SGS Control Services

National Labor Relations Board - Board Decisions

Aug 1, 2001

334 N.L.R.B. 858 (N.L.R.B. 2001)

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 858
SGS Control Services, Inc. and Oil, Chemical &
Atomic Workers International Union, Martinez
Local 1–5 of Oil, Chemical & Atomic Workers
International Union, AFL–CIO. Case 32–CA–
16559
August 1, 2001
DECISION AND ORDER
BY CHAIRMAN HURTGEN AND MEMBERS
LIEBMAN AND WALSH
On a charge filed January 22, 1998, by Oil, Chemical
& Atomic Workers International Union, AFL–CIO, Lo-
cal 1–5 (the Charging Party or Union), the General
Counsel of the National Labor Relations Board issued a
complaint on April 9, 1998, against SGS Control Ser-
vices, Inc. (CSI or Respondent), alleging that CSI vio-
lated Section 8(a)(5) and (1) of the Act by refusing to
bargain collectively in good faith with the Union as the
exclusive collective-bargaining representative of the em-
ployees in the bargaining unit. The Respondent filed a
timely answer admitting in part and denying in part the
allegations of the complaint.
On October 30, 1998, CSI, the Union, and the General
Counsel filed with the Board a motion to transfer pro-
ceedings to the Board and stipulation of facts. The par-
ties agreed that the formal documents, including, inter
alia, the charge, complaint, and notice of hearing, and the
answer to the complaint, the stipulation of facts, the cer-
tification of representative in Case 32–RC–4335, the
Charging Party’s proposed collective-bargaining provi-
sion on “Overtime Work,” Respondent’s letter to Charg-
ing Party dated December 4, 1997, the Charging Party’s
letter to Respondent dated December 19, 1997, the
Charging Party’s letter to Respondent dated December
30, 1997, the Respondent’s notification to employees
regarding payment of overtime dated January 6, 1998,
Respondent’s letter to the Charging Party dated January
10, 1998, Respondent’s proposed collective-bargaining
agreement provision on “Overtime Work,” and the Order
postponing hearing, shall constitute the entire record in
this case. The parties further stipulated that no oral tes-
timony is necessary or desired, that they waive a hearing,
the making of findings of fact and conclusions of law,
and the issuance of a decision by an administrative law
judge, and that they desire to submit this case directly to
the Board for findings of fact, conclusions of law, and an
order.
On December 4, 1998, the Board approved the stipula-
tion and transferred the proceeding to the Board for issu-
ance of a Decision and Order. The General Counsel and
CSI each filed briefs and answering briefs.
The Board has delegated its authority in this proceed-
ing to a three-member panel.
On the entire record and the briefs, the Board makes
the following
FINDINGS OF FACT
I. JURISDICTION
CSI, a New York corporation, with its headquarters
and administrative offices in Edison, New Jersey, is in
the business of inspecting and testing petroleum and ag-
ricultural products. CSI is a national organization
operating out of approximately 41 separate facilities,
located in 17 different states, the Commonwealth of
Puerto Rico, the U.S. Virgin Islands, and including
Richmond, California. During the past 12 months,
Respondent, in the course and conduct of its business
provided services valued in excess of $50,000 directly to
customers located outside the State of California.
The Respondent admits, and we find that CSI is an
employer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act and that the Union is
a labor organization within the meaning of Section 2(5)
of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
A. Facts
The agreed-to stipulation of facts shows that since
September 29, 1997, and continuing to date, the Union
has been the exclusive representative for purposes of
collective bargaining of the employees in the following
appropriate unit:
All full-time and regular part-time petroleum inspectors
and agricultural inspectors employed by Respondent at
its facilities located in Richmond and Torrance, Cali-
fornia and Bellingham, Washington; excluding all
other employees, guards, and supervisors as defined in
the Act.
Since on or about November 6, 1997, Respondent and
the Union have met for the purpose of negotiating a col-
lective-bargaining agreement covering the terms and
conditions of employment of the employees in the above
unit. Negotiations for a collective-bargaining agreement
are ongoing.
CSI’s labor relations and employment policies and
procedures have historically been, and are, centrally de-
termined and administered by CSI’s human resources
department located at CSI’s headquarters in Edison, New
Jersey. All CSI employees’ terms and conditions of em-
ployment are set forth in the “SGS Control Services, Inc.
Employee Handbook”( Handbook), which is universally
and uniformly applicable to all CSI employees. The
Handbook has been in force and effect since approxi-
334 NLRB No. 117
SGS CONTROL SERVICES 859
mately 1987. All CSI employees are provided a copy of
the Handbook upon hire, as well as all revisions when
made.
With respect to maximum hours of work and the pay-
ment of overtime, the Handbook expressly provides:
Except where otherwise required by law, overtime will
be paid only after 40 hours of work performed in one
workweek.
CSI is subject to the Federal Fair Labor Standards Act
(FLSA) and the states’ laws regulating employees’
wages and hours. Under the express provisions of the
FLSA, states’ wage-hour laws that mandate greater re-
quirements than the FLSA, take precedence over the
lesser requirements of the FLSA, and employers in such
states must comply with the greater requirements man-
dated by those state laws.
With respect to nonexempt employees (which includes
the unit employees at issue here), the FLSA requires that
overtime be paid for all hours worked in excess of 40
hours in 1 workweek. The wage-hour laws of several
states (including California) and jurisdictions in which
CSI has facilities have or had a greater requirement,
namely, that overtime be paid for all hours worked in
excess of a certain number of hours in 1 day.
This case involves a unit composed of employees in
California and Washington. In 1989 the State of Califor-
nia, through the California Industrial Welfare Commis-
sion (IWC), issued Wage Order 4–89, which mandated,
inter alia, that overtime be paid for all hours worked in
excess of 8 hours in 1 workday. Through December 31,
1997, in accordance with its Handbook provision, CSI
paid its employees in California overtime for hours
worked in excess of 8 hours in 1 workday, in compliance
with California law.
On April 11, 1997, the California IWC issued and an-
nounced to the public changes to Wage Order 4–89,
which, inter alia, conformed California’s wage-hour pro-
visions with the FLSA requirements pertaining to over-
time pay, to be effective January 1, 1998. The new pro-
vision required overtime wages to be paid for hours
worked in excess of 40 hours per workweek, and pro-
vided that “No overtime pay shall be required for hours
of work in excess of any daily number.” The new wage-
hour provisions issued by the IWC were later upheld on
appeals to the California courts.
In late Spring 1997, when CSI learned of the impend-
ing change in California wage-hour law, it determined
that effective January 1, 1998, in accordance with its
Handbook provision, it would cease paying to its Cali-
fornia nonexempt employees overtime for work in excess
of 8 hours in a workday. It would, instead, pay overtime
only for hours worked in excess of 40 hours per work-
week.
About August 1997 the Union conducted organizing
activity among certain CSI employees in California and
Washington, and an election petition was filed in Case
32–RC–4335. In the preelection period, the Union and
CSI employees were aware of the changes in the Califor-
nia law effective January 1, 1998, and that CSI planned
to pay overtime only after 40 hours of work in 1 work-
week effective January 1, 1998. In fact, CSI employees
sought union representation in whole or in part because
of this development. Following a Board conducted elec-
tion, the Union was certified as the collective-bargaining
representative of the CSI employees in the above-
mentioned unit.
On November 6, 1997, CSI and the Union met for the
first time to conduct collective-bargaining negotiations.
CSI’s director of human services, Steven Bloom, repre-
sented the Respondent. Paul Ramirez, an International
Representative who was temporarily sitting in for inter-
national representative Steve Sullivan and Local 15 Field
Representative Jeff Clark, represented the Union. At this
time, the Union submitted its proposals, which included a
provision entitled “Overtime Work.” This provision in-
cluded, inter alia, a section calling for overtime to be
paid for hours worked in excess of 8 hours for 1 day or
40 hours in 1 week, whichever is greater. Also during
this meeting, Bloom stated that, “There are some changes
that the company has considered prior to the OCAW’s
involvement, and that is the way in which overtime is
paid in California effective January 1, 1998—we all
know the law is changing out here.” After Bloom’s
statement, there were no discussions regarding the pay-
ment of overtime.
On December 4, 1997, Jeffrey W. Pagano, Esq., noti-
fied Sullivan and Clark by facsimile letter that he would
be handling negotiations for CSI. That same day, Sulli-
van called Pagano by telephone, and various subjects
were discussed, including dates for negotiations. There
was no discussion of overtime compensation at this time.
On December 5, 1997, Sullivan forwarded to Pagano a
copy of the Union’s bargaining proposals, including the
proposals submitted on November 6.
By letter of December 19, 1997, from Sullivan to Pa-
gano, Sullivan informed Pagano that at the November 6
meeting Bloom had stated that the Company was consid-
ering making some changes pertaining, inter alia, to the
payment of overtime. Sullivan advised that under Board
law, the Company could not make unilateral changes
after the election, and that such action would constitute
an unfair labor practice. Sullivan continued that the Un-
ion was putting CSI on notice that the Union insisted that
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 860
CSI make no unilateral changes concerning terms and
conditions of employment of the unit employees without
affording the Union an opportunity to bargain over any
changes. This letter was the first time since the Novem-
ber 6 meeting that the subject of overtime compensation
was raised.
Sullivan sent a letter to Pagano on December 30, 1997,
regarding setting dates for negotiations, and requested
that Pagano contact him by January 9, 1998, with avail-
able dates for negotiations.
On January 6, 1998, CSI notified all of its nonexempt
employees in California, unit and nonunit, that pursuant
to the changes in California’s wage-hour law and the
Handbook provision regarding the payment of overtime,
effective January 1, 1998, overtime would be paid only
for all hours of work in excess of 40 hours in a week.
As of January 1, 1998, CSI has paid its employees for
overtime only for all hours worked in excess of 40 hours
in a workweek.
On January 10, 1998, Pagano sent a letter to Sullivan,
and enclosed the January 6 notice it had given to its em-
ployees. In the letter, Pagano expressed his surprise that
Sullivan had not expressed any concerns he might have
had with the alleged statement of Bloom at the Novem-
ber 6 negotiation before Sullivan’s December 19 letter.
Pagano continued that the Respondent would make no
unilateral changes in terms and conditions of employ-
ment unless permitted by applicable law. He went on to
explain that the change in paying overtime compensation
to its California employees was in conformity with CSI’s
Handbook, which set forth the terms and conditions of
CSI employees’ employment, in conjunction with appli-
cable California law. As the California law had changed
effective January 1, continued payment of daily overtime
would have been a unilateral change in the terms and
conditions of employment of the California employees.
He stated that overtime is a subject of bargaining and that
the Respondent would entertain any proposals the Union
may have in this regard.
The first negotiating session following this letter was
on February 3, 1998. At that session, Pagano presented
Respondent’s contract proposals, including a proposal on
overtime calling for the payment of overtime for hours
worked in excess of 40 hours in a workweek.
Between February 3, 1998, and the signing of the
stipulation of facts in early November 1998, the parties
met at least 13 times for negotiations. In at least three of
those sessions, Pagano raised the subject of overtime
work. Discussions on this topic produced no agreement.
At the time of the stipulation, negotiations were continu-
ing, with no agreement on an overall collective-
bargaining agreement. There is no contention that an
overall impasse exists, and no contention that either party
failed to engage in good-faith bargaining other than with
respect to the change in overtime.
B. Contentions of the Parties
The General Counsel contends that the payment of
overtime for hours worked in excess of 8 hours a day
was an existing term and condition of employment for
unit employees located in California at the time of the
election and during the period of contract negotiations.
Therefore, the unilateral change in the payment of over-
time on January 1, 1998, in the absence of bargaining on
the subject and, in the absence of an overall impasse in
bargaining, violated Section 8(a)(5) and (1). According
to the General Counsel, there is no evidence that the Re-
spondent had “clearly decided” to change the overtime
pay prior to the advent of the Union. In fact, the change
in California law that Respondent claims caused the
change in overtime pay was not affirmed by the Califor-
nia Court of Appeal until May 7, 1998, 4 months after
Respondent made the change. The General Counsel fur-
ther argues that there is no documentary evidence of
when Respondent allegedly made its decision, or of any
notification to the employees concerning the change
prior to its implementation. The General Counsel relies
on Bloom’s statement at the November 6, 1997 negotiat-
ing session that Respondent was “considering” a change
as evidence that no decision had been made. If an earlier
decision was made, it was apparently abandoned before
Bloom made his statement. Further, if, as Respondent
contends, its Handbook provisions were the preexisting
terms and conditions of employment, no “decision”
would have to be made. However, Respondent claims to
have made one. The General Counsel also argues that, in
any event, the Handbook did not require the change in
overtime payment. Finally, the General Counsel argues
that because negotiations had begun prior to the change,
Respondent was not free to implement the change in the
absence of an “overall impasse” in negotiations.
The Respondent contends initially that no change in
the terms and conditions of employment took place when
overtime pay was changed in January 1998. Rather, its
Handbook, which had been in effect since 1987, consti-
tuted the terms and conditions of employment for all of
its nonexempt employees in all of its facilities, including
those in California. The Handbook states that “Except
where otherwise required by law, overtime will be paid
only after 40 hours of work performed in one week.” Its
employees in California were paid overtime only after 40
hours of work up until 1989, when California laws dic-
tated otherwise. There is also no provision in the Hand-
book mentioning overtime pay after 8 hours of work.
SGS CONTROL SERVICES 861
Respondent further contends that the stipulated facts
clearly show that in the spring of 1997, when CSI
learned of the change in California law, it “determined”
that it would cease paying overtime after 8 hours of work
and, in accordance with its Handbook provisions, again
pay overtime to its California employees, unit and non-
unit, only after 40 hours of work in 1 workweek. Also,
as the stipulated facts show, the Union and CSI’s em-
ployees were aware of the change in the California law to
be effective January 1, 1998, and that Respondent
“planned to pay overtime only after 40 hours of work”
effective on that date. Therefore, assuming that there
was a change in terms and conditions of employment, it
was made, and the parties were aware of it, prior to the
election.
C. Discussion
We find that by changing, effective January 1, 1998,
its overtime policy to provide overtime pay only for
hours worked in excess of 40 hours in a week, the Re-
spondent made a “change” in its employees’ terms and
conditions of employment. The payment of overtime
consistent with the then-current requirements of Califor-
nia law was an established practice. The Respondent’s
existing policy cannot fairly be read to say that the Re-
spondent reserved the right unilaterally to take advantage
of a future relaxation of state law requirements. Neither
the new California law, nor the Respondent’s policy,
authorized or required the Respondent to take unilateral
action to alter its overtime pay practice. Cf. Watsonville
Register-Pajaronian, 327 NLRB 957, 958–959 (1999)
(bargaining required over employer rule intended to qual-
ify employees for statutory exemption from overtime
requirements).1 It is clear that an employer normally
violates Section 8(a)(1) and (5) of the Act by unilaterally
implementing, without notice to the union and affording
the union an opportunity to bargain, changes in the terms
and conditions of employment of its employees repre-
sented by the union. NLRB v. Katz, 369 U.S. 736 (1962).

1 Chairman Hurtgen concludes that Respondent never changed its
terms and conditions of employment. Respondent’s policy, at all times,
was to pay overtime in excess of 40 hours per week, except where state
law required something different. Prior to January 1, 1998, California
law required payment of overtime after 8 hours per day. Respondent
complied with that law. State law changed effective January 1, 1998.
Accordingly, pursuant to its never-changed policy, Respondent began
paying for overtime in excess of 40 hours per week. In sum, Respon-
dent has never changed its policy.
Assuming arguendo that there was a change by Respondent, Chair-
man Hurtgen agrees with his colleagues that Respondent decided on
that change prior to the election. Thus, when Respondent implemented
that decision in January 1998, that action reflected the terms that ex-
isted prior to the election.
However, as set forth in Consolidated Printers, Inc.,
305 NLRB 1061, 1067 (1992), if, before becoming obli-
gated to bargain with the union, an employer makes a
decision to implement a change, it does not violate Sec-
tion 8(a)(5) by its later implementation of that change.2
The General Counsel submits that the Respondent did
not make a firm decision before the election to make any
change. We disagree. Here, the stipulation of the parties
explicitly states that the Respondent, in the spring of
1997 and well before the Union was on the scene, had
“determined” to change its method of paying overtime.
The stipulation also sets forth that, in the preelection pe-
riod, the Union and the employees were well aware that
the Respondent “planned” to pay overtime after 40 hours
of work in 1 workweek beginning January 1, 1998, when
the California law became effective. Contrary to the
General Counsel, we do not view these stipulated facts as
“conclusory” and lacking in meaning and specificity.
Rather, the stipulated facts establish the key point that
the Respondent made its decision regarding overtime
before the election.3
The General Counsel further contends that a statement
of Respondent’s representative, Bloom, at the parties’
initial negotiation meeting on November 6, 1997, intro-
duced some element of ambiguity regarding the Respon-
dent’s decision. According to the General Counsel,
Bloom’s statement supports his position that Respondent,
as of November 1997, had made no final decision regard-
ing overtime. Bloom stated that there were some
changes that CSI “has considered” prior to the Union’s
involvement, including changing the method of paying
overtime to conform to California law. However,
Bloom’s statement does not contradict the clear stipu-
lated facts establishing that the Respondent’s decision on
this matter had been made before this date and that the
Union and the employees were well aware of this deci-
sion. Bloom simply noted that the Respondent “has con-
sidered” certain changes. The fact that he failed to spec-
ify the results of that consideration does not controvert
the fact that a decision had been made.
2 In Consolidated Printers, supra, the judge found, and the Board
agreed, that the employer had “determined” before a union election to
work employees through the election and then to implement a layoff.
Id. at 1067. In these circumstances, the Board found that the employer
had no obligation to bargain about the postelection layoffs.
3 As set forth in Consolidated Printing, supra, it is not essential that
the precise date of the decision be established. 305 NLRB at 1061 fn.
2. The critical fact is whether the employer’s decision predated the
election.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 862
In these circumstances, we find that the Respondent
did not violate the Act when, consistent with its preelec-
tion decision, it implemented the overtime change on
January 1, 1998. We will therefore dismiss the com-
plaint.
ORDER
The complaint is dismissed in its entirety.