Lakeside Health Center

National Labor Relations Board - Board Decisions

Sep 29, 2003

340 N.L.R.B. 397 (N.L.R.B. 2003)

LAKESIDE HEALTH CENTER 397
Life Care Centers of America, Inc. d/b/a Lakeside
Health Center and SEIU 1199 Florida, AFL–
CIO, CLC. Case 12–CA–22172
September 29, 2003
DECISION AND ORDER
BY CHAIRMAN BATTISTA AND MEMBERS
LIEBMAN AND WALSH
On January 17, 2003, Administrative Law Judge
George Carson II issued the attached decision. The Re-
spondent filed exceptions and a supporting brief, and the
General Counsel filed an answering brief.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the decision and the record
in light of the exceptions and briefs and has decided to
affirm the judge’s rulings, findings,1 and conclusions and
to adopt the recommended Order.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, Life Care Centers of Amer-
ica, Inc. d/b/a Lakeside Health Center, West Palm Beach,
Florida, its officers, agents, successors, and assigns, shall
take the action set forth in the Order.

Susy Kucera, Esq., for the General Counsel.
Mark E. Levitt, Esq., of Tampa, Florida, for the Respondent.
Dale Ewart, for the Charging Party.

DECISION
STATEMENT OF THE CASE
GEORGE CARSON II, Administrative Law Judge. The
hearing was opened and closed telephonically on December 2,
2002, pursuant to the agreement of all parties, at which time I
granted the joint motion of all parties to submit this case by
stipulation and received the stipulation and exhibits. The
charge, filed on March 26, 2002, was amended on May 30,
2002. The complaint issued on August 27, 2002. The com-
plaint alleges that the Respondent violated Section 8(a)(1) and
(5) of the National Labor Relations Act by unilaterally discon-
tinuing its matching contribution to its 401(k) plan. The Re-
spondent’s answer denies that its conduct violated the Act. I
find that the Respondent did violate the Act as alleged in the
complaint.

1 In adopting the judge’s finding that the Respondent violated Sec.
8(a)(5), we find it unnecessary to rely on the judge’s discussion of
contractual waiver of bargaining rights in sec. B of the decision because
there was no agreement in effect between the Respondent and the Un-
ion at the time of the Respondent’s unilateral change.

On the entire record1 and after considering the briefs filed by
the General Counsel and the Respondent, I make the following
FINDINGS OF FACT
The Respondent, Life Care Centers of America, Inc. d/b/a
Lakeside Health Center (the Company), a Tennessee corpora-
tion, is engaged in the operation of nursing homes at various
locations including its facility in West Palm Beach, Florida, at
which it annually derives gross revenues in excess of $100,000
and purchases and receives goods valued in excess of $10,000
directly from points located outside the State of Florida. The
Respondent admits, and I find and conclude, that the Company
is an employer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
The Respondent admits, and I find and conclude, that SEIU
1199 Florida, AFL–CIO, CLC (the Union), is a labor organiza-
tion within the meaning of Section 2(5) of the Act.
I. ALLEGED UNFAIR LABOR PRACTICES
A. Stipulated Facts
The Company operates approximately 260 facilities in the
United States and offers various benefits to its employees at
those facilities including a 401(k) plan that was established on
or about July 1, 1992. Approximately 16,000 of the Com-
pany’s employees are eligible to participate in the 401(k) plan,
of which approximately 8000 have chosen to participate. At
the Company’s West Palm Beach, Florida Lakeside facility, as
of January 1, 2002, approximately 50 employees were eligible
to participate in the plan and approximately 21 were partici-
pants.
On March 27, 2001, the Regional Director for Region 12 ap-
proved a Stipulated Election Agreement pursuant to which an
election was held on April 20, 2001, at the Company’s Lake-
side facility among employees in the following appropriate
unit:

All full-time and regular part-time CNAs, rehabilitation aides,
activity aides, housekeeping aides, housekeeping technicians,
laundry, dietary aides, dietary cooks, plant maintenance, re-
storative CNAs, medical records clerks and floor technicians
employed by the Employer at its 2501 Australian Avenue,
West Palm Beach, Florida, facility; excluding all other em-
ployees including RNs, LPNs, central supply clerks, other
technical employees, confidential employees, professional
employees, office clerical employees, guards and supervisors
as defined by the Act.

The employees selected the Union as their collective-
bargaining representative, and on May 3, 2001, the Union was
certified. At all times since May 3, 2001, the Union has been
the Section 9(a) exclusive collective-bargaining representative
of the employees in the foregoing unit. In August 2001, the
parties began negotiations for a collective-bargaining agree-
ment. Those negotiations were successfully concluded and the
1 The record consists of the 10-page transcript, ALJ Exh. 1, the joint
motion, GC Exh. 1, the formal papers, and the Stipulation with Exhs.
2–11 attached thereto.
340 NLRB No. 57
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 398
parties entered into a collective-bargaining agreement effective
October 1, 2002.
The only issue in this proceeding relates to the 401(k) plan
that was established on July 1, 1992. The Company has, since
July 1, 1992, deducted employee contributions to the 401(k)
plan from the paychecks of those employees who elected to
participate in the plan. From July 1, 1992, until January 1,
2002, the Company had made a matching contribution in the
amount of 50 percent of the employees’ contributions up to the
first 3 percent of the employees’ earnings for those employees
who participated in the plan. This was a companywide plan,
and the same contributions were made for all 8000-employee
participants in the plan.
Section 3.02 of the original 401(k) plan, in pertinent part,
provided:

The Employer shall contribute . . . an amount equal to a per-
centage of Deferred Cash Contributions made on behalf of the
Member of the Plan during each payroll period, such percent-
age to be determined each Plan Year by the Board of Direc-
tors as of the last day of the preceding Plan Year. In no event
however, shall the Employer Matching Contribution pursuant
to this Section exceed 50 percent of the first 3 percent of the
[member’s earnings] . . . each payroll period.

The plan was amended on December 19, in 2000 and 2001, but
neither of those amendments related to section 3.02. On De-
cember 28, 2001, the Company amended section 3.02 of the
plan. The preamble to the amendment states that, “the Em-
ployer now wishes to amend the Plan to provide the Employer
with discretion in determining the matching contribution under
the Plan.” As amended, the pertinent part of section 3.02 now
states:

The Employer proposes to contribute . . . an amount equal to
a percentage . . . of the Deferred Cash Contributions made on
behalf of the Member during each payroll period, such per-
centage to be determined by the Board of Directors from time
to time and such percentage to be effective until such time as
determined by the Board of Directors. In no event however,
shall the Employer Matching Contribution pursuant to this
Section exceed 50 percent of the first 3 percent of the [mem-
ber’s earnings] . . . each payroll period. [Emphasis added for
clarity.]

On December 28, 2001, the board of directors adopted the
amendment granting it the authority to determine company
contributions “from time to time,” and suspended the company
contribution to the 401(k) plan effective January 1, 2002. A
notice stating this was included with employee paychecks and
posted on the employee bulletin board at the Lakeside facility
in early January. The notice, in pertinent part, states:

Effective January 1, 2002, the Employer Matching Contribu-
tion is suspended and will not be made again until such time
as determined by the Board of Directors.”

A letter to all employees from Life Care Chairman and CEO
Forrest L. Preston dated January 14, 2002, regarding the per-
formance of the Company, reports that preliminary indications
are that “we have been fortunate if we have breakeven opera-
tions for the company” for the past year. The letter then notes
that, “during the year of 2002, the employer matching contribu-
tion [for the 401(k) plan] has been suspended” as a cost saving
measure, that the action is the “financially responsible thing for
us to implement,” but that “the corporate contribution will be
reinstated at the earliest date that it becomes financially viable.”
In mid-January 2002, the administrator of the Lakeside facil-
ity, Karen DiPiero, a stipulated supervisor and agent of the
Company, held staff meetings with employees at which she
announced the suspension of matching contributions.
Although section 3.02, had, prior to December 28, 2001,
provided that the percentage of the Company’s contribution
would be determined by the board of directors “each Plan
Year,” the contribution had, at all times prior to January 1,
2002, been the maximum, “fifty percent of the first three per-
cent of the employees’ earnings.” (Stipulation, par. 10.)
In 2001 the stipulation of the parties does not specify the
date, a description of this benefit was distributed to employees
in a booklet entitled “Life Care 401k Savings Plan Summary
Plan Description.” The summary description, at pages 4 and 5,
informs employees that Life Care will make a contribution each
pay period that, “will be 50% of the first 3% of pay that you
contribute as a Deferred Cash Contribution for each pay pe-
riod.” Notwithstanding the foregoing, at page 13, the summary
description states that, “future conditions cannot be foreseen”
and that “Life Care, through its Board of Directors, reserves the
right to change or terminate this Plan at any time.”2
After the parties commenced collective-bargaining negotia-
tions in August 2001 and prior to January 1, 2002, the Com-
pany proposed that unit employees receive the same 401(k)
benefits as nonrepresented employees. The Union did not
agree to that proposal. There was no impasse relating to that
proposal.
Prior to suspending the company matching contribution ef-
fective January 1, 2002, and announcing that suspension to
employees by the notice included with their paychecks and
posted on the bulletin board and by the meetings with Adminis-
trator DiPiero, the Company did not notify the Union and “did
not offer to bargain with the Union specifically about Respon-
dent’s suspension of the 401(k) match or the effect of the sus-
pension of the 401(k) match.” [Stipulation, par. 18.]
The parties reached agreement on a collective-bargaining
agreement in September 2002 and, on ratification, it became
effective on October 1, 2002. Article 17 of the agreement pro-
vides that the “Employer shall continue to make available a
401(k) program on the same basis as offered to non-represented
employees of the Employer.”
B. Analysis and Concluding Findings
The General Counsel, citing various cases including Mid-
Continent Concrete, 336 NLRB 258 (2001), enfd. 308 F.3d 859
(8th Cir. 2002), and Britt Metal Processing, 322 NLRB 421
(1996), points out that the Respondent had matched employees’

2 The booklet, attached to the stipulation as Exh. 8, currently in-
cludes the notice that was distributed in January 2002 advising that
contributions were suspended. At the time of initial distribution in
2001, the notice would not have been included since it did not exist
until 2002.
LAKESIDE HEALTH CENTER 399
401(k) contributions at the same level since that benefit was
extended to them and that, “absent a different agreement
reached with the Union, the status quo right of the employees
represented by the Union was that same matching contribu-
tion.” The General Counsel argues that by unilaterally discon-
tinuing the matching contribution, the Respondent violated
Section 8(a)(5) of the Act.
The Respondent, citing Post-Tribune Co., 337 NLRB 1279
(2002), argues that it was privileged to change the matching
contribution because the plan specifically authorizes it to do so
and that suspension of the contribution did not constitute a
change in the status quo. The Respondent does not contend
that its action was privileged because it treated represented
employees in the same manner as nonrepresented employees.
Had it done so, I would have rejected that contention. Mid-
Continent Concrete, supra at 260.
In Post-Tribune Co., the Board succinctly stated the princi-
ple relating to a unilateral change in the status quo:

An employer violates Section 8(a)(5) and (1) if it makes a uni-
lateral change in wages, hours, or other terms and conditions
of employment without first giving the Union notice and an
opportunity to bargain. See NLRB v. Katz, 369 U.S. 736, 743
(1962). “[T]he vice involved in [a unilateral change] is that
the employer has changed the existing conditions of employ-
ment. It is this change which is prohibited and which forms
the basis of the unfair labor practice charge.” Daily News of
Los Angeles, 315 NLRB 1236, 1237 (1994), enfd. 73 F.3d
406 (D.C. Cir. 1996), cert. denied 519 U.S. 1090 (1997)
(quoting NLRB v. Dothan Eagle, 434 F.2d 93, 98 (5th Cir.
1970)). Therefore, where an employer’s action does not
change existing conditions—that is, where it does not alter the
status quo—the employer does not violate Section 8(a)(5) and
(1). See House of the Good Samaritan, 268 NLRB 236, 237
(1983). An established past practice can become part of the
status quo. See Katz, 369 U.S. at 746. Accordingly, the
Board has found no violation of Section 8(a)(5) and (1) where
the employer simply followed a well-established past practice.
See, e.g., Luther Manor Nursing Home, 270 NLRB 949, 959
(1984), affd. 772 F.2d 421 (8th Cir. 1985); A-V Corp., 209
NLRB 451, 452 (1974).

Id., slip op. at 1–2.
Applying the foregoing principle in that case, the Board
found that the respondent had “a consistent, established practice
of allocating insurance premiums,” that the respective percent-
ages of the premiums paid by the company and the employees
did not change, and thus, the status quo did not change although
the amount that employees paid increased. In those circum-
stances, the Board held that the status quo did not change and
that the Respondent did not violate the Act.
Thus, the initial inquiry in this case is to determine and iden-
tify the status quo. The Board’s language in TCI of New York,
301 NLRB 822 (1991), although referring to a bonus rather
than a 401(k) contribution, is instructive in this regard:

It is well settled that a bonus paid consistently over a number
of years is a component of employee wages and a term and
condition of employment, even though not expressly provided
for in the bargaining agreement, and that it cannot be unilater-
ally altered or abolished by the employer without affording
the Union notice and an opportunity to bargain. Gas Machin-
ery Co., 221 NLRB 862, 865 (1975). Thus, the Respondent’s
unilateral discontinuation of the bonus program constitutes an
unlawful refusal to bargain unless, as the Respondent con-
tends, the Union has waived its right to bargain over this mat-
ter. NLRB v. Katz, 369 U.S. 736, 743 (1962).

I cannot conclude, as argued by the Respondent in this case,
that its action did not alter the status quo. In the instant case,
the Respondent’s 401(k) match in the amount of 50 percent of
the employees’ contributions, up to 3 percent of the employees’
earnings, had not varied for 9-1/2 years, since July 1992. Every
payroll period for 9-1/2 years the match had been paid. In 2001
the Respondent distributed to employees a booklet stating that
this was the match. As the Respondent argues, the document
does state that the benefits described are defined by the plan,
but when stating the benefit, the document does not state that
the match will be a variable percentage depending on what the
board of directors decides. It states that the employer’s match
“will be 50% of the first 3% of pay that you contribute.”
The Respondent’s argument that the “plan . . . authorizes it”
to determine the matching contribution ignores the obvious fact
that the plan itself is a creation of the corporation and that the
matching contribution is controlled by the corporate board of
directors. The 401(k) matching contribution was a benefit that
the Respondent was not privileged to reduce without notice to
and bargaining with the Union. Britt Metal Processing, supra
at 421. Even when a benefit plan has been incorporated into a
collective-bargaining agreement, changes in that plan may not
be made without notice and bargaining unless the language
incorporating the plan constitutes a “clear and unmistakable
waiver.” See Trojan Yacht, 319 NLRB 741 (1995), and Exxon
Research & Engineering Co., 317 NLRB 675 (1995), enf. de-
nied 89 F.3d 228 (5th Cir. 1996). (Enforcement was denied
because Exxon Corporation was not a named respondent. The
Court of Appeals expressed no opinion regarding the issue of
waiver. 89 F.3d at 232.)
The Respondent’s argument might well have merit if, over
the 9-1/2 years that it had extended this benefit to employees,
the amount of the matching contribution had varied and an
announcement had been made each January specifying the
amount that would be matched during the forthcoming year.
There is no evidence of any annual announcement. It is stipu-
lated that there was no variance in the contribution. The sus-
pension of the matching contribution by the board of directors
in response to economic circumstances was a discretionary act.
In Eugene Iovine, Inc., 328 NLRB 294 (1999), enfd. mem. 242
F.3d 366 (2d Cir. 2001), in addressing a discretionary reduction
in employee working hours, the Board stated: “The Board and
the courts have consistently held that such discretionary acts are
. . . ‘precisely the type of action over which an employer must
bargain with a newly-certified union.’”
The complaint alleges that the Respondent unlawfully dis-
continued matching contributions for employees by failing to
give notice to the Union, or affording it an opportunity to bar-
gain. The record establishes the violation alleged in the com-
plaint.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 400
CONCLUSION OF LAW
By unilaterally, without notice to or bargaining with the Un-
ion, suspending its contribution to the 401(k) plan, the Respon-
dent has engaged in unfair labor practices affecting commerce
within the meaning of Section 8(a)(1) and (5) and Section 2(6)
and (7) of the Act.
REMEDY
Having found that the Respondent has engaged in certain un-
fair labor practices, I find that it must be ordered to cease and
desist and to take certain affirmative action designed to effectu-
ate the policies of the Act.
The Respondent, having unlawfully suspended its contribu-
tion to the 401(k) plan, must make whole all affected employ-
ees by contributing 50 percent of the first 3 percent of pay that
participating employees made for each payroll period between
January 1, 2002, and October 1, 2002, the effective date of the
collective-bargaining agreement into which it entered with the
Union, plus interest as computed in New Horizons for the Re-
tarded, 283 NLRB 1173 (1987).
On these findings of fact and conclusion of law and on the
entire record, I issue the following recommended3
ORDER
The Respondent, Life Care Centers of America, Inc. d/b/a
Lakeside Health Center, West Palm Beach, Florida, its officers,
agents, successors, and assigns, shall
1. Cease and desist from
(a) Refusing to bargain collectively with SEIU 1199 Florida,
AFL–CIO, CLC by unilaterally suspending the Respondent’s
contribution to the 401(k) plan.
(b) In any like or related manner interfering with, restraining,
and coercing employees in the exercise of rights guaranteed
them in Section 7 of the Act.
2. Take the following affirmative action necessary to effec-
tuate the policies of the Act.
(a) Bargain in good faith with the SEIU 1199 Florida, AFL–
CIO, CLC prior to making any changes in the wages, hours,
and terms and conditions of employment of employees in the
following appropriate bargaining unit:

All full-time and regular part-time CNAs, rehabilitation aides,
activity aides, housekeeping aides, housekeeping technicians,
laundry, dietary aides, dietary cooks, plant maintenance, re-
storative CNAs, medical records clerks and floor technicians
employed by the Employer at its 2501 Australian Avenue,
West Palm Beach, Florida, facility; excluding all other em-
ployees including RNs, LPNs, central supply clerks, other
technical employees, confidential employees, professional
employees, office clerical employees, guards and supervisors
as defined by the Act.

3 If no exceptions are filed as provided by Sec. 102.46 of the Board’s
Rules and Regulations, the findings, conclusions, and recommended
Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses.
(b) Within 14 days from the date of this Order, rescind the
unlawfully imposed suspension of matching contributions for
the period January 1, 2002, until October 1, 2002.
(c) Make whole all affected employees by contributing 50
percent of the first 3 percent of pay that participating employ-
ees made to the 401(k) plan for each payroll period between
January 1, 2002, and October 1, 2002, with interest, as set forth
in the remedy section of the decision.
(d) Preserve and, within 14 days of a request, or such addi-
tional time as the Regional Director may allow for good cause
shown, provide at a reasonable place designated by the Board
or its agents, all payroll records, social security payment re-
cords, timecards, personnel records and reports, and all other
records, including an electronic copy of such records if stored
in electronic form, necessary to analyze the amount of backpay
due under the terms of this Order.
(e) Within 14 days after service by the Region, post at its fa-
cilities in West Palm Beach, Florida, copies of the attached
notice marked “Appendix.”4 Copies of the notice, on forms
provided by the Regional Director for Region 12, after being
signed by the Respondent’s authorized representative, shall be
posted by the Respondent immediately on receipt and main-
tained for 60 consecutive days in conspicuous places including
all places where notices to employees 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. In the event that, during the pendency of these pro-
ceedings, the Respondent has gone out of business or closed the
facility involved in these proceedings, the Respondent shall
duplicate and mail, at its own expense, a copy of the notice to
all current employees and former employees employed by the
Respondent at any time since January 1, 2002.
(f) Within 21 days after service by the Region, file with the
Regional Director a sworn certification of a responsible official
on a form provided by the Region attesting to the steps that the
Respondent has taken to comply.

APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government

The National Labor Relations Board has found that we violated
Federal labor law and has ordered us to post and obey this no-
tice.

FEDERAL LAW GIVES YOU THE RIGHT TO

Form, join, or assist a union
Choose representatives to bargain with us on your behalf
Act together with other employees for your benefit and
protection
Choose not to engage in any of these protected activities.
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 Na-
tional Labor Relations Board” shall read “Posted Pursuant to a Judg-
ment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
LAKESIDE HEALTH CENTER 401

WE WILL NOT fail and refuse to bargain in good faith with
the SEIU 1199 Florida, AFL–CIO, CLC prior to making any
changes in the wages, hours, and terms and conditions of em-
ployment of you who are represented by the Union, and WE
WILL NOT unilaterally suspend our contribution to the 401(k)
plan.
WE WILL NOT in any like or related manner interfere with,
restrain, and coerce you in the exercise of rights guaranteed
them in Section 7 of the Act.
WE WILL, within 14 days from the date of the Board’s Or-
der, rescind our unlawfully imposed suspension of matching
contributions for the period January 1, 2002, until October 1,
2002, and make whole those of you who were affected as set
forth in the remedy section of the decision.
LIFE CARE CENTERS OF AMERICA, INC.
D/B/A LAKESIDE HEALTH CENTER