Richfield Oil Corp.

National Labor Relations Board - Board Decisions

Oct 18, 1954

110 N.L.R.B. 356 (N.L.R.B. 1954)

356 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
RICHFIELD OIL CORPORATION and OIL WORKERS INTERNATIONAL UNION,
CIO. Case No. 21-CA-168-5. October 18, 1954
Decision and Order
Upon charges duly filed by Oil Workers International Union, CIO,
herein called the Union, the General Counsel of the National Labor
Relations Board, herein called the Board, by the Regional Director
for the Twenty-first Region (Los Angeles, California), issued a com-
plaint dated November 16, 1953, against Richfield Oil Corporation,
herein called the Respondent, alleging that the Respondent had en-
gaged in and was engaging in unfair labor practices within the mean-
ing of Section 8 (a) (1) and (5) and Section 2 (6) and (7) of the
National Labor Relations Act, as amended (61 Stat. 136), herein called
the Act. Copies of the charges, complaint, and notice of hearing there-
on were duly served upon the Respondent and the Union.
The complaint alleges in substance that on or about April 14, 1953,
the Respondent unilaterally promulgated a "Stock Purchase Plan,"
herein called the Plan, in violation of Section 8 (a) (1) of the Act,
and that since on or about April 28, 1953, the Respondent has refused
to bargain with the Union concerning the Plan, in violation of Section
8 (a) (5) and (1) of the Act. Respondent duly filed its answer deny-
ing the commission of any unfair labor practices.
On February 12, 1954, all parties entered into a stipulation which
set forth an agreed statement of facts and executed a motion to trans-
fer proceeding to the Board, in which the parties waived their right
to a hearing and the issuance of an Intermediate Report and Recom-
mended Order and proposed findings of fact and conclusions of law.
By an order of the Board dated March 10, 1954, the above-mentioned
stipulation was approved and made part of the record herein, and
this proceeding was transferred to and continued before the Board.
Thereafter, on July 22, 1954, the Board heard oral argument in this
case,' in which the Respondent and General Counsel participated.
Upon the basis of the stipulation and the entire record in this case,
the Board, having duly considered the briefs filed by the parties, as
well as the brief filed as araicus curiae by the chamber of commerce
of the United States, makes the following :
FINDINGS OF FACT
1. THE BUSINESS OF THE RESPONDENT
The Respondent, a Delaware corporation, is engaged in the explora-
tion and drilling for, and in the production, refining, transportation,
1 Although not present at oral argument, Member Peterson has read the transcript of
argument herein
110 NLRB No. 54.
RICHFIELD OIL CORPORATION 357
and distribution of, petroleum and petroleum products. Its operations
are carried on in several States, including the State of California,
where the employees involved in this proceeding are employed, and in
the Dominion of Canada. During 1952, Respondent's sales of crude
oil and refined products were valued at $177,651,000. During the 12-
month period ending May 31, 1953, Respondent shipped products
valued in excess of $1,000,000 from the State of California to other
States.
The Respondent admits and we find that it is engaged in commerce
within the meaning of the Act.
II. THE LABOR ORGANIZATION INVOLVED
Oil Workers International Union, CIO, is a labor organization as
defined in Section 2 (5) of the Act.
III. THE UNFAIR LABOR PRACTICES
A. The appropriate unit and representation by the Union of a
majority therein
We find that all production, construction, and maintenance em-
ployees employed by the Respondent in the producing, refining,
natural gasoline, pipeline, and Long Beach harbor terminals divisions
in the State of California, including working foremen and pipeline
gaugers, but excluding all clerical, administrative, professional, tech-
nical, casual, temporary, marine department, and electrical employees,
guards, gatemen, watchmen, and all supervisors as defined in the Act
presently constitute, and have at all times pertinent to this case con-
stituted, a unit appropriate for the purposes of collective bargaining
within the meaning of Section 9 (b) of the Act.
We also find that since April 17, 1945, on which date the Board
certified the Union as the exclusive representative of all employees in
the above unit for purposes of collective bargaining,? the Union has
been, and now is, the exclusive bargaining representative of the em-
ployees in the unit for the purposes of collective bargaining with re-
spect to rates of pay, wages, hours of employment, and other conditions
of employment.
B. The refusal to bargain 3
Respondent admits that on April 14, 1953, it notified its employees
that its board of directors had adopted the Plan, that on April 21,
1953, the Union requested it to bargain concerning the Plan, and that
3 59 NLRB 1554
3 In view of our finding below that the Respondent violated Section 8 (a) (5) and (1)
of the Act by its refusal to bargain , upon request, concerning the Plan, we deem it unneces-
sary to concern ourselves with the allegation of the complaint that the Respondent also
violated Section 8 (a) (1) by its unilateral promulgation of the Plan
358 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
on April 28, 1953, and at all times thereafter, it refused, and now
refuses, to bargain with the Union with respect to the Plan, which
took effect on July 1, 1953. This refusal to bargain by the Respondent
is based solely on the contention that the Plan is not a subject matter
of compulsory collective bargaining. The sole issue for decision in
this case, therefore, is whether a stock purchase plan of the essential
character of the Respondent's falls within the area where the Act
requires bargaining.
The stated purpose of the Plan is "to foster a closer and continuing
association" between the Respondent and its employees. Participa-
tion in the Plan is voluntary. Membership is open to all persons
regularly employed by the Respondent who (a) have completed at
least 1 year of service in its employ, and (b) are at least 30 years of age
and not over 65 years of age if a man, or 60 years of age if a woman.
Members contribute, by way of authorized payroll deductions, a
monthly sum of not less than $5 nor more than 5 percent of their earn-
ings for the month. The Respondent, in turn, makes monthly contri-
butions equal to 50 percent of the contributions made by members each
month and an annual contribution whose amount is dependent upon
the ratio of profits to invested capital. Under this arrangement, Re-
spondent's contributions may amount to as much as 75 percent of the
members' contributions.
Member contributions are credited to a member account kept for
each participant; company contributions are credited to a trusteed
account maintained for each member. Except for such amounts as
are needed for the operation of the Plan or are retained "for the best
interests of the Members," the trustee under the Plan is required to use
the funds in the member and trusteed accounts to purchase shares of
Respondent's common stock in the open market or by private purchase,
at such prices, in such amounts, and at such times as he may determine,4
and to credit the shares purchased to the respective accounts of each
member at the end of the calendar quarter in which the stock is ac-
quired. All cash and stock dividends are credited to the respective ac-
counts, the cash dividends being used to purchase additional shares of
stock.
No cash or stock can be distributed to anyone while a member of the
Plan. Upon termination of service at age 55 if a man, or at age 50,
years if a woman, or in the event of death or total and permanent dis-
ability, the member or his beneficiary receives all cash and stock cred-
ited to his two accounts. A member leaving the employ of the Re-
spondent before reaching the aforementioned age receives the cash
and stock credited to his member account and a specified percentage
of the cash and stock credited to his trusteed account, ranging from
4 The Respondent has an authorized capital stock of 7,500,000 shares of voting common
stock, of which 4,000,000 are outstanding.
RICHFIELD OIL CORPORATION 359
nothing if he has participated in the Plan for less than 5 years to 100
percent if he has participated for 10 years or more. A member with-
drawing from the Plan while remaining an employee of the Company
receives only the cash and stock credited to his member account, and is
ineligible to reenter the Plan for 2 years.
A member's interest in the Plan is not assignable. When instructed
by a' member in writing, the trustee votes the stock allocated to the
member's two accounts in accordance with such instructions. All costs
and expenses incurred in administering the Plan are borne by the
Respondent, which reserves the right to amend or terminate the Plan
at any time. However, no assets of the trust may be used fof or
diverted to purposes other than for the exclusive benefit of the
members.
It is the contention of the Respondent that it was not required to
bargain regarding the Plan mainly because (1) the contributions made
by it thereunder are not encompassed by the term "wages" or "other
conditions of employment" within the meaning of the Act ' inasmuch
as they represent, not compensation for work performed, but merely
an incentive to employees to invest in company stock, a matter con-
cerning which the employees are free to act as they please, and (2)
such compulsory bargaining would contravene the basic policies of
the Act. We find this contention to be without merit.
It is now well established that the term "wages" comprehends all
emoluments of value which may accrue to employees because of their
employment relationships In our opinion, a stock purchase plan of
the character before us is embraced by this statutory term. Thus, it is
not, and indeed cannot be, seriously disputed by the Respondent that
as a result of its contributions under the Plan's benefits inure to em-
ployees which constitute an emolument of value. Such contributions
are, used to purchase shares of stock of the Respondent which are
then allocated to the employees, as described above. The fact that the
future value of the stock may be speculative does not, as our dissent-
ing colleague asserts, compel a finding that the Plan involves neither
wages nor even a condition of employment. We need only note here
that the future value to employees of the employer's contributions un-
der the pension plan in the Inland Steel case, which the Court held
was a condition of employment involving wages, was also speculative,
5 Section 8 (a) provides : "It shall be an unfair labor practice for an employer-(5) to
refuse to bargain collectively with the representatives of his employees , subject to the pro-
visions of section 9 (a) "
Section 9 (a) refers to " . . collective bargaining in respect to rates of pay, wages,
hours of employment, of other conditions of employment " The parallel language of Sec-
tion 8 (d), which defines collective bargaining for the purposes of Section 8 (a) (5) and
8 (b) (2), is " . with respect to wages , hours, and other terms and conditions of em-
ployment, . . .
°InUmd Steel Company, 77 NLRB 1, enfd. 170 F 2d 247 (C A 7), cert denied 336
U. S 960, W. TV. Cross cf,Co, Inc. v N L It B, 174 F 2d 875 (C A. 1) , Weyerhaeuser
Timber Company , 87 NLRB 672 -„ United Shoe Machine, y Corporation, Inc, 96 NLRB 1309.
360 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
depending upon the continued existence of the employer as well as
the survival of the employees to retirement age, let alone the health of
the dollar. It is accordingly plain that when, as in this case, the
bargainability of a plan providing for the deferred payment of com-
pensation is in issue, the result does not, and we fail to see how it can,
hinge on whether, in the Board's view, future events are likely to affect
adversely the value to the employees of the subject matter involved.
We also find that the benefits to employees under the Plan flow from
the employment relationship. In so finding, we reject as totally un-
relastic both Member Beeson's suggestion that the Plan is merely
designed to encourage employees to become coentrepreneurs and the
Respondent's position, noted above, that its contributions are in no
way related to compensation but represent merely an incentive to
employees to invest in company stock, the sole consideration therefor
being the contributions made by the participating employees. We
think that a common sense, nontechnical view of the Plan, including
its manifest purpose, its unmistakable emphasis upon the long term
accumulation of stock for future needs rather than upon stock owner-
ship as such, its requirement that participants,be employees, and,its
provision for benefits which are related to the employees' length of
service and amount of wages while participating, compels the con-
clusion that benefits accruing to employees thereunder represent a part
of the compensation or remuneration received by the employees for
their labor, differing from their weekly wages only in form and time
of payment.'
As indicated above, we are of the further opinion that a stock
purchase plan, such as that of the Respondent, is also encompassed by
the term "other conditions of employment." That broad generic
phrase has been held to refer at least to the terms or conditions under
which employment status is afforded.' In this case we find that em-
ployees who are members of the Plan perform their work under a
7 In this connection we perceive no real difference between the benefits which accrue to
employees under the Plan and those which result from a retirement and pension plan,
which the Inland Steel decision held are "wages "
Although not controlling , it is noteworthy that the Respondent applied for and re-
ceived Treasury Department approval of the Plan under sections 165 (a ) and 23 (p) of
the Internal Revenue Code The former section accords tax -exempt status to a trust
forming part of a stock bonus, pension , or profit-sharing plan of an employer for the
exclusive benefit of his employees or their beneficiaries The latter section allows tax de-
ductions for "Contributions of an employer to an employees ' trust or annuity plan and
compensation under a defeired-payment plan " With respect to section 23 (p), section
39 23 ( p)-1 (a) and (b) of Treasury Regulations 118 states in part as follows : "Sec-
tion 23 ( p) does not apply to a plan which does not defer the receipt of compen-
sation . Contributions may . . . be deducted under section 23 (p) only to the ex-
tent that they are ordinary and necessary expenses during the taxable year in carrying
on trade or business and are compensation for personal services actually rendered In
no case is a deduction allowable under section 23 (p) for the amount of any contribution
for the benefit of an employee in excess of the amount which , together with other deduc-
tions allowed for compensation for such employee 's services , constitutes a reasonable
allowance for compensation for the services actually rendered. . "
8 Inland Steel Company , supra , Weyerhaeuser Timber Company , supra.
RICHFIELD OIL CORPORATION 361
pledge from the Respondent of future payments in the form of com-
pany stock as well as ordinary weekly wages. To hold in these cir-
cumstances that the Plan is not a "condition of employment" would
be to deprive that statutory term of all meaning. In this connection,
contrary to the Respondent, we regard as uncontrolling the optional
nature of the Plan. The retirement plan which was held to be a
"condition of employment" in the Inland Steel case, for example, was
also optional with the employees.'
There remains for consideration the argument by the Respondent
that it would contravene the policies of the Act to require the Respond-
ent to bargain concerning the Plan. In this connection the Respond-
ent places much reliance upon the language in the "Declaration of
Policy" which appears as a preamble to the Act to the effect that it
is the purpose and policy of the Act to prescribe the legitimate rights
of employees and employers and to provide orderly and peaceful pro-
cedures for preventing the interferences by either with the legitimate
rights of the other. According to the Respondent, included among
the "legitimate rights" of an employer, which it claims are inviolate,
is the right of an employer to control his own business affairs and op-
erations and the disposition of his properties, and inasmuch as com-
pulsory collective bargaining concerning the Plan could result in a
substantial encroachment upon that right, it must be presumed that
the Act does not require it.
Section 8 (a) (5) itself discloses a congressional intent to require
collective bargaining as to all matters embraced by the terms "rates
of pay, wages, hours of employment, or other conditions of employ-
ment," and admits of no exceptions.10 In the face of this expression of
congressional purpose, the Respondent's policy argument is without
substance . But even assuming it to be true , as the Respondent in
effect argues, that Congress did not intend Section 8 (a) (5) to have
9Tlre Respondent 's contention that the Inland Steel is distinguishable from the instant
matter because the retirement plan involved in that case provided for compulsory retiie-
ment of employees after a certain age, and therefore affected their tenure of employment,
is likewise without merit In this respect the following language by the court is sig-
nificant ( 170 F 2d 247 at 253 ) . "The Company makes the far fetched argument that
the contributions made to a pension plan `differ in no respect from a voluntary payment
that Wright be made to each employee on his marriage, or on the birth of a child, or on
attaining the age of 50, or on enlisting in the armed forces in time of war or on partici-
pating as a member of a successful company baseball team ,' but we think there is a vast
difference which arises from the fact that such hypothetical payments are not made as
the result of a promise contained in a plan or program . They represent nothing more
than a gift Assume, however , that such supposed payments were made to employees as
a result of a company obligation contained in a plan or program Such an obligation
would represent a part of the consideration for services performed , and payments made in
the discharge of such obligation would, in our view , be `wages' or included in `conditions
of employment.' "
rQ In-Wy W. -Cross f Co.,.I-nc. v . N L R -B ; supra, the court said : " . we think that
Congress ' intended to impose upon employers a duty to bargain collectively with their
employees ' representatives with respect to any matter which might in the future emerge
as a bone of contention between them , provided , of course , it should be a matter 'in re-
spect to rates of pay , wages, hours of employment , or other conditions of employment ' "
362 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
so strict an interpretation and that the underlying policies of the Act
would be jeopardized were that section, its literal language satisfied,
held to require bargaining about certain matters falling within the
area of what is commonly termed "management prerogatives," we
find nothing in the Act, including its "Declaration of Policy," or in the
legislative history of the Act which indicates that Congress did not
intend to subject a stock purchase plan of the character involved in this
case to the bargaining process.
To support its contention that it would do violence to the basic
policies of the Act to compel an employer to bargain about such a
stock purchase plan as is involved herein, the Respondent argues
that such bargaining (1) would be tantamount to requiring an em-
ployer to bargain about the ownership and control of its company, inas-
much as a share of stock represents an interest in the company and
carries the right to vote, and (2) could result in the union's obtaining
a seat on both sides of the bargaining table, representing employees
in their capacity as employees on the one side and as stockholders on
the other, and could lead; to substantial interference.with, and per-
haps control over, management by the union. In the latter connection,
the Respondent asserts that the union would be able to pool stock-
holder-employees' voting rights and that it is not uncommon for
minority stockholders to hold the balance of power in corporate affairs.
However, neither on the basis of precedent nor upon de novo con-
sideration of the issue involved do we find in these arguments any
justification for the result contended for by the Respondent.
Regarding (1), the issue in this case is not whether ownership and
control of a business are subject matters of compulsory collective
bargaining, but whether bargaining is required with respect to a stock
purchase plan which provides for wage benefits in the form of stock
when it appears that such bargaining may have an incidental effect
upon aspects of what Respondent refers to as ownership and control
or the "legitimate rights" of an employer. To the extent that such
compulsory bargaining infringes upon the asserted right of an em-
ployer to dispose of his property and to run his business as he sees
fit, that interference, we believe, is not decisively distinguishable from
such intrusions in management affairs as occur whenever an employer
fulfills his statutory obligation to bargain collectively, as, for example,
when he bargains with respect to retirement and pension plans, group
health and insurance programs, merit wage increases, and profit-
sharing plans, all of which, the Board and courts have held, lie within
the statutory scope of collective bargaining." Clearly, therefore, not-
withstanding such interference, bargaining with respect to 'a stock
11 See Inland Steel Company, supra , TV TV Cross & Co , Inc. v. N. L. R B , supra;
N L R B v J H Allison Co, 165 F. 2d 766 (C. A. 6) ; N L R B . v. Black-Clawson Co,
210 F. 2d 523 (C. A. 6).
RICHFIELD OIL CORPORATION 363
purchase plan is sanctioned by the provisions of the Act. Indeed, in
United Shoe Machinery Company, Inc.,12 where an employer refused
to bargain about its long-established policy and method of granting
10 shares of common stock to every employee with at last 25 years of
service, a violation of Section 8 (a) (5) was found for the reason that
"the bonus grant of stock is an emolument of value, a perquisite
earned by reason of the employment relationship. As such, it comes
within the statutory definition of `wages' and is, therefore, an appro-
priate subject of bargaining between employer and employees."
With respect to (2), it is sufficient to point out that under the Act
the exclusive representative of employees is entitled to represent those
employees, including the stockholders, among them, only in their
capacity as employees. At the bargaining table, therefore, the statu-
tory representative cannot act, and the employer need not bargain
with it, except as the representative of employees as such , and only
with respect to "rates of pay, wages, hours of employment, or other
conditions of employment." 13 And, even in these areas, it may be
appropriate to point out to those who are inclined to equate an employ-
er's obligation to bargain with a complete and abject submission to
every union proposal, the Act, in the words of the Supreme Court,
"does not compel any agreement whatsoever between employees and
employers." 14 On the occasion of stockholder meetings, corporate
,elections, or any other matter in which only stockholders have the
-right to be heard, the union has no voice whatever as a statutory rep-
-resentative.
It by no means follows that the effect of our decision here is to
-require the Respondent to bargain with respect to its dividend, debt,
and financial policies, simply because, as the dissenting opinion would
have it, such matters are "relevant" to the establishment of a stock
-purchase plan. Indeed, these factors are no less relevant where a
-union seeks to bargain about higher wages, pension plans, or profit-
.sharing plans, all of which have been held by this Board and by the
courts to be subjects of mandatory collective bargaining. Yet no one
can seriously contend that those decisions have forced employers to
bargain as to their dividend, debt, or financial policies.15
In short, we are persuaded that the dire consequences foreseen by
,our dissenting colleague in this decision are much more illusory than
12 96 NLRB 1309
11 The mere ownership of stock has long been held to be insufficient reason for exclud-
ing stockholding employees from a collective-bargaining unit Union Furniture Company,
,67 NLRB 1307 ; Alderwood Products Corporation, 81 NLRB 136: Muskogee Dairy Prod-
ucts Co, 85 NLRB 520; Mutual Rough Hat Company, 86 NLRB 440; Brookings Plywood
'Corporation, 98 NLRB 794 , Coastal Plywood and Timber Company, 102 NLRB 300;
Everett Plywood d Door Corpoiatson, 105 NLRB 17.
14 N L R B v American National Insurance Co, 343 U S 395
is Inasmuch as the Union would not, as a consequence of employees acquiring stock in
the Respondent, occupy a dual capacity as alleged by the Respondent and Member Beeson,
Bausch d Lomb Optical Company , 108 NLRB 1555, upon which the Respondent and the
.dissent rely, is inapposite
364 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
real. They are substantially the same dire consequences predicted by
others on previous occasions-theoretical consequences which have con-
stantly failed to materialize in the practical atmosphere of the bar-
gaining processes.
On the basis of all the foregoing, and the record as a whole, we find
that the Plan represents a mandatory subject of collective bargaining
under the Act and that the Respondent, since about April 28, 1953, has
refused to bargain with the Union with respect thereto, in violation of
Section 8 (a) (5) of the Act, and thereby interfered with, restrained,
and coerced employees in the exercise of their statutory rights, in vio-
lation of Section 8 (a) (1) of the Act.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE
We find that the activities of the Respondent set forth in section III,
above, occurring in connection with its operations as described in sec-
tion 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 or obstructing commerce and the free flow
thereof.
V. THE REMEDY
Having found that the Respondent has engaged in the unfair labor
practices set forth above, we shall order that it cease and desist there-
from and take certain affirmative action designed to effectuate the
policies of the Act.
It has been found that, since the promulgation of the Plan, the
Respondent, upon request, has refused to bargain collectively on the
subject. We shall, therefore, in order to effectuate the policies of the
Act, require the Respondent, upon request, to bargain collectively with
the Union as the exclusive representative of its employees in the appro-
priate unit with respect to the Plan.
Because of the limited scope of the Respondent's refusal to bargain,
and because of the absence of any indication that danger of other
unfair labor practices is-to be anticipated from the Respondent's con-
duct in the past, we shall not order the Respondent to cease and desist
from the commission of any other unfair labor practices.
Upon the basis of the above findings of fact and upon the entire
record in this case, we make the following :
CONCLUSIONS OF LAW
1. Oil Workers International Union, CIO, is a labor- organization
within the meaning of Section 2 (5) of the Act.
2. All production; construction, and maintenance employees em-
ployed by the Respondent in the producing, refining, natural gasoline,
RICHFIELD OIL CORPORATION 365
pipeline, and Long Beach harbor terminals divisions in the State of
California, including working foremen and pipeline gaugers, but ex-
cluding all clerical, administrative, professional, technical, casual,
temporary, marine department, and electrical employees, guards, gate-
men, watchmen, and all supervisors as defined in the Act, constitute a
unit appropriate for the purposes of collective bargaining within the
meaning of Section 9 (b) of the Act.
3. Oil Workers International Union, CIO, was on April 17, 1945,
and at all times thereafter has been, the exclusive representative of all
employees in the aforesaid unit for the purposes of collective bar-
gaining.
4. By refusing to bargain collectively with Oil Workers Interna-
tional Union, CIO, as the exclusive representative of the employees in
the appropriate unit, the Respondent has engaged in and is engaging
in unfair labor practices within the meaning of Section 8 (a) (5) and
(t) of the Act.
5. The aforesaid unfair labor practices are unfair labor practices
affecting commerce within the meaning of Section 2 (6) and (7) of
the Act.
Order
Upon the basis of the above findings of fact and conclusions of law,
and pursuant to Section 10 (c) of the National Labor Relations Act, as
amended, the National Labor Relations Board, hereby orders that Re-
spondent, Richfield Oil Corporation, Los Angeles, California, its offi-
cers, agents, successors, and assigns, shall :
1. Cease and desist from refusing to bargain collectively with Oil
Workers Intel national Union, CIO, as the exclusive bargaining rep-
resentative of its employees in the appropriate unit with respect to its
"Stock Purchase Plan."
2. Take the following affirmative action, which the Board finds will
effectuate the policies of the Act:
(a) Upon request, bargain collectively with Oil Workers Interna-
tional Union, CIO, as the exclusive representative of all its employees
in the aforesaid appropriate unit with respect to its "Stock Purchase
Plan."
(b) Post at all its operations where employees in the appropriate
unit are employed copies of the notice attached hereto marked "Appen-
dix A.'"b Copies of said notice, to be furnished by the Regional Direc-
tor for the Twenty-first Region, shall, after being signed by Respond-
ent's representative, be posted for sixty (60) consecutive days there-
after in conspicuous places, including all places where notices to em-
I6 In the event that this Order is enfoi ced by a decree of a United States Court of Appeals,
there shall be substituted for the words "Pursuant to a Decision and Order " the words
"Pursuant to a Deciee of the United States Court of Appeals , Enforcing an Order."
366 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ployees are customarily posted. Reasonable steps shall be taken by Re-
spondent to insure that said notices are not altered, defaced, or covered
by any other material.
(c) Notify the Regional Director for the Twenty-first Region, in
writing, within ten (10) days from the date of this Order, -%r-liat steps
Respondent has taken to comply herewith.
MEMBER BEESON, dissenting :
I cannot agree with the majority in finding the Respondent guilty
of a refusal to bargain regarding its stock purchase plan. The ma-
jority's determination that such plan is a proper subject for compulsory
bargaining between a corporation and the representative of its eni-
ployees is not supported by the language of the Act and contravenes
both the intent and the basic purposes of the statute. To so find seems
to me an utterly unrealistic and dangerous expansion of the usual area
of collective bargaining . It is in my opinion not in the interests of the
public much less the true interests of the parties.
Section 8 (a) (5) and 8 (d), insofar as pertinent, requires bargain-
ing as to "wages" and "other terms and conditions of employment."'
Admittedly, the courts in cases like Inland Steel and W., W. Grass have-
held that such matters as pensions and insurance coverage, which
guarantee to the employees definite immediate or future benefit, are
encompassed by the above provisions. However, the stock purchase
plan here involved, unlike those matters, affords no certainty whatso-
ever of either present or future emolument to any employee. The plan
is merely designed to encourage employees to become coentrepreneurs,,
sharing in a future potentially profitable investment, subject to all the
risks faced by the other stockholders. The Coinpany's contribution
under the plan has no immediate value to the employee. Its future
value is purely speculative, depending on business conditions, the suc-
cess of management, and the fortunes of the market place. The em-
ployee's own investment is equally speculative and is subject to neither
an assured return nor a guarantee of principal or dividend.
To find an offer to employees of coownership with an indefinite,.
speculative possibility of capital enhancement, to constitute a wage or
term or condition of employment, strips those phrases of their ordinary
meaning. Merely because the plan is offered to employees does not, of
course, convert it to a mandatory bargaining issue." And the ma-
17 See N L. B. B v. Bemis Bios Bag Co, 206 F 2d 33 (C A 5), where the court held
that merely because company housing was limited to employees did not mean that it was
a bargainable issue See also The Scope of Collective Bargaining , Professor Robert D_
Gray, Circular No 21, California Institute of Technology, where it is shown that the Act
did not intend to require bargaining merely because a subject can affect " employment
conditions . To the same effect, see Regulation of Collective Bargaining by the National'
Labor Relations Board , by Archibald Cox and John T. Dunlop, 63 Harvard Law Review-
389.
RICHFIELD OIL CORPORATION 367
jority has failed to cite any legislative history for subverting the usual
meaning of the language of the Act.
In an attempt to support its position that the stock purchase plan
constituted "wages;' the majority refers to provisions in the Internal
Revenue Code, and related regulations which indicate company con-
tributions under the plan are deductible as compensation for services
rendered. Obviously, the treatment of such contributions for tax
purposes is not dispositive of the issue under the Labor-Management
Relations Act. In any event, the majority disregards the most sig-
nificant parts of the code and regulations, I. e., the tax effect upon the
employee. These provide that company contributions are not re-
ported by the employees as ordinary income like wages. Rather,
under a stock purchase plan the employee reports no income whatso-
ever at the time of the employer's contribution, and in general, reports
any amount above his own contribution, at the time of distribution
and/or sale, as a long-term capital gain. If no appreciation over his
own contribution is realized by the employee, he reports no taxable
income whatsoever, while a loss is reported as long-term capital loss.18
Consequently, for tax purposes, the employee under a stock purchase
plan is taxed in a manner closely analogous to other investors of risk
capital.
Apart from the fact that stock purchase plans fall outside the tra-
ditional meaning of "wages" and "other terms and conditions of em-
ployment," I believe other sections of the Act as well as its basic policies
establish beyond doubt that Congress not only never intended the
quoted language to include stock purchase plans, but on the contrary
intended to exclude such matters from the scope of compulsory bar-
gaining. Under Section 2 (3) and (11), for example, supervisory
per§onnel were removed from the operation of the Act. This means,
as indicated by the court in the recent Retail Clerks case,19 that a union
is prohibited from insisting on bargaining with respect to the selec-
tion and duties of management representatives, regardless of their
incidental effect on the working conditions of employees. As the selec-
tion and functions of representatives of the owners are beyond the
statutory limits of compulsory bargaining, certainly the determina-
tion of the very ownership of the company, involved in a stock
purchase plan, cannot be included in the required bargaining area
without violating the intent of Congress.
Moreover, in Section 1 of the Act, Congress manifested a clear in-
tention of protecting from interference by employers and labor organi-
>e See section 165 (b) of the Inteinal Revenue Code of 1939, substantially reenacted in
Section 402 of the Internal Revenue Code of 1954, and section 39 165-6 of Treasury Regu.
lations 118 Pensions receive a diverse treatment , with amounts above the employee con-
tribution treated as ordinary income Also, the value of stock bonuses is reported as ordi-
nary income based on the value when received Treasury Regulations 118, section
3922 (a)-3
1°N L. B. B v Retail Clerks Union Local 648, 211 F 2d 759 (C A 9)
368 DECISIONS OF NATIONAL ; LABOR RELATIONS_ BOARD
zations the "legitimate rights" of each other. Management cannot
and should not be permitted to interfere with the internal affairs of
unions.20 Conversely, unions cannot and should not be permitted to
interfere with matters solely within the province of management 21
Among the latter's exclusive responsibilities would seem to be without
question, dividend policy, type and amount of financing, including debt
to be incurred, and the like. Yet these are precisely the matters which
are relevant to and must be considered in the formulation and admin-
istration of any stock purchase plan, and they are matters concerning
which the majority is in substance now requiring the company to bar-
gain with the union. It is difficult to conceive of any more flagrant
invasion of what were heretofore considered the "legitimate rights"
of employers, designed to be protected by the Act.
The majority likewise projects the Union into an inconsistent dual
role of representing employees as workmen interested in better wages
and improved hours and working conditions, and at the same time
representing those employees who participate in the plan as stock-
holders interested in higher dividends, etc. The Board, in Bausch d
Lomb Optical Company, 108 NLRB 1555, recently recognized the
dangers latent in a union serving in the dual capacity of competing
employer and bargaining representative of the employees. The Board
there stated : "For the Union has acquired a special interest which may
well be at odds with what should be its sole concern-that of repre-
senting the interests of the Respondent's employees." And in numer-
ous cases , the Board has emphasized the duty of a union to represent
all employees in the unit without discrimination between them.22 I
believe an employee can invest his savings in the company for which
he works, as in any others, and at the same time be a good union mem-
ber. I do not believe, however, that the union which represents him
can wear two hats and still successfully bargain for the employees
as employees. To force the union into this dual position requires a
neglect of one responsibility or the other.
It is of course no answer to the union's problem of dual responsi-
bility to suggest, as does the majority, that the employer need not
bargain with the union as a representative of the employees in their
capacity of stockholders. As already mentioned, matters relating to
See , e g., N. L R . B. v. Dalton Telephone Co, 187 F. 2d 811 (C. A 5 ), in which the
court ruled that a union ' s registering under a State statute was a matter outside the area
of compulsory bargaining
21 See 79 Congressional Record 7073 See also Regulation of Collecteive Bargaining by
the National Labor Relations Board , 03 Harvard Law Review 389, supra, in which the
authors discuss the Inlam.d Steel decision , and wain that it would violate the basic pur-
poses of the Act and the best interests of collective bargaining , if it should be regarded as
indicating that all issues are bargainable They urge that we bear in mind that there
are three types of issues ' ( 1) Issues for joint labor -management determination, which
are bargainable ; ( 2) issues involving management pierogative , concerning which bar-
gaining should not be compulsory ; and, (3) issues involving internal affairs of unions,
concerning which bargaining should not be compulsory either.
22 See, e. g ., Hughes Tool Compamy, 104 NLRB 318.
RICHFIELD OIL CORPORATION 369
the employees as stockholders (such as dividends and financial
structure) are the very meat of the stock purchase plan and its
administration.
Moreover, there are numerous instances where the union while at-
tempting to act as employee representative on stock purchase plans
of necessity will be faced with issues involving the interests of stock-
holder-employees as opposed to those of nonstockholder-workers, viz:
a union , as representative of the stockholder-members, would want to
demand an assured dividend under the stock purchase plan, but such
provision might in the future shackle its proper bargaining function
of seeking increased wages for all employees in the unit. Indeed, as
a result of the union's dual position under the majority's decision, an
employer might be required to furnish confidential business data rele-
vant to a stock plan, which information the union, as representative
of the workers generally, has previously been held without right to
demand.23
I consider it also important that, not only are the employer's rights
infringed upon by the majority, but also subjeet to impairment are
the rights of other stockholders of the company. A labor union would
be enabled to obtain domination over a controlling number of shares,
thereby prejudicing the status of the other stockholders.24 The ma-
jority's pious observation that an employer would not have to agree
with the union is hardly a satisfactory response. As the Board itself
said in Bausch cC Lomb:
Nor would Respondent's right not to accede to any such de-
mands, as suggested by the Trial Examiner, be a satisfactory
answer in light of the fact that the demands could be implemented
by effective threats to the Respondent that, if it failed to accept the
Union's terms, its plants would be struck and picketed .. .
In summary, I believe that the majority's decision requiring bar-
gaining on stock purchase plans is contrary to the language of the
Act, the intent of Congress, and the fundamental purposes of the Act.
Such conclusion does not imply that I am in any way opposed to
the voluntary establishment of stock purchase plans. They provide
an added inducement to become a shareholder and presumably gain
a greater interest in the success of the enterprise. This, many people
believe, is a very good thing, stimulating participation in the Ameri-
can enterprise system and should be encouraged, not discouraged. I
agree.
23 See McLean-Arkansas Lumber Company, Inc, 109 NLRB 1022
u In fact, would not the inevitable step in required bargaining on a stock purchase plan
be a demand for a seat on the board of directors to protect the interests of the employee-
stockholders ? If such an eventuality occurs we should have moved very close to the
European institution of codetermination , where , by law , employees are represented on the
board of directors with an equal voice in management decisions.
338207-55-vol. 110-25
370 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Perhaps, our difficulty lies in the tendency to make of the Act a
strait jacket instead of a direction post in industrial relations which
I feel Congress intended it to be. The decision that stock purchase
plans are subject to compulsory bargaining may tend to stop the recent
trend in their growth. I believe this would be most regrettable. It is
an unfortunate tendency to confuse voluntary discussion of matters
of mutual interest with the statutory right to bargain over them.
Hitherto most companies have as a matter of common sense and
courtesy discussed such proposed offerings with the unions represent-
ing their employees and few unions have attempted to insist on bar-
gaining regarding either the inception of the plan or the details
regarding it, especially since the plans have been voluntary. To be
sure, any type of plan obviously intended to detract from the union's
influence or to serve as an offering of benefit to defeat a union would
be of a coercive nature and thus unlawful. Far better, it seems to me,
than to throttle a means of sharing in ownership of the enterprise is to
encourage the voluntary establishment of such beneficial plans and
the voluntary discussion of mutual problems regarding them.
Since this plan meets neither the meaning of wages or conditions
of employment as I see it, nor is it in the interest of any of the parties,
including the public, to make it a matter of compulsory bargaining,
I cannot find with my colleagues that the Respondent has violated the
law. Accordingly, I would dismiss the complaint.
MEMBER MURDOCH- 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 bargain collectively, upon request, with Oil Workers
International Union, CIO, as the exclusive representative of all
the employees in the bargaining unit described below with respect
to our "Stock Purchase Plan," and if an understanding is reached,
embody such understanding in a signed agreement.
The bargaining unit is : All production, construction, and main-
tenance employees employed by the Employer in the producing,
refining, natural gasoline, pipeline, and Long Beach harbor
terminals divisions in the State of California, including working
foremen and pipeline gaugers, but excluding all clerical, adminis-
trative, professional, technical, casual, temporary, marine depart-
AMALGAMATED LOCAL 286, ETC. 371
ment, and electrical employees, guards, gatemen, watchmen, and
all supervisors as defined in the Act.
RICHFIELD OIL CORPORATION,
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.
AMALGAMATED LOCAL 286, INTERNATIONAL UNION, UNITED AUTOMO-
BILE WORKERS OF ' AMERICA, AFL and HAROLD VLASAK AND PAUL
SCHWARTZ . Case No. 13-CB-248. October 18, 1954
Decision and Order
On December 4, 1953, Trial Examiner Samuel Binder issued his
Intermediate Report in the above -entitled proceeding , finding that
the Respondent had not engaged in certain unfair labor practices
within the meaning of Section 8 (b) (1) (A) of the Act and recom-
mending that the complaint be dismissed in its entirety , as set forth
in the copy of the Intermediate Report attached hereto. Thereafter,
the General Counsel filed exceptions to the Intermediate Report and a
supporting brief. The Respondent requested leave, and was permitted,
to file a brief in reply to the General Counsel 's brief.
The Board has reviewed the rulings of the Trial Examiner made
at the hearing and finds that no prejudicial error was committed.
The rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the exceptions and briefs , and the entire record in the
case, and finds merit in the General Counsel 's exceptions.
The Trial Examiner found that the Respondent did not violate
Section 8 (b) (1) (A) of the Act by threatening to deprive the com-
plainants , Vlasak and Schwartz , of certain insurance benefits for fail-
ing to maintain membership in good standing in its organization. He
based this conclusion on his interpretation of the Respondent's then
current contract with Delta Star Electric Division , H. K. Porter
Co., Inc., which he found had terminated preexisting insurance bene-
fits as a condition of employment and made them available to em-
ployees solely as an incident of union membership . For this reason,
the Trial Examiner found that the Respondent was privileged to re-
quire membership in good standing as a prerequisite for the enjoy-
ment of the insurance benefits in question.
Because we disagree with the Trial Examiner 's interpretation of
the contract , we find that the Respondent violated Section 8 (b) (1)
110 NLRB No. 53.