Carpenters' District Council of Detroit, Etc.

National Labor Relations Board - Board Decisions

Dec 26, 1963

145 N.L.R.B. 663 (N.L.R.B. 1963)

CARPENTERS' DISTRICT COUNCIL OF DETROIT, ETC. 663
concerted and union activities among its employees , Respondent has engaged in
and is engaging in unfair labor practices within the meaning of Section 8(a) (3)
and (1 ) of the Act.
(5) By interfering with , restraining, and coercing its employees in the exercise of
the rights guaranteed them in Section 7 of the Act, Respondent has engaged in and
is engaging in unfair labor practices within the meaning of Section 8(a) (1) of the
Act.
(6) The aforesaid unfair labor practices are unfair labor practices affecting com-
merce within the meaning of Section 2(6) and (7) of the Act.
[Recommended Order omitted from publication.]
Carpenters ' District Council of Detroit , Wayne and Oakland
Counties and Vicinity , United Brotherhood of Carpenters and
Joiners of America, AFL-CIO, and L. M. Weir , Harold Veach
and Marvin Grisham and Excello Dry Wall Co. Cate No. 7-CB-
917. December 06, 1963
DECISION AND ORDER
On October 1, 1962, Trial Examiner Thomas F. Maher issued his
Intermediate Report in the above-entitled proceeding, finding that the
Respondents had not engaged in unfair labor practices and recom-
mending that the complaint be dismissed in its entirety, as set forth
in the attached Intermediate Report. Thereafter, the General Coun-
sel filed exceptions to the Intermediate report and a supporting brief;
Respondents filed a brief in support of the Intermediate Report.
The Board has reviewed the rulings made by the Trial Examiner at
the hearing and finds that no prejudicial error was committed. The
rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the exceptions, the briefs, and the entire record in
the case, and finds merit in the exceptions. Accordingly, the Board
adopts the findings of the Trial Examiner, but not his conclusions or
recommendations.
The Trial Examiner concluded that it was not a violation of Section
8(b) (3) for Respondents to insist, as a condition to entering into a
collective-bargaining agreement with the Charging Party, Excello
Dry Wall Co., that the latter establish a fund of $2,500 to be deposited
in a trust or "escrow"account, as security for the payment of wages
to employees of Excello and of contributions to benefit funds on their
behalf. We do not agree.
Since 1940, the Board has consistently and repeatedly held, without
qualification and with court approval, that it is an unfair labor prac-
tice for either an employer or a union to insist that the other party post
a performance bond or its equivalent as a condition precedent to enter-
145 NLRB No 64.
664 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ing into a collective-bargaining agreement.' Performance bonds, the
Board has said, are not mandatory subjects of collective bargaining
because they are not within the area of "wages, hours and other terms
and conditions of employment." 2 The statutory obligation to bargain
is not limited and cannot be limited to financially responsible parties,
whether employer or labor union. That this construction of the cited
phrase is in accord with the intent of Congress is evident from the fact
that, although well aware of the Board rule that it was an unfair labor
practice for an employer to insist upon a demand for a performance
bond, Congress in amending the Wagner Act in 1947 did not repudiate
these Board decisions.'
The Trial Examiner attempted to distinguish the foregoing Board
and court decisions on the basis that, whereas in those cases the re-
spondents sought security funds to insure compliance with contract
obligations generally, in the present case the Respondents sought such
a fund to insure payment of wages and benefits only, and specifically
because the need for such a fund had been demonstrated by earlier
evidence of delinquency on the Employer's part. We do not believe
that the attempted distinction is valid. In the Con2vay's Express case4
the employer had repeatedly issued bad checks to employees with the
result that the employees had remained unpaid for periods of from
2 to 4 weeks, and the employer at one time had been $3,000 in arrears
for wages. During negotiations to settle a strike, the respondent union
insisted that it would not settle unless the employer posted a $5,000
performance bond. The Board held that by insisting on the bond
'Jasper Blackburn Products Corporation , 21 NLRB 1240 ( 1940 ) ; Scrapto Manufactur-
ing Company , 36 NLRB 411 (1941) ; Interstate Steamship Company, 36 NLRB 1307
(1941 ) ; Dalton Telephone Company, 82 NLRB 1001 ( 1949 ), enfd 187 F 2d 811 (C A 5),
cert denied 342 U S. 824 , International Brotherhood of Teamsters , etc., Local 294,
A F of L. (Henry V. Rabouin doing business as Conway 's Express ), 87 NLRB 972
( 1949 ) ; E A. Taormina, et al, d/b/a Taormina Company , 94 NLRB 884 ( 1951 ), enfd.
207 F. 2d 251 (C.A. 5) ; North Carolina Furniture , Inc., 121 NLRB 41 (1958 ) ; Cosco
Products Company, 123 NLRB 766 ( 1959 ), enforcement denied on other grounds 280 F 2d
905 (CA. 5 ) ; Local 164, Brotherhood of Painters , Decorators and Paperhangers of
America, AFL-CIO; et al. (A. D. Cheatham Painting Company ), 126 NLRB 997 ( 1960),
enfd 293 F 2d 133 (CA D C ), cert. denied 368 U . S. 824; F. MacKenzie Davison , et at.,
d/b/a Arlington Asphalt Company, 136 NLRB 742 ( 1962 ), enfd . 318 F 2d 550 (C.A 4) ;
American Compress Warehouse, Division of Frost-Whited Company, Inc, 144 NLRB 433
(1963) ; see also Wooster Division of Borg-Warner Corporation, 113 NLRB 1288, 1292
( 1955 ), enfd. 356 U . S. 342.
2 ". . . to bargain collectively is the performance of the mutual obligation of the em-
ployer and the representative of the employees to . . . confer in good faith with respect
to wages, hours , and other terms and conditions of employment . ( Section 8(d)
See the cases cited in footnote 1, supra.
3 See H. Rept 245, 80th Cong ., 1st sess ., pp 19-20, Leg. Hist. of the Labor Management
Relations Act, 1947 ( G.P 0., 1948 ), pp 310-311.
'International Brotherhood of Teamsters , etc, Local 294, A.F. of L. (Conway's Ex-
press ), supra ( Member Houston dissenting).
CARPENTERS' DISTRICT COUNCIL OF DETROIT, ETC . 665
the union had violated Section 8(b) (3) of the Act. The Board ex-
plained (87 NLRB 972, 978-979) :
The question is whether this demand for a bond was consistent
with the Union's obligation to bargain under Section 8(b) (3).
We think it was not. The Board, as early as 1940, held in the
Blackburn case that by demanding that a union post a perform-
ance bond, an employer "sought to prefix the fulfillment of its
statutory obligation with a condition not within the provisions,
and manifestly inconsistent with the policy of the Act," and there-
fore violated Section 8(5) of the Act. We believe that the same
rule should apply in the converse situation, where the demand for
a performance bond is made by a union rather than by an employer
It is true that the Union's insistence upon 'a bond, in the
circumstances of this case, was not wholly unreasonable and
that it was not, so far as the record shows, designed to frustrate
the settlement of the strike. However, the Union's good faith in
advancing this proposal is not decisive of the issue. It is the
tendency of such proposals to "delay or impede or otherwise cir-
cumscribe the bargaining process," which renders them improper.
[Footnotes omitted.]
Conway's Express is essentially this case. In both, there was sub-
stantial evidence of employer default in wage payments, perhaps
more so in Conway's Express than in the present case, and the need
for some form of wage guarantee to employees. In both cases, pay-
ments delinquency was the motivating factor in the union's demand
for a performance bond. Despite the evidence of this delinquency,
the need and reasonableness of the union's demand for a performance
bond, and the union's good faith, the Board in Conway's Express
nevertheless found that the union's insistence upon the bond as a con-
dition of entering into a collective-bargaining contract was a violation
of the union's duty to bargain.5
Moreover, a reading of the other cited cases in addition to Conway's
Express fails to indicate that the Board considered in any way sig-
nificant the precise scope of the performance bond in deciding that
5 The Trial Examiner argues that ConwaWs Express is not relevant because the demand
was for "an assurance of performance of contract provisions , and not, as here , a guarantee
that employees be paid wages and benefits agreed to by their employer ." There was in
Conway's Express no evidence as to the precise language of the performance bond sought
by the union . But both the Board's Decision and the Trial Examiner 's Intermediate Re-
port in that case show that it was the employer's wage defaults which occasioned the
demand for the performance bond and that it was this alleged justification which was
alone considered in determining whether the demand for the bond was lawful . The Trial
Examiner found that in view of the wage defaults , "the Union was not making an un-
reasonable demand for the performance bond. Rabouin had repeatedly issued bad checks
to his employees , and had been weeks behind in paying them." ( 87 NLRB at 1017.) The
Board held that this circumstance did not excuse insistence upon the bond . ( 87 NLRB
at 979 ) The Board 's language in doing so , as quoted above, is broad enough to cover
insistence upon a narrow as well as a abroad performance bond.
666 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
insistence on such a bond was unlawful. Logically it is difficult to
differentiate between a performance bond to secure payment of wages
and benefits, and a performance bond to secure performance of any
other term or condition of employment.6 A no-strike clause is a "con-
dition of employment" and as such a mandatory subject of collective
bargaining. Yet the Board has held that insistence upon a perform-
ance bond or its equivalent to insure compliance with a no-strike
clause, even where the proposal is reasonably based and made in good
faith, is a violation of the employer's duty to bargain.' Similarly, a
union's insistence upon a performance bond "as a protection against
possible [employer] violations of the terms or conditions of [a]
collective agreement" was held to be a violation of the union's obliga-
tion to bargain, even though the reasonableness of such demand was
evidenced by the fact that similar performance bonds were common in
the industry.8
The Trial Examiner also relies on certain language in the Arlington
Asphalt decision 9 to justify his dismissal of the complaint. In that
case the respondent employer insisted as a condition to agreement that
the contract include a clause whereby the union would agree to indem-
nify the employer against loss flowing from possible retaliatory action
by rival unions that might result from the employer's signing a
collective-bargaining contract with the bargaining representative.
The Board found that the employer' s insistence upon the inclusion of
this clause constituted a violation of Section 8 (a) (5) of the Act. The
Board said (136 NLRB 742, 745-746) :
. . . the Respondent's indemnity proposal does not concern it-
self with the relations between Respondent and its employees.
Rather, it deals with Respondent's relations with other employers
and unions.
In principle, the instant case is not much different from those
involving performance bonds. Under these decisions, it is well
established that such subjects are not deemed mandatory and
that an employer's insistence upon such a provision as a condi-
tion to signing an agreement violates Section 8(a) (5) 6 Like-
wise, a union violates Section 8 (b) (3), the corresponding refusal-
to-bargain section, by insisting that an employer post a, perform-
6 Jasper Blackburn Products Corporation, 21 NLRB 1240 ; Dalton Telephone Com-
pany, 82 NLRB 1001, enfd . 187 F. 2d 811 (C.A. 5) ; E. A. Taormina et at, d/b/a
Taormina Company, 94 NLRB 884 ; Cosco Products Company, 123 NLRB 766
6 See Judge Edgerton' s dissenting opinion in Local 164 , Brotherhood of Painters, Deco-
rators and Paperhangers of America , AFL-CIO; et al. (A. D Cheatham Painting Com-
pany ) v. N.L R.B , supra
7Scnwpto Manufacturing Company, 36 NLRB 411, 426-427; North Carolina Furniture,
Inc, 121 NLRB 41.
8 Local 164, Brotherhood of Painters , etc. (A, D. Cheatham Painting Company ), supra.
OF. MacKenzie Davison, et al, d/b /a Arlington Asphalt Company , 136 NLRB 742,
enfd 318 F 2d 550 (CA. 4).
CARPENTERS ' DISTRICT COUNCIL OF DETROIT, ETC. 667
ante bond as a condition precedent to executing a collective
bargaining agreement.' Thus, under the precedents, Respond-
ent's indemnity proposal cannot be found to be a mandatory
subject because it, like the performance bond, is related to se-
curity for the contracting party (the Respondent) rather than
relating to a benefit or security for the employees. [Emphasis
supplied.]
7 Henry V. Rabonsn d/b/a Conway 's Express , 87 NLRB 972 ; Local 164 et at,
Brotherhood of Painters , Decorators and Paperhangers of America v N L R.B
(A. D. Cheatham Painting Co.), 293 P. 2d 133 (CA D.C. 1961 ), enfg 126 NLRB 977,
cert denied 368 U S. 824.
The phraseology was not felicitous, but our understanding of the
italicized language, in its context, is that it was intended only to
emphasize that the indemnity clause there in question, certainly no
less than a performance bond, was by its very nature a nonmandatory
subject of bargaining. The implication drawn by the Trial Examiner,
that by this dictum the Board intended to differentiate between per-
formance bonds relating to benefits for employees, and other per-
formance bonds, is not justified by the full opinion. The cases cited
in the quotation stand squarely for the proposition that insistence
upon any performance bond by either employer or labor union is
per se an unlawful refusal to bargain. In fact, in the cited Conruway's
Express case, as pointed out above, the respondent union sought a
performance bond because of the employer's delinquency in making
wage payments to employees-the very situation in the present case.
To ascribe to the quoted language, therefore, the interpretation of
the Trial Examiner, would do violence to the precedents upon which
it relies and whose holdings it seeks to emphasize.
Notwithstanding the foregoing precedents, it is possible as a matter
of logic to make a reasonable and persuasive argument against finding
a violation here. Our colleagues have made it. Moreover parties
are voluntarily agreeing upon the inclusion of some bond provisions
in their collective-bargaining contracts, just as they are including
other matters which the Board has uniformly held not to be nnan-
datory bargaining subjects.
But with all due respect for the view of our colleagues to the con-
trary, we find no compelling reason here to alter the Board's con-
sistent interpretation of the statute concerning performance bonds.
We are not persuaded that, because some remote connection with
wages, hours, and terms and conditions of employment can be des-
cried, it will foster effective collective bargaining to reverse the prior
rulings and now construe the statute to open the way for unlimited
demands for wage bonds from employers and surety bonds against
strikes from unions as conditions precedent to concluding bargaining
agreements.
668 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Accordingly, we find, contrary to the Trial Examiner, that by in-
sisting that Excello establish a $2,500 fund as security for the pay-
ment of employee wages and fringe benefits, as a condition precedent
to entering into a collective-bargaining agreement with Excello, Re-
spondents violated Section 8(b) (3) of the Act.
THE REMEDY
Having found that Respondents have engaged in certain unfair
labor practices, we shall order that they cease and desist therefrom
and take certain affirmative action which we deem necessary to effec-
tuate the policies of the Act.
We have found that Respondents, in violation of Section 8(b) (3)
of the Act, refused to bargain with Excello Dry Wall Co., by re-
quiring as a condition to entering into a collective-bargaining agree-
ment, that Excello establish a fund as security for the payment of
employee wages and benefits. Accordingly, we shall order Respond-
ent labor organization to cease and desist from insisting upon the
creation of such fund and to bargain collectively upon request with
Excello, and, if an understanding is reached, to embody such under-
standing in a signed agreement.
CONCLUSIONS OF LAW
1. Carpenters' District Council of Detroit, Wayne and Oakland
Counties and Vicinity, United Brotherhood of Carpenters and Joiners
of America, AFL -CIO, is a labor organization within the meaning
of Section 2(5) of the Act.
2. At all times material herein, L. M. Weir, Harold Veach, and
Marvin Grisham acted as agents for the aforenlentioned labor
organization.
3. Excello Dry Wall Co. is engaged in commerce within the mean-
ing of Section 2(6) and (7) of the Act.
4. All journeymen carpenters and apprentices employed by Excello
Dry Wall Co., in the city of Detroit, its suburbs and surrounding
area, excluding office clerical employees and supervisors as defined
in the Act, constitute a unit appropriate for the purposes of collective
bargaining within the meaning of Section 9 (b) of the Act.
5. At all times material herein, the Respondent labor organization
has been the exclusive representative of all employees in the aforesaid
unit for the purposes of collective bargaining with respect to wages,
hours, and other terms and conditions of employment.
6. By insisting, as a condition precedent to entering into a collective-
bargaining agreement with Excello Dry Wall Co., that the Company
establish a $2,500 fund as security for the payment of wages to em-
ployees and contributions to employee fringe benefit funds, the Re-
spondents have engaged in unfair labor practices in violation of
Section 8 (b) (3) of the Act.
CARPENTERS ' DISTRICT COUNCIL OF DETROIT, ETC. 669
7. The aforesaid unfair labor practices having occurred in connec-
tion with the Company's business as set forth above, have a close,
intimate, and substantial relation to trade among the several States,
and substantially affect commerce within the meaning of Section 2(6)
and (7) of the Act.
ORDER
Upon the entire record in this case, and pursuant to Section 10 (c) of
the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that Respondents L. M. Weir, Harold
N. Veach, Marvin Grisham, and Carpenters' District Council of
Detroit, Wayne and Oakland Counties and Vicinity, United Brother-
hood of Carpenters and Joiners of America, AFL-CIO, and the lat-
ter's officers, agents, representatives, successors, and assigns, shall:
1. Cease and desist from requiring Excello Dry Wall Co. to estab-
lish a fund to insure the payment of employee wages and contributions
to fringe benefit funds as a condition precedent to entering into a
collective-bargaining agreement with the said Company.
2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act :
(a) Upon request, Respondent Union shall bargain collectively
with Excello Dry Wall Co., so long as Respondent Union is the ex-
clusive representative of the employees in the appropriate unit, with
respect to wages, hours, and other terms and conditions of employ-
ment, and, if an understanding is reached, embody such understanding
in a signed agreement, without requiring the Company to establish a
wage-security fund or similar arrangement.
(b) Post at the business offices and meeting halls of Respondent
Union in the Detroit, Michigan, area, copies of the attached notice
marked "Appendix." 10 Copies of said notice, to be furnished by the
Regional Director for the Seventh Region, shall, upon being duly
signed by the individual Respondents and Respondent Union's repre-
sentative, be posted by Respondent Union immediately upon receipt
thereof, and be maintained by it for 60 consecutive days thereafter, in
conspicuous places, including all places where notices to Respondent
Union's members are customarily posted. Reasonable steps shall be
taken by Respondents to insure that said notices are not altered, de-
faced, or covered by any other material.
(c) Mail to the Regional Director for the Seventh Region signed
copies of the attached notice marked "Appendix," for posting, the
Company willing, at its offices and at construction sites where em-
ployees represented by Respondent Union are employed. The notices
shall be posted on bulletin boards or other places where notices to
10 In the event that this Order is enforced by a decree of a United States Court of
Appeals, there shall be substituted for the words "A Decision and Order" the words "A
Decree 6f the United States Court of Appeals, Enforcing an Order."
670 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
employees are customarily posted and shall remain posted for 60 days
thereafter. Copies of the notice, to be furnished by the Regional Di-
rector for the Seventh Region, shall, after being signed by Respondents
or their representatives, be forthwith returned to the Regional
Director.
(d) Notify the Regional Director for the Seventh Region, in
writing, within 10 days from the date of this Order, what steps have
been taken to comply herewith.
MEMBERS BROWN and JENKINS, dissenting :
The question with which we are here confronted is whether the
Union violated its statutory duty to bargain when it demanded, and
then struck to obtain acquiescence in its demand, that the contract
include a provision requiring the Employer to place in escrow, with
a mutually acceptable third party, a deposit of $2,500 to assure timely
payment of wages to employees and of contributions to their com-
mon vacation, holiday, pension, health, and welfare funds.
In evaluating this situation the majority, in our view, accords too
much weight to a label. Thus, our colleagues are, in effect, holding
that whenever the form of a demand may be construed as in the
nature of a performance bond, that demand is necessarily outside
the area of a mandatory subject of collective-bargaining and insistence
upon such demand is per se an unlawful refusal to bargain. This
was precisely the pitfall which the Supreme Court warned against
in American National Insurance," where, after noting that ". . . at
least some of the matters covered by the management functions clause
proposed by respondent are conditions of employment which are
appropriate subjects of collective bargaining under Sections 8 (a) (5),
8(d), and 9(a) of the Act . . ." the Court rejected the Board's per se
holding with respect to the management functions clause, saying :
The duty to bargain collectively is to be enforced by applica-
tion of the good-faith bargaining standard of Section 8(d) to
the facts of each case rather than by prohibiting all employers
in every industry from bargaining for management functions
clauses altogether.
Thereafter, the Supreme Court, in Borg-R'arner,'2 provided further
guidelines for testing whether the statutory obligation to bargain
has been met. In that case it pointed out that if disagreement is
within the statutory area of "wages, hours, and other terms and con-
ditions of employment" neither party is legally obligated to yield.
In determining whether the ballot clause proposed therein involved
a mandatory or permissive subject for bargaining, the Court applied
the test of whether it ". . . regulate[d] the relations between the
"American National Insurance Co., 343 U. S. 395, 408.
12 NL.R.B. v. Wooster Division of Borg-Warner Corporation, 356 U.S. 342, 349.
CARPENTERS' DISTRICT COUNCIL OF DETROIT, ETC. 671
employer and the employees ..." and found the clause not within
the definition of subjects for mandatory bargaining because it
"deal[t] only with relations between the employees and their
union . . . ."
In similar cases subsequent to Borg-Warner, the Board and courts
have utilized the "relationship test" in determining whether the sub-
ject of a contract proposal is within the scope of "wages, hours, and
other terms and conditions of employment." 18 In doing so, the Board
has reiterated that "included in the scope of [this phrase] ... are all
emoluments of value or other benefits accruing to employees out of
their relationship with their employer." 14 And, since "it is the
particular proposal, not merely the problem to which it is addressed,
that must concern `wages, hours, and other terms and conditions of
employment' ..." 15 the court in Cheatham 1s deemed it appropriate
to determine who would be the beneficiary of the performance bond
proposed there. The court, in affirming that the contract clause in-
volved did not embrace a subject within the scope of mandatory
bargaining, observed ,that :
... the union was demanding a bond which might be forfeited
and the proceeds paid to the union should the contractor commit
any "substantial breach" of the agreement or fail to comply
"with any of the terms or conditions of employment specified
thereunder." The union itself in proposing the language clearly
recognized that terms or conditions of employment constitute
subjects quite apart from liability to attach by virtue of the
terms of the bond.
Then, in Arlington Asphalt'17 the Board, relying upon Borg-
Warner, found :
... the Respondent's indemnity proposal does not concern itself
with the relations between Respondent and its employees. Rather,
it deals with Respondent's relations with other employers and
unions.
... Respondent's indemnity proposal cannot be found to be a
mandatory subject because it . . . is related to security for the
mLocal 164, Brotherhood of Painters , etc. (A. D. Cheatham Painting Company), 126
NLRB 997 , enfd 293 F . 2d 133 (C.A.D.C.)), cert. denied 368 U.S. 824 ; F MacKenzie
Davison, at at., d/b /a Arlington Asphalt Company , 136 NLRB 742, enfd. 318 F. 2d 550
(C.A. 4) ; Detroit Resilient Floor Decorators Local Union No. 2265 , etc (Mill Floor
Covering , Inc.), 136 NLRB 769, 771 ; American Compress Warehouse, Division of Frost-
Wluted Company, Inc., 144 NLRB 433
14 See Board opinion in Mill Floor Covering, Inc., supra.
is Court decision in Arlington Asphalt, supra, in slip decision at p 10
1e Footnote 13, supra. The Board had found a similar test appropriate in evaluating a
"residence requirement" clause, finding that it was one relating "to the conditions of
employment of employees outside the unit represented by [the union] and . . . therefore
not a mandatory subject of bargaining."
17 Footnote 13, supra.
672 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
contracting party (the Respondent) rather than relating to a
benefit or security for the employees. [Emphasis supplied.]
The Fourth Circuit Court, in affirming the Board,18 quoted the above
language with approval.
Contrary to the suggestion of the majority, the phraseology used
by the Board in Arlington which was adopted in toto by the court was
not unintended. Rather, it is clear from the foregoing that the "rela-
tionship test" was purposefully utilized. Indeed it was specifically
advanced as the principal argument in the Board's brief to the court.
It was based upon and is consistent with the approach used in Borg-
Warner as applied by the Court of Appeals for the District of Co-
lumbia in the Cheatham case.
Consideration of the demand in the instant case in light of the
foregoing requires the conclusion that the "wage deposit" proposal
of the Union was a "mandatory" subject of bargaining concerning
which it could lawfully insist to a stage of impasse. Thus, it related
to a benefit or security for the employees. It dealt with wages of
the employees and involved when and how wages were to be paid to
them. It was not payable to and for the security of one of the con-
tracting parties. Instead, it was a deposit to assure timely payment
to employees of wages and fringe benefits if the Employer failed to
make such payment in the normal fashion. In other words, it was not
an indemnification of one of the parties for breach of the contract,
but was merely an 'alternate mode of wage payments to the beneficiaries
of the contract, the employees.19
According to our colleagues, they have difficulty in differentiating
between a "wage deposit" to secure payment of wages and benefits
such as is involved here and a bond to secure performance of any
other term or condition of employment-for example, bonds to insure
compliance with a no-strike clause. They point out that the Board
has held insistence by an employer upon obtaining the latter type of
bond unlawful despite the fact that a no-strike clause is a condition of
employment and a mandatory subject. In our view, they fail to
recognize that, unlike the present case, the bonds to secure performance
of the no-strike clauses in the cases to which they refer 20 were for the
protection of one of the contracting parties, i.e., the employer, and
not, as here, a deposit for the payment of wages to the employees.
19 Footnote 13, supra, slip decision at p. 10.
19 The Conway's Express case, relied upon so heavily by the majority, is distinguishable
from the instant one because the intent of the bond demanded there was to afford the union
security against possible defaults by the employer It was not payable directly to the em-
ployees as wages but to the contracting party demanding the security of a bond. Moreover,
even If there were no factual differences between this case and Conway's the more recent
Supreme Court decisions have controlling weight here rather than any prior Board
decision.
20 See footnote 7, supra.
CARPENTERS' DISTRICT COUNCIL OF DETROIT, ETC. 673
However, the fact that the proposal in this case involved a "manda-
tory" subject is not dispositive of the matter. For, it is necessary to
evaluate the circumstances in this case in terms of the presence or
absence of good faith on the part of the Union in advancing and press-
ing the proposal.21
It affirmatively appears here that the demand was an outgrowth
of a history of past delinquencies in which this Employer had failed
to make fund contributions for as long as 14 months, accumulating
arrears in amounts equal to 5 months' payments to the employees'
funds. Further, the Employer had failed to pay the employees on
paydays and had departed from the basis for computing pay specified
in the existing contract. It was with this history that the Union
sought to deal when it proposed as one of the terms of the new contract
the establishment of a "wage deposit" to assure prompt and full pay-
ment of fringe benefit contributions and of the wages due the em-
ployees. Moreover, the record is devoid of any evidence that in bar-
gaining with respect to the proposal the Union acted in bad faith.
Accordingly, it is clear that the Union espoused the proposal and
negotiated with respect to it in good faith.22
As support of their per se approach , our colleagues contend that nothing in the cases
dealing with performance bonds indicates that the Board considered in any way significant
the circumstances involved or the precise scope of the proposal. We do not agree w +h
their premise , nor can we accept their argument as persuasive In addition to the v°iid
distinction set forth by the Trial Examiner herein (the "relationship test") it should be
noted that the Board 's conclusion in the bulk of those cases relied upon by the majority
turned upon a finding of bad faith based on such factors as context and content For
example, several involved advancing a bonding proposal as a condition precedent to enter-
ing into negotiations on all other bargainable subjects . It is well settled that the mere
fact that a given subject is a "mandatory " one does not leave a party free to insist that
agreement be reached on that disputed matter before bargaining may proceed on other
"mandatory" subjects . See McGregor t Werner, Inc , 136 NLRB 1306, 1313-1315, and
cases cited therein. Others involved introduction of demands in a manner viewed as pur-
poseful "harassment" or requesting a bond in an amount considered "unreasonably drastic"
in the circumstances All are recognizable as subject to other cardinal principles testing
the existence of good-faith bargaining apart from any question of the "mandatory" status of
the contract proposal . Further, some of those cases involved other conduct demonstrating
bad faith and the finding of illegality rested upon the "totality" of the bargaining approach
Moreover, what the Board may have done or failed to do in this connection before the
Supreme Court' s decisions referred to herein does not justify refusing to apply the prin-
ciples established by the Court to this case.
i2 It is not at all unusual for parties in this industry to provide in their agreements for
bonds covering wage payments . Such bonds are as directly concerned with "rates of pay,
wages . . . or other conditions of employment" in Section 9(a) of the Act as are seniority
and other job protection provisions And they certainly are as immediately involved with
"wages" as "a group insurance program . . . [that] provides a financial cushion in the
event of illness or injury arising outside the scope of employment " (W. W Cross and
Company, Inc v. N.L R.B , 174 F. 2d 875, 878 (CA. 1) ; Richfield Oil Corporation v.
N.L R.B., 231 F. 2d 717, 724 (C.A DC.), cert. denied 351 U. S. 909 ; cf Inland Steel Com-
pany v. N.L.R .B., 170 F. 2d 247, 250-255 (C.A. 7), cert denied 336 U.S. 960) Indeed,
since 1935 ( see the Miller Act, 40 U.S.C. 270 ( a)-(d), which in effect expanded its prede-
cessor Heard Act of 1895) the Congress has required all contractors on Government con-
struction contracts exceeding $2,000 to furnish inter alia a "payment bond" as a guarantee
for wage claims of affected employees . Of. MacEvoy v. U S., 322 U S. 102 ; U S. v. Carter,
353 U.S. 210. Needless to say, thousands of such Government contracts are outstanding
with a dollar value in the billions.
734-070-64-vol. 145-44
674 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
It is our view that the Supreme Court decisions require utilization
of a case by case approach in determining the "mandatory" status of
specific bargaining proposals, rather than a per se approach. We be-
lieve that application of a Procrustean standard as to what constitutes
a mandatory subject renders a serious disservice to the collective-
bargaining process. We are mindful of the fact that the field of labor
relations is not static but is in a constant state of flux and nowhere is
this more clearly manifested than at the bargaining table where the
content and form of subjects are constantly evolving. This requires
an alertness to new variations which are in reality "emoluments of
value or other benefits accruing to employees out of their relationship
with the employer." Indeed, this approach is consistent with what
the Board majority itself recently emphasized. As stated in the Mill
Floor Covering 23 decision :
The Board is fully aware that the subject matter of bargaining
must reflect the changing conditions of industrial society and the
changing responsibilities of labor and management. The Board
intends to keep pace, through interpretation of the general terms
embodied in Section 8(d), to insure that bargaining for new
forms of "`wages" or for hitherto undeveloped terms or condi-
tions of employment is not restricted .. . .
Moreover, in our view, what may not necessarily be appropriate for
one bargaining table, may be a compelling term at another. Thus,
the nature of the demand itself, the circumstances in which it is put
forth, and the many other variables of a given bargaining context are
all relevant in determining, not only whether a "mandatory" subject
of bargaining is involved, but also whether there is a breach of the
good faith required in bargaining.
In the instant case, however, as we have heretofore indicated, a
test applied by the Supreme Court in Borg-Warner is obviously ap-
propriate to the situation involved. Therefore, in our opinion, there
is no justification for the Board to ignore and refuse to apply that test.
Accordingly, we would, in agreement with the Trial Examiner, find
that there was no violation of Section 8 (b) (3) as a matter of law, and
would dismiss the complaint in its entirety.
23 Footnote 13, supra
APPENDIX
NOTICE TO ALL MEMBERS OF CARPENTERS' DISTRICT COUNCIL OF
DETROIT, WAYNE AND OAKLAND COUNTIES AND VICINITY , UNITED
BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA , AFL-CIO
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, as amended , we hereby notify you that :
CARPENTERS' DISTRICT COUNCIL OF DETROIT, ETC. 675
WE WILL NOT require Excello Dry Wall Co. to establish a fund
to insure the payment of employee wages and contribution to
fringe benefit funds as a condition precedent to entering into a
collective-bargaining agreement with the said Company.
THE UNDERSIGNED LABOR UNION will, upon request, bargain col-
lectively with Excello Dry Wall Co., so long as our labor organiza-
tion is the exclusive representative of the employees in the
appropriate unit, with respect to wages, hours, and other terms
and conditions of employment, and, if an understanding is
reached, embody such understanding in a signed agreement, with-
out requiring the said Company to establish a wage-security or
similar fond as a condition precedent to entering into an
agreement.
The bargaining unit is :
All journeymen carpenters and apprentices employed by
Excello Dry V,Tall Co., in the city of Detroit, its suburbs and
surrounding area, excluding office clerical employees and
supervisors as defined in the Act.
CARPENTERS' DISTRICT COUNCIL OF DETROIT,
WAYNE AND OAKLAND COUNTIES AND VI-
CINITY, UNITED BROTHERHOOD OF CARPEN-
TERS AND JOINERS OF AMERICA, AFL-CIO,
Labor Organization.
Dated---------------- By-------------------------------------
(Representative ) ( Title)
(L Al. WLiR)
(IIAI:oLD VDACII)
-------------------------------------
(MARVIN GaISHAM)
This notice must remain posted for 60 consecutive days from the
date of posting, and must not be altered, defaced, or covered by any
other material.
Employees may communicate directly with the Board's Regional
Office, 500 Book Building, 1249 Washington Boulevard, Detroit,
Michigan, Telephone No. 963-9330, if they have any question concern-
ing this notice or compliance with its provisions.
INTERMEDIATE REPORT
STATEMENT OF THE CASE
Upon a charge and an amended charge filed respectively on April 20 and 30, 1962,
by Excello Dry Wall Co., herein referred to as the Company , the Regional Director
for the Seventh Region of the National Labor Relations Board, herein called the
Board, issued a complaint on behalf of the General Counsel of the Board on June 8,
676 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
1962, against Carpenters ' District Council of Detroit , Wayne and Oakland Counties
and Vicinity , United Brotherhood of Carpenters and Joiners of America , AFL-CIO,
and L. M. Weir, Harold Veach, and Marvin Grisham , Respondents herein, alleging
violations of Section 8(b)(3) of the National Labor Relations Act, as amended
(29 U.S.C., Sec. 151, et seq.), herein called the Act. In their duly filed answer
Respondents , while admitting certain allegations of the complaint , denied the com-
mission of any unfair labor practice.
Pursuant to notice , a hearing was held before Trial Examiner Thomas F. Maher
in Detroit , Michigan , on July 18, 1962. All parties were represented and were
afforded full opportunity to be heard, to introduce relevant evidence , to present oral
argument , and to file briefs with me. Briefs were filed on August 6, 1962.
Upon consideration of the entire record, including the briefs of the parties, and
upon my observation of the witnesses appearing before me , I make the following:
FINDINGS OF FACT
1. THE BUSINESS OF THE EMPLOYER
Excello Dry Wall Co., the Employer herein, is a Michigan corporation with its
office and place of business in Detroit , Michigan , where it is engaged in the installa-
tion of dry wall in new home construction in the Detroit area . In the course and
conduct of its operations during the year ending January 1, 1962, the Company
purchased and caused to be delivered to its jobs materials and supplies valued in
excess of $ 100,000 , of which supplies and materials valued in excess of $50,000
were transported and delivered to said jobs in the Detroit area , and received from
other enterprises and suppliers , each of whom had received the said goods from
points located outside the State of Michigan.
Upon the foregoing factual findings based upon a stipulation of all the parties
to this proceeding , I find that the Company is an employer engaged in commerce
within the meaning of the Act.
IT. THE STATUS OF THE RESPONDENT LABOR ORGANIZATION
It is agreed upon by the parties that Carpenters ' District Council of Detroit,
Wayne and Oakland Counties and Vicinity , United Brotherhood of Carpenters and
Joiners of America , AFL-CIO, is a labor organization within the meaning of
Section 2 (5) of the Act and I so find.
III. THE ISSUE
Whether a demand that an employer post a specified sum to guarantee prompt
and accurate payment of wages and benefit assessments is a mandatory subject of
bargaining.
IV. THE ALLEGED UNFAIR LABOR PRACTICE
A. Facts
The factual basis upon which the issue of this case rests can best be introduced
by the uncontested allegations of the complaint . Thus it is alleged that:
10. Commencing on or about April 2, 1962, and continuing to date hereof, the
Joint Respondents did refuse to bargain with the Company by engaging in the
following acts and conduct.
( a) Insisting that any contract executed pursuant to current negotiations.
contain a clause providing for a performance bond by the Company.
(b) Engaging in a strike of the Company 's employees with an object of forc-
ing the Company to take the action referred to in 10 ( a) above.
This, in the General Counsel's view , constitutes an unlawful refusal to bargain by
insistence to the point of impasse upon a matter that was a voluntary, as distinct
from a mandatory , subject of bargaining.
It is the Respondents ' position , however, that by virtue of certain established'
misgivings which inhibited its bargaining relationship with the Company the rights
of the Company 's employees whom the Respondent Union represented, and the
conditions of employment which the negotiations sought to establish for them,
could only be safeguarded , in futuro, by the inclusion in the contract of a provision
requiring the Company to place $2,500 on deposit with an agreed third party, a
sum adequate to indemnify the employees for the Company's failure to pay them
their agreed -upon wages and/or its failure to make payments to the insurance, vaca-
CARPENTERS' DISTRICT COUNCIL OF DETROIT, ETC. 677
tion, and pension funds established in their behalf. In support of its demand in
this respect and upon the Company's refusal to acquiesce, the Union instituted a
strike of the Company's employees.'
The need for such a safeguard emanates, in Respondents' view, from the history
of its bargaining with the Company. Thus, for example, the Company has been
as much as $12,000 to $14,000 in arrears in its required contribution to the em-
ployees' insurance, vacation, holiday, and pension funds,2 and regularly is in arrears
for at least 2 months. In addition, the Company has been known to violate its
agreement with the Union by paying its carpenter employees a piece rate rather
than the negotiated hourly rate; and indeed on several occasions delayed, by one
day in each case, paying the employees on their prescnbed payday.'
Because of the foregoing circumstances, Respondents state, it sought to insure
the prompt remittance of employee benefit payments and the prompt and agreed-upon
wage payment by the posting of the $2,500 sum. And because of the peculiar and
specific purpose for which it demanded the posting, and due to the unpleasant back-
ground which gave rise to it, Respondents insist that negotiations with respect to
such a posting are so directly related to and a part of the terms and conditions of
the Company's employees' employment as to constitute it a mandatory subject of
bargaining within the purview of the Supreme Court's decision in the Borg-Warner
case .4
B. Analysis and conclusions
The resemblance of this case to the usual variety involving a bargaining demand
for a performance bond is, in my judgment, a deceptive one. At first view the facts
here suggest an affinity with such cases by virtue of their common element the
demand. A second view, however, accents differences in purposes, objective, and
scope, and reveals a group of employees whose wages and fringe benefit payments
in the past have suffered recurring neglect at the Employer's hands, and who seek
for the future, through their chosen spokesmen, assurances that the agreed wages
and fringe benefits will be forthcoming, as and in the manner agreed upon. I am
strongly persuaded to the equities of this second view and recognize clear distinctions
between these circumstances and the facts upon which the cited cases rest.
First, it must be clearly understood that the posting of $2,500 demanded of the
Employer was to assure the accurate and prompt payment of agreed-upon wages,
and also to assure payment of vacation, insurance, and pension contributions into a
fund operating for the express benefit of its employees; it having been established
as a fact that delayed payments and reduced wages rates were frequent complaints.
I The Respondents reply in their answer as follows:
8. That, in response to Paragraphs Ten and Eleven, they admit that for some
period of time, which did not commence on or about April 2, 1962, but has continued
to the present, they did insist that Charles Rubin, operating under the name Excello
Dry `Nall Company or any other name, place on deposit under the control of someone
other than himself (and acceptable to the Union) the sum of $2,500 to insure pay-
ment of the wage rates, pooled vacation and holiday contributions, health and welfare
fund contributions and pension contributions to and on behalf of his carpenter em-
ployees, which rates and contributions are generally required of dry wall contractors
in this area whose employees are represented by the Union and to sign a contract with
the Union setting forth these and other terms and conditions under which carpenters
were to be employed and they admit that, upon refusal of Charles Rubin and Excello
Dry Wall Company to do so a strike was instituted, but they deny that they at any
time refused to bargain, attempted illegally to force the Company to do anything, or
engaged in any unfair labor practice within the meaning of Section 8(b) (3) of
the Act.
2 The employees of the Company, as members of the Union, together with the other
union member-emiployees in the area, participate as beneficiaries in specific funds created
for these purposes and in their behalf by the Union, administered by a joint board of
union and employer representatives, and supported by the per capita contributions of
employers whose employees are thus covered as beneficiaries
8 The foregoing is based upon the credited testimony of Respondent Grisham, and upon
records supplied by the administrators of the several trust funds involved, which records
indicate that never, during the most recent 2-year period, did the Company ever make its
payments on time, and that it frequently was in arrears over 3 months, and as much as
6 months
I N.L.R.B v. Wooster Division of Borg-Warner Corporation, 356 U S. 342.
678 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
It goes without saying, of course, that bargaining as to these wages and fringe
benefits, and as to the manner in which they are to be paid to, or in behalf of, the
employees is bargaining with respect to rates of pay, wages, or other conditions of
employment. As such, this is a mandatory subject matter which the parties may
pursue by insistent demands up to and beyond the point of impasse.5 It is equally
well settled that these insistent demands may be supported by strike action. Consider-
ing these same rates of pay, wages, and other conditions of employment after they
have been "finalized" by a contract, it is likewise settled law that a breach of the con-
tract with respect to them or any one of them may also be protested by strike action
with the aim of enforcing the contract, as written.
In summary, therefore, it may be stated that wages are the continuing subject of
bargaining and that strike action may be availed of to enforce not only the demands
of bargaining, but also the results of it. Now we come to the plight of the employees
here who, based upon experience, were to look with misgivings upon the results of
their bargaining with the Company. What their representatives have done is to insist,
even by recourse to strike, that these employees be assured of their rates of pay,
wages, and fringe benefit fund contributions, when and as agreed upon.
It cannot be said that a demand to the point of impasse for such items, themselves,
or a strike in support of such demand, or even a strike to enforce the items after
they are a part of the contract are breaches of good faith. Nevertheless, I am asked
to conclude that a demand for a showing of good faith, here a demand for monetary
assurances that these very same items (rates of pay, wages, and fringe benefit con-
tributions) will be paid as agreed to, is evidence of bad faith. Unless such a con-
tradiction has the support of explicit precedent, I cannot subscribe to it.
Numerous cases are cited in support of the General Counsel's contention that a
demand for a posted sum is not a mandatory subject of bargaining and hence is
either evidence of bad faith or per se unlawful when it is pursued to the point of
impasse, as here. A review of these cases persuades me that they bear no relevance
to the facts found here.
In certain instances bonds and indemnity are demanded of unions by employers
to protect against loss by violence and precipitate action, and to save harmless from
unwarranted strike action. In other instances bonds or indemnity are demanded of
an employer to protect or indemnify the union against an employer's breach of
contract. In no case referred to me do I find assurances demanded of employers
solely to safeguard employees in the attainment of their wages and conditions of
employment. Because much has been made of the pertinence of these cases a
consideration of them follows:
In Jasper Blackburn Products Corporation, 21 NLRB 1240, 1253, the employer
insisted that the union representative post bond "to uphold his end of the contract."
Quite apart from lacking any stated relationship to wages the need for a perform-
ance bond here was considered by the Board to be specious inasmuch as "none of
the proposals advanced either by the Respondent, or by the Union called for any
performance whatever on the Union's part." Thus, the Blackburn case might well
be viewed as relating to harassment-an element not present in the instant case.
Previously in Valley Mould and Iran Corporation, 20 NLRB 211, 228, 231, the
Board held unlawful the demand that the union post $200,000 as "security for per-
formance of any agreement." But here also the union's performance of any agree-
ment was the subject matter, and not assurance to employees of payment of wages
or benefits, as in the instant case.
In Scripto Manufacturing Company, 36 NLRB 411, 424, the posting of a bond
was demanded of a union to guarantee to the employer "faithful performance of
this agreement and to indemnify the Company against loss or damage resulting from
the Union's failure to comply with the terms hereof." Again there is nothing to
suggest a guarantee to employees of wages and other benefits.
In Interstate Steamship Company, 36 NLRB 1307, 1314, 1320, and footnote 19,
a demand of the union by the employer that both company and union post bond
"in order to insure faithful performance of the contract" was held to be a refusal
to bargain. In so holding the Board noted that such a condition would place
a premium upon a union's financial ability to post a bond-a "handicap on em-
ployees" not contemplated by the Act. Significantly, this case, lumping as it does
all Board cases on the subject into one legal theory, makes financial restriction
upon the union its focus. If this be the rationale then none of the cases cited to
this point are relevant to the instant case, for the bond here is certainly not directed
at a possibly indigent union but against an employer whose accumulated obligations
R N.L.R B. v. Wooster Division of Borg-Warner Corporation , supra.
CARPENTERS ' DISTRICT COUNCIL OF DETROIT, ETC. 679
to his employees have been shown to have frequently exceeded the amount of the
deposit demanded (supra) .6
In Cookeville Shirt Company and P. M. French, 79 NLRB 667, 670, the Board,
relying on the Scripto case, found to be evidence of bad faith the insistence by an
employer upon the union's posting of a bond as a condition of the execution of
any binding agreement. Indemnification of employees for wage and benefit loss was
not in issue there as it is here.
In Tower Hosiery Mills, Inc., 81 NLRB 658, the Board included a new criterion
of bad-faith bargaining. Thus, it described the inclusion in the contract "of an
unreasonably drastic union liability clause." Using this qualification of "reason-
ableness" the Board neither cited previously decided cases as authority nor did it
explain its deviation. In any event a guarantee of wages to employees was not
the subject of the demand.
In Dalton Telephone Company, 82 NLRB 1001, the Board had before it for
determination the legality of an employer's bargaining demand that, as a condition
to the execution of a contract, the union would register with a Georgia court, thereby
making it subject to legal process within the State. In holding such a condition to
constitute a refusal to bargain the Board analogized by referring to its policy respect-
ing demands for performance bonds. Thus, it stated that the demand by an em-
ployer for such a bond could not be made a condition precedent to the bargaining
process because it was calculated to delay and impede the process. Relating this
expressed policy to the facts here, quite apart from the fact that there an employer's
demand for a general performance bond was being referred to, the deposit demanded
here was not required as a condition of initiating the bargaining. Indeed it occurred
during bargaining. And however much of an impediment and a delay as the Board
views the effect of such a demand generally, the demand here was intended to
augment the process by insuring prompt and accurate payment of wages and benefits
agreed upon, not delay them.
In Brown & Root Inc., et al., doing business as a joint venture under the name
of Ozark Dam Constructors, 86 NLRB 520, the Board again had occasion to com-
ment unfavorably upon demands for performance bonds, but under circumstances
not applicable generally; the Board stating that the employer "insisted that the
Union post a drastic performance bond." As in the "unreasonably drastic" bond
demanded in the Tower Hosiery case (supra), it would be indeed difficult to imagine
any circumstance under which a drastic bond would be acceptable; hence the case
has no probative value here.
The performance bond found to have been unlawful by the Board in Standard
Generator Service Company of Missouri, Inc., 90 NLRB 790, 791, 800,7 was also
of such unusual character as to have no relevance here. Thus the employer demanded
a bond to insure the union's performance of certain pledges and obligations, in-
cluding loyalty to the Government, that were completely unrelated to the bargaining
subject matter Such requirements cannot be equated with a guarantee to employees
of their agreed-upon wages and benefits.
In E. A. Taormina, et al., d/b/a Taormina Company, 94 NLRB 884,8 the Board
adopted a per se approach to the demand for a performance bond, departing from
any previous reliance it may have had upon the presence or absence of good faith.9
Thus, it was conceded in that case that the demand for a $50,000 bond " was not
wholly unreasonable" and was not "designed to frustrate bargaining," but rather
was intended for "horse trading" purposes. Nonetheless, it is the tendenrv of such
proposals to delay or impede bargaining, i e., a per se impediment. Albeit a de-
mand for a general performance bond by an employer tends to delay and impede, it
does not follow that a demand by employees' representatives for a deposit to insure
wage and benefit payments does likewise. I would suggest that it achieves an oppo-
site result by eliminating delay.
And most recently, in F. MacKenzie Davison, et al., d/b/a Arlington Asphalt
Companv, 136 NLRB 742, the Board considered an emnloyer's demand, insisted
upon to impasse that as a condition to further bargaining the union, District 50, post
an indemnity bond to protect the employer and his operations from any retaliation
caused by the Local Building Trade Union's resentment against the employer because
it had recognized and negotiated with District 50. The Board rejected the Trial
8 Certainly the financial ability of an employer to pay wages due cannot be equated with
the financial ability of a union to post bond.
7 Enfd 186 F. 2d 606 (C A. 8).
8 Enfd. 207 F. 2d 251 (C A. 5).
But see Tower Hosiery Mills, Inc., discussed supra
680 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Examiner's conclusion that this was a mandatory subject of bargaining which could
thereby be insisted upon to impasse. It held that "the indemnity proposal does not
concern itself with relations between [the Company] and its employees. Rather,
it deals with [the Company's relations] with other employers and unions." For
this reason, the Board concluded, the case "is not much different from those involving
performance bonds." And indeed what was a shortcoming in that case, i.e., lack
of employer-employee relationship by which the Board equated the case with those
previously discussed, is the dominant element in the instant case. Here, unlike
Arlington Asphalt, the $2,500 deposit insisted upon the Union does concern itself
with relations between the Company and its employees, and because it does it
thereby lends strong implicit support for the legality of the Respondent Union's
demands made in behalf of the Company's employees.
So much for the cases which treat of an employer's demand of a union for bond
or indemnity as a condition of bargaining. Suffice it to say in summary what the
Board itself alluded to in Arlington Asphalt. None of them deal with the employer-
employee relationship. More specifically all of them deal with a union's guarantee
that it will perform all its contract obligations. This cannot be construed as a
guarantee or indemnity of wage or benefit payments; and because it cannot, restric-
tions upon indemnity for such purposes must stand or fall on more relevant authority
than has been discussed thus far.
The first of the cited cases in which the union demanded the posting of a per-
formance was International Brotherhood of Teamsters, etc., Local 294, A.F. of L.
(Conway's Express), 87 NLRB 927, 978, 1013, where the union demanded, during
negotiations for the settlement of a strike, that the employer post a performance
bond guaranteeing compliance with its contract with the union. The Board equated
the union's demand with similar employer demands in cited cases discussed above.
Specifically the Board, as in Taormina (supra), departed from any consideration of
good or bad faith, and stood upon a per se concept, stating in language identical to
the Taormina case, that although the demand was not "wholly unreasonable" and
was "not designed to frustrate" negotiations, nevertheless "it is the tendency of such
proposals to delay or impede or otherwise circumscribe the bargaining process."
When applied to the facts in the instant case the Conway's Express holding appears
to have no more relevance than cases wherein the demand was made by an employer.
For once again the demand was for an assurance of performance of contract pro-
visions, and not, as here, a guarantee that employees be paid wages and benefits
agreed to by their employer.
The demand by a union next arose in Detroit Window Cleaners Union, Local 139
of the Building Service Employees' International Union, AFL-CIO (Dealyte Service
Company), 126 NLRB 63. Here, for the first time, was a demand for a "guaranty
on Contract Liability," which included a guarantee (126 NLRB at 73) in behalf of
the company's employees of their wage payments, and the payment of benefits, as
in the instant case. In addition, however, the bond would guarantee the performance
by the employer of "any other obligations under this agreement." As the case also
involved the union's obligation to bargain with the company, as a resigned member
of an employer-association, an issue resolved by the Board in favor of the union,
the union's bargaining obligations with respect to this individual employer were
never reached for determination. In passing, however, the Board did note that the
proposed performance bond clause was not unlawful and that it was a proper subject
for bargaining. I do not read anything in this decision that would suggest, however,
whether or not it was considered a voluntary or a mandatory subject, hence I can
place no reliance upon it for present purposes.
The question of whether a performance bond clause, though legal, was man-
datory or voluntary 10 arose finally in Local 164, Brotherhood of Painters, Decora-
tors and Paper Hangers of America, AFL-CIO; et al. (A. D. Cheatham Painting
Company), 126 NLRB 997, wherein the union demanded that:
As a protection against possible violations of the terms or conditions of this
collective agreement, the undersigned (the Company) agrees to post a bond of
$5,000, which bond will be forfeited and paid to the Union in the event that it
is found by the Joint Trade Board hereunder that said contractor has committed
any substantial breach of this agreement or has failed to comply with any of the
terms or conditions of employment specified hereunder.
The Board held that insistence upon this clause and engaging in a strike to compel
its acceptance was, in the light of the precedents dealing with performance bonds,
10 Of. N.L.R.B. v. Wooster Division of Borg -Warner Corporation, supra.
CARPENTERS ' DISTRICT COUNCIL OF DETROIT, ETC. 681
a refusal to bargain in violation of Section 8(b)(3). Because it is so vigorously
urged that this case is dispositive of the issue at hand a brief commentary would
appear to be in order.
The performance bond here, like the others previously considered, extends beyond
the employer-employee relationship. Thus, it not only was to serve as a guarantee
"of the terms and conditions of employment," as does the required deposit herein,
but it also applies "to any substantial breach of their agreement." And it was this
second feature, "the substantial breach" portion, that the Respondent Union there
sought to equate with mandatory bargaining subjects. Quite consistently, it seems
to me, the Board relied upon earlier performance bond cases and found the sub-
ject not to be a mandatory one. Moreover, the Board considered, as did the Re-
spondent Union, the disciplinary features and the need for them "in the event of a
contract breach" and rejected them. Suffice it to say, discipline was never urged
in the instant case as a reason for the posting of the $2,500. The Union quite
frankly demanded its posting to cover wages and fringe benefits which the Company
had frequently delayed paying. This is discipline only in the broadest sense;
specifically it is a form of indemnification or insurance made necessary by a likeli-
hood of breakdown in the normal employer-employee relationship. Accordingly,
I view the Local 164 case as one, like the others already considered, directed to
the overall contract and not to the specifics of wages and benefit payments. By
virtue of this distinction, therefore, I would deem the case to be inapplicable to
the peculiar facts presented here.il
To summarize, briefly: the issue presented here is a narrow one, dealing not with
the enforcement of contract rights, generally, but with an obligation to employees
to pay them their wages promptly and accurately, and to make their benefit pay-
ments as agreed to. Moreover, the issue is further circumscribed by peculiar cir-
cumstances of an employer who had habitually failed or neglected to reimburse his
employees as agreed to. It is upon this narrowness of the application of the bond-
ing demand and the peculiar circumstances under which it was made and insisted
upon that I would distinguish the factual situation here from any presented in cases
previously decided by the Board. Indeed, I would note in this respect that a study
of the cases reveals no instance where either the Board or any court, including he
Court of Appeals of the District of Columbia Circuit, cf. footnote 11 (supra), has
ever held that a bond to secure payment of wages and benefits only was unrelated to
wages and hence a mandatory subject of bargaining. To hold otherwise would
most certainly result in a morass of contradiction. For if it be settled law that an
employer who changes wage rates, for example, without notice to the employees'
representative, the union, during the term of a contract indulges in bad-faith refusal
to bargain in violation of Section 8(a) (5),12 how then can it be logically maintained,
as General Counsel contends here, that to insist upon monetary assurances that this
type of bad-faith bargaining will not take place constitutes either bad faith itself, or
is otherwise a per se refusal by the Union to bargain, thus violating Section 8(b) (3).
Because I can find in the case neither support for such a contradiction nor for
holding unlawful a demand for a wage guarantee to employees where the need for
such has been established by substantial evidence of delinquency I shall recommend
that the complaint alleging a violation of Section 8 (b) (3) be dismissed
RECOMMENDATION
Upon the foregoing findings and conclusions , it is recommended that the com-
plaint be dismissed in its entirety.
111 am quite aware that the Court of Appeals for the District of Columbia Circuit
(293 F. 2d 133) has enforced the Board's Order in this case and that the Supreme Court
has denied the Union's petition for certiorari (368 U.S 824) Moreover, I note that in
its majority decision the court of appeals states its unwillingness "to say that a condition
precedent to employment is a 'condition of employment,' such as wages and hours, within
the meaning of the statute " As I do not read in the Board's decision any reliance upon
such a legal proposition, nor has the Board stated it elsewhere, I am constrained, with
every due respect for the court of appeals, not to rely upon the stated proposition until it
has been either adopted by the Board or approved by the Supreme Court. Cf Insurance
Agents' International Union, AFL-CIO (The Prudential Insurance Company of Aanerica),
119 NLRB 768, 772
12 Glen Raven Knitting Mills , Inc, 115 NLRB 422, 424.