Service Merchandise Co., Inc.

National Labor Relations Board - Board Decisions

Sep 27, 1990

299 N.L.R.B. 1125 (N.L.R.B. 1990)

SERVICE MERCHANDISE CO. 1125
Service Merchandise Company, Inc. and Priscilla
Jones. Case 26-CA-12422
September 27, 1990
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND DEVANEY
On June 1, 1988, Administrative Law Judge
Lawrence W. Cullen issued the attached decision.
The Respondent filed exceptions and a supporting
brief.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
The Board has considered the decision and the
record in light of the exceptions and brief and has
decided to affirm the judge's rulings, findings, and
conclusions only to the extent consistent with this
Decision and Order.
The judge found that since approximately May
30, 1987, the Respondent distributed to its employ-
ees nationwide a rule in its employee handbook
forbidding all wage discussion. 1 The judge found
the rule violated Section 8(a)(1) of the National
Labor Relations Act. The judge also found that the
Respondent had violated Section 8(a)(1) by issuing
a verbal reprimand to Charging Party Priscilla
Jones for allegedly violating the rule by discussing
wages and by discharging Jones for the same
reason.
The judge refused to grant Respondent's Motion
for Summary Judgment seeking dismissal of the
complaint. The Respondent's motion was based on
a settlement agreement executed by Jones in con-
sideration of the Respondent's payment of $3000 to
her. In refusing to dismiss the complaint, the judge
found that the Respondent's distributing, maintain-
ing, and enforcing the rule forbidding wage discus-
sion had "the inevitable effect of chilling all wage
discussions among the Respondent's employees na-
tionwide." The judge found that these violations
were not remedied by the settlement agreement.
Further, the judge found that an announcement
posted by Respondent rescinding the rule was inad-
equate to remedy the Respondent's violations. 2 He
The rule read as follows.
As an SMC associate, you may be exposed to confidential informa-
tion such as sales figures, cost of merchandise, wages, numbers of
personnel, etc. This Information is not to be discussed with anyone
who is not associated with the Company, nor with anyone within
the Company who does not need the information in the course of
job performance. In addition, your earnings are a private matter be-
tween you and SMC and are not to be revealed to or discussed with
others.
2 The announcement read as follows:
found that while the announcement stated that the
discussion of wages would no- result in discipline,
it made clear Respondent's continuing disapproval
of such discussions.
For the reasons stated below we conclude, con-
trary to the judge, that we should give effect to the
settlement agreement and dismiss the complaint al-
legations to the extent that they are related to the
reprimand and discharge of Jones. We find, how-
ever, that deferring to the parties' private settle-
ment agreement does not require or warrant the
dismissal of complaint allegations that the Respond-
ent distributed, maintained, and enforced a rule for-
bidding its employees to discuss wages in violation
of Section 8(a)(1) of the Act.
In Independent Stave Co., 287 NLRB 740, 743
(1987), the Board outlined factors to be considered
in evaluating non-Board settlements. The factors
were as follows:
all the surrounding circumstances including,
but not limited to, (1) whether the charging
party(ies), the respondent(s) and any of the in-
dividual discriminatee(s) have agreed to be
bound, and the position taken by the General
Counsel regarding the settlement; (2) whether
the settlement is reasonable in light of the
nature of the violations alleged, the risks inher-
ent in litigation, and the stage of the litigation;
(3) whether there has been any fraud, coer-
cion, or duress by any of the parties in reach-
ing the settlement; and (4) whether the Re-
spondent has engaged in a history of violations
of the Act or has breached previous settlement
agreements resolving unfair labor practice dis-
putes.
The judge correctly considered whether the pro-
posed settlement agreement sufficiently assured
adequate protection of the policies of the Act. The
Supreme Court has stated that the Board does not
adjudicate private rights, but "give[s] effect to the
Service
Merchandise
Associate Notice
Periodically the Company reviews its policies and publications to
ensure that they properly express current management philosophy
and the Company's desired relation with its associates, and that its
policies conform with applicable legislative and administrative deci-
sions. Accordingly, all associates should be aware that the Company
will continue, as it has in the past, to hold the wages paid to you in
confidence. Your particular wages are a business matter between you
and the Company. However, if you voluntarily choose to discuss
your wages with another party, the Company will no longer consid-
er such a discussion to be a breach of confidence and a cause for
disciplinary action. The Company does expect that you will respect
the right of other associates not to divulge their wages, if they so
choose.
This change has been or shortly will be incorporated in a revised
Getting Acquainted With SMC employee handbook.
299 NLRB No. 160
1126 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
declared public policy of the Act." 3 The Court has
also stated that private contracts that conflict with
the Board's functions must yield. 4 However, while
there is a "public interest in the vindication of stat-
utory rights" there is an "equally important public
interest in encouraging the parties' achievement of
a mutually agreeable settlement without litiga-
tion." 6
Here, the settlement agreement included a provi-
sion that Jones would not seek reemployment with
the Respondent. The General Counsel indicated at
the hearing that this provision was one reason that
the settlement agreement was unacceptable. In
looking at the particular circumstances of this case,
however, we note that at the time the settlement
agreement was reached there were only alleged
violations of the Act and the parties faced the risks
that are inherent in any litigation. The Respondent
and the Charging Party chose, therefore, to enter
into an agreement satisfactory to both to avoid
those risks. Further, the agreement is reasonable
and there was no evidence of coercion. 7 Accord-
ingly, we will give effect to the settlement agree-
ment and dismiss the complaint allegations to the
extent that they relate to the reprimand and dis-
charge of Jones.
However, the Respondent's December 21, 1987
notice posting revising its rule concerning discus-
sion of wages and its February 1988 withdrawal of
employee handbooks containing its unrevised rule
3 National Licorice Co. v. NLRB, 309 U.S. 350, 362 (1940).
4 .1. I. Case Co. v. NLRB, 321 U.S. 332 (1944), cited in Texaco, Inc.,
273 NLRB 1335 (1985).
5 See Independent Stave Co., 287 NLRB 740, 742 (1987), citing Clear
Haven Nursing Home, 236 NLRB 853, 854 (1978).
6 Independent Stave Co., above at 742.
7 Judge Cullen found that the Respondent has a history of violating the
Act. He based this finding in part on the then pending complaint in Cases
2-CA-22586 and 2-CA-22680, and findings of violations in Service Mer-
chandise Co., 278 NLRB 185 (1986), also involving this Respondent.
However, the Board this date has issued a decision in Cases 2-CA-
22586 and 2-CA-22680 adopting Judge Lawrence's decision in those
cases, granting the Respondent's Motion for Summary Judgment based
on a private settlement agreement. See Service Merchandise Co., 299
NLRB No. 161, issued today. Informal settlement agreements do not pro-
vide a basis for finding a proclivity to violate the Act. Longshoremen ILA
Local 1180, 263 NLRB 954 fn. 2 (1982). Further, the violations found in
Service Merchandise Co., 278 NLRB 185 (1986), were based on events that
occurred in 1979. In this case, misconduct committed approximately 8
years before the alleged misconduct here is too remote to establish a suf-
ficient proclivity to violate the Act that in itself would warrant refusing
to uphold a private settlement agreement. See Wolverine World Wide, 243
NLRB 425 (1979); Operating Engineers Local 12 (Hensel Phelps), 284
NLRB 246 (1987). Cf. Teamsters Local 115 (Gross Metal), 275 NLRB
1547 (1985), in which the Board rejected a proposed settlement in a
picket line violence case, relying on four prior cases, the first decided in
1966, in which the respondent was found to have engaged in picket line
violence.
We take official notice that the Board, on the General Counsel's rec-
ommendation, approved a settlement agreement terminating appellate liti-
gation regarding the Board's Order in 278 NLRB 185, above, by provid-
ing for entry in the court of appeals of a consent judgment after backpay
proceedings were held and certain specified modifications were made to
the remedial order.
were not part of the Respondent's settlement with
Jones. Thus, not only did the notice posting occur
3 months before the settlement, but the notice
made no mention of the Respondent's enforcement
of the rule against Jones. Moreover, as Jones de-
clined reinstatement at the time she entered into
the settlement agreement, she had no interest in the
content of the Respondent's notice revising its rule
against the discussion of wages. Accordingly, de-
ferring to the parties' private settlement does not
require dismissal of the complaint allegations that
the Respondent's distribution, maintenance, and en-
forcement of its rule against discussion of wages
violated Section 8(a)(1).
The judge found that the Respondent distributed
nationwide, through its employee handbook, a rule
forbidding all wage discussion. A request in an em-
ployee handbook that employees not discuss their
wages is a "clear restraint on the employees' Sec-
tion 7 right to engage in concerted activities for
mutual aid and protection concerning an undeni-
ably significant term of employment." We reject
the Respondent's bare assertion that the rule was
justified because of competition for employees and
a need to protect employees' privacy. We note that
there was no showing that the Respondent's em-
ployees possessed any special skills. We also find
that the rule was broader than necessary to achieve
its stated objectives and that it had the effect of sti-
fling all concerted activity. 3 For these reasons we
find that the distribution, maintenance, and enforce-
ment of the rule forbidding all wage discussion vio-
lated Section 8(a)(1) of the Act.
The Respondent argues, however, that it has re-
scinded the rule forbidding discussion of wages and
has posted an announcement in all its stores nation-
wide indicating that discussion of wages is allowed.
The Respondent's announcement, which indi-
cates that the employees may discuss wages, is in-
sufficient. In Passavant Memorial Area Hospital, 237
NLRB 138 (1978), the Board stated that a repudi-
ation of coercive conduct should give assurances to
employees that the employer will not interfere with
the exercise of their Section 7 rights in the future.
Further, to be effective "the repudiation must be
limely,"unambiguous,"specific in nature to the
coercive conduct,' and 'free from other proscribed
illegal conduct." Here, repudiation was insufficient
because it was untimely (coming almost 2 years
after the rule's inception and almost 2 months after
the rule had been enforced against Jones) 10 and be-
8 Heck% Inc., 293 NLRB 1111, 1119 (1989).
9 See generally Universal Fuels, 298 NLRB 254, 255 (1990).
i ° See EPE, Inc., 284 NLRB 191 fn. 2 (1987), enfd. in relevant part 845
F.2d 483 (4th Cir. 1988) (finding that a posted notice "was insufficient to
Continued
SERVICE MERCHANDISE CO. 1127
cause it did not assure employees that the Respond-
ent would not interfere with their Section 7 rights.
Therefore, having found that the Respondent has
not effectively repudiated its unlawful conduct, we
find that the Respondent's distribution, mainte-
nance, and enforcement of the rule forbidding the
employees to discuss their wages violated Section
8(a)(1) of the Act.
CONCLUSIONS OF LAW
1. The Respondent is an employer within the
meaning of Section 2(6) and (7) of the Act.
2. Giving effect to the settlement agreement en-
tered into by Charging Party Priscilla Jones and
the Respondent does not require the dismissal of
complaint allegations that the Respondent distribut-
ed, maintained, and enforced its rule against discus-
sion of wages and that such conduct violated Sec-
tion 8(a)(1) of the Act.
3. The Respondent violated Section 8(a)(1) of the
Act by the distribution, maintenance, and enforce-
ment of its rule forbidding its employees to discuss
their wages.
4. The above unfair labor practices are unfair
labor practices affecting commerce within the
meaning of Section 2(6) and (7) of the Act.
THE REMEDY
Having found that the Respondent has violated
the Act by distributing to its employees nationwide
and maintaining and enforcing a rule forbidding all
wage discussions, it shall be ordered to cease and
desist and to take certain affirmative actions (in-
cluding the posting of an appropriate notice, at
each of its facilities nationwide, designed to effectu-
ate the purposes of the Act) to remedy those viola-
tions, including the formal rescission of its rule
found unlawful.
ORDER
The National Labor Relations Board orders that
the Respondent, Service Merchandise Company,
Inc., Memphis, Tennessee, its officers, agents, suc-
cessors, and assigns, shall
1. Cease and desist from
negate" an unlawful no-solicitation rule, and relying on, inter alia, the
fact that the notice was posted about a month after the rule had been
enforced and "did not specifically refer to the incident").
Although we are dismissing the complaint allegation regarding Jones in
deference to the settlement, we may properly take account of the Re-
spondent's enforcement of its rule against Jones in assessing the adequacy
of its purported repudiation of the violation committed through its pro-
mulgation of the rule. It is undisputed that Jones was discharged for vio-
lating the "Confidential Information" policy; in contesting the various
complaint allegations, the Respondent had argued simply that the rule
was lawful and that, therefore, Jones' discharge was lawful.
(a) Distributing, maintaining, and enforcing its
unlawful rule prohibiting employees from discuss-
ing their wages with others.
(b) In any like or related manner interfering
with, restraining, or coercing employees in the ex-
ercise of their rights guaranteed them by Section 7
of the Act.
2. Take the following affirmative action neces-
sary to effectuate the policies of the Act.
(a) Immediately rescind the rule against employ-
ees discussing their wages with others.
(b) Post at each of its facilities nationwide copies
of the attached notice marked "Appendix."
Copies of the notice, on forms provided by the Re-
gional Director for Region 26 after being signed by
the Respondent's authorized representative, shall be
posted by the Respondent immediately upon re-
ceipt and maintained for 60 consecutive days in
conspicuous places including all places where no-
tices to employees are customarily posted. Reason-
able steps shall be taken by the Respondent to
ensure that the notice is not altered, defaced, or
covered by any other material.
(c) Notify the Regional Director in writing
within 20 days from the date of this Order what
steps the Respondent has taken to comply.
" If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice reading "Posted by Order of the Nation-
al Labor Relations Board" shall read "Posted Pursuant to a Judgment of
the United States Court of Appeals Enforcing an Order of the National
Labor Relations Board."
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found
that we violated the National Labor Relations Act
and has ordered us to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representa-
tives of their own choice
To act together for other mutual aid or pro-
tection
To choose not to engage in any of these
protected concerted activities.
WE WILL NOT distribute, maintain, or enforce
rules prohibiting you from discussing your wages
or other terms or conditions of employment with
others.
1128 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
WE WILL NOT in any like or related manner
interfere with, restrain, or coerce you in the exer-
cise of rights guaranteed you by Section 7 of the
Act.
WE WILL rescind our rule prohibiting employees
from discussing wages with others.
SERVICE MERCHANDISE COMPANY, INC.
William D. Levy, Esq., for the General Counsel.
Ralph J. Zatzkis, Esq. (McGlinchey, Stafford, Mintz,
Celli & Lang, P. C), of New Orleans, Louisiana, for
the Respondent.
DECISION
STATEMENT OF THE CASE
LAWRENCE W. CULLEN, Administrative Law Judge.
This case was heard before me on 29 March 1988 in
Memphis, Tennessee. The complaint in this case was
issued by the Regional Director of Region 26 of the Na-
tional Labor Relations Board (the Board), on 9 Decem-
ber 1987, and is based on a charge filed by Priscilla
Jones, an individual (Charging Party) on 30 November
1987. The complaint alleges that Service Merchandise
Company, Inc. (Respondent) violated Section 8(a)(1) of
the National Labor Relations Act (the Act), since on or
about 30 May 1987, through its employee handbook dis-
tributing to its employees nationwide and maintaining the
following rule for its employees:
As an SMC associate, you may be exposed to confi-
dential information such as sales figures, cost of mer-
chandise, wages, number of personnel, etc. This in-
formation is not to be discussed with anyone who is not
associated with the Company, nor with anyone within
the company, need the information in the course of job
performance. In addition, Your earnings are a private
matter between you and SMC and are not to be re-
vealed to or discussed with other. [Emphasis added.]
The complaint further alleges that Respondent violat-
ed Section 8(a)(1) of the Act by issuing a verbal repri-
mand to Priscilla Jones on or about October 1987 and by
discharging Priscilla Jones on 30 October 1987. Respond-
ent denies the commission of any unfair labor practices
and has asserted that the complaint should be dismissed
as a result of a settlement agreement reached independ-
ently between Respondent and Jones and executed by
Jones and that the notice has been rescinded and re-
placed by another notice allowing wage discussions by
employees.
Based on the evidence presented at the hearing, my
observation of the demeanor of the witnesses, and my
review of the transcript, closing arguments of counsels,
and the briefs submitted by the parties, I make the fol-
lowing
FINDINGS OF FACT
A. The Business of Respondent
The complaint alleges, Respondent admits, and I find,
that Respondent Service Merchandise Company, Inc., is
a corporation with its principle office and place of busi-
ness in Nashville, Tennessee, and places of business lo-
cated in several states, including a place of business lo-
cated on Austin Peay Highway in Memphis, Tennessee
(Respondent's facility), wherein it has been engaged in
the business of general merchandise sales; that during the
12 months preceding the filing of the complaint, Re-
spondent, in the course and conduct of its business oper-
ations described above, derived gross revenues in excess
of $500,000 and purchased and received at Respondent's
facility products, goods, and materials valued in excess of
$50,000 directly from points located outside the State of
Tennessee, and that Respondent is now, and has been at
all times material, an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the
Act.
B. The Alleged Unfair Labor Practices
The facts in this case are largely undisputed. Respond-
ent admits that it has distributed and maintained the
aforesaid rule nationwide at all of its stores since at least
1985 up to the time of the events leading up to the filing
of the complaint in December 1987. The handbook was
revised and redistributed in November 1987 with the rule
intact. According to the testimony of Willard Lilly, Re-
spondent's unit manager, an admitted supervisor, he was
informed by Assistant Manager Cynthia James that the
Charging Party, Priscilla Jones, had discussed wages
with other employees in violation of the above-men-
tioned rule prohibiting such discussions and had been
warned verbally by Assistant Manager James (also an ad-
mitted supervisor) concerning this violation of the rule.
Lilly testified that James informed him that Jones had
persisted in discussing wages with other employees and
that he caused her to be called to his office on 30 Octo-
ber 1987 whereupon he discharged Jones solely for vio-
lating the rule by discussing wages with others. Jones for
her part denied at the hearing that she had discussed
wages with others. Respondent called a witness, Debo-
rah James, a coemployee of Jones who testified that
Jones had asked her whether she (Deborah James) was
aware that new employees hired in the jewelry depart-
ment were being paid more than the wages at which
Jones and Deborah James were hired and that she
(Deborah James) reported this to Assistant Manager
Cynthia James. It is thus undisputed that Respondent dis-
tributed and maintained the aforesaid rule in effect and
that it reprimanded and discharged Jones for alleged vio-
lations of that rule. The General Counsel contends that
Respondent thereby violated the Act.
The Respondent contends, however, that its rule
against employees discussing wages is a valid one neces-
sitated by business considerations and has been adhered
to by Respondent and that the employees, including
Jones, are routinely apprised of this at the time of their
entry into Respondent's employment at which time they
SERVICE MERCHANDISE CO. 1129
are given an employee handbook containing the rule and
sign an acknowledgement thereof as did Jones in this
case. James Tucker, Respondent's operating vice presi-
dent of human resources, testified that the purpose of the
rule is to prevent other retail stores from knowing what
it pays its retail employees in each market area (i.e.,
Memphis) in order to quell spiraling increases in pay of
its employees by other retailers who are competing for
retail employees and to ensure the privacy of the em-
ployees concerning their pay. Respondent contends that
the rule has been adhered to by Respondent and that it
has maintained secrecy regarding the pay of its employ-
ees as borne out by Tucker's testimony concerning steps
taken to ensure secrecy of pay. Respondent further con-
tends that the Charging Party was not engaged in con-
certed activity such as to bring her under the protection
of the Act, regardless of the validity of the rule as this
was only an inquiry issued to another employee and
there is no showing that she had protested her pay to
management or that there was any concern among other
employees concerning pay.
Respondent further contends that the complaint should
be dismissed as a result of a settlement agreement it en-
tered into independently of the Board on 25 March 1988
with Charging Party Jones wherein Jones agreed to
waive all claims of any kind against Respondent and
agreed to and did file a request for withdrawal of the
charge with the Regional Director stating that she had
been offered reinstatement and has waived it, including
future reinstatement in return for $3000 (which was a
sum in excess of twice her current backpay amount at
the time of the hearing) and in return for a neutral refer-
ence. Respondent further contended at the hearing that it
had withdrawn its employee handbooks as of February
1988 containing the rule and had posted a notice' at all
of its facilities concerning this. The withdrawal request
was rejected by the Regional Director. The General
Counsel contends, however, that an informal settlement
is inappropriate in this case as a result of Respondent's
propensity to violate the Act in view of a Board decision
in Service Merchandise Co., 278 NLRB 185 (1986), find-
ing that Respondent violated the Act by shutting down
its operation and interrogating, threatening, and dis-
charging its employees to stem a union campaign and in
view of a complaint issued against Respondent in Case
1 The new notice reads as follows:
SERVICE
MERCHANDISE
ASSOCIATE NOTICE
Periodically the Company reviews its policies and publications to
ensure that they properly express current management philosophy and
the Company's desired relation with its associates, and that its policies
conform with applicable legislative and administrative decisions. Ac-
cordingly, all associates should be aware that the Company will con-
tinue, as it has in the past, to hold the wages paid to you in confidence.
Your Particular wages are a business matter between you and the Com-
pany. However, if You voluntarily choose to discuss your wages with an-
other party, the Company will no longer consider such a discussion to be
a breach of confidence and a cause for disciplinary action. The Compa-
ny does expect that you will respect the right of other associates not to
divulge their wages. if they so choose. [Emphasis added.]
This change has been or shortly will be incorporated in a revised
Getting Acquainted With SMC employee handbook.
2-CA-22586 and a charge pending in another case, all of
which General Counsel contends are part and parcel of
Respondent's attempts to unlawfully squelch any organi-
zational campaigns engaged in at its facilities. The Re-
spondent for its part contends that it is not a consistent
violator as the decision in Service Merchandise Co., supra,
concerned incidents which occurred a number of years
ago and is currently on appeal before the Circuit Court
of Appeals for the Sixth Circuit and that the complaint
and charge are unrelated to the instant case as the instant
case does not involve an organizational campaign. More-
over, Respondent contends that the complaint and
charge contain unproven allegations which cannot give
rise to a finding that it is a consistent violator of the Act.
C. Analysis
1. The distribution and maintenance of the rule
I find that Respondent violated Section 8(a)(1) of the
Act by the distribution and maintenance of its rule pro-
hibiting its employees from discussing wages. This rule is
inherently violative of the employees' rights under Sec-
tion 7 of the Act to engage in concerted activities con-
cerning their wages, terms, and conditions of employ-
ment. It is obvious that the employees' rights to engage
in these activities would be rendered meaningless if em-
ployees were not even permitted to discuss their wages
for there could be no concerted activity under such cir-
cumstances. Of necessity, concerted activity of employ-
ees invariably start with discussion prior to actions.
A.L.S.A.C., 277 NLRB 1532 (1986); Blue Cross-Blue
Shield of Alabama, 225 NLRB 1217 (1976); Jennette
Corp., 217 NLRB 653 (1975), enfd. 532 F.2d 916 (3d Cir.
1977). I further find that Respondent has failed to dem-
onstrate any business justification for the maintenance of
such a rule. Respondent's vice president in charge of op-
erations contended that wage secrecy was necessary to
compete in the Memphis market for employees with
other retailers. However, he acknowledged that Re-
spondent routinely hires new employees at minimum
wage and pays up to $5.50 an hour for employees it sub-
jectively determines are experienced. There was no
showing of any special skills required of these employ-
ees. I also reject Respondent's alleged concern for its
employee's privacy as valid justification for the rule. In
the event that Respondent has demonstrated a business
justification sufficient to require a balancing of interests
in this case, I find that the public policy in favor of per-
mitting employees to exercise their protected rights
under Section 7 far outweighs the business interest of
Respondent in keeping its wages secret from other retail
employers who compete for employees or of Respond-
ent's professed interest in protecting the privacy of its
employees as to their compensation. A.L.S.A.C., supra;
International Business Machines Corp., 265 NLRB 638
(1982); Altoona Hospital, 270 NLRB 1179, 1180 (1984). I
further find that in any event the rule is overly broad to
accomplish Respondent's stated business objective and
has the effect of stifling all concerted activity under the
Act. W. R. Grace Co., 240 NLRB 813, 816 (1979).
1130 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2. The reprimand and discharge of Jones
As I have found that the maintenance of the rule vio-
lates Section 8(a)(1) of the Act by interfering with the
Section 7 rights of its employees, I find the undisputed
evidence that Jones was reprimanded and discharged for
allegedly violating the rule supports a finding that the
reprimand and discharge of Jones by Respondent was
also violative of Section 8(a)(1) of the Act. I credit the
testimony of Deborah James that Jones did discuss
wages with her. I find that the General Counsel has
made a prima facie case of the aforesaid violation of the
Act by Respondent and that the Respondent has failed to
rebut the prima facie case by a preponderance of the evi-
dence.
In the event the concerted activity of Jones is deemed
to be crucial to a determination of a violation of the Act,
I find that the preliminary discussions of Jones or inquir-
ies by her concerning the wages of her fellow employees
constituted an essential ingredient to the taking of con-
certed action and fall within the realm of concerted ac-
tivity protected under Section 7 of the Act. A.L.S.A.C.,
supra; L. G. Williams Oil Co., 285 NLRB 418 (1987); El
Gran Combo, 284 NLRB 1115, 1117 (1987).
3. The settlement agreement
I find that the settlement agreement as entered into by
Respondent and the Charging Party is inadequate to
fully remedy the violations of the Act, and that a formal
Board Order is necessary to effectuate the policies of the
Act. Initially, I find, as the General Counsel contends,
that the issues encompassed in the complaint are broader
than the case of Jones standing alone. This is necessarily
so as the rule found to have been unlawfully distributed,
maintained, and enforced was distributed and maintained
nationwide at all of Respondent's facilities and has the
inevitable effect of chilling all wage discussions among
Respondent's employees nationwide. These violations
were not remedied by the private settlement entered into
by Jones and the Respondent. It is well settled that the
General Counsel is charged with the protection of public
rights under the law.
I find the notice posted by Respondent is inadequate
to remedy the violations of the Act as it merely states
that the discussion of wages will no longer subject em-
ployees to disciplinary action. However, the notice
makes manifestly clear that Respondent continues to look
with disfavor on the discussion of wages among its em-
ployees. I conclude that a clear and unequivocal notice
that the employees have the right to discuss wages under
Section 7 of the Act, and that Respondent clearly dis-
avows its unlawful conduct in distributing, maintaining,
and enforcing the prohibition against employees discuss-
ing their wages is essential to fully remedy the unfair
practices.
I also find evidence in the past conduct of Respondent
in its shutdown of its operations and discharge of 41 of
its employees to squelch a union organizing campaign as
found by the Board in Service Merchandise Co., supra,
and the pending complaint in Case 2-CA-22586 alleging
numerous unfair labor practices to stem protected con-
certed activities under the Act by resorting to unlawful
means supports the General Counsel's position that a
formal settlement is necessary to fully remedy the viola-
tions in this case. Contrary to the Respondent, I find that
its actions in distributing, maintaining, and enforcing the
rule against discussion among employees of wages and
salaries in this case has a substantial link to its actions in
the other cases cited above as the distribution, mainte-
nance, and enforcement of the rule prohibiting wage dis-
cussions has the inevitable effect of seeming even the
commencement of discussion of pay of employees which
is one of the most basic rights protected by Section 7 of
the Act, and which discussion is essential to engagement
in concerted activities.
In Independent Stave Co., 287 NLRB 740 (1987), cited
by both parties, the Board set out the factors it will con-
sider in evaluating the adequacy of non-Board settle-
ments of unfair labor practices and stated that it "will ex-
amine all the surrounding circumstances including, but
not limited to, (1) whether the Charging Party(ies), the
Respondent(s) and any of the individual discriminates(s)
have agreed to be bound, and the position taken by the
General Counsel regarding the settlement; (2) whether
the settlement is reasonable in light of the nature of the
violations alleged, the risks inherent in litigation, and the
stage of the litigation; (3) whether there has been any
fraud, coercion, or duress by any of the parties in reach-
ing the settlement; and (4) whether the Respondent has
engaged in a history of violations of the Act or has
breached previous settlement agreements resolving unfair
labor practice disputes." In the instant case, the General
Counsel opposed the settlement, and there is evidence
that Respondent has a history of violations of the Act
utilized to stem union campaigns and I find that the dis-
tribution, maintenance, and enforcement of the rule pro-
hibiting its employees from discussing salaries is consist-
ent with its earlier efforts to stem union activities
through unlawful means. See also Teamsters Local 115
(Gross Metal), 275 NLRB 1547 (1985), wherein the
Board considered pending proceedings alleging similar
misconduct as well as prior similar violations found by
the Board in affirming the rejection by an administrative
law judge of an offer of settlement by the Respondent to
which the General Counsel had agreed.
CONCLUSIONS OF LAW
1. Respondent is an employer within the meaning of
Section 2(6) and (7) of the Act.
2. Respondent violated Section 8(a)(1) of the Act by
the distribution, maintenance, and enforcement of its rule
against its employees discussing their wages with others.
3. Respondent violated Section 8(a)(1) of the Act by
its reprimand and subsequent discharge of its employee
Priscilla Jones for her alleged violation of the unlawful
rule against employees discussing wages with others.
4. The settlement agreement entered into by Priscilla
Jones and Respondent is inadequate to fully remedy the
violations of the Act.
5. The above unfair labor practices have the effect of
burdening commerce within the meaning of Section 2(6)
and (7) of the Act.
SERVICE MERCHANDISE CO. 1131
THE REMEDY
Having found that Respondent has violated the Act, it
shall be ordered to cease and desist therefrom, and to
take certain affirmative actions (including the posting of
an appropriate notice, designed to effectuate the pur-
poses of the Act) by remedying those violations includ-
ing the formal rescission of its rule found unlawful and
an offer of reinstatement to Priscilla Jones to her former
position, or, to a substantially equivalent one if her
former position no longer exists with all seniority and
other rights previously enjoyed and with full backpay
and benefits with interest as computed in New Horizons
for the Retarded, 283 NLRB 1173 (1987). 2 Any issue of
2 Under New Horizons, interest is computed at the "short-term Federal
rate" for the underpayment of taxes as set out in the 1986 amendment to
26 U.S.C. § 6621.
setoff amounts paid to Jones under the terms of the set-
tlement shall be resolved at the compliance stage of the
proceedings.
Respondent shall also remove from its records any ref-
erence to the unlawful reprimand and discharge of Pris-
cilla Jones. As the rule was distributed to its employees
nationwide, Respondent shall post the appropriate no-
tices at its establishments nationwide. It is recommended
that "Appendix A" be posted nationwide and that "Ap-
pendix B" be posted at its Memphis facility. In the ab-
sence of a showing of special circumstances, I do not
recommend the inclusion of a visitatorial order as re-
quested by the General Counsel, Cherokee Marine Termi-
nal, 287 NLRB 1080 (1988).
[Recommended Order omitted from publication.]