United Technologies Corp.

National Labor Relations Board - Board Decisions

Jan 30, 1986

278 N.L.R.B. 306 (N.L.R.B. 1986)

306 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
United Technologies Corporation and- Local Lodge
700, International Association of Machinists
and Aerospace Workers , AFL-CIO. Case 39-
CA-2269
30 January 1986
DECISION AND ORDER
BY CHAIRMAN DOTSON AND MEMBERS
DENNIS AND JOHANSEN
Upon a charge filed 25 July 1984 by Local
Lodge 700, International Association of Machinists
and Aerospace Workers, AFL-CIO (the Union),
the General Counsel of the National Labor Rela-
tions Board issued a complaint on 4 February 1985.
The complaint alleges that the Respondent violated
Section 8(a)(l) and (5) of the Act by implementing,
without first notifying the Union or affording it an
opportunity to bargain, a program called "Correct-
A-Bill" which provided additional benefits for em-
ployees in the bargaining unit represented by the
Union. The Respondent filed a timely answer ad-
mitting in part and denying in part the allegations
of the complaint.
On 29 April 1985 the General Counsel, the
Union, and the Respondent filed a motion to trans-
fer the proceeding to the Board and a stipulation of
facts. The parties waived a hearing and the issu-
ance of a decision by an administrative law judge
and indicated their desire to submit the case direct-
ly to the Board for findings of fact, conclusions of
law, and a decision. The parties also agreed that
the charge, the complaint, the Respondent's
answer, and the stipulation of facts would consti-
tute the entire record before the Board.
On 5 August 1985 the Board issued an Order
granting the parties' motion, approving the stipula-
tion, and transferring the proceeding to the Board.
Thereafter, the General Counsel and the Respond-
ent filed briefs.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
On the entire record and the briefs, the Board
makes the following
FINDINGS OF FACT
1. JURISDICTION
The Respondent, a Delaware corporation with
its main office in Hartford, Connecticut, and with
an office and place of business in Middletown,
Connecticut, is engaged in the manufacture and
nonretail sale and distribution of aircraft engines
and related products. During 1984, in the course
and conduct of its business operations, the Re-
spondent sold and shipped from its Middletown fa-
cility products, goods, and materials valued in
excess of $50,000 directly to points outside the
State of Connecticut. We find that the Respondent
is an employer engaged in commerce within the
meaning of Section 2(6) and (7) of the Act and that
the Union is a labor organization within the mean-
ing of Section 2(5) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
A. The Stipulated Facts
The following employees of the Respondent con-
stitute a unit appropriate for the purpose of collec-
tive bargaining within the meaning of Section 9(b)
of the Act:
All production and maintenance employees of
the United Technologies Corporation, Pratt &
Whitney Aircraft Group (Commercial Engi-
neering and Manufacturing Division) at its
Middletown, Connecticut plant, including in-
spectors, crib attendants, material handlers,
working leaders, and plant clerical employees
but excluding all timekeepers, engineering and
technical employees, professional employees,
laboratory technicians, foremen's clerks, sala-
ried office and salaried clerical employees,
medical employees, first aid employees, plant
production employees, executives, plant super-
intendents, division superintendents, general
foremen, foremen, assistant foremen, group su-
pervisors, watch engineers, and all other su-
pervisory employees with authority to hire,
promote, discharge, discipline, or otherwise
effect changes in the status of employees, or
effectively recommended such action.
Since about November 1958, and at all times mate-
rial, the Union has been the designated exclusive
collective-bargaining representative of the employ-
ees in the above unit and has been recognized as
such by the Respondent. Such recognition has been
embodied in successive collective-bargaining agree-
ments, the most recent of which was effective by
its terms from 29 November 1982 until 1 December
1985.
At all times since November 1958, the Union has
been, and is, the exclusive representative of the em-
ployees in the bargaining unit for the purposes of
collective bargaining with respect to rates of pay,
wages, hours, and other terms and conditions of
employment within the meaning of Section 9(a) of
the Act.
The current collective-bargaining agreement pro-
vides that bargaining unit employees are covered
by the Respondent's group health and life insur-
ance plan, which covers, among other things, hos-
278 NLRB No. 41
UNITED TECHNOLOGIES CORP. 307
pital and outpatient surgical services for employees
and their dependents. In July 1984, the Respondent
implemented a corporatewide Correct-A-Bill pro-
gram as part of an effort to contain spiraling em-
ployee health care costs, which had reached a level
of approximately $250 million per year. The Cor-
rect-A-Bill - program invited employees to audit
their hospital and surgical center bills and to report
any_ overcharges by hospitals or surgical centers to
the Respondent's insurance carrier on forms pro-
vided by the Respondent. Any employee who re-
ported an overcharge was to receive from the Re-
spondent a payment equal to 80 percent of any
amount refunded to the insurance carrier by the
health care provider pursuant to the employee's
report. The program resulted from the Respond-
ent's belief that incorrect charges by hospitals and
surgical centers substantially increased its yearly
health care costs and that many such errors were
of the type that the recipients of the services are
best able to detect.
The Respondent implemented the Correct-A-Bill
program for a 1-year trial beginning July 1984. The
program applied to approximately 130,700 employ-
ees at the Respondent's various facilities through-
out the United States, including the approximately
3600 employees in the bargaining' unit described
above. Of the remaining employees covered by the
program, about 63,200 belong to 168' other bargain-
ing units represented by 40 different unions, and
about 63,900 employees are unrepresented.
The implementation of the Correct-A-Bill pro-
gram was not in any manner the product of, or
preceded by, negotiations between the Respondent
and any of the unions representing, any of,its em-
ployees. The Respondent met with a representative
of the Union to inform him about the Correct-A-
Bill program on 17 July 1985, 2 days before letters
and brochures describing the program and solicit-
ing employee participation were sent to employees.
At the 17 July meeting, the Respondent gave the
Union's representative a copy of the letter and the
brochure, as well as a 17 July memorandum to su-
pervisors describing the program and advising the
supervisors how to assist in its implementation. On
18 July 1985 the Union filed a grievance alleging
that the Respondent's implementation of the pro-
gram without first negotiating with the Union vio-
lated the collective-bargaining agreement and the
Act. The parties met to discuss the grievance on 23
July and 24 August 1985. The Respondent has
since refused the Union's request to arbitrate the
grievance.
Between the time the Respondent implemented
the Correct-A-Bill program in July 1984 and the
time the parties entered into the stipulation of facts
ir%tlie-present case (23 and 24 April 1985), an un-
specified number of the. Respondent's employees
nationwide had processed claims and 29 employees
received a total of $12,105.40 in payments from the
Respondent as a result of the employees' detection
of overcharges by hospitals ' and surgical centers.
One of the -employees who received such a pay-
ment was a member of the bargaining unit de-
scribed above. He received a check for $219.60 on
20 March 1985.
B. Contentions of the Parties
The General Counsel, noting that employee
medical insurance is a mandatory subject of bar-
gaining, contends that the awards .made available
to employees under the Correct-A-Bill program
constitute an, "emolument of value" arising out of
the employment relationship and, therefore, fall
within the scope of terms and conditions of em-
ployment over which an employer is required to
bargain. The General Counsel further argues, that
the indeterminate level of the benefits available to
employees and the voluntariness of employee par-
ticipation do not remove the program from the Re-
spondent's bargaining obligation. She therefore
argues that the Respondent failed and refused to
bargain in violation, of Section 8(a)(5) of the Act by
unilaterally implementing the program.
The Respondent contends that the Correct-A-
Bill program had such an indirect, attenuated, and
minimal effect on the terms and conditions of em-
ployment of bargaining unit employees that it was
not a mandatory subject of bargaining . In this
regard the, Respondent notes particularly the limit-
ed duration of the program and the fact that, it
would affect, only those employees who underwent
hospitalization or, surgery during the time the pro-
gram -was in effect. The Respondent further argues
that requiring it to bargain with the unions repre-
senting the various units of its employees -before
applying such a program to employees in those
units would result in the Respondent's applying the
program only to its unrepresented employees or
would result in cumbersome negotiations with
some 40 unions. The Respondent argues that the
former course would involve "pointless discrimina-
tion" while the latter course would impose a
burden on the Respondent that would outweigh
any benefit to, labor-management relations and the
collective-bargaining process. Accordingly, the Re-
spondent argues that it did-not violate the Act "by
implementing the Correct-A-Bill program without
first affording the Union an opportunity to bargain.
308 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
C. Discussion
We_fmd that the Respondent did not violate Sec-
tion 8(a)(1) and (5) of the Act by unilaterally im-
plementing the Correct-A-Bill program. An em-
ployer violates its duty to bargain with the exclu-
sive representative' of its employees by unilaterally
implementing changes in ` terms and conditions of
their employment.' It is well settled that health in-
surance benefits constitute a term or condition of
employment over which an employer is required to
bargain before implementing any change in such
benefits.2 However, in order for a statutory bar-
gaining obligation to arise with respect to a par-
ticular- change implemented by an employer, such
change must be a "material, substantial, and a sig-
nificant" one affecting the terms and conditions of
employment of bargaining unit employees.3
Here, the Correct-A-Bill program implemented
by the' Respondent was of limited duration. It did,
not -constitute a,change in any health care service
covered by the Respondent's health insurance plan
nor did it otherwise affect the terms of the plan
itself. Instead, it merely provided employees with
an incentive to review their hospital or surgical
center bills to detect overbilling for services re-
ceived during the program year. It therefore was
likely to affect only a small number of employees
in the unit. Here, the fact that only one of the ap-
proximately 3600 employees in the bargaining unit
received any payment during the first 9 months of
the program demonstrates the very limited impact
that the program had on' bargaining unit employ-
ees.4
In these circumstances, we find that the Re-
spondent's implementation of the Correct-A-Bill
program did not amount to a material, substantial,
and significant change (if a change at all) in the
terms and conditions of employment of bargaining
unit employees and therefore did not give rise to
any bargaining obligation. We therefore find that
the Respondent did not fail or refuse to bargain in
violation of Section 8(a)(5) and (l): Accordingly,
we shall dismiss the complaint.
i NLRB v. Katz, 369 U S. 736 (1962)
2 See, e g., Dial Tuxedos, 250 NLRB 476 (1980); East Belden Corp, 239
NLRB 776, 793 (1978).
a See, e .g., Peerless Food Products, 236 NLRB 161 (1978); Weather Tec
Corp., 238 NLRB 1535, 1536 (1978); Rust Craft Broadcasting, 225 NLRB
327 (1976).
4 Contrary to our dissenting colleague, our analysis is not based on
hindsight , but rather on the clearly limited scope of the progam which
could affect only those employees who underwent surgery or who were
otherwise hospitalized during the 12-month period in question
CONCLUSIONS OF LAW
1. The Respondent , United Technologies Corpo-
ration, is an employer engaged in commerce within
the meaning of Section 2(6) and (7) of the Act.
2. The Union, Local Lodge 700, International
Association of Machinists and Aerospace Workers,
AFL-CIO, is a labor organization within the mean-
ing of Section 2(5) of the Act.
3. The Respondent has not violated the Act as
alleged in the complaint.
ORDER
The complaint is dismissed.
MEMBER DENNIS, dissenting.
Contrary to my colleagues, I would find that the
Respondent's unilateral implementation of a 1-year
program to award employees for detecting health
care overcharges constitutes an unlawful change in
employment terms and conditions. I therefore dis-
sent.
In July 1984 the Respondent, without bargaining
with the Union, implemented the "Correct-A-Bill"
program, under which the Respondent rewarded
an employee for reporting hospital or surgical
center, overcharges to the Respondent's insurance
carrier.' Apparently because the program was of
limited duration and benefited only one unit
member during the program's 9-month existence,
my colleagues find that the Respondent's imple-
mentation of the program did not amount to a ma-
terial, substantial, and significant change in employ-
ment terms and conditions.
Thus, my colleagues, although not denying that
the program provided' an employee benefit, have
decided (with the advantage of hindsight) that the
Correct-A-Bill program is not an unlawful change
because only one unit member benefited in 9
months. I decline to engage in post hoc justifica-
tion, but rather focus on the relevant timeframe,
i.e., when the Respondent unilaterally changed the
employees' employment terms and conditions. The
Respondent's program was a monetary benefit for
employees that accrued to them based on their re-
lationship with their employer.2 Carpenters Local
2265 (Mill Floor Covering), 136 NLRB 769, 771
(1962). Consequently, unilaterally implementing the
program violated the Respondent's obligation to
bargain with the Union before making changes in
employment terms and conditions.
' An employee receives a payment equal to 80 percent of the amount
the health care provider refunds to the insurance carrier
2 The number of unit members who actually received payments is ir-
relevant Certainly, however, the Respondent anticipated the number of
employees affected would be sizeable