities.   Housestaff devote approximately 80 percent of their time to clinical work or patient care related activities and 20 percent to didactic activities.

The Essentials set forth the following guidelines for didactic activities:  “Emphasis should be placed on personal instruction at the bedside, in the operating room and in the delivery room, on related laboratory studies, teaching rounds, departmental conferences or seminars, clinical-pathological conferences, demonstrations and lectures.”

There are several ways in which didactic activities occur at University and affiliated hospitals.   First, some medical specialties set aside portions of the residents' time for participation in intensive classroom, instructional or research activity.   Thus, residents in certain medical specialties attend instructional lectures or may do elective work in a particular research or clinical area.

In addition, attending rounds are held on a regular basis, sometimes daily, and last between one and three hours.   During these rounds, housestaff, and medical students as well, visit patients accompanied by the attending physician or sometimes the chief resident.   Possible diagnoses are discussed and treatment plans are explored.

Each department also conducts weekly “grand rounds,” conferences at which particularly interesting or troublesome cases are discussed by the faculty with housestaff assigned to the department.   Housestaff are required to attend these conferences unless they are excused due to patient care responsibilities or fatigue.

In addition, most departments have other lecture sessions, given weekly or sometimes more frequently, on topics of concern to housestaff.   When housestaff are on call at the hospital but have free time, they are also expected to pursue independent study on topics of relevance or interest.

The great bulk of the residents' time, as previously noted, is spent gaining clinical experience by rendering patient care and performing related duties.   Since a beginning resident has little or no clinical experience in most medical specialties, such a resident requires close supervision.   As a resident gains experience, he receives more indirect supervision and will himself supervise less experienced residents and medical students.   Thus, a first-year resident who has a question concerning treatment or patient care will first ask a more experienced resident, whereas a senior resident will consult the chief resident, a fellow or a faculty member.

In general, residents are given as much independent patient care responsibility as they are able to handle.   Housestaff work long hours and 80 to 100 hours per week is not unusual.   Night call duty is handled almost exclusively by housestaff, since attending physicians are rarely in the hospital at night.   Night call duty benefits the hospital and its patients, but it also serves an educational purpose by allowing housestaff to observe changes in a patient's condition on a continuing basis.   Certain particular medical situations, such as gunshot wounds and other trauma, also occur more often during evening hours.

Residency programs are structured so that housestaff rotate through different hospital services relevant to the resident's particular specialty.   Housestaff perform a great variety of duties in the hospital, taking patients' histories, performing physical examinations and making findings and designing diagnostic workups.   First-year residents also normally write all orders for patient treatment and prescriptions.   This practice keeps them informed about all aspects of the patient's care so that they can observe the natural history of the disease and the patient's responses to different forms of treatment.   Residents are also assigned to outpatient clinics where they treat patients with minor problems and admit to the hospital those requiring more extensive treatment.   In other rotations, such as in the general medical wards, residents perform a great variety of medical procedures, such as bone marrow biopsies, lumbar punctures, ordering and reviewing test results, administering dangerous drugs, suturing and various surgical procedures.   They also perform such routine tasks as making entries on patients' charts and collating laboratory reports.   In most situations, senior residents assist less experienced residents until they gain sufficient competence to perform a particular procedure without supervision.   Residents are also required to supervise hospital personnel such as nurses and technicians.   Subspecialty fellows also follow rotation schedules and they act as consultants, in their specialized fields, to other housestaff.   Fellows may also do research in their particular fields.   They are normally not on regular call schedules as are other housestaff.

Housestaff are evaluated as to their performance by the attending physician at the end of each rotation, and housestaff, in turn, rate the faculty on their teaching abilities.

Based upon the above factual findings, the PERB hearing officer concluded that housestaff were not employees entitled to collective bargaining rights under subdivisions (f) or (o ) of section 3562.   In reaching his decision, the hearing officer relied heavily upon the reasoning of two decisions by the National Labor Relations Board (NLRB), Cedars-Sinai Medical Center (1976) 91 L.R.R.M. 1398 [223 N.L.R.B. 57] (hereafter Cedars-Sinai ) and St. Clare's Hospital (1977) 95 L.R.R.M. 1180 [229 N.L.R.B. 158] (hereafter St. Clare's ), holding that housestaff were primarily students rather than employees within the meaning of the National Labor Relations Act (NLRA).   While recognizing that HEERA was unique, in that it contained a provision (§ 3562, subd. (f)) which was addressed specifically to student employees, the hearing officer concluded that the California Legislature had enacted that provision in order to adopt the reasoning of the Cedars-Sinai and St. Clare's cases that housestaff were primarily students.   The hearing officer pointed out that housestaff could not be deemed to be employees under subdivision (f) of section 3562 unless their “educational objectives” were “subordinate” to the services they performed, and that all of the housestaff witnesses testified that “their educational objectives in choosing and participating in a residency program are to receive the best medical training and qualify for specialty or subspecialty certification.”   The Essentials likewise stated that the primary purpose of a residency program was education.   The hearing officer concluded, “the fact housestaff spend a large portion of their time rendering care to patients, and that oftentimes the value of the care to the patient might outweigh the educational value to the house officer of rendering a particular service, do not enter into the determination required by section 3562(f).   The proper focus of the inquiry is whether the purposes of the residency programs are predominately educational or predominately service-oriented.   Based on the record in this case, it must be found that the residency programs' purposes are predominately educational, and that rendering patient care services, although a necessary and vital component, is of secondary importance.”   As for PNHA's claim that housestaff were professional employees within the meaning of subdivision (o ) of section 3562, the hearing officer pointed out that the provision in question was a verbatim copy of section 2(12) of the NLRA, which had been held inapplicable to housestaff in the Cedars-Sinai case.   The hearing officer rendered his proposed decision that PNHA's unfair practice charge be dismissed.

PNHA filed exceptions to the proposed decision, and, on February 14, 1983, PERB rendered a decision which adopted the hearing officer's findings of fact, which the board characterized as being “free of prejudicial error.”   Also, PERB made certain additional findings of its own, which tended to emphasize the long hours worked by housestaff and the varied patient-oriented services rendered by them with little or no supervision by attending physicians.   For example, the board found that certain patients might be admitted, treated and discharged without ever having been personally seen by an attending physician;  and that the direct patient care provided by housestaff freed attending physicians to take responsibility for more patients and made it possible for hospitals and attending physicians to maintain constant standby physician services for all patients at a lower cost than might otherwise be possible.   The board also found that The Essentials stated that the qualifications of residents should leave no doubt as to their competence, since the primary obligation of the hospital was the patients' welfare.   Finally, PERB found that housestaff were free to miss grand rounds, a significant didactic function, whenever they deemed their clinical responsibilities to be more important;  and the board made specific mention of testimony by a pediatric resident at UCSF that his patient care responsibilities made it necessary for him to miss from 40 to 75 percent of the conferences available to him.

PERB's conclusions of law were in direct opposition to those of the hearing officer.   The board concluded that housestaff provided services that were of primary benefit to the patients and the hospital, and that the educational benefits obtained by housestaff were incidental and subordinate to the primary health care services which they rendered to patients.   PERB deemed it of little significance that The Essentials stated that the primary purpose of a residency program was educational.   The board pointed out that the purpose of The Essentials was to guide hospitals in developing effective residency programs and not to deal with the statutory question of whether housestaff were employees within the meaning of HEERA.   The board did attach significance to the various indicia of employment which the University itself had conferred upon housestaff, such as the fact that they complete forms dealing with employment status and personnel action, are paid monthly compensation with step and cost-of-living increases, receive workers' compensation insurance paid for by the University, and must pay federal and state income taxes.

PERB found the reasoning of the two NLRB cases, Cedars-Sinai and St. Clare's, unpersuasive, primarily because of differences between the NLRA and HEERA:  the fact that coverage or noncoverage under the NLRA depended solely upon whether one was an “employee,” whereas HEERA established the distinct category of a “student employee” who might or might not qualify for coverage under HEERA.   PERB also noted that the majority of states which had addressed the question of housestaff rights had held that they were employees within the meaning of the states' collective bargaining statutes.   The board's ultimate holding on the status of housestaff under HEERA was as follows:  “Based on the considerable amount of time housestaff spend on clinical activities and direct patient care, the nature of the procedures they perform with little or no supervision, the professional guidance they provide for interns, medical students and other hospital employees such as nurses and technicians, and the indicia of employment that characterize housestaff as employees rather than students, we find that the educational objectives of the residency program are subordinate to the delivery of services housestaff provide.”

The board then went on to decide whether the second aspect of the two-pronged test set forth in subdivision (f) of section 3562 was met:  whether coverage of housestaff under HEERA would further the purposes of that act.   PERB concluded that it would, noting that one of the specifically stated purposes of HEERA was to provide the means by which relations between each higher education employer and its employees might assure that the responsibilities and authorities granted to the separate institutions under the state Constitution and by statute were carried out in an atmosphere permitting the fullest participation by employees in the determination of conditions of employment affecting them.  (See § 3560, subd. (e).)

PERB concluded that the University had violated HEERA by refusing to make payroll deductions for housestaff's dues in PNHA.   The board ordered that the University cease and desist from this practice and that it reimburse PNHA for the dues lost as a result of the University's ceasing to make payroll deductions as of August 1, 1979.

The matter then came before this court on the University's petition for a writ of review, asking us to vacate the PERB decision.



The heart of the controversy between the parties consists of their divergent interpretations of HEERA in the light of prior decisions by the NLRB and by courts in other states on the status of housestaff.   Petitioner views HEERA as essentially having adopted the reasoning of two NLRB cases, Cedars-Sinai and St. Clare's, which held that housestaff were not employees entitled to coverage under the NLRA.   The University asserts that PERB's allegedly erroneous conclusion that housestaff are covered by HEERA was the result of the board's having accorded too little weight to the two NLRB cases and too much weight to decisions in other states which, according to the University, are inapposite because they construed state statutes which are markedly different from HEERA.

On the other hand, PERB and the real party in interest claim that PERB quite rightly declined to construe HEERA as an endorsement of the reasoning of the two NLRB cases.   Instead, PERB contends that the provisions of HEERA here under review were deliberately worded in such a manner as to reject the reasoning of the two NLRB cases in favor of those decisions in other states which held that housestaff are entitled to coverage under the states' collective bargaining statutes.   PERB and the real party in interest each claim that PERB's decision that housestaff are covered by HEERA is correct for two separate reasons:  housestaff constitute “professional employees” under subdivision (o ) of section 3562, as well as student employees under subdivision (f) of section 3562.

In order to properly analyze these arguments, it is necessary to summarize in some detail the prior cases dealing with the status of housestaff under the NLRA and the collective bargaining statutes of other states.

The Cedars-Sinai case was the NLRB's first opportunity to deal with the housestaff question.   In 1974, Congress had amended the NLRA to eliminate a provision expressly exempting nonprofit hospitals from its coverage.  (Compare Labor Relations Management Act, c. 120, § 101, 61 Stat. 139 (1947) with 29 U.S.C. § 152(2) (Supp. III 1979).)   This amendment left it up to the NLRB to determine whether housestaff of such hospitals should be viewed as employees entitled to collective bargaining rights under the NLRA.

In 1976, the NLRB dealt with the housestaff question in the Cedars-Sinai case.   The NLRB's factual recital makes it clear that the activities of housestaff in that case were quite similar to those of housestaff in this case.   Thus, the NLRB acknowledged that housestaff possess certain employee characteristics.  (P. 1399.)   The opinion states that they spend a great deal of time in patient care and that they receive malpractice insurance, medical and dental plans and annual paid vacations.  (Pp. 1399–1401.)   Nevertheless, the NLRB concluded that housestaff were “primarily students” and should not be deemed employees under the NLRA.  (P. 1400.)   The NLRB based its conclusion upon a primary purpose test which gave overriding significance to the subjective motivations of housestaff in choosing a particular residency program.   In its opinion, the NLRB stated, “we find that interns, residents, and clinical fellows are primarily engaged in graduate educational training at Cedars-Sinai and that their status is therefore that of students rather than of employees.   They participate in these programs not for the purpose of earning a living;  instead they are there to pursue the graduate medical education that is a requirement for the practice of medicine.   An internship is a requirement for the examination for licensing.   And residency and fellowship programs are necessary to qualify for certification in specialties and subspecialties.   While the housestaff spends a great percentage of their time in direct patient care, this is simply the means by which the learning process is carried out․   The number of hours worked or the quality of the care rendered to the patients does not result in any change in monetary compensation paid to the housestaff members․   Nor does it appear that those applying for such programs attached any great significance to the amount of the stipend.   Rather their choice was based on the quality of the educational program and the opportunity for an extensive training experience․  [¶]  In sum, we believe that interns, residents, and clinical fellows are primarily students.   We conclude, therefore, that they are not employees within the meaning of ․ the [NLRA].”  (P. 1400.)

In a dissenting opinion, NLRB Chairman Fanning criticized the majority's use of the primary purpose test, as well as its analysis of the facts.   He noted that the terms “employees” and “students” were not mutually exclusive and that the NLRB had on many occasions included students in bargaining units and had even endorsed bargaining units composed exclusively of students.  (P. 1401.)   Fanning expressed the view that housestaff were unquestionably “professional employees” within the meaning of section 2(12) of the NLRA.4  He pointed out that section 2(12) was in part specifically designed to cover housestaff, as was demonstrated by the House Conference Report accompanying the Taft-Hartley amendments to the NLRA.  (P. 1405.)   That report stated that section 2(12) of the NLRA was designed to embrace “ ‘such persons as legal, engineering, scientific and medical personnel together with their junior professional assistants.’ ”  (Emphasis supplied by Fanning.)   Being of the view that the definition contained in section 2(12) precisely fitted housestaff, Chairman Fanning was unable to accept the majority's conclusion that since housestaff were not “employees,” they could not be “professional employees” and that section 2(12) was therefore irrelevant.  (P. 1405.)

In 1977, the NLRB reexamined the housestaff question in the St. Clare's case and sought to clarify its decision in the Cedars-Sinai case.  (P. 1181.)   The NLRB first summarized prior board precedent concerning students as falling into four categories.   Two of these categories, involving students employed by commercial employers, are inapplicable here.   The remaining two categories consist of (1) students employed by their own educational institutions in a capacity unrelated to their course of study (p. 1182);  and (2) students performing services at their educational institutions which were directly related to their educational institutions which were directly related to their educational program.  (P. 1183.)   Housestaff fall within the latter category.

In St. Clare's, the NLRB stated that under previous board decisions, both of these categories of students had been excluded from bargaining units, including nonstudent employees, and had also been denied the privilege of forming their own bargaining units.  (Pp. 1182–1183.)   In the case of students performing services at their educational institutions which were directly related to their course of study, the NLRB concluded that, universally, they had been viewed as serving “primarily as students and not primarily as employees.”  (P. 1183.)   The majority opinion in the St. Clare's case reaffirmed this reasoning:  “In our view this is a very fundamental distinction for it means that the mutual interests of the students and the educational institution in the services being rendered are predominantly academic rather than economic in nature.   Such interests are completely foreign to the normal employment relationship and, in our judgment, are not readily adaptable to the collective-bargaining process.   It is for this reason that the Board has determined that the national labor policy does not require—and in fact precludes—the extension of collective-bargaining rights and obligations to situations such as the one now before us.”  (P. 1183.)

The majority concluded that granting collective bargaining rights to housestaff would be detrimental to the student-teacher relationship between housestaff and their educational institutions.  (P. 1183–1184.)

Chairman Fanning again dissented.   He expressed his emphatic disagreement with the majority's conclusion that under prior board precedent, students employed by their own educational institutions had been considered inherently unsuitable for coverage under the NLRA.  (Pp. 1188–1189.)   Fanning surmised that the majority's effort to “distort 40 years of Board precedent” was intended to “alleviate the justifiable criticism” generated by the Cedars-Sinai opinion.  (P. 1190.)   He viewed the majority's attempt to justify their decision as mistake.   He then summarized his own views:  “In the final analysis, it is the height of absurdity for Congress to enlarge this Board's jurisdiction, to encompass the vast bulk of health care institutions in this country for the avowed purpose of minimizing the potential disruptions of health care delivery posed by organizational efforts of individuals not covered by Federal regulation until the amendments, and then, for this Board, upon some notion that the decisional basis for the question of coverage is found in ‘precedent’ involving student janitors, science graduate assistants, and physics majors, to leave without regulation those in the forefront of organizing activity in the health care field, doctors.”

Thus, the majority and dissenting opinions in Cedars-Sinai and St. Clare's present two very divergent views on the status of housestaff.

A number of states have also addressed the question of the status of housestaff under their own collective bargaining statutes.   The majority have concluded that housestaff are entitled to coverage.5

The reasoning of those cases adhering to the majority position is best demonstrated by an analysis of Regents of Univ. of Mich. v. Michigan Emp. Rel. Com'n (1973) 389 Mich. 96, 204 N.W.2d 218 [92 L.R.R.M. 2909].  In that case, the Michigan Supreme Court found it significant that the applicable state statute, the Michigan Public Employees Relations Act (PERA) created only one exception from its coverage (classified civil service) and did not make any exception for individuals who had the dual status of students and employees.  (P. 225.)

With regard to the evidence bearing upon the question of whether housestaff were in fact employees, the court noted numerous employee characteristics of housestaff.   The court acknowledged the existence of various student characteristics, such as the fact that the intern and residency programs were approved by the American Medical Association Council of Medical Education;  that the stipends paid to housestaff have no relation to the number of hours worked or the duties performed;  that interns were not licensed to practice medicine;  and that patient care responsibility was an important part of a medical education (pp. 225–226);  however, it had no difficulty in upholding the finding by the Michigan Employment Relations Commission (MERC) that housestaff were employees entitled to collective bargaining rights under PERA.   The court stated, “We do not regard these two categories [students and employees] as mutually exclusive.   Interns, residents and post-doctoral fellows are both students and employees.   The fact that they are continually acquiring new skills does not detract from the findings of the MERC that they may organize as employees under the provisions of PERA.”   The court held that the scope of collective bargaining by housestaff could be limited, on a case-by-case basis, so as not to infringe upon the Regents' constitutional autonomy in the educational sphere.  (P. 224.)

Representative of the minority position taken by the courts of other states is Pa. Ass'n of Int. & Res. v. Albert Einstein Med. Ctr., supra, 470 Pa. 562, 369 A.2d 711 [92 L.R.R.M. 3410].  In that case, the Pennsylvania Supreme Court held that housestaff were not entitled to coverage under a state statute which contained a very broad definition of an employee and contained no exclusion for students.   The court acknowledged the existence of some of the usual employee characteristics of housestaff:  85 to 90 percent of their time was devoted to patient-care service;  their wages were subject to federal income taxes;  and only 10 to 15 percent of their time was spent in formal classroom instruction.  (P. 714.)   However, the majority of the Pennsylvania Supreme Court chose to follow the primary purpose test espoused in the Cedars-Sinai case, from which the majority quoted quite extensively.  (Pp. 715.)

It is apparent from this synopsis of prior case law that, at the time of the enactment of HEERA by the California Legislature, there were two well defined views on the question of whether housestaff should be accorded collective bargaining rights.   Therefore, it might seem reasonable to assume that, by the adoption of HEERA, the Legislature intended to show its preference for one view or the other.   Given the fact (apparent from the cases herein discussed) that housestaff throughout this country perform, essentially, the same functions and are cloaked with, essentially, the same indicia of employment, it would seem that the Legislature could most easily and clearly have expressed its views on the subject of housestaff status by enacting a statute which applies specifically to housestaff and which states that they shall or shall not be accorded collective bargaining rights under HEERA.

Unfortunately, it did not;  or, if it did, it is certainly not clear, either to the parties or to this court.   Obviously, subdivision (f) of section 3562 is no such statute.   It merely begs the question and invites PERB, and ultimately the California courts, to re-engage in the analysis already undertaken by the NLRA and the courts of other states in order to determine, in the first instance, whether the educational objectives of housestaff “are subordinate to the services they perform” and, in the second instance, whether the purposes of HEERA would be furthered by extending coverage to housestaff.   Far from putting the question of housestaff status at rest, this extremely broad language would leave it up to PERB and the courts to devise reasonable standards for determining when the educational objectives of housestaff should be deemed subordinate to the services they perform and when, assuming that educational objectives are not subordinate to services, the purposes of HEERA would be promoted by granting collective bargaining rights to housestaff.   If subdivision (f) is to be deemed the controlling provision on the subject of housestaff, then it follows that the California Legislature has chosen not to decide which of the two preexisting views on housestaff to endorse but has left that question for PERB and the courts.

In this case, PERB accepted the challenge and we now undertake a review of its decision.

 PERB asserts that the interpretation of a statute by an agency charged with the responsibility for its application and enforcement is entitled to great deference, but, in this instance, we cannot agree.   In the recent case of Bureau of Alcohol, Tob. & Firearms v. FLRA (1983) ––– U.S. ––––, ––––, footnote 8, 104 S.Ct. 439, 444–445, footnote 8, 78 L.Ed.2d 195, 202–203, footnote 8, the United States Supreme Court observed that when an administrative agency's decision is premised on its understanding of specific legislative intent, “it engages in the quintessential judicial function of deciding what a statute means.   In that case, the agency's interpretation, particularly to the extent it rests on factual premises within its expertise, may be influential, but it cannot bind a court.”   Since we are dealing here with newly enacted legislation which has not been the subject of any developing body of administrative law, we feel no particular constraint to follow PERB's initial interpretation of that legislation where, as here, we are persuaded that such interpretation is unreasonable.

At the outset, we note that subdivision (f) of section 3562, HEERA, upon which PERB relies, is a creature of the California Legislature.   Its provisions are nowhere to be found in the NLRA.   On the other hand, subdivision (o ) of that section, which defines a “professional employee,” was extracted, verbatim, from the NLRA.   As earlier pointed out, it was in this section of the NLRA that Chairman Fanning found support for his dissenting opinion in Cedars-Sinai, supra.

Although the criteria set forth in that definition precisely describes medical students, nowhere in the body of HEERA (except subdivision (o )), does the phrase “professional employee” appear.   What is even more significant, PERB did not rely upon that definition to reach its decision.   We assume that, by its inclusion, the Legislature merely sought to distinguish a “professional employee” from a “student employee.”   Petitioner adopts the position of the NLRB in Cedars-Sinai, namely, that since we are dealing with students, then the definition of a “professional employee” is not relevant.   We agree.

 No one involved in this action has denied that housestaff are students or that the services which they provide are related to their educational objectives.   As has been noted, the controversial portion of HEERA, i.e., subdivision (f) of section 3562, focuses upon two areas:  educational objectives versus services performed.   On the basis of the hearing officer's factual findings, and for reasons earlier set forth herein, PERB has concluded that housestaff are employees under the HEERA because their educational activities, in large measure, benefit the University's hospitals and patients.   We believe that, in so finding, the board has quantified the educational aspects of the University's residency program 6 but has overlooked the more important question, namely, what is the objective of the residency program?   Is it, as the board seems to contend, to provide health services to the community, or is it to train and prepare medical students for the practice of their profession?   We believe it to be the latter.

If the “indicia of employment” which PERB finds persuasive as “characterizing housestaff as employees” were entirely removed from the residency program, is there any doubt that the participants, nevertheless, would continue in pursuit of their educational objectives in that program?   We think not.   In these situations, employment is merely incidental to the students' primary interest of acquiring an education.  (St. Clare's, supra, at p. 1182.)

PERB finds significance in the fact that housestaff receive compensation in the form of monthly payroll checks “as a quid pro quo ” for the services they provide.   They receive step increases plus cost-of-living increases while on the payroll.

While this may be indicia of an employer-employee relationship, we seriously doubt that it is a compensation which, by today's standard of medical fees charged by a practicing physician, bears any reasonable relationship to the services rendered.   In fact, it should be noted that, historically, housestaff received little or no compensation, other than bed and room and a pittance for their sustenance, while enrolled in a residency program.   While there has been improvement in this area, it is still true that the relationship between the University and housestaff, insofar as it relates to educational objectives and health care services, has not materially changed except in the area of curriculum.

PERB recognizes that “[g]raduate medical training programs are governed by the ‘Essentials of Accredited Residencies' ․” and that “the primary purpose of the residency program is educational,” yet concludes that such statement is not relevant to the board's inquiry.

It is clear from this record that The Essentials pre-date the enactment of HEERA and that they establish, on a national basis, criteria for accreditation as a residency program.   In the event of conflict between its provisions and those of HEERA, clearly the latter must govern.   However, we find no such conflict and since HEERA appears to have left the matter open to further determination, we cannot agree that The Essentials are without value in our consideration of this matter.   As noted earlier, The Essentials distinguish between the primary purpose of a hospital and a residency program and state that professional education is the primary purpose of such programs.

Webster defines “primary ” as “principal;  ․ of first rank, importance, or value ․,” whereas “subordinate ” is defined as “placed in or occupying a lower class, rank or position:  INFERIOR ․”  (Webster's New Collegiate Dict. (9th ed. 1984) p. 934, col. 1, p. 1175, col. 2.)   Therefore, when we seek to identify the Legislature's true purpose in subdivision (f) of section 3562, we can reasonably assume that, by its use of the term “subordinate” it meant something less than primary.   Accordingly, in order to answer the riddle posed by subdivision (f), we conclude that one must look to the “primary purpose” of the residency program, thus, contrary to the Board's position, we find The Essential's statement persuasive.

In its decision, PERB states that “[c]overage of housestaff under the Act will thus provide them with the opportunity to participate fully in the determination of the conditions of employment which affect them such as wages and working hours.”

However, in the medical-academic environment, such matters are properly regarded as a part of the curriculum.   For example, in the residency program, long hours are a vital part of discipline in the educational process.   As noted by the hearing officer in his findings, the treatment of disease is often a 24-hour process.   Certain medical situations, usually emergencies, often occur during the late and morning hours.

PERB concedes that the “scope of negotiations” provided by HEERA has yet to be determined and that the “negotiating relationship may encompass a variety of interests beyond the traditional subject of wages and hours.”  (Emphasis added.).

Here, again, we believe that the Board has missed the point.   For one thing, subdivision (q) of section 3562 of HEERA limits the scope of representation to wages, hours of employment and other terms and conditions of employment.   Consideration of a “variety of interests” suggests agenda items which are beyond the permissible scope of negotiations, as circumscribed by subsection (q).   Also, for reasons already pointed out, the matter of hours of employment in a residency program does not lend itself to treatment in the “traditional” manner, thus those involved in negotiations might well be accused of trespassing in an area reserved to academia.

Finally, PERB concludes that “the educational mission of the University as it relates to the delivery of the highest quality of health care services and research is best served by granting housestaff the collective negotiation rights outlined in HEERA.”

We do not view this as the function of the University's residency program.   Rather, it is a program designed to educate and train graduate students in specialty areas of medicine and health care so as to better qualify them for the practice of their profession.   Rendition of health care services, in a hospital setting, is a vital but nevertheless incidental part of that educational program.   A resident's ultimate employment as a practicing physician is totally dependent upon satisfactory completion of that phase of his education.

Perhaps our resolution of this matter is best summarized in the thoughts set forth in a decision by the Supreme Court of Pennsylvania:  “[W]hile [housestaff] herein are clothed with the indicia of employee status, the true nature of their reason for being at [petitioner's hospital] negates their employee status.  [Housestaff] do not go to work at [petitioner's hospital] in the true bargained-for exchange normally associated with the employer-employee relationship.  [Housestaff] are not primarily seeking monetary gain, but rather are attempting to fulfill educational requirements, either to initially practice medicine, or obtain certain specialties in the medical field.”  (Pa. Ass'n of Int. & Res. v. Albert Einstein Med. Ctr., supra, 470 Pa. 562, 369 A.2d 711, 714 [92 L.R.R.M. 3410, 3412].)

We conclude that the services rendered by students enrolled in the University's residency program are subordinate to their educational objectives, hence such students are not employees for purposes of HEERA.

The PERB decision here under review is annulled, and the case is remanded to PERB with directions to render a new decision, consistent with the views expressed herein, holding that medical housestaff are not entitled to collective bargaining rights under HEERA.


FOOTNOTE.   Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part I.

1.   All subsequent statutory references herein are to the Government Code, unless otherwise specified.

2.   Employees of these institutions were among the last public employees in California to be accorded public bargaining rights.   Thus, in 1976, employees of public school systems in the state, except employees of the University of California or California State University (see § 3540.1, subd. (k)) were granted collective bargaining rights under the Educational Employment Relations Act (EERA).  (§§ 3540–3549.3.)   In 1978, state civil service employees, a category which also excludes employees of the University of California and California State Colleges (Cal. Const., art. VII, § 4, subd. (h)) acquired collective bargaining rights under the State Employer-Employee Relations Act (SEERA) in 1978.  (§§ 3512–3524.)

3.   See footnote * ante.

4.   Subdivision (o ) of section 3562 is derived from and a verbatim quotation of section 2(12) of the NLRA.

5.   See e.g., House Officers Assn. v. University of Nebraska Medical Center (1977) 198 Neb. 697, 255 N.W.2d 258 [95 L.R.R.M. 3346];  Regents of Univ. of Mich. v. Michigan Emp. Rel. Com'n, supra, 204 N.W.2d 218;  [82 L.R.R.M. 2909];  City of Cambridge, Cambridge House Officers Ass'n (1976) 2 M.L.C. 1450 (Mass.Labor Cases);  Wyckoff Heights Hosp. (1971) 34 S.L.R.B. No. 81;  Albert Einstein College of Med. of Yeshiva Univ. (1970) 33 S.L.R.B. No. 86;  Bronx Eye Infirmary Inc. (1970) 33 S.L.R.B. No. 41;  but see, e.g. Pa. Ass'n of Int. & Res. v. Albert Einstein Med. Ctr. (1977) 470 Pa. 562, 369 A.2d 711 [192 L.R.R.M. 3410];  University of South Florida College of Medicine (1982) Florida Public Employees Relations Commission, Dec. No. 825–103 [4 N.P.E.R. 10–13166].

6.   PERB states that “housestaff generally spend more than three-quarters of their time in clinical activities, often reacting to life-threatening situations with little or no supervision.”

ROUSE, Associate Justice.

KLINE, P.J., and SMITH, J., concur.