Phoenix Mutual Life Insurance Co.

National Labor Relations Board - Board Decisions

Jun 6, 1947

73 N.L.R.B. 1463 (N.L.R.B. 1947)

In the Matter of PI-IOENIX MUTUAL LIFE INSURANCE COMPANY and
CLARENCE M. DAVIS AND W. DONALD JOHNSON
Case No. 13-C-2d35.-Decided June 6, 1947
Cllr. Robert T. Drake, for the Board.
Eckert d Peterson, by Messrs. Harold W. Huff and Richard V.
Henry, Jr., of Chicago, Ill., for the respondent.
Mr. Ben Law, of counsel to the Board.
DECISION
AND
ORDER
On July 26, 1946, Trial Examiner A. Bruce Hunt issued his Inter-
mediate Report in the above-entitled proceeding, finding that the re-
spondent had engaged in and was engaging in certain unfair labor
practices and recommending that it cease and desist therefrom and
take certain affirmative action, as set forth in the copy of the Inter-
mediate Report attached hereto. Thereafter, the respondent filed ex-
ceptions to the Intermediate Report and a supporting brief, and the
complainants filed a document in the nature of a brief and exceptions,
entitled "Additional Statement for the Record." On October 29, 1946,
the Board, at Washington, D. C., heard oral argument in which the
respondent participated; the complainants did not appear.
The Board has considered the rulings made by the Trial Examiner
at the hearing and finds that no prejudicial error was committed.
The Board has considered the Intermediate Report, the exceptions
and briefs, and the entire record in the case, and hereby adopts the
findings, conclusions, and recommendations of the Trial Examiner,.
with the exceptions, additions, and modifications hereinafter set forth.
1. We agree with the Trial Examiner that the respondent violated
Section 8 (1) of the Act by discharging Clarence M. Davis and W.
Donald Johnson on September 15, 1944.
Davis and Johnson were discharged because they and their fellow
salesmen in the respondent's Chicago-LaSalle office attempted to com-
municate to the respondent their views with respect to the appoint-
ment of a cashier in that office. They merely discussed among them-
selves an announcement that the new cashier was to be brought in from
73 N. L. R. B., No. 249.
1463
1464 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
an outside office to fill a vacancy, and considered the tentative terms
of a letter designed to be sent to the respondent outlining their joint
views in the matter. The whole affair was abortive. Before a final
draft of the letter could be prepared, the respondent discharged Davis
and Johnson and warned Salesman Henry Goldberg not to sign it.
A legitimate interest of any insurance salesman is that he not be
hindered in earning his income. Correlatively, working conditions
which facilitate that understandable objective must be of large con-
cern to him. The facts in this case, uncontroverted and, moreover,
testified to by witnesses for both sides in substantial agreement, estab-
lish that the function of a cashier, her capability and competency and,
of course, identity have a direct connection and relationship with the
working conditions of the salesmen. The cashier is in charge of the
cashier's department, which consists of several clerical and steno-
graphic employees and performs numerous functions essential to the
work of the salesmen. Thus, the cashier's department provides steno-
graphic assistance for the salesmen, maintains records concerning
applications received and policies issued, collects premiums from sales-
men and disburses initial commissions to them. In addition, upon
request of salesmen, the cashier's department supplies to them essential
data concerning policies, premiums, dividends, beneficiaries, and so
forth. Indeed, the sole witness for the respondent, a supervisory
cashier, testified that the cashier's department has a responsibility to
serve the salesmen efficiently. The Trial Examiner found that mem-
bers of the cashier's department "work in close cooperation with sales-
men, who were often aided or hindered by the degree of efficiency
displayed by that staff." Instances were adverted to at the hearing of
salesmen who were caused inconvenience and delay by errors in the
cashier's department. The respondent's sole witness testified that
salesmen and the cashier had "to work together to get the most out of
their opportunities" and that favoritism on the part of the cashier
would operate to the detriment of salesmen other than those favored.
Certainly, therefore, a continuing and comprehensive relationship
.exists between the salesmen and the cashier in their daily work, and
doubtless a large degree of dependence is placed by salesmen upon the
competency of cashiers. Consequently, the identity and capability of
the new cashier in this case must be held to have been of important
interest to the salesmen. In view of these facts, and the natural infer-
ences to be drawn from them, we believe that what these salesmen did
was closely related to their legitimate interests as employees. In
essence, their activity consisted of common discussion of circum-
stances which they considered elements of a grievance concerning their
working conditions, and preparation of a method for presenting the
grievance to their employer. This was reasonable and temperate con-
duct by employees who had a real cause for concern and was clearly
PHOENIX MUTUAL LIFE INSURANCE COMPANY, 1465
within the scope of the kind of concerted activity protected by Section
7 of the Act.'-
Our holding is not to be construed as meaning that the respondent
would have been under any obligation ultimately to comply with the
wishes of the salesmen in selecting or rejecting a particular cashier.
Even if it be assumed that that choice would finally be a matter for
management to determine, the fact remains that the guaranty of Sec-
tion 7 of the Act extends not only to concerted activities for the
purposes of collective bargaining, but also to those undertaken for
"other mutual aid or protection." The moderate conduct engaged in
by Davis and Johnson have a sufficiently reasonable relation to the
conditions of their employment to fall within the ambit of the statute.
2. Because Branch Manager Harry C. Herbig's warning to Sales-
man Goldberg not to sign the letter, referred to above, when considered
in the light of the discharges of Davis and Johnson which occurred at
approximately the same time, carried with it a coercive import of
retributive displeasure on the part of the respondent in the event that
the warning were not heeded, we agree with the Trial Examiner that
the respondent thereby interfered with, restrained, and coerced its
employees in the exercise of the rights guaranteed by Section 7 of the
Act, in violation of Section 8 (1) thereof.
THE REMEDY
The Trial Examiner recommended that, in order to remedy the re-
spondent's discrimination against the complainants, it offer them re-
instatement without prejudice to their seniority or other rights and
privileges, including, in particular, such retirement benefits as they
would have had absent the respondent's discrimination against them,
and that it make them whole for any loss of pay that they may have
suffered by reason of the discrimination. We agree that the respond-
ent should be required to offer reinstatement, as described above to
the complainants. We also agree that the respondent should be re-
quired to make them whole, but in the manner hereinafter set forth,
which differs in certain respects from the recommendations of the
Trial Examiner.
The record discloses that no charge was filed with regard to the
discrimination against the complainants until July 24, 1945, more
than 10 months after the date of such discrimination. There is no
explanation in the record for the delay, which seems to us unreason-
ably long. It has long been our established policy to deny back pay
for any period antedating the filing of charges, where there has been
an unreasonable delay in filing them.2 In conformity with this policy,
' See N. L R B v. Peter Cailler Kohler Swiss Chocolates Co, Inc., 130 F. (2d) 503
(C C. A 2). enf g 33 N L R B 1170
2 See, for example, Matter of The Alexander Milburn Company, 62 N L R. B 482, 513
(decided 1945), and cases cited therein.
1466 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
we shall order that the respondent pay back pay, in the manner here-
inafter set forth, only for the period from July 24, 1945, the date on
which the complainants first filed their charges, to the date of an offer
of reinstatement.3
As set forth in the Intermediate Report, the respondent' s insurance
salesmen involved herein received under their agency contracts as
compensation for their services initial commissions based"on the first
annual premiums paid by new policy holders to whom they sold in-
surance, and renewal commissions based on premiums paid on those
policies during subsequent years. We agree with the Trial Examiner
that renewal commissions should be treated as deferred compensation
for "establishing the business" by sale of the policy and therefore as
having been earned before the discrimination against the complain-
ants, rather than as "earning" for work performed during the years
that the policy is in force; and consequently, that renewal commis-
sions should not be regarded as a constituent element of what the
complainants would have "earned" had each worked for the respond-
ent during the period of discrimination. We shall therefore require
the respondent to pay to the complainants all unpaid renewal com-
missions which would have become due them during the period from
July 24, 1945, to the date of the respondent's offer of reinstatement,
if they had continued in the employ of the respondent, without any
deduction therefrom for their earnings elsewhere subsequent to their
discharge.
In their "Additional Statement For The Record," the complainants
appear to suggest that they should receive, as additional compensa-
tion for damage to their professional status resulting from the re-
spondent's discrimination against them, full renewal commissions as
provided by their contracts even if they elect to decline an offer of
reinstatement. Because of the difficulty of fairly appraising the ex-
tent of damage, if any, to professional status, we believe that an order,
such as that sought by the complainants, would not effectuate the
3 We shall order such back pay for Johnson , as well as Davis. even though Johnson made
a qualified refusal of reinstatement under the following circumstances lccording to un-
denied testimony of Johnson , which we credit , Branch Manager Herbig told Johnson at
the time of his discharge that personnel at the respondent's home office disliked Johnson
A few days later, Johnson met Clifford Morse. the respondent's assistant agency manager,
in the presence of Herbig Morse suggested that, if Johnson would like to return to work,
the respondent would reconsider his case . Johnson replied that he did not see how he
could return to work " under prevailing conditions ," and requested written assurance from
Morse that he [Johnson] was not disliked at the home office Morse stated that it was
not true that Johnson was disliked and then suggested that lie resign Johnson agreed to
resign upon receipt of a letter from the respondent's home office, stating that lie was not
disliked , and Morse agreed to send such a letter However , Johnson never received such a
letter nor did lie resign we find Herbig's statement to Johnson that lie was disliked by
home office personnel, coming as it did in conjunction with Herbig ' s termination of John-
son's contract because of his participation in protected concerted activity, to be an integral
part of the discrimination against hint. We do not regard Johnson's qualified refusal to
return to work, under these circumstances, as warranting abatement of his back pay
Johnson ieasonably feared further discrimination in the form of nullification of his sales
efforts by the respondent ' s officials if he returned to work " under prevailing conditions."
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1467
policies of the Act. Therefore, should reinstatement be declined by
either of the complainants, any renewal commissions accruing after
the offer of reinstatement shall be retained by the respondent or paid
to the complainant, as the applicable agency contract may provide in
the case of voluntary termination of the contract by the salesman.
However, we shall order the respondent to make the complainants
whole for any loss of pay they may have suffered by reason of the
respondent's discrimination against them, by payment to each of them
of a sum of money equal to the amount which he normally would have
earned during the period from the date on which charges were first
filed herein to the date of the respondent's offer of reinstatement, less
his net earnings, as defined in the Intermediate Report, during said
period. That portion of gross normal earnings represented by the
total amount of initial (first year) commissions which each complain-
ant would have earned during the period in question shall be de-
termined on the basis of the amount of average monthly earnings
from initial commissions of each of the complainants during the year
immediately preceding his discharge.4
In its brief the respondent states that, if it is found to have violated
the Act, the notice, attached to the Intermediate Report as Appendix
A, should be amended to read, "We will not in any manner interfere
with, restrain, or coerce our employees in the exercise of their right
to engage in concerted activities for the purpose of mutual aid or pro-
tection." In view of the nature and extent of the unfair labor prac-
tices engaged in by the respondent, we reject the Trial Examiner's
recommendation that there be entered a blanket cease and desist order
and shall make our order coextensive with the unfair labor practices
actually committed.
Except as otherwise indicated herein, we adopt the Trial Examiner's
Intermediate Report in all respects. However, we expressly reserve
jurisdiction to modify the back pay and reinstatement provisions of
our Order, if made necessary by a change of conditions in the future,
and to make supplements thereto as may hereinafter become necessary
in order to define or clarify their application to a specific set of cir-
cumstances.
ORDER
Upon the entire record in the case and pursuant to Section 10 (c)
of the National Labor Relations Act, the National Labor Relations
Board hereby orders that the respondent, Phoenix Mutual Life In-
surance Company, and its officers, agents, successors, and assigns, shall :
4 Gross normal earnings shall also include renewal commissions which would have ac-
crued on policies that the complainants would have sold during the period of discrimination.
Inasmuch as the iecord affords no basis for measurement of such renewal commissions, we
herehv direct that they be determined in the compliance stage of this proceeding, subject to
oui reservation of jurisdiction as to such matters as hereinafter provided.
1468 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
1. Cease and desist from interfering with, restraining, or coercing its
employees, by discharge or otherwise, in the exercise of the right to
engage in concerted activities for the purpose of collective bargaining
or other mutual aid or protection, as guaranteed in Section 7 of the Act.
2. Take the following affirmative action, which the Board finds will
effectuate the policies of the Act :
(a) Offer to Clarence M. Davis and W. Donald Johnson immediate
and full reinstatement to their former or substantially equivalent
positions, without prejudice to their seniority or other rights or privi-
leges, in the manner herein provided in "The Remedy";
(b) Make whole, in the manner herein provided in "The Remedy,"
Clarence M. Davis and W. Donald Johnson for any loss of earnings
that they may have suffered by reason of the respondent's discrimina-
tion against them;
(c) Post, in its Chicago-LaSalle office, copies of the notice attached
hereto and marked "Appendix A." Copies of the notice, to be fur-
nished by the Regional Director for the Thirteenth Region, shall,
after being duly signed by the respondent's representative, be posted
by the respondent immediately upon receipt thereof, and maintained
by it for at least sixty (60) consecutive days thereafter, in conspicuous
places, including all places where notices to employees are customarily
posted. Reasonable steps shall be taken by the respondent to insure
that said notices are not altered, defaced, or covered by any other
material; and
(d) Notify the Regional Director for the Thirteenth Region in
writing, within ten (10) days from the date of this Order, what steps
the respondent has taken to comply herewith.
MR. JAMES J. REYNOLDS, JR., took no part in the consideration of
the above Decision and Order.
APPENDIX A
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, we hereby notify our employees that :
We will not in any manner interfere with, restrain, or coerce
our employees in the exercise of their right to engage in con-
certed activities for the purpose of collective bargaining or other
mutual aid or protection.
We will offer to the employees named below immediate and
full reinstatement to their former or substantially equivalent
positions without prejudice to any seniority or other rights and
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1469
privileges previously enjoyed, and make them whole for any
loss of pay suffered as a result of the discrimination.
Clarence M. Davis
W. Donald Johnson
PIIOENIY MUTUAL LIFE INSURANCE COMPANY,
Employer.
Dated-------- By---------------------------------------------
(Representative) (Title)
This notice must remain posted for 60 days from the date hereof,
and must not be altered, defaced, or covered by any other material.
INTERMEDIATE REPORT
Mr. Robert T. Diake, for the Board.
Eckert & Peterson , by Messrs. Harold W. Huff and Richard V. Henry, Jr., of
Chicago, Ill ., for the respondent.
STATFDME\'L OF THE CASE
Upon an amended charge duly filed by Clarence M. Davis and W. Donald John-
son, herein jointly called the complainants, the National Labor Relations Board,
herein called the Board, by the Regional Director for the Thirteenth Region
(Chicago, Illinois ), issued its complaint dated May 23, 1946, against Phoenix
Mutual Life Insurance Company, Chicago, Illinois, herein called the respondent,
alleging that the respondent had engaged in and was engaging in unfair labor
practices affecting commerce within the meaning of Section 8 (1) and Section
2 (6) and (7) of the National Labor Relations Act, 49 Stat. 449, herein called
the Act. Copies of the complaint, together with notice of hearing thereon,
were duly served upon the respondent and the complainants.
With respect to the unfair labor practices, the complaint alleged in substance
that: (1) on or about September 15, 1944, the respondent discharged the com-
plainants, and has since refused to reinstate them, because they engaged in
concerted activities with other employees for the purposes of collective bargain-
ing and other mutual aid and protection; and (2) since January 1, 1943, the
respondent has questioned, warned and threatened its employees concerning their
concerted activities for the purposes of mutal aid and protection. The answer
of the respondent, filed on June 11, 1946, admits certain allegations of the com-
plaint concerning its corporate structure and business activities, but denies
that it engaged in unfair labor practices In addition, the answer alleges that
the respondent is not engaged in commerce and that the complainants are not
employees within the meaning of Section 2 (3) of the Act.
Pursuant to notice, a hearing was held at Chicago, Illinois, on June 18 to 24,
1946, before the undersigned, the Trial Examiner designated by the Chief Trial
Examiner The Board and the respondent were represented by counsel Full
opportunity to be heard, to examine and cross-examine witnesses, and to introduce
evidence hearing on the issues was afforded both parties. At the close of the
Board's case, the respondent moved to dismiss the complaint on the grounds
that its activity constituted neither unfair labor practices nor a burden upon
commerce, that neither it nor its local office in Chicago is engaged in commerce,
and that the complainants ate not employees within the meaning of Section 2
(:i) of the Act The motions were denied The respondent renewed its motions
1470 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
at the close of the hearing, at which time they were taken under advisement
by the undersigned. They are hereby denied. At the close of the hearing,
counsel for the Board moved to conforin the pleadings to the proof as to formal
matters, and this motion was granted without objection. After the introduction
of all the evidence, counsel for the Board and the respondent presented oral
argument which was included in the transcript of the hearing. No briefs have
been filed with the undersigned.
Upon the entire record in the case, and from his observation of the witnesses,
the undersigned makes the following :
FINDINGS OF FACT
I THE 13USINESS OF THE RESPONDENT
The respondent. a Connecticut corporation, is a mutual life insurance com-
pany with its principal office in Hartford, Connecticut. It is engaged in the
business of selling and issuing life insurance policies and annuities and in the
investment of its funds in real estate and a variety of securities. The respond-
ent ranks no lower than twenty-fourth among all insurance companies in the
United States, using total insurance in force as the criterion. and it conducts
its business, including the writing of insurance, the collection of premiums and
the payment of benefits, in 33 States and the District of Columbia It has 2
branch offices in Chicago, one of which is known as the "Chicago-La Salle office"
and which is the office involved in this proceeding
The respondent's total insurance in force on December 31, 1945, was $814,-
789,831. On the same date, its total assets amounted to $386,044,844 including
United States Government bonds valued at $146,324,512, Canadian provincial
bonds valued at $72,834,695, and bank, insurance and public utility stocks having
a market value of $3,529,776 The industrial, public utility, banking and insur-
ance corporations, whose securities are owned by the respondent, operate on a
nation-wide basis.
The respondent denies that it is subject to the jurisdiction of the Board. It
asserts, first, that it is not engaged in commerce within the meaning of the Act
It is apparent, however, that the respondent's business is conducted across state
and international boundaries, "an operation manifestly dependent upon the con-
stant employment of interstate communication and transportation facilities. In-
deed, without those services the respondent would be unable to conduct its
business "' As was said in Uieitel States v. South-Eastern Underwriters Asso-
ciation, at al.,' and as is equally applicable here:
The modern insurance business has become one of the largest and most
important branches of commerce Premiums collected from policyholders
in every part of the United States flow into these companies for investment.
As policies become payable, checks and drafts flow back to the many states
where policyholders reside The result is a continuous and indivisible stream
of intercourse among the states composed of collections of premiums, pay'
ments of policy obligations, and the countless documents and communications
which are essential to the negotiation and execution of policy contracts.
1Matter of Home Beneficial Life Insurance Co., Inc, and American Federation of In-
dustrial and Ordinary Insurance Agents' Union, 69 N L R B 32 Cf. Polish National
Alliance, etc i N L P. B, 322 U. S 643 N L R B c Prudential Insurance Company
of America, 134 1' 2d 355 (C C A 6) . Matter of Industrial Life and Health Insurance
Company and American Federation of Industrial and Ordinary Insurance Agents Union,
etc, 47 N LIZ B 395
2 322 U S 533, 539-41, 64 S Ct 1162, 1166-7
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1471
The respondent asserts, however, that even if it is found that the respondent
is engaged in commerce, the Chicago-LaSalle branch office has not at any time
material been engaged in commerce. That is to say, although the Board may
have jurisdiction over the principal office, or "Home Office," of the respondent
in Hartford, Connecticut, the Board does not have jurisdiction over the Chicago-
LaSalle office. The undersigned finds no merit in this proposition. The latter
office cannot be considered logically as a separate enterprise It, like other
branch offices of the respondent in various States and the District of Columbia,
is a part of a single insurance business which is controlled and directed by the
respondent's officials in Hartford.' As the respondent itself has publicized, each
branch office is a "part of the Home Office " Personnel won king within the Chi-
cago-LaSalle office are constantly engaged in the solicitation of applications for
insurance, the collection of premiums, and the forwarding of such applications
and premiums to the 1-Iome Office. Likewise, they Have functions to perform
in the payment of the respondent's obligations to policyholders and beneficiaries
in the area covered by the office. Clearly, that office is engaged in commerce,
and both the magnitude of interstate business transacted therein" and whether
such business be initiated in Chicago or Harttord s are immaterial.
The respondent asserts, third, that it is not subject to the Board 's jurisdiction
because the complainants, in performing their duties on behalf of the respondent,
were not engaged in commerce The complainants, as will appear more fully
below, are insurance salesmen, whose duties included the solicitation of applica-
tions for insurance and the collection of premiums, both of which were mailed
to the Home Office, as well as the rendering of various services to policyholders.
Thus, their activities were an integral part of the respondent' s business. It
would be ininiaterial, however, weie their activities far less closely related
thereto. This is so because it is the respondent's business, not the nature of
the employees' ° work, which is the test of the Board's jurisdiction'
Finally, the respondent asserts that its activities described below do not con-
stitute a burden upon commerce. Again the respondent has misapprehended
the scope of the Act, as well as the congressional intent in enacting the legisla-
lion, but because of counsel's sincerity in advancing its contention the under-
signed believes it appropriate to re-state ceitain long established and funda-
mental principles It is true that we do not have here a situation involving a
stoppage of %voik by the respondent's employees or a lessening of the respond-
ent's interstate operations. In fact, so far as the record shows, there was not
the slightest curtailment of those operations by reason of the respondent's ac-
'N L R 73 v Schmidt Balmy Co , Inc , 122 F 2d 162 (C C A 4)
4 Pottsh National Alltaiice, ric v Al L It B, Sups a, n 1, J L. Brandeis if Sons v
N L It B, 142 F 2d 977 (C C A 8).
1I'olish National Alliance, etc i _N L R B, supra, n 1, N L R B v Schmidt Baking,
Co, Inc, supra, n 3
The question of 'ahether the complainants are "employees" is discussed in section II
C, 1, below
"The Act seeks to forestall laboi troubles which may affect commerce, not merely to
stop or remedy those which have occurred , and commerce may be affected though the
lahoiere are not themselves engaged in commerce," N. L R B v Tex-O-Ilan Flour Malts
Goinpang, 122 1" 2d 433 (C C A 5) , of Batley Brothers v N L R B, 134 F 2d 981
(C C A 7) A case upon liluch the respondent earnestly relies, Ifinkler v Biglitq-Three
Maiden Lane Corporation, 50 F Supp 263, involved the application of the Pair Labor
Standards Act, 52 Slat 1060, 29 U S C , Sees 201 ct seq, to a particular employee. The
opinion there, holding that the "nattu'e of plaintiff's (emploiee's) activities is con-
tiolling-and not the bu'rnes of his eniplovet," is of no weight in a manner involving
the application of the National Labor Relations Act because of the entnely different
peen' see of these separate pieces of legislation
739936-47-col 78 94
1472 DECISIONS OF, NATIONAL LABOR RELATIONS BOARD
tivities. These factors, however, are not the criteria by which application of
the Act is determined. It is beyond dispute that the Board, in performing the
mandate of Congress, need not await an actual stoppage of commerce,' nor need
there be a showing of a likelihood of such stoppage.° Moreover, it is immaterial
if unfair labor practices exist for a period of 2 years without causing a labor
dispute,1° and there need be no evidence whatsoever that such practices did
in fact lead to a labor dispute burdening or obstructing commerce 11 This is so
because the congressional findings, as stated in Section 1 of the Act, are con-
clusive.12 Once it is established that unfair labor practices have occurred in
an industry engaged in interstate commerce, or in an industry whose business
affects interstate commerce, the Board is charged with the responsibility of
correcting them.13
For the reasons set forth above, the undersigned finds that the respondent is
engaged in commerce within the meaning of the Act.
II. TIIE UNFAIR LABOR PRACTICES
A. The cashier's department
This case presents few, if any, factual issues. We are concerned with certain
activity of the respondent and its salesmen immediately preceding and during
the month of September 1944. The issues are whether those salesmen are
"employees", whether they engaged in activity which is protected by the Act, and
whether the complainants were discriminated against therefor The Board's wit-
nesses are in substantial agreement as to the events, and the respondent's single
witness did not dispute them on any material point.
In the Chicago-LaSalle office there are approximately 10 salesmen who work
under the supervision of the branch manager, and a clerical and stenographic
staff which works under the supervision of the cashier. Both the manager and
the cashier are responsible to appropriate officials in the Home Office in Hartford.
The clerical and stenographic staff consists of approximately one-half dozen
persons, including the cashier. Among them are divided duties including the
taking of dictation from the manager and salesmen, bookkeeping functions such
as the maintenance of records concerning applications received and policies issued,
the collection of premiums from salesmen or policyholders and the disbursement
of initial commissions to salesmen. In addition, upon the request of salesmen,
members of this staff supply to them various data concerning policies, premiums,
dividends, beneficiaries, etc. It is clear, as the respondent's sole witness testified,
that the cashier's department is charged with the responsibility, in part, of
serving "the salesmen efficiently." Members of that department work in close
cooperation with salesmen, who were often aided or hindered by the degree of
efficiency displayed by that staff. For instance, it was established that incon-
venience, embarrassment or added work were caused a salesman by an error which
IN. I R. B v American Potash d Chemical Corporation , 98 F 2d 488 (C . C A. 9),
cert den 306 U S. 643
° N L. R B v The J L Hudson Company, 135 F. 2d 380 (C C A 6).
'ON. L R B. v. The Alloy Cast Steel Company, 117 F 2d 302 (C C A 6).
12N L. R B v. Register Publishing Company, etc , 141 F. 2d 156 (C C A )
'2N. L R B . v American Potash d Chemical Corporation, supra , n 8, N L R B v.
Suburban Lumber Company , 121 F 2d 829 (C C. A 3), cert den 314 U S 693, 62 S
Ct 364
1" "Whether or not piaclices may be deemed by Congiess to affect interstate commerce
is not to be determined by confining judgment to the quantitative effect of the activities
immediately before the Board Appropriate for judgment is the tact that the immediate
situation is representative of many others thioughout the country, the total incidence
of which if left unchecked may well become tar reaching in its harm to commerce," Polish
National Alliance, etc v N. L. R B , supra, n. 1.
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1473
a cashier made in calculating costs to guide the salesman in dealing with a
prospective policyholder, by another cashier in the erroneous application of
dividends which had accrued to a policyholder , by the inability of a cashier to
furnish answers to particular questions respecting policies , and by faulty in-
formation supplied by a cashier respecting a settlement agreement.
B. The events of September 1944
About September 1, 1944, Harry C. Herbig, manager of the Chicago -LaSalle
office , called a meeting of personnel in the office and announced the resignation of
the cashier , one Freund , saying also that the matter of a successor was under
consideration by the Home Office and that a cashier from another branch office
probably would succeed Freund. The announcement was of considerable im-
portance to the salesmen for the reasons mentioned above, and (luring the following
2 weeks the matter of a successor was discussed at length by them. On Sep-
tember 11 , they met in the office and continued their discussions , commenting in
particular that there had been four different cashiers since 1937, and expressing
agreement that both inconvenience and loss of time had been caused in "breaking
in new cashiers ." The discussion terminated , to be resumed at lunch that day.
At the luncheon , one of the complainants , Davis, was designated by a fellow sales-
man to draft a letter to the Home Office informing officials there of the attitude
and wishes of the salesmen . Davis drafted the letter , stating that the several
changes in cashiers had interrupted the salesmen 's "methods of operation and
our service to our policyholders," asking that the successor to Freund be a person
who would remain in the position permanently , and recommending the promotion
of one Garn , the assistant cashier who was highly regarded by the salesmen.
After drafting the letter, Davis showed it to a number of the salesmen, and on
September 13 or 14 another luncheon was held at which the salesmen discussed
the draft in detail and made changes therein. Subsequent to this luncheon, on the
same or the following day, Manager Herbig approached Henry Goldberg , a sales-
man, inquired about the letter, and asked Goldberg to relate its contents. Goldberg
replied that ". . . the final drafting of the letter had not been completed so that
. . . [he] didn't know exactly what the final contents would be." Herbig then
said that if he were Goldberg , he would not -sign the letter.
The letter was never placed in final form for signatures of the salesmen and
mailing to the Home Office. Davis, who had been designated to prepare the letter,
intended to have it ready for signatures on September 16, but in the meantime
he received a written notice from Herbig that the contract under which he acted
as a salesman was being cancelled by the respondent pursuant to the 30-day
termination clause." Johnson, the second complainant, had been active with
Davis and other salesmen in drafting the letter, and he received a similar notice."
C. The issues
As stated above, the issues for determination herein are whether the complain-
ants are employees of the respondent within the meaning of Section 2 (3) of the
Act, whether the activity in which they engaged with other salesmen is protected
14 On September 15, Davis received from Manager Hering a letter in part as follows :
Your recent actions and involvement in the resignations and new appointment affect-
ing our Cashier's Department have been so far beyond the premise of your respon-
sibility, and so completely unpleasant that in full agreement with the Home Office we
are cancelling your Agent's Contract, effective thirty days from today.
13 On September 15, Johnson received from Hering a letter containing language identical
with that set out in the footnote immediately above. Unlike the letter to Davis, however,
the letter to Johnson contained this paragraph :
For some time your disregard and disapproval of the Phoenix Mutual, its Staff, and
most of its programs have been quite apparent to observers.
1474 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
by the Act , and whether they were discriminated against by the respondent because-
of such activity The issues will be discussed in the order stated.
1. Are the respondent's salesmen "employees"?
Each of the salesmen is under a written contractual relationship with the
respondent. The contracts, substantially the same in the instance of each sales-
man, set forth the rates of compensation and, in large measure, define the duties
and responsibilities of the salesmen. According to the Board s attorney, the
relationship of the respondent and the salesmen is that of employer-employees.
On the other hand, at the commencement of the hearing, the respondent's counsel
took the position that the salesmen "by contract are agents operating independ-
ently as independent contractors," but during the oral argument at the close of the
hearing the contention was made simply that salesmen are "non-employees,"
"individuals who were clearly to be without the meaning of the word `employee'
for the purposes of the Act." It is necessary, therefore, to consider the relation-
ship of the respondent and its salesmen in some detail.
The salesmen are selected from individuals who have made applications to the
respondent, much as individuals apply for many positions in the business world,
and after careful consideration has been given to the applications and personal
interviews have been held. The individuals so selected then undergo periods of
training and study, largely under the supervision of the Office, Manager. and some-
times under the supervision of personnel from the Home Office. The respondent
has publicized the training period as essential if ' agents were to earn the living
to which they were entitled, and it the public was to receive the life insurance
service it had a right to expect . . ' During the first 2 ^ eats of service, a
salesman may receive financial assistance from the respondent in the form of
advances on commissions After that period, he becomes a "senior salesman"
and is not entitled to such assistance
The compensation of salesmeen is derived from commissions earned on the sales
of policies, and fees for various services rendered to policiholders The com-
mission iates :ue determineC by the respondent and are applicable to all its
salesmen. The salesmen themselves have no voice in the determination of the
commission rates or other terms and conditions of the contracts
The duties of salesmen consist primarily in calling upon prospects and policy-
holders and, therefore, their working hours are spent in large measure away
from the district office The office, however, is their headquarters There they
are supplied by the respondent with office space, desks telephones, stenographic
aid, and other necessary supplies In addition, the n espondent bears the expense
of a state license for each salesman, entitling lam to sell insurance, as well as
the expense of an indemnity bond and certain advertising materials and aids
Meetings of the salesmen with the manager are held in the office once a month
or more often, at which times the salesmen report upon their activities and re-
ceive instructions They are not permitted by their contracts to sell insurance
for any concern other than the respondent, are iequnred to de'ote their full time
thereto, and may not assign to others their rights under the contracts Finally,
the salesmen are required to submit a report of their activities each week, listing
the number of hours worked and stating in detail the type of activities in which
they were engaged
It is manifest that the salesmen occupy extremely important positions in the
respondent's business. Without their services the business could not function.
Indeed, the respondent sells insurance policies only through its salesmen, whom it
has termed "the most important part of its structure," and to whom it has re-
ferred in its publications as "employees" and as a staff which it "employs." As
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1475
dndicative of the respondent's own view of the salesmen's importance and rela-
tionship to it, it is significant that the respondent has instituted and financed
-a retirement plan for them
In contending that the complainants are not employees within the meaning of
ithe Act, the respondent argues that they "had no hours of employment because
they could cone and go as they chose and they were paid commission based upon
the number of life insurance policies that they sold. Flow, when and why they
sold them was a matter within their own discretion No restraints were placed
-upon them as to how they did their job." This argument, in the opinion of the
undersigned, is not persuasive It is unrealistic Neither the argument nor the
salesman's contract creates more than an illusion of a principal-independent con-
tractor relationship Other and dominant factors dispel the illusion
That the salesmen did have hours of %vork is demonstrated by the requirement
that they file a weekly report of their activities Tine, there (Toes not appear
.to have been a requiiemennt that work be performed between certain fixed hours,
but it is apparent from an examination of the weekly report form that a number
of hours were to be utilized each day in the performance of a salesman's varied
duties Nor can it be inferred that salesmen were permitted to solicit policies
when and as they chose. On the contrary, they were obligated to follow certain
leads furnished by the respondent and to engage in no other remunerative activity,
.and the penalty for performance below a certain standard was cancellation
-of the contract
The undersigned believes that the doctrine enunciated in the Ilea?st" case is
controlling here In that case it was established that common law standards are
not applicable in determining who are employees within the meaning of the Act.
Instead, the answer is to be found primarily in "the history, terms and purposes
of the legislation . . . which `must be read in the light of the mischief to be
corrected and the end to be attained' . . .", and where " 'all the conditions of the
relation iequiie piotection, piotection ought to begiven'" (Emphasis supplied.)
Various factors which were noted by the Court in determining the question in
that case are presented here Thus, the rates of compensation and the broad terms
and conditions of work are fixed by the respondent, with no alternative on the
part of salesman but to accept the contracts prepared by the respondent or to
terminate the relationship Moreover, various sales equipment and advertising
matter are furnished to the salesmen by the respondent, and the salesmen con-
stitute a vital and essential part of the respondent's business. In particular, the
salesmen here "are subject, as a matter of economic fact, to the evils the statute
was designed to eradicate . This is so because there exists an inequality
of bargaining power on the part of the salesmen, on the one hand, and the re-
spondent, on the other, as is evidenced by the respondent's unilateral determi-
nation of commission rates and other terms and conditions of the salesmen's con-
tracts. Moreover, on the same point, it is significant that salesmen and other
personnel of various insurance concerns have engaged in organizational ac-
tivity in different parts of the nation, and the undersigned takes judicial notice
of numerous cases before the Board which involve their activity." Finally, the
fact that the respondent has created and maintained a retirement plan for sales-
men is highly significant of their status as "employees", a term by which the
'4 N. L. it . B. v Hearst Publications , Iliac, 322 U . S. 111, 124, 127, 129, 64 S. Ct. 851, 857,
858, 860, cf N L B B. v. R A Blount, et al, 131 F. 2d 585 (C C. A. 8), cert den 318
U S 791
IT See Note 26 in N L. it. B v. Heai st Publications , Inc, supra, n. 16
The practice of self organization and collective bargaining to resolve labor disputes
has for some time been common among such atypical "emplovees" as insurance
agents .. .
1476 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
respondent has described them on other occasions Under all the circumstances,
the undersigned finds that the respondent's salesmen are employees within the
meaning of Section 2 (3) of the Act is
2. Concerted activity
The respondent asserts that the activity of the salesmen above desci ibed is
not within the protection of the Act It seasons. first, that there was no labor
organization involved in the activity, and no effort by the Salesmen to create
such an organization or to select one as their representative for the purpose of
collective bargaining; second, that the selection of a cashier was outside the
scope of the salesmen's legitimate affairs, that the person chosen by the respond-
ent to succeed Freund was well qualified, and that the salesmen did not suffer by
reason of that appointment; third, that the activity of the salesmen consisted
merely of discussion among themselves, plus the drafting of a letter, that there
was no proposal made to any of the respondent's officials with power and au-
thority to select a cashier, and that it was not the intent of Congiess to afford
protection to such discussions; and, fourth, that concerted activ ty of employees
must relate to wages, hours or conditions of eniplovnnent
Section 8 (1) of the Act provides that it shall be an unfair labor piactice for
an employer to "interfere with, restrain, or i oerce eniplo^ ees in the even cise
of the rights guaranteed in Section 7 " Section 7 provides:
Employees shall have the right to sell-organization, to toim, join, or as-
sist labor organizations, to bargain collectively through representatives of
their own choosing, and to engage in concerted activities, for the purpose of
collective bargaining or other mutual aid or protection.
Thus, the question presented here is whether the salesmen's activity, which
obviously was concerted and not individual, was an exercise of their rights not-
withstanding the absence of both a labor organization and any effort by the sales-
men to select a collective bargaining repiesentative in the opinion of the
undersigned, an affirmative answer is fundamental and manifest, as is demon-
strated by an analysis of those rights.
Section 7 defines clearly the rights which employees may exercise for the purpose
of either collective bargaining, or other mutual aid. or protection. They are, first,
the right to self-organization, i. e, to organize themselves into an independent
and autonomous body; second, the right to form, join, or assist labor organiza-
tions, i. e., to engage in union activities; third, the right to bargain collectively
through representatives of their own choosing; and, fourth, the right to engage
in concerted activities, i e, to act collectively without formal organization.
It long has been established that the rights of employees which are guaranteed
by the Act do not depend entirely upon the existence of a labor organization.'''
18 In Matter of Washington Branch of the Sun Life Insurance Company of America, 15
N L R B 817, the Board found that "canvassers ' ,who sell insurance policies, are em-
ployees within the meaning of the Act The same finding ,was made in Matter of John
Hancock Mutual Life Insurance Company , 26 N L . R B 1024, involving "industrial insur-
ance agents"; in Matter of Life Insurance Company of Virginia, 29 N L R B 246 and
38 N. L. it. B. 20, involving "debit collectors" ; in Matter of Metropolitan Life Insurance
Company, 43 N. L R B 962, involving "msui,ince agents,' including "regular", "Office
accounts," and "detached" agents, in Matter of Life and Casualtg Insurance Conipanr/ of
Tennessee, 53 N. L. it. B 1196 , involving "agents" who write various types of insurance ;
in Matter of The Western and Southern Life Insurance, Conipanu, 56 N L R B 859,
involving "collectors and insurance salesmen", and in Matter of The Life Insurance
Company of Virginia, 57 N L R B 279, involving "industrial insurance agents "
19 Matter of General Shale Products Corporation and United Construction Workers
Organizing Connnrttee, 26 N L R B 921 ; Matter of Worthington Creamery and Prod-
ace Company and General Drraers, Helpers, Warehouse. Produce and Creamery Employees
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1477
Indeed, certain of those rights must need be exercised in order to bring such an
organization into existence . Likewise , it is immaterial that the sole appointive
power in the instance of cashiers lies in officials in the Home Office or that such
power was exercised wisely and to the advantage of all concerned . The sole
problem here is whether the concerted activity of the salesmen was for the pur-
pose of collective bai gaining or other mutual aid or protection . '0 The fact
that the cashier 's department must work in close cooperation with salesmen,
whose relations with prospects and policy holders and whose working time may
be affected adversely or beneficially by the calibre of that department , require
an affirmative conclusion . Obviously , the salesmen proposed to inform the
respondent of their viewpoint on a matter which was reasonably related to their
employment , compliance with which by the respondent , in their opinion, would
have benefited them . That is sufficient . The undersigned finds that the activity
of the salesmen was concerted activity within the meaning of Section 7 of the
Act."
3. The violations of Section 8 (1)
The complaint alleges that the respondent, in terminating the contracts of the
complainants, thereby interfered with, restrained, and coerced its employees in
the exercise of the rights guaranteed in Section 7 of the Act. The letters of
the complainants from Manager Herbig, which are set forth in part in footnotes
Union, etc., 52 N. L. R. B. 121; Matter of Ever Ready Label Corporation and United Pho-
tographic Employees Union, etc., et al, 54 N L R B 551 ; Rockingham Poultry Market-
ing Cooperative, Inc., and American Federation of Labor, 59 N L R. B 486; and Matter
of ill F A. Milling Company, etc, and United Grain Processors, etc, 26 N L. R B 614
"The issue here is not whether the respondent was requited to comply with the wishes
of the salesmen . Indeed, such issue could not be determined by the Board because there
is no requirement in the Act that an employer comply with the substantive demands of
its employees respecting rates of pay, wages, hours of employment, or other conditions of
employment Nor, in the absence of an allegation that the respondent violated Section 8
(5) of the Act, is the issue whether the respondent was required even to meet with the
salesmen and to bargain over the matter of the ne^v cashier. Instead, the issue is simply
whether the salesmen had a right to determine their wishes by free discussion, preparatory
to making those wishes known to the respondent, without interference, restraint, or
coercion by it See Re-statement of the Law of Torts, Vol IV, pp. 118-9:
Accordingly, the propriety of the object of workeis' concerted activity does not
depend upon a judicial determination of its fairness as between workers and em-
ployers The issue is, rather, whether the workers are demanding something which
is reasonably related to employment and to the purposes of collective bargaining.
Is the object one the attainment of which the workers believe will strengthen their
bargaining power in the labor market, or will constitute an immediate benefit to
themselves in their present jobs?
Again, the issue as to propriety of the object does not require a judicial determi-
nation that the attainment of the object will in fact benefit the workers as stated.
The inquiry is, rather, whether the workers are really seeking this object and believe
that its attainment will benefit them
2i The Board has held that the activity of supervisoiy employees to achieve the promo-
tion of a fellow supervisor is concerted activity within the meaning of the Act, Matter of
American Steel Foandaries, etc, and Foreman's Association of America etc, 68 N. L R. B.
514 ; that for employees to express dissatisfaction with an overtime system, even
in the absence of a labor organization, constitutes a form of conceited activity, Matter
of General Shale Products Corporation, supra, n 19; that the circulation by unorganized
employees of a petition for an increase in piece sates is concerted activity, Matter of
Worthington Creamery and Produce Company, supra, n 19 , that the informal presenta-
tion of grievances by unorganized employees is concerted activity, Matter of Ever Ready
Label Corporation, supra, n 19, that the circulation by unorganized employees of a
petition for it wage increase is concerted activity, Matter of Rockingham Poultry Mar-
feting Cooperative, Inc, supra, n 19; and that, even in the absence of a labor organiza-
tion, the filing of individual law suits by four employees against their employer to recover
for the violation of a State statute prohibiting a wage reduction without thirty days'
prior notice is a form of concerted activity Jlattei of Jf F A Milling Company, etc., supra,
n. 19.
1478 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
14 and 15, state explicitly that the contracts were being terminated because of
the activity which the undersigned has found is protected by the Act The
respondent asserts with respect to Davis, however, that in terminating his con-
tract it considered breaches of professional conduct on his part There is no
evidence to support this contention Not only did the respondent offer no evi-
dence along this line, but the cross-examination of Davis furnishes no support
for it. With respect to Johnson, the respondent declined to state for the record
the reason or reasons for the termination of contract. Although there is evi-
dence, as set out in the first paragraph of the letter to Johnson from Manager
Herbig , that Johnson was not held in the highest regard by Herbig, the record
leaves no doubt that both Davis and Johnson were capable salesmen who had
received repeated compliments from officials of the respondent. Under all the
circumstances, the undersigned is convinced and finds that the respondent's
termination of the complainants' contracts was motivated wholly or primarily
because of their activity above described, and it is immaterial whether the
respondent gave consideration to other factors32
As set forth above, on September 13 or 14, Manager Herbig inquired of Sales-
man Goldbeig concerning the contents of the letter which the salesmen proposed
to send to the Home Office, and advised Goldberg that if he, Herbig, were a.
salesman , he would not sign the letter. This action of Herbig cannot be con.
sidered as an isolated incident, but must be evaluated in the light of his letters
to Davis and Johnson which were prepared within the next 24 hours. Those
remarks, therefore, were in violation of Section 8 (1) of the Act.
The undersigned finds that Davis and Johnson were discharged because they
engaged in concerted activities with other employees for the purpose of collective
bargaining or other mutual aid or protection. The complaint alleges, in addi-
tion, that the respondent refused to reinstate Davis and Johnson. The facts
are that Clifford Morse, the respondent's assistant agency manager whose head-
quarters are in the Home Office, talked with Davis a few days after the notices
of termination of the contracts, stating that the respondent would "stand be-
hind" Manager Herbig and denying Davis' request that he be permitted to work
in the respondent's other branch office in Chicago Morse expressed the belief
to Davis, however, that the respondent should afford Davis "the privilege of
resigning . rather than having a Not of termination of contract against
. . . [his] record" Davis thereupon, with Morse's assistance, wrote a letter
to the respondent cancelling the contract pursuant to the 30-day termination
clause." It is clear from the foregoing, and the undersigned finds, that the
respondent refused to reinstate Davis. The situation respecting Johnson, how-
ever, is somewhat different On the same day that Morse talked with Davis,
Morse also talked with Johnson. Morse was not a witness, and Johnson testi-
fied that :
22 The Board has fiequently held that if an employer affects an employment ielationship
because of the employee ' s exercise of his rights under the Act, it is immaterial that there
may have been addnonal and lawful reasons for the employer's conduct Cf Matter of
Dow Chemical Company and United Mine Workers of America, etc, 13 N L R B. 993,
enf'd N L R B v The Dow Chemical Company, 117 F 2d 455 (C C A 0), and cases
cited therein , National Labor Relations Board, Fifth Annual Report, p 38, Sixth Annual
Report, p 45
za The action of Davis in writing the letter of termination of contract is of scant mate-
riality since it is well established that the "resignation" of an employee , under the cir-
cumstances present here , cannot serve as a defense to the unfair labor practices . Matter
of Chicago Apparatus Company and Federation of Architects, Enquicrrs, Chemists and
Technicians, Local 107, 12 N L. R. B 1002, enf'd N. L R B v Chicago Apparatus
Company, 116 F. 2d 753 (C C A 7).
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1479
. . . The conversation was started and Mr. Morse said to me if I would
like to-I think he said that if I would like to go back with the company or
the company would reconsider or what the company could do about it. . . .
Johnson's recollection of the conversation with Morse, as the quoted testimony
shows, was not clear and definite. He testified that he obtained the impression
from Morse that "the whole thing might be straightened out . . . that the
whole thing could be reconsidered, and he [Morse] was asking my opinion of
whether I would consider forgetting all about it . . ." Johnson replied that
he did not "see how it is possible that . . . [he] could go back now under
these conditions"" After some further conversation which Johnson did not
recall, Morse suggested to him that he resign because he would have to "get
references from the company, and as you know it always looks better if you
resign." Johnson, however, for reasons which are immaterial here, did not fol-
low Morse's suggestion that he write a letter to the respondent terminating the
contract.
In the undersigned's opinion, the remarks of Morse to Johnson do not consti-
tute an offer of reinstatement, and the respondent did not contend at the hearing
that such an offer was niade.25 When the respondent discharged Johnson, it
then and there became its duty under the Act to rectify the wrong of its unfair
labor practice by unequivocally offering to Johnson reinstatement with all the
rights and privileges which he had previously enjoyed The statement of Morse
that the matter could be reconsidered by the respondent and that Johnson
nvight be reinstated is not such an offer as the Act requires, and especially is
this true when one considers Morse's statement to Davis on the same day that
the respondent would "stand behind" Manager Herbig. Moreover, the duty of
the respondent to make an unequivocal offer is not dispelled by Johnson's state-
ment that he did not "see how it is possible that . . . [he] could go back
under these conditions " 20 Accordingly, the undersigned finds that the respond-
ent did not offer reinstatement to Johnson. On the other hand, there is no
showing that Johnson requested reinstatement, and the undersigned therefore
finds that he was not denied it^7
The undersigned finds further that the respondent, by dischaiging Davis and
Johnson, by refusing the reinstate Davis, and by the above-described remarks of
Herbig to Goldberg, interfered with, restrained, and coerced its employees in the
exercise of the rights guaranteed in Section 7 of the Act.
IH. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE
The activities of the respondent set forth in Section II above, occurring in
connection with the operations of the respondent described in Section I above,
have a close, intimate, and substantial relation to trade, traffic, and commerce
among the several States, and tend to lead to labor disputes burdening and ob-
structing commerce and the free flow of commerce.
14 The conditions which Johnson had in mind , it developed at the hearing, were fears
that the respondent , by refusing to, approve applications for policies which he solicited,
might nullify the results of his endeavors . He did not, however, relate the basis of the
tear to Morse , but twice testified that Morse knew what he had in mind
^ As stated, Morse was not a witness . Moreover, Manager Herbig was present at
Morse ' s conversations with Johnson and Davis , but he was not called as a witness
although he was present during most of the hearing.
Johnson testified that he "would seriously consider" a bona fide offer of reinstatement.
ar It is too well settled to require citation of authoiity that a discharge for concerted
activities constitutes a violation of the Act although it is not followed by a discriminatory
refusal to reinstate.
1480 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
IV. T1IE Ri MEDY
Having found that the respondent has engaged in certain unfair labor prac-
tices, the undersigned will recommend that it cease and desist therefrom and
that it take certain affirmative action designed to effectuate the policies of the Act.
The undersigned has found that the respondent interfered with, restrained,
and coerced its employees by discriminating in regard to the hire and tenure of
employment of Clarence M. Davis and W Donald Johnson.' The undersigned
will recommend, therefore, that the respondent offer immediate and full rein-
statement to said employees to their former or substantially equivalent positions
without prejudice to their seniority or other rights and privileges, including,
in particular, such retirement benefits as said employees would possess had they
not been the subjects of the respondent's unlawful discrimination The under-
signed will recommend further that the respondent make whole said Clarence M.
Davis and W. Donald Johnson for any losses of pay they have suffered by reason
of the discrimination against them by payment to each of them of a sum of money
equal to that which he normally would have earned from the date of such dis-
crimination, September 15, 1944, to the date of the offer of reinstatement, less
his net earnings 29 during said period.
The recommendations of the undersigned which are set forth in the paragraph
next above are adaptations of the Board's long established policy in the instances
of discharge because of union or concerted activity. The Board attorney con-
tends, however, that those recommendations need to be clarified because of certain
unusual circumstances present in this case. A brief statement will serve to pose
the problems.
As related above, the salesmen work for the respondent pursuant to written
contractual relationships. Under the terms of the contracts, the salesmen
receive initial commissions from the first premiums paid by the new policyholders.
During later years, depending upon various factors, including the types of
policies sold and the volume of business procured by a salesman, there are
additional or "renewal," commissions to be paid With the termination of the
complainants' contracts, however, it no longer remained a contractual obligation
of the respondent to pay the full amount of the renewal commissions 30 Counsel
for the Board contends that the complainants are entitled to receive the renewal
commissions under all policies sold by them. He argues that such commissions
represent delayed payments of amounts actually earned before the date of the
i8 Because of the absence of a labor organization . the complaint does not allege that the
respondent ' s action in terminating the contracts of Davis and Johnson was in violation of
Section 8 ( 3) of the Act . Thus , that issue is not before the undersigned . It is appro-
priate to observe, however , that the respondent 's conduct may well have been in violation
of that sub-section also, but whether in violation thereof , or only in violation of Section
8 (1), the undersigned believes that it is necessary to recommend that the complainants
be ieinstated and made whole in order to effectuate the policies of the Act Cf Matter
of Ever Ready Label Corporation , supra, n. 19 ; Matter of Worthington Creamery and
Produce Company , supra, n. 19 ; Matter of Rockingham Poultry Marketing Cooperative
Inc., supra, n 19.
2° By "net earnings" is meant earnings less expenses , such as for transportation, room,
and board , incurred by an employee in connection with obtaining work and working else-
where than for the respondent , which would not have been incurred but for his unlawful dis-
charge and the consequent necessity of his seeking employment elsewhere . See Matter of
Crossett Lumber Company , 8 N L R B 440 'Conies received for work performed upon
federal , State, county , municipal , of other work-relict piolects shall be considered as earn-
ings See Republic Steel Corporation 1. N L R B, 311 U S 7
"It is not clear to the undersigned whether the respondent , in the instance of termina-
tion of contract , is entitled to retain all or only a portion of the renewal commissions
thereafter accruing . Nor is it clear what the practice has been
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1481
discrimination . Support for his position is found in one of the respondent's
publications , entitled " , . Balanced Compensation Program for Career
Agents," in which it is stated that compensation for salesmen "received beyond
first year commissions " consists in part of "deferred compensation for estab-
lishing the business-the amount being reflected by the extent to which it stays
in force."
The answer to the problem lies in determining whether renewal commissions
are properly a part of "normal earnings ," i. e., the amount each of the com-
plainants would have earned had he worked for the respondent during the period
from the date of the discrimination to the date of the offer of reinstatement.
Life insurance salesmen , as we have seen, are not paid full compensation
promptly as are most wage and salaried employees . A salesman 's renewal
commissions on a policy are "deferred compensation," i. e, portions of the
amount earned for "establishing the business" by sale of the policy but payment
of which is alloted over future years as the policy remains in force. Thus, all
of the commission may not be paid for perhaps a decade, although the work of
the salesman which entitles him to the renewal commissions long since may have
been completed . Renewal commissions , therefore , do not appear to be "earnings"
for work performed during the years ,the policy is in force , and the undersigned
believes that this case is to be differentiated from the usual case where the
employer is required to compensate the discharged employee only for his loss of
earnings which flow from services that would have been rendered during the
period of discrimination , in which period the employer actually received no
services in return , because here the respondent prior to the discharges did
receive the services from which the renewal commissions flow. The under`
signed concludes that the particular renewal commissions in issue here are not
rightly included within the Board's use of the term "normal earnings ." Moreover,
the policies of the Act would not be effectuated by permitting the respondent to
retain renewal commissions of the complainants , payable during the time that they
are involuntarily and unlawfully separated from their employment , and thereby
to become unjustly enriched by its own unfair labor practices . On the other
hand, once either of the complainants declines an offer of reinstatement, he has
-ceased by his own act to be an employee of the respondent . The undersigned
therefore recommends that, notwithstanding the amount of the net earnings of
each of the complainants and whether said amount exceeds the amount of his
normal earnings, the respondent pay to each of them any unpaid renewal com-
missions , or portions thereof, due during the period from the date of the dis-
crimination to the date of the offer of reinstatement . Any renewal commissions
accruing after the latter date shall be retained by the respondent or paid to the
complainants according to the usual practice following the voluntary termination
o f a salesman ' s contract , should reinstatement be declined.
A somewhat similar problem is raised in connection with any rights which
the complainants had in the retirement program maintained by the respondent
for its salesmen According to counsel for the Board, the retirement credits,
if any, of the complainants should be considered by the Board as a "part of the
compensation termed in the Act `back pay'," regardless of whether reinstatement
is declined . Unlike the matter of renewal commissions , which represent de-
ferred payments of money actually earned by the complainants , it appears that
the retirement "plan is non -contributory on the part of the salesmen, although
they have the privilege of increasing their retirement income through voluntary
participation " There is no evidence that either of the complainants paid any
amount into the retirement fund ; in fact , the respondent (lid not concede that
either of them had any rights in the plan at the time their contracts were ter-
1482 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
minated. The undersigned has already recommended that the complainants be
offered reinstatement without prejudice to such retirement rights as they would
possess had they not been the subjects of discrimination This recommendation
is based not only upon the undersigned's own opinion of affirmative action which
is necessary to effectuate the policies of the Act, but also upon a stipulation of
counsel, entered into by the respondent without waiving any of its separate
defenses. The recommendation fully provides for a situation where the offois
of reinstatement are accepted. On the other hand, if eithei of the complainants
declines such offer, he is thereby in the position of having voluntarily ceased
his employment with the respondent In that event, his rights under the re-
tirement plan are fixed by the plan itself and, according to the testimony of
Complainant Davis, a salesman who terminates his Conti act thereby loses his
retirement rights pursuant to the terms of the plan It appears, therefore, that
no additional recommendation with respect to retirement benefits is necessary
or appropriate.
The undersigned believes that the respondent's illegal conduct constitutes
a threat to the broad rights of employees under the Act As Herbig's letters
to the complainants made clear, the activity in which they had engaged, pur-
suant to their lawful right, was regarded as "completely unpleasant." With
the "full agreement" of appropriate ofhi hats in the Hone Office, the complainants
suffered an extreme form of discrimination, the arbitram termination of their
contracts The remaining salesmen could not but see the point They never
carried out their intention of signing and mailing to the Home Ofii,e the letter
which represented the fruit of their discussions Their conceited actiNity died
aborting. Collective bargaining never passed the embryonic stage
Because of the respondent's unlawful conduct and its underlying purpose
and tendency, the undersigned is convinced that the unfaii labor practices
found are persuasively related to the other unfair labor practices proscribed
and that danger of their commission in the future is to be anticipated from the
course of the respondent's conduct in the past" This is especially true because
the discharge of employees for engaging in concerted activities, stiiking as it
does at their means of livelihood, "goes to the very heart of the Act '"2 The
preventive purpose of the Act will be thwarted unless the nnder-,igned's recmn-
mendations are coextensive with the threat In order, therefore. to make ef-
fective the interdependent guarantees of Section 7, to prevent a recurrence of
unfair labor practices, and thereby to minimize industrial strite which burdens
and obstructs commerce, and thus effectuate the policies of the Act, the under-
signed will recommend that the respondent cease and desist Iron in any Manner
infringing the rights guaranteed in Section 7 of the Act
Upon the basis of the above findings of fact and upon the entire record in
the case; the undersigned makes the following :
CONCLUSIONS OF L_1w
1. By interfering with , restraining , and coercing its employees in the exercise
of the rights guaranteed in Section 7 of the Act, the respondent has engaged in
and is engaging in unfair labor practices within the meaning of Section 8 (1)
of the Act.
2. The aforesaid unfair labor practices are unfair labor practices affecting
commerce within the meaning of Section 2 (6) and (7) of the Act.
31 N. L R B v . Express Publislainq Co., 312 U S 426
S2 N L R B v . Entibistle Manufacturing Company, 120 F 2d 532, 5 36 (C C A 4)
enf'g 23 N. L. R. B 1058
PHOENIX MUTUAL LIFE INSURANCE COMPANY 1483
RECOMMENDATIONS
Upon the basis of the above findings of fact and conclusions of law, the under-
signed hereby recommends that Phoenix Mutual' Life Insurance Company, its
officers, agents, successors, and assigns, shall :
1. Cease and desist from discharging any of its employees or in any other
manner interfering with, restraining, or coercing its employees in the exercise
of the right to self-organization, to form, join, or assist labor organizations, to
bargain collectively through representatives of their own choosing, or to engage
in concerted activities for the purpose of collective bargaining or other mutual
aid or protection, as guaranteed in Section 7 of the Act.
2. Take the following affirmative action, which the undersigned finds will
effectuate the policies of the Act :
(a) Offer to Clarence M. Davis and W. Donald Johnson immediate and full
reinstatement to their former or substantially equivalent positions without
prejudice to their seniority or other rights or privileges in the manner set forth
in "The remedy" ;
(b) Make whole, in the manner set forth in "The remedy", Clarence M.
Davis and W. Donald Johnson for any loss of earnings and renewal commis-
sions they may have sufferell by reason of the respondent's discrimination
against them ;
(c) Post in its Chicago-LaSalle office copies of the notice attached hereto
and marked "Appendix A." Copies of the notice, to be furnished by the Regional
Director for the Thirteenth Region, shall, after being duly signed by the re-
spondent's representative, be posted by the respondent immediately upon re-
ceipt thereof, and maintained by it for at least sixty (60) consecutive days
thereafter, in conspicuous places, including all places where notices to em-
ployees are customarily posted. Reasonable steps shall be taken by the respon-
dent to insure that said notices are not altered, defaced or covered by any other
material ; and
(d) File with the Regional Director for the Thirteenth Region within ten
(10) days from the receipt of this Intermediate Report, a report in writing,
setting forth in detail the manner and form in which the respondent has com-
plied with the foregoing recommendations.
It is further recommended that unless on or before ten (10) days from the
receipt of this Intermediate Report, the respondent notifies said Regional
Director in writing that it will comply with the foregoing recommendations, the
National Labor Relations Board issue an order requiring the respondent to
take the action aforesaid.
As provided in Section 33 of Article II of the Rules and Regulations of the
National Labor Relations Board, Series 3, as amended, effective November 27,
1045, any party or counsel for the Board may, within fifteen (15) days from the
date of the entry of the order transferring the case to the Board, pursuant to
Section 32 of Article II of said Rules and Regulations, file with the Board,
Rochambeau Building, Washington 25, D. C., an original and four copies of a
statement in writing, setting forth such exceptions to the Intermediate Report
or to any other part of the record or proceeding (including rulings upon all
motions or objections) as he relies upon, together with the original and four
copies of a brief in support thereof. Immediately upon the filing of such state-
ment of exceptions and/or brief, the party or counsel for the Board filing the
same shall serve a copy thereof upon each of the other parties and shall file a
copy with the Regional Director. As further provided in said Section 33, should
any party desire permission to argue orally before the Board, request therefor
1484 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
must be made in writing to the Board within ten (10) days from the date of the
order transferring the case to the Board. Any party desiring to submit a brief
in support of the Intermediate Report shall do so within fifteen (15) days from
the date of the entry of the order transferring the case to the Board, by filing
with the Board an original and four copies thereof, and by immediately serving
it copy thereof upon each of the other parties and the Regional Director.
A. BRUCE HUNT,
Ti ial Eaaininer.
Dated July 26, 1946
APPENDIX A
NoTICe To ALL EMri,LOYEFs
Pursuant to the recommendations of a Trial Examiner of the National Labor
Relations Boaid, and in order to effectuate the policies of the National Labor
Relations Act, we hereby notify our employees that:
We will not in any manner interfere with, restrain, or coerce our em-
ployees in the exercise of their right to self ,organization, to form, join or
assist labor organizations, to bargain collectively through representatives
of their own choosing, and to engage in concerted activities for the purpose
of collective bargaining or other mutual aid or protection.
We will offer to the employees named below immediate and full reinstate-
ment to their former or substantially equivalent positions without preju-
dice to any seniority or other rights and privileges previously enjoyed,
and make them whole for any loss of pay suffered as a result of the
discrimination.
Clarence Al Davis
W. Donald Johnson
All our employees are free to become or remain members of any labor organi-
zation. We will not discriminate in regard to hire or tenure of employment
or any term or condition of employment against any employ ee because of
membership in or activity on behalf of any labor organization, or because he
or she has engaged in concerted activities for the purpose of collective bar-
gaining or other mutual aid or protection.
PHoENix lluru.tr. LIFT? INSUR_\NCE Co it sr,
Employer
Dated------------- By -------------------------------------------------
(Representative) (Title)
NoTE.-Any of the above-named employees presently serving in the Armed
Forces of the United States will be offered full reinstatement upon application
in accordance with the Selective Service Act after discharge from the Armed
Forces.
This notice must remain posted for 60 days fiom the date hereof, and must
not be altered, defaced, or covered by any other material.