Struthers Wells Corp.Download PDFNational Labor Relations Board - Board DecisionsSep 28, 1979245 N.L.R.B. 1170 (N.L.R.B. 1979) Copy Citation DECISIONS OF NATIONAL LABOR RELATIONS BOARD Struthers Wells Corp. and Office and Professional Employees International Union, Local No. 186, AFL-CIO. Case 6-CA 11088 September 28, 1979 DECISION AND ORDER BY CHAIRMAN FANNING AND MEMBERS JENKINS AND MURPHY On March 22, 1979, Admininstrative Law Judge Robert M. Schwarzbart issued the attached Decision in this proceeding. Thereafter, Respondent filed ex- ceptions and a supporting brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its au- thority in this proceeding to a three-member panel. The Board has considered the record and the at- tached Decision in light of the exceptions and brief and has decided to affirm the rulings, findings,' and conclusions of the Administrative Law Judge as modified below. The Administrative Law Judge found that Respon- dent violated Section 8(a)(5) and (1) of the Act by refusing to December 1977 to give certain employees merit increases assertedly owing to them under the provisions of its bargaining agreement with the Union. The record does not, however, support the finding that the specific increases allegedly withheld unlawfully were in fact due and owing at times mate- rial. Nevertheless, we agree with the Administrative Law Judge that Respondent violated the Act as al- leged in the complaint, but we do so on the ground that Respondent during the period have involved im- properly failed to evaluate employee performance as required by its contract and to grant to those employ- ees where warranted the merit increases they would have been entitled to as a consequence of such con- tractually required work evaluations. Respondent's contract with the Union provides in article X, section 3: Management will review the Employee's [sic] records twice each calendar year, in approxi- mately May and November, to determine which Employees are entitled to merit increases .... Merit increases granted will become effective in the first payroll period beginning after June 1 I Respondent has excepted to certain credibility findings made by the Ad- ninistrative Law Judge. It is the Board's established policy not to overrule an administrative law judge's resolutions with respect to credibility unless the clear preponderance of all of the relevant evidence convinces us that the resolutions are incorrect. Standard Dry Wall Products, Inc., 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully examined the record and find no basis for reversing his findings. and in the first payroll period beginning after December I respectively. Under Respondent's established practice, the merit review is initiated by an employee's supervisor who gives an oral evaluation of the employee's work to Respondent's industrial relations manager, R. A. Marti. He, in turn, compiles all relevant data on the matter and then discusses the proposed increase with Respondent's executive vice president, Fanaritis, and its president, Wallace. The decision to grant an em- ployee a merit increase, and in what amount, is made at this top management level and, after various pa- perwork is completed, such decision is conveyed to the employee by his/her supervisor. In November and/or December 1977, employees Munksgaard, Irvine, and Wilkins were told that they were being recommended for merit increases, and subsequently supervisors notified them that they would receive such increases. However, neither these three nor any other employees received merit in- creases on or about December 1, 1977. But there is no evidence that, although supervisors had put employ- ees in for merit raises, Respondent had processed such raises and had reached a decision at the top lev- el, as was the customary practice, either to grant or deny any merit increases at times here relevant. Rather, Industrial Relations Manager Marti stated to Union President Dickerson on December 22 that, al- though he had completed a review of unit employees and although some had improved greatly and were doing good work, no merit increases would be given because of Respondent's economic condition. There is nothing to show that merit increase proposals for specific employees were presented to, or decided by, Executive Vice President Fanaritis and President Wallace. Nevertheless, the Administrative Law Judge, as stated, found that employees Munksgaard, Irvine, and Wilkins had unlawfully been denied merit in- creases, concluding that "if [as here] merit increases are announced . . . Respondent thereupon becomes responsible for paying them .... " He supports this conclusion on the grounds that the supervisors who announced the increases had apparent authority to grant increases and that the Union and the employees were warranted in assuming the decisional process had been completed when the supervisors announced them. As for the first point, the Administrative Law Judge is factually wrong; there is no basis for finding the supervisors had apparent authority to grant in- creases. Their role, as the facts outlined indicate, was to recommend, and to notify an employee of, a merit increase. There is nothing to suggest anyone believed supervisors had the authority to grant increases. Fur- 245 NLRB No. 150 1170 STRUTHERS WELLS CORP. thermore, we have considerable doubts that even if the supervisors had the alleged apparent authority Respondent would have in the circumstances been bound to pay announced, but actually undecided, merit increases. As for the second point, that the Union and employees may have justifiably believed that the merit increase decisional process had been completed, it obviously does not imply or show that it had been, much less that Respondent was obligated to grant the purported increases. In short, we find, as Respondent strongly contends, that in the fall of 1977 merit increases were not processed, at least beyond Marti, that no decision was reached to give Munks- gaard, Irvine, and Wilkins merit increases, and thus that Respondent did not violate the Act by failing to give these employees the announced increases.2 Nevertheless, the applicable contract language pro- vides, as quoted more fully above, that Respondent "will review the Employees' records" in approxi- mately November of each year "to determine which Employees are entitled to merit increases" which "will become effective in the first payroll period be- ginning after December .... " Concededly, Respon- dent made no such review-or at least completed no such review through top management-in the last quarter of 1977, and no employee received any merit increase in December. The reason, according to Mar- ti, for the failure to make or complete the late 1977 reviews was, as noted above, Respondent's economic situation, not a determination that there were no em- ployees entitled to merit increases. Thus, Marti testi- fied to the effect that he told the Union it had been determined to give no merit increases because there had been a downturn in business, recent general wage increases had been substantial, and Respondent had been fairly generous in the past in giving merit in- creases.3 However, the applicable contractual lan- guage with respect to merit increases includes no ex- ceptions, economic or otherwise, for omitting the twice-yearly merit increase reviews and for the grant- ing of such increases where warranted. Consequently, Respondent's failure to review the employees' records in the last quarter of 1977 to determine which em- ployees were entitled to merit increases, and its fail- ure to grant such increases where warranted, consti- tuted a clear unilateral change in the contractually established terms and conditions of employment. Re- 2 Oak Cliff-Golman Baking Company, 207 NLRB 1063 (1973), cited by the Administrative Law Judge does not require a different result for it dealt with a situation where the employer ceased in midterm paying contractually specified wages while here there were no duly determined pay increases for Respondent to pay. 3 In its brief, Respondent states that it decided in December 1977 that no employees were entitled to merit increases. However, Marti's testimony. on which Respondent relies, was that no determination was made whether or not any employees were entitled to merit increases and that the only decision made was not to grant any. spondent, by engaging in such conduct, refused to bargain collectively with the Union and thereby, we find, violated Section 8(a)(5) and (1) of the Act.4 THE REMEDY Having found that Respondent has engaged in cer- tain unfair labor practices, we shall order that it cease and desist therefrom and that it take certain affirma- tive action in order to effectuate the purposes of the Act. We shall, therefore, order Respondent, inter alia, to conduct the merit increase review of employees omitted in the last quarter of 1977, determine under the standards customarily used if any employees were entitled at that time to merit increases, and, if so, retroactively grant those employees such increases ef- fective the first payroll period beginning after Decem- ber 1, 1977, and make them whole with interest for the amount of the merit increases unlawfully with- held since that time. Said interest shall be computed in the manner set forth in Florida Steel Corporation, 231 NLRB 651 (1977).5 We shall also order that Re- spondent cease and desist from engaging in any like or related unlawful conduct. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Rela- tions Board hereby orders that the Respondent, Struthers Wells Corp., Warren, Pennsylvania, its offi- cers, agents, successors, and assigns, shall: i. Cease and desist from: (a) Refusing to bargain collectively with Office and Professional Employees International Union, Local No. 186, AFL-CIO, as the exclusive representative of its employees in the appropriate unit by failing to conduct contractually required semiannual employee merit increase reviews and by failing to grant employ- ees merit increases where warranted. The appropriate unit is: All employees employed by the Respondent at its Warren, Pennsylvania, facility, in the job clas- sifications set forth in Exhibit "A" of the collec- tive-bargaining agreement between the Respon- dent and the Union, effective from November 1, ' We agree with the Administrative Law Judge that this case is not one that should be deferred to arbitration under Collver Insulated Wire, 4 Gulf and Western Systems Co., 192 NLRB 837 (1971), or-we add-under Roy Robinson, Inc. d/b/a Roy Robinson Chevrolet, 228 NLRB 828 (1977), for the issue before us does not involve contract interpretation The merit pay prosi- sion is on its face clear and unambiguous, and no construction of the con- tract is relevant for evaluating the reasons advanced bS Respondent for failing to comply with that contract provision. Chairman Fanning and Mem- ber Jenkins in any event would not consider deferral to arbitration for the reasons set forth in their dissents in the above cases 'See, generally. Isis Plumbing & Heating Co., 138 NLRB 716 1962) 1171 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 1977, to November 1, 1980, excluding guards, professional employees and supervisors, as de- fined in the Act, and all other employees. (b) In any like or related manner interfering with, restraining, or coercing its employees in the exercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act: (a) Conduct the merit increase reviews of employ- ees omitted in the last quarter of 1977, determine un- der the standards customarily applied if any employ- ees were entitled at that time to merit increases, and if any employees were then entitled to such increases grant those employees such increases effective as of the first payroll period beginning after December 1, 1977, and make them whole with interest for the amount of the merit increases unlawfully withheld since that time in the manner set forth in the remedy section of this Decision. (b) Preserve and, upon request, make available to the Board or its agents, for examination and copying, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order. (c) Post at its Warren, Pennsylvania, facility copies of the attached notice marked "Appendix."' Copies of said notice, on forms provided by the Regional Director for Region 6, after being duly signed by Re- spondent's authorized representative, shall be posted by it immediately upon receipt thereof, and be main- tained by Respondent for 60 consecutive days there- after, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by Respondent to insure that said notices are not altered, defaced, or covered by any other material. (d) Notify the Regional Director for Region 6, in writing, within 20 days from the date of this Order, what steps Respondent has taken to comply herewith. I In the event that 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 National 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 After a hearing at which we were represented by our attorney and in which all sides presented evidence, it has been found that we violated the National Labor Relations Act, as amended, in certain respects. To correct and remedy these violations, we have been directed to take certain actions and to post this no- tice. WE WILL NOT refuse to bargain collectively with Office and Professional Employees Interna- tional Union, Local No. 186, AFL-CIO, as the exclusive representative of our employees in the appropriate unit by failing to conduct contractu- ally required semiannual employee merit in- crease reviews and by failing to grant you merit increases where warranted. The appropriate unit is: All employees employed by Struthers Wells Corp. at our Warren, Pennsylvania, facility, in the job classifications set forth in Exhibit "A" of the collective-bargaining agreement be- tween the above-named Company and the Union effective from November 1, 1977, to November 1, 1980, excluding guards, profes- sional employees and supervisors, as defined in the Act, and all other employees. WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees in the exercise of the rights guaranteed them by Section 7 of the Act. WE WILL conduct your merit increase reviews omitted in the last quarter of 1977, determine under the standards customarily applied if any of you were then entitled to merit increases, and, if any of you were so entitled, WE WILL grant you such increases effective as of the first payroll pe- riod beginning after December 1, 1977, and WE WILL make you whole, with interest, for the amount of the merit increases unlawfully with- held since that time. STRUTHERS WELLS CORP. DECISION STATEMENT OF THE CASE ROBERT M. SCHWARZBART, Administrative Law Judge: This case was heard on October 18, 1978, in Warren, Penn- sylvania, pursuant to a charge filed on March 22, 1978, by Office and Professional Employees International Union, Local No. 186, AFL-CIO, herein the Union, and complaint issued on May 24, 1978, alleging that Struthers Wells Corp., herein Respondent, violated Section 8(a)(1) and (5) of the National Labor Relations Act, as amended. Respondent, in its answer, denied the commission of unfair labor practices. Issues 1. Whether Respondent, in December 1977, violated Section 8(a)(5) and (1) of the Act by unilaterally repudiat- 1172 STRUTHERS WELLS CORP. ing an alleged obligation under its collective-bargaining agreement with the Union to grant merit increases. 2. Whether jurisdiction over this matter should be de- clined, as any unfair labor practice finding must be predi- cated exclusively upon breach of contract. rather than from repudiation of the bargaining relationship, and, accord- ingly, whether this proceeding should be deferred to arbi- tration under Collyer Insulated Wire A Gulf and Western Systems Co. All parties were given full opportunity to participate, to introduce relevant evidence, to examine and cross-examine witnesses, and to file briefs. Briefs, which have been care- fully considered, were filed by the General Counsel and Respondent. Upon the entire record of the case, and from my observa- tion of the witnesses and their demeanor, I make the follow- ing: FINDINGS OF FACT I. THE BUSINESS OF RESPONDENT Respondent, a Maryland corporation with its principal office and place of business located in Warren, Pennsylva- nia, is engaged in several States of the United States in the manufacture and nonretail sale of equipment for the chemi- cal, petroleum, and fertilizer industries. Respondent's War- ren facility is the only one involved herein. During the 12- month period immediately preceding the issuance of this complaint, a representative period, Respondent purchased goods and materials valued in excess of $50,000 directly from points outside the Commonwealth of Pennsylvania for use at its Warren facility. During this same period, Respon- dent shipped goods and materials valued in excess of $50,000 from its Warren facility directly to points located outside the Commonwealth of Pennsylvania. The complaint alleges, the answer admits, and I find that Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The Union is a labor organization within the meaning of Section 2(5) of the Act. IIl. THE ALLEGED UNFAIR LABOR PRACTICES A. Background Respondent, engaged in the manufacture and nonretail sale of equipment for the chemical, petroleum, and fertilizer industries, has recognized the Union for approximately 30 years as the collective-bargaining representative for a unit of about 40 office and nonmanufacturing employees em- ployed at its Warren, Pennsylvania, plant.' These employ- 1 192 NLRB 837 (1971). The parties agree that the appropriate unit includes all employees em- ployed by Respondent at its Warren, Pennsylvania. facility in the job classi- fications set forth in Exhibit "A" of the collective-bargaining agreement be- tween Respondent and the Union, effective from November 1, 1977. to November 1., 1980, excluding professional employees, guards, and supervi- ees work under 16 supervisors. Respondent and the Union have been parties to a series of collective-bargaining agree- ments. As noted, the current agreement will expire on No- vember 1, 1980. The parties are in accord that Raymond A. Marti, Re- spondent's manager of industrial relations, Fred A. Chlo- pecki, assistant vice president and plant manager, Bert M. Bliss, a production coordinator, and Edward A. Selan, a production coordinator and the warehouse supervisor, are supervisors within the meaning of Section 2(11) of the Act.' B. The Facts The dispute herein involves Respondent's refusal to grant merit increases in December 1977 to unit employees who, the General Counsel and Union contend, had been told they would receive them by their supervisors under a semi- annual merit review program provided in the collective-bar- gaining agreement. No contention is made that these raises were denied for discriminatory reasons. Respondent asserts that although employee evaluations in connection with merit review were conducted as required in the contract, no merit increases for employees in this unit actually were ap- proved and Respondent acted within its proper discretion in not granting them. Respondent argues that, under the contract, it alone is involved in establishing the criteria used in evaluating employees for merit increases, in conducting these evaluations, and, finally, in deciding which if any of the unit employees received such raises. Therefore. it is urged that Respondent's management officials were exercis- ing rights reserved in the contract in deciding to not grant merit increases at the time in question. Respondent's merit review program is set forth in article X, dealing with wages, as follows: Section 3. Management will review the Employees' records twice each calendar year, in approximately May and November, to determine which Employees are entitled to merit increases within the rate ranges of their respective classifications. Merit increases granted will become effective in the first payroll period begin- ning after December I respectively. Section 4. A merit increase shall not be less than five cents (5¢) unless such amount results in a rate in excess of the maximum of the rate range for the Employee's classification in which case the merit increase will be that amount less than five cents (5C) which will bring the Employee to the maximum. Raymond A. Marti. Respondent's manager of industrial relations, testified that language identical to the above- quoted provisions had been contained in past successive contracts between the parties for the past 10 to 15 years. Since December 1970, merit increases had been paid every June and December to varying numbers of unit employees. From 3 to 16 unit employees have received these raises at a time, at Respondent's discretion. Since December 1970, the sors. as defined in the Act, and all other employees. The specific classifica- tions contained in contract Exhibit "A" are listed below in Appendix A to this Decision. 'While admitting the supervisory status of the foregoing individuals, Re- spondent does not concede their agency status to bind Respondent with respect to the conduct alleged as unlawful in this matter. I 173 DECISIONS OF NATIONAL LABOR RELATIONS BOARD only other occasion when merit increases were not granted, except for December 1977, was in December 1974. Unlike the December 1977 nonpayment, no grievance had been filed protesting Respondent's failure to provide merit in- creases in December 1974. Merit increases are significant in that they are one of but three ways in which employees can receive pay raises, the other two being negotiated contractual raises and cost-of- living allowances which are added to the base pay rate for each classification. Exhibit "A" of the contract, in addition to listing the various unit job classifications contained in Appendix A is this Decision, also provides a range of maxi- mum and minimum pay rates for each such classification. It is only through merit raises that employees can advance to the top pay rates established for their classification. Under the procedure used by Respondent, semiannual merit review evaluations are initiated by the employees' im- mediate supervisors who confer with Industrial Relations Manager Marti as to the work performance of the employ- ees under them. For the past 3 years these evaluations have been given orally. Marti's office would thereafter compile the data so gathered in a compendium which includes, among other things, the names of the employees within their classifications, dates of hire, and the dates of their last merit increases.4 Marti then would discuss the data and the supervisors' comments with Respondent's executive vice president, John P. Fanaritis, and president, John C. Wal- lace. The decisions as to whether to grant merit raises, to whom, and in what amounts, accordingly, are made at this top management level and must be finally approved by President Wallace.' If a decision is made to grant merit increases, multicolor sets of personnel action forms are pre- pared in the industrial relations office for each employee to receive a raise. Upon completion, these are signed by the employees' immediate supervisors, Marti, Fanaritis, and Wallace, respectively. One copy is given to the supervisor who tells the employee that he will be getting a merit in- crease, and another copy later is sent to the Union. The affected employee does not get a copy of the personnel ac- tion form and, as noted, learns of his raise from his supervi- sor. The record establishes, as Respondent contends, that the Union plays no role in making review evaluations and the criteria used are unilaterally established by Respondent. During negotiations in late October 1977, which led to the current collective-bargaining agreement, Respondent re- jected a proposal by the union committee that they be in- cluded in the evaluation process so that the Union could know what went on. While there is evidence that Respon- dent unsuccessfully proposed the eliminated of merit in- creases during the 1974 contract negotiations, the Company I Marti explained that while the purpose of the merit program is to reward the consistently deserving, consideration is also given to when various em- ployees received their last merit increases so that where employees of compa- rable caliber are being considered, preference might be given to those who had not received the most recent raises. Marti explained that one reason why management is involved in the final decision with respect to merit increases is that immediate supervisors do not all use the same evaluation criteria, and the management panel, with its added perspective, is in a position to contribute greater uniformity and ob- jectivity to the process. did not seek to do away with this program during the 1977 negotiations. 6 but, rather, reaffirmed that the merit system would be continued under the forthcoming contract as in the past. As Respondent interprets the relevant contract provi- sions, it is obligated to regularly conduct employee evalu- ations in good faith before June I and December I of each year to determine whether merit increases should be given and who should get them. However, being the sole judge in this area, the obligation to pay these raises does not become fixed under the contract unless () found warranted by top management, including Respondent's president, executive vice president and manager of industrial relations, and (2) announced to the recipient employees by their respective supervisors. The General Counsel and Union assert that Respondent became bound to pay the raises after certain unit employees were told by supervisors, acting with apparent authority, that they would be receiving them in December 1977. Ac- cordingly, in not giving these increments, Respondent vio- lated its duty to bargain by unilaterally repudiating its obli- gation. Industrial Relations Manager Marti and Union President Dickerson both testified that the first notice afforded the Union that merit raises would not be paid was on Decem- ber 22, 1977, during a private conversation. Their respective accounts of this session varied slightly. Marti testified that he had told Dickerson that Respondent had reviewed the employees in the unit, that Respondent had had a business downturn and was considering possible employee layoffs, that recent general increases were substantial, that Respon- dent had been generous in giving past merit increases and, that although a hard decision, Respondent had determined that there would be no merit increases given at that time. Marti observed that this did not mean that all employees were doing poor jobs, although some were in that category, and invited Dickerson to discuss the matter with him fur- ther, should she so desire, upon his return from a forthcom- ing brief vacation. Dickerson related that on December 22 Marti had told her that he had completed a review of the unit employees. He felt that some had improved greatly and some, in fact, were doing very good work. Unfortunately, because of the company's condition at the time, no merit increases could be given. Marti noted that employees had just received a contract raise through negotiations and would be getting a cost-of-living increase in January 1978. When she asked if Marti meant that some of her people who were deserving 6There is conflict in the testimony of certain of the General Counsel's witnesses as to whether Respondent tried to end the merit program during the 1977 negotiation before promising that it would be continued without change during the term of the currenct contract. Annette Yasurek, who had served as union president during those negotiations, testified on rebuttal that Respondent's attorney had suggested ending this program. However, Sandra Dickerson, the Union's current president, who also had participated as a member of the Union's 1977 negotiating committee, related that while Re- spondent's attorney had rejected the Union's proposed involvement in the evaluation process, he did not say that the merit increase provisions would be eliminated. As the Company denies having proposed an end to this proce- dure, I find that no such attempt was made by Respondent during the 1977 contract negotiations. 1174 STRUTHERS WELLS CORP. would not be getting merit raises, Marti affirmed that she was right, no merit increases would be given. 7 Following this discussion, the Union, on January 17. 1978, filed a grievance on behalf of its membership protest- ing Respondent's refusal to pay merit increases to unnamed employees as of December 1., 1977, although some union members "had very high hopes of receiving merit raises through encouraging discussions with their supervisors. In some cases, members were told how much they would re- ceive! In one case ... a member was told to look for a raise in last week's paycheck!" In spite of the Union's explanation in the body of its grievance that the grievance was timely, Respondent ini- tially took the position that it had not been filed in the time period permitted in the contract.' From January 25 to April 6, 1978, there followed an exchange of a series of letters between the Union and Respondent, initiated by the for- mer, wherein the Union protested Respondent's position that the grievance should not be considered on the merits as it had been filed too late under the terms of the contract. Respondent in its letters, signed by Marti, persistently re- plied that although the Company had agreed to meet with the Union concerning the grievance, it maintained its posi- tion that the grievance was inappropriate and untimely and, should the Union proceed to arbitration. Respondent would make these arguments before the arbitrator. It was not until May 23, just 2 months after the Union filed the unfair labor practice charge in the present case, that Re- spondent, in writing, requested that the Board's Regional Director for Region 6 defer to arbitration the dispute re- garding the contractual rights of employees to merit in- creases in December 1977. Respondent assured that if so deferred, it would agree to have the matter decided on its merits without raising the issue of whether the grievance had been timely filed. As noted, Respondent's present posi- tion is that this proceeding be deferred to arbitration under Collyer. Dickerson explained that although the grievance did not specifically name any employees, it was filed only after she had conferred with several employees who informed her that they had been told by supervisors that they were going to receive merit increases in December 1977. While she also claimed to have had direct contact with additional employ- ees who for various reasons had "high expectations" of re- ceiving merit increases in December 1977, the evidence turned on the experiences and wage expectations of em- ployees Ronald Irvine, Thomas Wilkins, and James Munks- gard. Irvine9 initially testified that in November or December 7During earlier meetings with company representatives on other business. Dickerson had asked Marti if the Company had finished its merit increase evaluations. Marti had replied each time that he was still in the process of reviewing the employees with their supervisors. I Art. IV of the current collective-bargaining agreement, Grievance Proce- dure and Arbitration, provides in relevant part as follows: Section I .... There will be no obligation to process any gnevance that is not presented . . . within five working days from the date of discovery of the facts originally giving rise to it. 'Irvine, employed by Respondent as a material coordinator in the ware- house until his layoff for lack of work on June 24, 1978. had received five merit increases from September 30, 1974, to February 21, 1977, the effective date of his last such raise. He related that he had learned of each merit increment from his supervisor of the time. 1977 his immediate supervisor. Edward A. Selan.' 0 told him while they were alone in the warehouse, "Ron. we got your raise approved." Either later that day or the next morning. Fred Chlopecki, the assistant vice president and plant man- ager, stopped Irvine in the hall and said the same thing about Irvine's merit raise as had Selan. However, when Irvine did not receive the promised merit raise in December 1977. during the next pay period. which occurred sometime during the first 2 weeks of January 1978, he asked Selan why he did not get his raise. Selan replied that no one had received merit increases. The Company thought it just could not afford them. On cross-examination, Irvine became less positive in his testimony. He conceded that after the supervisor under whom he had worked before January 1977 had left Respon- dent, he had had another supervisor. Frank Gulley. whom he temporarily had forgotten. Irvine recalled that it was only after his brief time with Gulley that he began to report to Selan. Accordingly, he was not certain whether it was Gulley or Selan who earlier in 1977 had told him that he would receive his most previous merit increase. However. he reaffirmed that he had learned of the last raise from whichever supervisor, Gulley or Selan, he had at the time. Irvine also conceded that in December 1977 Selan and Chlopecki might both have told him that they had approved his merit increase, rather than that it had received company approval. James Munksgard" testified as to three conversations concerning a December 1. 1977, merit increase with pro- duction coordinator Bert Bliss. The first took place in mid- November 1977 when Munksgard asked if Bliss had put him in for a raise. Although Bliss replied that as Munks- gard had been doing a pretty good job for him, he would do so, Munksgard was not given the increase. After receiving the next paycheck, Munksgard notified Bliss that the merit increase had not been in his pay and asked what had hap- pened. Bliss told Munksgard that he had put him in for the raise and that he could look forward to it in his next pay- check. When Munksgard did not receive the increase, he immediately went to Bliss for a third time to ask about it. Bliss replied that the paperwork was on Chlopecki's desk and had not yet been forwarded." Later that day Munksgard went to Chlopecki's office and asked if there were any record of his raise. Chlopecki re- plied that he did not have any paperwork on the raise, but. when asked if Munksgard was going to get a raise, an- swered that he would put him in for it and that Munksgard would not have to wait for the next evaluation period. B0 As noted above, it has been found in accordance with the agreement of the parties that Selan, a production coordinator and the warehouse supervi- sor, is a supervisor within the meaning of Sec. 2( 11) of the Act. Irvine ini- tially testified that he had been reporting to Selan since his last supervisor had left the Company in January 1977. " Munksgard worked for Respondent as a timekeeper from July 8. 1974. until laid off for economic reasons on June I. 1978. He had received no pnor merit increases from Respondent. 2 Munksgard's testimony that Bliss had told him to expect a merit in- crease is corroborated by Union President Dickerson, who, without contra- diction, related that on about January 13, 1978, after hearing Munksgard's complaint, she had asked Bliss about Munksgard's raise. Bliss had told her that he did not know what had happened to it, that the Company used to have trouble with Munksgard, but that he really had improved and "buckled down." Bliss stated his belief that Munksgard deserved a raise. I 1 75 DECISIONS OF NATIONAL LABOR RELATIONS BOARD When the raise again did not appear on his check, Munksgard went to his union to request that a grievance be filed." Although calling no witnesses to contradict Munksgard's account of his conversations with Bliss and Chlopecki, Re- spondent presented counterevidence that Munksgard had received written formal reprimands on June 8 and July 26, 1977, both during the 6-month period immediately preced- ing the December 1, 1977, evaluation.'4 Therefore, Respon- dent argues that it was unlikely that Munksgard, who had never received a merit increase, would have been given one in December 1977. Thomas Wilkins'5 testified that in November 1977 he asked production coordinator Selan if he would recom- mend him for a merit increase. Selan said that he would see what he could do. Later that month Selan told Wilkins that he and Ron Irvine would both be getting merit increases. The same afternoon, Selan initiated a second conversation with Wilkins, telling him that he would be receiving a 5- cent raise. Wilkins, however, never received the merit in- crease. Wilkins related that in mid-January 1978, together with Dickerson and other union officials, he attended a meeting with Industrial Relations Manager Marti and Robert D. Randolph, Respondent's counsel. At the meeting. while the parties were talking of layoff, Marti told the union repre- sentatives that the Company could not afford to give any- one a merit increase.' 6 During cross-examination, Wilkins conceded that in No- vember and December 1977 Joe Kestler was his regular supervisor and the one who normally would recommend his merit raises, that Selan supervised him only in Kestler's absence, and that he had asked Selan for the increase be- cause Kestler had told him that he would not put him in for one. C. Discussion and Concluding Findings Respondent, to prevent Board intervention in this dis- pute, urges that the subject matter raised in the complaint should be deferred to arbitration pursuant to Collyer Insu- lated Wire, A Gulf and Western Systems Co.,' 7 and also that, 11 Munksgard also filed a charge with the National Labor Relations Board which was later withdrawn in favor of the present case, filed by the Union in its representative capacity. '4 The first grievance noted five offenses, most of which involved the sub- mission of incorrect timesheets. The action taken with respect to the first reprimand was a formal warning with proposed future action of time off without pay. However, on the second reprimand. concerning Munksgard's failure to provide notice of 3 days' absence, it was noted that as Munksgard was then on layoff, time off without pay could not be used as disciplinary action against him. It was specified on the reprimand that proposed future action would result in Munksgard's termination. Munksgard was recalled in August 1977 and worked continuously thereafter until laid off for economic reasons in June 1978. '1 Wilkins was employed by Respondent as a helper, timekeeper, and warehouse material coordinator from January 1973 to the time of the hear- ing, becoming a material coordinator in January 1974. He also has served as vice president of the Union since November 1977. Wilkins received four merit increases effective between December 1973 and January 1977. mi Marti denied having stated at the January 1978 meeting that Respon- dent could not afford to give merit increases. However, since he had inti- mated as much to Dickerson during their December 22 conversation con- cerning merit raises, Wilkins' account on this point is credited. 17 192 NLRB 837 (1971). since the allegations of the complaint relate exclusively to Respondent's violation of the collective-bargaining agree- ment, the dispute does not involve an unfair labor practice but a simple breach of contract, beyond the Board's reme- dial authority. Respondent further argues that if this matter is considered on the merits, the complaint should still be dismissed as the General Counsel has failed to establish that under the prevailing circumstances Respondent had become obligated to afford merit increases in December 1977, as they had not then been approved by the manage- ment panel, including Respondent's president, pursuant to the company's standard procedures. Therefore it is ex- tremely unlikely that the three employees, Munksgard. Ir- vine, and Wilkins, would have received merit increments at that time, in any event. On this last point, Respondent noted that Munksgard had not received a merit increase during his 3-1/2 years with the Company. In June and July 1977, within the 6- month period preceding the merit review evaluations for December 1., he had been given two written formal repri- mands. However, Munksgard's testimony that Bliss had told him to expect a merit increase is corroborated by Dick- erson, who had received similar information from Bliss at the time. Although Irvine had been afforded an impressive number of merit increases in the past, Respondent indicates that Irvine, when cross-examined, could not recall whether he had been told by Supervisors Selan and Chlopecki that his raise actually had been approved, as initially testified, or merely that they had approved it, which meant that it was still being processed and no final decision had yet been made by the management panel. Respondent also argues that although Irvine at first had averred that he had been told of his earlier raises b various immediate supervisors and that he had been thus informed of his most previous merit raise from Supervisor Selan, he later could not recall if it had been Selan or a preceding supervisor, Gulley, who had so notified him. Although Irvine was vague on this point, he, in fact, did receive the earlier raises, and his basic testimony of having been informed of the approval of his various merit raises by whichever supervisor he had at the time remains essentially uncontradicted. Moreover, Irvine's initial statement that he had been told in December 1977 that his raise had been approved is corroborated by Wil- kins' testimony that Selan had said the merit increases for both himself and Irvine would be forthcoming. Respondent did not call as witnesses the supervisors who had announced the merit increases, as testified by the three employees. Therefore, the employees' testimony in this area, while rendered somewhat dubious by evidence that in November and December 1977 not all were good candi- dates for such raises, was not actually rebutted. In these circumstances, it was incumbent on Respondent, if it would rebut the General Counsel's case, to come forward with evidence of what, if anything, these employees had been told by supervisors concerning merit increases and to ex- plain any difference in what the three employees had been told they would receive and what actually was done con- cerning increases. This information lay exclusively within 1176 STRUTHERS WELLS CORP. Respondent's knowledge.' Accordingly, as the employees' testimony is essentially uncontradicted and partially cor- roborated, and noting that Irvine's performance had netted him five merit increases in close succession, that Wilkins earlier had received four merit increases and that although Munksgard's record was less distinguished, his uncontro- verted account is supported by Dickerson, I find that Ir- vine, Munksgard, and Wilkins had been told by their super- visors that they would receive merit raises in December 1977.'9 The most germane contractual provision is article X, sec- tion 3, which, to repeat, reads as follows: "Management will review the Employees' records twice each calendar year, in approximately May and November, to determine which employees are entitled to receive merit increases within the rate ranges of their respective classifications. Merit increases granted will become effective in the first payroll period beginning after June I and in the first payroll period beginning after December , respectively." Under this provision, Respondent concededly is obligated to con- duct semiannual employee evaluations to determine whether any employees, and, if so, which, are entitled to receive merit increases. Respondent, under existing prac- tice, has not been compelled to involve the Union in any aspect of the evaluation process, including the criteria used. However, if merit increases are announced, I find that Re- spondent thereupon becomes responsible for paying them on June I and/or December 1, as declared. As noted, de- cided merit increases are communicated by the supervisors to the recipient employees, and the Union only later re- ceives copies of relevant personnel action forms confirming the raises. Accordingly, it is when employees are notified by their supervisors of merit increases that Respondent's obli- gation to pay them matures 0 As the evidence in the present case reveals that certain employees were advised by super- visory personnel that they were going to receive merit in- creases in December 1977, it is not necessary to become involved in what the contract would require if no such raises had been declared. Respondent's contention that it was not bound by the actions of the supervisors in an- nouncing the raises is without legal merit. As noted in Southern Stevedoring Company, Inc., 21 "[w]here, as here, an employer has endowed its foremen with supervisory author- ity as defined in Section 2(11) of the Act, it must accept responsibility for their conduct .... " This is particularly true here, where the practice of noti- fication by supervisors had been consistently followed. Ei- ther express or apparent authority is sufficient to bind a principal for the acts of its agents.2 I Swier Electric Company, Inc., 223 NLRB 569, 574 (1976); Miller Red- wood Company, 164 NLRB 389 (1967). enfd. on this point 407 F.2d 1366, 1370 (9th Cir. 1969). 9 While, as noted above, Wilkins' immediate supervisor in December 1977 was Keater, Wilkins testified without contradiction that Selan had super- vised him occasionally, had signed his timecards and had granted him time off. 20 The role of the supervisors in the merit review process is vital as super- visors are management's primary source of information in conducting em- ployee evaluations. 21 230 NLRB 609. 615 (1977). 22 Also see Lutheran Homes and Hospitals, Inc. d/b/a Fairlawn Care Cen- ter, 233 NLRB 1025 (1977). No merit is found to Respondent's argument that the General Counsel did not prove that merit increases had been granted the three named employees because it was not shown affirmatively that under Respondent's evaluation method the raises actually had been approved by the man- agement panel, including Respondent's president. Respon- dent has steadfastly adhered to its policy of unilaterally making these employees evaluations, internally preparing and circulating the personnel action forms for use in con- nection with the process, and in furnishing the Union with copies only after the decisions have been made and the employees notified. Respondent has firmly resisted the Union's proposals to participate or even to observe these procedures. While Respondent has arranged to keep its own counsel in these evaluations, it cannot argue in the context of a bargaining obligation that its secret internal deliberations are more binding than its overt actions. The Union and employees are warranted in presuming that when the supervisors convey news of the raises, the deci- sional process has been completed. As Respondent, in ef- fect, has argued, its private deliberations are its own affair.2 Respondent's arguments, that as the subject matter of the complaint relates to Respondent's breach of contract, rather than an unfair labor practice, it is beyond the Board's remedial authority: that its conduct was nondis- criminatory: and that the nonpayment of merit increases in December 1977 was temporary based on economic circum- stances and did not constitute a repudiation of the contract or bargaining relationship, are answered in Administrative Law Judge Harmatz' Board-approved Decisions in Sun Harbor Manor2' and Fairfield Nursing Home.25 In Sun Har- bor Manor, supra, Administrative Law Judge Harmatz noted (at 946): The General Counsel's case draws force from the Board's decision in Oak Cliff-Golman Baking Company [207 NLRB 1063 (supplementing 202 NLRB 614, enfd. 505 F.2d 1302 (5th Cir. 1975), cert. denied 423 U.S. 826 (1975)]. There the Board found that an employer violated Section 8(a)(5) and () of the Act soley by virtue of its unilateral downward revision of wage stan- dards called for by a subsisting collective-bargaining agreement. In that case, the operative conduct giving rise to the unfair labor practice charge consisted of a breach of contract. In addition, the Board acknowl- edged that said breach stemmed from an economic cri- sis and was not discriminatorily motivated. Nonethe- less, the Board in finding the violation viewed the dishonor of the contractual wage provisions as striking at the heart of the statutory process of collective bar- gaining stating: '. . . it is not just a mere breach of the contract, but amounts, as a practical matter, to the striking of a death blow to the contract as a whole, and is thus, in reality, a basic repudiation of the bargaining relationship." 207 NLRB at 1064. The fact that an employer's failure to abide by contractual wage standards is only intended to relieve a temporary con- 23 The late date. December 22, when Respondent first announced to the Union that it would not afford merit increases. payable under the contract on December I. is consistent with the finding herein that Respondent ongi- nally had intended to grant raises and later unilaterally reversed itself 24 228 NLRB 945 (1977). 2 5 228NLRB 1208, 1210 11 (1977). 1177 DECISIONS OF NATIONAL LABOR RELATIONS BOARD dition, does not remove such action from the intended scope of Section 8(d) of the Act. See Washington Employers, Inc., 200 NLRB 825 (1972). Contrary to Respondent's contention that this matter is distinguishable from Oak Cliff-Golman, supra, in that the basic wage rates in issue in that case are more fundamental to the contract than the merit review raises in issue here and that, therefore, any breach of the merit review provision would not be sufficient magnitude to constitute a repudi- ation of the bargaining relationship as in Oak Cliff-Golman, I find that the merit program herein is an important, intrin- sic part of Respondent's general wage structure. During the contract term, it is the only way in which the employees can advance through the pay ranges prescribed in the agree- ment their classifications to reach the highest specified scale, and, with negotiated contractual and cost-of-living increases, merit raises are one of the three ways in which Respondent's employees can receive any kind of pay incre- ment. Respondent's conduct found herein, in committing itself to pay these increases, only to unilaterally revoke them, while also a contract breach, is not less of a repudi- ation of the bargaining relationship than in the cases cited. The Board has long recognized the significance of merit review and, where warranted by the practice and agreement of the parties, unlawful refusals to bargain have been found where employers failed or refused to furnish bargaining representatives with merit review data necessary to enable administration of such program.26 Further, in Milgram Food Stores, Inc.,7 the Board found that an employer had violated Section 8(a)(5) and (I) of the Act by unilaterally changing the wage rates prescribed in the contract although the number of employees affected compared to the overall number of employees in the unit, as here, was small. Even disregarding Respondent's now abandoned initial refusal of several months duration to consider the relevant grievance on the merits because it was allegedly untimely filed, the Board has refused to defer the regulation of collec- tive bargaining to other forums when the unfair labor prac- tice involved was so fundamental? Accordingly, I find that the instant matter should not be deferred to arbitration un- der Collyer. In accord with the General Counsel, I find that the fact that the Union did not grieve or otherwise protest a failure or refusal by Respondent to grant merit increases in De- cember 1974 cannot be construed as a waiver of rights on this isssue 3 years later. In 1974, unlike the present circum- stance, it is not clear that Respondent had withheld such raises after having first announced them to recipient em- ployees. In any event, it is well established that a waiver 2 See International Telephone d Telegraph Corporation (ITT Federal Labo- ratories), 159 NLRB 1757, 1764-1765 (1966), enfd. in relevant part, 382 F.2d 366 (3d Cir. 1967), cert. denied 389 U.S. 1039 (1968). While the ITT case, supra, is factually distinguishable from the present matter in that the union in ITT, unlike the present Union, had participated actively in administering the merit review program, that case does tend to illustrate the significance the Board and courts have attached to merit review as part of contractual wages. 27235 NLRB 1 (1978). 2 See Oak Cliff-Golman Baking Conpany, supra Fairfield Nursing Home, supra. Also see Los Angeles Marine Hardware Co., a Division of Mission Marine Associates, Inc., et al., 235 NLRB 720, 731, fn. I (1978). must be clear to be effective, and wavier will not be inferred merely from a union's failure to file an earlier grievance as to similar conduct. This is particularly true when it cannot be inferred from the record that the circumstances in 1974 were the same as here. In this matter, Respondent, having become bound to pay the increases as for the years before December 1974 and for 3 years since then, cannot unilater- ally retreat from its contractual wage obligations on the basis of an alleged earlier waiver by the Union.) ° Based on the foregoing, I conclude that by failing to pay Irvine, Wilkins, and Munksgard the merit review increases due on December 1, 1977, under the terms of its existing contract, Respondent violated Section 8(a)(5) and (I) of the Act. IV. THE EFFEC(T OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Respondent as set forth in section III, above, occurring in connection with the operations of Re- spondent, described in section I, above, have a close, inti- mate, and substantial relationship to trade, traffic, and com- merce among the several States and tend to lead to labor disputes burdening and obstructing commerce and the free flow thereof. Upon the basis of the foregoing findings of fact and en- tire record in this case, I make the following: CONCLUSIONS OF LAW I. Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Union is a labor organization within the meaning of Section 2(5) of the Act. 3. The following unit is appropriate for purposes of col- lective bargaining within the meaning of Section 9(b) of the Act: All employees employed by the Respondent at its Warren, Pennsylvania, facility, in the job classifica- tions set forth in Exhibit "A" of the collective-bargain- ing agreement between the Respondent and the Union, effective from November 1, 1977, to November 1, 1980, excluding guards, professional employees and su- pervisors, as defined in the Act, and all other employ- ees. 4. At all times material herein the Union has been the exclusive bargaining representative of the employees in the "Miller Brewing Company, 166 NLRB 831. 832, enfd. 408 F.2d 12 (9th Cir. 1969). ° Respondent contends that the General Counsel is precluded from ad- ducing evidence concerning Irvine and Wilkins as the General Counsel's bill of particulars had named Munksgard as the only employee who had not been granted a promised merit increase. The General Counsel, the record reveals, had learned of Irvine and Wilkins only after issuance of the com- plaint and bill of particulars and, upon completing additional investigation as to these individuals, had informed the office of Respondent's counsel in advance of the trial that litigation would include them, as well. As the issues relating to Irvine and Wilkins are the same as those affecting Munksgard and alleged in the complaint, and were fully litigated at the hearing, Respon- dent's argument is not meritorious. 1178 STRUTHERS WELLS CORP. aforesaid unit within the meaning of Section 9(a) of the Act. 5. By refusing to pay promised merit increases as of De- cember , 1977, when due under the terms of the collective- bargaining agreement to Ronald Irvine, James Munksgard, and Thomas Wilkins and any other similarly entitled em- ployees in the above unit, Respondent has engaged in, and is engaging in, unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. 6. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that Respondent has engaged in certain unfair labor practices, I shall recommend that it be required to cease and desist therefrom and take certain affirmative action designed to effectuate the purpose of the Act. Having found that Respondent failed to pay merit wage increases under the terms of the collective-bargaining agree- ment, it shall be recommended that Respondent be directed to grant such increases as of December 1, 1977, as required by the collective-bargaining agreement to Thomas Wilkins, Ronald Irvine, and James Munksgard, making them whole for any losses suffered as a result of the unilateral refusal to grant such merit increases, and to refrain from refusing to comply with the terms of the contract without first reaching an agreement with the Union. Interest on the backpay shall be computed in the manner prescribed in F. W. Woolworth Companyn' and Florida Steel Corporation. As Respondent does not necessarily give recipient em- ployees merit increases in the same amount, and as it has been found that only Wilkins had been informed of the size of his merit raise-5 cents per hour-the facts necessary for an exact determination of the amount of the merit raises 't 90 NLRB 289 (1950). 3 231 NLRB 651 (1977). See generally, Isis Plumbing & Heating Co., 138 NLRB 716 (1962). enforcement denied on different grounds, 322 F.2d 913 (9th Cir. 1963). which would have been paid to Irvine and Munksgard by Respondent on December 1, 1977, absent its unlawful con- duct, are unavailable. Accordingly, if Respondent and the Union cannot agree within reasonable time on the amounts of the merit increase to be afforded Irvine and Munksgard, the issue shall be left to the compliance stage of this pro- ceeding to determine such amounts, or, if agreement cannot then be reached, to a backpay proceeding." [Recommended Order omitted from publication.] Florida Steel Corporation, 220 NLRB 1201, 1204 (1975). In giving the Union first opportunity to bargain with Respondent in the limited area of settling the amounts of the December 1, 1977. ment increase to be paid Munksgard and Irvine, I do not propose to create for the Union a more general role in the overall merit review evaluation process than it has been able to negotiate for itself. However, under the present circumstances, it would appear preferable to allow the Union, with its background of what has been afforded in the past, to participate in the specific area of resolving the amounts of the December 1,. 1977, ment raises for Irvine and Munks- gard, rather than to have Respondent unilaterally determine the extent of liability for its own unlawful conduct. APPENDIX A The job classifications included within the unit found ap- propriate herein, as set forth in Exhibit "A" of the collec- tive-bargaining agreement between Struthers Wells Corp. and Office and Professional Employees International Union, Local No. 186, AFL-CIO, are as follows: Office Persons Typists Telephone Operators General Clerks Purchasing Clerks Keypunch Operators Technical Services Specialists Stenographers Accounts Payable Clerks Accounts Receivable Clerks Receptionists Secretary/Stenographers Payroll Clerks Office Services Specialists Cost Clerks Labor Control Timekeepers Chief Labor Control Timekeepers Material Coordinators 1179 Copy with citationCopy as parenthetical citation