Emerald Maintenance, Inc.

National Labor Relations Board - Board Decisions

Mar 5, 1971

188 N.L.R.B. 876 (N.L.R.B. 1971)

876 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Emerald Maintenance, Inc., and Public Service, Pro-
duction and Maintenance Employees Local Union
No. 1057, affiliated with Laborers' International Un-
ion of North America , AFL-CIO. Case No. 23-CA-
3597
March 5, 1971
DECISION AND ORDER
BY CHAIRMAN MILLER AND MEMBERS FANNING,
BROWN , AND KENNEDY
On October 19, 1970 , Trial Examiner Thomas A.
Ricci issued his Decision in the above-entitled pro-
ceeding, finding that Respondent had engaged in and
was engaging in certain unfair labor practices within
the meaning of the National Labor Relations Act, as
amended, and recommending that it cease and desist
therefrom and take certain affirmative action, as set
forth in the attached Trial Examiner 's Decision.
Thereafter , Respondent filed exceptions to the Trial
Examiner's Decision and a supporting brief . Thereaf-
ter the United States Air Force filed an amicus curiae
brief.
The Board has reviewed the rulings of the Trial
Examiner made at the hearing and finds that no preju-
dicial error was committed . The rulings are hereby
affirmed . The Board has considered the Trial
Examiner's Decision , the exceptions and briefs, and
the entire record in the case , and hereby adopts the
findings, conclusions , and recommendations of the
Trial Examiner but only to the extent, and for the
reasons, stated herein.
On April 1, 1970, pursuant to a contract awarded
by the Air Force , Respondent undertook as a civilian
contractor to provide roads and grounds maintenance
and certain base housing services at Laredo Air Force
Base, Texas . During the year preceding Respondent's
accession to those contracts , base housing services
had been provided by The Bartlett Company, and
road and grounds maintenance by Rice Cleaning
Services , each under contract let by the Air Force for
a 1-year period . The employees of Bartlett and those
of Rice were represented by the Charging Union un-
der virtually identical collective-bargaining agree-
ments negotiated shortly after those firms were
awarded their respective contracts . Each collective-
bargaining agreement was effective until September
30, 1970.
Upon assumption of its contractual obligations on
April 1, 1970, Respondent not only continued to per-
form essentially the same work as had been done by
Bartlett and Rice , it also performed that work with
substantially the same employee complement as had
its predecessors . Notwithstanding that continuity of
operations, Respondent rejected the Union's de-
mands that it be recognized as the employees' repre-
sentative and that Respondent adhere, until the
September 30 expirations, to the collective agree-
ments which the Charging Party had negotiated with
Bartlett and Rice.
The Trial Examiner concluded that Respondent vi-
olated Section 8(a)(5) by its refusal to recognize and
bargain with the Union as the exclusive representative
of its employees. We agree.' Cruse Motors, Inc., 105
NLRB 242.
The further question, whether Respondent was re-
quired by Section 8(a)(5) to give effect to the preexist-
ing contracts, is one of Gordian complexity, despite
the apparent similarity of this case to Burns Interna-
tional Detective Agency, 182 NLRB No. 50. We over-
rule the Trial Examiner's finding of violation in this
regard.
The contractual relationship between Respondent
and the United States Air Force came into being pur-
suant to the provisions of the Service Contract Act of
1965, 41 U.S.C. Secs. 351-357, and in consequence of
the national policies fostered by statutory procure-
ment standards, 10 U.S.C. Sec. 2301, et seq. This, like
all such contracts, was consummated without negotia-
tions. The Air Force issued a descriptive invitation for
bids in early January 1970. The Respondent and oth-
ers submitted sealed bids in mid-January and, shortly
before April 1, 1970 , the ensuing year's work was
awarded, as the Service Contract Act requires, to the
low bidder. But in undertaking its contractual duties,
in exchange for a fixed sum, Respondent reckoned
without the Union.
The Union had been certified in 1965 as the repre-
sentative of a unit of all of the employees of a service
contractor which at that time provided both housing
services and road and grounds maintenance, as well
as other base support functions. After 1965, the bar-
gaining unit had been fragmented by the advent of
successive contractors, including Bartlett and Rice,
each of whose employees were represented in separate
units? As noted, the Union' s agreements with Bartlett
and Rice were to terminate September 30, 1970, 6
months beyond the terminal dates of the Air Force
Service contracts which Bartlett and Rice enjoyed at
the time the collective agreements were negotiated. In
addition, and this fact lies at the heart of
Respondent's argument, each of those contracts in-
cluded provisions for the substantial increase of em-
ployee benefits effective April 1, 1970. Though the
matter is not free from doubt, it appears that the
1 We agree, further, that Respondent's unilateral changes of the terms and
conditions of employment in effect prior to March I were also violative of
Section 8(aX5)
2 We find no merit in Respondent's contention that these latter units were
inappropriate
188 NLRB No. 139
EMERALD MAINTENANCE, INC.
Union, and Bartlett and Rice, had agreed to those
April 1, 1970, wage increases with the expectation that
the agreed increases would be considered by the De-
partment of Labor in specifying a prevailing area
wage for the contract year commencing April 1, 1970.
If that had occurred, each bidder for the April 1970
Air Force contract would have taken the increased
rate into account as a cost item in computing its bid.
Ultimately, in that event, the Air Force would have
absorbed the entire cost of the wage increase.
However, on September 19, 1969, the Comptroller
General of the United States ruled that the prospec-
tive wage increase was not properly includable in the
prevailing wage determination. Comp. Gen. Op. B- 16
7639. In accordance with the Comptroller General's
ruling, the Laredo Air Force Base service contracts
were advertised for bids in January 1970, but the fu-
ture wage and benefit increases in Rice's and
Bartlett's collective-bargaining agreements were not
specified by the Air Force as the "prevailing" rate.
Rather, the rates specified were those which were then
being paid under the current collective-bargaining
agreements. After the invitations for bids were issued,
the Union notified potential bidders of the terms of its
collective-bargaining agreements with Rice and Bart-
lett. The Union's letter to Respondent was dated Jan-
uary 12 and was received by Respondent prior to
submission of its bid. Respondent's bid was, neverthe-
less, based upon the prevailing wage specified in the
invitation for bids. The record also suggests, but does
not affimatively show, that both Rice and Bartlett
unsuccessfully rebid for their respective contracts.
Upon Respondent's refusal on April 1, 1970, to
adhere to its predecessors' contracts, the instant
charge was filed. The complaint herein was issued
following issuance of the Board's decision in Burns,
supra.
In Burns the Board established the general rule that
a successor employer shall be bound to the terms and
conditions of a valid existing collective-bargaining
contract of the predecessor employer. The Board, in
Burns, summarized its holding in these words:
The question before us thus narrows to wheth-
er the national labor policy embodied in the Act
requires the successor-employer to take over and
honor a collective-bargaining agreement nego-
tiated on behalf of the employing enterprise by
the predecessor. We hold that, absent unusual
circumstances, the Act imposes such an obliga-
tion.
In the normal case, we perceive no real inequi-
ty in requiring a "successor-employer" to take
877
over his predecessor's collective-bargaining
agreement, for he stands in the shoes of his pred-
ecessor. He can make whatever adjustments the
acceptance of such obligation may dictate in his
negotiations concerning the takeover of the bus-
iness. [Emphasis supplied.]
The facts of this case suggept that it should be regard-
ed as one of those exceptions which Burns anticipated,
and, for the reasons which follow, we hold that such
an exception is warranted.
It was an objective of Burns, perhaps indeed the
major objective, to provide continuity of employment
and stability of employment terms to both employees
and employers in enterprises undergoing ownership
changes. But a mechanistic application of Burns un-
der the circumstances here would retard, rather than
advance, that goal. These Federal service contracts
are not subject to refinement through negotiation.
Thus, the contracting parties have no device through
which they can by agreement allocate between them-
selves the sudden cost changes resulting from changed
employment terms. We perceive that Respondent as
successful bidder for such a service contract could be
expected to have only three options if compelled to
abide by its predecessor's contracts: it might abandon
the service contracts, forcing the Air Force to perform
the services with its own employees; it might refrain,
without regard to considerations of lawfulness, from
employing the work force of the predecessors, or, it
might fulfill its contractual obligations to the Air
Force and its predecessors' obligations to the Union,
thereby jeopardizing its economic viability and the
jobs of its employees. It does not serve the purposes
of Burns to confront an employer and its employees
with such alternatives.
It is true, on the other hand, that to some extent the
exemption of Respondent from the contractual ob-
ligations of its predecessors will diminish the effec-
tiveness of the Union in advancing its members'
interests. Long-term contracts will be uncommon and
the benefits of mature collective-bargaining relation-
ships often forgone. Negotiations over the wage rates
of employees will be confined by the terms of the
employer's service contract. Wage rate changes-ei-
ther upward or downward-will be gradual, or, per-
haps, nonexistent. But those results inhere in the
comprehensive statutory scheme which Congress has
provided for the letting of service contracts and we do
not believe that those difficulties can be diminished
by rigid adherence to Burns. In reaching this conclu-
sion we are mindful that we might, by reaching a
contrary result, compel many bidders for Federal
service contracts to predicate their bids upon prospec-
tive wage costs established by long-term collective-
bargaining agreements. We note, however, that the
agencies primarily charged with administration of the
878 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Federal Service Contract Act have declined to take
steps to achieve that result' This case suggests the
hazards of enforcing the contracts of one employer
against a successor where annual rebidding normally
produces annual changes in contractor identity.
These circumstances might encourage less arm's
length collective bargain whenever the employer
had reason to expect that if would not be awarded the
next succeeding annual service contract. The prob-
lems raised require comprehensive treatment by the
agencies which administer the Service Contract Act.
We shall reverse the Trial Examiner's finding that
Respondent violated Section 8(a)(5) by failing to give
effect to the collective-bargaining agreement of its
predecessors.
THE REMEDY
The Respondent will be ordered to bargain with the
Union on request, as was its statutory duty from April
1, 1970, and to make restitution of any benefits which
may have been lost because of any unilateral changes
made in the terms and conditions of employment. The
extent to which economic benefits have unlawfully
been denied the employees was not fully explored or
established in the record, but these are matters that
may properly be determined at the compliance stage
of the proceeding. Any restitution required herein
shall be computed with interest thereon at the rate of
6 percent per annum. Isis Plumbing & Heating Co.,
138 NLRB 716.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor Rela-
tions Board hereby orders that the Respondent, Em-
erald Maintenance, Inc., Laredo, Texas, its officers,
agents , successors, and assigns, shall:
1. Cease and desist from:
(a) Refusing to bargain collectively with Public
Service, Production and Maintenance Employees Lo-
cal No. 1057, affiliated with Laborers' International
Union of North America, AFL-CIO, as the exclusive
representative of all employees in the bargaining unit.
(b) In any like or related manner interfering with,
restraining, or coercing its employees in the exercise
of their right to self-organization, to form, join, or
assist any labor organization, to bargain collectively
through representatives of their own choosing, and to
engage in other concerted activities for the purpose of
collective bargaining or other mutual aid or protec-
tion, or to refrain from any and all such activities.
2. Take the following affirmative action which the
Board finds will effectuate the policies of the Act:
(a) Upon request bargain collectively with Public
Service, Production and Maintenance Employees Lo-
cal Union No. 1057, affiliated with Laborers' Interna-
tional Union of North America, AFL-CIO, as the
exclusive bargaining representative of all employees
in the appropriate unit set forth in the Trial
Examiner's Conclusions of Law, with respect to rates
of pay, wages, hours of employment, and other terms
and conditions of employment, and, if an understand-
ing is reached, embody such understanding in a
signed agreement.
(b) Make whole all of the employees in the bargain-
ing unit for economic benefits withhold from them by
the Respondent, in the manner set forth under "The
Remedy."
(c) Post at its office in the Laredo Air Force Base,
Laredo, Texas, copies of the attached notice marked
"Appendix."4 Copies of said notice, on forms provid-
ed by the Regional Director for Region 23, after being
duly signed by the Respondent's representative, shall
be posted by the Respondent immediately upon re-
ceipt thereof, and be maintained by it for 60 consecu-
tive days thereafter, in conspicuous places, including
all places where notices to employees are customarily
posted. Reasonable steps shall be taken by Respon-
dent to insure that said notices are not altered, de-
faced, or covered by any other material.
(d) Notify the Regional Director, for Region 23, in
writing, within 20 days from the date of receipt of this
Decision, what steps it has taken to comply herewith.
3 Comp Gen. Op. B-167639.
4 In the event that this Order is enforced by a Judgment of a United States
Court of Appeals, the words in the notice reading "Posted by Order of the
National Labor Relations Board" shall be changed to read "Posted pursuant
to a Judgment of the United States Court of Appeals Enforcing an Order of
the National Labor Relations Board."
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
WE WILL NOT refuse to bargain collectively with
Public Service, Production and Maintenance
Employees Local Union No. 1057, affiliated with
Laborers' International Union of North Ameri-
ca, AFL-CIO, as the exclusive representative of
the employees in the bargaining unit described
below.
WE WILL NOT in any like or related manner in-
terfere with, restrain, or coerce our employees in
the exercise of their right to self-organization,
to form, join, or assist any labor organization, to
EMERALD MAINTENANCE, INC. 879
bargain collectively through representatives of
their own choosing, and to engage in other con-
certed activities for the purpose of collective bar-
gaining or other mutual aid or protection, or to
refrain from any and all such activities.
WE WILL bargain collectively, upon request,
with this Union as the exclusive representative of
our employees in the bargaining unit described
below with respect to rates of pay, wages, hours
of employment, and other terms and conditions
of employment, and, if an understanding is
reached, embody such understanding in a signed
agreement. The bargaining unit is:
All service, production and maintenance em-
ployees engaged in the performance of our con-
tracts at Laredo Air Force Base, excluding
executives, guards, and professional employees
as defined in the Act.
WE WILL make restitution to our employees for
any benefits which they may have lost because of
any unilateral changes we made in their terms
and conditions of employment.
Upon the entire record, and from my observation of the
witnesses, I make the following:
FINDINGS OF FACT
I THE BUSINESS OF THE RESPONDENT
The Respondent, an Idaho corporation, maintains its
principal office in Sandpoint, Idaho, and conducts its oper-
ations in various States of the United States at military
installations. It is a service maintenance contractor working
under National Defense Works contracts. During the pen-
od from April 1, 1970, to March 31, 1971, in its business
operations at the Laredo Air Force Base, in Texas, it will
furnish services valued in excess of $500,000, of which serv-
ices valued in excess of $500,000 will have a substantial
impact on national defense. This proceedin is concerned
only with the Respondent's operations at this Air Force
Base . I find that the Respondent is engaged in commerce
within the meaning of the Act and that it will effectuate the
policies of the Act to exercise jurisdiction herein.
II THE LABOR ORGANIZATION INVOLVED
I find that the Union is a labor organization within the
meaning of the Act.
EMERALD MAINTENANCE, INC.
(Employer)
Dated By
(Representative ) (Title)
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 compli-
ance with its provisions may be directed to the
Board's Office, 6617 Federal Building, 515 Rusk Ave-
nue, Houston, Texas 77002, Telephone 713-226-
4296.
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
THOMAS A. Ricci, Trial Examiner: A hearing in the above-
entitled proceeding was held before the duly designated
Trial Examiner on July 21, 1970, at Laredo, Texas, on com-
plaint of the General Counsel against Emerald Mainte-
nance, Inc., herein called the Respondent or the Company.
The issue litigated is whether the Respondent violated Sec-
tion 8(a)(5) of the statute in its admitted refusal to bargain
with Public Service, Production and Maintenance Employ-
ees Local Union No. 1057, affiliated with Laborers' Interna-
tional Union of North America, AFL-CIO, herein called
the Union. Briefs were filed after the close of the hearing by
the Respondent and the General Counsel. The United
States Air Force filed an amicus curiae brief.
III THE UNFAIR LABOR PRACTICES
A. The Issue of the Case
This is a refusal-to-bargain case; the essential facts are
not disputed. At the Laredo Air Force Base the Defense
Department arranges to have essential services performed
by independent, private contractors. The contracts are let
annually following invitations to competitive bidding. The
separate contract services are as follows: motor pool, photo
lab, food services, refueling, base housing, and roads and
grounds maintenance. This case involves the successive
contractors who undertook, by contract, to perform two of
these services; one was base housing and the other roads
and grounds maintenance. For the 1- ear period extending
from April 1, 1969, through March 31, 1970, the contract
work for base housing was performed by a company called
The Bartlett Company, and the work for roads and grounds
maintenance by a company called Rice Cleaning Service.
The Union was certified by the Board as exclusive bargain-
ing representative for employees performing the work in
both these categories in 1965, when a predecessor contrac-
tor was so engaged. In the intervening years it continued to
represent both groups of employees as successive contrac-
tors bid and took on the work for 1-year periods. On March
31, 1969, it signed separate contracts, one with Rice
Cleaning Service and one with The Bartlett Company, for
the employees of these companies in their respective respon-
sibilities. The agreements are comprehensive collective-bar-
gaining contracts covering conditions of employment, and
including wage rates. The period for both contracts extend-
ed over 18 months, to expire on September 30, 1970.
The Respondent is a successor to the two earlier contrac-
tors in furnishing civilian services at this Government loca-
tion. To win the job it underbid the predecessor employers,
among others. When it arrived, and used very substantially
the same group of employees, it refused to have anything to
do with the Union, long the certified bargaining agent of the
employee complement, it rejected the collective-bargaining
agreements then in effect in establishing wages and other
conditions of employment, and it fixed wages and other
880 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
employee benefits below the level provided for in the con-
tract as though there never had been either a union or a
contract. The defense to all this is essentially that inasmuch
as the Respondent,/in order to obtain the service contract
awards from the Government, necessarily had to underbid
the predecessor companies which had negotiated the wages,
etc., for the employees, it follows logically that it must be
permitted to pay the employees less than had been agreed
through their union. And the question of the case therefore
becomes: Is there sufficient reason to distinguish this situ-
ation from the rule of law set out in the Board's recent
decision in Burns International Detective Agency, 182 NLRB
No. 50?
B. The Pertinent Facts
Early in January 1970 the Government invited bids for
the performance of this work for the 12-month _period to
begin April 1. The Union, aware of the identity of the com-
panies so invited, wrote to each of them during January to
advise them of employment conditions prevailing at the Air
Force Base . Its letter to the Respondent is dated January 12,
and states that the Union was the certified bargaining re ppre-
sentative for the employees involved, that there were collec-
tive-bargaining agreements in effect through September 30,
1970, that they contained successorship clauses making
them binding upon successor contractors , and that the Un-
ion expected any successful bidder to continue to recognize
the Union as bargaining agent and to honor the terms of the
existing agreements . Of particular importance to this case is
the following in the Union's letter:
The agreements contain wage and fringe benefit in-
creases which will become effective April 1, 1970.
These increases are not reflected in the wage deter-
minations included in the invitations for bids. In pre-
paring your bids we urge you to take into consideration
the wages and fringe benefits included in the Union
agreements.
There were attached to the notice sent to the Respondent
a summary sheet detailing 11 of the fringe benefit payment
obligations provided for in the existing agreements, and a
photostat copy of one page from each of the two contracts
setting out the wage rates , with particular emphasis upon
the hourly rates contracted for to take effect on April 1 for
each of the categories covered by the agreement.
The Respondent was the successful bidder for both the
work previously performed by Rice Cleaning Services and
by The Bartlett Company . It took over the work pursuant
to its contracts with the Government at 1 minute after mid-
night on the morning of April 1, 1970.
n March 20, after learning that the Respondent had
been the successful bidder on both the base housing and the
roads and grounds maintenance service contracts, David
Jacobs , business manager for the Union, spoke to Dan De-
shon, the company president . He suggested discussing the
contracts in effect and the Respondent s performance of the
terms of the agreements at the Air Force Base ; he also
offered to send Deshon full copies of the two contracts-the
one with The Barlett Company and the one with Rice
Cleaning . Deshon replied he would arrive at Laredo on the
25th , he had received the Union 's communication of Janu-
ary, and there was no need to send him further copies of the
agreements . On the 25th Jacobs spoke to both Deshon and
his lawyer , Glenn Bandelin , at Laredo . He asked was the
Respondent prepared to employ the same group of people.
The lawyer informed him the Respondent did not consider
itself bound by the contracts and would not recognize the
Union.
On March 31 , the day before the Respondent took over
the services , Jacobs delivered to Ferrera and Bums, supervi-
sors for both the predecessor companies and for the Re-
spondent, a copy of the seniority list with the names of the
regular employees , and informed them the men would re-
port for work the next morning.
Before the usual starting time at 7 a .m. on April 1 a large
number of the employees who had regularly worked for the
two prior companies presented themselves for work at the
Air Force base . Jacobs, the business manager , and Jose
Vasquez, an International representative , spoke to Presi-
dent Deshon and Bandelin, his lawyer . They told the Com-
pany officials that the men were reporting and ready to
work . Deshon replied they must apply for employment as
any new applicants . Jacobs explained that under the exist-
ing contract with the predecessors there was a hiring hall
arrangement, and that there had to be preference for the
union members who were already employees . For this pur-
pose, the Union placed union referral slips in the hands of
the approximately 80 employees who were standing about.
The men individually applied for work , executed employ-
ment applications , and delivered them to the Company. The
Respondent 's representatives refused to accept the union
referral slips . The union agents again that morning request-
ed that the Respondent recognize the Union and negotiate
any questions that might arise with it. Again the Company's
position was that it would not recognize the Union at all.
During the next few days the Union again demanded
recognition and requested that the Respondent honor the
two contracts ; the request was always refused . At one point
the Respondent 's lawyer advised the Union that it would
consider an election amon the employees at a later date to
determine whether the Union represented a majorit y. A
final demand for recognition was made in writing on May
18, 1970. To this the Respondent answered by letter dated
May 25 , reiterating its rejection of the Union's requests.
When it left the base , Rice Cleaning had 82 employees at
work under its Government contract ; Bartlett hadabout 14.
The Respondent put 47 persons to work on April 1; 4 on
April 2; 1 on April 3 ; and I on April 7. Of this 53-man total,
39 had been regular employees of the Rice Cleaning Com-
pany , and 14 were not. 'The complement was increased be-
ginning on April 15 and running into about May 1. During
this period 33 more employees were taken on, 23 of them
former employees of Rice Cleaning , and 10 not. This total-
86 men-were used for the service work required under the
Respondent 's road and grounds maintenance agreement
with the Government . As-for the base housing service con-
tract, for which The Bartlett Company had used 14 work-
men, the parties stipulated that the Respondent hired
"substantially the same employees as were employed under
the A. G. Bartlett contract."
Jacobs testified , without contradiction, that of the 86-
man total 63 were dues-paying members of the Union at the
time they were taken on by the Respondent . There is no
reason for not crediting this testimony of the business man-
ager ; the contracts then in effect contained regular union-
security clauses . Jacobs also testified that of the approxi-
mately 14 employees hired by the Respondent, who had
worked for The Bartlett Company , 8 or 9 were then dues-
paying members of the Union.
On May 5 or 6 the Company distributed to all its employ-
ees a comprehensive seven-page statement of policy. It de-
tails what the Company planned to pay and how it intended
to treat the employees on such matters as holidays, vaca-
tions , overtime , and seniority ; it also set out a number of
rules of conduct and a grievance procedure for the employ-
ees to use if they wished to discuss any conditions of em-
EMERALD MAINTENANCE, INC.
ployment with management . There was no schedule of wag-
es attached. It is clear on the record as a whole, however,
that the Respondent did not pay the specified increases in
wages , set out in the two existing contracts and to take effect
on April 1, 1970. It seems a fair inference, although the
matter is not explicitly established on the record, that the
Company did pay the employees whatever hourly rates they
were being paid during the month of March, before the
Respondent took over.
C Analysis and Conclusion
The defense to the complaint is twofold . First, the Re-
spondent contends it is not the successor to Rice Cleaning
and Bartlett , because it did not agree with these companies
to take over their business , because the employees it hired
were new applicants for employment, and because the bus-
iness it does is different from that carried on by the prede-
cessors . Second , it argues that because it was not party to
the contracts in question , did not itself sign them , it cannot,
as a matter of law , be deemed bound by their substantive
terms . I find no merit in either of these defenses.
The work services furnished by the two earlier companies
to the Government at the Laredo Air Force Base was briefly
described as follows on the record . As to the base housing:
"That [the service under The A. G. Bartlett contract] is the
base housing services administration . It's a billeting office.
They give out quarters to transient military people, u
know . They give them, and also the students , student piloots,
they are issued rooms where they live . And they have a
supply procedure , and they have housing referrals . In other
words , they give out the houses that the Government owns
on base to newcomers."
As to roads and grounds maintenance : "Roads and
grounds contract covers custodial services of many build-
ings on the base , janitorial , waxing , buffing and all that. It
covers pest and rodent control service . It covers the mainte-
nance of improved and unimproved grounds and the main-
tenance of roads . It also covers refuse collection, the
covering of a sanitary pit, and things like that . The grass
cuttin g. '
Dewey Foster , resident manager first for Rice Cleaning
and later , without interruption , for the Respondent on both
contracts , explained the following as intended to prove that
the work performed has changed . The total area to be cov-
ered by janitorial services has been reduced by 110,000
square feet . Certain grounds "on base housing" have been
added to the total area for which maintenance is to be
furnished . Refuse collection has been reduced from three
times per week to two times each week . The "cleaning of
certain windows" has been added to the contract . The Re-
spondent has built "two new roads ," work which was not
performed by the predecessor . The Respondent maintains
islands separating driveways and roadways , a refinement
not covered by earlier contract . A supply man who used to
work only part time , now works full time . The contractor
was reimbursed for the services of supervisors on an hourly
work basis in the earlier contract ; now the cost of supervi-
sors is included in what is called overhead.
On cross-examination Foster conceded the janitorial
services are of the same kind as before , and that this is
equally true of all road maintenance and trash removal
work . He added that to construct the two new roads the
same classifications of employees were used as did work
before and do work now , and that this is equally true of the
maintenance on islands . Foster also testified that the Re-
spondent now uses eight supervisors , seven of whom did the
same work for Rice Cleaning before.
881
The record shows that the employee classifications are
the same: heavy equipment operators , truckdrivers, light
equipment operators , janitors , laborers , refuse collection
crew , pavement repair men , and cement finishers . The par-
ties also stipulated that these people now use the same
equipment as they did before : fawn mowers , garbage dis-
posal trucks , graders , tractors , and cleaning and mainte-
nance machinery.
When to these facts is added the more significant reality
that of the 100 or so employees hired by the Respondent
about 75 had been doing the same work for its predecessors,
it is clear that the "employing enterprise" continued sub-
stantially without interru ption on April 1, 1970. The test of
successorship , in proceedings of this type , as applied by the
Board and the courts , turns on the subsidiary question
whether the business being carried on after a change in
identity of the employer is in reality the same employin g
enterprise as in the past. [W]e necessarily deal in terms of
succession of employment , and not succession of employ-
ers, i .e., in terms of the continued nature of the employment
rather than the source of such employment ." N.L.R.B. v.
McFarland, 306 F .2d 219 (C.A. 10).We controlling fact in
each case is therefore whether the employment enterprise
substantially or essentially continues under the new owner-
ship as before ." Cruse Motors, Inc., 105 NLRB 242. "The
duty of an employer who has taken over an `employing
industry' to honor the employees' choice of a bargaining
agent is not one that derives from a private contract, nor is
it one that necessarily turns upon the acquisition of assets
or assumption of other obligations usually incident to a sale,
lease , or other arrangement between employers. It is a pub-
lic obligation arising -by operation of the Act." Maintenance,
Inc., 148 NLRB 1299. See also John Wiley and Sons v. Liv-
ingston, 376 U .S. 543: "The objectives of national labor
policy ; reflected in established principles of federal law,
require that the rightful prerogative oT owners independ-
ently to rearrange their businesses and even eliminate them-
selves as employers be balanced by some protection to the
employees from a sudden change in the employment rela-
tionship."
I find that Emerald Maintenance, Inc., is a successor to
Rice Cleaning Service and The Bartlett Company by virtue
of the continuing employment enterprise which it under-
took on April 1, 1970, and as such was obligated to bar am
with the Union as successor . A substantial majority of the
employees who worked for it at the start were members of
the Union , the statutory obligation of the predecessor com-
panies to recognize that Union as exclusive majority repre-
sentative is unquestioned , and the validity of the
collective-bargaining agreements then in effect for this
complement of employees is clear . I therefore find that by
its refusal to recognize and bargain with the Charging Un-
ion the Respondent violated Section 8 (aX5) of the Act.
The second defense argument is addressed to the Board
holding in Burns International Detective Agency, supra, that
the successor to an "employing enterprise" must not only
bargain with the established majority representative but
also honor the terms of an existing collective -bargaining
agreement . The argument rests upon the assertion that it
was only by underbidding all other companies who were
willing to take on the service arrangement with the Gov-
ernment that the Respondent was able to undertake the
business at all, and that it therefore cannot afford to pay
whatever wages its predecessors had agreed upon with the
employees through their Union . Indeed , Deshon, for the
Respondent, stated that were he to pay the contractually
agreed-upon wages, his Company stood to lose a great deal
of money on the entire venture.
882 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Despite the superficial persuasiveness of this defense, it
must fall before the rationale of the Supreme Court in Wiley
& Livingston, supra, where the Court said: "While the princi-
ples of law governing ordinary contracts would not bind to
a contract an unconsenting successor to a contracting party,
a collective -bargaining agreement is not an ordinary con-
tract . . . . `The collective agreement covers the whole em-
F loyment relationship. It calls into being a new common
aw-the common law of a particular industry or of a partic-
ular plant.' . . . it is not in any real sense the simple product
of a consensual relationship."
The Respondent is not in a tenable position here. Appar-
ently when the Government distributed its invitations for
bids, it did not specify the precise wages due the employees
at the Air Force base under existing agreements. But the
Union took pains to be sure all the bidders were alerted to
the facts by expressly mailing to each the substantive terms
of its contracts, and especially a reprint of the wage scales
due to take effect on April 1. At the hearing Deshon candid-
ly conceded he had this information in his hands before he
submitted his bid, but deliberately chose to ignore it. More
significant, he testified Rice Cleaning Service is a competi-
tor of his, and the testimony strongly indicates Rice
Cleaning may have itself been an unsuccessful bidder, for
Deshon also admitted his bid was made "in open competi-
tion with these competitors."
One can readily understand why Rice Cleaning Service is
doing little business these days; Deshon said he had not
read of any awards being made to that company recently.
The Respondent came down from the northern reaches of
Idaho to the Mexican border to undercut Rice Cleaning and
Bartlett, to take the business away from them, and at least
one of its, aces in the hole was a plan to place the burden
of its lesser bid upon the employees. Had the predecessor
companies remained they would unquestionably have been
bound to pay the wages agreed upon by contract for April
1 and thereafter; it follows that their bids-at least with
respect to this no doubt major element of labor cost-would
be quite higher than the major If merely because
the Government chooses to solicit its contractors in this
manner the Respondent is free to ignore existing contractu-
al wage agreements , and not pay-in this case raises on
April 1-what the predecessor was obligated to pay, it
would logically also have to be held that tomorrow the
Respondent could go to another area of the country, under-
cut another existing contractor , again ignore an effective
collective-bargaining agreement , and be free to pay less
than whatever, the established wage rates of the moment
mi t be . I doubt any coherent system of law could envisage
sucZi a way of life today. Certainly the rule sought to be
invoked here by the Respondent would make a mockery of
both the entire collective-bargaining principle and the stat-
ute itself.
The answer to all this is that in a successorship case like
this the employees go with the business, they are part and
No useful purpose would be served by repeating here the
extended rationale of the Board in Burns International De-
tective Agency, supra, explaining the reasons why the succes-
sor is bound by an existing collective-bargaining agreement.
I see no reason for distinguishing the case at bar from the
lead decision . In fact there is persuasive indication in a
companion decision that the Board itself would not reach
a contrary conclusion here . In Kota Division of Dura Corpo-
ration, 182 NLRB No. 51, also a successorship case, the
recognized and contract union sought to evade the binding
provisions of the existing agreement and to negotiate a new
contract with the successor , presumably for the purpose of
raising the wages and other employee benefits . In dismissing
the complaint allegation that the successor had unlawfully
refused to bargain when it rejected that union's insistence
upon negotiating increased benefits , the Board ruled that
the Union, and through it the employees it represented, had
to live with the wages and other conditions of employment
as agreed upon in the contract , at least for the duration of
the agreement . But if, where the contract by its terms ex-
tends beyond the date of the successorship, the union is
foreclosed from insisting upon more , of necessity the suc-
cessor must be foreclosed from the privilege of paying less.
In its amicus brief the United States Air Force in effect
asks for dismissal of the entire complaint , for it contends
both that there can be no successorship concept for Gov-
ernment contractors of this kind, and that if there were to
be such a finding, in no event may a Government contractor
lawfully be deemed bound by the collective -bargaining con-
tract of a predecessor . The brief starts with this statement:
"The successor-employer doctrine is not applicable to con-
tractors operating under Government contracts that are
governed by the Service Contract Act." The brief then clo-
ses with this contention : "We submit that in Government
service contracts, the wage rates which a contractor is re-
quired by law to pay should be set by the Government and
not by the predecessor -contractor and union." The net ef-
fect of all this is an end insistence that among civilian em-
ployees working for a Government contractor there may be
no union activity , no union representation , and no collec-
tive bargaining.
The argument starts by asserting that these employees are
"unique, that the "normal employer -employee relation-
ship' does not exist under "service contracts," and that this
entire employee category falls in "the Federal Procurement
Sector." There are employees working in private industry
and there are Government workers , called civil servants.
The second class is expressly excluded from the coverage of
the Act, and the first is no less clearly included as among
those entitled to the protected right to self-organization and
collective bargaining . As used in this brief the phrase "Fed-
eral Procurement Sector" is intended to remove the employ-
ees of a service contractdr such as Emerald Maintenance-
as well, I suppose, as the employees of Maintenance, Inc.,
parcel of the employing enterprise which continues unim-
paired, and their established wage rates , as well as other
proper conditions of employment, are an equally insepara-
ble component of what the successor succeeds to.
Accordingly I find that the Respondent was bound by its
predeccessor's contracts, and that by unilaterally changing
conditions of employment for the employees involved vio-
lated Section 8(a)(5) of the Act. This finding of separate
violations of the statute embraces each and every one of the
detailed allegations set out in paragraph 16 of the com-
plaint, for the May 5, 1970, written statement of company
policy distributed to the employees reflects the substantial
unilateral action with respect to each of these allegations.'
i I find, as substantially alleged in the complaint and as directly proved in
the collective-bargaining agreements in effect on April 1, 1970, that all serv-
ice, production, and maintenance employees engaged in the performance of
the Respondent's contract at Laredo Air Force Base, but excluding execu-
tives, guards, supervisors, and professionals as defined in the National Labor
Relations Act, constitute a unit appropriate for the purposes of collective
bargaining within the meaning of Section 9(b) of the Act I also find that at
all times since April 1, 1970, and continuing to date , the Union has been the
representative for purposes of collective bargaining of the employees in this
unit, and by virtue of Section 9(a) of the Act has been and is now the
exclusive representative of all such employees for the purposes of collective
bargaining with respect to rates of pay, wages, hours of employment, and
other terms and conditions of employment.
EMERALD MAINTENANCE, INC.
supra, and of Tri-State Maintenance-z from the area of
private industry employment, without, however, going so
Par as to place them in the class of Government employees.
Clearly the Respondent's employees are not civil servants,
for at the hearing the Respondent made much of the fact
that in 1969 a predecessor contractor defaulted, and the
Defense Department had to hire direct civilian employees,
truly Government workers, to complete the contract year
before another independent contractor could be found. It is
equally clear that Emerald Maintenance is a private em-
ployer, an independent contractor, and that as an employer
it is subject to all laws applicable to private industry. In-
deed, there is no question but that the very purpose of the
Government in utilizing the services of such independent
employers is to avoid the responsibility, otherwise com-
peIIed, of functioning as does any regular employer in the
land.
The Air Force representatives, who operate the Laredo
Air Force Base, chose not to participate in this proceeding.
Their brief nevertheless contains factual statements and sets
out internal governmental regulations that are not part of
this record. These procedural rules-issued in part by the
Comptroller General and in party by the Department of
Labor-purport to fix with finality and precise wages to be
paid employees working under service contracts, and, in-
deed, all fringe benefits to be enjoyed. The Government
invites annual bids for this work, and its invitations set out
what are "prevailing wage rates." The Respondent's agents
called these "minimum wage rates," below which it could
not go. And at some points in the brief the Air Force also
calls them "minimum wages." But the brief then also ex-
plains the schedule as being "prevailing wages," and then
makes absolutely clear that by "prevailing wages" is meant
what the regular work complement of the current service
contractor are being paid at the time the invitations to bid
are distributed. In this case, without cavil in the brief, it
meant exactly what the collective-bargaining agreements
called for during the period before April 1, 1970. With the
amicus brief then insisting that as a matter of law the new
contractor-the successful bidder-could not pay anything
above the "prevailing" rate set out in the Government's
invitation, the net effect is a conclusion that wages, as well
as other conditions of employment, must remain frozen as
the work might pass year after year from one contractor to
another.
But if, as already quoted from the brief, "The wage rates
which a contractor is required by law to pay should be set
by the Government," there is an end to collective bargain-
ing, and any pretext that these "private" industry employees
enjoy the benefits of self-organization becomes a fiction and
not a reality. Had Congress intended to repeal the Taft-
Hartley Act with respect to all civilian employees working
for private service contractors doing business with the Gov-
ernment, it would have said so in no uncertain terms. It is
for this reason-because the entire category is not one of the
listed exclusions under Section 2(3) of the Act-that the
brief creates an artificial class called "Federal Procurement
Sector." It is a misleading grouping that would evade the
basic purposes of the statute.
And it is for this same reason that the brief stops short
of calling them "Government Sector" employees. In that
event they would have to be either civil service people sub-
ject to the Classification Act, or blue collar workers. In
either case they would for the least be entitled today to the
union and collective-bargaining privileges permissible un-
2 167 NLRB 933, enfd 408 F.2d 171 (C.A.D C.), as unfair labor practices
committed by a Government service contractor
883
der appropriate Executive Order. As the brief would have
it they are neither fish nor fowl; if not with the contractor,
and if not with the Government, with whom do these em-
ployees bargain?
The superficially persuasive collateral arguments, also
urged in support of the major thrust, give no real comfort
to the defense as a whole. It is said that because the bidder
on a Government service contract does business with the
Government and attempts to become the lowest bidder, he
has no room for "adjustment" to the conditions of employ-
ment established by proper collective bargaining in the bus-
iness to which he succeeds, as might be true of an employer
who takes on the "employing enterprise" of any other pri-
vate contractor. The answer to this is that he, the would-be
service contractor, aware of the effective and lawful con-
tract in force, bids a little higher so that the established wage
scale is no less protected than his own profit interests. And
if all other bidders are equally advised-as was also true
here-concerning the conditions of the "enterprise" they
wish to take over, no one will achieve low bid status at the
expense of the employees; instead the burden of the wage
scale will fall equally on all bidders.
There are repeated protestations in this brief that there is
no real cause for concern because the wages set out in the
bid invitations-whether called minimum , prevailing, or le-
gall y obligatory-as fixed by the office of the Secretary of
Labor are set with an e'e to "fairness for the worker,"
"reasonable," "equitable.' These assertions are irrelevant to
the question of law presented. It is also difficult to discern
any merit in the following statement in the brief: "The fact
that the bidding is accomplished annually will naturally
result in the employees realizing the benefits of effective
bargaining by their union representatives." What "effective
bargaining by their union?" Emerald Maintenance did not
know it had this contract job until its bid had been accepted
by the Government; and if the Air Force brief is correct,
Emerald had every right to feel secure it could not "legally"
be obligated to pay higher wages than had been paid by
Rice Cleaning and Bartlett. In fact, it predicated its bid
upon this assurance. It first became the Employer on April
1. What economic conditions of employment were there
then to bargain about with the employees' choice of union?
Emerald could not increase any wages, nor indeed any
fringe benefits, unless, of course, it was willing to forego its
profits, already narrowed to meet competing bids. The over-
all price to the Government, as surely, could in no event be
raised. And again the pervasive argument running through
the brief leads to a logical conclusion that in the case of
Government service contracts such as these, wages-and
fringe benefits-never change. All this is said to flow as a
matter of law because Congress insists on appropriating
funds only on an annual basis. Would that this congression-
al policy could also serve to stay the inexorable rising costs
or bread and butter-if only in the Laredo Air Force Base.
There are many other arguments, most of them variations
on the basic theme; one more deserves comment. The con-
tractor knows he will be gone next year and therefore reck-
lessly agrees to a big pay hike for next year, when someone
else will have to pay it. There is no evidence in this record
of any such purpose by the predecessor employers. In fact,
the Air Force brief expressly disavows any such charge here.
In any event, as the brief also concedes, where it can be
shown that a contract negotiated by a predecessor was not
made in good faith, or not truly intended as real conditions
of employment, the Board will treat that case as it deserves
to be treated. I have no reason to believe the Board will not
do the same next time the occasion arises.
884 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
IV THE REMEDY
The contracts in effect in April 1970 by their terms ex-
tended to September 30, 1970 , and each contained pro-
visions for automatic annual renewal thereafter absent
timely notice of intent to terminate. The Union served such
notice on the Respondent, and of its desire to negotiate a
new agreement. The Respondent answered to express its
own desire to terminate the contracts , while simultaneously
stating it was not bound by them.
The Respondent must be ordered to bargain with the
Union on request, as was its statutory duty from the begin-
ning on April 1, 1970. The contracts , which it unlawfully
refused to honor , expired on September 30, but their sub-
stantive provisions could not be altered unilaterally by the
employer, in this instance neither before nor after the termi-
nation date . Meaningful remedial action in the circum-
stances , therefore, requires that the Respondent be ordered
to make restitution of all contractual benefits withheld from
the emplo ees by virtue of the failure to honor and abide
by the collective bargaining agreements in effect on April 1,
1970, and to make restitution of any benefits which may
have been lost because of any unilateral changes made in
the terms and conditions of employment . The extent to
which agreed-upon wages and other economic benefits,
have unlawfully been denied the employees was not ex-
plored or established in the record as made , but these are
matters properly to be determined at the compliance stage
of the proceeding . Among them , but not limited , are wage
Payments lower than called for by the contracts , reduction
in holiday benefits , and denial of established seniority
rights.
V THE EFFECT OF THE UNFAIR LABOR
PRACTICES UPON COMMERCE
The activities of the Respondent set forth in section III,
above, occurring in connection with its operations as de-
scribed in section I, above, have a close, intimate, and sub-
stantial relation to trade, traffic, and commerce among the
several States and tend to lead to labor disputes burdening
and obstructing the free flow of commerce.
CONCLUSIONS OF LAW
1. The Respondent is an employer within the meaning of
Section 2(2) of the Act, and is engaged in commerce wit in
the meaning of Section 2(6) and (7) of the Act.
2. The Union is a labor organization within the meaning
of Section 2(5) of the Act.
3. All service, production, and maintenance employees of
the Respondent engaged in the performance of its contracts
at Laredo Air Force Base , excluding executives, guards,
professional employees, and supervisors as defined in the
Act, constitute a unit appropriate for the purposes of collec-
tive bargaining within the meaning of Section 9(b) of the
Act.
4. The Union was on April 1, 1970, and at all times
thereafter has been the exclusive collective-bargaining rep-
resentative of Respondent's employees in the appropriate
unit within the meaning of Section 9(a) of the Act.
5. By refusing on and after April 1, 1970, to meet with the
above-named labor organization and to bargain with it for
purposes of collective bargaining, and by unilaterally
changing conditions of employment after April 1, 1970, the
Respondent has engaged in and is engagin in unfair labor
practices within the meaning of Section 8(a)(5) and (1) of
the Act.
6. The aforesaid unfair labor practices are unfair labor
practices within the meaning of Section 2(6) and (7) of the
Act.
RECOMMENDED ORDER
Upon the foregoing findings of facts and conclusions of
law, and upon the entire record in the case , I recommend
that Emerald Maintenance , Inc., Laredo , Texas, its officers,
agents , successors , and assigns , shall:
1. Cease and desist from:
(a) Refusing to bargain collectively with Public Service,
Production and Maintenance Employees Local No. 1057,
affiliated with Laborers' International Union of North
America , AFL-CIO, as the exclusive representative of all
employees in the bargaining unit.
(li) In any like or related manner interfering with, re-
straining, or coercing its employees in the exercise of the
rights to self-organization , to form , join, or assist any labor
organization , to bargain collectively through representa-
tives of their own choosing, and to engage in other concert-
ed activities for the purpose of collective bargaining or other
mutual aid or protection , or to refrain from any and all such
activities.
2. Take the following affirmative action which I find will
effectuate the policies of the Act:
(a) Upon request bargain collectively with Public Service,
Production and Maintenance Employees Local Union No.
1057, affiliated with Laborers ' International Union of
North America , AFL-CIO, as the exclusive bargaining rep-
resentative of all employees in the appropriate unit de-
scribed above , with respect to rates of pay, wages , hours of
employment, and other terms and conditions of employ-
ment , and, if an understanding is reached, embody such
understanding in a signed agreement.
(b) Make whole all of the employees in the bargaining
unit for any wages and economic fringe benefits withheld
from them by the Respondent , in the manner set forth in the
section entitled "The Remedy ," in consequence of its refus-
al to abide by the terms of the collective -bargaining agree
ments in effect on April 1, 1970.
(c) Post at its offices in the Laredo Air Force Base, Lare-
do, Texas, copies of the attached notice marked "Appen-
dix."3 Copies of said notice , on forms provided by the Re-
gional Director for Region 23, shall , after being signed by
the Respondent's representative, be posted by the Respon-
dent immediately upon receipt thereof , and be maintained
by it for 60 consecutive days thereafter, in conspicuous
places, including all places where notices to employees are
customarily posted . Reasonable steps shall be taken by Re-
spondent to insure that said notices are not altered, defaced,
or covered by any other material.
(d) Notify said Regional Director , in writing, within 20
days from the date of receipt of this Decision , what steps it
has taken to comply herewith.'
3 In the event no exceptions are filed as provided by Section 102 46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions, recommendations , and Recommended Order herein shall, as
provided in Section 102 48 of the Rules and Regulations , be adopted by the
Board and become its findings , conclusions , and Order, and all objections
thereto shall be deemed waived for all purposes In the event that the Board
Order is enforced by a judgment of a United States Court of Appeals, the
words in the notice reading "Posted by Order of the National Labor Rela-
tions Board" shall be changed to read "Posted pursuant to a Judgment of
the United States Court of Appeals enforcing an Order of the National Labor
Relations Board "
In the event that this Recommended Order is adopted by the Board, this
provision shall be modified to read "Notify the Regional Director for Re-
gion 23, in writing , within 10 days from the date of this Order, what steps
Respondent has taken to comply herewith "