NLRB Cases Archive 1960 - 1995, LABOR-RELATIONS 1993-94 CCH-NLRB ¶15,454, OKLAHOMA FIXTURE COMPANY and INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 584, AFL-CIO., (Aug. 31, 1994), National Labor Relations Board, (Aug 31, 1994)

OKLAHOMA FIXTURE COMPANY and INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 584, AFL-CIO.

314 NLRB No 159.Case No. 17-CA-16206. August 31, 1994 Bruce C. Nasdor, Administrative Law Judge..

Before Stephens, Devaney and Browning.

Constance N. Traylor, for General Counsel. Stephen L. Andrew and D. Kevin Ikenberry, for Respondent. Tom Birmingham, for Charging Party.

Threats--Discharges--Resort to Union.--By threatening to fire an employee because his inquiries about insurance payments on his behalf led to a heated union phone call to an employer’s vice president, an employer acted unlawfully. Such a warning would plainly tend to discourage the employee from seeking the assistance of the union. Section 8(a)(1).

Back reference: ¶3770.10.

Layoffs--Fact Finding--Business Justification.--An employer proved by the preponderance of the evidence that it would have laid off unit employees even in the absence of their union activities. The company’s decision to subcontract electrical work to a company with which it had previously subcontracted was based on concerns about legal liability and the company’s relationship with a retail store whose continued business was crucial. Section 8(a)(3).

Contracting Out--Bargaining Duty--Core Entrepreneurial Concerns.--When an employer, without notice to or bargaining with a union, informed it of its decision to subcontract electrical work and immediately lay off unit employees, it did not act unlawfully. Under the particular circumstances, the decision was outside the scope of mandatory bargaining and was based on core entrepreneurial concerns. Credited testimony established that the employer was concerned about legal liability and the risk of losing virtually all of its revenue in the event of electrical damage to a large retail establishment that was its main customer. The employer viewed the subcontractor as a buffer insulating the employer from these risks. Section 8(a)(5).

Back reference: 3145.875.

Bargaining Subjects--Contracting Out--Core Entrepreneurial Decision.--Because an employer’s decision to lay off unit employees and contract out electrical work was a core entrepreneurial decision, it was outside the scope of mandatory bargaining. Credited testimony showed that the decision involved considerations of corporate strategy fundamental to preserving the enterprise, not labor cost considerations. Section 8(a)(5).

Back reference.: ¶3020.71.

Contracting Out--Bargaining Duty--Effects Bargaining.--An employer acted unlawfully when it failed to give an incumbent union a meaningful opportunity to bargain about the effects of its decision to contract out electrical work. The employer’s claim that the union waived its right to bargain by failing to request effects bargaining was unsuccessful. The employer first told the union that it was “considering” contracting out, and three weeks later informed the union that it was laying off unit employees the following day. A union’s obligation to request effects bargaining is triggered only by a clear announcement that a decision affecting the employees’ terms and conditions of employment has been made and that the employer intends to implement the decision. Section 8(a)(5).

Back reference: ¶3145.878.

From Text of Board’s Decision

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, [1] and conclusions only to the extent consistent with this Decision and Order.

1. The judge found that the Respondent did not violate Section 8(a)(1) by threatening employee Richard Gill with discharge. The General Counsel has excepted to this finding. For the reasons stated below, we conclude that the Respondent’s conduct violated Section 8(a)(1) of the Act.

In February 1992, Gill asked Superintendent Jerry Walllace when the Respondent would begin making insurance contributions on his behalf because he had heard that contributions were being made for other employees. When Wallace failed to respond, Gill spoke to employee Ray Creel about the problem. Creel contacted Union Business Manager Tom Quigley, and Quigley in turn called Vice President Mark Cavins to ask about Gill’s insurance.

Sometime after Quigley’s inquiry, Supervisor Bob Fields told Gill that Cavins wanted Gill fired because of Gill’s inquiry whcih resulted in the Union’s phone call to Cavins. Fields told Gill that Cavins was “really pissed at you” because Cavins had gotten “chewed out” by Quigley over the late insurance payments and that Cavins was angry that the Union had gotten involved. Fields warned Gills, “They want me to fire you. But you’re too good a worker and I’m not going to do it. Just stay out of his way.”

The judge found that Gill’s testimony “is so amorphous and nebulous,” that it is not clear that the threat was intended to discourage union activity. We disagree. We find that Gill’s credited testimony, which was not contraverted by Fields, was not amorphous or nebulous. To the contrary, we find that Gill’s testimoney clearly establishes that Fields warned Gill that a vice president of the Respondent wanted to discharge him because the Union inquired about his insurance payments. Such a warning would plainly tend to discourage Gill from seeking the assistance of the Union. Under these circumstances, we find that the Respondent unlawfully threatened Gill with discharge in violation of Section 8(a)(1).

2. The General Counsel has excepted to the judge’s finding that the Respondent did not violate Section 8(a)(3) and (1) by laying off unit employees following its decision to subcontract their work. For the reasons set forth below, we agree with the judge that the Respondent did not violate Section 8(a)(3) and (1).

The facts are fully set out by the judge. In brief, the Respondent is engaged in the manufacture and sale of display cases for department stores. Dillard’s is the Respondent’s largest customer and accounts for more than 95 percent of its revenue. Of the 900 employees employed by the Respondent, approximately 600 are currently represented by a union.

From 1986 through March 1991, the Respondent subcontracted its electrical work to a company named Webco. In March 1991, the Respondent, seeking more control over the performance of the work and the direction of overtime, hired its own electricians to perform the work. Following an election on November 6, 1991, IBEW Local 584 (the Union) was certified as the collective-bargaining representative of the Respondent’s electricians. The parties began contract negotiations in spring 1992. [2]

During a negotiation session on May 14, the Respondent announced that it was considering the possibility of subcontracting the electrical work. The Respondent explained that it was concerned about its legal liability in the event an electrical wiring problem caused damage to Dillard’s property or customers, and that it wanted to use a subcontractor who would have insurance to cover such damage. In addition, the Respondent was concerned that in the event an electrical mishap did occur, it would lose the Dillard’s account to one of its competitors and be forced into bankruptcy. Further, Cavins testified that he was not knowledgeable about electrical wiring and could not properly oversee the electrical work being performed by the unit employees. When the union representative asked if there was anything the Union could do to help the Respondent out, the Respondent replied that it did not believe so. The Respondent stressed that although it was considering subcontracting, no decision had yet been made. Nonetheless, the Respondent stated that until a decision was made, there was no point in going forward with contract negotiations.

By letter dated May 15, the Union requested that the Respondent provide the Union with information related to its insurance coverage covering electrical damage. The parties agreed that this information would be provided at their next bargaining session on June 8.

On June 8, the Respondent’s attorney called the Union’s attorney and announced that a final decision had been made to subcontract the electrical work, to terminate the bargaining unit the following day, and to pay the employees wages through the end of the week. The Respondent also informed the Union that since the decision had been made, there was no point in holding the meeting scheduled for later that day. After this conversation, the Respondent faxed to the Union the requested insurance information.

The judge found that the Respondent’s decision to subcontract and lay off employees was based on legitimate business considerations, and was not motivated by union animus. The judge credited the testimony of Vice President Mark Cavins that he was genuinely concerned about the legal liability and the risk of losing Dillard’s business in the event of electrical damage caused by the Respondent’s employees. The judge noted that any animus demonstrated by pre-10(b) conduct was in the context of the Union’s organizational campaign prior to the November 6, 1991 election, and he reasoned that it did not transfer over to the June 9 layoff.

The General Counsel contends that the layoff was discriminatorily motivated. In support, the General Counsel contends that certain statements by Supervisors Cavins, Fields and Wallace demonstrate union animus. [3] The General Counsel further contends that the unconvincing nature of the Respondent’s asserted business justification, coupled with the timing of the decision, strongly support an inference of unlawful motive.

Applying the analysis set forth in Wright Line, [4] we find that even assuming arguendo that the General Counsel made a showing sufficient to support the inference that the employees’ union activity was a motivating factor in the Respondent’s decision to lay them off, the Respondent has proven by a preponderance of the evidence that it would have laid off the unit employees even in the absence of their union activities. The judge credited Vice President Cavins’ testimony that he decided to subcontract the electrical work because he was concerned about legal liability and the risk of losing Dillard’s business. Cavins explained that he viewed Webco as a buffer that would insulate the Respondent from these risks. Cavins also testified that he was not familiar with electrical wiring and felt that he could not properly inspect the work of his employees. By delegating to Webco the responsibility for wiring the fixtures and inspecting the work, the Respondent believed it could lessen its liability risk and preserve its crucial business relationship with Dillard’s. Under these circumstances, and partiucularly in light of the judge’s crediting of Cavins’ testimony, we find that the Respondent has satisfied its burden under Wright Line. Accordingly, we will dismiss this allegation.

3. The judge also found that the Respondent did not violate Section 8(a)(5) and (1) of the Act by failing to notify and bargain with the Union over its decision to subcontract the electrical work. For the reasons set forth below, we agree with the judge.

As noted above, the Respondent, without notice to or bargaining with the Union, informed the Union on June 8 of its decision to subcontract and immediately lay off the unit employees. The General Counsel contends that under Torrington Industries, 307 NLRB 809 (1992), the decision to subcontract was a mandatory subject of bargaining because the decision did not constitute a significant change in the nature or direction of the business, and was simply the substitution of one group of workers for another group to perform the same work, at the same facility, under the ultimate control of the same employer. We disagree with the General Counsel and find that under the particular circumstances presented here, the decision to subcontract was a nonmandatory subject of bargaining.

In Torrington Industries, the employer laid off employees and replaced them with nonunit employees without providing adequate notice to the union or affording the union an opportunity to bargain about the decision and effects. The Board found that the employer’s reasons for its subcontracting “were not matters of core entrepreneurial concern and outside the scope of bargaining.” 307 NLRB at 810. The Board noted, however, that “there may be cases in which the nonlabor-cost reason for subcontracting may provide a basis for concluding that the decision to subcontract is not a mandatory subject of bargaining.” Id. The Board also stated that it was “not fashioning a per se rule that any subcontracting decision that does not involve a significant change in scope and direction of the enterprise is a mandatory subject of bargaining.” 307 NLRB at 811.

This case presents the unusual situation to which the Board was referring in Torrington Industries because the credited testimony establishes that the decision to subconract was based on core entrepreneurial concerns outside the scope of mandatory bargaining. As discussed above, the judge credit Cavins’ testimony that he decided to subcontract the electrical work because he was concerned about legal liability and the risk of losing virtually all the Respondent’s revenue in the event of electrical damage to Dillard’s property or customers resulting from an inproperly wired fixture. Cavins explained that the subcontractor would serve as a buffer insulating the Respondent from these risks. “Labor costs,” even in the broad sense of the term employed by the Board were not a factor in the decision. Accepting as we do the credited reasons for the Respondent’s decision, we find that it involved considerations of corporate strategy fundamental to preservation of the enterprise. We further find that the Union had no authority or even potential control over the basis for the decision. Therefore, we conclude that the subcontracting decision was outside the scope of mandatory bargaining and that the Respondent’s failure to bargain over it did not violate Section 8(a)(5) and (1) of the Act.

4. The judge further found that the Respondent did not unlawfullly fail to provide notice to the Union and afford the Union an opportunity to bargain over the effects of its decision to subcontract on unit employees. The judge noted that the Union made no demands to bargain with the Respondent over the effects of its decision and therefore concluded that effects bargaining was not an issue in this case. We disagree.

Contrary to the judge’s finding, we find that effects bargaining is at issue here. The complaint alleges that the Respondent unlawfully failed to bargain about the effects of its decision to terminate the bargaining unit, and the General Counsel repeated this allegation at the hearing. For the reasons stated below, we find that by failing to give the Union adequate notice and an opportunity to bargain over the effects of its decision, the Respondent violated Section 8(a)(5) and (1).

The Supreme Court noted in First National Maintenance Corp., [91 LC ¶12,805] 452 U.S. 666, 681 (1981):

There is no dispute that the union must be given a significant opportunity to bargain about these matters of job security as part of the “effects” bargaining mandated by Section 8(a)(5). And under Section 8(a)(5), bargaining over the effects of a decision must be conducted in a meaningful manner and at a meaningful time, and the Board may impose sanctions to insure its adequacy. [Citations omitted.]

We conclude that the Respondent did not afford the Union a meaningful opportunity to bargain about the effects of its decision when, on June 8, it informed the Union of its final decision to subcontract work, to lay off the unit employees the following day, and to pay them wages through the end of the week. After announcing these decisions, the Respondent advised the Union that it did not see any point in further negotiations and cancelled the bargaining sessions scheduled for that day. On June 9, the unit employees were terminated and paid through the end of the week. Under these circumstances, we find that the Respondent announced its decision to terminate the bargaining unit in a manner that precluded meaningful bargaining over the effects on unit employees. [5]

In so finding, we reject the Respondent’s contention that the Union waived its right to effects bargaining when it did not request bargaining after the May 14 announcement that the Respondent was “considering” the possibility of subcontracting. The Respondent stressed at this meeting that no decision had yet been made and that it was merely considering the possibility.

When relying on a claim of waive of a statutory right to bargain, an employer has the burden of proving a clear relinquishment of that right. NLRB v. Clallenger-Cook Bros., [108 LC ¶10,437] 843 F.2d 230, 233 (6th Cir. 1988). Under Section 8(d) of the Act, a union’s rights to bargain is limited to matters of “wages, hours, and other terms and conditions of employment.” Thus, a union’s obligation to request effects bargaining, if it wishes to exercise its statutory right and avoid waiver, may only be triggered by a clear announcement that a decision affecting the employees’ terms and conditions of employment has been made and that the employer intends to implement this decision. This obligation is not triggered by an “inchoate and imprecise” announcement of future plans about which the timing and circumstances are unclear. [6] The Respondent’s announcement that it was “considering” the possibility of subcontracting, while at the same time stressing that no decision had yet been made, is too “inchoate and imprecise” to give rise to an obligation to request effects bargaining. Accordingly, we find that the Union did not waive its effects bargaining right based on the Respondent’s May 14 announcement. [7]