John W. Bolton & Sons, Inc.

National Labor Relations Board - Board Decisions

Oct 17, 1950

91 N.L.R.B. 989 (N.L.R.B. 1950)

In the Matter of JOHN W. BOLTON & SONS7 INC. and LODGE 1271 OF THE
INTERNATIONAL ASSOCIATION OF MACHINISTS
Case No. 1-CA-369.-Decided October 17; 1950
DECISION AND ORDER
On December 30, 1949, Trial Examiner George Bokat issued his
Intermediate Report in the above-entitled proceeding, finding that
the Respondent had engaged in and was engaging in unfair labor
practices within the meaning of Section 8 (a) (5) and (1) of the Act,
and recommending that it cease and desist therefrom and take certain
affirmative action, as set forth in the copy of the Intermediate Report
attached hereto. Thereafter the Respondent filed exceptions to the
Intermediate Report and a supporting brief.'
The Board has reviewed the rulings of the Trial Examiner at the
hearing and finds that no prejudicial errors were committed. The
rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the Respondent's exceptions and brief, and the entire
record in the case, and hereby adopts the findings, conclusions, and
recommendations of the Trial Examiner ,with the following modi-
fications : 2
The Trial Examiner found that the Respondent had violated the
provisions of Section 8 (a) (5) of the Act by unilaterally instituting
a wage incentive program to take effect during the life of the contract
between the parties without having complied with the provisions of
Section 8 (d) of the Act. We agree. In affirming this ultimate find-
ing of the Trial Examiner we do not pass upon that part of his
reasoning which exceeds the findings and conclusions set forth here-
inafter.
As indicated in the Intermediate Report the contract provided for
the payment of wages on a cents-per-hour basis and the reopening
clause of the contract provided that any wage negotiations during the
I We are unable to determine from the wording of his brief whether or not the Respond-
ent wished to move for oral argument in this case . In any event , the record , exhibits, and
brief adequately present the issues in the case.
2 Chairman Herzog and Member Murdock join in the finding herein that the Respondent
violated Section ( a) (5) by failing to comply with the notice requirements of Section 8 (d)
only because they, deem themselves bound by , the majority 's construction of Section 8 (d)
,in Wilson '& Company, 89 NLRB 810.
91 NLRB No. 160.
989
990 DECISIONS OF NATIONAL, LABOR RELATIONS BOARD
life of the contract was to be limited to a discussion on that basis only.
When, on the reopening of the contract and thereafter, the Respondent
sought to negotiate with the Union concerning a wage incentive pro-
gram it. met with a refusal on the part of the Union.3 Subsequently
Respondent unilaterally instituted the program. The question for
decision is -whether or not this innovation constituted.a modification
of the existing contract within the meaning of Section 8 (d) of the
Act. Like the Trial Examiner, we think that it did. The contract
had fixed the method of payment of the employees in the unit on a
cents-per-hour basis. The addition of an incentive wage payment
plan to the established wage payment structure varied the established
plan and indeed was inextricably and inseparably bound up with it.
.We therefore view the Respondent's superimposition of the wage
incentive plan as a modification of the specific terms of the contract,
within the meaning of Section 8 (d). As the plan took effect during
the life of the agreement and without compliance with the notice
provisions of Section 8 (d) of the Act, it follows that the Respondent
violated Section 8 (a) (5) of the Act.4
ORDER.
Upon the entire record in the case, and pursuant to Section 10 (c) of
the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent, John W. Bolton
& Sons, Inc., and its officers, agents, successors, and assigns, shall:
1. Cease and desist from :
(a) Refusing to bargain collectively with Lodge 1271 of the Inter-
national Association of Machinists, with respect to an incentive bonus
plan in accordance with the provision of Section 8 (d) as exclusive
bargaining representative of all production and maintenance em-
ployees of the Respondent, excluding executives, superintendents,
office and clerical workers, foremen, assistant foremen, firemen, watch-
men, engineers, guards, and those employees known as Emerson plant
employees;
(b) Making any changes affecting any employees in the unit repre-
sented by the Union, with respect to any incentive bonus plan without
complying with the notice requirements of Section 8 (d) of National
Labor Relations Act.
3 In view of our holding that the wage incentive program constitutes a modification of
the contract the Union was under no legal obligation to bargain with the Respondent on the
subject at this time.
* It is thus unnecessary to pass upon the question whether, if the notice requirements of
Section 8 (d) had been complied with, the fact that the Respondent took such action on
wages at a time when it was not appropriate under the wage reopening provision of the
contract, would constitute a violation of Section 8 (d).
JOHN W. BOLTON & SONS, INC. 991
2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act :
(a) Revoke the incentive bonus plan instituted on January 17,
1949, or thereafter, with respect to any employees in the unit repre-
sented by the Union and revert to the method and manner of paying
such employees as provided by the contract in force and effect prior
to the institution of such plan;
(b) Bargain collectively in accordance with the provisions of Sec-
tion 8 (d) with respect to any incentive bonus plan with the Union
as exclusive bargaining representative of its employees in the afore-
said described appropriate unit;
(c) Post at its Lawrence, Massachusetts, plant, copies of the notice
attached hereto as an Appendix.5 Copies of said notice, to be furnished
by the Regional Director for the First Region, shall, after being
duly signed by, the Respondent's representative, be posted by the
Respondent immediately upon receipt, thereof and maintained by it
for sixty (60) consecutive days thereafter in conspicuous places, in-
cluding all places where notices to employees are customarily posted.
Reasonable steps shall be taken by Respondent to insure that said
notices are not altered, defaced, or covered by any other material;
(d) Notify the Regional Director for the First Region (Boston,
Massachusetts), in writing, within ten (10) days from the date of
receipt of this Order, what steps the Respondent has taken to comply
herewith.
MEMBER REYNOLDS took no part in the consideration of the.above
Decision and Order.
APPENDIX A
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, we hereby notify our employees that:
WE WILL NOT refuse to bargain collectively with. LODGE 1271 of
THE INTERNATIONAL ASSOCIATION OF MACHINISTS, with respect
to an incentive bonus plan when and if the plan is raised as a
bargainable issue at the appropriate time defined by the National
Labor Relations Act, as the exclusive bargaining representative
of all our production and maintenance employees, excluding execu-
tives, superintendents, office and clerical workers, foremen, assist-
5 In the event this Order is enforced by decree of a United States Court of Appeals, there
shall be inserted in the notice before the words , "Decision and Order the words , "Decree
of the United States Court of Appeals Enforcing."
992 DECISIONS - OF NATIONAL LABOR RELATIONS BOARD
ant foremen , firemen, watchmen , engineers , guards , and those
employees known as Emerson plant employees.
' WE WILL NOT make any changes affecting any employees. in the
above-described unit with respect to any incentive bonus plan
without prior consultation with the union at the appropriate
time defined by the National 'Labor Relations Act.
WE WILL revoke the incentive bonus plan that we instituted on
January 17, 1949, and thereafter , with respect to any of our em-
ployees in the unit represented by the union, and revert to the
method and manner of paying our employees as provided by our
contract with the union prior to the institution of the plan.
JOHN W . BOLTON & SONS, INC.,
Employer.
By ----------------------------------( Representative ) ( Title)
Dated --------------------
This notice must remain posted for 60 days from the date hereof,.
and must not be altered, defaced, or covered by any other material.
INTERMEDIATE REPORT
Mr. Sidney A. Coven, for the General Counsel.
Phipps, Durgin & Cook, by Mr. James . H. Dufn, of Boston, Mass ., for the
Respondent.
' -Mr. Harold ' F. Reardon , for the Union.
STATEMENT OF THE CASE
' Upon . a charge filed on February 14, 1949, by International Association of
Machinists , herein called the Union , the General Counsel of the National Labor _
Relations Board , called herein respectively the General Counsel and the Board,
by the Regional Director of the First Region ( Boston, Massachusetts ); issued
his complaint dated August 8, 1949, against John W . Bolton & Sons , Inc., herein
called the Respondent , alleging that - the Respondent had engaged in and was
engaging in unfair labor practices affecting commerce within the meaning of
Section 8 ( a) (1) and ( 5) and Section 2 (6) and ( 7) of the National Labor
Relations Act, 61 Stat. 136, herein called the Act. Copies of the charge and the
complaint , together with notice of hearing, were duly served upon the Respondent.
With respect to the unfair labor practices , the complaint alleged, in sub-
stance, that the Respondent , did, without consultation with the Union, the duly
designated bargaining representative of its employees in an appropriate unit,
announce and inaugurate a wage incentive bonus plan in its yard and container
departments about - January 17 and February 7, 1949, respectively , and thereby
refused to bargain in good faith with the Union in violation of Section 8 (a) (5)
of the Act and derivatively in violation of Section 8 (a) (1) thereof.
In its duly filed answer , the Respondent denied the commission of any unfair
labor practices , and affirmatively alleged that it had consulted with the Union
concerning the incentive pay plan , that the plan was permitted by the pending
contract it had with the Union but that in any event the institution of such
a plan was a prerogative of the Respondent.
JOHN W. BOLTON & SONS, INC . 993
Pursuant to notice, a hearing was held on August 23, 1949, at Lawrence,
Massachusetts , before George Bokat , the undersigned Trial Examiner duly
designated by the Chief Trial Examiner . The General Counsel and the Respon-
dent were represented by counsel, the Union by a representative, and participated
in the hearing. Full opportunity to be heard , to examine and cross-examine
witnesses, and to introduce evidence bearing on the issues was afforded all
parties. The Respondent moved to dismiss the complaint on two grounds :
(1) That the complaint is not based upon the charge as filed by the Union; and
(2) that the pending contract with the Union provides for arbitration of any
question involving an alleged breach of said contract . Decision having been
reserved on these motions they are hereby denied in accordance with their more
complete treatment and disposition hereinafter . The General Counsel's motion
to conform the pleadings to the proof in matters not of substance was granted.
The parties presented oral argument and filed briefs with the undersigned.
Upon the entire record in the case and from observation of the witnesses, I
make the following:
FINDINGS OF FACT
L THE BUSINESS OF THE RESPONDENT
The Respondent, a Massachusetts corporation, is engaged in the manufacture
and service of knives for paper machinery . The principal raw material pur-
chased is steel, to an annual value in excess of $100,000 of which more than
75 percent comes from points outside the Commonwealth of Massachusetts. The
Respondent's finished products exceed $150,000 in value, annually, of which
more than 75 percent is shipped to points outside the Commonwealth of Massa-
chusetts . The Respondent admits, and I find, that it is engaged in commerce
within the meaning of the Act.
II. THE LABOR ORGANIZATION INVOLVED
Lodge 1271 of the International Association of Machinists is a labor organi-
zation within the meaning of the Act admitting to membership employees of the
Respondent.
III. THE UNFAIR LABOR PRACTICES
A. The refusal to bargain
1. The appropriate unit and representation by the Union of a majority therein
At the hearing, the parties stipulated and I find, that all production and main-
tenance employees of the Respondent, excluding executives, superintendents,
office and clerical workers, foremen, assistant foremen, firemen, watchmen,
engineers, guards, and those employees known as Emerson plant employees, con-
stitute a unit appropriate for the purposes of collective bargaining within the
meaning of Section 9 (b) of the Act.
The parties further stipulated that at all times since on or about September
22, 1942, the Union has been and now is the duly designated representative of all
the employees of the Respondent in the aforesaid bargaining unit. I, therefore,
find that at all times since about September 22, 1942, the Union was, and now is,
the duly designated bargaining representative of all the employees in the appro-
priate bargaining unit for the purposes of collective bargaining with respect to
rates of pay, wages, hours of employment, and other conditions of employment.
99.4 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
2. The refusal to bargain
There is no dispute as to the essential facts. The parties have been in con-
tractual relations since September 1942. The contract out of which the issue in
this, case arose became effective on December 1, 1947, and was to run for at least
2 years. Article XVI of this contract reads as follows :
Wages
Effective as of December 1, 1947, a wage increase of five cents (5¢) per
hour is to be added to the present base rates and is to be paid to all em-
ployees covered by this agreement.
It is agreed, however, that either Company or Union may reopen the
question of wages, insofar as cents per hour is concerned, upon sixty (60)
days' notice in writing to the other party prior to December 1, 1948, but in
no event are negotiations with respect to wages to be started earlier than
October 1, 1948, and such reopening shall not be requested by or permitted
either party more than once during the term of this agreement. [Emphasis
supplied.]
Pursuant to this clause and at the request of the Union the parties in October
1948 began negotiations for an increase in the basic hourly rate of pay.
The Respondent, particularly since the close of the late war, has been. seriously
concerned about its production, and during contract negotiations had taken
the problem up with the Union. In March 1948, it retained the services of a
firm of industrial engineers to survey the Respondent's operations in order to
improve its productivity and cost scheduling and to determine the feasibility of
an incentive bonus plan. The Respondent asked the cooperation of the Union
and.the Union agreed, believing at the time that it was for the purpose of getting
a "true picture of the costs" and that it would not go any further, but as the
survey progressed the Union withdrew from any further participation because it
believed that the studies were "leading into an incentive plan." The Union
traditionally has been opposed to the payment of wages based upon piecework or
an incentive plan.'
During the negotiations arising out of the reopening of the contract the Re-
spondent learned from its, industrial, engineers that they had been able to estab-
lish standards measuring "the output or the efforts of the various people in the
plant" but the studies had not yet progressed far enough to determine whether it
was feasible "to use those standards for the payment of premium money," the
essence of an incentive bonus plan. As a result, on about October 15, 1948,.
during the aforesaid negotiations, the Respondent asked the Union whether it
would consider a wage incentive plan but the Union flatly refused and the matter
was dropped. The Respondent also told the Union that the job survey indicated
that some employees were underpaid and some overpaid and therefore proposed
that the underpaid employes be given a larger share of any hourly increases
agreed upon. The Respondent evidently had in mind establishing a more ac-
curate hourly base rate upon which any incentive plan payment would be made,
if,one went into effect. The Union, however, refused and insisted on negotiating
for aflat hourly increase for all employees. As a result of these negotiations
Y According to James W. Melvin, president of Lodge 1271 of the Union, the constitution
of the Union states that "we will not advocate or condone any method of piece work, job
evaluation, or incentive." Two members of the Union employed by the Respondent who
accepted positions timing the operation of the men on their machines were charged by the
Union with violating its constitution and "were duly tried and dismissed from the Union."
JOHN W. BOLTON & SONS, INC. 995
the parties on December 1, 1948, executed the following supplement to the pending
agreement :
In accordance with the terms of Article XVI of the contract now existing
between John W. Bolton & Sons, Inc. and Local 1271, International Asso-
ciation of Machinists, dated December 5, 1947, effective December 1, 1947,
and after negotiations in accordance therewith, it is mutually agreed that
the following Article XVI may be substituted for Article XVI in the present
existing contract:
ARTICLE XVI
WAGES
Effective as of December 6, 1948, a wage increase of seven cents (7¢) ; per
hour is to be added to the present base rates and is to be paid to all em-
ployees covered by this agreement.
It is agreed, however, that either the Company or Union may reopen the
question of wages, insofar as cents per hour is concerned, upon sixty (60)
days' notice in writing to the other party prior to June 1, 1949, but in no event
are negotiations with respect to wages to be started earlier than April 1, 1949.
Such reopening shall not be requested by, or permitted, either party more
than once during the remainder of the term of this agreement.
In all other respects the terms and conditions of said contract are affirmed
and remain in full force and effect.
In the latter part of December 1948, the industrial engineers recommended to
the Respondent that it was feasible to institute an incentive plan, "to make pay-
ment of money for excess production effort," over and above the standards
previously established in October. Despite the known opposition of the Union,
the Respondent, after obtaining the advice of counsel, decided to institute
the incentive plan in the yard department and to extend it to each department
upon the completion of the survey for that department because it wanted to in-
crease productivity and reduce costs.
The Respondent met regularly with the Union once a month. At the next reg-
ular meeting on January 3, 1949, the Respondent announced to the Union that it
was desirous of instituting the incentive plan in the yard department. The
Union objected, stating that it was a violation of the contract and the law because
the contract already fixed the method of payment of wages, and threatened to file
charges with the Board if the plan was put into effect. It was agreed to hold
another meeting on January 11 with counsel for the Respondent present. At this
meeting counsel suggested that the plan be accepted on a trial basis by the
Union without prejudice to the rights of either party. The Union refused. Coun-
sel then suggested. that since the contract provided for arbitration of any ques-
tion involving an alleged breach of the contract that the dispute be submitted
to arbitration. The Union refused, stating that it was not a subject for arbi-
tration because it was a violation of the Act.
On January 17, 1949, the Respondent instituted the incentive plan in the
yard department. The following notice to the employees was posted.
JOHN W. BOLTON AND SONS, INC.
Wage Incentive Policy
A wage incentive plan is being installed in this Company in order to pro-
vide the opportunity for the employees to increase their present earnings.
In the administration of this wage incentive plan the following points are
hereby established as Company Policy :
917572-51-vol. 91-64
996 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
LAll employees on the incentive plan are guaranteed their hourly base
rates for the total actual hours worked regardless of performance.
2. Standards once established will not be changed unless conditions change
and then adjustments will be made only on those elements affected. (Poor
material , bad weather, etc.)
3. When new or changed equipment is introduced , or when methods of man-
ufacturing are changed, new standards will be developed for these conditions.
4. Operators shall earn premium time only for good work produced.
5. Premium time will be calculated on a daily basis and paid weekly.
The Respondent's incentive plan is based on a unit hour basis starting with
each employee's basic hourly rate of pay. If an employee gets out units of pro-
duction in excess of the standard fixed for his position he receives additional
pay for the extra effort , expressed in minutes multiplied by his hourly rate of
pay. No employee is penalized if he fails to achieve his standard and he is still
paid his hourly rate as provided by the contract. No employee has suffered. any
loss in his established rate of pay as a result of the institution of the plan. Sim-
ply stated, the Respondent increased the wages of each employee, who, by his skill,
ability, or zeal turned out more work than was normally expected of him.
B. Conclusions
The gist of the problem presented herein, is whether an employer, within the
meaning of the Act, can institute an incentive wage plan to be effective. during the
life of a collective bargaining agreement already negotiated, where the plan does
not change or vary the base rate of pay already established by the contract and
the employer has offered to consult or bargain with the collective bargaining
representative of its employees concerning the institution of such a plan.
Under the Wagner Act it was well settled that the statutory duty to bargain
collectively did not cease with the execution of the collective agreement. The
Board and the Court stated that the employer was under the further duty to
negotiate with the accredited bargaining agency concerning the modification,
interpretation , and administration of the existing contract! And this appeared
to be true even if the request to bargain sought to change or modify -the terms of
an existing agreement? Under these established principles, it might well be
argued that at least under the Wagner Act the Respondent herein did not vio-
late its duty to bargain because it offered to consult and negotiate with the
Union concerning the incentive wage plan before its institution. This brings us to
the definition of collective bargaining set forth in Section 8 (d,)' of the Act,
Z N. L. R . B. v. Sands Mfg. Co ., 306 U. S . 332; Rapid Roller Co . v. N. L. R. B., 126 F. 2d
452 (C . A. 7) ; Carroll's Transfer Co., 56 NLRB 935; Alexander Milburn Co ., 62 NLRB
482, 510:
3 "It may at any time become desirable or indeed necessary to bargain collectively for
the modification of an existing collective agreement which has proved in practice to be
in some respects unfair or unworkable . . . " N. L. R. B. v. Newark Morning Ledger Co.,
120 F. 2d 266 ( C. A. 3), cert. den . 314 U. S. 693 . See also the dissent of former Board
Member Gerard D. Reilly in J. H. Allison & Co., 70 NLRB 377, 381, enfd. 165 F, 2d 766
(C. A. 6). In this case, the majority of the Board found the employer guilty of a refusal
to bargain about certain individual merit increases. Mr. Reilly's dissent was bottomed
primarily upon his feeling that the union's demand was not seasonable because (1) the
union's first request came during the effective period of an already negotiated agreement,
and (2 ). while the second request came during negotiations for the succeeding . contract,
nevertheless the union came to terms with the employer and the parties executed an agree-
ment for another year, and in the words of Mr. Reilly , the employer "'traded off ' a demand
on one issue for a substantial concession on another ." I mention this dissent because its
underlying rationalization is now to be found in Section 8 (d) of the Taft-Hartley Act.
JOHN W. BOLTON & SONS, INC. 997
which'placed duties ano'.responsibilitieson employers and unions alike over and
beyond those fixed by settled principles under the Wagner Act. In my opinion in
the interpretation .of this section and its application to the facts herein will be
found the answer to the issue here posed.
Section 8 ( d) after defining the obligation to bargain collectively continues
as follows :
Provided , That where there is in effect a collective -bargaining contract
covering employees in an industry affecting commerce , the duty to bargain
collectively shall also mean that no party to such contract shall terminate
or modify such contract , unless the party desiring such termination or modi-
fication-
(1) serves a written notice upon the other party party to the contract
of the proposed termination or modification sixty days prior to the
expiration date thereof , or in the event such contract contains no expira-
tion date , sixty days prior to the time it is proposed to make such
termination or modification ;
(2) offers to meet and confer with the other party for the purpose of
negotiating a new contract or a contract containing the proposed modi-
fications;
(3) notifies the Federal Mediation and Conciliation Service within
thirty days after such notice of the existence of a dispute , and simul-
taneously therewith notifies any State or Territorial agency established
to mediate and conciliate disputes within the State or Territory where
the dispute occurred , provided no agreement has been reached by that
time; and
(4) continues in full force and effect, without resorting to strike or
lock-out, all the terms and conditions of the existing contract for a
period of sixty days after such notice is given or until the expiration date
of such contract , whichever occurs later :
The duties imposed upon employers , employees , and labor organizations by
paragraphs ( 2), (3), and ( 4) shall become inapplicable upon an intervening
certification of the Board , under which the labor organization or individual,
which is a party to the contract , has been superseded as or ceased to be the
representative of the employees subject to the provisions of section 9 (a),
and the duties so imposed shall not be construed as requiring either party
to discuss or agree to any modification of the terms and conditions contained
in a contract for a fixed period, if such modification is to become effective
before such terms and conditions can be reopened under the provisions
of the contract. Any employee who engages in a strike within the sixty-
day period specified in this subsection shall lose his status as an em-
ployee of the employer engaged in the particular labor dispute , for the pur-
poses of sections 8, 9, and 10 of this Act, as amended, but such loss of status
for such employee shall terminate if and when he is reemployed by such
employer . [Emphasis supplied.]
It is thus . clear that no party to a contract can terminate or modify such con-
tract unless the procedure set forth above is followed , and that in any event
neither party is under any obligation to discuss or agree to any proposed modi-
fication if such modification is to become effective before such terms and conditions
.can be reopened under the provisions of the contract.
998 DECISIONS OF NATIONAL. LABOR RELATIONS BOARD
The contract in question was to expire on November 30, 1949, with provisioni
for automatic renewal for an additional year if neither party served a 30-day
notice, and therefore was "a contract for a fixed period " within the meaning of-
Section 8 ( d). And concededly the incentive bonus plan became effective on.
January 17, 1949 , considerably prior to the contract termination date. It must-
now be determined whether the institution of the plan constituted a modification
of the contract . The Respondent contends that it did not because the plan did.
not change or vary the base rate of pay of any employee because his wages,
hours , and other conditions of employment remained exactly the same as they-
were set forth in the contract , and afforded at most a means whereby an em
ployee who could produce more than the normal average could receive additional
compensation for such over -production.
Resolution of this point depends in part as to whether incentive premium pay
constitutes wages, the Respondent contending that it does not, the General Coun-
sel that it does. The Respondent makes this contention I believe in order to be
consistent with its claim "that the institution of an incentive pay plan having-
as its aim and object the increase of production is, a prerogative of management,.
and further believes that the terms of the contract permit it to institute such,
a plan." I have no doubt and find, that the term "wages" includes any method'
of computing the amount of pay received by an employee and even in its narrow
sense would include computation by means of an incentive plan. ' This finding
disposes of the Respondent 's contention that the contract permits the institution
of the plan since the management prerogative clause thereof' contains the fol-
lowing language : "provided , however, that this shall not be construed to super-
sede or impair the rights of employees with respect to wages or conditions of-
employment granted them in other provisions of this agreement ." 'Nor do I
find any merit in Respondent 's contention that because the "aim and object" of
the incentive pay plan was to increase production , as it undoubtedly was, that it
was therefore a management prerogative . Any matter relating to "rates of pay,.
wages, hours of employment , or other conditions of employment" as spelled out
in Section 9 (a) of the Act obviously is a proper subject for collective bargaining,.
as the Board and the Courts have consistently held. And this is true regardless
of the merit of the "aim and object " of the employer'
It is dear . that under the incentive pay plan instituted by the Respondent the
employees continued . to receive the same hourly rate of pay provided by the
contract regardless of whether they achieved the standard fixed by the plan, and':
received d.bonus or reward only if they achieved more than the standard. And
says the Respondent , this case is unlike the Allison case, cited supra , because.
"this plan does not put this Respondent in the position of singling out any
individual to be the recipient of the benefits . It is up to the individual as to.
whether he will or will not receive the benefits." Therefore argues the Respond-
4 In its broader sense wages also include emoluments of value such as pension and insur-
ance benefits . See Inland Steel Co ., 77 NLRB V.
5 "The Union recognizes the responsibility of management ; and nothing in this - agree--
merit shall be deemed to limit the Company in anyway in the exercise of the regular and'
customary functions of management, . . .
a-A't the hearing the Respondent made the point that under the recognition clause of the
bargaining agreement . It. recognized the Union as exclusive representative of its employees
only "as to wages , hours and conditions of employment" and not as to rates of . pay. This
contention not only is disposed of by the finding that an incentive pay plan is encompassed
by the term "wages" but also by Section 9- (a) which specifically gives to an exclusive bar-
gaining representative authority to bargain as. to rates of pay.
JOHN W. BOLTON & SONS, INC. 999
ent for this and the other reasons urged above its adoption of the plan was not
-a modification of the contract.
While the Respondent's contentions appear to have some merit I am not per-
suaded by,them. The fact remains, as I have indicated above, that any system
.,of merit increases however called, directly relates to wages and would be an
.integral part of the wage structure, and as such, a proper subject for collective
bargaining, as the Respondent clearly recognized when it offered to bargain
with the Union concerning the institution of the plan. The parties had bargained
:and reduced to writing their agreement that the employees would be paid so
many cents per hour on a straight hourly basis, they had not bargained or reached
.any agreement about the method or standards to be applied in rewarding the
.individual employees by merit increases based on the amount of work each
produced. The amount and the method of payment of wages had been bargained
.and agreed upon, the incentive pay plan changed the amount and the method-the
Union contending that until the proper time came for reopening the contract it
had the right under this Act to insist on payment by Respondent to the employees
.of the amount of wages fixed in the contract-no more, no less. The Respondent
knew that the Union was opposed to any incentive bonus plan. It was anxious to
.increase production and had worked out a plan that it honestly believed could
only be beneficial to its employees. But the Union still opposed it and its reasons
.are not set forth in the record. But it is known that some unions look with fear
.and suspicion upon any system of compensation that rewards the individual for
.increased production. They believe that increased compensation, if individually
rewarded, is often earned at the cost of breaking down some other standard
thought to be for the welfare of the group, and of being paid at the long-range
.expense of the group as a whole.
However, it is really immaterial what reasons motivated the Union in refusing
to discuss the bonus plan when formally raised by the Respondent for the first
time during negotiations in October of 1.948. The Union invoked the wage reopen-
ing clause of the pending agreement which gave either party the right to "reopen
-the question of wages, insofar as cents per hour is concerned." Even if it be
.assumed that the incentive bonus plan came within the definition of the wage
.reopening clause of "cents per hour," and that the Respondent was prepared
:seriously to raise it at that time as a proper bargaining issue, the Respondent
dropped it upon the Union's opposition and reached an agreement for a flat 7
cent per hour increase for each employee. Thus, in effect the Respondent waived
.its right to press at that time, the incentive plan as a bargainable issue under
the wage reopening clause. The supplemental agreement, however, did provide
that either party "may reopen the question of wages, insofar as cents per hour
:is concerned, upon sixty (60) days notice in writing to the other party prior
to June 1, 1949, but in no event are negotiations with respect to wages to be
.started earlier than April 1, 1949." It is therefore apparent that even taking an
interpretation of the supplemental wage reopening clause most favorable to the
.Respondent, td wit, that the incentive plan was consistent with such clause, never-
theless, under Section S (d) and the Respondent's own agreement, it could not
be raised any earlier than April 1, 1949. The Respondent, nevertheless, raised
it with the Union on January 3 and 11, 1949, and put the plan into effect, despite
the Union's opposition, on January 17, 1949.
I find that the incentive pay plan instituted by the Respondent constituted a
modification of the terms and conditions of its contract with the Union, the
1000 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
modification becoming effective before such terms and conditions could be re-
opened under the provisions of said contract.'
Several remaining contentions of the Respondent will now be dealt with. The
Respondent contends that when it instituted the incentive plan it acted in good
faith with no intent to bypass or undermine the Union, and that its history
of collective bargaining with the Union since 1942 clearly demonstrates that it
never attempted to interfere with the rights of its employees guaranteed by
the Act. I have no doubt of the fundamental good faith bf the Respondent
or of its good intentions. But I do. find that it has misconceived its obligation
under Section 8 (d) which specifically provides that "the duty to bargain collec-
tively shall also mean that no party to such contract shall . . . modify such
contract" except as provided therein. The Respondent, I have found, did modify
its contract with the Union in contravention of the statute and thereby violated
its duty to bargain collectively within the meaning of the Act. Under such
circumstances its intent or good faith becomes immaterial and the Respondent
acted at its peril as to its construction of the law. Respondent's argument
in this respect should be addressed to the framers of the legislation. It is
not my province to pass upon the wisdom of the particular language of which
the Respondent has run afoul. A union which had attempted by strike action
to enforce an untimely modification of a contract under similar circumstances
would also be guilty of violating the law and the employees participating in
such strike would lose their rights as employees under the Act.
The next Contention of the Respondent derives from the arbitration clause
contained in the contract whereby the "parties agree that all questions involving
an alleged breach of contract arising out of this agreement shall be submitted
to [a] Board of Arbitration for final decision." The Respondent urges that the
Board should exercise its discretion by not asserting jurisdiction herein until
.the parties have exhausted their remedies under. the arbitration clause of the
contract 8 I do not believe that it would effectuate the policies of the Act to
permit the Respondent to avoid its obligation not to modify a contract at an
unseasonable time, or put another way, to avoid its obligation to bargain con-
cerning the incentive plan at the appropriate time, because the Union invoked
the Board's jurisdiction instead of attempting to seek some sort of relief under
the arbitration clause of the contract 9 This is a case of first impression and
so far as I am aware the particular legal problem involved has not yet been
decided by the Board. In view of.the exclusive authority vested in the Board
'under Section 10 (a) of the Act it would appear to be the proper forum for
adjudicating the legal issues raised by the Respondent: Moreover, the contract.
'itself raises a serious question as to whether the subject matter herein involved
'is arbitrable since it provides "that general increases or decreases in wages
shall not be considered a grievance nor subject to arbitration during the terms
of this agreement"
As stated earlier, the Respondent moved to dismiss the complaint because the
complaint does not follow the charge. The charge alleges that the Respondent.
7 In its brief to the Trial Examiner, the Respondent relied heavily on the case of Libby,
McNeill & Libby, 65 NLRB 873, where the Board treated with a problem very similar to
the case at bar. However, not only are the facts distinguishable but that case wag
decided under the Wagner Act, whereas this one is being determined under Section 8 (d)
of the present statute.
8In this connection the Respondent cites the cases of Consolidated 'Aircraft Corpora-
tion, 47 NLRB 694; Timken Roller Bearing Co. v. N. L. R. B., 161 F. 2d 949 ( C. A. 6),
setting aside 70 NLRB 500, and others.
r See General Motor8 Corporation, 81 NLRB 779.
JOHN W. BOLTON & SONS, INC. 1001
"put into effect a new method of computing and paying for employees time,"
whereas the complaint alleges that the Respondent "did. . . . announce and
inaugurate a wage incentive plan." I find the charge to be sufficiently related
to the matter alleged in the complaint even under the Respondent's interpreta-
tion of the requirements of Section 10 (b) of the Act. 30 Furthermore, there can
be no question but that the Respondent knew when it received a copy of the
charge that it grew out of the institution of the incentive bonus plan and there-
fore had notice of the subject matter of the dispute. Not only did the Union
inform the Respondent that it was going to file a charge when it learned of the
Respondent's intention to promulgate the plan, but the Respondent itself pre-,
pared- for the Regional Director of the General Council, after receiving the-
charge, a memorandum listing all the conferences which had been held with
the Union with respect to the plan.
In conclusion, I find that the Respondent violated Section 8 (a) (5) of the
Act by modifying its contract with the Union at an inappropriate time in viola-
tion of its duty to bargain collectively as defined in Section 8 (d) of the Act.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE
The activities of the Respondent set forth in Section III, above , occurring in
connection with the operations of the Respondent described in Section I, above,.
have a close , intimate , and substantial relation to trade, traffic , and commerce
among the several States , and tend to lead to labor disputes burdening and.
obstructing commerce and the free flow of commerce.
V. THE REMEDY
Having found that the Respondent has engaged in the unfair labor practices
set forth above, I shall recommend that it cease and desist therefrom and
that it take certain affirmative action designed to effectuate the policies of the,
Act.
I find that by merely ordering the Respondent to cease and desist from the
unfair labor practices found above that it would not effectuate. the policies
of the Act unless the Respondent was also ordered to restore the status quo..
To permit the incentive bonus plan to remain in effect in the face of the clear
mandate of the Act would enable the Respondent to retain the fruits of its
unfair labor practices and thereby give it an advantage at the bargaining table-
when and if the issue of the plan was properly raised at the appropriate time.
I shall therefore recommend that the Respondent revoke its incentive pay plam
and revert to the method and manner of paying its employees as provided by
the contract in effect just prior to the institution of the plan.
Except for the unlawful conduct flowing out of the Respondent's modification.
of its contract with the Union, the record does not disclose that a danger exists-
that the Respondent in the future may commit other unfair labor practices,
unrelated in kind to that found. Therefore it will not be recommended that.
the Board issue the usual broad cease and desist order.
Upon the basis of the above findings of fact and upon the entire record of the,
case, I make the following:
10 Since the charge does not serve the purpose of a pleading, there need not be specific
conformity of the complaint to the charge . See Cathey Lumber Company , 86 NLRB 157,
and cases cited therein.
1002 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
CONCLUSIONS OF LAW
1. Lodge 1271 , International Association of Machinists ,, is a labor organiza-
tion within the meaning of Section 2 (5) of the Act.
2. All production and maintenance employees of the Respondent , excluding
executives , superintendents , office and clerical workers, foremen , assistant
foremen, firemen , watchmen , engineers , guards, and those employees known as
Emerson plant employees , constitute a unit appropriate for collective bargaining
within the meaning of Section 9 ( b) of the Act.
3. Lodge 1271 , International Association of Machinists, was on or about Sep-
tember 22 , 1942, and at all times thereafter has been, the exclusive representative
of all the employees in such unit for the purposes of collective bargaining within
the meaning of Section 9 (a) of the Act.
4. By modifying its contract with Lodge 1271 , International Association of
Machinists, in violation of Section 8 (d) of the Act , the Respondent has refused
to bargain collectively with said Union at an appropriate time in violation of
Section 8 ( a) (5) of the Act.
5. By said act , the Respondent interfered with, restrained , and coerced its
employees in the exercise of the rights guaranteed in Section 7 of the Act, and
has thereby engaged in unfair labor practices within the meaning of Section
8 (a) (1) of the Act.
6. The aforesaid unfair labor practices are unfair labor practices affecting
commerce within the meaning of Section 2 ( 6) and ( 7) of the Act.
[Recommended Order omitted from publicatipn in this volume.]