TXU Electric Co.

National Labor Relations Board - Board Decisions

Dec 16, 2004

343 N.L.R.B. 1404 (N.L.R.B. 2004)

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
343 NLRB No. 132
1404
TXU Electric Company and International Brother-
hood of Electrical Workers, AFL–CIO, CLC,
Local Union 2337. Case 16–CA–20247
December 16, 2004
DECISION AND ORDER
BY CHAIRMAN BATTISTA AND MEMBERS SCHAUMBER
AND WALSH
The principal issue in this case is whether the Respon-
dent violated Section 8(a)(5) of the Act by changing its
past practice of annual salary plan adjustments for unit
employees while it negotiated with the Union for an ini-
tial contract. The judge found that the Respondent did
not violate the Act because the Respondent gave suffi-
cient notice to the Union of the proposed change and the
Union declined to request bargaining over it.1 We agree
with the judge that the Respondent was privileged to act
in the circumstances of this case, which present an ex-
ception to the general requirement of an overall bargain-
ing impasse prior to implementation of a proposal.2 Ac-
cordingly, we dismiss the complaint in its entirety.
I. BACKGROUND
The Respondent is a public utility engaged in the busi-
ness of providing electrical service in the State of Texas.
The Respondent employs approximately 850 employees
classified as technicians throughout its statewide system.
The Union was certified on February 19, 1999,3 as the
exclusive collective-bargaining representative of a unit
consisting of 26 chemistry technicians employed at the
Respondent’s Comanche Peak Steam Electric Station.

1 On June 9, 2000, Administrative Law Judge Pargen Robertson is-
sued the attached decision. The General Counsel and the Charging
Party filed exceptions and supporting briefs, and the Respondent filed
an answering brief.
The National Labor Relations Board has delegated 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 briefs and has decided to affirm the judge’s rulings,
findings, and conclusions and to adopt his recommendation to dismiss
the complaint.
The General Counsel and the Charging Party have excepted to some
of the judge’s credibility findings. The Board’s established policy is
not to overrule an administrative law judge’s credibility resolutions
unless the clear preponderance of all the relevant evidence convinces us
that they are incorrect. Standard Dry Wall Products, 91 NLRB 544
(1950), enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully exam-
ined the record and find no basis for reversing the findings.
2 In light of our agreement with the judge’s finding that the Respon-
dent did not violate Sec. 8(a)(5) as alleged, we also agree with the
judge’s finding that the Respondent did not violate Sec. 8(a)(1) by
advising unit employees that they would not receive pay increases
under the Respondent’s new salary plan because their wages had to be
negotiated.
3 All subsequent dates are in 1999 unless indicated otherwise.
At the time of the Union’s certification, the salaries of
both unit and nonunit technicians were established by the
Respondent’s 1999 technician salary plan.4 For the past
22 years, the Respondent has annually reviewed its tech-
nician salary plan to determine if adjustments are neces-
sary by examining current market conditions, company
economics, the current retention of employees, and other
factors. Any changes in employee compensation were
typically made in the month of December and became
effective for the following year. For the past 22 years,
the Respondent increased the salary range for each tech-
nician job classification annually.5
The Respondent and the Union began bargaining for
an initial contract on May 7.6 Jimmy Walker, the Re-
spondent’s chief negotiator, testified that at that meeting,
he advised the Union that the “current wage package plan
that was in effect was a status quo issue and that the
structure of the plan would not change until and unless
[the parties] reached an agreement on such change.” The
Union did not object to Walker’s statement or request
bargaining over the Respondent’s decision.
The parties met again on July 12 at which time the Un-
ion presented a wage proposal.7 Walker reminded the
Union about his May 7 statement “regarding the status
quo of wages and salary structure.” Walker testified that
he specifically referred to the current 1999 technician
salary plan and reiterated that the “salary structure for
[unit employees] would not move, until and unless we
negotiated a change to that.” Again the Union did not
object or demand bargaining. The parties continued to
meet and discuss wages and benefits at subsequent nego-
tiating sessions, but reached no agreement.
Consistent with its past practice, the Respondent re-
viewed its technician salary plan and, in December,
adopted a revised salary plan, referred to as the 2000
technician salary plan, which increased salary ranges by
3.6 percent. The Respondent applied the revised salary
plan only to its nonunit technicians, and, as the Respon-
dent had advised the Union in May and July, the Re-
spondent continued to apply the 1999 salary plan to unit
employees.

4 Consistent with past practice, the amounts were set in December
1998, to be effective for 1999. We refer to these amounts as the 1999
plan.
5 For example, salary ranges were increased by 3 percent in 1996, 3
percent in 1997, and 2 percent in 1998.
6 The parties met approximately 20 times between May and Febru-
ary 2000. During this time, they exchanged a variety of proposals, but
did not reach an agreement.
7 The Union previously had requested information regarding wage
issues from the Respondent.
TXU ELECTRIC CO. 1405
II. THE JUDGE’S DECISION
As stated above, the judge recommended dismissal of
the complaint allegation that the Respondent unilaterally
changed terms and conditions of employment in viola-
tion of Section 8(a)(5) and (1) by failing to apply the
2000 technician salary plan to bargaining unit employ-
ees. The judge acknowledged that the “Respondent
made changes in working conditions when it adopted a
[2000] technicians salary plan and applied that plan to
non-unit technicians.” However, the judge concluded
that the Respondent did not change working conditions
unilaterally. The judge found that the Respondent gave
notice to the Union at the first bargaining session that “it
planned to maintain the [1999] technicians salary plan
for unit employees pending agreement.” The judge also
found that the Union failed to object or demand bargain-
ing about that decision, even though unit employees
knew that the Respondent annually reviewed the techni-
cians’ salary plan in December. The judge found that the
Union did not object until after the parties had negotiated
over economic issues and after the Respondent an-
nounced that its 2000 plan would be applied only to non-
unit employees.
According to the judge, the “Respondent did what it
was legally required to do” by providing the Union with
notice, on May 7, of its intent “to maintain the status quo
of the [1999] plan” and by providing the Union with an
opportunity to “negotiate knowing of the likelihood that
Respondent would adopt a new technicians salary plan in
December 1999.”
The judge also recommended dismissal of the inde-
pendent 8(a)(1) allegations of the complaint. The judge
concluded that Section 8(c) protected the supervisors’
statements that the Respondent planned to exclude unit
employees from the 2000 technician salary plan.
III. ANALYSIS AND CONCLUSIONS
This case concerns a situation in which the status quo
of a mandatory bargaining subject at the commencement
of a bargaining relationship includes an annual review of
wages to determine whether an increase will be given
and, if so, the amount. That is, the established wage
rates are not fixed for an indefinite period of time. In-
stead, the employer has a past practice of annually re-
viewing and adjusting those rates according to certain
criteria. Obviously, it may continue to do so unilaterally
with respect to its nonunit employees. The question be-
fore us is what must the employer do to honor its new
bargaining obligation for unit employees. Unlike a fixed
term and condition of employment, the unit employees’
wage rates are scheduled for review and change on a
certain date even if the parties have not reached overall
agreement or impasse in bargaining by that date.
The Board addressed a similar situation in Stone Con-
tainer Corp., 313 NLRB 336 (1993), and recognized the
need for an exception to the traditional bargaining stan-
dard of Bottom Line Enterprises,8 relied on by the dis-
sent, which requires an overall impasse in negotiations as
a whole to be reached before an employer may lawfully
implement a change in a past practice term of employ-
ment. The employer in Stone Container notified the
newly-certified union that for economic reasons it could
not grant employees their annual wage increase, which
was to occur in April 1989 while the parties were negoti-
ating for an initial collective-bargaining agreement. The
Board found that the employer gave the union enough
time to bargain over its decision, but the union made no
counterproposals for an April increase and did not raise
the issue during negotiations.
In dismissing the allegation that the employer violated
Section 8(a)(5) by not giving an April increase in the
absence of an overall impasse in negotiations, the Board
stressed that the annual wage review was a “discrete
event, . . . that simply happens to occur while contract
negotiations are in progress . . . [and that] bargaining
over the amount of such [an] increase could not await an
impasse in overall negotiations.” 313 NLRB at 336. The
Board further stressed that the employer was not propos-
ing to abandon permanently the annual wage review pro-
gram, nor was it declining to bargain over how much of
an increase, if any, it should give in April 1989. Under
these circumstances, since the union did not request bar-
gaining when notice was afforded to it, the Board deter-
mined that the employer could lawfully decline to grant
the wage increase.
The Board reached a similar conclusion in Alltel Ken-
tucky, 326 NLRB 1350 (1998). There the employer told
the union during bargaining that, based on a wage survey
it had conducted, it did not intend to increase employees’
wages in January 1997 as it had done annually for the
previous several years. The union failed to request bar-
gaining over the employer’s proposal not to give the
January increase. Referring to Stone Container, the
Board stated: “[A]n overall bargaining impasse is not a
condition precedent to a change in a term or condition of
employment where, as here, the change concerns a dis-
crete event which is scheduled to occur during the bar-
gaining process,” 326 NLRB at 1350 fn. 4. The Board
found that the January increase was such a “discrete
event,” and that the employer had given notice to the

8 302 NLRB 373 (1991), enfd. mem. sub nom. Master Window
Cleaning v. NLRB, 15 F.3d 1087 (9th Cir. 1994).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1406
union that the employer did not intend to give the in-
crease in January. As in Stone Container, the Board
concluded: “[T]he Union’s failure to request bargaining
in the face of such notice defeats any claim that the Re-
spondent unlawfully discontinued the January increase.”
Id. at 1350 (citations omitted).9
Here, just as in Stone Container and Alltel Kentucky,
the Respondent’s terms and conditions of employment
included an annually recurring event, viz, a December
wage determination for the coming year. On May 7,
1999, the Respondent realized that negotiations might
still be ongoing when December 1999 rolled around.
Accordingly, the Respondent gave the Union notice that,
absent an agreement, its plan for unit employees for De-
cember 1999 was to continue the 1999 wages into 2000.
That is, the December 1999 wage determination for the
year 2000 would apply only to nonunit employees.10 As
the judge correctly found, this constituted notice of an
intended change in past practice, i.e., that the review and
wage adjustments of prior years would not apply to unit
employees. Rather, the unit employees would receive
the same amount that they received under the 1999 salary
plan. In addition, the Respondent reminded the Union of
its decision in July.
The Respondent gave the Union ample time in ad-
vance of the December wage event to request bargaining.
Having been twice notified of the Respondent’s decision
not to adjust unit employees’ wages in December, it was
incumbent on the Union to request bargaining over that
decision.11 Yet, the Union did not do so either time the
decision was announced. Thus, under the rationale of
Stone Container and Alltel Kentucky, we find that the
Respondent did not violate the Act when the Respondent
declined to apply the 2000 salary plan to unit employees
during negotiations for a collective-bargaining agree-
ment.
The Respondent’s conduct is distinguishable from the
unlawful unilateral conduct of the employer in Daily
News of Los Angeles, 315 NLRB 1236 (1994), affd. 73
F.3d 406 (D.C. Cir. 1996), cert. denied 519 U.S. 1090
(1997), who did not give the union bargaining represen-
tative notice or opportunity to bargain before unilaterally
suspending a practice of annual individual merit wage
reviews for unit employees. Contrary to the dissent, the
D.C. Circuit did not address the issue presented here, i.e.,
whether such a change would be permissible if the union
had notice and opportunity to bargain about a discrete
event. In affirming the Board’s finding of a violation,

9 See also Brannan Sand & Gravel, 314 NLRB 282 (1994), and
Nabors Alaska Drilling, 341 NLRB 610 (2004).
10 There is no allegation of 8(a)(3) discrimination.
11 Alltel Kentucky, 326 NLRB 1350 (1998).
the court rejected the company’s argument that a tempo-
rary suspension of its wage practice was not a change in
an established term of employment, but it did not directly
address the view of concurring Board Members in Daily
News that such a change would be lawful if implemented
after bargaining or after the union failed to pursue an
opportunity to bargain.12
The dissent does not dispute the adequacy of the Re-
spondent’s notice to the Union. Nor does it find that the
Respondent indicated an unwillingness to bargain over
the decision to maintain the 1999 salary plan in effect
during the course of negotiations. Instead, the dissent
argues that the rationale of Stone Container and Alltel
Kentucky does not permit unilateral change in a specific
bargaining subject during overall contract negotiations
when the proposed change is not consistent with the past
practice of annual increases and the criteria used to de-
termine those annual changes. According to the dissent,
the Respondent, unlike the employers in those cases,
unlawfully abandoned its annual wage review program
when it did not propose or implement the same new sal-
ary plan for unit employees that it implemented for non-
unit employees in accord with its past practice and crite-
ria.
We disagree with our colleague’s analysis of the facts
in this case. The Respondent did not eliminate its prac-
tice of establishing a salary plan each year. Nor did it
announce to the Union that it was permanently abandon-
ing such a practice. Instead, it told the Union that the
1999 salary plan then in effect for unit employees would
remain in effect pending negotiations between the par-
ties. Although, as noted above, this constituted notice of
a change in past practice in that the unit employees
would not be included in the 2000 salary plan, it did not
constitute notice of an intention to permanently discon-
tinue its past practice of annual salary reviews. In short,
the Respondent’s proposed change addressed the upcom-
ing salary plan to take effect for 2000. It did not affect
future years. The issue of a salary plan for the following
year, or for the duration of any contract concluded prior
to then, was open for negotiation.

12 We find no need to address the court’s view that the employer’s
action in Stone Container did not involve any change in the wage status
quo, so that the employer had no obligation to provide notice to the
union and an opportunity to bargain before unilateral implementation.
See Daily News, 73 F.3d at 413. However, the court’s view of this
precedent provides no support for the dissent about the nature of the
bargaining obligation when the employer does propose changes upon
the occurrence of a discrete annual event. The actual holding of the
court is entirely consistent with our position here, i.e., that an employer
cannot make unilateral changes unless it gives the union notice and an
opportunity to bargain.
TXU ELECTRIC CO. 1407
Contrary to our dissenting colleague, we concede noth-
ing by recognizing that the Respondent’s proposal in-
volved a change in past practice. Indeed, we rely on that
fact in concluding that because the proposed change in-
volved an annually occurring employment term, sched-
uled to recur in the midst of collective bargaining, the
bargaining standard of Stone Container applies rather
than Bottom Line. By that standard, and in the context of
a new collective-bargaining relationship, the Respon-
dent’s conduct was entirely consistent with good faith
bargaining. It notified the Union of an upcoming annual
recurring event and made a bargaining proposal to deal
with it.
In recognizing that the Respondent was changing a
past practice, we acknowledge that if the past practice
had been completely followed, the employees would
have received a 3.6-percent increase. In this regard, we
acknowledge that this case is factually different from
Stone Container and Alltel, where the employers contin-
ued to apply their past criteria, and this resulted in a zero
wage increase for both unit and nonunit employees. By
contrast, if the Respondent here had applied its usual
criteria, the wage increase would have been 3.6 percent.
However, we read Stone Container as standing for a
broader proposition. We agree with the concurring opin-
ion in Daily News of Los Angeles, 315 NLRB at 1244,
that where, as here, a discrete event occurs every year at
a given time, and negotiations for a first contract will be
ongoing at that time, an employer can announce in ad-
vance that it plans to make changes as to that event.
“[T]he employer’s bargaining position may be to con-
tinue the practice for that year, to modify it, or to delete it
for that year.” As long as the union is given notice and
opportunity to bargain as to those matters, the employer
can carry out the changes even if there is no overall im-
passe as of the time of the change. That is what hap-
pened here.
The dissent argues that our holding in this case repre-
sents a seismic break from precedent and undermines the
bargaining process. It does nothing of the sort. We are
not sanctioning the use of unilateral wage changes as an
economic weapon during bargaining. Furthermore, we
adhere to the governing principles of collective bargain-
ing that disfavor piecemeal bargaining and preclude uni-
lateral implementation of a bargaining proposal unless
the parties have bargained to overall impasse for an
agreement as a whole. In the instance of bargaining sub-
jects with fixed terms, the recognized limited exceptions
to the obligation to bargain to overall impasse are those
summarized in Bottom Line Enterprises.
However, this case deals with a situation in which
piecemeal treatment is unavoidable, at least on an interim
basis. The date for annual review and possible wage
adjustment was approaching. Absent a contract on that
date, the Respondent had to do something with respect to
that matter. It could not wait for an overall impasse. In
this situation, our recognition of an exception to the gen-
eral principles governing collective bargaining is not at
all an endorsement of piecemeal bargaining.13 Moreover,
it does not present the vices of such bargaining identified
by the 7th Circuit in the passage from Duffy Tool &
Stamping v. NLRB, 233 F.3d 995, 997 (7th Cir. 2000),
quoted by the dissent. The bargaining subject of wages
is not removed from the table by the employer’s interim
unilateral action. The general outline of an established
annual wage review program remains in place, the em-
ployer remains obligated to continue to bargain about
wages in negotiations for an overall contract, and the
parties may include this subject with others when striking
deals for a final agreement. Furthermore, the exception
is by definition limited to a discrete recurring event. It
provides a bargaining bridge to cross the transitional pe-
riod when an employer must deal with that event while
engaged in initial negotiations with a newly-recognized
or certified union. The principle has no broad applica-
tion or disruptive potential.
Under Stone Container and Alltel, the Respondent,
having twice notified the Union of its intention to main-
tain the 1999 salary plan, afforded the Union ample op-
portunity to bargain on this particular subject. The Un-
ion failed to request bargaining at any point during the
intervening 6 months. Having received no response from
the Union, Respondent was not required to wait until the
parties reached an overall impasse in negotiations before
implementing the change in annual salary plans. We

13 The dissent misleadingly argues that Stone Container has not been
described as creating a “third exception” to Bottom Line. As stated
above, Bottom Line does not involve interim bargaining obligations
about a discrete event that occurs while overall contract negotiations
are in progress. Stone Container, Alltel, and Brannan Sand & Gravel
do involve this separate bargaining situation and recognize an excep-
tion permitting unilateral action if a union has notice and sufficient
opportunity to bargain about the employer’s proposal for dealing with
this event. See Nabors Alaska Drilling, Inc., supra at 612–615 (Board
affirms judge’s conclusion, expressly relying on Stone Container, that
employer lawfully implemented changes pursuant to annual health plan
review after it gave union adequate notice and opportunity to bargain).
See also “Changing Heath Insurance Plans” in General Counsel’s Re-
port on Recent Case Developments, R-2464 (Nov. 8, 2002) available at
www.nlrb.gov, where the General Counsel recognizes this exception:
“[In Brannan Sand and Gravel, t]he Board stated that an employer is
not obligated to refrain from implementing proposed changes in health
care plans until impasse is reached in overall negotiations where the
employer has a practice of reviewing and adjusting its health care plan
annually. To meet the Brannan Sand & Gravel exception, an employer
must demonstrate that it has a past practice of reviewing and adjusting
its insurance plan annually, and that it gave the union adequate notice
and an opportunity to bargain.”
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1408
find, therefore, in agreement with the judge, that the Re-
spondent did not violate the Act by declining to apply the
2000 wage increase to unit employees.
ORDER
The complaint is dismissed.
MEMBER WALSH, dissenting.
I. INTRODUCTION
The Respondent was not privileged to unilaterally
deny unit employees an annual wage increase in the ab-
sence of an overall impasse in negotiations for a collec-
tive-bargaining agreement. The majority’s holding to the
contrary disregards the Board’s well-established princi-
ple that, absent extraordinary circumstances not present
in this case, an employer must refrain from making uni-
lateral changes to terms and conditions of employment
prior to overall impasse in negotiations for a collective-
bargaining agreement as a whole. In other words, an
employer cannot bargain piecemeal over discrete terms
and conditions of employment; instead, it must maintain
the status quo of all mandatory subjects of bargaining
during the course of contract negotiations. This overall
impasse rule is grounded in the longstanding Supreme
Court precedent of NLRB v. Katz, 369 U.S. 736 (1962),
in which the Court held that an employer’s unilateral
change in a term and condition of employment that is a
subject of ongoing contract negotiations is the equivalent
of a refusal to bargain over that subject, and therefore
violates the employer’s statutory duty to bargain.
The status quo of an employer’s terms and conditions
of employment often includes an established program for
considering and implementing wage adjustments at regu-
lar, recurring intervals. Applying the overall impasse
rule to established wage adjustment programs, the Board
has held that where a wage adjustment is fixed as to tim-
ing and as to criteria for determining whether an increase
is warranted, but discretionary as to amount, an em-
ployer, absent overall impasse, must maintain the fixed
aspects of the program and negotiate with the union over
the discretionary aspect of the program, i.e., the amount
of the increase.
It is undisputed that the Respondent has an established
annual wage adjustment program that is fixed as to tim-
ing and criteria but discretionary as to amount. It is fur-
ther undisputed that during bargaining for an initial con-
tract, the time arrived for the Respondent to implement
its annual wage increase pursuant to that program. Un-
der these circumstances, the Respondent’s duty was
plain: to maintain its program and negotiate with the
Union over the amount of the wage adjustment for unit
employees. Instead, without having reached overall im-
passe, the Respondent unilaterally discontinued its wage
increase program as to its unit employees and denied
them the scheduled wage increase that it provided to its
nonunit employees. Therefore, the Respondent violated
Section 8(a)(5) and (1).
In holding to the contrary, my colleagues misinterpret
Stone Container Corp., 313 NLRB 336 (1993), as allow-
ing an employer to unilaterally change a term and condi-
tion of employment during contract negotiations. In their
view, Stone Container stands for the proposition that if
the term and condition of employment, such as an annual
wage adjustment program, involves a discrete event
scheduled to recur during the course of bargaining, the
employer may refuse to implement the program as long
as it provides the union reasonable notice and an oppor-
tunity to bargain over that change. Contrary to the ma-
jority, however, the employer in Stone Container did not
unilaterally refuse to implement the wage adjustment
program itself. It maintained the program and gave the
union reasonable notice and an opportunity to bargain
over its discretionary aspect, the amount of the increase.
Because the annual wage increase was scheduled to oc-
cur during contract negotiations, the Board found that
bargaining over the discretionary amount of the increase
necessarily could not await overall impasse. The Board
held that the employer met its statutory bargaining duty
to maintain the status quo because it applied its usual
criteria and provided the union reasonable notice and an
opportunity to bargain over the amount of the increase.
The Board did not alter its well-settled principle that an
employer must maintain the status quo of the wage ad-
justment program itself, and any proposed changes to
that program must remain on the bargaining table absent
overall impasse. The employer in Stone Container satis-
fied its statutory bargaining obligation. The Respondent
here did not.
My colleagues’ unprecedented holding, which allows
employers to unilaterally change so salient a bargaining
subject as annual wage adjustment programs merely be-
cause a wage increase is scheduled to occur during the
course of bargaining, is a radical and unjustifiable depar-
ture from the Board’s overall impasse rule that encour-
ages piecemeal bargaining and undermines rather than
promotes stable labor relations through the collective-
bargaining process. Accordingly, I dissent.
II. BACKGROUND
At the time of the Union’s February 19991 certification
as representative of the Respondent’s Comanche Peak
chemical technicians, the salaries of all the Respondent’s
chemical technicians, including those of unit employees,
were established by the 1998–1999 technician salary

1 All subsequent dates are in 1999 unless indicated otherwise.
TXU ELECTRIC CO. 1409
plan. The Respondent’s practice for the past 22 years
has been to review the technician salary plan and in-
crease the salary range for each job classification annu-
ally, typically in December. The Respondent’s review
includes an examination of current market conditions,
company economics, and employee retention.
The parties began bargaining for an initial contract on
May 7 and met again on July 12. At both bargaining
sessions, the Respondent’s chief negotiator, Jimmy
Walker, told the Union that the then-current wage plan,
which was the 1998–1999 plan, was a “status quo” issue
that would not change unless the parties negotiated a
change. The parties exchanged wage proposals and
counterproposals and discussed the issue of wages during
their negotiations, but they had not reached either an
agreement or overall impasse by December. Consistent
with its past practice, the Respondent conducted its an-
nual December wage review and formulated a new salary
plan, the 1999–2000 technician salary plan. The 1999–
2000 plan provided for a wage increase of 3.6 percent,
and the Respondent implemented the new wage plan at
the usual time for its nonunit technicians. Contrary to its
past practice, however, the Respondent did not apply the
new wage plan to unit employees, but instead continued
to pay them under the 1998–1999 plan. The General
Counsel alleged that the Respondent’s conduct in this
regard violated Section 8(a)(5).2
III. JUDGE’S DECISION
The judge found that although the Respondent made
changes in working conditions when it failed to apply the
1999–2000 plan to unit employees, it satisfied its statu-
tory bargaining obligation by giving the Union notice of
and the opportunity to bargain over its decision. The
judge found that the Union did not object to the Respon-
dent’s “announced plan to maintain the status quo of the
[1998–1999] plan” and did not seek to bargain over that
decision by making a counterproposal. Under these cir-
cumstances, the judge concluded that the Respondent did
not violate Section 8(a)(5).

2 The complaint also alleged related violations of Sec. 8(a)(1) based
on the following incidents. (1) Unit employees met with Acting Man-
ager Robert Theimer in late November, and one technician asked him
what the pay increase was going to be that year. Theimer replied that
the 1999–2000 salary plan did not apply to unit technicians now be-
cause their wages had to be negotiated. (2) Supervisor David Perkins
told unit employees in January 2000 that they would not receive a pay
increase under the 1999–2000 salary plan because of the union issue,
that their pay would have to be negotiated, and that there would be no
raise until there was a contract.
IV. DISCUSSION
A. The Overall Impasse Rule
Under Section 8(a)(5) of the Act, employers commit
an unfair labor practice by “refus[ing] to bargain collec-
tively with the representatives of [their] employees.” 29
U.S.C. § 158(a)(5). Section 8(d) defines the obligation
to bargain collectively as “the mutual obligation of the
employer and the representative of the employees to
meet at reasonable times and confer in good faith with
respect to wages, hours, and other terms and conditions
of employment.” 29 U.S.C. § 158(d).
Pursuant to this statutory bargaining obligation, the
Board has long held that “when, as here, parties are en-
gaged in negotiations [for a collective-bargaining agree-
ment], an employer’s obligation to refrain from unilateral
changes extends beyond the mere duty to give notice and
an opportunity to bargain; it encompasses a duty to re-
frain from implementation at all, unless and until an
overall impasse has been reached on bargaining for the
agreement as a whole.” Bottom Line Enterprises, 302
NLRB 373, 374 (1991) (emphasis added), enfd. sub nom.
Master Window Cleaning, Inc. v. NLRB, 15 F.3d 1087
(9th Cir. 1994).3 Stated another way, during negotiations
for a collective-bargaining agreement, an employer must
maintain the status quo with regard to all mandatory bar-
gaining subjects absent overall impasse in negotiations.4
The Board has recognized two limited exceptions to this
overall impasse rule: “when a union, in response to an
employer’s diligent and earnest efforts to engage in bar-
gaining, insists on continually avoiding or delaying bar-
gaining, and when economic exigencies compel prompt
action.” Bottom Line Enterprises, 302 NLRB at 374
(alterations and internal quotations omitted); accord:
RBE Electronics of S.D., supra at 81.
The overall impasse rule is rooted in longstanding Su-
preme Court precedent and is fundamental to the Act’s
purpose of fostering stable labor relations through the
collective-bargaining process. In its 1962 Katz decision,
the Supreme Court held that an employer violates the
duty to bargain by unilaterally changing a term and con-
dition of employment under negotiation, regardless of its
motivation for doing so. NLRB v. Katz, 369 U.S. 736,
743 (1962). The Court reasoned that such a change con-
stitutes “a refusal to negotiate about the affected condi-
tions of employment under negotiation, and must of ne-
cessity obstruct bargaining, contrary to the congressional

3 Accord: RBE Electronics of S.D., Inc., 320 NLRB 80, 81 (1995);
Intermountain Rural Electric Assn., 305 NLRB 783, 786 (1991), enfd.
984 F.2d 1562 (10th Cir. 1993); and Winn-Dixie Stores, Inc., 243
NLRB 972, 973 (1979).
4 See Intermountain Rural Electric Assn., 984 F.2d at 1566; Our
Lady of Lourdes Health Center, 306 NLRB 337, 339–340 (1992).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1410
policy.” Id. at 747. Accordingly, the Court held that the
employer’s unilateral grant of discretionary merit wage
increases was “tantamount to an outright refusal to nego-
tiate on that subject,” and therefore a violation of Section
8(a)(5). Id. at 746. Consistent with Katz, the Court has
since recognized that the Board’s overall impasse rule is
grounded in the reality “that it is difficult to bargain if,
during negotiations, an employer is free to alter the very
terms and conditions that are the subject of those nego-
tiations.” Litton Financial Printing Div. v. NLRB, 501
U.S. 190, 198 (1991) (noting the Court’s approval of the
Board’s overall impasse rule).
With one exception, the Federal courts of appeal have
adopted the Board’s overall impasse rule.5 In doing so,
they have recognized the importance of that rule to effec-
tuating the Act’s fundamental policy objective of foster-
ing stable labor relations through the collective-
bargaining process. Thus, the Sixth Circuit has ex-
plained that an employer’s unilateral change in condi-
tions of employment under negotiation “‘minimizes the
influence of organized bargaining’ and emphasizes to the
employees ‘that there is no necessity for a collective bar-
gaining agent.’” Pleasantview Nursing Home, Inc., 351
F.3d at 755 (quoting Loral Defense System v. NLRB, 200
F.3d 436, 449 (6th Cir. (1999)). The Seventh Circuit has
described the Board’s overall impasse rule as “impor-
tant” because the “overriding goal of federal labor law is
labor peace,” and labor peace “is promoted when the
parties to a labor dispute avoid a test of strength involv-
ing a strike or a lockout by negotiating a collective bar-
gaining agreement,” a result that the overall impasse rule
fosters. Duffy Tool & Stamping, LLC, 233 F.3d at 997.
And the First Circuit has underlined the vital nature of
the overall impasse rule, explaining that to allow an em-
ployer “to remove, one by one, issues from the table”
would “impair the ability [of the parties] to reach an
overall agreement through compromise on particular
items” and “would undercut the role of the Union as the
collective bargaining representative, effectively commu-
nicating that the Union lacked the power to keep issues at
the table.” Visiting Nurse Services of Western Mass.,
177 F.3d at 59.
Only the U.S. Court of Appeals for the Fifth Circuit
has failed to adopt the Board’s overall impasse rule.
Instead, the Fifth Circuit follows a piecemeal-bargaining
approach. See NLRB v. Citizens Hotel Co., 326 F.2d
501, 505 (5th Cir. 1964); NLRB v. Pinkston-Hollar Con-

5 See, e.g., Pleasantview Nursing Home, Inc. v. NLRB, 351 F.3d 747,
755 (6th Cir. 2003); Vincent Industrial Plastics, Inc. v. NLRB, 209 F.3d
727, 735 (D.C. Cir. 2000); Duffy Tool & Stamping, LLC v. NLRB, 233
F.3d 995, 996–997 (7th Cir. 2000); and Visiting Nurse Services of
Western Mass. v. NLRB, 177 F.3d 52, 58 (1st Cir. 1999).
struction Service, 954 F.2d 306, 311–312 (5th Cir. 1992).
Under this approach, an employer may implement a uni-
lateral change to an existing employment term, even if
the parties have not reached overall impasse, as long as
the employer provides sufficient notice to enable the un-
ion to discuss its objections. Pinkston-Hollar Construc-
tion Service, 954 F.2d at 311–312.
In Winn-Dixie Stores, Inc., 243 NLRB 972 (1979), the
Board fully explicated its rationale for rejecting the Fifth
Circuit’s piecemeal-bargaining approach. The Board
explained that, unlike the overall impasse requirement,
which is supported by “the basic tenets established by the
Court in NLRB v. Katz . . . and by Congress in enacting
Section 8(d) of the Act,” the Fifth Circuit’s approach
does not satisfy the statutory definition of the duty to
bargain because it allows an employer “to implement any
and all changes it desire[s] regardless of the state of ne-
gotiations between the bargaining representative of its
employees and itself” upon simply notifying the union of
the intended change and giving the union an opportunity
to discuss it. Id. at 974. “[U]nder this approach,” the
Board concluded,
form, rather than substance, becomes the determinative
factor in deciding whether the bargaining obligation
has been fulfilled. In consequence, meaningful collec-
tive bargaining is precluded and the role of the bargain-
ing representative is effectively vitiated. We cannot
endorse an approach so clearly in disparagement of the
collective-bargaining process.
Id. In other words, the Board determined that the Fifth Cir-
cuit’s view of the employer’s collective-bargaining obliga-
tion renders that duty a mere formality. Such a view is in-
consistent with the type of “give and take [negotiation] be-
tween parties carried on in good faith with the intention of
reaching agreement through compromise” envisioned by the
Act. Id. Instead, the Fifth Circuit’s approach renders the
union impotent because its disapproval of a proposed
change is meaningless in the face of the employer’s ability
to unilaterally implement the change, in the midst of con-
tract negotiations, despite that disapproval. Accordingly,
this approach essentially allows an employer to present its
decision as a fait accompli, disguised as an opportunity to
bargain. Id. at 975 (“[I]n the absence of an impasse, [the
employer’s] offer ‘to bargain’ about the wage increase [is]
really more in the nature of a proposal that the [u]nion ac-
cept the increase ‘or else.’”). The Board thus concluded in
Winn-Dixie Stores that the employer’s duty to bargain
“[c]learly . . . requires more than going through the motions
of proffering a specific bargaining proposal as to one item
while others are undecided and merely giving the bargain-
ing agent an opportunity to respond.” Id. at 974.
TXU ELECTRIC CO. 1411
Other Federal courts of appeal have sided with the
Board in its rejection of the Fifth Circuit’s approach.
See, e.g., Duffy Tool & Stamping, LLC, 233 F.3d, supra
at 998; Vincent Industrial Plastics, Inc., 209 F.3d, supra
at 735; Visiting Nurse Services of Western Mass., 177
F.3d, supra at 59. For example, in Duffy Tool & Stamp-
ing, the Seventh Circuit explained that the Fifth Circuit’s
approach “empt[ies] the duty to bargain of meaning, and
this in two respects: (1) by removing issues from the bar-
gaining agenda early in the bargaining process, it would
make it less likely for the parties to find common ground;
[and] (2) by enabling the employer to paint the union as
impotent, it would embolden him to hold out for a deal
so unfavorable to the union as to preclude agreement.”
233 F.3d at 998. The court further explained:
If by deadlocking on a particular issue the employer is
free to implement his proposal with regard to that issue,
he signals to the workers that the union is a paper tiger.
. . . It makes it look as if the workers are actually worse
off as the result of the election—which of course is
what the employer, looking forward to a possible strike
vote and to the eventual decertification of the union,
wants them to think. By undermining support for the
union, the employer positions himself to stiffen his de-
mands in what remains of the bargaining process,
knowing that if the process breaks down the union may
be unable to muster enough votes to call a strike. This
stiffening of terms is likely to cause the process to
break down, since the union cannot afford, by moderat-
ing its own demands, to acknowledge that it is indeed a
paper tiger.
Id. at 998–999 (citations omitted) (emphasis in original).
For these reasons, the court concluded that the Board “is on
sound ground in insisting that the employer bargain until it
is plain that the parties are deadlocked in the negotiation as a
whole.” Id. at 999.
B. Pursuant to the Overall Impasse Rule, an Employer’s
Unilateral Change to an Established Wage
PracticeDuring Ongoing Contract
Negotiations is Unlawful
It is well settled that where an employer has an estab-
lished system of granting wage increases that constitutes
a term and condition of employment, the employer may
not unilaterally change or discontinue that practice dur-
ing contract negotiations prior to overall impasse. See,
e.g., Burrows Paper Corp., 332 NLRB 82, 84 (2000);
Kurdziel Iron of Wauseon, Inc., 327 NLRB 155, 155
(1998); Rural/Metro Medical Services., 327 NLRB 49,
51 (1998); Dynatron/Bondo Corp., 323 NLRB 1263,
1264 (1997), enfd. 176 F.3d 1310 (11th Cir. 1999); Har-
rison Ready Mix Concrete Co., 316 NLRB 242, 242
(1995); Daily News of Los Angeles, 315 NLRB 1236,
1237–1241 (1994), enfd. 73 F.3d 406 (D.C. Cir. 1996),
cert. denied 519 U.S. 1090 (1997).6 Whether the em-
ployer has satisfied its bargaining obligation regarding a
wage increase practice is determined by the answers to
the following questions: (1) Does the employer’s practice
constitute a term and condition of employment? (2) If it
does, did the employer satisfy its obligation to maintain
the status quo of that practice during the course of con-
tract negotiations? (3) If the employer did not do so, and
instead instituted a change to that practice, was the
change unilateral, i.e., implemented without the union’s
consent or in the absence of a clear and unmistakable
waiver by the union of its right to bargain about the
change?
For the employer’s wage increase practice to constitute
a term and condition of employment, it must rise to the
level of an “established practice . . . regularly expected
by the employees.” Rural/Metro Medical Services, 327
NLRB at 51 (quoting Daily News of Los Angeles, 315
NLRB at 1236). The Board has identified the following
three criteria for making this determination: (1) the num-
ber of years the program has been in place; (2) the regu-
larity with which raises are granted; and (3) whether the
employer used fixed criteria to determine whether an
employee will receive a raise and the amount thereof. Id.
If a wage increase is not pursuant to an established
practice that constitutes a term and condition of employ-
ment, then the employer is not free to grant it prior to
overall impasse, absent the union’s consent or clear and
unmistakable waiver, because to do so would constitute a
unilateral change in the employees’ wages. Katz, 369
U.S. at 746–747; Burrows Paper Corp., 332 NLRB at

6 Accord: Pleasantview Nursing Home, Inc. v. NLRB, 351 F.3d 747
(6th Cir. 2003) (affirming the Board’s holding that the employer’s
unilateral increase in starting wages during contract negotiations consti-
tuted an unfair labor practice); NLRB v. Beverly Enterprises-
Massachusetts, Inc., 174 F.3d 13 (1st Cir. 1999) (affirming the Board’s
holding that the employer violated Sec. 8(a)(5) by unilaterally decreas-
ing the maximum annual wage increase awarded during the course of
contract negotiations with a newly certified union); NLRB v. Triple A
Fire Protection, Inc., 136 F.3d 727 (11th Cir. 1998) (affirming the
Board’s holding that the employer violated the Act by unilaterally
reducing wage rates of bargaining unit employees and unilaterally
ceasing to make payments to pension and benefit funds during negotia-
tions for a new collective-bargaining agreement); Bryant & Stratton
Business Inst., Inc. v. NLRB, 140 F.3d 169 (2d Cir. 1998) (affirming the
Board’s holding that the employer’s unilateral suspension of its annual
merit wage increase program during the course of negotiations with a
newly certified bargaining representative was unlawful); NLRB v. Al-
lied Products Corp., 548 F.2d 644, 653 (6th Cir. 1977) (“Because the
Company unilaterally changed [its existing wage structure], instead of
maintaining the status quo, the Board properly found that it had com-
mitted an unfair labor practice.”).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1412
83–84. If, however, the employer has a wage increase
practice that constitutes a term and condition of employ-
ment, the employer must maintain the status quo of that
practice during the period of contract negotiations. This
means that the employer must maintain the fixed aspects
of that practice and bargain with the union over any dis-
cretionary aspect of the practice before granting or deny-
ing the wage increase. As the Board explained long ago
in Oneita Knitting Mills, 205 NLRB 500 fn. 1 (1973):
An employer with a past history of a merit increase
program neither may discontinue that program . . . nor
may he any longer continue to unilaterally exercise his
discretion with respect to such increases, once an ex-
clusive bargaining agent is selected. NLRB v. Katz, 396
U.S. 736 (1962). What is required is a maintenance of
preexisting practices, i.e., the general outline of the
program, however, the implementation of that program
(to the extent that discretion has existed in determining
the amounts or timing of the increases) becomes a mat-
ter as to which the bargaining agent is entitled to be
consulted. [Emphasis added.]
Thus, for example, if a wage increase has been routinely
granted in the past according to fixed criteria at a regular
time, the practice is a term and condition of employment,
and the employer must maintain those fixed aspects of the
practice during contract negotiations just as it did before the
union was elected. Daily News of Los Angeles, 73 F.3d at
412; Kurdziel Iron of Wauseon, Inc., 327 NLRB at 155;
Rural/Metro, 327 NLRB at 51. In this circumstance, if the
amount of the increase is also fixed under the employer’s
past practice, the employer must continue to grant the fixed
amount and is not required to bargain with the union over
the amount of the increase. Daily News of Los Angeles, 315
NLRB at 1239 fn. 28; Southeastern Michigan Gas Co., 198
NLRB 1221, 1223 (1972). If, however, the employer has
retained discretion regarding the amount of the increase, it
must provide the union reasonable notice and an opportu-
nity to bargain over the proposed amount prior to the sched-
uled time for implementation. Stone Container Corp., 313
NLRB at 336; Vibra-Screw, Inc., 301 NLRB 371, 377
(1991); Advertiser’s Mfg. Co., 280 NLRB 1185, 1195–1196
(1986), enfd. 823 F.2d 1086 (7th Cir. 1987); Hanes Corp.,
260 NLRB 557, 557 (1982), overruled in part on other
grounds Adair Standish Corp., 292 NLRB 890 (1989);
Oneita Knitting Mills, supra. If the employer fails to do so,
then it has not satisfied its bargaining obligation under Sec-
tion 8(a)(5).
If the employer goes further and does not even main-
tain the fixed aspects of its wage increase practice, then it
has necessarily implemented a change to a term and con-
dition of employment. If the employer has done so uni-
laterally, i.e., without the union’s consent or a clear and
unmistakable waiver by the union of its right to bargain
about the change, then the employer’s failure to bargain
to overall impasse violates Section 8(a)(5). Kurdziel
Iron of Wauseon, Inc., 327 NLRB at 155; Burrows Paper
Corp., 332 NLRB at 84. As discussed below, that is ex-
actly what happened here.
C. Application of the Overall Impasse Rule to the Pre-
sent Case Compels a Finding that the Respondent’s
Unilateral Change to its Annual Wage Increase
Practice Violated Section 8(a)(5)
Applying these well-settled principles to the facts of
the present case compels the conclusion that the Respon-
dent violated Section 8(a)(5) by unilaterally discontinu-
ing its wage increase program as to its unit employees.
The Respondent for 22 years has reviewed salaries annu-
ally and, based on established criteria, has typically made
salary adjustments effective in the month of December.
Further, as the judge found, employees were well aware
of the Respondent’s annual economic review practice.
Under Board precedent, the Respondent’s past practice
was sufficiently well established to become “a term and
condition of employment regularly expected by the [Re-
spondent’s] employees.”7 Daily News, 315 NLRB at
1236. In fact, the Respondent continued its practice in
December 1999, when it completed its annual wage re-
view and, based on that review, implemented the 1999–
2000 pay plan for nonunit employees.
Given that the Respondent’s annual wage increase
practice was a term and condition of employment, the
Respondent was obligated, under the well-settled prece-
dent explained above, to maintain the status quo of that
practice and refrain from making unilateral changes ab-
sent overall impasse. Thus, the Respondent was required
to maintain the practice’s fixed aspects, i.e., the criteria
used to determine whether to grant the increases and the
timing of the increases, and to give the Union reasonable
notice and an opportunity to bargain over the discretion-
ary aspect of the practice, i.e., the amount of the in-
creases. The Respondent did not meet this obligation.
Instead, it decided at the outset of bargaining to freeze
the unit employees’ wages at the level set by the 1998–

7 The Respondent relies on Winn-Dixie Raleigh, 267 NLRB 231
(1983), in support of its argument that an employer does not violate
Sec. 8(a)(5) by withholding a wage increase from represented employ-
ees (and granting it to nonrepresented employees) “when the subject of
wages was on the bargaining table and the employer was engaging in
good faith bargaining with the union at the time it granted the in-
crease.” Winn-Dixie Raleigh is distinguishable, however, for the reason
given by the D.C. Circuit in Daily News of Los Angeles, i.e., “there was
no finding in that case that the employer had established fixed criteria
for determining the amount of its yearly, across-the-board wage in-
crease.” 73 F.3d at 413.
TXU ELECTRIC CO. 1413
1999 plan, and it thereafter excluded them from the
1999–2000 plan, which provided for wage increases for
its nonunit employees. Thus, the Respondent changed its
annual wage increase practice by failing to apply its es-
tablished criteria in determining whether to award its unit
employees annual wage increases, and by denying them
the increase they would have received under the 1999–
2000 plan at the scheduled time.
Having determined that the Respondent changed a
term and condition of employment, I now turn to the
issue of whether the Respondent satisfied its statutory
bargaining obligation before doing so. There has been
no showing that the Union consented to this change or
that the Union clearly and unmistakably waived its right
to bargain over the change. Therefore, the Respondent’s
change was unilateral. Because the parties had not
reached overall impasse at the time that the Respondent
implemented this unilateral change, the Respondent
failed to satisfy its bargaining obligation under Section
8(a)(5).8
D. The Majority’s Unprecedented Holding is Contrary
to the Overall Impasse Rule and Undermines
the Substantial Policy Considerations
Underlying that Rule
The majority’s holding that the Respondent’s unilat-
eral change to its annual wage increase practice was law-
ful is a radical departure from the Board’s longstanding
overall impasse rule. The majority’s decision eviscerates
the employer’s obligation to maintain the status quo of
an established annual wage increase practice during con-
tract negotiations. It thereby unjustifiably impedes the
collective-bargaining process by allowing the employer
to unilaterally remove the issue of changes to this crucial
existing benefit from the bargaining table. My col-
leagues fail to state any policy basis for this substantial
departure from Board precedent, despite the significant
national labor policy considerations underlying the
Board’s overall impasse rule discussed above.
While holding that the Respondent’s unilateral change
was lawful, the majority concedes (1) that the Respon-
dent’s annual practice of granting wage increases each
December for the last 22 years based on established crite-
ria was a term and condition of employment; and (2) that

8 Accordingly, the statements of Supervisors Theimer and Perkins,
informing unit employees that they would not receive the scheduled
increases under the 1999–2000 plan because their wages had to be
negotiated with the Union, were not accurate statements of the Respon-
dent’s bargaining obligation. These statements essentially placed the
blame on the Union for the Respondent’s own unlawful failure to fol-
low its prior practice. The statements were coercive and therefore
violated Sec. 8(a)(1). See Rural/Metro Medical Services, supra at 50;
Lamonts Apparel, 317 NLRB 286, 288 (1995); Harrison Ready Mix
Concrete Co., supra at 242.
the Respondent changed this practice before reaching
overall impasse by failing to apply its established criteria
in determining whether to grant a wage increase to its
unit employees. Thus, my colleagues do not deny that
the Respondent unilaterally implemented a change in a
term and condition of employment before reaching over-
all impasse. Nonetheless, they contend that the Respon-
dent’s unilateral change was lawful under the rationale of
Stone Container Corp., 313 NLRB 336 (1993). My col-
leagues’ error lies in their assertion that Stone Container
stands for the “broader proposition” that if a term and
condition of employment, such as an annual wage ad-
justment program, involves a discrete event scheduled to
recur during the course of bargaining, the employer may
refuse to implement the entire program as long as it pro-
vides the union reasonable notice and an opportunity to
bargain over the change. They further assert that Stone
Container therefore carved out a “third exception” to the
Bottom Line overall impasse rule.9 Their interpretation is
contrary to a plain reading of that case.
In Stone Container, the employer, like the Respondent,
had an established annual practice under which it rou-
tinely granted wage increases at the same time each year
according to the results of its annual wage survey in an
amount determined at its discretion. Accordingly, in
order to maintain the status quo, the employer was re-
quired to maintain the fixed aspects of its practice during
the course of contract negotiations, i.e., the timing and
criteria aspects, and it was also required to provide the
union reasonable notice and opportunity to bargain over
the discretionary aspect, i.e., the amount of the increases,
before implementing the wage increases, if any, at the
usual time. The Board recognized that “the April wage
increases . . . were annually occurring events and thus
bargaining over the amount of such increases could not
await impasse in overall negotiations.” Id. at 336 (em-
phasis added). The Board held that the employer met its
bargaining obligation because rather than “declining to
bargain over how much of an increase, if any, it should
give in April 1989,” the employer “expressed its willing-

9 Significantly, neither the Board nor any court has described Stone
Container, in the decade since its issuance, as establishing a third ex-
ception to the Bottom Line overall impasse rule. Rather, the Board and
the courts have continued to recognize only two exceptions to this rule,
i.e., the “economic exigency” exception and the “dilatory tactics” ex-
ception. See, e.g., Duffy Tool & Stamping, LLC, 233 F.3d at 997
(“[U]nless the union takes steps to delay or avoid bargaining or if the
alteration is necessary to avoid serious hardship to the employer,” an
employer may not unilaterally change existing terms and conditions of
employment absent overall impasse.); Vincent Industrial Plastics, Inc.,
209 F.3d at 734 (noting the only two exceptions to the Board’s overall
impasse rule); Register-Guard, 339 NLRB 353, 354 (2003) (reiterating
that the Board has recognized only two limited exceptions to the overall
impasse rule).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1414
ness to discuss the subject [with the union], conducted its
‘annual wage and benefit survey,’ and proposed giving
no wage increase because, in its view, financial circum-
stances did not justify one at that time.” Id.
Accordingly, the Board’s holding in Stone Container
is fully consistent with the Bottom Line overall impasse
rule. Far from establishing a “third exception” to that
rule, the Stone Container Board expressly distinguished
Bottom Line on the basis that the employer in that case
“unilaterally discontinued its contributions to the union’s
health and welfare and pension trust funds; thus, the em-
ployer’s unilateral implementation concerned a proposal,
which was one of the subjects that was part of the nego-
tiations for an overall agreement.” Id. (emphasis added).
The Board also expressly distinguished Daily News of
Los Angeles on the same basis, explaining that
“[b]ecause the Respondent simply made a decision here
regarding the particular wage increase and did not pur-
port to terminate the annual wage review practice, the
circumstances here are distinguishable from those in
Daily News of Los Angeles.” Id. at 336 fn. 7. Thus, the
Stone Container Board did not apply the Bottom Line
overall impasse rule because the employer in Stone Con-
tainer did not discontinue an established employment
practice during contract negotiations; rather, it complied
with its obligation to maintain the status quo of its annual
wage increase practice.
Indeed, the only reason why any bargaining duty at-
tached to the April wage increases in Stone Container
was that the employer had retained discretion over the
amount of the increases and therefore had to give the
union an opportunity to bargain over that discretionary
aspect. If the amount of the increases had also been
fixed (e.g., 4 percent every year), then it would have
been required to provide the increases in that amount at
the scheduled time, and no bargaining with the union
would have been required. At least that has been the rule
up until today. See Daily News of Los Angeles, 315
NLRB at 1239 fn. 28; Southeastern Michigan Gas Co.,
198 NLRB 1221, 1223 (1972). My colleagues, however,
now hold that where “a discrete event occurs every year
at a given time, and negotiations for a first contract will
be ongoing at that time, an employer can announce in
advance that it plans to make changes as to that event.”
Under this holding, an annual wage increase totally fixed
in all respects may be unilaterally discontinued upon
notice to the union. Stone Container cannot be stretched
that far.
The majority’s confusion partially rests in its failure to
recognize that the “annually occurring event” in Stone
Container was, as identified by the Board in that case,
the “April wage increases,” not the employer’s entire
annual wage increase program. As explained above, the
Stone Container Board recognized the reality that bar-
gaining over the amount of the increases could not await
overall impasse because the increases were scheduled to
occur during contract negotiations. Id. at 336. The ma-
jority misconstrues the Stone Container Board’s recogni-
tion of this fact as providing authorization for the Re-
spondent to unilaterally suspend its annual wage increase
program, as applied to unit employees, upon notice to the
Union. However, as explained above, the Stone Con-
tainer Board based its holding on the fact that the em-
ployer did not discontinue its annual wage increase prac-
tice, but instead properly maintained the fixed aspects of
that practice while bargaining with the union over the
discretionary amount of the increases. Clearly, had the
employer in Stone Container unilaterally discontinued its
established practice prior to overall impasse, as the em-
ployers did in Bottom Line Enterprises and Daily News
of Los Angeles, and as the Respondent did in the present
case as to its unit employees, the Board would have ap-
plied the Bottom Line standard and found such a unilat-
eral change to be unlawful.
Thus, contrary to my colleagues, Stone Container does
not stand for the “broader proposition” that an employer
is free to unilaterally change a term and condition of em-
ployment that involves a discrete event scheduled to re-
cur during the course of bargaining. To the contrary,
Stone Container is consistent with the Board’s long-
standing overall impasse rule, grounded in the Katz doc-
trine, that employers must maintain the status quo of
terms and conditions of employment during the course of
contract negotiations absent the union’s consent or over-
all impasse.
Similarly, in Alltel Kentucky, Inc., 326 NLRB 1350
(1998), upon which the majority also relies, the employer
had an established annual wage increase practice. The
employer decided not to grant a scheduled increase dur-
ing the course of contract negotiations based on the re-
sults of a wage survey that showed that its current wage
scale was higher than the market average. The employer
gave the union reasonable notice and an opportunity to
bargain over its proposal of a zero percent wage increase,
and the union did not submit any counterproposals on the
issue. Thus, as in Stone Container, the employer pro-
vided the required notice and opportunity to bargain over
the amount of the scheduled wage increase, and the
Board therefore found that it had satisfied its bargaining
obligation. Id. at 1350–1351.
Again, in American Packaging Corp., 311 NLRB 482
(1993), decided earlier in the same year as Stone Con-
tainer, the employer had an established practice of grant-
ing production-based bonuses every September 1 based
TXU ELECTRIC CO. 1415
on its review of the past year’s costs and profits. During
contract negotiations, the union informed the employer
that the employer should apply its established formula
and that the union did not expect a bonus to be paid to
unit employees if one was not paid to the nonunion em-
ployees. As requested, the employer applied its estab-
lished formula and determined that no bonus was earned
by any of its employees. The Board found that the em-
ployer did not act unlawfully because it had not discon-
tinued its established practice; rather, it bargained with
the union, the union waived its right to bargain about the
bonus amount, and the employer, in applying its estab-
lished formula, “legitimately determined that no year-end
bonus was earned for 1990.” Id. at 483. Thus, in Ameri-
can Packaging, as in Stone Container and Alltel Ken-
tucky, the Board found that the employer had satisfied its
bargaining obligation because it had maintained the
status quo of its annual pay adjustment practice and had
given the union reasonable notice and opportunity to
bargain over the amount of the scheduled adjustment.
Significantly, in Daily News of Los Angeles, 73 F.3d at
413, the D.C. Circuit rejected the overbroad interpreta-
tion of Stone Container now espoused by the majority.
The court was reviewing the Board’s supplemental deci-
sion on remand (Daily News of Los Angeles, 315 NLRB
1236 (1994)), in which the Board reaffirmed its prior
conclusion that the employer’s unilateral discontinuance
of its annual merit wage increase practice during contract
negotiations violated Section 8(a)(5). In the Board’s
split decision as to rationale, Chairman Gould and Mem-
ber Browning distinguished Stone Container, supra, and
American Packaging, supra, explaining that “the critical
distinction between the present facts and those operative
in [those two cases] is that the latter two employers ap-
plied the preexisting system for granting raises while the
Respondent did not.” Daily News, 315 NLRB at 1240.
Thus, “[t]he absence of increases in Stone Container and
American Packaging flowed from the employers’ appli-
cation of their merit review program, not, as here, from
the Respondent’s unilateral decision to withhold raises
even if the raises would have been given under an appli-
cation of the preexisting merit raise program.” Id. In
concurrence, Members Stephens and Cohen posited, as
my colleagues do in the present case, that under Stone
Container, “[w]here there is a past practice concerning
an annual event (e.g., an annual wage increase), and the
event is scheduled to recur during negotiations for a con-
tract,” id. at 1243, an employer may unilaterally “mod-
ify” or “delete” the employment practice itself for the
current year, as long as the employer provides the union
reasonable notice and an opportunity to bargain before
doing so. Id. at 1243–1244 fn. 1. However, Members
Stephens and Cohen concurred as to the result reached
by their colleagues on the basis that the Daily News had
not provided the union reasonable notice and opportunity
to bargain. Id. at 1244.
On review, the D.C. Circuit rejected the concurrence’s
view and adopted Chairman Gould’s and Member
Browning’s rationale, agreeing that Stone Container and
American Packaging were distinguishable on the basis
that in each case “the employer did not suspend the pro-
gram, but rather applied its usual evaluation criteria be-
fore deciding that no increases were justified.” Daily
News of Los Angeles, 73 F.3d at 413. The court agreed
that unlike the employers in those two cases, who did not
change their existing practices, the Daily News had
unlawfully changed its annual wage increase practice by
failing to apply its fixed criteria in determining whether
to grant merit increases. Id. (“Daily News . . . could not
make an across-the-board policy determination based on
non-merit criteria. . . . By ignoring the established crite-
ria for making its wage-increase decisions, the Company
changed a fixed aspect of the policy.”).
The D.C. Circuit also rejected the argument, resur-
rected by my colleagues, that an employer’s unilateral
change to an annual wage increase practice is permissible
under Stone Container if it is not a “permanent” policy
change, but instead a change for the current year only.
Id. at 414 fn. 8. Specifically, the court rejected Daily
News’ assertion that its actions were similar to those
found lawful in Stone Container and American Packag-
ing given that “its decision to stop granting the wage
increases was not a permanent policy change.” Id. As
the court explained, this purported distinction between a
permanent and temporary change is one without a differ-
ence under the Bottom Line standard because a unilateral
suspension of an established employment practice is a
change in a term and condition of employment and is
therefore unlawful “regardless of how long the suspen-
sion lasts.” Id. (citing UAW v. NLRB, 455 F.2d 1357,
1365 (D.C. Cir. 1971), in which the court found a viola-
tion even though the unilateral suspension of a merit re-
view plan lasted less than 5 months).
The D.C. Circuit’s conclusion in this regard is unas-
sailable. An employer cannot excuse such unilateral
conduct on the basis that it remains willing to bargain
with the union over a particular term and condition of
employment after the employer has suspended it. The
unilateral suspension injures the bargaining process and
undermines the union by shifting the baseline of negotia-
tions as to a mandatory subject of bargaining. By taking
away an existing benefit, the employer forces the union
into the position of having to bargain to get it back, in-
stead of the employer having to negotiate to change it.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1416
Accordingly, in the present case, the Respondent’s uni-
lateral change in its annual wage increase practice was
unlawful, regardless of whether it was implemented for
the current year only or future years as well.10 The ma-
jority’s authorization of such unilateral action profoundly
damages the give-and-take nature of the bargaining proc-
ess that the overall impasse rule is meant to foster and
protect.
Finally, my colleagues erroneously contend that once
the Respondent had provided the Union with reasonable
notice and an opportunity to bargain about the proposed
change to its annual wage increase practice, it was in-
cumbent upon the Union to request bargaining over that
proposal. This contention ignores the Board’s well-
settled principle that during contract negotiations, “a un-
ion must clearly intend, express, and manifest a con-
scious relinquishment of its right to bargain before it will
be deemed to have waived its bargaining rights.” Inter-
mountain Rural Electric Assn., 305 NLRB 783, 786
(1991); accord: Bottom Line Enterprises, 302 NLRB at
374 (“Absent exceptional circumstances, an employer
may not justify a unilateral implementation of a proposal
on a particular subject, submitted during negotiations for
a labor agreement . . . on the ground of a union’s failure
to request bargaining on that subject.”). This is
“[b]ecause the parties are in fact bargaining on various
proposals, [and therefore] there is no need for additional
requests for bargaining on those proposals.” Intermoun-
tain Rural Electric Assn., 305 NLRB at 786; accord:
Pleasantview Nursing Home, Inc., 351 F.3d at 756–757
(“In a [contract] negotiation, a party need not respond to
every statement with a forceful rejection and insistence
on further bargaining; further bargaining is assumed and
a waiver of the issue will not be presumed unless it is
clear and unmistakable.”). Instead of applying these
principles, my colleagues mistakenly apply the standards
relevant to a setting where contract negotiations are not
ongoing, where “it is incumbent upon a union to request
bargaining when it receives sufficient notice to permit
meaningful bargaining over an employer’s proposal to
change terms and conditions of employment.” Inter-
mountain Rural Electric Assn., supra at 786.
It is uncontested that the parties in the present case ex-
changed wage proposals and counterproposals and dis-
cussed the issue of wages during their negotiations for an

10 Moreover, my colleagues’ premise that “the Respondent’s pro-
posed change addressed the upcoming salary plan to take effect for
2000 . . . [and] did not affect future years” is inaccurate. The Respon-
dent indefinitely suspended its wage increase practice as to its unit
employees when it informed the Union that it would freeze unit em-
ployees’ wages by continuing to apply the 1998–1999 plan until such
indeterminate time as the parties negotiated a change to that plan.
initial contract, but they had not reached an agreement at
the time the Respondent unilaterally denied the wage
increase to its unit employees. Pursuant to the applicable
standard in the contract negotiation setting, the Union
was not obliged to request additional bargaining regard-
ing the Respondent’s announced intention to change its
annual wage increase practice. Absent a clear and un-
mistakable waiver by the Union on this issue, which it
undeniably did not give, the Respondent was prohibited
from unilaterally implementing the change, and the Un-
ion was entitled to rely on that prohibition all the way to
overall impasse.
My colleagues’ holding to the contrary essentially
adopts the Fifth Circuit’s piecemeal-bargaining ap-
proach, discussed above, as to actions qualifying as “dis-
crete events scheduled to occur during the course of bar-
gaining,” despite the universal rejection of that approach
by the Board and other Federal courts of appeal. As ex-
plained by the Board in Winn Dixie, supra, this approach,
which requires the employer to do nothing more than
provide reasonable notice and an opportunity to bargain
before implementing a change in a term and condition of
employment, renders the employer’s bargaining obliga-
tion during contract negotiations a mere formality, since
the employer is free to implement its desired change re-
gardless of the union’s response. It therefore essentially
allows the employer to present its proposal to change an
established employment practice as a fait accompli.
Furthermore, my colleagues’ approach effectively au-
thorizes employers to use a unilateral change in an an-
nual wage increase practice during contract negotiations
as an economic weapon, despite decisions of the Board
and the D.C. Circuit to the contrary. In Daily News of
Los Angeles, 979 F.2d 1571, 1576–1578 (D.C. Cir.
1992), the D.C. Circuit invited the Board to consider on
remand whether the employer was free to deny scheduled
merit wage increases to its unit employees, while provid-
ing such increases to its unrepresented employees, as a
legitimate economic weapon pursuant to NLRB v. Insur-
ance Agents, 361 U.S. 477 (1960), and American Ship
Building Co. v. NLRB, 380 U.S. 300 (1965). The Board
answered this question in the negative. Daily News of
Los Angeles, 315 NLRB at 1243. The Board explained
that “while the Supreme Court has made clear . . . that
the Board is not warranted in becoming involved in the
substantive aspect of the bargaining process by function-
ing as an arbiter of the sort of economic weapons the
parties may use in seeking acceptance of their bargaining
demands, it is also clear that not all economic weapons
seriously affecting employee rights may be employed
with impunity merely because employed in aid of one’s
bargaining position.” Id. at 1242–1243 (internal quota-
TXU ELECTRIC CO. 1417
tions and citations omitted). The Board pointed out that
the Court in Katz “was careful to note that the availabil-
ity of economic weaponry under Insurance Agents is
subject to one crucial qualification—the party utilizing it
must at the same time be engaged in lawful bargaining.
Thus, . . . Katz made clear that the Board ‘is authorized
to order the cessation of behavior which is in effect a
refusal to negotiate.’” Id. at 1243 (quoting Katz, 369
U.S. at 747). The Board concluded that the employer’s
unilateral action of discontinuing merit wage increases
was inconsistent with the right to bargain collectively
under Section 8(a)(5) and therefore not a legitimate eco-
nomic weapon. Id. at 1242–1243.
On review, the D.C. Circuit agreed unreservedly with
the Board’s analysis in this regard, explaining as follows:
In this case, as in Katz itself, the unilateral action of the
employer constitutes a refusal to negotiate to impasse
over a mandatory subject of bargaining, which is a vio-
lation of [S]ection 8(a)(5) precisely because such an ac-
tion impermissibly interferes with the collective bar-
gaining process. It is clear beyond a doubt that the
Company’s action cannot fall within Insurance Agents
or American Ship because, in refusing to negotiate over
a mandatory subject, the employer is evading the duty
to bargain. Nothing in Insurance Agents, American
Ship or Katz allows an employer to refuse to bargain
over a mandatory subject by simply declaring the re-
fusal to be an “economic weapon” or tactic to gain lev-
erage in negotiations. To condone such a proposition
would make a mockery of the bargaining process.
Daily News of Los Angeles, 73 F.3d at 414. Accordingly, an
employer’s unilateral change, midstream in contract nego-
tiations, to an annual wage increase practice is unlawful
because it constitutes a refusal to bargain to overall impasse
over a mandatory subject of bargaining. My colleagues’
condonation of this behavior now places a powerful and
heretofore unlawful economic weapon in the hands of em-
ployers. By allowing an employer to unilaterally manipu-
late an existing term and condition of employment to its
advantage in the midst of collective bargaining, and thereby
shift the baseline of negotiations as to that term and condi-
tion of employment, my colleagues’ holding subverts the
give-and-take nature of the collective-bargaining process
that the Board’s longstanding overall impasse rule,
grounded in Katz, is meant to foster and protect.
V. CONCLUSION
Under the Board’s overall impasse rule, the Respon-
dent violated Section 8(a)(5) and (1) by unilaterally
changing a term and condition of employment during
negotiations for a collective-bargaining agreement. De-
spite the Board’s well-established rule prohibiting such
conduct, the majority holds that merely because an event
is scheduled to recur during contract negotiations pursu-
ant to an employer’s past practice, the employer may
lawfully implement a wholesale change to the practice
itself so long as it satisfies the empty formality of provid-
ing notice to the union of its intent to do so. This holding
represents an unprecedented and radical departure from
the Board’s overall impasse rule that undermines the
important national labor policy on which that rule is
based: to foster industrial peace through the collective-
bargaining process by preventing an employer from re-
moving issues from the bargaining table in the midst of
contract negotiations, thereby impairing the parties’ abil-
ity to reach an overall agreement. The predictable ten-
dency of my colleagues’ decision, I fear, will be to drive
the clash of interests between management and labor
away from the give and take of the bargaining table into
more economically disruptive avenues of collective ac-
tion.
Linda Campbell Reeder, Esq., for the General Counsel.
David C. Lonergan, Esq. and Alicia Voltmer, Esq., of Dallas,
Texas, for the Respondent.
Jon Gardner, of Ft. Worth, Texas, for the Charging Party.
DECISION
STATEMENT OF THE CASES
PARGEN ROBERTSON, Administrative Law Judge. This hear-
ing was held in Ft. Worth, Texas, on March 27, 2000. Respon-
dent, the Charging Party, and the General Counsel were repre-
sented and were afforded full opportunity to be heard, to exam-
ine witnesses, and to introduce evidence. The General Counsel
filed a motion to sever Cases 16–CA–19810, 16–CA–19810–2,
16–CA–19895, and 16–CA–20210–2 from Case 16–CA–
20247. That motion is granted.1 The charge in Case 16–CA–
20247 was filed on January 4, 2000. Respondent and the Gen-
eral Counsel filed briefs. Upon consideration of the entire re-
cord and briefs, I make the following findings.
Respondent admitted that at material times it has been a
Texas corporation, with a place of business in Glen Rose,
Texas, where it has been engaged as a public utility in the busi-
ness of providing electrical service; that during the past 12
months, in conducting those business operations, it derived
gross revenues in excess of $250,000 and purchased and re-
ceived at its Glen Rose facility goods and materials valued in
excess of $50,000 directly from suppliers located outside
Texas; and that it has been an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the National
Labor Relations Act (the Act). Respondent admitted that the
Charging Party has been a labor organization at material times.

1 Respondent contented that the motion to sever should be denied
and, instead, the charges should be dismissed. I reject that contention.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1418
Respondent admitted that the Union was certified on Febru-
ary 19, 1999, and that it represented employees in the following
appropriate bargaining unit at material times:
All chemistry technicians, including lead technicians, em-
ployed by Respondent at the Comanche Peak Steam Electric
Station at Glen Rose, Texas.
Respondent has a large work force. There are approximately
14,000 employees in the United States. A number of those em-
ployees are technicians including the chemistry technicians in
the unit. Before February 1999 about 850 employees were cov-
ered by the technicians salary plan. Of those 850 employees
only 26 are in the bargaining unit.
At issue is application of Respondent’s salary plan for tech-
nicians. When the Union was certified both unit and nonunit
technicians were paid under Respondent’s 1999 technicians
salary plan. Respondent routinely reviewed its benefits. Ac-
cordingly the technicians salary plan was reviewed and on De-
cember 26, 1999, Respondent adopted a 2000 technicians sal-
ary plan. That plan was not applied to bargaining unit techni-
cians.
The General Counsel alleged that Respondent unlawfully
failed to include unit technicians in the 2000 technicians salary
plan and that it threatened employees that no wage raises would
be given until it and the Union agreed to a contract.
Pursuant to recommendations from human resources a policy
committee routinely reviewed the total compensation package
for Respondent’s systemwide technicians work force. That
review included consideration of its technicians salary plan.
The review was routinely performed on an annual basis and
involved examination of the current market conditions, com-
pany economics, the current retention of employees, and other
factors. Following the policy committee report a decision was
made as to whether adjustments were needed in the compensa-
tion package (Tr. 67–69). Before the end of 1999 the policy
committee recommended a new technicians salary plan for
2000 and the elimination of double overtime pay and pay for
overtime meals for technicians. Those recommendations were
instituted as to some technicians but not to bargaining unit
technicians around December 26, 1999.2 Some unit employees
received a pay increase under the 1999 salary plan. However,
those unit technicians that had topped out at 100-percent job
rating were not eligible for a pay increase in accord with the
1999 plan. If Respondent had applied the 2000 salary plan to
unit employees those topped out unit technicians would have

2 According to lead chemistry technician Shawn Flaherty every
technician that was topped out at 100 percent received a pay raise each
year around December 26 until 1999. Flaherty received a commendable
evaluation in January 2000. Based on that evaluation he would have
received a 3.6-percent increase in pay if Respondent had granted the
same increase it granted to all its nonunit technician employees that
were covered by the 2000 plan. Chemistry Technician Randall Walsh
testified that he has received a performance review around December
26 every year since he reached the “top-out of the job-value.” He re-
ceived a pay increase each December 26 based on his performance
review and the technicians’ salary plan chart. Since voting in the Union
the unit employees rated at 100 percent have not received a pay in-
crease.
received a pay increase upon evaluations of commendable or
above.
Respondent’s labor relations coordinator, Jimmy Walker,
testified that Respondent and the Union have met in negotia-
tions approximately 20 times but have not reached agreement.
During their first meeting on May 7, 1999,3 Walker advised the
Union that the current wage package plan was a status quo
issue and would not change until the parties reached a collec-
tive-bargaining agreement. The Union did not object.4 Since
that time both the Union and Respondent have made several
wage proposals, the Union requested information from Re-
spondent regarding wages and the parties have exchanged let-
ters regarding those negotiations (see R. Exhs. 5–8).
The Union submitted a proposal on June 18, 1999, which in-
cluded double overtime and pay for overtime meals (R. Exh.
12). Respondent supplied the Union with information pursuant
to its requests. During July 12 negotiations, the Union submit-
ted its first wage proposal and Jimmy Walker reminded the
Union of the May 7 discussion that the 1999 technicians salary
plan would remain in effect until the parties negotiated a new
agreement. On August 20, Respondent proposed elimination of
doubletime and institution of time-and-one-half for overtime
over 40 hours a week. Respondent submitted a wage counter-
proposal on October 8. Respondent’s counterproposal included
a potential merit based increase for career-level senior chemical
operators (R. Exh. 9).
Respondent implemented its 2000 technicians salary plan to
nonunit employees on December 26, 1999. There was no
change in Respondent’s practice of evaluating employees at the
end of the year and awarding wage increases to employees5 on
the basis of those evaluations. All employees including unit
employees continued to receive annual evaluations after De-
cember 26, 1999. After December 26, 1999, unit employees
received evaluations and possible wage increases under the
1999 technicians salary plan while nonunit technicians received
evaluations with possible pay increases under the 2000 techni-
cians salary plan.
The Union next submitted a wage proposal on January 19,
2000. That proposal called for seniority-based pay increases.
Respondent submitted a counterproposal on January 31. That
proposal also included a potential merit based increase for ca-
reer-level senior chemical operators and the overall pay ranged
from $12.90 an hour for starting associate chemical operators to
a career-level rate of $26.52 an hour for senior chemical opera-
tors after 72 months with a possible merit-based increase up to
$29.87 an hour (R. Exh. 14). Respondent’s October 8 counter-
proposal ranged from $12.45 an hour for starting associate
chemical operators to a career-level rate of $25.60 an hour for

3 Shawn Flaherty, who is a member of the union negotiating com-
mittee, admitted that Walker told the union negotiators about retaining
the 1999 salary plan but he recalled that occurred in the fall of 1999. As
shown below, I credit Walker in that regard.
4 Flaherty testified that the Union did object that unit employees
should receive the same raises each year as the other technicians.
5 Unit employees were evaluated at the end of 1999 and those unit
employees that were at 100-percent pay were not granted a pay in-
crease. Under that 1999 plan, unit employees at 100-percent pay were
not entitled to a pay increase regardless of their evaluations.
TXU ELECTRIC CO. 1419
senior chemical operators after 72 months with a possible merit
based increase up to $28.83 an hour (R. Exh. 9).
Also on January 31 the Union submitted an overtime pro-
posal which represented a proposed increase in the amount of
hours paid at doubletime (R. Exh. 13). For example that pro-
posal called for time-and-a-half pay for overtime but dou-
bletime for over 12 hours a day and over 49 hours a week.
Although no new proposals were submitted the parties con-
tinued to meet in negotiations during February 2000.
Shawn Flaherty testified that Labor Relations Manager
Jimmy Walker told union negotiators about the December 1999
raise. Walker told the employees they would not receive the
wage increase because they were locked into the technicians
salary plan of 1999. Later, Chemistry Manager Bozeman told
Flaherty that pay raises were subject to negotiations and due to
the status quo issue, unit employees would not receive the nor-
mal pay raises.
Randall Walsh and other unit technicians met with Chemis-
try Supervisor Robert Theimer at the plant in late November
1999. One of the technicians asked Theimer what the techni-
cians’ pay increase was going to be that year. Theimer replied
that the wage increase did not apply to the technicians now
because the wages had to be negotiated. Walsh and three or
four other technicians met with Supervisor David Perkins on
January 11, 2000. Walsh asked Perkins why some of the tech-
nicians received wage increases and others received no in-
crease. Perkins said that he did not know about anyone receiv-
ing raises but he knew the technicians there were not going to
receive a wage increase because of the union issue, that their
pay was going to be negotiated and they would not receive an
increase until there was a contract. Later that day, Perkins
phoned Walsh and said that the people that weren’t at 100-
percent job value under the old plan would receive pay in-
creases but anyone else would not get a raise until a contract
was negotiated. Perkins said the 2000 pay plan did not apply to
unit employees. Walsh did not receive a pay increase on De-
cember 26, 1999, even though he was rated commendable in
his job evaluation. Under the 2000 technicians’ salary increase
guide6 in accord with his work history, Walsh would have re-
ceived a pay increase around December 26, 1999.
A. Findings; Credibility
There is a dispute between Shawn Flaherty and Jimmy
Walker about negotiations regarding Respondent’s intent to
maintain its 1999 technicians salary plan for unit employees.
Flaherty admitted that Walker told the union negotiators that it
would continue to apply the 1999 plan to unit employees. How-
ever, he, as opposed to Walker, testified that the Union objected
to Respondent continuing to apply the 1999 technicians salary
plan. I was more impressed with Walker’s demeanor and testi-
mony. Walker testified in detail regarding negotiation sessions
and he demonstrated actual recall of individual negotiation
sessions. Flaherty did recall the Union quarreling with Respon-
dent in December about application of the 2000 salary plan to
unit employees but he did not demonstrate recall as to what was
said about the status quo and the 1999 plan during May and

6 Jt. Exh. 4, p. 11.
July negotiations. In view of the full record I find that Walker
first brought up the status quo matter in May and again in July.
I am not surprised about the Union quarreling with Respondent
in December about the 2000 salary plan since unit employees
were told about the plan’s implementation during that month.
Moreover, I am concerned about Flaherty’s testimony that
the Union decided not to file charges when first told about Re-
spondent’s belief that the 1999 plan was the status quo for unit
employees but to wait to see if Respondent changed its mind.
During the period when Respondent first announced its status
quo plan, the Union was actively filing charges against Re-
spondent. For example Case 16–CA–19810 was filed on March
17, and Case 16–CA–19895 was filed on May 20, 1999. It is
difficult to understand why a factor as important as a wage
adjustment was not included in those charges if, as Flaherty
testified, the Union objected when Respondent announced its
position. Instead it appears from Flaherty’s testimony when
considered along with that of Walker, that the Union did not
actually object until after the 2000 salary plan was implemented
in December. I credit the testimony of Walker including his
testimony that Respondent advised the Union on more than one
occasion of its intent to maintain the status quo under the 1999
technicians salary plan until a collective-bargaining agreement
was reached.
Randall Walsh testified about a January 11, 2000 meeting
with four or five employees and Supervisor David Perkins.
Perkins responded to Walsh’s question as to why some techni-
cians did not receive a pay increase. Perkins told the employees
they would not get a pay raise because of the union issue and
not until there was a contract (Tr. 48, 49). Perkins admitted that
he told Shawn Flaherty that wage increases would be governed
by the 1999 technicians salary plan. Perkins denied that he
talked with Walsh about pay increases. In view of the full re-
cord I am convinced that David Perkins told employees they
would not receive a pay increase under the 2000 technicians
salary plan. In that regard I credit testimony that Perkins subse-
quently phoned Walsh that employees that were not at 100-
percent job value would receive a pay increase under the 1999
technicians salary plan but that the 2000 plan did not apply to
unit employees.
B. Conclusions
1. The 8(a)(1) allegations
The complaint alleged that Supervisors Theimer and Perkins
threatened employees they would not receive a pay increase
because of negotiations with the Union. As shown above,
Theimer and Perkins did tell employees that Respondent
planned to exclude unit employees from the 2000 technicians
salary plan.
2. The 8(a)(1) and (5) allegations
The General Counsel contended that by failing to apply the
2000 technicians salary plan to bargaining unit employees,
Respondent unilaterally changed terms and conditions of em-
ployment. Respondent contended that it did not unilaterally
change terms and conditions of employment.
I credit testimony and other evidence that shows:
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1420
The Union was certified on February 19, 1999. At the time
of the Union’s certification, unit employees’ pay was set by the
1999 technicians salary plan. The parties started negotiations on
May 7, 1999. Respondent told the Union that it planned to
maintain the 1999 technicians salary plan for unit employees
pending agreement. The Union did not object. On May 7, it was
well known by unit employees that Respondent routinely re-
viewed its technicians salary plan at the end of December each
year. On June 18, the Union proposed, among other things, that
Respondent pay double overtime and pay for overtime meals.
On July 12, the Union submitted its first wage proposal and
Respondent reminded the Union of its intent to maintain the
1999 technicians salary plan for unit employees pending
agreement. On August 20, Respondent proposed elimination of
double overtime pay and pay for overtime meals. On October 8,
Respondent made a wage proposal that ranged from $12.45 an
hour for starting associate chemical operators to a career-level
rate of $25.60 an hour for senior chemical operators after 72
months with a possible merit based increase up to $28.83 an
hour (R. Exh. 9). On and after December 26, 1999, Respondent
applied a different technicians salary plan to nonunit techni-
cians. In addition to implementation of that 2000 technicians
salary plan Respondent eliminated double overtime pay and
pay for overtime meals for nonunit technicians. The 2000 tech-
nicians salary plan was not applied to unit employees and there
was no change in unit employees’ double overtime pay and pay
for overtime meals. If the 2000 plan had been applied to unit
employees, those chemistry technicians rated at 100 percent
would have received December 26, 1999 pay increases if
evaluated at commendable or higher. Some unit employees did
receive a pay increase after December 26, 1999, but those in-
creases were granted under the 1999 technicians salary plan.
The Union filed its unfair labor practice charge on January 4,
2000. The Union submitted another wage proposal on January
19 and Respondent submitted a counterproposal on January 31,
2000. The Union submitted a proposal that same day to in-
crease the amount of hours paid at doubletime. The parties have
continued to negotiate.
The General Counsel argued that Respondent’s action is
unlawful. Respondent failed to bargain before eliminating bar-
gaining unit technicians from its 2000 technicians salary plan?
(Daily News of Los Angeles, 304 NLRB 511 (1991); Harrison
Ready Mix Concrete, 316 NLRB 242 (1995); Lasalle Ambu-
lance, Inc., 327 NLRB 49 (1998). In Daily News of Los Ange-
les, the Board stated:
Two well–settled legal principles, both enunciated by the Su-
preme Court in its decision in NLBR v. Katz, 369 U.S. 736
(1962), underlie the judge’s analysis. First, an employer ne-
gotiating with a newly certified bargaining representative is
prohibited under Section 8(a)(5) from altering established
terms and conditions of employment without first notifying
and bargaining with the union..7 [Id.; Emphasis added.]

7 The Board went on to state:
Finally, the dissent’s conclusion that the Union in this case sought
“the best of both worlds” misses the mark. What the Union sought
was nothing more than what the Board and courts require the Re-
spondent to do, namely, to maintain the existing terms and conditions
Respondent contended that it did bargain over application of
its 2000 technicians salary plan to unit employees. From the
Union’s certification in February 1999 Respondent was faced
with a dilemma regarding unit employees. At that time both
Respondent and unit employees were aware of Respondent’s
annual practice of reviewing economic conditions including its
technicians salary plan. Respondent advised the Union that it
would maintain the 1999 technicians salary plan as status quo
for unit employees pending negotiations and the Union did not
object.
There is no dispute but that Respondent made changes in
working conditions when it adopted a 2000 technicians salary
plan and applied that plan to nonunit technicians on December
26, 1999. Nor is there a dispute but that Respondent continued
to apply its 1999 technicians salary plan to unit employees.
There remains a question regarding bargaining. Respondent
and the Union did discuss maintenance of the 1999 technicians
salary plan for unit employees during collective-bargaining
negotiations. I must examine whether Respondent’s action in
eliminating unit employees from its 2000 technicians salary
plan constitutes bad-faith bargaining in view of Respondent’s
notice to the Union and subsequent actions.
An employer may not lawfully alter “established terms and
conditions of employment without first notifying and bargaining
with the union. (Daily News of Los Angeles, supra). Here the
employer did notify the Union and the Union did not object to
Respondent announced intent to maintain the 1999 plan for unit
employees.
One may ask what the Act is designed to protect regarding
unilateral changes in violation of an employer’s bargaining
obligation. Obviously, at least one objective is to prevent an
employer from unlawfully undermining the bargaining repre-
sentative. If there was an instance of Respondent unlawfully
undermining the Union, that occurred either in November when
a supervisor told employees of Respondent’s intent regarding
the 2000 plan as to unit employees or in December 1999, when
Respondent actually implemented its 2000 technicians salary
plan. Respondent told the Union of its intent regarding unit
employees several months before November and December. I
credited the testimony of Jimmy Walker. Walker testified that
Respondent advised the Union during May 7 and July 12, 1999,
negotiations that it would continue to apply the 1999 techni-
cians salary plan to unit employees until the parties reached a
collective-bargaining agreement. When Respondent told the
Union of its intent to maintain the status quo, unit employees
were well aware of Respondent’s annual economic review
practice. Nevertheless, the Union did not object to Respon-
dent’s announced status quo plan until after8 it and Respondent
engaged in extensive negotiations over economics and after
Respondent announced its 2000 technicians salary plan in De-
cember 1999.9 Additionally, Respondent advised the Union and
unit employees on the negotiating committee that it viewed

of employment pending negotiated changes in past practices or an
impasse in bargaining. [Id. at 512. Emphasis added.]
8 Respondent filed the charge in this matter on January 4, 2000.
9 See NLRB v. Rochester Institute of Technology, 724 F.2d 9 (2d Cir.
1983).
TXU ELECTRIC CO. 1421
continuation of the 1999 Technicians Salary Plan as necessary
maintenance of the status quo for unit employees long before
any supervisors told unit employees they would not receive
wage increases under the 2000 technicians salary plan.10
Whether Respondent’s May 7 action constitutes bargaining
may be questioned. However, that issue was not called into
question. The Union did not initially object when Respondent
said it would maintain the status quo.11 There was no demand
for bargaining and, of course, there was no showing that Re-
spondent refused to bargain about that issue. I am convinced
that Respondent did what it was legally required to do at that
point. Subsequently, on July 12 Respondent reminded the Un-
ion again of its intent to maintain the 1999 plan for unit em-
ployees.
If Respondent and the Union had agreed to a collective-
bargaining agreement after May 7, an agreement would have
resulted in unit employees being segmented from other techni-
cians for pay purposes. If the agreement had preceded Decem-
ber 26 unit employees would have received benefits under the
agreement before Respondent’s annual review of the techni-
cians salary plan. When Respondent first told the Union of its
intent to maintain the status quo, the 1999 technicians salary
plan had been in effect for only 4 months. At any time over the
next 7-1/2 months, an agreement to increase unit employees
salary would have preceded any pay increase for other techni-
cians. The parties did not reach early agreement but there was
no showing that was caused by any unlawful action by Respon-
dent.
By affording the Union the opportunity to either object to its
announced plan to maintain the status quo of the 1999 plan and
avoid negotiating an early agreement that would precede the
2000 technicians salary plan, or, to otherwise negotiate know-
ing of the likelihood that Respondent would adopt a new tech-
nicians salary plan in December 1999, Respondent appeared to
act in good faith.
Before December 26, 1999, the Union and Respondent also
engaged in negotiations about pay and overtime. Although
Respondent changed the salary plan for nonunit technician
employees it also changed its double overtime and overtime
meal policy. Respondent did not change those benefits for unit
employees. Unit employees retained double overtime and pay
for overtime meals.
In view of the above and the full record, I find that the par-
ties did negotiate over the wages of unit employees and Re-
spondent did not unilaterally discontinue its pay plan for unit
employees. Negotiations included Respondent advising the
Union of its intent to maintain the 1999 technicians salary plan
for unit employees until agreement; the Union’s failure to ob-
ject; and several wage increase offers during bargaining from
both the Union and Respondent.

10 Shawn Flaherty admitted that Respondent’s negotiators told union
negotiators of its plan to continue the 1999 plan in the fall of 1999.
Jimmy Walker credibly testified that he told the union negotiators of
Respondent’s plan to continue application of the 1999 plan during May
1999 negotiations.
11 According to Flaherty’s testimony the Union argued with Respon-
dent about unit employees not being included in the 2000-salary plan in
December. The Union filed the charge herein on January 4, 2000.
The Union made several economic proposals during negotia-
tions including proposals on June 18 and July 12, 1999, and
January 19, 2000. Respondent submitted economic proposals
including proposals on August 20 and October 8, 1999, and
January 31, 2000.
In view of those factors I find that this case must be distin-
guished from Daily News of Los Angeles, supra, and Harrison
Ready Mix Concrete, supra. The General Counsel and the Un-
ion’s contention that Respondent bargained in bad faith is un-
dercut by the regularity of Respondent’s wage and benefits
review. As shown above, in addition to being advised in May
1999 of Respondent’s intent to maintain the status quo under
the 1999 technicians salary plan, the unit employees were well
aware of Respondent’s annual wage review process. Neverthe-
less, the Union said nothing about applying the 2000 techni-
cians salary plan to unit employees before the annual wage
review in December 1999.
The bargaining unit composed only a small segment of those
technicians covered by Respondent’s technicians salary plan.
Some 850 technician employees were covered by the 1999 plan
including the 26 unit employees. The 2000 policy committee
recommended increased wages for those remaining 850 techni-
cians but as to those that had topped out at 100 percent, the
wage increase depended on each one receiving an evaluation of
commendable or above. Moreover, all those remaining nonunit
technicians lost benefits. Respondent eliminated their double
overtime pay and pay for overtime meals. As to unit employ-
ees, those that were eligible under the 1999 technicians salary
plan received a pay increase and no unit employee suffered loss
of double overtime pay or pay for overtime meals.
Respondent did not unilaterally withhold a pay increase
without bargaining with the Union.
The General Counsel argued that Respondent failed to meet
the standard set out in Lasalle Ambulance, Inc., 327 NLRB 49
(1998), regardless of whether Respondent proposed continua-
tion of the 1999 plan to unit employees. There, the Board held
that an employer may not lawfully depart from an established
practice absent negotiations with, and agreement by, the union
or unless the parties reached impasse during good-faith bar-
gaining.
However, Lasalle Ambulance involved several factors that
are not present here. In Lasalle, the employer threatened to
withhold performance reviews and merit increases if the union
was voted in during an NLRB election. Here, there was no
showing that Respondent engaged in unfair labor practices in
order to defeat the Union during an election.
In cases including some cited by the General Counsel, the
Board has reacted to efforts to undercut one party during nego-
tiations. Oftentimes, an employer acts to undercut a union by
showing that nonunit employees are treated better than those in
a bargaining unit. Here, that appears to be the case as of De-
cember 26, 1999. However, it is important to consider that Re-
spondent advised the Union of its plan in that regard on May 7,
1999. At that time it was well known among unit employees
that Respondent routinely studied its pay and benefits for tech-
nicians at the end of each year. On May 7, both Respondent and
the Union faced a dilemma. The dilemma of whether unit em-
ployees would or would not fall within the 2000 technicians
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1422
salary plan. Respondent announced its intent in that regard. The
Union did not object but it also did not specifically agree. Nor
did the Union advance any alternative to Respondent’s pro-
posal. Instead, the Union remained silent and waited 7 months
before filing charges. It appears from that action that the Union
sought to capitalize on Respondent’s dilemma. Perhaps the
Union wanted to be in position to resist agreement until Re-
spondent instituted its 2000 technicians salary plan. If its
charge was found to be meritorious, it could receive back
wages for unit employees and negotiate from the 2000 techni-
cians salary plan.
The record failed to show bad faith in Respondent’s actions.
The credited testimony showed that Respondent and the Union
started negotiations on May 7 after an election on February 7,
1999. Some 20 negotiation session had been held before the
hearing and both parties had made proposals including wage
proposals. During those negotiations Respondent was faced
with difficult economic dilemmas. Respondent faced questions
including economics and employee retention in consideration
of some 850 technicians. At the same time Respondent was
negotiating in apparent good faith regarding 26 bargaining unit
employees. Respondent’s review of nonunit employee condi-
tions resulted in some increased wages but it also resulted in
savings for Respondent through elimination of double-overtime
pay and pay for overtime meals. All those issues were also
being discussed with the Union in bargaining unit negotiations.
I am convinced that Respondent did not act unlawfully by
continuing to apply the 1999 technicians salary plan to unit
employees after it adopted a new plan for some of its other
technician employees and that comments by supervisors
Theimer and Perkins were protected under Section 8(c) of the
Act. Both those supervisors advised employees of Respon-
dent’s intent to not apply the 2000 plan to unit employees.
ORDER
I recommend that the complaint be dismissed.