Neighborhood House Assn.

National Labor Relations Board - Board Decisions

Jun 30, 2006

347 N.L.R.B. 553 (N.L.R.B. 2006)

NEIGHBORHOOD HOUSE ASSN.
347 NLRB No. 52
553
The Neighborhood House Association and Service
Employees International Union, Local 2028.1
Case 21–CA–35986
June 30, 2006
DECISION AND ORDER
BY CHAIRMAN BATTISTA AND MEMBERS SCHAUMBER
AND WALSH
On June 15, 2004, Administrative Law Judge James L.
Rose issued the attached decision. The Respondent filed
exceptions and a supporting brief, the General Counsel
filed a cross-exception and an answering brief, and the
Respondent filed a reply 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,2 and conclusions
only to the extent consistent with this Decision and Or-
der.
This case presents two issues: first, whether the Re-
spondent violated Section 8(a)(5) and (1) of the Act by
withholding a regularly scheduled cost-of-living increase
(COLA) from its unit employees; second, whether the
Respondent violated Section 8(a)(5) and (1) of the Act
by proposing a 2.2-percent COLA increase and then con-
ditioning implementation of that proposed COLA on the
Union’s waiving its right to bargain further over the
COLA amount.
Contrary to the judge and our dissenting colleague, we
find, as explained below, that the principles set forth in
Stone Container Corp., 313 NLRB 336 (1993), and TXU
Electric Co., 343 NLRB 1404 (2004), dispose of both
issues. Because the COLA constituted a discrete event
that was scheduled to recur during negotiations for an
initial contract, the Respondent was free to implement its
proposal so long as the Respondent provided the Union
with reasonable advance notice and an opportunity to
bargain. The Respondent met this obligation. Accord-
ingly, we find that the Respondent did not violate Section
8(a)(5) and (1), and we dismiss the complaint.

1 We have amended the caption to reflect the disaffiliation of the
Service Employees International Union from the AFL–CIO effective
July 25, 2005.
2 The Respondent has excepted to some of the judge’s credibility
findings. The Board’s established policy is not to overrule an adminis-
trative law judge’s credibility resolutions unless the clear preponder-
ance of all the relevant evidence convinces us that they are incorrect.
Standard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188 F.2d 362
(3d Cir. 1951). We have carefully examined the record and find no
basis for reversing the findings.
I. BACKGROUND
The Respondent is a nonprofit multipurpose human
service agency located in San Diego, California. It pro-
vides social services to the community including a Head
Start program funded through a grant from the Federal
Government. The Respondent applies for and receives
this grant once every 3 years. The Federal Government
also allocates an increase to the grant for each fiscal year,
which the Respondent, subject to Federal Government
approval, determines how to spend.
The Respondent’s past practice, dating back 5 years,
was to grant an annual COLA increase to its employees.
Depending on the Federal Government’s approval of the
Respondent’s proposed allocation of its annual grant
increase, employees’ COLA increases during this period
ranged from 2.2 to 3.6 percent. For 2003, the Federal
Government approved the Respondent’s allocation of its
annual grant increase to fund a 2.2-percent COLA for its
employees.
On March 7, 2003,3 the NLRB certified the Union as
the collective-bargaining representative for separate units
of the Respondent’s professional and nonprofessional
Head Start employees. The Respondent and the Union
commenced bargaining for an initial contract in June.
The Union’s initial proposal included a 3.0-percent
COLA. In mid-July, the Respondent made a counterpro-
posal that included a 2.2-percent COLA.
Apart from their respective COLA proposals, each
party made a proposal for an additional wage increase.
The Union proposed a 7.5-percent across-the-board wage
increase for all bargaining unit employees, retroactive to
July 1, 2002. The Respondent proposed a 2.5-percent
wage step increase tied to performance.
The parties next discussed the COLA issue at the Oc-
tober 14 bargaining session. At this session, the Union
proposed that the Respondent implement the 2.2-percent
COLA, but reserved the right to continue to bargain for
the additional COLA amount included in its proposal.
The Respondent replied that it would not implement the
2.2-percent COLA until the Union agreed that the im-
plementation would close the COLA issue for that year.
The parties did not communicate further regarding the
COLA issue until December. In a letter to the Union
dated December 10, the Respondent adhered to its bar-
gaining position and again sought the Union’s agreement
to resolve the issue by consenting to the immediate im-
plementation of a 2.2-percent COLA. The Respondent
stated that if the Union did not consent, it would only
implement the COLA for nonbargaining unit employees.
The Union replied by letter dated December 12, reiterat-

3 All subsequent dates are in 2003, unless otherwise indicated.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD554
ing its prior bargaining position that it would not object
to immediate implementation of the proposed 2.2-percent
COLA, but would insist on additional bargaining on
wages and “future COLA payments.” By letter of De-
cember 16, the Respondent notified the Union that it
would not implement the COLA for bargaining unit em-
ployees because the Union was not willing to reach a
complete and final agreement on the COLA issue. Con-
sistent with its bargaining position, the Respondent, on
December 18, implemented the 2.2-percent COLA for its
nonbargaining unit employees and withheld the COLA
from unit employees.
II. DISCUSSION
The judge found that the Respondent had an estab-
lished practice of implementing a COLA increase in De-
cember of each year, and that it violated Section 8(a)(5)
and (1) by withholding the regularly scheduled COLA
increase from bargaining unit employees. The judge also
found that the Respondent violated Section 8(a)(5) and
(1) by conditioning implementation of the COLA in-
crease on the Union’s waiver of its right to negotiate an
addition to the COLA.
The Respondent excepts to these findings on the
ground, inter alia, that its actions were lawful under the
principles of Stone Container Corp., supra, and Alltel
Kentucky, Inc., 326 NLRB 1350 (1998).4 We agree.

4 In Stone Container, the employer had an established practice of
conducting an annual wage and benefit survey and implementing an
increase, if appropriate, each April. The union was certified in July
1988. During negotiations for a first contract in March 1989, the par-
ties discussed the April increase and the employer informed the union
that it would not grant an increase that year due to economic reasons.
The employer made its proposal in time to allow for bargaining over
the matter, but the union made no counterproposal and did not raise the
issue again during negotiations. Reasoning that the annual wage re-
view was a discrete, recurrent event, and that negotiations over the
amount of any such April increase could not await overall impasse, the
Board concluded that the employer satisfied its bargaining obligation
by providing the union with notice and an opportunity to bargain. The
Board stressed that, as in the instant case, the employer did not decline
to bargain over how much, if any increase it would give, and did not
propose elimination of the annual wage review practice. It simply
made a decision as to the specific annual wage increase at issue, and
provided the union sufficient opportunity to bargain over that subject.
In Alltel Kentucky, the employer told the union during bargaining
that, based on a wage survey it had conducted, it would not increase
employees’ wages in January as it had done annually for the previous
several years. Referring to Stone Container, the Board noted that over-
all bargaining impasse was not a condition precedent to a change in a
term or condition of employment where the change concerned a dis-
crete event scheduled to occur during bargaining. The Board adopted
the judge’s finding that the wage increase was a discrete event and that
the employer satisfied its bargaining obligation by giving notice to the
union and an opportunity to bargain over its proposal to freeze wages
that year.
A. The Respondent Satisfied Its Bargaining Obligation
As a general rule, where parties are engaged in nego-
tiations for a collective-bargaining agreement, the em-
ployer must maintain the status quo of all mandatory
bargaining subjects absent overall impasse.5 However,
as explained more fully in our recent decision in TXU
Electric Co., supra,6 the Board in Stone Container, supra,
set forth an exception to the general rule. Under this
exception, if a term or condition of employment concerns
a discrete recurring event, such as an annually scheduled
wage review, and that event is scheduled to occur during
negotiations for an initial contract, the employer may
lawfully implement a change in that term or condition if
it provides the union with reasonable advance notice and
an opportunity to bargain about the intended change in
past practice. TXU Electric, supra, slip op. at 2–3; see
also Stone Container, supra at 336, and Alltel Kentucky,
326 NLRB at 1350 fn. 4.
Contrary to the judge and our dissenting colleague, we
find that the Stone Container exception governs here.
The COLA increase constituted a discrete recurring
event that was scheduled to occur during bargaining for
an initial contract. The Respondent provided the Union
with ample advance notice of, and an opportunity to bar-
gain over, its position on a COLA increase for 2003.
The Respondent first proposed a 2.2-percent COLA in
July. In October, the Respondent proposed to implement
the 2.2-percent COLA only if the Union agreed that im-
plementation would close the COLA issue for that year.
Thus, the Respondent proposed a COLA of 2.2 percent if
the Union agreed to it, or no COLA in December if the
Union did not agree. In December, the Respondent reit-

5 Bottom Line Enterprises, 302 NLRB 373, 374 (1991), enfd. mem.
sub nom. Master Window Cleaning, Inc. v. NLRB, 15 F.3d 1087 (9th
Cir. 1994). Chairman Battista notes that an “overall impasse” does not
require an impasse on each and every issue. In his view, if there is an
impasse on major issues, the mere fact that there may be flexibility on
minor issues (e.g., use of bulletin boards) would not preclude a finding
of “overall impasse.”
6 In TXU Electric, the employer had a past practice of annually re-
viewing its salary plan to determine if adjustments were necessary.
During bargaining for an initial contract, the employer notified the
union that it intended to maintain the current salary plan for unit em-
ployees unless the parties reached an agreement on a change to the
plan. The union did not object to the employer’s statement or request
bargaining. Thereafter, consistent with its past practice, the employer
reviewed its salary plan, adopted a revised plan, and increased the
salaries of only its nonunit employees. The Board, applying the ration-
ale of Stone Container and Alltel Kentucky, found that the employer did
not violate the Act by changing its past practice of annual salary plan
adjustments for unit employees while it negotiated with the union for
an initial contract. The Board found that where a discrete event occurs
every year at a given time, and that negotiations for a first contract will
be ongoing at that time, an employer can announce in advance that it
plans to make changes as to that event, as long as the union is given
notice and an opportunity to bargain as to those matters.
NEIGHBORHOOD HOUSE ASSN. 555
erated its proposal to immediately implement the 2.2-
percent COLA only if the Union would close the COLA
issue for that year. Having thus satisfied its bargaining
obligation under Stone Container, the Respondent was
privileged to implement its proposal, i.e., to withhold in
December the COLA increase from bargaining unit em-
ployees, when the Union did not agree that the COLA for
2003 would be 2.2 percent.7 Accordingly, the Respon-
dent did not violate Section 8(a)(5) and (1) by withhold-
ing the COLA increase from its bargaining unit employ-
ees.8
Our dissenting colleague argues that Stone Container,
Alltel Kentucky, and TXU Electric do not support our
finding that the Respondent’s actions in this case were
lawful. Specifically, the dissent argues that, unlike the
unions in those cases, the Union here expressly protested
the Respondent’s plan to implement the COLA for unit
employees if the Union agreed to finalize the COLA
term. The dissent also observes that, unlike the situa-
tions in Stone Container and Alltel Kentucky, the Re-
spondent’s decision here not to grant the COLA to the

7 The fact that a December increase would have been retroactively
effective to July does not alter the Stone Container analysis. Further, it
should be noted that there is no allegation that the Respondent’s pro-
posal was made in bad faith.
8 Our dissenting colleague relies on Lee’s Summit Hospital &Health
Midwest, 338 NLRB 841 (2003), to support his argument that the Re-
spondent violated Sec. 8(a)(5) and (1) by withholding the COLA in-
crease from its bargaining unit employees.
Chairman Battista finds that Lee’s Summit Hospital, 338 NLRB 841
(2003), is distinguishable. In Lee’s the employer had a past practice of
granting a general wage adjustment to employees each fall. Following
the union’s April 2000 certification, the employer announced on Sep-
tember 19, 2000, that unit employees would not receive the annual
wage adjustment that it was granting its nonunit employees on October
2. When the union protested the withholding of the increase during the
next bargaining session on September 25, the employer’s chief negotia-
tor responded that she would recommend that the unit employees be
given the wage increase on October 2 if the union was willing to agree
that this increase would constitute the total first year’s increase under
the contract. When the union did not agree, the employer withheld the
wage increase. Under these circumstances, unlike here, the employer
did not provide reasonable advance notice and an opportunity to bar-
gain about its intended departure from past practice. By contrast, in the
instant case, the Respondent made its offer to the Union in October, and
the conduct did not occur until December. Chairman Battista thus
concludes that a reasonable opportunity for bargaining was given. He
does not read Lee’s Summit as holding that an impasse has to be
reached before implementation in circumstances where, as here, there
has been a reasonable opportunity to bargain.
Member Schaumber agrees there are factual distinctions between
this case and Lee’s Summit Hospital, but also finds that, to the extent
that Lee’s Summit Hospital can be read as suggesting that an employer
must bargain to overall impasse before changing a discrete, recurrent
term or condition of employment while negotiations for an initial con-
tract are underway, that principle does not survive TXU Electric Co.,
343 NLRB 1404 (2004).
unit employees was not prompted by economic consid-
erations.
However, the factual distinctions cited by the dissent
were not the basis for the Board’s holding in TXU Elec-
tric.9 As the Board’s decision makes clear, the core issue
in TXU Electric was whether a change in a term or con-
dition of employment related to a discrete recurring
event “would be permissible if the union had notice and
opportunity to bargain” about the change.10 TXU Elec-
tric, supra 1406. To that end, the Board in TXU Electric
specifically indicated that it agreed with the view of the
concurring members in Daily News of Los Angeles, 315
NLRB 1236 (1994), affd. 73 F.3d 406 (D.C. Cir. 1996),
cert. denied 519 U.S. 1090 (1997), that:
where, as here, a discrete event occurs every year at a
given time, and negotiations for a first contract will be
ongoing at that time, an employer can announce in ad-
vance that it plans to make changes as to that event.
“[T]he employer’s bargaining position may be to con-
tinue the practice for that year, to modify it, or to delete
it for that year.” As long as the union is given notice
and opportunity to bargain as to those matters, the em-
ployer can carry out the changes even if there is no
overall impasse as of the time of the change. [Id. supra
at 1407.]
That is what happened here. The COLA increase was a
discrete recurring event that was scheduled to occur
while negotiations for a first contract were underway.
The Respondent gave the Union notice of its plan to
make a change in that event, i.e., to implement a 2.2-
percent COLA increase only if the Union agreed that this
would close the COLA issue. The Respondent also gave
the Union an opportunity to bargain. Therefore, as in
TXU Electric, we find that the Respondent did not vio-
late the Act when it “declined to [grant the COLA in-
crease] to unit employees during negotiations for a col-
lective-bargaining agreement.” Id. at 1405.
B. The Respondent did not Adopt a “Take-It-Or-
Leave-It” Position
The judge also found that the Respondent violated
Section 8(a)(5) and (1) by conditioning implementation
of the COLA increase on the Union’s waiver of its right

9 Similarly, the Board’s decision in TXU Electric explained that the
holdings in Alltel Kentucky and Stone Container are not limited to the
particular situations cited by the dissent. See TXU Electric, slip op.
1407 (recognizing the different factual settings in Alltell Kentucky and
Stone Container, but finding those cases to stand for the “broader
proposition” applied herein).
10 Indeed, the dissent in TXU Electric characterized the holding as
allowing employers to unilaterally change “annual wage adjustment
programs merely because a wage increase is scheduled to occur during
the course of bargaining.” Id. at 1408.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD556
to negotiate an addition to the COLA. Contrary to the
judge and our dissenting colleague, we find the Respon-
dent’s actions lawful under our recent decision in TXU
Electric, supra.
As explained above, under TXU Electric, the respon-
dent was free to implement its proposal regarding the
COLA increase if it provided the union with reasonable
advance notice and an opportunity to bargain about the
intended change. Here, the Respondent adopted a bar-
gaining position entirely consistent with that standard.
The Respondent notified the Union that it intended to
depart from its past practice of granting a COLA increase
and would withhold the COLA from bargaining unit em-
ployees in December if the Union did not agree to final-
ize the COLA term.
Thus, we find that the Respondent bargained in good
faith over the amount of the COLA increase. The Re-
spondent did not take the COLA issue “off the table” or
refuse to bargain about the issue during contract negotia-
tions. It did not communicate to the Union that it would
refuse to entertain counterproposals on the COLA issue.
Nor did the Respondent propose to eliminate its past
practice of assessing COLAs on an annual basis. Rather,
the Respondent proposed to implement its 2003 COLA
increase proposal only if the Union agreed to finalize the
term. Otherwise, the Respondent would withhold the
COLA increase and continue to bargain over the amount
of the increase. The Respondent’s bargaining position
was entirely consistent with good-faith bargaining.11
Hydrotherm, Inc., 302 NLRB 990 (1991), upon which
the judge and our dissenting colleague rely to find the
Respondent’s bargaining position unlawful, is distin-
guishable. In that case, the complaint alleged that the
Respondent engaged in surface bargaining during the
parties’ negotiations. The judge found that the respon-
dent’s overall behavior exceeded lawful “hard bargain-
ing” and instead demonstrated bad faith. Id. at 993. The
Board agreed with the judge, finding that the “totality of
the positions” taken by the respondent during bargaining
and the manner in which the respondent advanced those
positions were inconsistent with a good-faith approach to
negotiations. Id. at 994. The Board found that the re-
spondent’s dealings with both the union and its employ-
ees regarding wages were an example of its overall bad-
faith bargaining. In negotiations, the employer took the
bargaining position that it would continue its past prac-
tice of an annual merit increase if, and only if, the union
agreed to forgo all bargaining over wages for the coming

11 Cf. TXU Electric, 343 NLRB 1402, 1406 (finding that an em-
ployer had acted “entirely consistent with good faith bargaining” when
it gave notice that it would depart from its past practice of performing
an annual wage review unless and until the parties agreed otherwise).
year. The Board adopted the judge’s finding that the
employer’s position with respect to wages amounted to a
“take-it-or-leave-it” proposal. In addition, the employer
compounded its bad faith by falsely portraying the un-
ion’s position on wages in a letter to employees. The
employer’s conduct regarding wages, together with the
many other indicia of bad faith found by the Board, es-
tablished the surface-bargaining violation.
Our dissenting colleague argues that the situation in
Hydrotherm is “precisely” the situation in the instant
case and is therefore controlling. Here, however, the
Respondent did not make the broad proposals that the
Board in Hydrotherm relied upon to infer that the re-
spondent in that case had bargained in bad faith. More-
over, there is no allegation or evidence of bad-faith or
surface bargaining by the Respondent. Finally, the Re-
spondent did not condition implementation of the COLA
increase on the Union’s agreement to forgo all bargain-
ing over wages. Negotiations continued between the
parties over their other wage proposals, including the
Union’s proposal for a 7.5-percent general wage increase
and the Respondent’s proposal for a 2.5-percent wage
step increase. Indeed, the Respondent did not condition
implementation of COLA on the Union’s foregoing
COLA increases for the duration of the contract. It did
so only with respect to 1 year. In sum, the Respondent
did not bargain in bad faith with respect to wages or
COLA.12 Rather, the Respondent conditioned implemen-
tation only on the Union’s agreement to finalize the
COLA term for 2003. Also, unlike the employer in Hy-
drotherm, the Respondent did not misrepresent the Un-
ion’s bargaining position in communications with em-
ployees. Therefore, we dismiss the allegation that the
Respondent violated Section 8(a)(5) and (1) by condi-
tioning implementation of the COLA on the Union’s
waiver of its right to negotiate an additional COLA.
ORDER
The complaint is dismissed.
MEMBER WALSH, dissenting.
Based on well-established legal principles, the Re-
spondent violated Section 8(a)(5) and (1) of the Act (a)
by conditioning the implementation of the scheduled
2003 2.2-percent COLA for unit employees on the Un-
ion’s waiving its right to continue to negotiate, after that
implementation, for an additional .8 percent of COLA,
and (b) (after the Union refused to waive its negotiating

12 In Hydrotherm, in contrast, the Board found the employer’s bar-
gaining tactic unlawful because “it stated that the scheduled wage in-
creases would be granted only if the Union agreed to put forward no
counter-proposal whatsoever.” Hydrotherm, supra, 302 NLRB at 995
(emphasis added).
NEIGHBORHOOD HOUSE ASSN. 557
right) by unilaterally withholding the scheduled 2.2-
percent COLA from the unit employees.
A. Facts
My colleagues have set forth the facts about the annual
COLAs and about the parties’ negotiations over the total
amount of the 2003 COLA for the unit employees. The
Respondent’s established practice of implementing
scheduled annual COLA wage increases had become an
established term and condition of employment. In addi-
tion to the oral and written negotiations about the COLA
summarized by my colleagues, there was a September
2003 conversation between Union Executive Director
Mary Grillo and Respondent Executive Vice President
Regina Evans.1 The Union was seeking an overall 3-
percent COLA, and the Respondent was offering the
scheduled 2.2-percent COLA. Evans told Grillo that the
Respondent was going to implement the scheduled 2.2-
percent COLA. Grillo replied that the Respondent had
an obligation to discuss with the Union any changes in
wages, hours, and other terms and conditions of em-
ployment. Evans asked Grillo if the Union did not want
the Respondent to implement the scheduled 2.2-percent
COLA for the unit employees. Grillo replied that the
Union never stood in the way of wage increases, but the
Respondent was still obligated to discuss wages with the
Union.
Not only did the Union expressly not oppose imple-
mentation of the scheduled 2.2-percent COLA for the
unit employees in this September conversation, but in an
October 14 bargaining session the Union made it clear to
the Respondent that the Union would accept that COLA.
The Respondent told the Union during this session that
the Respondent was planning to implement the scheduled
2.2-percent COLA prior to the Christmas holidays. The
Union replied that the Union expected the COLA to be
implemented as it had been implemented in prior years.
Indeed, the Union then insisted that the scheduled 2.2-
percent COLA be implemented while the parties contin-
ued to bargain about the additional .8 percent of COLA
that the Union was still seeking. The Respondent would
not agree to that. The Respondent would only agree to
implement the scheduled 2.2-percent COLA for the unit
employees if the Union would agree not to attempt to
obtain an additional .8 percent of COLA in subsequent
negotiations. The Union would not agree to that.2

1 All dates are 2003, unless stated otherwise.
2 My colleagues state that the Respondent proposed a COLA of 2.2
percent for the unit employees if the Union agreed to it, or no COLA
“in December” if the Union did not agree. In fact, because any COLA
would have been retroactive to July 1, the start of the Respondent’s
fiscal year, the Respondent’s demand effectively gave the Union the
choice either to (1) accept the 2.2-percent FY 2003–2004 COLA for the
The parties held to these respective positions through-
out the negotiations. Finally, on December 18, the Re-
spondent implemented the scheduled 2.2-percent COLA
for nonunit employees. But the Respondent unilaterally
withheld the COLA from the unit employees, expressly
because the Union would not agree to give up its at-
tempts to get an additional .8 percent of COLA in subse-
quent negotiations.
B. Analysis and Conclusions
1. Conditioning the scheduled COLA on a
union waiver
In finding that the Respondent violated Section 8(a)(5)
and (1) of the Act by conditioning the implementation of
the scheduled 2003 2.2-percent COLA for unit employ-
ees on the Union’s waiving its right to continue to nego-
tiate, after that implementation, for an additional .8 per-
cent of COLA, the judge correctly relied on Hydrotherm,
Inc.,3 which is squarely on point and which dictates the
result on this issue. The employer in Hydrotherm vio-
lated Section 8(a)(5) when it refused to implement its
established past practice of granting scheduled annual
merit wage increases for selected employees, unless the
union agreed not to pursue negotiations for a general
wage increase for all employees. The union did not op-
pose the granting of the scheduled annual merit wage
increases. It merely sought to pursue its right to negoti-
ate in addition for a general wage increase that would
also benefit employees who were not selected for a merit
increase. While the employer lawfully could have pro-
posed to the union that wages would be limited to the
scheduled merit increases, it unlawfully held to the posi-
tion that the scheduled merit wage increases would be
granted only if the union agreed to put forward no coun-
terproposal at all on wages.4
As the judge found, the situation in Hydrotherm is
precisely the situation here. The Respondent repeatedly
told the Union that the price of the Respondent imple-
menting the scheduled 2.2-percent COLA was the Union
waiving its right to thereafter negotiate for the additional
.8 percent of COLA. But the Respondent could have
lawfully implemented the scheduled 2.2-percent COLA
for the unit employees while continuing to negotiate
about the Union’s proposal for an additional .8 percent.
In short, as the judge found, the Respondent unlawfully
withheld an established benefit as a bargaining tactic.5

unit employees and forego bargaining about the Union’s request for an
additional .8 percent, or (2) forego any COLA for all of FY 2003–2004.
3 302 NLRB 990 (1991).
4 Id. at 995–996.
5 My colleagues’ attempt to distinguish Hydrotherm is not well
founded. First, they note that the employer in that case, unlike the
Respondent here, was found to have engaged in overall bad-faith bar-
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD558
2. Unilaterally withholding the scheduled COLA
In finding that the Respondent violated Section 8(a)(5)
and (1) of the Act by unilaterally withholding the sched-
uled 2003 2.2-percent COLA from the unit employees,
the judge correctly relied on Lee’s Summit Hospital &
Health Midwest,6 which, like Hydrotherm in the preced-
ing discussion, is squarely on point and which dictates
the result on this issue. The employer in Lee’s Summit
Hospital violated Section 8(a)(5) when it unilaterally
withheld an annual wage adjustment that had become,
over the years, an established condition of employment
that the employer was not free to change unilaterally. As
in Lee’s Summit Hospital, so also here, the annual COLA
had become an established condition of employment that
the Respondent was not free to change unilaterally, and
the Respondent violated the Act when it unlawfully
withheld the 2003 COLA from the unit employees.7

gaining and to have falsely portrayed the union’s bargaining position in
a letter to employees. These are red herrings. There is nothing in the
Board’s decision in Hydrotherm that shows that the employer’s condi-
tioning implementation of its scheduled annual merit increases for
selected employees on the union’s agreement not to pursue negotiations
for a general wage increase for all employees would not have been
found unlawful even outside the context of overall bad-faith bargaining
or even in the absence of a false portrayal of the union’s position. Sec-
ond, my colleagues argue that while the employer in Hydrotherm con-
ditioned implementation of its established past practice of granting
scheduled annual merit wage increases on the union’s waiver of its
right to negotiate about wages in general, the Respondent here did not
condition implementation of the scheduled 2.2-percent COLA on the
Union waiving its right to pursue negotiations over wages in general,
but only the additional .8 percent of COLA in particular. But the Union
here had as much right to negotiate about an additional .8 percent of
COLA following implementation of the scheduled 2.2-percent COLA
as the union in Hydrotherm had a right to negotiate about additional
wages increase in general beyond the scheduled annual merit wage
increases. In both cases, the employers unlawfully conditioned imple-
mentation of scheduled increases on the unions’ waiver of their rights
to bargain about additional increases.
6 338 NLRB 841 (2003).
7 The Chairman’s attempt to distinguish Lee’s Summit Hospital, su-
pra, is unfounded. He argues that the reason the employer in that case
violated the Act was because it withheld the annual wage adjustment
from the unit employees without first providing the union with reason-
able advance notice and an opportunity to bargain about it. But that
was not the reason the Board found the employer violated the Act in
that case. In fact, neither the Board nor the judge even mentioned such
a theory. Instead, the Board based its finding of a violation on the fact
that “the wage adjustment had become an established pattern and prac-
tice over many years, and therefore constituted a condition of employ-
ment that the Respondent was not free to change unilaterally.” Id. at
841 fn. 3. Moreover, at the same time that the employer announced to
the union that it was withholding the annual wage adjustment from the
unit employees, the employer nevertheless did offer to bargain about
wages for the unit employees. Notwithstanding the employer’s offer to
bargain, the Board found that the employer violated the Act by unilat-
erally withholding the annual wage adjustment from the unit employ-
ees.
3. The majority’s dismissal of the complaint
The well-established and longstanding general rule
(with two exceptions not applicable here) prior to TXU
Electric Co.,8 was that during negotiations for a collec-
tive-bargaining agreement, an employer must maintain
the status quo with regard to all mandatory subjects of
bargaining unless the parties have reached overall im-
passe in bargaining for the agreement as a whole.9 Dur-
ing such negotiations, an employer’s duty to refrain from
making unilateral changes extends beyond the mere duty
to give the union notice and opportunity to bargain about
a proposed change, and encompasses the duty to refrain
from implementing such a change at all unless and until
the parties have reached overall impasse in bargaining
for the agreement as a whole.10
In nevertheless finding that the Respondent did not
violate the Act here, my colleagues rely on TXU Electric
Co., supra, Stone Container Corp.,11 and Alltel Ken-
tucky.12 For the reasons fully set forth in my dissent in
TXU, I find that case was wrongly decided. But in any
event, TXU, Stone Container Corp., and Alltel Kentucky
are all inapposite here.
In TXU, the employer had an established 22-year past
practice of conducting annual wage reviews in December
and giving annual wage increases in January based on
those reviews. During bargaining for an initial collec-
tive-bargaining agreement, however, the employer twice
told the union that the employer was not going to give
increases unless and until the parties bargained to agree-
ment on such a change. The union did not at any time
object to the employer’s position or request bargaining
about it. Consistent with its past practice, the employer
adopted a revised salary structure and increased sala-
ries—but this time only for nonunit employees. The
employer withheld the increases from the unit employ-
ees.
Nevertheless, the majority in TXU found that the em-
ployer did not violate the Act. The majority stated:
The Respondent gave the Union ample time in advance
of the December wage event to request bargaining.
Having been twice notified of the Respondent’s deci-
sion not to adjust unit employees’ wages in December,
it was incumbent on the Union to request bargaining

8 343 NLRB 1404 (2004).
9 Bottom Line Enterprises, 302 NLRB 373, 374 (1991), enfd. mem.
sub nom. Master Window Cleaning, Inc. v. NLRB, 15 F.3d 1087 (9th
Cir. 1994); Intermountain Rural Electric Assn. v. NLRB, 984 F.2d
1562, 1566 (10th Cir. 1993), enfg. 305 NLRB 783 (1991).
10 Bottom Line Enterprises, supra, 302 NLRB at 374; RBE Electron-
ics of S.D., Inc., 320 NLRB 80, 81 (1995).
11 313 NLRB 336 (1993).
12 326 NLRB 1350 (1998).
NEIGHBORHOOD HOUSE ASSN. 559
over that decision. [Citing Alltel Kentucky, supra.] Yet,
the Union did not do so either time the decision was
announced. Thus, under the rationale of Stone Con-
tainer and Alltel Kentucky, we find that the Respondent
did not violate the Act when the Respondent declined
to apply the 2000 salary plan to unit employees during
negotiations for a collective-bargaining agreement.13
But unlike in TXU, the Union here expressly protested
the Respondent’s plan to withhold the scheduled COLA
from the unit employees unless the Union agreed to
waive its right to bargain for additional COLA. Addi-
tionally, in subsequent negotiating correspondence the
Union expressly declared its intention to continue nego-
tiations on wages and future COLA payments during
negotiations and expressly reserved its right to do so.
Thus, in addition to disagreeing with the reasoning and
result in TXU, I find in any event that it is inapposite and
does not support my colleagues’ dismissal of the com-
plaint.14
Stone Container, supra, and Alltel Kentucky, supra,
also relied upon by my colleagues, are also inapposite
here. In Stone Container, the employer notified the
newly-certified union that for economic reasons it could
not grant the annually scheduled wage increase that was
scheduled to occur while the parties were negotiating for
an initial collective-bargaining agreement. The Board
found that because the employer gave the union enough
time to bargain over the employer’s decision not to give
the scheduled increase, and because the union made no
counterproposals concerning the scheduled increase and
did not raise the issue during negotiations, the employer

13 TXU Electric, supra at 1405.
14 My colleagues assert that the above facts that distinguish TXU
from the instant case were not the basis for the result in TXU. First, the
above-quoted passage from TXU belies that assertion. Additionally, the
Board in TXU stated in the very preamble to its decision that it agreed
with the judge under the circumstances of that case that the employer
did not unlawfully change its past practice of annual salary plan ad-
justments while negotiating with the union for an initial contract “be-
cause the [employer] gave sufficient notice to the [u]nion of the pro-
posed change and the [u]nion declined to request bargaining over it.”
Id., slip op. at 1. Finally, the Board ended its decision on the same
note:
Under Stone Container and Alltel, the Respondent, having twice noti-
fied the Union of its intention to maintain the 1999 salary plan, af-
forded the Union ample opportunity to bargain on this particular sub-
ject. The Union failed to request bargaining at any point during the in-
tervening 6 months. Having received no response from the Union, the
Respondent was not required to wait until the parties reached an over-
all impasse in negotiations before implementing the change in annual
salary plans. [Id. at 4–5 [emphasis added].]
Thus, the union’s failure to request bargaining in TXU was an express,
significant factor in the Board’s dismissal of the complaint, and it distin-
guishes that case from this one, where the union repeatedly demanded that
the Respondent bargain with it about any changes in wages.
had satisfied its bargaining obligation regarding the
scheduled annual wage increase and did not violate the
Act by unilaterally not giving it.15
In Alltel Kentucky, like in Stone Container, the em-
ployer told the union during bargaining for an initial col-
lective-bargaining agreement that based on a wage sur-
vey conducted by the employer showing that the em-
ployer’s wage scale was higher than the average for the
surveyed area, the employer did not intend to grant the
annual COLA wage increase that was scheduled to occur
while the parties were negotiating for an initial collec-
tive-bargaining agreement. The Board found that, hav-
ing been notified of the employer’s intention not to give
the scheduled annual increase, it was incumbent upon the
union to request bargaining over the employer’s deci-
sion. The union failed to do so. Citing Stone Container,
the Board found that the union’s failure to request bar-
gaining in the face of the employer’s notice to the union
that it did not intend to give the annually scheduled
COLA wage increase defeated any claim that the em-
ployer unlawfully discontinued the increase.
In the instant case, however, unlike in Stone Container
and Alltel Kentucky, the Respondent’s decision not to
grant the scheduled 2.2-percent COLA to the unit em-
ployees was not prompted by economic considerations,
but was the consequence of the Respondent’s negotiating
tactic of refusing to grant the scheduled 2.2-percent
COLA for the unit employees unless the Union waived
its right to bargain for an additional .8 percent of COLA
after implementation of the scheduled COLA. And also
unlike the unions in Stone Container and Alltel Kentucky,
the Union here expressly protested the Respondent’s plan
to withhold the scheduled COLA from the unit employ-
ees unless the Union agreed to waive its right to bargain
for additional COLA, and in subsequent negotiating cor-
respondence the Union expressly declared its intention to
continue negotiations on wages and future COLA pay-
ments during negotiations and expressly reserved its
right to do so.
In sum, I find, for the reasons set forth in the TXU dis-
sent, that case was wrongly decided, that my colleagues’
reliance on TXU, Stone Container, and Alltell, supra, is
in any event unavailing, and that their attempts to distin-
guish Hydrotherm and Lee’s Summit Hospital, supra, are
unsuccessful. I would adopt the judge’s unfair labor
practice findings.
Robert MacKay, for the General Counsel.
Christopher W. Carlton and Dave Carothers, Esqs., of San

15 The TXU majority agreed with this view of Stone Container: “Un-
der these circumstances, since the union did not request bargaining
when notice was afforded to it, the Board determined that the employer
could lawfully decline to grant the wage increase.” Supra, slip op. at 2.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD560
Diego, California, for the Respondent.
DECISON
STATEMENT OF THE CASE
JAMES L. ROSE, Administrative Law Judge. This matter was
tried before me at San Diego, California, on April 28, 2004,
upon the General Counsel’s complaint (amended at the hearing)
which alleged principally that the Respondent unilaterally
changed an established working condition of granting a cost of
living increase (COLA) to employees by withholding imple-
mentation of an approved COLA and thus violated Section
8(a)(5) of the National Labor Relations Act (the Act).
The Respondent generally denied that it committed the un-
fair labor practices alleged, and affirmatively contends the
COLA approved was a subject of negotiations and the parties
have been unable to agree to the amount of the COLA.
Upon the entire record, including my observation of the wit-
nesses, briefs1 and arguments of counsel, I make the following
FINDINGS OF FACT AND CONCLUSIONS OF LAW
I. JURISDICTION
At all material times, the Respondent has been a California
501(c)(3) nonprofit corporation engaged in providing social
welfare services with offices and facilities throughout San
Diego County, California. In the course of its operations, the
Respondent annually derives gross revenues in excess of
$250,000 and annually purchases and receives at its San Diego
County locations, goods, products, and materials valued in
excess of $50,000 from enterprises which had received such
goods, products and materials directly from points outside the
State of California. At all material times, the Respondent has
been an employer engaged in interstate commerce within the
meaning of Sections 2(2), (6), and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
Service Employees International Union, Local 2028, AFL–
CIO (the Union) is admitted to be, and I find is, a labor organi-
zation within the meaning of Section 2(5) of the Act.

1 Counsel for the General Counsel filed a motion to strike posthear-
ing brief of Respondent, on grounds that the Respondent’s brief was
hand delivered to my office on the brief due date but counsel for the
General Counsel was not notified of this by telephone as, he asserts, is
required by Sec. 102.114 of the Board Rules and Regulations. While
there may have been technical noncompliance on the part of counsel for
the Respondent, I cannot conceive how such would in any way preju-
dice the General Counsel. Counsel for the General Counsel contends
that his brief was mailed on June 1, 2004, and “General Counsel’s
timely filed brief was in Respondent’s possession before Respondent
filed its brief.” This is pure speculation and is probably not accurate.
The General Counsel’s brief would certainly not have been delivered to
the Respondent’s San Diego office before June 2, yet the Respondent’s
brief is date stamped in my San Francisco office on June 2. Indeed,
counsel for the General Counsel’s brief is date stamped June 3, though
he asserts he mailed it to me and to counsel for the Respondent on June
1. I overrule the General Counsel’s motion and have considered the
briefs of both counsel.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Facts
The essential material facts here are not in dispute. The Re-
spondent is engaged in providing a variety of social services in
the San Diego area, including the Federally funded Head Start
program. In providing these services the Respondent employs
professionals, nonprofessionals, and others.
On March 7, 2003, the Union was certified as the exclusive
bargaining representative in separate units of Head Start em-
ployees—one of professionals and the other of nonprofession-
als. The parties began negotiations for a collective-bargaining
agreement in early summer and to the date of the hearing here
have had numerous bargaining sessions but have not reached an
agreement.
Every 3 years, the Respondent applies for and has received a
federally funded grant to operate the Head Start program. Each
year the Federal grant includes a cost-of-living (COLA) in-
crease. The Respondent determines how this COLA will be
allocated, but must apply for permission to use it in such man-
ner. Upon receiving permission, the Respondent then grants a
COLA to its Head Start employees. For the past 5 years, the
COLA increases have been: 2002–2003, 3.5 percent; 2001–
2002, 3.5 percent 2000–2001, 3.6 percent; 1999–2000, 2.2
percent; and, 1998–1999, 3.1 percent.
For fiscal year 2003–2004, the Federal grant was for a
COLA of 1.5 percent; however, the Respondent determined to
use it all for wages which would amount to a 2.2-percent
COLA for each employee. The Respondent submitted its pro-
posed COLA in the spring received approval in the fall to allo-
cate the COLA at 2.2 percent for employee wages, retroactive
to July 1—the actual implementation to be accomplished by the
December holidays.
Mary Grillo is the executive director for the Union, and the
Union’s chief negotiator. She testified that in September she
had a telephone conversation with Regina Evans, the Respon-
dent’s executive vice president and chief operating officer,
during which Evans said that the Respondent “was going to
proceed to implement the COLA. And I informed her that now
that the Union has been recognized they have to discuss any
changes to wages, benefits and working conditions.” And: “So
she asked me if I didn’t want the COLA implemented and I
stated that, of course, we never stand in the way of increasing
workers’ wages but that she is obligated to discuss these mat-
ters with the Union.”
Evans denied that she and Grillo discussed the proposed
COLA in September (though agreeing they had a phone con-
versation then); however, she testified that in May or June they
had a phone conversation during which “I also informed Ms.
Grillo that we had an approved cost of living adjustment from
the Federal government . . . .” Since the proposed 2.2 percent
was not approved by the Federal administrators until fall, I
conclude that the discussion wherein Evans said the Respon-
dent intended to implement it must have taken place in Sep-
tember. That it had not been implemented was discussed at the
October 4 session. Perhaps in May or June, Evans had in-
formed Grillo that the Respondent had applied for approval of
2.2 percent. And in the Union’s first contract proposal, pre-
NEIGHBORHOOD HOUSE ASSN. 561
sented in June, a COLA of 3 percent was proposed, which the
Union acknowledges was the 2.2 plus .8 percent, in addition to
a 7.5-percent wage increase. In its initial proposal, submitted in
June or July, the Respondent offered a 2.2-percent COLA plus
a 2.5-percent wage step increase.
There followed bargaining sessions, particularly one on Oc-
tober 14, wherein the Union asked that the 2.2 percent be
granted and the remaining .8 percent be left to negotiations.
But for Grillo’s initial statement to Evans that the Respondent
could not implement the COLA absent bargaining, the Union
has taken the position that the Respondent should implement
the 2.2 percent and the parties would continue to bargain over
the remaining .8 percent (as well as other items). The Respon-
dent has repeatedly argued that it would only implement the 2.2
percent if the Union would agree that such would end discus-
sion of the COLA. These respective positions are memorial-
ized in a series of letters between the Respondent and the Un-
ion, the relevant portions of which:
December 10, Evans to Grillo:
At this point, we believe that it would be unfair to our
employees if we did not implement the COLA before the
end of December. To prevent this inequity, we need to
implement the COLA for all eligible Head Start employ-
ees in time to include all retroactive pay (for the period
July 1, 2003, to present) in the paychecks that will be dis-
tributed on December 18, 2003. Accordingly, regardless
of whether it is obligated to do so, NHA is requesting
SEIU Local 2028 to bring closure to this issue by consent-
ing to the immediate implementation of the 2.2% COLA
for the bargaining unit employees. If SEIU Local 2028 is
unwilling to consent to implementation of the budgeted
COLA for bargaining unit employees, NHA will have no
choice but to implement the COLA for non-bargaining
unit employees only.
December 12, Grillo to Evans:
SEIU Local 2028 has no objection to your immediate
implementation of the 2.2% COLA retroactive to July 1,
2003 for bargaining unit employees. * * * SEIU Local
wants to make it clear that by consenting to the immediate
implementation of the COLA that it is not agreeing that
the issue of wages is closed. Nor is the issue of future
COLA payments closed. SEIU Local 2028 intends to con-
tinue negotiations on these issues and we specifically re-
serve the right to do so.
December 16, Evans to Grillo:
(Referring to Grillo”s December 12 letter) you indi-
cated that SEIU Local 2028 would consent to NHA’s im-
plementation of its budgeted COLA of 2.2% but only if
the Union could continue to negotiate for a larger COLA.
This is not an acceptable or fair bargaining tactic. The
Agency is not willing to implement a COLA unless and
until the parties have reached a complete and final agree-
ment on this issue. As a result, NHA will not be imple-
menting the budgeted COLA for the bargaining unit at this
time.
Memo December 18, Evans to employees:
I must point out that the agency had also hoped to im-
plement the 2.2% COLA for eligible team members in the
bargaining units represented by SEIU Local 2028, but the
Union has not yet agreed to accept this COLA. Instead,
SEIU Local 2028 is demanding a 3.0% COLA. In fact,
the agency offered to implement the 2.2% COLA for the
bargaining units employees if the Union would agree to
drop its demand for a 3.0% COLA, but the Union would
not agree to do so. We continue to negotiate in good faith
with SEIU Local 2028 about the 2003-2004 COLA (as
well as the other terms for a labor contract), and we will
do our best to promptly implement whatever COLA is fi-
nally negotiated with the Union for the bargaining units.
B. Analysis and Concluding Findings
Although there are some minor disputes about what was said
concerning the 2003–2004 COLA and when, they are irrelevant
to the material issues here. There is no doubt that implement-
ing a COLA had become an established practice upon the Fed-
eral administrator of the Hear Start program designating a
COLA for the fiscal year. While the amount of the COLA is
discretionary and must be approved before implementation, the
fact of a COLA is, and has been, a fixed working condition.
On facts similar to those here, the Board recently said:
In adopting the judge’s finding that the Respondent violated
Section 8(a)(5) by unilaterally withholding the 2000 annual
wage adjustment, we also adopt his finding that the wage ad-
justment had become an established pattern and practice over
many years, and therefore constituted a condition of employ-
ment that the Respondent was not free to change unilaterally.
[Lee’s Summit Hospital and Health Midwest, 338 NLRB 841
fn. 3 (2003).]
Similarly, in Hydrotherm, Inc., 302 NLRB 990 (1991), the
Board found a violation of 8(a)(5) when the company refused
to implement its past practice of granting annual merit wage
increases unless the union agreed not to pursue negotiations for
a general wage increase. The Board noted that the company
was free to propose that wages would be limited to the sched-
uled merit increases, or even propose less. “It was not acting in
good faith, however, when it stated that the scheduled wage
increases would be granted only if the [u]nion agreed to put
forward no counter-proposal whatsoever.”
Such is precisely the situation here. The Respondent repeat-
edly told the Union that the price of implementing the approved
COLA of 2.2 percent was foregoing any further negotiations of
a COLA. In short, the Respondent withheld an established
benefit as a bargaining tactic. By this act it violated Section
8(a)(5) notwithstanding that the matter of implementing the
COLA had been discussed in negotiation sessions. The Re-
spondent certainly could have implemented the 2.2-percent
COLA without agreeing to the Union’s proposal for an addi-
tional .8 percent or indeed any other of the Union’s proposals.
The Respondent relies on Stone Container Corp., 313 NLRB
336 (1993), and Alltel Kentucky Inc., 326 NLRB 1350 (1998),
in arguing that refusing to implement the COLA in these cir-
cumstances was not violative of the Act. In Stone Container,
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD562
the company informed the union that it would not be granting a
wage increase (which it had for several years) due to economic
reasons. However, the company did not refuse to bargain about
this refusal. And in Alltel Kentucky, there was no violation of
the Act when during negotiations for an initial contract the
employer told the union of its intent to discontinue the past
practice of granting cost-of-living increases.
In these, and similar cases, the company announced its intent
to discontinue a past practice, and gave the union an opportu-
nity to negotiate. Thus, the ultimate discontinuance was not
unilateral and violative of the Act. Here, on the other hand, the
Respondent did not suggest that it was intending to cease im-
plementing a COLA for 2003–2004, or subsequent years. It
was simply delaying implementation of the COLA until it re-
ceived a favorable response from the Union concerning nego-
tiations. The Respondent did not propose, nor was there dis-
cussion about, eliminating a past practice, as in Stone Container
and Alltel Kentucky. The practice of granting a COLA ap-
proved by the Head Start administrator remained. Actually
implementing it was contingent on the Union agreeing not to
pursue any additional amount. Thus when the Respondent
refused to implement the COLA by December, as had been the
practice, it unilaterally changed a condition of employment.
On these facts I conclude that in December the Respondent
unilaterally withheld implementation of the 2.2-percent COLA
for employees in both bargaining units and conditioned imple-
mentation of the COLA on the Union waiving its right to nego-
tiate an addition to the COLA, all in violation of Section
8(a)(5) of the Act.
IV. REMEDY
Having concluded that the Respondent committed certain
unfair labor practices, I shall recommend it cease and desist
therefrom and take certain affirmative action necessary to ef-
fectuate the policies of the Act, including granting to each em-
ployee in the bargaining units backpay in the amount of 2.2
percent of their respective annual wage retroactive to July 1,
2003, with interest. Any employee terminated for any reason
after July 1, 2003, will also be entitled to receive the COLA.
It appears, and I conclude, that the COLA issue has affected
the overall ability of the Union to negotiate a collective-
bargaining agreement in a timely fashion. Notwithstanding that
the parties have had numerous bargaining sessions, I conclude
that it is necessary to extend the certification year in order to
give the Union a fair chance to negotiate a collective-
bargaining agreement. Mar Jac Poultry, 136 NLRB 785
(1962).
[Recommended Order omitted from publication.]