Murphy Diesel Co.

National Labor Relations Board - Board Decisions

Oct 15, 1969

179 N.L.R.B. 149 (N.L.R.B. 1969)

MURPHY DIESEL COMPANY
Murphy Diesel Company and District No. 10,
International Association of Machinists and
Aerospace Workers, AFL-CIO. Case 30-CA-960
October 15, 1969
DECISION AND ORDER
BY MEMBERS FANNING, BROWN, AND ZAGORIA
On July 24, 1969, Trial Examiner Ramey
Donovan issued his Decision in the above-entitled
proceeding, finding that the Respondent had not
engaged in certain unfair labor practices alleged in
the complaint, and recommending that the
complaint be dismissed in its entirety, as set forth in
the attached Trial Examiner's Decision Thereafter,
the General Counsel filed exceptions to the Trial
Examiner's Decision and a supporting brief, and the
Respondent filed a brief in answer to the General
Counsel's brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
powers in connection with this case to a
three-member panel
The Board has reviewed the rulings of the Trial
Examiner made at the hearing and finds that no
prejudicial 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 this case, and hereby adopts the
findings, conclusions,' and recommendations of the
Trial Examiner.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby adopts as its Order the
Recommended Order of the Trial Examiner, and
orders that the complaint herein be, and it hereby is,
dismissed in its entirety.
In the circumstances of this case, we are satisfied that the Union was
aware of the Respondent's intention not to pay a bonus in 1968 if its
operations did not return a profit during that year, that the Union had
adequate opportunity to apprise itself of the status of profit or Iack
thereof, and that the Union was afforded every opportunity to bargain
about elimination of the 1968 bonus during the long negotiations for a
contract which concluded in November 1968, the Respondent's asserted
inability to pay certain demands being in issue, but that the Union did not
do so Solely for these reasons, we find that the Respondent did not violate
Section 8(a)(5) and (I) of the Act by unilaterally eliminating the bonus for
1968, and there is insufficient evidence to establish that the discontinuance
was unlawfully motivated and therefore violated Section 8(a)(3) and (1)
TRIAL EXAMINER'S DECISION
RAMEY DONOVAN, Trial Examiner The charge in this
case was filed by District No. 10, International
Association of Machinists and Aerospace Workers,
AFL-CIO, herein called the Union, on January 15, 1969.
A complaint , under date of February 20, 1969, was issued
149
by the General Counsel of the Board by the Regional
Director of Region 30 of the Board The complaint alleges
that on or about December 20, Murphy Diesel Company,
herein called Respondent, or the Company,
discriminatorily withheld an annual Christmas bonus to its
unit employees and that, since that date, Respondent has
refused to bargain with the Union by reason of
Respondent's unilateral elimination of the aforesaid bonus
without prior notice or consultation with the Union Such
conduct is alleged to have been in violation of Section
8(a)(1),(3), and (5) of the Act. Respondent, in its answers,
denies the commission of the unfair labor practices alleged
and alleges that the bonus was a gratuity to which no
right ensued to the Union and further alleges that the
charge was not filed in good faith and also that the Union
had acquiesced in the past in Respondent's discontinuance
of similar gratuities and that the Union although advised
in 1967 that there would be no bonus in 1968 had not
requested bargaining thereon.
With all parties represented, the case was tried in
Milwaukee, Wisconsin, on April 3, 1969.'
I JURISDICTION
Respondent is a Delaware corporation with its offices
and plant located in Milwaukee, Wisconsin. Respondent
engages in the manufacture, sale, and distribution of diesel
engines During the past year, a representative period,
Respondent had sales valued in excess of $500,000. In that
same period, Respondent sold and shipped, in interstate
commerce, products valued in excess of $50,000 directly to
customers located outside Wisconsin
Respondent is an employer engaged in interstate
commerce within the meaning of the Act and the Union is
a labor organization within the meaning of the Act
iI. THE ALLEGED UNFAIR LABOR PRACTICES
Background
Since approximately 1941 Respondent has recognized
the Union as the collective bargaining representative in an
appropriate unit of its employees, consisting of all
employees engaged in production and in maintenance of
the plant, including stockroom and shipping employees,
but exclusive of foremen, chief inspector, engineering
department personnel, tool design engineers, all clerical or
office employees, and plant guards During this period, the
Respondent and the Union have had a series of
collective-bargaining contracts, the most recent of which is
for a 2-year period from April 1, 1968
Over the years, various benefits or conditions of
employment had been in existence at Respondent's plant
From 1947 through 1967, Respondent had paid the
bargaining unit employees an annual Christmas bonus
The bonus was paid to each unit employee by separate
check, a few days before Christmas, and was accompanied
by a note from the Company president thanking
employees for their cooperation during the year and
extending season's greetings The giving of the bonus and
the amount thereof was the determination of Respondent
'Subsequent to the hearing, the General Counsel filed a motion to
correct the transcript on May 2, 1969 Respondent filed objection to the
aforesaid motion The Examiner has read and considered the Motion and
the Objection and the transcript of the testimony and hereby grants the
Motion as appropriate and in conformity with the facts and utterances at
the hearing
179 NLRB No. 27
150 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
exclusively The bonus and the amount was not related to
individual employee merit, earnings, or related factors
The sole criteria used by the Company was whether its
business earned a profit during the year and the business
did operate at a profit from 1947 through 1966.1 The
amount of the bonus was an arbitrary figure determined
by the Company according to its own formula. Thus,
from 1956 through 1967, unit employees with the
Company 6 months to I year received $l5,' unit
employees with the Company I year to 2 years received
$25,1 unit employees with service of 2 years and over
received $35,5 unit supervisors or leadmen received $50 6
In 1967, 123 unit employees received a total of $3,840.'
From 1949 to 1954, the amounts of the bonus had been
$5, $10, $15, $20, $25 and $35. This was changed by the
Company in 1955 when the amounts were $10, $15, $20,
$25 and $40, and, in 1956 another change was made by
the Company in the amounts as described above for 1956
through 1967
During approximately the same period, 1947 through
1966, the Company gave to all employees, unit and
nonunit , a Christmas turkey and a Christmas fruit basket
The Company discontinued the turkey and basket after
1966 and did not give them in 1967 or 1968 An annual
Christmas party for all employees financed by the
Company had been discontinued by the Company about 7
years ago or around 1962. The Company had also
financed an annual picnic in the amount of $1,200 for all
employees until 1968 In 1968, the Company stated that it
would contribute $400 toward the picnic but, when this
was not acted upon, the picnic was discontinued.
None of the above matters, the bonus, turkeys, fruit
basket, party, or picnic had ever been the subject of
negotiations between the Union and Respondent or
embraced by the contracts, and the various changes made
by the Company over the years, as described above, were
made by the Company without notice to the Union and
without negotiations or request for negotiations, and
without grievances or complaints thereon The Company
deducted government taxes from the bonus since it was
required to do so and had been so advised. Cornwall,
assistant secretary of the Company who had been in its
employ since 1944, testified that the Company had also
made withholding deductions on the turkeys and fruit
baskets until there was a change in the law in that regard
For at least 15-20 years Respondent had paid its
nonunit personnel a sum of money by separate check at
Christmas time in December Cornwall characterized the
foregoing payment to nonunit employees as a deferred
payment The General Counsel in his brief refers to the
payment as a Christmas bonus
Le Tendre, a witness called by the General Counsel,
had worked for Respondent from 1960 to March 1968 as
a layout draftsman In such a position he was one of the
nonunit employees. He testified credibly that he had been
hired by Respondent's assistant chief engineer, Kramer,
who at the time of hearing, was the chief engineer.
Kramer told Le Tendre when he hired him that Le Tendre
would receive 20 percent of his annual wage as a bonus in
December of each year. Thereafter, from 1960 through
1967, while Le Tendre was employed by Respondent, the
'The 1967 and 1968 situation is discussed at a later point
'Fifteen employees in 1967
'Twenty-four employees in 1967
'Seventy-nine employees in 1967
'Five in number in 1967
'There were 133 unit employees in 1967 but 10 were ineligible,
apparently having less than 6 months service
president of the Company came around the plant in
December and gave Le Tendre an envelope with a
separate check and a Christmas season greeting The
check was for 20 percent of Le Tendre's salary for the
particular year.' This payment was also made to other
nonunit personnel and was a percentage of the individual's
salary ' The record contains no precise figures on the
annual total payments to nonunit personnel each
December but Cornwall's guess was that it would be
somewhere in the neighborhood of $75,000, more or less
There were approximately 63-65 nonunit personnel The
comparable figure for 133 unit employees' bonus in 1967
was, as we have seen, $3,840.11
As contrasted with the definitive statement to Le
Tendre, when hired, to the effect that he would receive 20
percent of his annual wage as a bonus, there is the
uncontroverted testimony of Becker who retired from
Respondent's employ on January 31, 1969 after 32 years
of service. At one time he had been a unit employee
represented by the Union Becker had been the
Respondent's general foreman since 1950 and as such he
did the hiring of unit employees in the shop Becker states
that in interviewing applicants for employment, if he
found a suitable applicant, he would tell the applicant of
the various advantages of working for Respondent and the
conditions of employment, such as the wage rates,
progression, vacation and pension provisions. He never
mentioned the Christmas bonus since, he testified, he did
not know in his own mind whether or not there would be
a Christmas bonus in a particular year - there being
nothing in the contract about a bonus
In 1967, Respondent experienced its first net loss in its
yearly business The net loss was $203,040 as contrasted
with a net profit of $204,709 in the preceding year, 1966.
In 1968, Respondent's net loss was $356,286 In a sense,
the direct operational losses were even more substantial
Before taxes, the next earnings in 1966 were $375,709, in
1967 the net loss was $398,040, in 1968 the net loss was
$624,286 After taxes, the over-all net profit in 1966 was
$204,709, the comparable figure for 1967, due to $195,000
in refunded taxes, was a net loss of $203,040; and for
1968, due to refundable taxes of $268,000, the net loss was
$356,286
About the latter part of 1967, around November, steps
were taken to negotiate a new contract between the
parties The Union submitted a contract proposal to the
Company Evidently to set forth its general economic
situation as bearing on the upcoming negotiations,
Respondent, through Daley, its plant manager, wrote to
the Union on December 15, 1967. The letter states.
To begin, we are not satisfied with our present
economic picture No doubt it is clear in everyone's
mind that our shipments of engines dropped steadily
since last May Payment comes only from units
shipped Many unpleasant things must be done in a
situation such as we find ourselves today First
expenditures must be drastically reduced This means
'Le Tendre received no such payment in 1968 since he had left in March
1968 and, of course, was no longer employed in December 1968
'Cornwall was uncertain whether or not the percentage figure used in the
computation had remained constant over the years or whether different
percentages were used in different salary brackets In any event, in the
absence of other evidence , we regard Le Tendre' s situations as basically
typical of the situation of all nonunlt employees and apparently he was
called as a witness to illustrate the nonumt situation
"At the time of the hearing Respondent employed about 105 unit
employees
MURPHY DIESEL COMPANY
1 All purchases must be reviewed to allow only
the vitally necessary items
2. No new purchases of equipment
3 Items such as the company's annual gift had to
be suspended
4. Any increase in cost in any way must be
postponed. [The letter then devotes two paragraphs
to the economic problem of manufacturing costs and
the fact that "our new engines just cost too much to
produce"] There is one item of expense that Mr
Houston [president of the Company] insisted on, in
spite of strong advice against the expenditure, and
that is that a Christmas bonus will be given this year
However, it should be noted that next year there will
be no Christmas gift unless there is a profit
[Two paragraphs then discuss means of production
improvement and express uncertainty "as to when we
can get started on some sound plan of employee
benefits in increased wages " Emphasis supplied]
Negotiations for a new contract having been initiated,
as we have seen, in the latter part of 1967, the parties
thereafter met at various times in 1968. Evidently because
a central element in the Company's position was its
asserted poor financial posture, the matter of the
Company's books came up at a meeting between the
Union and the Company in February 1968. On this
occasion the attorney for the Union examined the
Company's books when proferred by the Company.
Blumke, an employee of the Company for the past 23
years, a member of the union negotiating committee since
December 1967, and a member of the executive board of
District 10 and secretary of Lodge 339, testified that he
was aware , in February 1968, that the Company had lost
money in 1967 and in January and February 1968."
Cornwall testified credibly in the Examiner 's opinion, that
at a meeting , about March 12, 1968, between the Union
and the Company negotiating committee subsequent to
the occasion when the Union attorney had examined the
Company books, he, Cornwall, had a brief conversation
with Blumke. Although the subject of the bonus had not
been raised directly in the negotiations, Blumke,
apparently with reference to the Company's financial
position, said "something to the effect that I suppose this
means that the bonus will not be paid" and Cornwall said
that, if financial conditions continued as they had been, he
guessed that it was correct that the bonus would not be
paid ' 2
The prior contract having expired on January 2, 1968,
negotiations for a new contract took place from the Fall
of 1967 to November 26, 1968, when agreement was
reached on the terms of a new contract which was for a
2-year period from April 1, 1968. In the period
aforementioned there had been a strike by the Union
against the Company that lasted from August 12 to
November 26, 1968. Court litigation had been initiated by
the Company against the Union regarding the strike.
The unit employees did not receive a Christmas bonus
in December 1968, or thereafter. The nonunit employees
did receive, in December, the 20 percent of their annual
wage as in prior years. Other than as described previously,
there was no announcement regarding the bonus by the
Company to the Union or to employees. Nor had the
Union sought to negotiate with the Company regarding
the bonus or its status.
"It appears evident that the perusal of the books had verified these facts
"Blumke testified that he did not recall saying the above but he did not
state, although asked, that he did not make such a remark
CONCLUSIONS
151
The question of whether a Christmas bonus, given over
a period of years by an employer to its employees and not
negotiated or covered by contract, is embraced within the
terms "wages, hours of employment, or other conditions
of employment" under Section 9(a) and Section 8(a)(5) of
the Act, is neither novel nor a matter of first impression
insofar as the Board and the Courts are concerned. In
1940, the Board considered an employer-union issue that
arose in 1938 concerning various employee benefits
including paid holidays and Christmas bonuses." The facts
in the case were that in 1936 the employer gave a bonus
of 2 weeks' pay at Christmas but in 1937 and 1938,
respectively, the Christmas bonus was $20 to each
employee The Board held that the employer could not
remove such matters from the obligation of collective
bargaining or treat "such matters as gratuities to be
granted and withdrawn at will. ." The Board's decision
was enforced by the Court of Appeals 14 Another Court of
Appeals, in dealing with Christmas bonuses, cited with
approval the Singer decision of the Seventh Circuit as a
case where "it was recognized that the payment of a
bonus was a subject as to which an employer was bound
to bargain collectively upon request" or, in effect, that the
bonus constituted a mandatory subject of bargaining."
Nor is the basis of or method used in computing the
bonus, the determining factor in the conclusion as to
whether a Christmas bonus is a bargainable subject ' 6 And
the characterization of a benefit or a remuneration as a
bonus, gift, or gratuity is not dispositive since the terms of
Section 9(a) of the Act embrace "emoluments resulting
from employment. . . and "direct and immediate
economic benefits flowing from the employment
relationship."" Accordingly, it is found that the Christmas
bonus to the unit employees in the instant case is within
the meaning of, and entailed the legal obligations of,
Section 9(a) and Section 8(a)(5) of the Act
When a matter, such as the instant unit bonus , is within
the coverage of Section 9(a) of the Act, the legal
consequence is two-fold, namely, the employer is obliged
to bargain with the Union, upon request, about the bonus,
and the employer is obligated, as a general proposition, to
refrain from acting unilaterally on the bonus, as, for
instance , by eliminating the bonus, or by decreasing or
increasing the bonus, in much the same manner as
unilateral action is proscribed as to an increase or
decrease in hourly wage rates or other matters embraced
"Singer Manufacturing Company , 24 NLRB 444
"Singer Manufacturing Co v N L R B, 119 F 2d 131 (C A. 7), cert
denied 313 U S 595
'N L R B v Niles-Bement-Pond Company, 199 F 2d 713, 714, (C A
2)
""The fact that the amount of the Christmas checks was not related
directly to employees ' earnings does not warrant a different result A direct
or indirect relationship to other wages may, of course , serve to strengthen
employees' reliance, on continuation of the practice and their treatment of
the checks or bonus as wages However, this factor is not controlling,"
[citing Singer Manufacturing Company , supra/ General Telephone
Company of Florida, 144 NLRB 311, 313, 314 In Tucker Steel Corp and
Steel Supply Co . 134 NLRB 323, the employer for about 10 years from
1946 to 1956 had arbitrarily given its employees Christmas bonuses in such
sums as $50, $75 and $100 based on the employer's inclination as to
individual employees , in 1956 the employer decided that its prior method
was too time consuming and' bonuses of 1 week ' s salary were given from
1956 to 1960 The type or basis of the bonuses was not a determining
factor in the Board 's decision that the bonuses were wages and conditions
of employment
"W W Cross Co v NLRB, 174 F 2d 875, 878 (CA 1)
152 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
by Section 9(a). In the instant case, the complaint
allegation does not aver that Respondent ever refused to
bargain with the Union about the bonus upon request, but
does allege that Respondent violated Section 8(a)(5) and
(1) of the Act by "unilaterally eliminating the Christmas
hours" on or about December 20, 1968. It is further
alleged that Respondent withheld and failed to pay the
Christmas bonus to unit employees in 1968 because of the
said employees' membership and activities in the Union, a
discriminating action in violation of Section 8(a)(3) and
(1) of the Act.
As we have seen, in the instant case, the Company, for
approximately 20 years, had, unilaterally, initiated,
controlled, changed, administered, and given various
emoluments and benefits to its employees in the form of
turkeys, fruit baskets, annual partys and picnics and
Christmas bonuses. We can appropriately characterize the
foregoing as employee benefits flowing from the
employment relationship Undoubtedly there would be a
varying scale of receptivity and appreciation by individual
employees towards different items in the foregoing list of
benefits A married employee and his wife and six children
might rate the annual picnic high in a scale of values.
Aside from the intangible aspects of a picnic, it could be
translated in monetary terms to the equivalent of a $10 or
$15 or more bonus to an employee and his family. In
varying degrees, the party would also have a value rating
in tangible and intangible terms. This would also be true
of the turkeys and fruit baskets. Even in our sophisticated
and rather materialistic society benefits from one person
to another are more commonly bestowed in the form of
things rather than in cash although the recipient may, in
his or her own mind, translate the gift coat, watch, or
whatever, into terms of its cost to the giver. The ulterior
motivated relationship between salesman, sales engineer,
on the one hand, and the purchasing agent or buyer, on
the other, is commonly characterized by dinner, drinks
and entertainment paid for by the salesman rather than
the giving of its equivalent in cash to the buyer. We
accordingly perceive no essential distinction in the instant
case between the party, picnic, turkeys, fruit baskets, on
the one hand, and the bonus, on the other, insofar as the
respective positions or rights of the employer and the
Union are involved with regard to these benefits flowing
from the employment relationship.
We have therefore a long past history, in the instant
case, of the Respondent's exercise of unilateral control
over such employee benefits as described above, including
bonuses. This past history was not one preceding the
advent of the Union and inherited by the Union, where
the Union, after its advent, sought to have a voice in such
matters or protested changes therein; but rather it is a
history of unilateral control of such benefits by
Respondent that was exercised without any remonstrance
or display of interest on the part of the Union in availing
itself of its right to be heard on such matters.18 The
Respondent' s unilateral control of these various employee
benefits or conditions of employment, with the apparent
acquiescence of the Union, included changes in the
benefits which culminated in the eventual discontinuance
of the turkeys, baskets, party, and picnic at different
times.
"There is no evidence that the Union ' s acquiescence in Respondent's
unilateral control was due to a belief that the Union had no right to be
heard on such matters Indeed , the only evidence in the instant case as to
how the Union regarded the various employee benefits aforementioned is
the testimony of a 23-year employee and union officer , Blumke, who
Neither the Respondent's unilateral control of the
various benefits nor even the unilateral discontinuance of
such benefits was of sufficient interest to the Union to
give rise to any attempt to discuss such matters with the
Respondent. As the various benefits, in turn, were
unilaterally discontinued, the Union did not attempt to
discuss the future prospects of the remaining benefits or to
preserve them by contract incorporation. Eventually, when
only the bonus had not been discontinued, the Union was
apparently not even then sufficiently concerned to inquire
about the future of the bonus or to seek to preserve it by
referring to it in the contract.
Not infrequently, when a union wishes to preserve some
existing employee benefit but does not wish to accord the
item the prominence and attention of a separate article in
the contract, the Union will propose to the employer that
the contract contain a "preservation of existing benefits
clause." As the name implies, such a clause simply
provides that any existing conditions that inure to the
benefit of employees shall remain unchanged during the
term of the contract. It is also true that union contracts
quite commonly deal specifically with a great many details
of the employment relationship when the details are
regarded by the Union as sufficiently important. Thus,
there may be contract specification that the employer will
supply work gloves and a particular kind thereof; there
may be details regarding work clothes and their
laundering and how many items of such clothing will be
furnished by the employer to each employee per week,
there may be contract reference to details regarding
sanitary facilities, including towels, soap and related
items Indeed, union contracts, particularly when a union
has been in a particular plant for many years and has had
a series of contracts therein, usually cover all matters
pertaining to the employment relationship of which the
Union and its members are conscious and which they
regard as important to them in their relations with the
employer, or, at least, there usually will have been an
attempt to cover such matters even though on particular
items the employer may not have agreed to the proposed
contract clause.' 9
This is of course not to say that all bargainable matters
must be found in the four corners of the contract since no
contract can be so prescient or so all embracing, and since
a statutory right to bargain coexists with the contract.
However, where, as in the instant case, there were during
about 20 years of the Union's incumbency a number of
fringe benefits of employment over which the employer
exercised unchallanged unilateral control, including the
elimination of such benefits, one by one, in various
subsequent years, without any attempt by the Union to
remonstrate or to participate in decisions or to preserve
remaining benefits, there is reason to believe that the
Union viewed such benefits as paternalistic vestigia in
which it had no interest to participate or to preserve and
testified that he regarded the Christmas turkeys, fruit baskets, party,
picnic, and bonus "as wages " Wages are surely known to be a bargamable
subject Moreover , if a union considers a matter to be important to itself
and its members or if it wishes to be heard on certain subject, it will
manifest its interest
"One of many sound and persuasive "selling" points of a union to
employees is that the Union will secure a written contract with the
employer that will set forth in black and white the benefits and rights of
the employees so that by picking up the contract the employee will know
precisely what wages , vacation benefits , protection, and conditions of
employment he is entitled to This situation is contrasted to the non-union
shop where there is no contract or charter of rights and benefits and where
the employee is solely dependent upon the employer's volition
MURPHY DIESEL COMPANY 153
regarding which, for whatever reason (either as
aforesuggested or for some other reason), it did not wish
to bargain or to refer to or to memoralize in any way
either in its contract or otherwise. In any event, in our
opinion whatever the Union's motivation or the reason for
its complete abstention from any aspect of the fringe
benefits and for its manifest lack of interest in preserving
or negotiating about such benefits, the employer could and
did reasonably rely on this long history of union conduct
when it eliminated the Christmas bonus as it had
previously eliminated, unilaterally, the picnic, the party,
the turkeys and the baskets of fruit. SO
Apart from other considerations aforementioned but
confirmatory thereof is the company letter to the Union in
December 1967 This letter was within the ambit of
negotiations and collective bargaining since it was written
in response to the written contract proposal submitted by
the Union for a new contract The General Counsel in his
brief states "that Respondent's reference [in December
1967] to the possible elimination of the bonus . [in
1968] was merely a collective bargaining technique . . .
this document was submitted by Respondent during
negotiations purely as a negotiating position in response to
the Union's proposal on various economic matters."
The Examiner is aware that in contract negotiations
both the Company and the Union are interested parties
and that they are each seeking to protect, preserve and
advance the interest of their respective constituents. If, as
the General Counsel states, the December letter set forth
the company's position regarding the negotiations, this
was what the law requires There is nothing in this record
that would lead the Examiner to conclude that the letter
was not written in good faith. The plant manager who
wrote the letter was not a witness and there is no other
evidence upon which the Examiner can appraise the letter
except the letter itself in a company-union background of
contractual relations extending over 20 years." The letter
impressed the Examiner as rather candid and as written,
as it purported to be, by the plant manager of a relatively
small company who was using his own language in stating
things about which he was well informed. In any event it
is a letter setting forth the Company's basic position with
a minimum of rhetoric or flourish. The letter refers to the
Company's poor and unsatisfactory business picture, a
fact later confirmed by the Union's inspection of the
'°Cf Tucker Steel Corp and Steel Supply Co , supra The instant case is
not the situation of an employer who expressly assured the Union that it
had no intention of diminishing fringe benefits , including Christmas bonus
checks, and where the Board found that " Respondent's own assurances to
the Union and to employees during negotiations effectively preclude it
from relying on the Union' s failure to request bargaining on the subject as
justification for its unilateral action " General Telephone Company of
Florida. supra Here, in contrast , there were no such assurances and a
rather clear picture of fringe benefits being eliminated , one by one, and as
recently as 1967 and 1968 Moreover, in December 1967, the Respondent
had advised the Union of its intention regarding the bonus for 1968 Nor
do we perceive any significance to the fact that other fringe benefits that
had previously been eliminated applied to all employees Unit employees
were as much the beneficiaries as others in the general fringe benefits and
presumably had as much interest therein And , of course , if interested, they
had reason to be concerned about any benefits Moreover , a principal
distinction between represented and unrepresented employees is that the
latter, the union represented employees , have a representative who will
protect their interest When, therefore , by acquiescence and inaction, in the
face of the employer's elimination of various employee benefits , the Union
allows the unit employees to undergo the same deprivation of benefits as
the nonunit employees , the Union inaction is apparently deliberate and of
some significance as a manifestation of the Union' s attitude toward such
fringe benefits
books and by evidence in the instant record The letter
states, in substance , that the business stance dictated that
"the company ' s annual gift [the bonus ] had to be
suspended" for Christmas 1967 It is then stated that in
spite of "strong advice" to the contrary , apparently from
the high management officials, the president , Houston,
insisted that the Christmas bonus be paid in December
1967 Then follows the flat and definitive statement that
the Company' s position was, quite apparently including
Houston, that "next year 119681 there will be no
Christmas bonus unless there is a profit " In short, with a
brief "within the family " reference that it was only due to
the president 's personal intervention that the bonus was
going to be given for 1967, despite strong views that
business economics dictated its elimination in 1967, the
Union was being told that unless the Company operated
at a profit in 1968 there would be no bonus in 1968.
It is our opinion that the Respondent in the above letter
advised the Union of its proposed action regarding the
1968 bonus The Union was thereby afforded a reasonable
opportunity to probe, to test , to explore this bargaining
subject and to request bargaining thereon including the
submission of arguments and counter proposals.22 The
General Counsel's characterization of the Respondent's
December 1967 letter regarding the bonus as "a
negotiating position" is therefore not the fatal imputation
apparently intended by the characterization. The
Respondent did not confront the Union, as in Citizens
Hotel , supra, with a fait accompli. It was incumbant upon
the Union , if it wished to negotiate about the bonus, to
request such negotiations when the Respondent 's letter
advised the Union of the Respondent ' s intention to
discontinue the bonus Perhaps the Respondent would
have refused to negotiate about the bonus but it was never
put to the test . Throughout months of negotiations the
Union never sought to raise, to explore, to negotiate about
the bonus . The essence of Section 8(a)(5) of the Act is
that the Union shall have a reasonable opportunity to
bargain about matters embraced within Section 9(a) of the
Act and it is illegal for the employer "to refuse" to
bargain on such subjects . The vice in unilateral employer
action is that the Union has not been afforded a
reasonable opportunity to bargain on the particular matter
and instead is confronted with an accomplished fact 21
We do not, in the circumstances of this case , regard the
Respondent ' s statement about the bonus in its letter as
vague and indefinite and thus not qualifying as a
statement of Respondent ' s intention that merited the
Union's attention if it wished to bargain about the bonus
2' Nothing has been called to our attention to indicate that the
relationship was other than a good , or, at least, a viable relationship
"In N L R B v Citizens Hotel Company, 326 U S 501, 505 (C A 5),
the employer in October 1961 decided to discontinue its bonus for
Christmas 1961 The employer 's department heads advised the employees
that there would be no bonus that December and apparently signs were
posted to that effect Thereafter, when the Union sought to negotiate a
contract with the employer , it found itself confronted with a fait accompli
insofar as the bonus was concerned The Court found that there had been
an "impermissible unilateral change constituting a failure to bargain " The
Court observed that "an employer must at least inform the Union of its
proposed actions under circumstances which afford a reasonable
opportunity for counter arguments or proposals "
""Normally an employer's statutory duty is simply to give notice to
and, if necessary , discuss with a union any proposed changes in working
conditions As a general rule, an employer is derelict in his bargaining
obligation if he alters the established terms and conditions of employment
without first notifying the representative of his employees , and, upon
request, discussing the proposed change with that representative " Zenith
Radio Corporation , 177 NLRB No 30
154 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
It was clearly stated that there would be no bonus in 1968
unless the Company operated at a profit. Since the letter
was in response to the Union's proposed new contract
containing various economic demands, the letter described
the general business and financial posture of the Company
and the picture given was that the business and financial
picture was poor Subsequently, in negotiations in 1968,
the Union, early in the year, February, examined the
Company books and financial records.2d The Union
thereby became aware that the Company had lost money
in 1967 and that it continued to do so in January and
February 1968 In an aside at a negotiation meeting in
March 1968, Blumke, a member of the Union negotiating
committee, remarked, in effect, that he supposed that the
Company's bad financial position indicated that the bonus
would not be paid.25 Cornwall, a company official, replied
that if financial conditions continued as they were he
guessed that it was correct that the bonus would not be
paid.
Negotiations on the new contract did not terminate
until November 26, 1968, when a 2-year contract was
agreed upon, to run from April 1, 1968 Since both parties
regarded the Company's financial position as relevant and
as a matter of interest to them in the negotiations, the
Examiner believes that when negotiations concluded near
the end of November 1968, the Union was aware that the
Company was operating at a loss in 1968 It is true that
the record shows simply that the Union looked at the
books in February 1968, and ascertained that the
Company operated at a loss in 1967 and in January and
February 1968. However, since the Company's financial
position was in issue, it is extremely unlikely that the
Union would not have requested a look at the books again
if it, in any way, suspected that the financial picture from
March to November 26, 1968, had changed and that latter
months would show a profitable operation. When an
employer is pleading inability to pay in response to the
economic demands of a union, it is fairly obvious that the
Union will be keenly attuned to the financial condition of
the employer since the Union's bargaining position on
economic issues will be enhanced considerably if, in fact,
the employer's business and financial posture is good or
improved in contrast to the contention of poor business
Either the instant union was aware, at least in general
terms, that the Company's business and financial position
was bad (as was the fact), not only in January and
February 1968, but in succeeding months up to November
26 when a contract was agreed upon, or the Union was
not interested in whether the Company was operating at a
loss, as it had claimed, or whether it was operating at a
profit. The Examiner does not believe that the Union was
indifferent to the matter of whether the Company's
business was as bad in succeeding months in 1968 as it
had been in 1967 and in January and February 1968 or
whether business had materially improved during the
months of succeeding negotiations.
In connection with our belief that the look at the
company books in February 1968 gave the Union a
reasonably representative picture of the state of the
Company's financial posture and that the Union continued
"Quite evidently the Company was pleading inability to pay and
verification of the Company ' s financial position was appropriate
"The Examiner is satisfied that the Union and its committee were aware
of the contents of the Company ' s December 1967 letter when negotiating
commenced Blumke at one point testified that he read the letter only a
day or so before the hearing but he also said that in reading the letter its
contents came back to him "but how they were given to me by word of
mouth or by reading them , I can't answer that truthfully "
to be generally aware that 1968 was a financially bad year
for the Company, we have also considered the following.
The Company manufactures and sells diesel engines The
Union represented all the Company's production and
maintenance employees including shipping room
employees who numbered overall about 105 26 In a plant
of such size, manufacturing relatively large units like
diesel engines, the employees manufacturing the engines
will have a fairly good general idea of the volume of work
being performed, including the number of units being
shipped daily, weekly, or monthly They will not have an
accountant's information or precise balance sheet figures
of profit and loss but they will have a general basis of
knowing whether the plant is doing more or less business
at particular periods or whether business is about the
same as it was last month or last year and so forth For
instance, the Union knew that the Company's business
was bad in 1967 and in January and February 1968 A
member of the Union negotiating committee was a
production employee at Respondent's plant and had been
such for 23 years In our opinion, the Union and the
employees it represented knew generally how many units
the Company was manufacturing and shipping in 1967
and in January and February 1968 when the Company
was operating at a loss They knew that there were about
30 fewer unit employees in 1968 than in 1967 If there
were approximately 105 production unit employees in
February 1968, the employees and the Union would know
if in March-November the Company had hired 10, 20, 30,
40 or 50 additional production employees or whether the
complement remained at 105 or decreased; they would be
aware of any material increase in overtime or whether it
remained as it had been in January or February or
whether it decreased; they would be aware if, in January
and February, they had manufactured and shipped 50
engines a week, they were manufacturing and shipping
approximately 40, 50, 60, 70, or 100 units a week in
March-November 1968. In short, we believe that the
Union did not request to see the Company books after
February 1968, because it knew generally that business
was as bad or worse from March-November 1968. Further
confirmation of this conclusion is found in the fact that
the Company's direct operational loss in 1968 was
$624,286 as compared with a loss of $398,040 in 1967,
and a profit of $375,709 in 1966. Such a substantial
operational loss in 1968 as compared with even the loss of
1967 must have been reflected in the actual day-to-day
work in the plant and, in our opinion, the employees and
the Union were generally aware that, since, in 1967 the
Company had operated at a loss, it was certainly not
improving in 1968
With regard to the specific matter of the bonus on
which the Company had informed the Union that there
would be no bonus in 1968 unless the Company operated
at a profit, the Union did not avail itself of the
opportunity to bargain or to request bargaining on the
matter Although for reasons previously stated, we believe
that when the parties reached agreement on a contract on
November 26, 1968, the Union was generally aware that
the Company in 1968 was not operating at a profit, we
will assume , arguendo, that the Union did not know
whether or not the Company was operating at a loss or a
profit In view of what the Company had told the Union
of its intentions regarding the bonus, we believe that if the
Union was interested in bargaining on the subject and
protecting the interest of its members by being informed
"Unit and nonunit employees together apparently totaled less than 200
MURPHY DIESEL COMPANY 155
as what might occur to the bonus, it would have raised the
subject during negotiations including counterproposals and
arguments, and if unsuccessful in changing the Company's
intention, the Union could have made an inquiry, at least
by November 1968, as to whether or not the Company
had been earning a profit, if the Company had said it was
not, the Union could have verified the assertion by a look
at the books We believe that the Act in protecting the
right of a union to bargain with an employer, envisages an
opportunity to bargain and to request bargaining but that
this right entails that the Union exercise some degree of
reasonable diligence in availing itself of its right We do
not find on the facts in this case that Respondent in
eliminating the bonus refused to bargain with the Union
by illegal unilateral action and we recommend dismissal of
the Section 8(a)(5) and ( 1) allegation of the complaint.
Before going on to another aspect of the case, we will
discuss a contention of the General Counsel regarding the
foregoing Section 8(a)(5) matters. Early in the hearing
Cornwall testified that the 1965 bonus was not paid to the
unit employees "based on the fact that the Company lost
money." When asked as to when this decision was made,
Cornwall said he was "guessing" but "I would say [it]
probably would be towards the end of the year, yes",
probably in November-December 1968 "because it would
be at that time the final figures would be available " The
witness said he was referring to the financial figures of the
Company's operations in 1968 The General Counsel then
asked the witness whether it was not true that, after this
decision in November-December 1968, the Company
eliminated the bonus in December 1968, "without advising
the Union " Cornwall replied that "they [the Union]
were not advised at that time [in November-December
1968] They had been advised prior to that time [by the
letter of December 1967]." Based on this evidence, the
General Counsel asserts in his brief that since the decision
to eliminate the bonus was not made until
November-December 1968, the Respondent cannot
maintain that it had advised the Union of its intention or
decision to eliminate the bonus prior to the time that it
made its decision.
We are not persuaded by this argument of the General
Counsel for several reasons. The Company definitely
advised the Union in December 1967, that there would be
no bonus in 1968 unless there was a profit. There was no
"maybe" or "perhaps." It was a simple equation of
profit-no profit'no bonus. There is no evidence that the
announced decision of December 1967 was ever
reconsidered, or that the Company was debating whether
the decision was still in full effect between December 1967
and November-December 1968 or that the Company was
uncertain as to whether it would implement the decision
The only "decision" made in 1968 regarding the bonus
was to look at the financial picture of the Company for
1968 to see or to confirm that the Company had not
operated at a profit for the year. This financial picture
evidently was clear by at least the end of November and
before Christmas 1968. The basic decision not to pay the
bonus unless there was a profit had been made in
December 1967, and the Union had been so advised at
that time. The condition (profit or no profit) specified in
the December 1967 letter was simply verified in the latter
part of 1968 and the 1967 decision or intention was
implemented in the latter part of 1968 after checking
financial figures for the year. The Company would have
been derelict if it discontinued the bonus without verifying
that its own specified condition for the elimination of the
bonus did in fact exist The situation may be compared to
that in a school or college where the administration
decided and issued a bulletin, in September 1967, that no
member of the senior class would receive his diploma and
be graduated in June 1968 unless his average for the year
was "C" or better. In June 1968, 10 seniors did not
receive diplomas and are not graduated They retain an
attorney and some kind of a hearing is held on the matter
At the hearing the assistant dean is asked by the
complainants' attorney when the decision was made that
the 10 named seniors would not graduate. The witness
replies that on June 1, 1965, 2 weeks before graduation
the names of all seniors and their averages for the year
were listed Those whose averages were below "C" were
eliminated from the list of graduates. The attorney for the
complainants then argues that the decision not to graduate
the 10 seniors was made on June 1, 1968, only 10 days
before graduation and that such a last minute decision
was obviously unfair and unilateral and without adequate
notice In the Examiner's opinion, in the foregoing
illustration , the basic decision was made in September
1967 as announced in the bulletin . In June 1968 , the prior
decision was simply implemented by checking and
verifying which students did not meet the condition set
forth in the September 1967 bulletin, namely a "C" or
better average for the academic year.
We come now to the allegation that Respondent
discriminatorily eliminated the unit employees' bonus
because of their membership in and activities on behalf of
the Union. There is, first of all, no separate Section
8(a)(1) evidence in the record that Respondent is an
anti-union employer opposed to unions, union
membership, or union activities. Instead there is a history
of over 20 years of collective bargaining and contractual
relations with the instant Union. The General Counsel's
position , as we understand it from his brief, is that for
over 20 years the Respondent paid a bonus to unit
employees and non unit employees and that by withholding
the bonus from the unit employees in 1968 but continuing
to pay the bonus to the nonunit employees, "Respondent
was directly discriminating against the employees
represented by the Union." Further, it is asserted, that, in
the past, when Respondent eliminated benefits such as the
turkeys, baskets, party, and picnic, unit and nonunit
employees "were affected equally." Finally, the General
Counsel believes that Respondent's action is "suspect"
because the bonus was eliminated approximately a month
after the employees returned to work after their 3 month
strike ended in November 1968.
In a case such as this, where the parties have had a
long and well established collective bargaining
relationship, discriminatory motivation is not to be
inferred lightly. By the same token, the long history
cannot serve as a shield if the evidence does establish
discriminatory conduct.
The General Counsel's argument or implication that the
elimination of the bonus a month after the 1968 strike
ended indicates that it was discriminatory, presumably a
reprisal for the strike, is not persuasive although we do
not ignore the possibility. In our opinion , the evidence
indicates that in December 1967, the 1967 bonus was
almost eliminated within management 's internal decisional
process, and was paid only at the insistence of the
president But, in the same context in December 1967, the
Company stated unequivocally to the Union that the 1968
bonus would not be paid unless there was a profit for the
year. This was about 8 months before any strike or, as far
as appears, any mention of a strike Subsequently, the
156 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Company did not operate at a profit in 1968 but at a
substantial loss We therefore regard the argument that
the timing of the elimination of the bonus after the strike
indicated discrimination as unpersuasive The bonus was
eliminated pursuant to a decision or an intention adopted
well before and unconnected with the strike
The fact that in the past, when Respondent eliminated
the turkeys, baskets, party, and picnic, unit and nonunit
employees were equally affected and all were deprived of
these fringe benefits, stems from the fact that all the
employees received the turkeys and so forth and when
such benefits were eliminated all employees were deprived
It would be something else if the Company continued to
give the benefits to the non-unit employees while
eliminating them as to the unit employees.
As to the bonus situation, it is true that both groups of
employees received an extra check at Christmas, generally
referred to as a Christmas bonus The unit bonuses were
$15, 25, 35, and 50 As we have seen, these bonuses bore
no relationship to wages or salary and only related to
length of service in a very limited way." If the non-unit
employees received the same bonuses of $15 to $50 on the
same basis as the unit employees or even if the bonuses
were approximately similar, we might have a different
situation before us However, the evidence is that the
nonunit bonus was comparatively substantial and related
directly to individual salary. On representative evidence in
the record we use the figure for the nonunit bonus as
being 20 percent of the individual's salary
A nonunit employee such as Le Tendre, a draftsman,
received 20 percent of his yearly salary as a bonus at
Christmas He was told that he would receive the
foregoing when he was hired and he did receive it every
year he worked for the Company. Let us assume that Le
Tendre was told that his salary was $6,500 and that he
would receive 20 percent of his salary as a bonus in
December. What did Le Tendre and his wife consider his
salary to be and what, in fact, was it' In our opinion, it
was $7,800 per year And, if during his 6 years with the
Company, his salary was increased to $7,500, he was then
earning $9,000
Assume that when Le Tendre started to work for the
Company, the prevailing pay for draftsmen in the area
was $7,500-7,800 per year Presumably, Le Tendre might
not have accepted a salary of $6,500 from Respondent but
he might have been quite willing to work for $7,500 Very
little arithmetic was required to understand that
Respondent would pay and was paying $6,500 plus 20
percent or $7,800, the prevailing wage If Respondent,
who was evidently, paternalistically inclined, wished to tell
Le Tendre that his salary was $6,500 but that Respondent
would give him 20 percent of his salary as a Christmas
check, that was presumably agreeable with the employee
and others similarly situated However, if instead of the
foregoing situation, assume that the prevailing wage for
draftsmen in the area was $6,500. The Company informs
Le Tendre that he will receive $6,500 plus 20 percent of
this salary every December. In such a posture,
Respondent, unlike in the first example, above, is paying
its draftsmen $1,300 more than the prevailing wage In
short, all its nonunit employees, perhaps 40 percent of its
total complement, would be receiving salaries that were 20
percent above the prevailing rates for personnel in their
classifications. We think it unlikely that an employer in an
industrial area and in a competitive business was paying a
"The criteria were 6 months to 1 year, $15, 1 to 2 years, $25, 2 years or
more, $35, group leaders, $50
large group of its employees 20 percent more than the
prevailing wage It is more likely that the situation was
more of the nature of the first example that we gave
above and that the 20 percent represented deferred wages
which, when added to the regular weekly or monthly
salary, gave the recipient the prevailing wage, give or take
a little above or a little below or the same
In any event, Respondent states that the 20 percent
Christmas check to its nonunit employees represented
deferred wages. While this alone does not establish the
fact, we perceive nothing in the record to lead us to a
different conclusion. Twenty percent of salary is a rather
substantial figure, it is directly related to the wage or
salary, it was, in our opinion, wages or salary and since it
was not paid until December, it is appropriately described
as deferred. The unit employees' bonus, on the other
hand, was minimal, probably less than 1 percent of an
employees' wage Although the Union had negotiated with
the Company for over 20 years about wages and other
items and had wage and related provisions in its contract,
it never discussed or had anything in its contract about the
bonus. If the Company was paying the prevailing union
rate over the years but wished to defer 20 percent (or even
5 or 10 percent) of the wages until December so that such
20 percent of the wages could be called a Christmas
bonus, the Union probably would not have agreed but, if
it did, it certainly would have included this and all other
aspects of wages in the contract. The unit bonus had
remained unchanged for over 10 years despite inflation
and the increase in wage rates The nonunit 20 percent
"bonus," however, increased over the years since it was
geared to increasing salaries, the latter increasing both
under inflationary pressure and in accord with individual
increases and promotions In our opinion, the nonunit
employees' 20 percent bonus constituted wages and, quite
evidently, deferred wages Elimination of the 20 percent of
salary, since salary was for all practical purposes salary
plus 20 percent thereof, would mean a 20 percent cut in
salary. We doubt that any Company or any employees
would regard such a cut as feasible or acceptable in this
inflationary period The unit employees' bonus, in our
opinion, did not constitute wages and was not regarded as
wages by the Union and that is apparently why the Union
never sought to negotiate about the bonus and to have it
increase to keep abreast with inflation and other wage
increases or to preserve it by incorporation in any wage
contract clause. The unit bonus was, as we stated earlier,
a benefit or emolument arising out of the employment
relationship, a condition of employment, about which the
Union could have bargained but did not choose to do so
We are not attempting to propound or to argue the
merits of contentions that might be made between the
Union and the Company if the Union had chosen to
negotiate about the bonus and to argue why the Company
should do one thing or another about the unit bonus in
relation to the Christmas checks to the nonunit
employees We are simply examining the two bonuses to
see whether the Company, as it claimed, did have a
reasonable basis for regarding the two bonuses as of a
different nature and whether it is credible that the
Company acted for nondiscriminatory reasons. And this
for the reason that the complaint allegation is that the
Company paid one bonus but discontinued the other
because the recipients of the latter were in the Union,
were represented by the Union, and had engaged in a
strike against the Company In short, the elimination of
the unit bonus is alleged to have been discriminatory.
MURPHY DIESEL COMPANY
On the evidence in this record , we do not find that the
elimination of the unit bonus was discriminatorily
motivated Nor do we find illegal discrimination by
imputation irrespective of motive 11 We recommend
dismissal of the complaint allegation that Respondent
violated Section 8(a)(3) and (1) of the Act
CONCLUSIONS OF LAW
For the reasons stated hereinabove Respondent has not
violated Section 8(a)(1)(3) and (5) of the Act.
RECOMMENDED ORDER
It is recommended that the complaint be dismissed.
157
"In some situations , "proof of intent is unnecessary where employer
conduct inherently encourages or discourages union membership " and
in such situations " the employer could not , without violating Section
8(a)(3), discriminate in wages solely on the basis of such [ Union]
membership " Radio Officers Union (Gaynor News ) v N L R B, 347
U S 17, 45, 47 In the instant case, the evidence does not show that union
membership or activities were the reasons for the elimination of the bonus