Coastal International Security, Inc.

National Labor Relations Board - Administrative Judge Opinions

Dec 6, 2007

16-CA-023864 (N.L.R.B. Dec. 6, 2007)

JD(ATL)–39–07
Fort Worth, TX
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
ATLANTA BRANCH OFFICE
COASTAL INTERNATIONAL SECURITY, INC.
and
INTERNATIONAL UNION OF UNITED
GOVERNMENT SECURITY OFFICERS OF
AMERICA, AFL-CIO, AND ITS LOCAL 203
Case 16–CA–23864
Edward B. Valverde, Esq., for the General Counsel.
John A. Ferguson, Jr., Esq., for the Respondent.
Mr. James D. Carney for the Charging Party.
DECISION
Statement of the Case
GEORGE CARSON II, Administrative Law Judge. This case was tried in Fort Worth,
Texas, on October, 2007, pursuant to a complaint that issued on May 29, 2007.1 The complaint
alleges that the Respondent unilaterally changed the wage rate of newly hired employees in
violation of Section 8(a)(1) and (5) of the National Labor Relations Act. The Respondent’s
answer denies any violation of the Act. I find that the Respondent violated the Act as alleged in
the complaint.
On the entire record, including my observation of the demeanor of the witnesses, and
after considering the briefs filed by the General Counsel and the Respondent, I make the
following2
Findings of Fact
I. Jurisdiction
The Respondent, Coastal International Security, Inc., Coastal, a South Carolina
corporation, is engaged in the business of providing security services to federal, state, and local
government agencies and to private businesses throughout the United States. In 2006, it
provided security services to the United States Government in and around Fort Worth, Texas.
During that same period it derived gross revenues in excess of $50,000 for the performance of
services to customers outside the State of Texas and purchased materials valued in excess of
$50,000 directly from points outside the State of Texas. The Respondent admits, and I find and
conclude, that it is an employer engaged in commerce within the meaning of Section 2(2), (6),
and (7) of the Act.
The Respondent admits, and I find and conclude, that International Union of United

1 The charge was filed on September 10, 2004, and was amended on September 24, 2004.
2 Respondent submitted as a post hearing exhibit, the Union’s demand for arbitration dated
March 28, 2005. It is hereby received as Respondent’s Exhibit 6.
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Government Security Officers of America, AFL-CIO, and its Local 203, hereinafter separately
referred to as the International and Local 203 and jointly referred to as the Union, is a labor
organization within the meaning of Section 2(5) of the Act.
II. Alleged Unfair Labor Practices
A. Background
Coastal is currently a wholly owned subsidiary of AKAL Security. In 2003, negotiations
for the acquisition of Coastal by AKAL were in progress, and management officials of AKAL,
including then Director, currently Vice President, of Human Resources Janet Gunn, were
involved in decisions relating to contracts upon which Coastal was bidding, including specifically
the contract relating to security services in and around Fort Worth, Texas. Vice President Gunn
testified that she was involved in that bid proposal and was aware that there was a collective-
bargaining agreement between the Union and Security Consultants Group, Inc., Security
Consultants, the company that was then providing the security services. Coastal was awarded
the contract and began performance of GSA Security Service Contract #GS-7P-00-HHD-0035,
in April 2004. In 2006, the contract was awarded to another company, and Coastal ceased
performing services in the Fort Worth area in early October 2006.
The security personnel already performing services in the Fort Worth area have typically
been hired by each succeeding successful bidder for the contract. Coastal did hire a majority of
the employees formerly employed by Security Consultants, and there was no announcement of
any change in their terms and conditions of employment when those employees were hired.
There is no issue of successorship. Coastal admits that it is a successor under the criteria set
out in NLRB v. Burns Security Service, 406 U.S. 272 (1972). On July 30, 2004, Coastal agreed
to adopt the existing collective-bargaining agreement between Security Consultants and the
Union and both parties agreed to extend the contract until September 30, 2005. On June 6,
2005, they agreed to further extend the agreement until September 30, 2006. Upon the
expiration of the extended collective-bargaining agreement, Coastal and the Union entered into
a new collective-bargaining agreement effective by its terms from September 29, 2006, to
September 30, 2009.
The complaint alleges, and the answer admits, that the appropriate unit is:
INCLUDED: All security officers as defined in Section 9(b)(3) of the National Labor
Relations Act, as amended, employed by the company under the GSA security services
contract #GS-7P-00-HHD-0035 or any successor contract, in Fort Worth, TX, and
surrounding areas
EXCLUDED: All office clerical employees, professional employees, and supervisors as
defined in the Act.
The issue herein is whether Coastal violated the Act by paying $5.15 per hour, the
federal minimum wage, to newly hired employees while they were in training, a period that
typically lasted from four to six weeks.
B. Facts
Security Officer Ray Matthews was initially hired by Sooner Process and Investigation,
Sooner, the predecessor of Security Consultants. Although the employees, at that time, were
not represented by a labor union, Matthews was paid as a security guard while in training.
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Thereafter, the Union became the collective bargaining representative of the employees, and
Sooner and the Union executed a collective-bargaining agreement. Matthews, who became
chief steward, was aware that Sooner continued to pay newly hired employees in training at the
contractual rate. Security Consultants took over the GSA contract in March of 2001, and the
Union and Security Consultants thereafter entered into a collective-bargaining agreement
effective from September 30, 2001, until September 29, 2004. It is that contract that the Union
and Coastal agreed to extend until September 29, 2006.
Security Officer John Mulholland was hired by Security Consultants on January 3, 2002,
and was paid what was, at that time, the rate specified in the collective-bargaining agreement
for security guards of $17.50 an hour plus health and welfare benefits while in training. While
serving as Vice President of Local 203 when Security Consultants was the contractor, there
were two training classes. Employees in those classes showed Mulholland “their pay stubs, and
they were given the same wage that we were, except they were not receiving the uniform
allowance.” Coastal was awarded the GSA contract late in 2003, and, in December 2003,
Mulholland and the other security officers employed by Security Consultants “went to a hotel in
Arlington, [Texas] and we all applied for our own jobs.”
Coastal began performing security services under the GSA contract in April 2004.
Security Officer Michael Montgomery began training with Coastal on October 26, 2004. He was
not paid the contractual rate. Montgomery was informed by Contract Manager Robert Wingerter
that, during training, the wage paid would be $5.15, the federal minimum wage. Wingerter
required the individuals in training “to bring in various documents” that Coastal would submit to
the Texas Department of Public Safety. The Texas Department of Public Safety issued a
license to Montgomery as a “commissioned security officer” on December 14, 2004. Although
Montgomery began training on October 26, 2004, the license states his hire date by Coastal as
November 12, 2004. Montgomery’s wife, Margaret Montgomery, began training on October 25,
2004. Her license as a “commissioned security officer” issued on December 16, 2004. It reflects
that she was hired by Coastal on October 25, 2004, the day she began training. Coastal issued
payroll checks to Michael Montgomery reflecting his employee number and the payment of the
$5.15 wage rate. His W-2 Form for 2004 from Coastal shows his employee number, his
earnings, and deductions for income tax withholding and Social Security tax.
Coastal never informed the Union that it was paying minimum wage rather that the
contractual rate to employees in training; thus, the Union was unaware that this was occurring
until it came to the attention of officers of the Union in the summer of 2004. At that time,
Mulholland was Vice President of Local 203. On September 9, 2004, prior to the October class
in which the Montgomerys were trained, Mulholland, filed a grievance on behalf of “all new hire
personnel” protesting that they “are being paid minimum wage instead of wage rates
established in CBA.” Mulholland presented the grievance to Contract Manager Wingerter. They
met but were unable to resolve the grievance. The Union then filed the charge herein on
September 10, 2004. A complaint was also filed with the Department of Labor.
On September 30, 2004, Nicole Terrell, Human Resource Coordinator for Coastal,
responded to Region 16 concerning the charge filed by the Union in a letter stating that the
“wages received by Officers” were in accord with the collective-bargaining agreement and that
“officers who participate in training time or new weapons qualification” are paid the “agreed
upon hourly rate” set out in the contract. The letter does not claim that individuals in training
were not employees or were not in the unit. The Regional Director, on October 20, 2004,
deferred action upon the charge pursuant to Collyer Insulated Wire, 192 NLRB 837 (1972).
On February 1, 2005, the Region inquired regarding the status of the grievance, and
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Jonathan Rhodes, Human Resource Officer for AKAL Security, the parent company of Coastal,
replied on February 15, 2005, that Coastal had “not since [the deferral] received any
correspondence” from Local 203 concerning “the matter.” The letter does not mention the
pending grievance dated September 9, 2004, filed by Vice President Mulholland. Local 203
President Ray Matthews replied to the Region on March 12, 2005, that the Union desired “to go
to arbitration.” On March 28, 2005, the Union sent a Demand for Arbitration to Coastal.
By letter dated April 5, 2005, Terrell replied to the Union’s Demand for Arbitration stating
that the Union “at no time attempted to present this dispute as a grievance after the decision …
[to defer] on October 20, 2004.” Terrell states that Coastal felt that the arbitration request was
invalid because the Union had not followed the steps of the grievance procedure. On the same
day, Terrell wrote the Regional Director noting that the Region “deferred this case to the
grievance process to be filed in a prompt and timely manner,” and that Coastal had “received
nothing” until the Demand for Arbitration. Neither of Terrell’s letters mentions the grievance
dated September 9, 2004, that Mulholland had presented to Contract Manager Wingerter.
As already noted, the Union, in addition to filing the unfair labor practice charge, also
contacted the Department of Labor. Vice President Gunn recalls being contacted by a
Department of Labor investigator named Lopez in October or November 2004 and “we provided
them with a lot of information” including the “hours for approximately five [training] classes that
had been held” up to that point. On March 21, 2005, Investigator Perry Lopez prepared a
“Summary of Unpaid Wages” listing 14 Coastal employees, all of whom had been trained prior
to Coastal actually taking over performance of the contract in April 2004. It does not appear that
that document was sent to Coastal at that time. So far as the record shows, Coastal was
advised of the alleged underpayment at a conference held in either September or October,
some six months later. A letter dated October 27, 2005, from Assistant District Director Gary
Edwards to Coastal’s Vice President of Administration David Rodgers refers to a recent “final
conference” at which Coastal was advised that “14 employees were underpaid in the amount of
$32,286.65 … as a result of not paying according to the Wage Decisions, incorporating a
collective bargaining agreement, included in the Contract for certain training time.” The letter
invites Coastal to submit its views to Denise Flores, Regional Wage Specialist. The record does
not reflect any submission to Flores by Coastal. On November 22, 2005, Flores wrote Rodgers
advising that action was being taken “to request that the contracting agency withhold sufficient
funds to satisfy the back wage finding. A copy of our withholding request is enclosed.” The
letter also advises Coastal of its right to contest the findings. The withholding request, also
dated November 22, 2005, made to Contracting Officer Karen Nelson, repeats that “the
employer failed to pay the required wage determination rates, as incorporated by a Collective
Bargaining Agreement (CBA) on the contract.” There is no evidence that Coastal contested that
finding. On January 13, 2006, Coastal paid the $32,286.65.
On December 19, 2005, Michael Montgomery, who had been elected President of Local
203 in October 2005, filed two grievances, one relating to payment of minimum wage to
employees in training and the other relating to seniority dates. Montgomery met with Contract
Manager Robert Wingerter who stated Coastal’s position “that this was company policy, new
hires were paid minimum wage during training and were not to be paid any of the other
benefits, and that their seniority date would be assigned as of the date that their GSA card 3527
was signed.” Thereafter, on March 28, 2006, the parties held a prearbitration conference call.
The participants in the March 28, 2006, prearbitration conference call for the Union were
Local 203 President Montgomery; Dan DeRosa, President of a sister local, Local 213; and then
Vice President, now President, of the International Union James Carney. The participants for
Coastal were Human Resources Coordinator Terrell and Sean Engelin, Labor Relations
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Manager for AKAL. Carney stated the position of the Union that the seniority date was, and had
been, the employee’s initial hire date and that Coastal “had deviated from that practice with its
new hires by saying that their seniority dates were somehow different.” He stated the contention
of the Union that the payment of less than the collective-bargaining agreement wages to
employees in training violated the collective-bargaining agreement, violated the Service
Contract Act, and constituted a unilateral change. He noted that, it appeared there were
“multiple jurisdictions that applied,” that as a “a unilateral change the NLRA would come into
effect[,] … [i]f it was a deviation from the Department of Labor Wage and Hour Service Contract
Act, they would have jurisdiction,” and that if it was a violation of the collective-bargaining
agreement then the arbitration provisions of the contract would control.
Human Resource Coordinator Terrell contended that the contract had not been violated.
Carney pointed out Article XV, Section 2, on page 19 of the collective-bargaining agreement
which states that “[n]ew hires and incumbent personnel, while attending annual or refresher
training specific to the job site, will be paid at the wage rate established in Section 1 of this
article.” He stated that the Union believed that “that section holds,” explaining that “it's always
been that the new-hire employees while they're going through training get the CBA rate.”
Terrell responded that “the employees were not employees … they came under Coastal
Training Academy, therefore, they're not subject to the CBA [collective-bargaining agreement]”
or the Service Contract Act. Carney asked why Coastal had been required to pay the
contractual rate to the first training class. Terrell answered that that occurred “as a result of a
clerical error.” Carney asked for copies of “the compliance letters that she had up to that point.”
The conference call ended with Carney stating that the Union wanted to “get some more
information, develop the grievance further, and then have another conference call.” Thereafter,
on the afternoon of March 28, 2005, Carney sent an e-mail to Terrell and Engelin restating the
positions stated in the conference call and requesting information, including specifically
information regarding Coastal Training Academy.
On March 31, 2006, Engelin responded by e-mail asking Carney to “[p]lease explain
why you believe you are entitled to any of this information. Your bargaining unit does not
include trainees.”
Carney responded by e-mail the same day referring to past practice, the collective-
bargaining agreement reference to new hires, and the fact that the employees in training had
been paid by Coastal, not Coastal Training Academy.
Engelin answered Carney’s e-mail later that same afternoon, March 31, 2006, asserting
that trainees were not “new hires,” and restating that Coastal did not “recognize your claim to
represent them or your ability to file grievances on their behalf.”
Late that evening, Carney sent an e-mail to Engelin noting, inter alia, that Coastal had
“never used the term ‘trainees’ until late,” and that the Union would be “going to the NLRB.”
On April 3, 2006, Engelin responded stating that Coastal “had consistently used the
term trainees” and incredibly asserted that Coastal “refuted your claim that these people are
employees.” On April 4, Carney responded that the Union does “represent the new hires, who
you call ’Trainees.’”
On April 10, 2006, the Union filed a charge that, inter alia, again alleged that Coastal
had unilaterally changed the terms and conditions of employment with regard to “new hire
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training wage rates” and failed to provide requested relevant information. A complaint issued
with regard to the information request. The allegations of the complaint were settled. The record
does not establish the date of the settlement. The initial charge relating to a unilateral change in
wage rates, the charge in this proceeding, was still deferred. The record does not establish the
date that the Regional Director revoked the October 20, 2004, deferral of the charge herein that
had been filed on September 10, 2004. The complaint herein issued on May 29, 2007.
At the hearing, Vice President of Human Resources Janet Gunn testified that Coastal
operates a training academy in the Washington, D.C., area, Coastal Training Academy, that
provides the training necessary to obtain GSA certification. The record does not establish
whether the individuals undergoing the training pay tuition, but there is no evidence that these
individuals are paid by the academy or are being trained in conjunction with a specific GSA
contract. According to Gunn, “about 50 percent of the people who go through the training
academy are eventually hired by Coastal, and about 50 percent go to work for other people or
fail the course.” Gunn admitted that there was no academy in the Fort Worth area and that the
contention that Terrell made in the conference call of employment by the training academy was
“a mistake on her part to say it that way.”
Gunn testified that the “clerical error” to which Terrell referred related to the reported
date of hire of employees in the first training class, a class begun prior to April to assure that
Coastal was not short staffed when it assumed the GSA contract. According to Gunn’s initial
testimony the error occurred because Coastal used the GSA Form 139 that it uses to bill the
Government, but “whited out the information from the Government” and then used the form as
a time sheet for individuals in training because it is in the “standard format of a time sheet.”
According to Gunn, the “gentleman who was starting the contract, along with the admin person,
… took the time sheet, which was the GSA 139, the standard, regular, everyday GSA 139” and
used that form for the first class. Thereafter “the woman who was doing the data entry,” who
worked at Coastal headquarters in South Carolina and whose name Gunn could not recall, “just
assumed that that was the hire date.” According to Gunn, because of the foregoing errors, the
original report produced in the Wage and Hour investigation showed the individuals in the first
class “as being full employees as of that date … [b]ecause the hire date was showing the date
they started the training.” According to Gunn, it should have shown the date the employee
began “working on the contract.”
On cross-examination, when asked, “What was the form that was actually used in the
first class that was the wrong recordkeeping?” Gunn answered, “I don’t know. … We actually
tried to figure it out earlier and couldn't, so – all I know is it was submitted to South Carolina. …
I can't remember who -- submitted the information wrong into the company's database, and
when the reports were run, they showed something the … Department of Labor wasn't happy
with.”
The foregoing testimony by Gunn makes no sense. The crucial error, according to
Gunn, was the reporting of the hire date as the date the employee began training, and that error
purportedly occurred because the “gentleman who was starting the contract” and administrative
person “took the time sheet, which was the GSA 139, the standard, regular, everyday GSA 139”
and used that form for the first class, instead of whiting out the “information from the
Government” on the form. If, as Gunn initially testified, the GSA Form 139s for the first class
had not been “whited out,” whereas the “information from the Government” was purportedly
whited out for subsequent classes, there should have been no reason that, when “[w]e [Gunn
and unidentified others] actually tried to figure it out earlier,” they “couldn’t.”
In actual fact, the date of hire was the date the employees began training. Employers do
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not deduct income tax withholding and social security tax from the wages of individuals who are
not employees. Michael Montgomery’s documentary evidence, payroll checks and a W-2 form
for 2004 when he was in training, reflect the $5.15 wage paid to him and the withholding of
income tax and social security tax by Coastal. Those documents also reflect his employee
number. The foregoing documents establish that he was an employee and that Coastal was his
employer. Although there is no explanation for Coastal’s reporting to the Texas Department of
Public Safety that Michael Montgomery was hired on November 14, 2004, rather than October
26, 2004, the date he began training, the financial documents confirm that he was hired in
October. The documentary evidence relating to Margaret Montgomery reflects that Coastal
reported to the Texas Department of Public Safety that her hire date was the date she began
training, October 25, 2004.
The Statement of Work relating to the Fort Worth service contract requires the
contractor to “follow and complete the procedures listed below to obtain a GSA Certification
Form 3527 for each uniformed employee prior to them working a post on an FPS [Federal
Protective Service] Task Order/Contract. Paragraph 3 of the Statement of Work requires that
the contractor “[c]onduct required Contractor provided training and testing/qualifying” and
“[u]pon successful completion” schedule administration of the written examination, which “tests
the employees [sic] knowledge and understanding of the Contract Guard Information Manual.”
The Statement of Work makes no mention of pay and consistently refers to the individuals
undergoing training in order to obtain a Form 3527 as employees.
Vice President Gunn testified that, prior to bidding on the contract, she read the
collective-bargaining agreement between Security Consultants and the Union and determined
that “trainees,” whom she referred to as “candidates,” were not covered by the contract on the
basis of the language in the recognition clause which provides that the appropriate unit consists
of “[a]ll security officers as defined in Section 9(b)(3) of the National Labor Relations Act, as
amended, employed by the company under the GSA security services contract #GS-7P-00-
HHD-0035 or any successor contract, in Fort Worth, TX, and surrounding areas.” When asked
by Counsel for the Respondent, “Did you consider the trainees in the bargaining unit?” Gunn
answered, “Candidates are not in the bargaining unit.”
Article XV, Section 1, of the collective-bargaining agreement specified a single position,
Guard II, and a single wage rate that, as of September 30, 2003, was $18.50 an hour. Article
XV, Section 2 provided that “[n]ew hires and incumbent personnel, while attending annual or
refresher training specific to the job site, will be paid at the wage rate established in Section 1 of
this article” Article IX, Section 1, provided that “[n]ew employees and those hired after a break
in continuity of employment" would be probationary employees for 90 days. Gunn admitted that
she was aware that Article XV, Section 2, of the collective-bargaining agreement referred to
new hires and that Article IX, Section 1, referred to new employees. Despite the foregoing
contractual provisions, she acknowledged that she did not contact the Union to inquire
regarding the past practice with regard to new hires or new employees because she thought
that the “recognition language speaks for itself. … Candidates aren't new hires.”
I do not credit Gunn’s testimony that Coastal based any decision relating to the wages
of employees in training upon the recognition clause which Gunn contends does not cover
“candidates.” Contract Manager Wingerter claimed only that the payment of minimum wage
“was company policy” when denying the grievance filed by Local 203 President Montgomery. If,
as Coastal now contends, payment of minimum wage to newly hired guards in training was
predicated upon their exclusion from the collective-bargaining agreement by the recognition
clause, Coastal would never have agreed to defer the issue raised by this charge to the
grievance procedure.
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During the Department of Labor investigation, Gunn obtained an opinion letter from the
Department of Labor that had been sent to the Union. President Carney explained that Ron
Smith, formerly a vice president but not now employed by the Union, wrote the Administrative
Review Board regarding compensation for employees undergoing required training and testing.
On October 20, 2004, he received a reply from Timothy Helm of the Office of Enforcement
Policy of the Wage and Hour Division, which, in the second paragraph, in pertinent part states
that “[w]here pre-award training and testing is mandated by the contract, all the time spent in
such training and testing constitutes hours worked regardless of whether the trainee is
subsequently hired as a security guard” because “employee coverage may be broadly
interpreted to include individuals in a training status who perform duties “necessary to the
performance of the contract ….” The third and fourth paragraphs of the opinion letter relate to a
statement of work that Smith had enclosed, but which is not in evidence. In referring to that
statement of work, Helm stated that “the pre-employment training and testing time” would not
be subject to the wage determination rate of $12 an hour because “the employees, while in
training or being tested, are not performing any of the guard services for which wage rates and
fringe benefits are specified in the applicable wage determination.” President Carney testified
that the reference to $12 an hour as the wage determination confirms that the letter did not
relate to Fort Worth where there was a collective-bargaining agreement in place. The foregoing
document makes no mention of a collective-bargaining agreement.
C. Analysis and Concluding Findings
The complaint alleges that the Respondent “changed the wage rate of newly hired
employees to $5.15 an hour.” The answer denies this allegation, but at the hearing the
Respondent admitted that, during training, “trainees” were paid that amount.
The General Counsel contends that the undisputed evidence that both of Respondent
Coastal’s predecessors, Sooner and Security Consultants, paid guards in training at the
contractual rate establishes a past practice that the Respondent was not privileged to change
without notice to or bargaining with the Union.
The Respondent argues that it “never included the trainees in the bargaining unit, and
always paid the trainees the minimum wage” and “was not aware, and could not have become
aware” that Security Consultants “chose to pay its trainees the CBA [collective-bargaining
agreement] rate.”
The Respondent claims that that these individuals were not in the unit until the Form
3527 was issued to them and argues that the statement in the October 20, 2004 opinion letter
that the wage determination was not applicable because “the employees, while in training or
being tested, are not performing any of the guard services for which wage rates and fringe
benefits are specified” supports that position. I cannot agree. The statement in the opinion letter
relates to “pre-employment training” and refers to a $12 an hour wage determination. Whether,
in that hypothetical situation, the wage determination was not applicable is immaterial insofar as
the issue herein is whether this Respondent made a unilateral change. In this case the
individuals in training were employees of Coastal and were identified by an employee number.
The Statement of Work herein requires that the contractor “[c]onduct required Contractor
provided training and testing/qualifying.” There was a collective-bargaining agreement in effect,
and the Respondent was held liable for underpayment of wages to employees in the first
training class because “the employer failed to pay the required wage determination rates, as
incorporated by a Collective Bargaining Agreement (CBA) on the contract.”
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I make no finding regarding compliance with the Service Contract Act, but I note that
Gunn’s simple explanation regarding the Form 139s of the first training class is suspect in view
of her admission that the Respondent “tried to figure it out earlier and couldn't.” Gunn testified
that Coastal was held liable because Coastal reported the date of hire of employees in the first
class as the first date of training rather than the date the employee began “working on the
contract.” If, as the Respondent contends, the relevant date was the date that the employee
received a Form 3527 and actually began “working on the contract,” the reporting of a different
date of hire would be immaterial. The Respondent could have defended the finding of liability by
showing the records reflecting that the employees were in training. There is no evidence that
the Respondent did so. Although Gunn testified that records for the “approximately” five classes
that had been held were sent to the Wage and Hour Division, the record does not establish
exactly what records were sent. Insofar as the Respondent was not reporting employees in
subsequent training classes “as being full employees,” the wording Gunn used in her testimony,
the Wage and Hour Division would have no basis for determining whether the Respondent was
in compliance with the Service Contract Act
Notwithstanding the foregoing discussion, this is not a case concerning compliance with
the Service Contract Act. Numerous cases establish that, although an employer may not pay
employees less than the wage determination set out in conjunction with award of a contract
under the Service Contract Act, it “does not prohibit the payment of wages higher than those
established by the wage determination.” Old Dominion Security, 289 NLRB 81 (1988). Whether
the Respondent was or was not in compliance with the Service Contract Act is immaterial. The
issue in this case is whether there was an unlawful unilateral change.
Irrefutable evidence, the assignment of employee numbers and the making of statutory
deductions from their pay, establishes that these guards in training were hired and were
employees of the Respondent Coastal. The Respondent’s brief notes that the recognition
clause of the collective-bargaining agreement “contains a specific reference to the government
contract number” and argues that it does “not cover the trainees before they stated working on
the contract.” I disagree. The recognition clause states that the unit is “[a]ll security officers as
defined in Section 9(b)(3) of the National Labor Relations Act, as amended, employed by the
company under the GSA security services contract #GS-7P-00-HHD-0035 or any successor
contract, in Fort Worth, TX, and surrounding areas.” In Old Dominion Security, supra, the
guards in training were considered to be guards and subject to a wage determination under the
Service Contract Act. The Statement of Work herein consistently refers to the individuals in
training as employees and provides that Coastal “[c]onduct required Contractor provided
training and testing/qualifying” and “[u]pon successful completion” schedule administration of
the written examination, which “tests the employees [sic] knowledge and understanding of the
Contract Guard Information Manual.” The employees in this case, unlike students attending
Coastal Training Academy in the Washington, D.C., area, in which some 50 percent of the
students do not go to work for Coastal, were hired by Coastal to staff a specific contract.
The Respondent first raised the claim that employees undergoing training were not in
the unit in the e-mail of March 31, 2006, from Engelin to Carney. In 2004, following the filing of
the charge herein, the Respondent agreed to deferral of the charge, thereby acknowledging
that these employees were covered by the grievance procedure of the collective-bargaining
agreement. Human Resource Coordinator Terrell’s letter to the Union dated April 5, 2005, in
response to the Union’s Demand for Arbitration, argues that the Union “at no time attempted to
present this dispute as a grievance after the decision … [to defer] on October 20, 2004,” and
that the arbitration request was invalid because the Union had not followed the steps of the
grievance procedure. In response to the grievance filed by Montgomery on December 19, 2005,
Contract Manager Wingerter stated Coastal’s position “that this was company policy.” There
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was no claim that the issue was not subject to the grievance procedure because employees in
training were not employees or were not in the unit. The Respondent was found liable for
underpaid wages to the first training class because “the employer failed to pay the required
wage determination rates, as incorporated by a Collective Bargaining Agreement (CBA) on the
contract.” The Respondent paid those back wages on January 16, 2006. Thereafter, in the
conference call of March 28, 2006, Human Resource Coordinator Terrell contended that
individuals in training were not employees. Vice President Gunn, at the hearing, acknowledged
that Terrell misspoke. In an e-mail on March 31, 2006, Engelin claimed that “trainees,” i.e.,
newly hired employees in training, were not in the unit. The past practice of the predecessors
and the conduct of the Respondent confirm that, until March 31, 2006, during the term of the
collective-bargaining agreement, there was no contention that newly hired guard employees in
training were not in the unit.
The recognition clause includes “[a]ll security officers … employed by the company
under the GSA … contract.” It excludes “office clerical employees, professional employees, and
supervisors.” Newly hired guards in training are not separately mentioned. “Candidates” are not
mentioned. The collective-bargaining agreement refers to new hires and new employees. The
payment of the contractual wage rate by Sooner, the predecessor of Security Consultants, and
Security Consultants to newly hired guards in training establishes their historical inclusion in the
unit. The Respondent agreed to defer the issue raised by the charge herein to the grievance
procedure. “[A]n employer may not unilaterally alter the scope of a bargaining unit during the
term of a collective-bargaining agreement covering that unit.” Gratiot Community Hospital, 312
NLRB 1075, 1083 (1993). Newly hired guard employees are in the unit.
“An employer’s practices, even if not required by a collective-bargaining agreement,
which are regular and long-standing, rather than random or intermittent, … cannot be altered
without offering … [the employees’] collective bargaining representative notice and an
opportunity to bargain over the proposed change.” Sunoco, Inc., 349 NLRB No. 26, slip op. at 5
(2007). The payment of the contractual rate to newly hired guard employees in training by the
predecessors established a past practice. The Respondent, as a Burns successor, was
obligated to give notice to and bargain with the Union before changing that past practice. In
Rosdev Hospitality, Secaucus LP, 349 NLRB No. 20 (2007), although the collective-bargaining
agreement between the union and predecessor employer provided that hotel seniority was
determined by length of service with the employer and that leave was determined on that basis,
in practice the predecessor awarded leave on the basis of the “employee’s tenure at the hotel
and not his or her tenure with Felcor [the predecessor employer] itself as stated in the contract.”
[Emphasis in the original.] Id. slip op. at 2. The successor unilaterally altered this practice by
computing leave on the basis of the employee’s tenure with the employer, “not on tenure at the
hotel.” The Board, in finding an unlawful unilateral change, held:
A successor employer in Respondent's position may not unilaterally change the terms
and conditions of employment, whether they were established by a previous collective-
bargaining agreement or by the predecessor's past practices. Blitz Maintenance, 297
NLRB 1005, 1008-1009 (1990), enfd. mem. 919 F.2d 141 (6th Cir. 1990). Ibid.
The Respondent’s contention that it “was not aware, and could not have become aware”
of the practice of its predecessors has no merit. There can be no claim of ignorance by the
Respondent after September 9, 2004, when, after learning that guards in training had not been
paid the contractual rate, the Union filed its grievance protesting the payment of “minimum
wage instead of wage rate established in CBA.” Although agreeing to waive time limits so that
the grievance could be deferred, which it was on October 20, 2004, the Respondent continued
to pay minimum wage to the training classes that began thereafter. There can be no justifiable
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claim of ignorance of the past practice prior to September 9, 2005. Gunn was aware that Article
XV, Section 2, of the collective-bargaining agreement provided that “[n]ew hires and incumbent
personnel, while attending annual or refresher training specific to the job site, will be paid at the
wage rate established in Section 1 of this article” and that Article IX, Section 1 referred to the
probationary period of new employees. Her failure to inquire of the Union regarding the past
practice with regard to new hires or new employees because she individually decided that
“[c]andidates aren't new hires,” reveals indifference to the role of the employees’ collective
bargaining representative. I concur in the observation in the brief of the General Counsel that
the failure of Gunn to make any inquiry of the Union in regard to those contractual provisions “is
troublesome at best.” An employer may not “blind itself” to obvious facts and then claim
ignorance. Cf. Eaton Warehousing Co., 297 NLRB 958, 961-962 (1990), enfd. mem. 919 F.2d
141 (6th Cir. 1990). Furthermore, ignorance of a past practice by a successor is no defense to
its unilateral discontinuation of that past practice. See Rosdev Hospitality, Secaucus LP, supra,
JD slip op. at 9, citing Pepsi-Cola Distributing Co., 241 NLRB 869 (1979), enfd. 646 F.2d 1173
(6th Cir. 1981), cert. denied 456 U.S. 936 (1982). In this case there was no ignorance after
September 9, 2004, and any claimed ignorance prior to that date occurred because, despite the
contractual provisions relating to new hires and new employees, the Respondent made no
inquiry of the Union with regard to the past practices of its predecessors.
Newly hired guard employees are in the unit. The Respondent’s predecessors, Sooner
and Security Consultants, paid newly hired guard employees the contractual wage rate when
they were in training thereby establishing a past practice. The Respondent changed that past
practice without notice to or bargaining with the Union. By unilaterally changing “the wage rate
of newly hired employees to $5.15 an hour,” the Respondent violated Section 8(a)(5) of the Act.
Conclusions of Law
By unilaterally, without notice to or bargaining with International Union of United
Government Security Officers of America, AFL-CIO, and its Local 203, paying newly hired
employees $5.15 per hour rather than the contractual wage rate, the Respondent has engaged
in unfair labor practices affecting commerce within the meaning of Section 8(a)(1) and (5) and
Section 2(6) and (7) of the Act.
Remedy
Having found that the Respondent has engaged in certain unfair labor practices, I find
that it must be ordered to cease and desist and to take certain affirmative action designed to
effectuate the policies of the Act.
The Respondent having unilaterally paid newly hired employees $5.15 per hour rather
than the contractual wage rate when they were in training, it must make them whole for the
difference between that wage rate and the applicable contractual wage rate-- $18.50 per hour
prior to September 30, 2005, $19.06 per hour from October 1, 2005, through September 30,
2005, and $19.76 per hour from October 1, 2005 through September 30, 2006,-- plus interest
as computed in New Horizons for the Retarded, 283 NLRB 1173 (1987). Records provided to
the Union pursuant to its information request, General Counsel’s Exhibit 14, stipulated at the
hearing to be a new hire report, include the names of the 14 employees who were
compensated pursuant to the Wage and Hour determination for training prior to May 15, 2004,
and their names are omitted from my recommended Order. One of those employees, Alan
Boswell, who was compensated for training prior to May 15, 2004, is shown as attending
training from July 24 through August 31, 2004, during which he was paid $5.15 per hour, a
period for which he was not compensated. Seven employees: Jennifer Hale, Clinton
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MacKenzie, DeShawn Moffett, Charles Morris, Sr., Matthew O’Del, Wesley Roeder, and Robert
Yanick, are each reported on General Counsel’s Exhibit 14 as attending one day of training
after March 10, 2004. Several employees’ names appear on General Counsel’s Exhibit 14 with
a date prior to March 10, 2004, the Section 10(b) date, and I have, therefore omitted their
names from my recommended Order. Insofar as records furnished pursuant to my recommend
Order establish that they were underpaid within the Section 10(b) period, they are similarly
situated employees and must be made whole. The record does not establish whether there
were additional training classes in 2005 and 2006. My recommended Order will provide that all
employees similarly situated, i.e. paid $5.15 during training after March 10, 2004, the Section
10(b) date, be made whole. I leave for compliance the determination as to the actual number of
underpaid employees. An unprinted stripe on General Counsel’s Exhibit 14 makes the spelling
of several names uncertain. If any question arises as a result of my attempt at the most likely
correct spelling, the respective employee numbers should provide the correct identification.
The Respondent, having ceased performing services in the Fort Worth area, must also
mail an appropriate notice as set out in the recommended Order.
On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended3
ORDER
The Respondent, Coastal International Security, Inc., Surfside Beach, South Carolina,
its officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Unilaterally, without notice to or bargaining with International Union of United
Government Security Officers of America, AFL-CIO, and its Local 203, paying newly hired unit
employees $5.15 per hour rather than the contractual wage rate. The appropriate unit is:
INCLUDED: All security officers as defined in Section 9(b)(3) of the National Labor
Relations Act, as amended, employed by the company under the GSA security services
contract #GS-7P-00-HHD-0035 or any successor contract, in Fort Worth, TX, and
surrounding areas
EXCLUDED: All office clerical employees, professional employees, and supervisors as
defined in the Act.
(b) In any like or related manner interfering with, restraining, or coercing employees in
the exercise of the rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to effectuate the policies of the Act.
(a) Make whole the following named employees and all similarly situated employees
who were underpaid during their training after March 10, 2004, for their loss of earnings in the

3 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and Regulations,
the findings, conclusions, and recommended Order shall, as provided in Sec. 102.48 of the
Rules, be adopted by the Board and all objections to them shall be deemed waived for all
purposes.
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manner set forth in the remedy section of the Decision:
Edwin Alexander
Michael Baker
Joseph Barnes
Alan Boswell
Walter Braggs, Jr.
Glenn Bueker
Roy Burns
Mark Carnes
David Chapman
Will Finley
Steven Frazier
Rafael Garza, Jr.
Tony Gutierrez
Jennifer Hale
Brian Hancock
Mark Harbin
Bill Henderson
Scott Hunt
Danny Kelly
Edward Kenney
Charles Kersey
Jerry Long
Clinton MacKenzie
Iqbal Mahmud
William Marr
Alan Matheny
Douglas Maxwell
James McDaniel
Roger McFann
James Miller
DeShawn Moffett
Margaret Montgomery
Michael Montgomery
Charles Morris, Sr.
Matthew O’Del
Jimmie Page
Carl Pittman
Jeremy Pitts
Samuel Polk
Hector Reynoso
Taylor Rice
Taylor Rivers
Wesley Roeder
David Rooks
Sidney Ross
Steven Sharlow
Joe Tittle
Matthew Trubenstein
John Villaneal
Derrick Void
Roy Walsh
Dawnyale Williams
Tyra Williams
Robert Yanick
(b) Preserve and, within 14 days of a request, or such additional time as the Regional
Director may allow for good cause shown, provide at a reasonable place designated by the
Board or its agents, all payroll records, social security payment records, timecards, personnel
records and reports, and all other records, including an electronic copy of such records if stored
in electronic form, necessary to analyze the amount of backpay due under the terms of this
Order.
(c) Within 14 days after service by the Region, the Respondent shall mail copies of the
attached Notice marked “Appendix”4 to all former unit employees employed by the Respondent
in the Fort Worth, Texas, area, at any time since March 10, 2004. The Notice, after being
signed by the Respondent's authorized representative, shall be duplicated and mailed at the
Respondent’s own expense to the last known address of each employee.
(d) Within 21 days after service by the Region, file with the Regional Director a sworn
certification of a responsible official on a form provided by the Region attesting to the steps that
the Respondent has taken to comply.
Dated, Washington, D.C., December 6, 2007.
_____________________
George Carson II
Administrative Law Judge

4 If this Order is enforced by a Judgment of the United States Court of Appeals, the words in
the notice reading “POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD”
shall read “POSTED PURSUANT TO A JUDGMENT OF THE UNITED STATES COURT OF
APPEALS ENFORCING AN ORDER OF THE NATIONAL LABOR RELATIONS BOARD.”
JD(ATL)–39–07
Fort Worth, TX
APPENDIX
NOTICE TO EMPLOYEES
Posted by Order of the
National Labor Relations Board
An Agency of the United States Government
The National Labor Relations Board has found that we violated Federal labor law and has
ordered us to post and obey this notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on your behalf
Act together with other employees for your benefit and protection
Choose not to engage in any of these protected activities
WE WILL NOT unilaterally, without notice to or bargaining with International Union of United
Government Security Officers of America, AFL-CIO, and its Local 203, pay newly hired unit
employees $5.15 per hour rather than the contractual wage rate. The appropriate unit is:
INCLUDED: All security officers as defined in Section 9(b)(3) of the National Labor
Relations Act, as amended, employed by the company under the GSA security services
contract #GS-7P-00-HHD-0035 or any successor contract, in Fort Worth, TX, and
surrounding areas
EXCLUDED: All office clerical employees, professional employees, and supervisors as
defined in the Act.
WE WILL make whole the following employees and all similarly situated employees who were
underpaid during their training after March 10, 2004, for their lost earnings in the manner set
forth in the remedy section of the Decision:
Edwin Alexander
Michael Baker
Joseph Barnes
Alan Boswell
Walter Braggs, Jr.
Glenn Bueker
Roy Burns
Mark Carnes
David Chapman
Will Finley
Steven Frazier
Rafael Garza, Jr.
Tony Gutierrez
Jennifer Hale
Brian Hancock
Mark Harbin
Bill Henderson
Scott Hunt
Danny Kelly
Edward Kenney
Charles Kersey
Jerry Long
Clinton MacKenzie
Iqbal Mahmud
William Marr
Alan Matheny
Douglas Maxwell
James McDaniel
Roger McFann
James Miller
DeShawn Moffett
Margaret Montgomery
Michael Montgomery
Charles Morris, Sr.
Matthew O’Del
Jimmie Page
Carl Pittman
Jeremy Pitts
Samuel Polk
Hector Reynoso
Taylor Rice
Taylor Rivers
Wesley Roeder
David Rooks
Sidney Ross
Steven Sharlow
Joe Tittle
Matthew Trubenstein
John Villaneal
Derrick Void
Roy Walsh
Dawnyale Williams
Tyra Williams
Robert Yanick
JD(ATL)–39–07
WE WILL NOT in any like or related manner interfere with, restrain, or coerce any of you in the
exercise of your rights guaranteed by Section 7 of the Act.
COASTAL INTERNATIONAL SECURITY, INC.
(Employer)
Dated By
(Representative) (Title)
The National Labor Relations Board is an independent Federal agency created in 1935 to enforce the National Labor
Relations Act. It conducts secret-ballot elections to determine whether employees want union representation and it
investigates and remedies unfair labor practices by employers and unions. To find out more about your rights under
the Act and how to file a charge or election petition, you may speak confidentially to any agent with the Board’s
Regional Office set forth below. You may also obtain information from the Board’s website: www.nlrb.gov.
819 Taylor Street, Fort Worth TX 76102-6178
(817) 978–2921, Hours: 8:15 a.m. to 4:45 p.m.
THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED BY ANYONE
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. ANY QUESTIONS CONCERNING THIS
NOTICE OR COMPLIANCE WITH ITS PROVISIONS MAY BE DIRECTED TO THE ABOVE REGIONAL OFFICE’S
COMPLIANCE OFFICER, (817) 978–0678