284 N.L.R.B. 418 (N.L.R.B. 1987)

General Split Corp.

National Labor Relations Board - Board DecisionsJun 22, 1987

284 N.L.R.B. 418 (N.L.R.B. 1987)

418 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD General Split Corporation and Leather Workers Union, Local No. 47, United Food and Commer- cial Workers, AFL-CIO-CLC. Case 30-CA- 9121 22 June 1987 DECISION AND ORDER BY MEMBERS JOHANSEN, BABSON, AND STEPHENS Upon a charge filed by the Union 20 February 1986, the General Counsel of the National Labor Relations Board issued a complaint 26 March 1986 against the Respondent, alleging that it has violated Section 8(a)(5) and (1) and Section 8(d) of the Act by failing and refusing to provide contractually mandated severance pay to approximately 175 of its employees. The Respondent filed an answer, ad- mitting in part and denying in part the allegations in the complaint, submitting affirmative defenses, and requesting that the complaint be dismissed. The complaint alleges, and the Respondent admits, that in approximately March 1985, the Re- spondent began to transfer its operations from Mil- waukee to Sheboygan, Wisconsin. In early Decem- ber the transfer was completed. The most recent collective-bargaining agreement between the Re- spondent and the Union, effective 1 April 1985 to 31 March 1988, provides for severance pay for em- ployees who elect not to transfer to Sheboygan or who transfer to Sheboygan but quit their employ- ment within 4 weeks after their first day of em- ployment at Sheboygan. The agreement provides that the severance payments be made 4 weeks after the last employee from Milwaukee has exercised his right to transfer to Sheboygan. This occurred in early December 1985. Approximately 175 employ- ees are entitled to severance pay under the provi- sions in the collective-bargaining agreement. Since early January 1986 the Union has request- ed the Respondent to furnish the employees their contractual severance pay, but since early January 1986 the Respondent has failed and refused to pay. In its answer the Respondent admits the above allegations, but denies that this conduct constitutes an unlawful refusal to bargain in good faith. The Respondent admits that it owes the debt but sub- mits that the reason for its failure to pay is solely its present fmancial inability to do so. The Re- spondent argues that the Board lacks jurisdiction to act as a collection agency for the payment of moneys where there has not been a failure to bar- gain in good faith. On 8 September 1986 the General Counsel filed with the Board a Motion for Summary Judgment, asserting that the Respondent's answer raises no genuine issues of fact which require an evidentiary hearing, and requesting that the Board issue a De- cision and Order finding the allegations in the com- plaint to be true and issuing an appropriate remedi- al Order. Thereafter, on 10 September 1986 the Board issued an order transferring proceeding to the Board and Notice to Show Cause why the General Counsel's Motion for Summary Judgment should not be granted. The Respondent filed a re- sponse. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. Ruling on the Motion for Summary Judgment The Respondent's admissions establish that the Union was certified as the exclusive collective-bar- gaining representative of the Respondent's produc- tion, maintenance, and shipping employees; that the Respondent was obligated under the terms of its collective-bargaining agreement with the Union to make severance payments to approximately 175 employees; and the Respondent failed and refused to pay the severance pay. It is well established that Section 8(aX5) and (1) and Section 8(d) of the Act prohibit an employer who is a party to an existing collective-bargaining agreement from modifying the terms and condi- tions of employment established by that agreement without obtaining the consent of the union. 1 Here, the Respondent has admitted that it unilaterally failed and refused to make the contractually re- quired severance payments. Accordingly, the Re- spondent has admitted all the facts material to a resolution of the unfair labor practice issues raised by the complaint. The Respondent's claim that it is financially unable to make the required payments does not constitute an adequate defense to an alle- gation that an employer has violated Section 8(a)(5) and (1) and Section 8(d) of the Act by 'fail- ing to abide by provisions of a collective-bargain- ing agreement. See International Distribution Cen- ters, 281 NLRB 742 (1986). 2 Because there are no 1 E.g., Nestle Co., 251 NLRB 1023 (1980); Pere Marquette Park Lodge, 237 NLRB 855, 861 (1978). 2 In contending that the complaint should be dismissed, our dissenting colleague argues, as he did in his partial dissent in Hiysota Fuel Co., 280 NLRB 763 (1986), that, so long as an employer acknowledges its contrac- tual obligation, financial problems "beyond the employer's control" should "excuse actions that represent only a delinquency or temporary failure to make timely payments." The dissent's unwillingness to find an unlawful refusal to bargam thus rests on the employer's intent eventually to meet its contractual obligation. Whatever might be the proper rule regarding a single delayed payment in a series of periodic obligations, we cannot agree that financial difficul- ties should constitute a defense to an 8(a)(5) allegation when the employ- er fails to perform the obligation that constitutes its sole final agreement with respect to employees who will not be continuing in its employ and Continued 284 NLRB No. 49 GENERAL SPLIT CORP. 419 material facts in dispute, we grant the General Counsel's Motion for Summary Judgment. On the entire record, the Board makes the fol- lowing FINDINGS OF FACT I. JURISDICTION The Respondent, a Wisconsin corporation with offices and places of business in Sheboygan and Milwaukee, Wisconsin, is engaged in the manufac- ture of leather products. During the past calendar year, a representative period, the Respondent has sold and shipped goods valued in excess of $50,000 from its Milwaukee and Sheboygan, Wisconsin fa- cilities directly to points located outside the State of Wisconsin. We find that the Respondent is an employer engaged in commerce within the mean- ing of Section 2(2), (6), and (7) of the Act and that the Union is a labor organization within the mean- ing of Section 2(5) of the Act. IL THE UNFAIR LABOR PRACTICES A. The Unit The following employees of the Respondent con- stitute a unit appropriate for collective-bargaining purposes within the meaning of Section 9(b) of the Act: All production, maintenance and shipping de- partment employees, but excluding office and plant clerical employees, truckdrivers, guards and supervisors as defined in the Act. B. The Collective-Bargaining Agreement About 1 December 1964 the Union was certified under Section 9(a) of the Act as the exclusive col- lective-bargaining representative of the employees in the unit described above, and since that date, the Union has been recognized as such by the Re- spondent. Such recognition has been embodied in successive collective-bargaining agreements,. the most recent of which is effective by its terms for the period 1 April 1985 to 31 March 1988, inclu- sive. merely promises that at some unspecified time it will live up to its agree- ment. We note that in excusing only a "temporary" failure to make the severance payments, the dissent implicitly agrees that a delay can ripen into a repudiation, whatever promises the employer might make. We are uncertain what standard our colleague would apply in determining when a cause of action for repudiation of this one-time obligation would accrue, and we think that charging parties would also find it difficult knowing how long to wait before filing a charge without risking dismis- sal on the grounds that the 10(b) limitation penod had already expired. We therefore believe that the better course is to treat the financial inabil- ity defense here exactly as we do in cases in which an employer pays lower-than-contract wages out of financial necessity. See, e.g., NLRB v. Manley Truck Line, 779 F.2d 1327 (7th Cir. 1985) (unilateral imposition of a wage "deferral" plan). C. The Refusal to Bargain Since early January 1986 the Respondent has failed and refused to provide contractually mandat- ed severance pay to approximately 175 bargaining unit employees. Accordingly, we find that the Re- spondent has failed and refused to bargain collec- tively and in good faith with the Union as the ex- clusive collective-bargaining representative of its unit employees and has violated Section 8(a)(5) and (1) and Section 8(d) of the Act. CONCLUSIONS OF LAW By failing and refusing to provide contractually required severance pay to approximately 175 unit employees, the Respondent has engaged in unfair labor practices affecting commerce within the meaning of Section 8(a)(5) and (1), Section 8(d), and Section 2(6) and (7) of the Act. REMEDY Having found that the Respondent has engaged in unfair labor practices within the meaning of Sec- tion 8(a)(5) and (1) and Section 8(d) of the Act, we shall order it to cease and desist and to take certain affirmative action designed to effectuate the poli- cies of the Act. Accordingly, we shall order the Respondent to make all contractually required sev- erance payments to unit employees, with interest to be computed in the manner prescribed in New Ho- rizons for the Retarded, 283 NLRB 1173 (1987).3 ORDER The National Labor Relations Board orders that the Respondent, General Split Corporation, She- boygan and Milwaukee, Wisconsin, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Refusing to bargain collectively with the Union as the exclusive collective-bargaining repre- sentative of bargaining unit employees by failing and refusing to make contractually required sever- ance payments to unit employees. (b) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action neces- sary to effectuate the policies of the Act. 3 The General Counsel seeks a visitatonal clause authorizing the Board, for compliance purposes, to obtain discovery from the Respond- ent under the Federal Rules of Civil Procedure subject to the supervision of the United States court of appeals enforcing this Order. Under the cir- cumstances of this case, we find it unnecessary to include such a clause. Accordingly, we deny the General Counsel's request. 420 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD (a) Make all contractually required severance payments to unit employees, with interest. (b) Preserve and, on request, make available to the Board or its agents for examination and copy- ing, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the amount of severance pay due under the terms of this Order. (c) Post at its facilities in Sheboygan and Mil- waukee, Wisconsin, copies of the attached notice marked "Appendix." 4 Copies of the notice, on forms provided by the Regional Director for Region 30, after being signed by the Respondent's authorized representative, shall be posted by the Respondent immediately upon receipt and main- tained for 60 consecutive days in conspicuous places including all places where notices to em- ployees are customarily posted. Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material. (d) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply. MEMBER JOHANSEN, dissenting. At issue before the Board is whether the Re- spondent violated Section 8(a)(5) and (1) and Sec- tion 8(d) of the Act by its failure, since early Janu- ary 1986, to make contractually required severance payments to unit employees. The majority fmds that the Respondent's conduct violated the Act. I disagree. Generally, an employer's unilateral change of employees' terms and conditions of employment during the course of a collective-bargaining rela- tionship is deemed to be an unlawful refusal to bar- gain. Thus, an employer acts in derogation of its bargaining obligation under Section 8(d) of the Act when, during the effective period of a contract to which it is bound, it unilaterally changes or other- wise repudiates terms and conditions of employ- ment contained in the collective-bargaining agree- ment. See, e.g., C & S Industries, 158 NLRB 454 (1966). However, the Board must recognize that there are limited circumstances in which an em- ployer's unilateral actions, while changing the em- 4 If 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 Nation- al Labor Relations Board" shall read "Posted Pursuant to a Judgment of the Umted States Court of Appeals Enforcing an Order of the National Labor Relations Board." ployee's terms and conditions of employment, are mandated by factors beyond an employer's control. Under such circumstances, an employer's conduct should not be found to be an unfair labor practice. In circumstances in which an employer has not re- pudiated its contractual obligations but has been forced to fail to observe temporarily certain con- tractual provisions, an employer has not unlawfully refused to bargain, but has, at most, breached its contract. Contrary to the majority, I believe that the Re- spondent's failure to make severance payments cannot fairly be characterized as a repudiation of its contractual obligations.' As I stated in my par- tial dissent in Hiysota Fuel Co., 280 NLRB 763 (1986), repudiation implies that a party has totally abrogated, disowned, or rejected certain obliga- tions. Here, to the contrary, the Respondent has consistently acknowledged that it owes the sever- ance pay to the employees. It alleges, however, and the General Counsel does not dispute, that the only reason for its failure to pay its obligation is its present financial inability to pay. Although the Board has held that economic ne- cessity is not a defense to the unilateral repudiation of the monetary provisions of a collective-bargain- ing agreement, 2 my position here does not conflict with this precedent. Although economic necessity does not justify repudiation, I believe that it should excuse actions that represent only a delinquency or temporary failure to make timely payments. Such actions should not be considered unlawful refusals to bargain. When an employer's actions are temporary in nature, necessitated by forces such as fmancial problems beyond the employer's control, do not precipitate a strike, and the employer continues to acknowledge its contractual obligations, the em- ployer has not undermined or obstructed bargain- ing. Here, the Respondent's conduct has not under- mined or obstructed the bargaining relationship. Congress intended that not every contract viola- tion is also an unfair labor practice. If the Board is to give meaning to this Congressional intent, it must decline to find unfair labor practices in cases such as this. Because I believe that the Respond- ent's failure to make severance payments constitut- ed no more than a breach of contract, I would dis- miss the complaint. 1 The complaint does not specifically allege that the Respondent repu- diated its collective-bargaining agreement. 2 See, e g., Morelli Construction Co., 240 NLRB 1190 (1979), GENERAL SPLIT CORP. 421 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 the National Labor Relations Act and has ordered us to post and abide by this notice. WE WILL NOT refuse to bargain with the Union as the exclusive collective-bargaining representative of our bargaining unit employees by failing and re- fusing to make contractually required severance payments to unit employees. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exer- cise of the rights guaranteed you by Section 7 of the Act. WE WILL make all contractually required sever- ance payments to our unit employees, with interest. GENERAL SPLIT CORPORATION 422 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD THIS PAGE LEFT BLANK INTENTIONALLY.