Compu-Net Communications

National Labor Relations Board - Board Decisions

Sep 30, 1994

315 N.L.R.B. 216 (N.L.R.B. 1994)

216
315 NLRB No. 32
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The expiration date of the loan arrangement with Norstar Bank
at sec. II,A,2 par. 2 and sec. II,B,2 par. 4 should be September 30,
1991.
2 In agreeing with the judge that the Respondents unlawfully failed
to bargain with the Union concerning the decision to subcontract the
upstate work and the effects of that decision, we rely on Fibreboard
Corp. v. NLRB, 379 U.S. 203 (1964), and we do not pass on the
judge’s characterization of Dubuque Packing Co., 303 NLRB 386
(1991), enfd. sub nom. Food & Commercial Workers Local 150-A
v. NLRB, 1 F.3d 24 (D.C. Cir. 1993), cert. granted 114 S.Ct. 1395
(1994). Concededly, the judge’s conclusions of law speak of a trans-
fer of operations. However, it is clear that this case does not involve
a ‘‘relocation’’ within the meaning of Dubuque Packing. Rather, in
context, the judge was referring only to a transfer of operations from
Respondent Compu-Net to its alter ego, Respondent Control. The
only decision bargaining involved in this aspect of the case is the
decision by Compu-Net/Control to subcontract the work to TAD.
Thus, this aspect of the case is governed by Fibreboard principles.
3 We agree with the judge that reinstitution of the Respondents’
upstate operations is an appropriate remedy in view of the Respond-
ents’ unlawful subcontracting of that work without providing the
Union notice or an opportunity to bargain. However, the Respond-
ents may introduce previously unavailable evidence, if any, at the
compliance stage of this proceeding to demonstrate that the reinstitu-
tion of those operations is unduly burdensome. Lear Siegler, Inc.,
295 NLRB 857 (1989). We have modified par. 2(c) of the rec-
ommended Order accordingly.
Compu-Net Communications, Inc. and Control Net-
work Communciations, Inc., a Single Employer
and/or Alter Egos and Communications Work-
ers of America, District One, AFL–CIO. Case
2–CA–25590
September 30, 1994
DECISION AND ORDER
BY MEMBERS STEPHENS, DEVANEY, AND COHEN
On November 5, 1993, Administrative Law Judge
Eleanor MacDonald issued the attached decision. The
Respondents filed exceptions and a supporting brief,
and the General Counsel filed a brief in support of the
judge’s decision.
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 de-
cided to affirm the judge’s rulings, findings,1 and con-
clusions2 and to adopt the recommended Order as
modified.3
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondents, Compu-Net Communica-
tions, Inc., Latham and White Plains, New York, and
Control Network Communications, a Single Employer
and/or Alter Egos, Latham, New York, their officers,
agents, successors, and assigns, shall take the actions
set forth in the Order as modified.
1. Substitute the following for paragraph 2(c).
‘‘(c) Unless it is shown that it is unduly burdensome
to reinstitute the outside of New York City operations,
reinstitute those operations, offer employees in the unit
reinstatement and make them whole, and, on request,
bargain with the Union in the manner set forth in the
remedy section of the judge’s decision; if such burden-
someness is shown, make the employees whole for any
losses suffered as a result of the unlawful subcontract-
ing until such time as those operations terminated.’’
2. Substitute the attached notice for that of the ad-
ministrative law judge.
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we
violated the National Labor Relations Act and has or-
dered us to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives
of their own choice
To act together for other mutual aid or protec-
tion
To choose not to engage in any of these pro-
tected concerted activities.
WE WILL NOT refuse to bargain with Communica-
tions Workers of America, District One, AFL–CIO in
the following appropriate unit:
All full-time and regular part-time Cable Pullers,
Installers, Senior Installers and Drivers employed
by Compu-Net in New England, New York, New
Jersey, Pennsylvania and Washington, D.C., but
excluding office clerical employees, guards and
supervisors as defined in the Act.
WE WILL NOT make unilateral changes in the health
insurance benefits of employees.
WE WILL NOT refuse to bargain with the Union con-
cerning the effects of closing our New York City oper-
ations.
WE WILL NOT refuse to bargain with the Union con-
cerning our decision and the effects thereof of sub-
contracting our outside of New York City operations.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the
rights guaranteed you by Section 7 of the Act.
WE WILL make whole all our employees for any
losses suffered by them as the result of unilateral
changes in their health insurance benefits.
217COMPU-NET COMMUNICATIONS
1 The White Plains office was closed in November 1991.
WE WILL make whole our New York City employ-
ees in the manner set forth in the decision.
Unless it is shown that it is unduly burdensome to
reinstitute the outside of New York City operations,
WE WILL reinstitute those operations, offer employees
in the unit reinstatement and make them whole, and,
on request, bargain with the Union in the manner set
forth in the remedy section of the judge’s decision; if
such burdensomeness is shown, WE WILL make the em-
ployees whole for any losses suffered as a result of the
unlawful subcontracting until such time as those oper-
ations terminated.
COMPU-NET COMMUNICATIONS, INC.
AND CONTROL NETWORK COMMUNICA-
TIONS, INC., A SINGLE EMPLOYER
AND/OR ALTER EGOS
Mindy Landow, Esq., for the General Counsel.
James M. Reilly, Esq. (Herzog, Engstrom & Koplovitz, P.C.),
of Albany, New York, for the Respondent.
Gabrielle Semel, Esq., of New York, New York, for the
Charging Party.
DECISION
STATEMENT OF THE CASE
ELEANOR MACDONALD, Administrative Law Judge. This
case was tried in New York, New York, on March 22 and
23, 1993. The complaint alleges that Respondents Compu-
Net and Control are a single employer and/or alter egos. The
complaint alleges that Respondent Compu-Net, in violation
of Section 8(a)(1) and (5) of the Act, failed to give prior no-
tice and an opportunity to bargain to the Charging Party
Union before it modified the medical benefits provided to
employees, ceased its operations in New York City and laid
off employees, transferred its upstate operations to Respond-
ent Control, and subcontracted the upstate work, and that
Compu-Net refused to bargain over the change in medical
benefits, over the decision and effects of closing the busi-
ness, laying off the employees, transferring the upstate oper-
ations, and subcontracting unit work. Respondent denies that
it violated the Act.
On the entire record, including my observations of the de-
meanor of the witnesses, and after considering the briefs
filed by the General Counsel and Respondent, I make the
following
FINDINGS OF FACT
I. JURISDICTION
It is admitted, and I find, that Respondent Compu-Net
Communications, Inc. and Respondent Control Network
Communications, Inc. each annually provided services valued
in excess of $50,000 to various enterprises within the State
of New York which were directly engaged in interstate com-
merce and that Compu-Net and Control are employers en-
gaged in commerce within the meaning of Section 2(2), (6),
and (7) of the Act. It is also admitted and I find that the
Union is a labor organization within the meaning of Section
2(5) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
A. The Facts
1. Corporate structure and operations
Respondent Compu-Net has been in business since 1981,
engaged in the design, engineering, installation, and mainte-
nance of private telephone systems. Compu-Net’s craft em-
ployees have been members of Local 1101 of the Union, and
Compu-Net and the Union have been parties to a series of
collective-bargaining agreements, the latest of which had a
term from August 1, 1990, through August 1, 1993. It is un-
disputed that the appropriate unit of Compu-Net’s employees
is:
All full-time and regular part-time Cable Pullers, In-
stallers, Senior Installers and Drivers employed by
Compu-Net in New England, New York, New Jersey,
Pennsylvania and Washington, DC., but excluding of-
fice clerical employees, guards and supervisors as de-
fined in the Act.
The collective-bargaining agreement between Compu-Net
and the Union provided for a welfare program including the
following:
basic medical benefits covering reasonable and cus-
tomary charges; and major medical benefits with an un-
limited maximum benefit; a dental benefit plan; and
long term disability benefits. These benefits are de-
scribed by the specific insurance contracts to be filed
with C.W.A. District One.
The contract also contained a provision that the Company
must give precise notice of any work being subcontracted
out, and that subcontracting would not result in layoffs of
bargaining unit employees nor would it be used as an
antiunion tactic.
Compu-Net maintained an upstate corporate office in
Latham, New York, and an office in White Plains, New
York, called the downstate office.1 The three owners of
Compu-Net are its president, Ralph Rusilas, vice president
for finance, Peter Wagner, and vice president for marketing,
Edwin Lenhart. Compu-Net’s Latham office supervised the
work performed in upstate New York as well as out of State:
the White Plains office ran the jobs in New York City.
Respondent Control Network is also owned by its three of-
ficers, President Ralph Rusilas, Vice President for Finance
Peter Wagner, and Vice President for Marketing Edwin
Lenhart. The Company was set up in 1987 and it obtained
a contract to maintain the telephone lines at the General
Electric plant in Schenectady, New York. Compu-Net had in-
stalled these lines for GE in 1984. Since 1990, the offices
of Control have been at the same Latham location as those
of Compu-Net. Control operated mostly in upstate New
York; for a while, the only work it engaged in was the main-
tenance at the General Electric plant in Schenectady, New
York, but by 1991, Control had other work similar to that
218 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2 The record does not permit a comparison of the salaries paid to
the officers by Compu-Net and Control.
3 Norstar Bank held as collateral for the loan to Compu-Net the
tools, test equipment, and some of the vehicles owned by the Com-
pany. In addition, officers had pledged their personal assets such as
real property and IRA accounts, and Control was a guarantor of the
loan.
performed by Compu-Net, that is the installation and service
of communications systems. By 1991, Control had 10 em-
ployees: 6 of these worked at the GE plant and of the other
4, 2 were apparently supervisors. Since 1987, the craft em-
ployees of Control have been represented by the IBEW.
Vice President Wagner testified that Control’s employees
carried their own tools, but occasionally they used tools
owned by Compu-Net. Former Compu-Net employee Louis
Goitz testified that the tools he used, ladders, drills, pulleys,
winches, and fiber optic equipment, were stored in the
Latham office and were used by employees of both Control
and Comp-Net. Goitz also testified that a fleet of vehicles
was maintained at the Latham office location. Some of the
trucks bore the name ‘‘Compu-Net’’ and some were un-
marked. Until 1989, the trucks were registered to Compu-Net
and then the registration was transferred to Control; the
‘‘Compu-Net’’ markings were not changed at this time.
Goitz stated that his work for Compu-Net was supervised
by either Steven Rinkewich or David Rusilas. If they were
not there, he reported to Fred Pierce or Chuck Gralley.
Pierce and Gralley had been employed by Compu-Net but in
1989 or 1990, they began to work for Control. Goitz stated
that even after Control took over the maintenance contract at
the GE plant in Schenectady, Compu-Net employees returned
intermittently to move and change equipment at GE. On such
occasions, they were supervised by Control Supervisor Brian
Ferenkauf.
The evidence shows that the Latham Building is 50-per-
cent owned by two of Compu-Net’s principal shareholders:
Compu-Net paid rent of over $40,000 per year for its office
space in 1989 and 1990. In 1991, Control paid over $4000
rent and in 1992 it paid over $48,000 in rent.
Concerning the allocation of time spent by employees of
both Companies, Wagner testified that he did not keep exact
records of how the officers and supervisors divided their du-
ties between Control and Compu-Net. Wagner did not record
the time he spent on Compu-Net and Control projects sepa-
rately, but he had a ‘‘broad sense’’ of how he divided his
time. Similarly, the office manager did not keep separate
timesheets for the two Companies. Nor did Compu-Net and
Control maintain separate records for the use of Xerox or
other office equipment. Wagner named three supervisors of
Compu-Net who performed services for Control: these were
Fred Pierce, Dave Rusilas, and Steve Rinkewich. He asserted
that Control paid Compu-Net for their services. Compu-Net’s
financial statements for the years 1989 and 1990 show that
Control paid Compu-Net fees for ‘‘administrative services’’;
in 1989, the fee was $90,000 and in 1990 the fee was
$180,000. Control owed Compu-Net $60,000 of this fee as
of December 31, 1990. Compu-Net sold assets worth
$17,800 to Control in 1989 and reported a net gain on the
sale of $128. In 1990, Compu-Net incurred over $11,000
worth of expenses on behalf of Control; about half of this
was pension expense and the rest is not further clarified. In
1989, Compu-Net, as a subcontractor, provided labor and
materials on several contracts for Control worth over
$212,000. In 1990, Compu-Net as a subcontractor provided
labor and materials to Control worth over $431,000. Also in
1990, Compu-Net purchased material totaling $6000 from
Control and it owed Control over $2000 of this as of Decem-
ber 31, 1990.
Control’s financial statement shows that in 1991, Compu-
Net’s last year of operation, Compu-Net paid Control over
$24,000 for ‘‘sales.’’
Goitz testified that in addition to Pierce and Gralley, who
transferred from Compu-Net to Control, Carl Albright trans-
ferred from Compu-Net to Control in February 1991. In ad-
dition, Wagner stated that Chuck Shannon worked for
Compu-Net as a driver and then as an installer; Shannon left
Compu-Net in 1985 and was later hired by Control. Brian
Fahrenkopf had been hired by Compu-Net; he left that Com-
pany and then went to work for Control. Mike Shanager
worked for Compu-Net and then he went to work for Con-
trol.
Compu-Net and Control used the same corporate logo, a
wave with the letters ‘‘CNC.’’ In 1992, Compu-Net sold the
logo to Control for $5000. The same in-house accountant
kept the records of Control and Compu-Net, and both Com-
panies used the same outside accounting firm. Compu-Net
and Control used many of the same vendors to obtain sup-
plies required by their jobs.
Control was a guarantor of Compu-Net’s line of credit
from Norstar Bank. This loan agreement is more fully dis-
cussed below.
2. Compu-Net’s financial problems
Wagner testified that Compu-Net’s operations became less
profitable after 1986: by mid-1991, the Company had a nega-
tive net worth. Wagner attributed this to the recession and
to the loss of a substantial client, Drexel, Burnham, Lambert.
In the second quarter of 1991, according to Wagner, Compu-
Net management held a strategy session and decided to re-
duce expenses. The three corporate officers eliminated their
salaries, and two members of the administrative staff were
laid off.2
Compu-Net had a loan arrangement with Norstar Bank
which permitted it to borrow against current accounts receiv-
able. The amount of actual borrowing could not exceed 80
percent of the receivables. Each time a customer paid a bill
for which the receivables had been pledged to the Bank, the
amount of the payment had to be applied to reduce the
amount of the loan outstanding. The loan could be increased
against the limit again only when Compu-Net obtained new
business and was able to pledge new receivables against the
loan. The Norstar loan was due to expire September 1, 1991.
On June 30, 1991, Compu-Net submitted a financial state-
ment to Norstar for the purpose of obtaining a renewal of the
loan after September 1. This was not an audited statement,
Wagner testified, because the bank had told Compu-Net not
to go to the extra expense required for such a statement. Be-
cause of Compu-Net’s grim financial outlook, Norstar Bank
informed the Company that the loan would not be renewed
after September 1. Norstar wanted the loan to be fully paid,
by late September and the Bank had turned the Compu-Net
account over to its collection staff.3 Norstar was insisting
219COMPU-NET COMMUNICATIONS
that all receivables should be paid directly to the Bank so
that they could be applied against the outstanding loan. This
meant that even if Compu-Net could generate new business,
the money could not be used for payroll but would have to
be paid directly to the bank. However, Compu-Net did not
close its doors on September 30, 1991. The Company tried
to work out a repayment plan with the Bank and Norstar
held off foreclosing on the collateral.
At this point, Compu-Net owed about $250,000 and its re-
ceivables were less than 80 percent of this amount. In Octo-
ber, the Bank made it clear that it would be satisfied with
a combination of payments made from receivables and from
family loans. A payment of $170,000 was made and the loan
was finally paid off a few months later.
Wagner testified that once Norstar Bank had determined
that it would not renew the loan beyond September 30, he
went to the Union to seek financial relief. Another reason for
speaking to the Union was that the insurer providing medical
coverage to the employees had announced a 40-percent in-
crease in rates and was seeking an advance payment from
Compu-Net amounting to 2 months’ worth of premiums be-
cause the Company had been late in paying premiums in the
past. Wagner stated that Compu-Net could not afford to pay
the higher premiums and did not have the money for the ad-
vance payments. He had found another insurance company
that would provide coverage at lower rates and he wanted to
tell the Union about the new medical plan.
3. October 8, 1991 meeting
On October 8, 1991, Wagner and Compu-Net President
Ralph Rusilas met with Union Chief Steward Eugene Alva-
rez and International Staff Representative Edward Baxter.
Alvarez testified that Wagner and Rusilas discussed the
new medical program; he recalled that the new program did
not provide unlimited major medical coverage and that it
raised the deductible. He also recalled that the Union had a
few questions about the coverage and that company rep-
resentatives were to contact the Union again with respect to
these questions. Alvarez testified that during the term of the
collective-bargaining agreement before the one at issue here-
in, he had met with Compu-Net representatives because the
Company wanted to make a midterm change in medical in-
surance. At that time, both sides agreed to the alteration re-
quested by the Company.
Baxter testified that the change in medical insurance car-
riers proposed by Compu-Net executives would save the
Company $26,000. As Baxter recalled the meeting, he asked
whether rehabilitation coverage would be changed and the
management representatives said it would not be reduced.
Baxter also recalled that under the old plan employees had
a prescription card and were able to fill prescriptions for $4
each. Under the new program, there would be a deductible
applied to prescriptions and the cost of prescriptions would
be reimbursed at 80 percent. Baxter stated that Wagner and
Rusilas were not able to answer all the Union’s questions
and they gave him a name and telephone number at the new
insurance company to call for further information. Baxter did
not testify that there would be any change in the unlimited
nature of major medical coverage.
Wagner testified that at the October 8 meeting he pre-
sented the new medical plan to the Union. According to
Wagner, the new plan was within the criteria set forth in the
collective-bargaining agreement and provided unlimited
major medical coverage. The only change which caused con-
cern to the union representatives was the elimination of the
prescription drug card. Wagner testified that the drug card
feature cost $23,000 in premiums annually but that employ-
ees had only used it to pay for $8000 in prescription drugs
in the last year. He therefore viewed this feature as uneco-
nomical. Wagner testified that the new plan would cost
$22,000 per month whereas the cost of the old plan was
about to rise to $28,000 per month.
I do not credit Alvarez that the new plan would not have
provided unlimited major medical coverage as required by
the contract in view of the fact that Baxter did not mention
this as a problem and in view of Wagner’s detailed testimony
about the new medical program. I find that Alvarez’ recollec-
tion is not accurate. Thus, I find that the only change of con-
cern to the Union was the absence of a prescription drug
card in the new medical plan.
International Representative Baxter testified that at the Oc-
tober 8 meeting, the Company told the Union that it wished
to reduce employee wages by 20 percent. When Baxter re-
plied that this was a big reduction and suggested that the
Union might agree if the employees were able to recoup the
loss if the Company made money again in a few years,
Rusilas said he just wanted a 20-percent reduction. Rusilas
explained that the employees’ wages were too high and that
he was not able to bid for jobs successfully. Rusilas gave
Baxter some financial statements which showed assets and
receivables for both Compu-Net and Control. Baxter later
showed these documents to the Union’s expert, Ken Perez,
and Perez asked for the worksheets and notes used to com-
pile the statements. Baxter asked Wagner for the notes, but
Wagner said he could not afford to get them. According to
Baxter, neither Wagner nor Rusilas mentioned any problems
with the Company’s bank loan at this meeting. During subse-
quent telephone conversations with management, Baxter was
told that there were meetings between company officials and
the bank, but it was not until mid-January 1992 that Rusilas
told Baxter that money was not coming in fast enough and
that the Company could not make its payments to the bank.
Baxter testified that he put management’s proposals for a
20-percent cut in wages and a change in insurance carriers
to the employees who worked in downstate New York and
that they unanimously rejected the Company’s request. When
Baxter called Rusilas to tell him of the employees’ decision
and explained that they were especially concerned about the
lack of a prescription card under the new plan, Rusilas said
that Baxter had not explained the insurance in the right way.
Rusilas asked Baxter whether the Union would object if
management met with the employees to explain the insurance
to them. Baxter said that either he or Alvarez would attend
such a meeting. In the event, Alvarez was scheduled to at-
tend. Wagner testified that he arranged for his insurance
agent to accompany him to the meeting with employees
about the new medical plan, and that the meeting was sched-
uled to begin 1 hour before lunch so that there would be
plenty of time for a presentation and then questions and an-
swers. Wagner invited Baxter or his representative to be
there; Alvarez was late to the meeting, and Wagner decided
220 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
4 Alvarez arrived about 25 minutes after the lunch hour had begun.
5 According to Wagner, the final agreement with TAD was
reached in the week before November 22, 1991.
to go ahead and present the plan to the employees.4 Wagner
testified that he had already decided to change carriers and
adopt the new insurance plan. Alvarez testified that when he
arrived at the meeting, Wagner and Rusilas were there ex-
plaining the new medical program and they had given the
employees cards to fill out for the plan. Alvarez told the em-
ployees not to fill out the cards because the Union had not
accepted the new medical program. When Wagner said that
he needed the change to be made quickly, Alvarez replied
that he should negotiate with the International. Alvarez left
before the meeting ended. Baxter testified that on November
1, 1991, he received a number of calls from Compu-Net em-
ployees saying that they had been informed that there was
a change in the insurance policy. In addition, Wagner sent
Baxter a copy of his memorandum to employees giving them
information about the new insurance plan. Baxter testified
that after November 1, he called the Company a few times
but did not get any response.
Baxter testified that ‘‘health insurance is negotiated at the
expiration of every contract and then the plan is left up in
the district office where I worked, and we have a copy of
the plan . . . in case the members call up and have questions
about the plan.’’
4. Termination of employees
On November 22, 1991, Compu-Net issued a memoran-
dum to its employees terminating them as of that day ‘‘due
to continued unprofitable operations.’’ The memorandum
said it would be impossible to rehire any employees in the
foreseeable future and it provided COBRA information as
well as specifics about the issuance of final paychecks and
vacation pay. It is undisputed that the Union had not been
given any notice prior to this date.
Wagner testified that when he met with the Union on Oc-
tober 8, he had no plans to lay off the work force. In late
October, Wagner discussed with a company named TAD an
arrangement whereby TAD would assume the Compu-Net
contracts for work to be performed in New York City. Fur-
thermore, in early November, Wagner told Compu-Net’s cus-
tomers that TAD might replace it but that TAD would keep
the same employees on the job. TAD met with the clients
in early November. According to Wagner, it was very impor-
tant to the customers for the work force to remain stable;
customers wanted to see the same employees coming on the
job because the employees were familiar with the layout of
the job. Wagner did not inform the Union because he wanted
to maintain secrecy ‘‘in order to have this succeed in a com-
petitive environment that existed in New York City.’’ Wag-
ner explained that he was afraid competitors would try to get
Compu-Net’s contracts and that this would imperil the Com-
pany’s ability to collect amounts already due on the con-
tracts. Wagner testified that beginning in mid-October 1991,
the Norstar Bank was also kept informed of the discussions
with TAD.
The arrangement with TAD called for TAD to take over
an installation project at HIP (Health Insurance Plan), in
New York City which was 50-percent completed. The job,
which was due to be completed by the end of 1991, had a
gross value of $300,000. Compu-Net had received one pay-
ment from HIP and another payment was due; Compu-Net
owed vendors $90,000 for materials delivered to the job.
Under Compu-Net’s agreement with TAD, the latter com-
pany would assume all the liabilities to vendors and all fu-
ture billings would be on behalf of TAD. This arrangement
would purportedly insure that HIP made the payment that
was currently due on the contract. TAD was also to take
over a continuing contract with Columbia University.
Compu-Net and TAD also had an agreement that on other,
selected jobs, they would share evenly in the actual profits
resulting from the contracts. Wagner described his contacts
with Compu-Net’s clients as having the goal of convincing
them that TAD would provide an ongoing service com-
parable to that provided by Compu-Net with the same em-
ployees reporting daily to do the work. However, Wagner
also testified that TAD did not promise to hire the Compu-
Net employees, it only said that it would interview them.5
On November 22, Wagner met with the Compu-Net em-
ployees on the Columbia University job in New York City
and told them about TAD. Wagner gave the employees the
Company’s proposed computation of accrued vacation days,
and then left while the employees met with officials of TAD.
Employees were given the termination notice but the Union
was not informed in advance and no union representative
was present when Wagner met with the employees.
Wagner stated that at the beginning of November, Compu-
Net’s obligations were about $190,000 to $200,000 due to
vendors, the bank loan, current payrolls, and medical and
other insurance.
Testifying about the basis for the decision to close Compu-
Net, Wagner listed the absence of a major source of revenue,
the end of bank credit, the lack of private resources among
the owners, the fear that the Company could not continue to
meet its payroll and the need to get money from TAD to pay
off the bank loan.
5. Compu-Net’s relationship with TAD and Control
After November 22, 1991, all of Compu-Net’s operations
downstate were turned over to TAD, and TAD hired many
of the downstate unit employees. In addition, TAD hired
Ralph Rusilas as the project manager to complete the HIP
contract. Rusilas went to New York City 3 days a week on
this job through January 1992.
Wagner stated that most of Compu-Net’s upstate jobs were
almost complete by November 1991; those that remained to
be finished were done by employees on the TAD payroll.
Wagner testified that Compu-Net employees completed a job
at the Norstar Bank: he stated that Compu-Net ‘‘employed’’
the employees who finished the work and they were ‘‘paid
through TAD.’’ The evidence also shows that Carl Albright,
a former Compu-Net employee who went to work for Con-
trol in February 1991, performed fiber optic splicing at
Norstar Bank in December 1991.
On January 1, 1992, Control hired the technical and ad-
ministrative personnel of Compu-Net and vested all of their
accrued benefits worth in excess of $8000. These employees
included systems designer, Steven Rinkewich, David Rusilas,
Sue Hogan, Tony Rusilas, Ralph Rusilas, Wagner, and some
others.
221COMPU-NET COMMUNICATIONS
6 TAD billed Control for the employees’ time in a range of $12
to $16 per hour. 7 Control is now called Wavecom Network, Ltd.
After November 22, 1991, Control continued to maintain
the GE plant in Schenectady, New York. In addition, Control
had other jobs which it performed using labor rented from
TAD.6 By the end of 1991, Control was using six or seven
former upstate Compu-Net employees who had been hired by
TAD; these workers reported for work at the Latham loca-
tion. They went to their job locations in trucks formerly be-
longing to Compu-Net and some of them used tools owned
by Compu-Net. The employees were told to say that they
worked for Control because Control had the contracts to per-
form the work and Control was directing the employees.
Control was trying to maintain an image of being able to
perform its contracts. Wagner stated that the cost of using
TAD labor was less than the cost of using Compu-Net em-
ployees because, in general, TAD paid lower wages and did
not pay for health insurance and the other union benefits.
By September 1992, Control was using about 30 TAD em-
ployees on a regular basis; of these, 12 were former Compu-
Net employees. During the week ending September 19, 1992,
8 of the 13 TAD employees used by Control were former
Compu-Net employees.
Wagner testified that some former employees of Compu-
Net who were working for TAD asked for travel advances
in order to go to jobs that TAD had taken over from Compu-
Net. Although TAD charges its clients for travel expenses in-
curred by its employees and reimburses the employees, TAD
does not advance travel money to employees. As a result,
Control occasionally advanced money to TAD employees
and was repaid by them directly.
Although Wagner testified that Compu-Net was not ac-
tively in business after November 22, that it ceased bidding
for jobs and existed just to settle its debts, several bids sub-
mitted by Compu-Net show that this was not entirely the
case. On November 22, 1991, Compu-Net submitted a bid
for work totaling approximately $70,000 signed by Steven
Rinkewich a systems designer for Compu-Net. Furthermore,
Compu-Net apparently submitted a bid to SNET Systems,
Inc. on October 16, 1991, signed by Rinkewich. The record
contains an identical bid, also dated October 16, on Control
stationary and signed by Rinkewich as systems designer for
Control: this bid was accepted by SNET on November 26,
1991. Wagner did not explain how the two documents came
to exist but he recalled that Control actually did the work.
Wagner testified that after Compu-Net ceased operations,
Control performed work at sites previously installed by
Compu-Net.
The record shows that in 1992, Compu-Net paid Control
over $33,000 as a management fee and that Control had
about $15,000 worth of expenses paid to Compu-Net for
work that was subcontracted.
The record shows that in 1992, Compu-Net paid Control
for employee time, rent, and administrative expenses and that
Control paid Compu-Net for the use of office furniture, vehi-
cles, and other equipment. The net outcome of these trans-
actions was that Control paid Compu-Net $784 by check.
On March 1, 1993, Wagner began working for Sage
Datacom of New York, Inc. Before that time, Control had
sold all of its assets to Sage. Wagner testified that he does
not own much of Sage, but that he still owns Compu-Net
and Control.7
The evidence shows that the trucks at the Latham office
still bore the name of Compu-Net at least until the end of
1992, and that the office entrance doors still bore the name
of Compu-Net. At the time of the instant hearing in March
1993, the yellow pages telephone directory still carried an
advertisement for Compu-Net. There was no listing in either
the yellow or the white pages for Control.
6. Demands for bargaining after November 22, 1991
International Staff Representative Baxter testified that
when he learned the employees were laid off on November
22, he called the Latham office and asked to speak to one
of the principals of Compu-Net. When successive attempts to
speak to a manager of Compu-Net were unsuccessful, Baxter
sent a letter to Wagner dated December 2, 1991, stating that
Compu-Net must bargain about changing the health insur-
ance carrier and terminating its employees. Baxter demanded
negotiations concerning a ‘‘closing package, severance,
health, etc.’’ After writing the letter, Baxter finally spoke to
Wagner and informed him that Compu-Net must bargain
over the effects of the shutdown; Wagner replied that his at-
torneys said that there was no obligation to bargain. On De-
cember 3, 1991, Baxter faxed a letter to Wagner asserting
that Compu-Net must bargain over the effects of closing the
Company, demanding a return to the original health insur-
ance policy, and discussing certain grievances which are not
relevant herein. The letter requested Wagner’s reply by De-
cember 6 ‘‘so we can set up a date to bargain over the ef-
fects of your operation shut-down,’’ and threatened the filing
of a charge if Wagner did not respond.
Wagner’s response, dated December 5, stated that the new
insurance plan was superior to the old, that it would be
cheaper for the employees to continue coverage under
COBRA and that, in any case, the new plan complied with
the collective-bargaining agreement. The letter denied any
obligation to bargain over the closing and did not mention
bargaining over effects. Finally, the letter discussed at length
the grievance matters and said Compu-Net would meet to
discuss the matters ‘‘at a mutually convenient time’’ and
asked for more particulars to the claims.
Baxter’s letter of December 10 reiterated Compu-Net’s ob-
ligation to bargain over the effects of the shutdown. The let-
ter reiterated the Union’s position that Compu-Net could not
unilaterally change the health insurance plan and demanded
reinstatement of the original plan. The letter closed with a
demand that Wagner inform Baxter ‘‘when you wish to start
the bargaining process.’’ Wagner replied on December 11,
stating that he could not understand ‘‘just what there is to
negotiate’’ regarding the decision to close, but offering to
meet with the Union about this matter. Wagner said, ‘‘[W]e
request that you make the trip to Albany since our transpor-
tation expenses are currently not being reimbursed by the
company.’’ Wagner’s letter went on to discuss the benefits
of the new insurance plan. Finally, Wagner asked Baxter to
contact him for a ‘‘mutually convenient’’ time to meet in Al-
bany. Baxter testified that between December 3 and January
16, he called Compu-Net and left messages at least 20 times
and that he actually spoke to Wagner and Ralph Rusilas on
222 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the telephone at least 10 times, but that they would not give
him any dates for a meeting. The two told Baxter that there
was no sense in meeting because they did not have any
money and could not negotiate anything with the Union that
would cost any money; they also told Baxter that they were
too busy to meet with the Union because they were meeting
with their bank. Baxter replied that it would make things
easier if the Company said in writing that it had no money
and that it could not negotiate; then Baxter would file a
charge with the Labor Board. Baxter also told the two men
that he did not believe that Compu-Net had no money. Bax-
ter wrote to Wagner on January 3, 1992, informing him that
the Union would soon file charges against the Company and
stating that he had just discovered that although the Com-
pany had been telling him it could not afford travel to meet
with the Union in New York City, Rusilas had been working
in New York City for months completing a Compu-Net job.
About this time, Wagner responded with a letter on January
6 which reiterated that Compu-Net had no money but offer-
ing to meet with Baxter in Latham. Wagner spoke to Baxter
on January 16, and proposed three dates for a meeting. In
the event, Rusilas came to Baxter’s office on January 22,
1992.
When Baxter and Rusilas met, Rusilas told Baxter that
Compu-Net had gone out of business because it had no
money. Baxter said the Company should have negotiated
with the Union. Baxter testified that when he would tele-
phone the company in Latham, the secretary answered by
saying ‘‘Compu-Net Communications.’’ He asked Rusilas
about this, and the latter replied that the secretary was paid
by Control. According to Baxter, the secretary continued to
say ‘‘Compu-Net’’ when he called the company until late in
1992.
B. Discussion and Conclusions
1. Modification of medical insurance benefits
There is no dispute that Respondent Compu-Net and the
Union did not reach agreement on the Company’s request to
change to a new insurance carrier and a new insurance plan.
Wagner testified that when the original insurance carrier an-
nounced higher premiums, he found a new carrier with lower
rates and presented the new plan to the Union. After some
discussion between Respondent and the Union, the Union
was still dissatisfied with the proposed new plan because un-
like the old plan which had a $4 prescription card, the new
plan had a deductible and an 80-percent reimbursement for
prescriptions. The unit employees rejected the new plan and,
at Ralph Rusilas’ request, the Union agreed that management
could try again to explain the new plan to the employees at
a joint meeting to be attended by the Union. At this point,
of course, there had been no agreement by the Union to a
change to the new insurance plan. Wagner testified that de-
spite the Union’s failure to agree to the new medical plan,
he had determined even before the joint meeting with the
employees that Compu-Net would indeed adopt the new
medical plan. When the Union arrived at the joint meeting,
management was already distributing cards for the new in-
surance plan to the employees. The Union made it clear that
it had not agreed to the new plan and it again told manage-
ment to negotiate any proposed changes.
The summary given above shows that Compu-Net made a
unilateral change in the medical insurance plan, indisputably
a term and condition fixed by the parties’ collective-bargain-
ing agreement. Respondent’s defense is that it is privileged
by the language of the contract. Respondent argues that the
new insurance plan provided the essential coverage required
by the collective-bargaining agreement and that the reference
in the agreement to benefits described by specific insurance
contracts filed with the Union was ‘‘apparently for adminis-
trative purposes.’’ However, International Representative
Baxter testified, without contradiction, that ‘‘health insurance
is negotiated at the expiration of every contract.’’ Further,
the language of the collective-bargaining agreement supports
his recollection; the agreement sets forth a brief summary of
the medical benefits and then states that the benefits are de-
scribed by the actual insurance contract on file. This lan-
guage is entirely consistent with Baxter’s testimony that the
specific health insurance benefits are negotiated each contract
term. The reference to the filing of the document in the
union office explains that the medical benefits, too numerous
to set forth in detail in a collective-bargaining agreement, are
evidenced by the insurance contract placed in the file. More-
over, Respondent’s own actions support the General Coun-
sel’s position here. Compu-Net did in fact contact the Union
and attempt to gain the Union’s assent to the change in in-
surance plans. If the collective-bargaining agreement had in-
deed permitted the Company to make the unilateral change
and merely required the company to send a copy of the new
insurance contract for the Union’s file, then Rusilas and
Wagner, ostensibly busy placating their bank, would not
have bothered to attend two meetings in New York City in
an effort to negotiate a change in insurance plans: instead,
the Company would simply have sent the new insurance doc-
ument to the Union for filing. In order to accept the Re-
spondent’s view of the meaning of the collective-bargaining
agreement, I would have to construe the language referring
to the placing of insurance contracts in the Union’s file as
a clear and unmistakable waiver by the Union of its right to
negotiate changes in the medical insurance plan. Metropoli-
tan Edison v. NLRB, 460 U.S. 693, 708 (1983). The lan-
guage of the agreement is very far from evincing such a
waiver.
Compu-Net also argues that its unilateral action is excused
because of financial necessity. However, it is well estab-
lished that economic problems do not privilege an employer
to make unilateral midterm changes in terms and conditions
of employment embodied in a collective-bargaining agree-
ment. Mack Trucks, 294 NLRB 864, 865 (1989).
Thus, I find that Respondent Compu-Net, in violation of
Section 8(a)(1) and (5) of the Act, made a unilateral change
in the health insurance benefits provided for in the collective-
bargaining agreement. Although the General Counsel also ar-
gues that Compu-Net also failed to provide any medical in-
surance because it made certain payments late to the insur-
ance carrier, there is no evidence that the insurance carrier
refused coverage to a unit employee. I therefore do not find
merit to this additional allegation.
2. Termination of New York City operations
The General Counsel concedes that under First National
Maintenance Corp., 452 U.S. 666 (1981), Respondent
Compu-Net was not required to bargain about the decision
223COMPU-NET COMMUNICATIONS
to close its New York City operations. Moreover, Compu-
Net concedes that normally it would have had an obligation
to advise the Union of the closing of New York City oper-
ations in advance and to bargain about the effects of the de-
cision to close. However, Compu-Net urges that under Na-
tional Terminal Baking Co., 190 NLRB 465 (1971), it was
excused from providing advance notice and engaging in bar-
gaining prior to implementation of its decision to close by
reason of emergency circumstances. The General Counsel’s
position is that preimplementation notice and bargaining
were required and that Respondent was not facing a special,
catastrophic situation such as to excuse Compu-Net’s failure
to negotiate prior to closing its New York City operations.
Under exigent circumstances, the Board had held that an
employer need not give notice of its intention to close a busi-
ness or a portion of its business and bargain concerning the
effects of the closing on employees. In National Terminal
Baking Co., supra, the owner closed the business after two
of its trucks were stolen in 1 week and he had no money
left with which to continue the business; ‘‘there was no pos-
sible way to bargain about effects before closing.’’ In M &
M Transportation Co., 239 NLRB 73, 75 (1978), no viola-
tion was found for the failure to bargain about the effects be-
fore closing where the company closed down when it
‘‘lacked the funds to continue the operation [and] it lacked
even the money to pay its employees.’’ In Raskin Packing
Co., 246 NLRB 78 (1979), the employer lost the perform-
ance bond required by Federal statute and, as soon as the
bank learned that the employer could not obtain a new bond,
the bank ended the employer’s line of credit and the com-
pany closed immediately. No violation was found in the fail-
ure to negotiate concerning the effects before the actual clo-
sure because there had been no thought of closing the busi-
ness until the bank canceled the credit.
The facts in the instant case do not show that Compu-Net
was faced with a rapidly developing catastrophe or emer-
gency which necessitated immediate closing of the Company
without notice to the Union and an opportunity to bargain
about effects before the actual closing of the New York City
operations took place. Rather, the facts show that Respondent
had ample time to consider its financial position, to attempt
to correct it, to develop strategies for an orderly disposition
of the business, and completion of outstanding jobs and for
realization of outstanding amounts due to the Company. The
strategy developed by the Company included keeping the
employees and the Union in the dark about the intended clo-
sure of New York City operations.
More specifically, Wagner’s testimony shows that although
the Norstar Bank did not renew the loan past September 1,
1991, it gave Compu-Net ample notice of its intention.
Norstar and Respondent’s officers discussed a repayment
plan throughout September and October, and the loan was re-
paid in stages during the several months following October
1991. In October, Respondent began discussions with TAD
and kept the Norstar Bank informed of the discussions. By
early November, Respondent was informing its New York
City clients that TAD would assume the Compu-Net con-
tracts and would keep the same employees on the job. The
testimony establishes that a paramount consideration in the
discussions with clients was the ability by Compu-Net to
offer them the reassurance that the employees on the job
would not change.
Wagner’s stated rationale for keeping the Union in the
dark was that New York City had a competitive environment
and competitors would try to get Compu-Net’s contracts. But
Wagner did not explain how or why competitors would take
away Compu-Net’s contracts if he told the Union but not if
he told the clients. I find that the real reason Wagner wanted
to keep the Union and the employees in the dark until he
could present them with a fait accompli on November 22,
1991, was to insure that the same employees would remain
on the job. The employees were obviously valuable and he
did not wish them to have time to seek other employment
before they were told, all in the same day, that Compu-Net
was out of business and that TAD representatives were on
the premises ready to hire them.
As the Supreme Court stated in First National Mainte-
nance, supra at 682, an employer’s bargaining with a union
over the effects of its decision to close a business ‘‘must be
conducted in a meaningful manner and at a meaningful
time.’’ The Board explained in Metropolitan Tele-Tronics
Corp., 279 NLRB 957, 959 (1987), enfd. 819 F.2d 1130 (2d
Cir. 1987): ‘‘An element of ’meaningful’ bargaining is ‘time-
ly notice to the union’ of the decision. . . . By concealing
its decision from [the union] until after it began to vacate [its
closed] facility, the company failed to provide timely notice,
thus denying the union an opportunity to bargain at a time
when the union retained at least a measure of bargaining
power.’’ In the instant case, Respondent Compu-Net con-
cealed its decision from the Union because the Union had a
measure of bargaining power due to the fact that it rep-
resented employees who were vital to Respondent’s plan to
close the Company in an orderly fashion and obtain sums of
money from its clients. This case is remarkably like Kirk-
wood Fabricators, 285 NLRB 33, 36 (1987), where what
might have been ‘‘sound business practice’’ nevertheless was
found to be a ‘‘clear and continuous’’ refusal timely to notify
and bargain with the employees’ representative concerning
the effects of ceasing operations. I thus find that Respondent
Compu-Net violated Section 8(a)(5) and (1) of the Act when
it failed to notify the Union and bargain with the Union be-
fore November 22, 1991, concerning its decision to close the
New York City operations.
The General Counsel urges that even after November 22,
Respondent refused to bargain over the effects of closing the
New York City operations. The record amply supports the
General Counsel’s position. Union Representative Baxter
began telephoning Respondent’s Latham office in an attempt
to speak to management as soon as the employees were ter-
minated. Meeting with no success, he began writing to Wag-
ner, asserting the Company’s duty to bargain about the ef-
fects of terminating the employees. On December 2 and
again on December 5, Wagner denied that there was any
duty to bargain. Finally, after receiving Baxter’s December
10 letter reiterating the Company’s duty to bargain over ef-
fects, Wagner replied that he did not understand what there
was to negotiate, but offering to meet. However, Wagner
stated that the Company could not afford to meet in New
York City, the location of the last two meetings between the
Respondent and the Union, and Wagner requested that the
Union come up to Latham. Since the evidence establishes
that Rusilas was being paid by TAD to supervise certain jobs
in New York City during this time, Wagner’s plea of poverty
as a justification for meeting in a location inconvenient to the
224 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
8 In the alternative, the General Counsel argues that Control is a
single employer with Compu-Net and that the Compu-Net collective-
bargaining agreement should be applied to an appropriate unit of
employees of the single employer. It must also not be forgotten that
Control was a guarantor of Compu-Net’s loan.
Union must be regarded as not candid and as another stalling
tactic on the part of Respondent.
I credit Baxter’s testimony that he called the Latham office
many times and that on those occasions when he was suc-
cessful in reaching Rusilas or Wagner, the two said they
were too busy to meet and in any case, they had no money
so there was no sense in meeting. I credit Baxter that he told
Rusilas and Wagner that they could put it in writing that they
could not negotiate and then he would file a charge. After
Baxter learned of Rusilas’ presence in New York City and
threatened again to file a charge, Rusilas finally came to his
office in January 1992.
The summary above shows that Respondent refused to
meet with the Union after November 22, 1991, to negotiate
over the effects of closing the New York City operations and
that Respondent stalled repeatedly when requested by the
Union to meet with it. Respondent Compu-Net thereby vio-
lated Section 8(a)(5) and (1) of the Act.
3. Alleged subcontracting of upstate work
The General Counsel asserts that after Compu-Net osten-
sibly ceased its upstate operations, it transferred these oper-
ations to its alter ego, Control, and that Control then subcon-
tracted its labor requirements with TAD.8 The General Coun-
sel does not urge that this constituted an 8(d) violation and
this issue was not litigated by the parties. Respondent argues
that Control is not the alter ego of Compu-Net and that Con-
trol was not precluded ‘‘from seeking contracts which
Compu-Net might have engaged in’’ had it survived ‘‘simply
because [Control] was under common ownership and control
with Compu-Net.’’ Respondent’s brief urges that Control was
not established to divert business from a nonunion shop and
it states that the TAD labor obtained by Control consisted of
union members ‘‘many of whom had been Compu-net [sic]
employees.’’
I find that the evidence establishes that Control is an alter
ego of Compu-Net in that the two enterprises have substan-
tially identical management, business purpose, operation,
equipment, customers, supervision, and ownership. Advance
Electric, 268 NLRB 1001 (1984). The owners and officers
of Compu-Net and Control are identical. The two Companies
are managed by the same individuals in the same titles. The
companies use substantially identical equipment: tools and
materials stored at the Latham facility were used by employ-
ees of both Compu-Net and Control. The fleet of vehicles at
Latham was used by both Compu-Net and Control employ-
ees. Control Supervisors Pierce and Gralley supervised em-
ployees of Compu-Net at Latham and when Compu-Net em-
ployees worked at the GE Schenectady plant their work was
directed by Control Supervisor Ferenkauf. Both Control and
Compu-Net performed work installing and maintaining pri-
vate telephone lines and operated out of the same office at
Latham, sharing the in-house accountant and other office per-
sonnel. For at least 1 year after Compu-Net went out of busi-
ness, the telephone at the Latham office was answered by a
receptionist who said, ‘‘Compu-Net.’’ The Latham office and
the fleet of vehicles continued to bear the name ‘‘Compu-
Net’’ after November 22, 1991, and no change was made in
the signage that identified the premises by the name
‘‘Compu-Net.’’ Both Control and Compu-Net had always
used the same corporate logo. The same individual prepared
bids for new work for both Compu-Net and Control. The
evidence shows that the two Companies had many of the
same customers: employees of both Companies performed
work for GE and for the Norstar Bank, and both Companies
submitted bids to the same potential customers. Both Compu-
Net and Control used the same vendors during the time when
they were in business. After Compu-Net ostensibly went out
of business, Control performed jobs that Compu-Net admit-
tedly would have performed; Control used former Compu-
Net employees who were being paid through TAD.
Although Control was established in 1987 and was not
used, at that time, to evade Compu-Net’s responsibilities
under the Act, I find that it was so used beginning in 1991.
Wagner’s testimony established beyond any doubt that
Compu-Net wanted to reduce labor costs; indeed, Wagner
met with the Union in October 1991, and attempted to obtain
a large reduction in wage rates on the basis that the Com-
pany was not able to compete successfully. When the effort
to obtain wage concessions was unavailing, Compu-Net de-
termined to go out of business. However, Wagner and
Rusilas, as owners of both Compu-Net and Control did not
thereby decide to forego the good will associated with
Compu-Net’s name and the income the Company could have
generated. Instead, they transferred the work that Compu-Net
would have performed to Control and hired former Compu-
Net employees, paying them through TAD at lower than
union rates and benefits. The vehicles and the method of an-
swering the telephone at the office continued to identify the
company as ‘‘Compu-Net.’’ I note that Compu-Net submitted
a bid dated November 22, 1991, for certain work to an estab-
lished Compu-Net customer, but that Control actually did the
work; an identical bid bearing the same date but submitted
on Control stationery and signed by the customer appears in
the file. The conclusion seems fair that after Compu-Net bid
for the work, it was determined that Control should take it
over. Further, Control performed upstate work using former
upstate Compu-Net employees paid by TAD: this pattern
began right after Compu-Net purportedly went out of busi-
ness and coincided with an unprecedented buildup in the
number of employees utilized by Control. Whereas Control
had about two craft employees performing non-GE work up-
state before November 1991, this number grew to at least 12
by the end of 1992. Thus, I conclude that Compu-Net shifted
its work to its alter ego Control after November 22, 1991,
to evade its responsibilities under the Act to honor its collec-
tive-bargaining agreement with the Union. Advance Electric,
supra at 1004.
Although Wagner testified that Compu-Net decided to use
TAD because TAD agreed to pay Compu-Net’s suppliers and
because TAD could finance the payroll by waiting several
weeks for payment from the customers, I do not credit this
explanation. First, the money owed to vendors related to the
HIP job in New York City. This part of the explanation does
not pertain to the upstate jobs. Further, Respondent has by
no means shown that it was out of cash and could not meet
its payroll. The financial statements submitted show that
there were many payments made in certain vaguely defined
225COMPU-NET COMMUNICATIONS
9 It must also not be forgotten that Control was a guarantor of
Compu-Net’s loan. 10 Transmarine Navigation Corp., 170 NLRB 389 (1968).
categories between Compu-Net and Control. Wagner testified
that no records were kept which would show exactly what
resources were used specifically by Compu-Net and Control,
but that he used his judgment to allocate costs between the
two Companies. Thus, Wagner had a great ability to shift
funds between the two Companies and the record will not
support a finding that Compu-Net was unable to make pay-
roll. Further, despite Wagner’s testimony that Norstar Bank
was, in effect, closing down the business, the record shows
that Compu-Net was granted several months to pay down the
loan in an orderly fashion.9 The bank was kept fully aware
of Compu-Net’s discussions with TAD and the customers
and knew that work was being shifted to TAD employees.
During this period, Compu-Net received payments from its
customers and Wagner and Rusilas found more funds from
their private resources. For aught that appears in the record,
Compu-Net could have continued to perform work upstate
and generate income; the only difference would have been
that the profit taken by the owners would have been less be-
cause of the higher labor costs under the union contract.
I conclude that Respondents decided to subcontract the
outside of New York City work because a significant savings
in the cost of labor could be achieved by using TAD to pay
the employees. Since the decision turned on labor costs, and
since there was no change in Respondents’ method of oper-
ation in that the subcontracted employees reported to the
Latham facility and used the same equipment and were su-
pervised by the same supervisors, the decision to subcontract
the work was a proper subject for collective bargaining with
the Union. See Storer Cable TV of Texas, 295 NLRB 295
(1989). Although the Board engaged in the First National
Maintenance balancing test in the cited case, it would seem
that in the instant case the balancing test is not required be-
cause Compu-Net did not cease or relocate the upstate por-
tion of its operations; instead, it transferred these operations
to its alter ego Control and then subcontracted them. Cf. Du-
buque Packing Co., 303 NLRB 386 (1991), and Torrington
Industries, 307 NLRB 809 (1992), in which the Board held
that where a Fibreboard subcontracting decision results in
the performance of work at the same plant under the control
of the same employer the Board will not apply the First Na-
tional Maintenance test.
Having found that Compu-Net continued to operate
through its alter ego Control, I also find that it subcontracted
its labor requirements with TAD. Clearly, the decision to
subcontract was a matter that Compu-Net should have nego-
tiated with the Union. Fibreboard Corp. v. NLRB, 379 U.S.
203, 211 (1964). I find that Respondent Compu-Net and its
alter ego Control violated Section 8(a)(5) and (1) of the Act
by failing to bargain with the Union over the decision and
effects of subcontracting the upstate unit work with TAD
employees.
CONCLUSIONS OF LAW
1. The following employees of Respondent Compu-Net
Communications, Inc. constitute a unit appropriate for the
purposes of collective bargaining within the meaning of Sec-
tion 9 (b) of the Act:
All full-time and regular part-time Cable Pullers, In-
stallers, Senior Installers and Drivers employed by
Compu-Net in New England, New York, New Jersey,
Pennsylvania and Washington, DC., but excluding of-
fice clerical employees, guards and supervisors as de-
fined in the Act.
2. Respondent Control Network Communications, Inc. is,
for the purpose of this proceeding, the alter ego of Respond-
ent Compu-Net Communications, Inc.
3. At all times material, Communications Workers of
America, District One, AFL–CIO has been the exclusive rep-
resentative of all employees within the appropriate unit de-
scribed above for purposes of collective bargaining within
the meaning of Section 9(a) of the Act.
4. By making a unilateral change in the health insurance
benefits and by refusing to bargain over the change, Re-
spondent Compu-Net violated Section 8(a)(5) and (1) of the
Act.
5. By failing to give prior notice and an opportunity to
bargain to the Union and by refusing to bargain over the de-
cision and effects of closing its operations in New York City
and terminating its employees, Respondent Compu-Net vio-
lated Section 8(a)(5) and (1) of the Act.
6. By failing to give prior notice and an opportunity to
bargain to the Union and by refusing to bargain over the de-
cision and effects of transferring its upstate operations to Re-
spondent Control and subcontracting the upstate work, Re-
spondent Compu-Net and its alter ego Control have violated
Section 8(a)(5) and (1) of the Act.
THE REMEDY
Having found that Respondents have engaged in certain
unfair labor practices, I find that they must be ordered to
cease and desist and to take certain affirmative action de-
signed to effectuate the policies of the Act.
The employees must be made whole for any losses result-
ing from Respondent’s unilateral change in health insurance
benefits.
As a result of Respondent’s unlawful failure to bargain
about the effects of its cessation of its New York City oper-
ations, the New York City employees have been denied an
opportunity to bargain through their collective-bargaining
representative at a time when Respondent might still have
been in need of their services, and a measure of balanced
bargaining power existed. Meaningful bargaining cannot be
assured until some measure of economic strength is restored
to the Union. A bargaining order alone, therefore, cannot
serve as an adequate remedy for the unfair labor practice
committed.
Accordingly, I shall recommend that, in order to effectuate
the purposes of the Act, Respondent bargain with the Union
concerning the effects on its New York City employees of
the closing of its New York City operations, and shall order
a limited backpay requirement designed both to make whole
the employees for losses suffered as a result of the violation
and to recreate in some practicable manner a situation in
which the parties’ bargaining is not entirely devoid of eco-
nomic consequences for Respondent.10 Thus, Respondent
shall pay the New York City employees backpay at the rate
226 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
11 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and rec-
ommended Order shall, as provided in Sec. 102.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.
12 If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ‘‘Posted by Order of the
National Labor Relations Board’’ shall read ‘‘Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order
of the National Labor Relations Board.’’
of their normal wages when last in Respondent’s employ
from 5 days after the date of the Board’s Order until the oc-
currence of the earliest of the following conditions: (1) the
date Respondent bargains to agreement with the Union on
those subjects pertaining to the effects of the closing of Re-
spondent’s New York City operations on its employees; (2)
a bona fide impasse in bargaining; (3) the failure of the
Union to request bargaining within 5 days of the Board’s
Order, or to commence negotiations within 5 days of Re-
spondent’s notice of its desire to bargain with the Union; or
(4) the subsequent failure of the Union to bargain in good
faith; but in no event shall the sum to any of these employ-
ees exceed the amount he would have earned as wages from
November 22, 1991, the date that Respondent terminated the
New York City operations, to the time he secured equivalent
employment elsewhere, or the date on which Respondent
shall have offered to bargain, whichever occurs sooner; pro-
vided, however, that in no event shall this sum be less than
these employees would have earned for a 2-week period at
the normal rate of their normal wages when last in Respond-
ent’s employ.
Having found that Respondent Control is the alter ego of
Respondent Compu-Net and that Respondents have trans-
ferred the Compu-Net operations outside of New York City
to Respondent Control and then subcontracted the operations
outside of New York City, and having found that Respond-
ents failed to bargain over the decision to subcontract unit
work and to discharge the out of New York City employees,
as well as the effects of that decision, I shall recommend that
Respondents be ordered to reinstitute the Compu-Net oper-
ations as such existed outside the New York City area prior
to November 22, 1991, offer employees in the unit so af-
fected by the transfer and subcontracting of that work rein-
statement and make them whole for any monetary loss they
may have incurred, and I shall recommend that Respondents,
on request, bargain in good faith with the Union as the ex-
clusive bargaining representative of the unit.
Backpay shall be computed in the manner prescribed in
F. W. Woolworth Co., 90 NLRB 289 (1950), with interest to
be computed in the manner prescribed in New Horizons for
the Retarded, 283 NLRB 1173 (1987).
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended11
ORDER
The Respondents, Compu-Net Communications, Inc. and
Control Network Communications, Inc., a Single Employer
and/or Alter Egos, their officers, agents, successors, and as-
signs, shall
1. Cease and desist from
(a) Making unilateral changes in the health insurance bene-
fits of employees and refusing to bargain over the changes.
(b) Failing to give prior notice and an opportunity to bar-
gain to the Union and refusing to bargain over the decision
and effects of closing New York City operations and termi-
nating the employees.
(c) Failing to give prior notice and an opportunity to bar-
gain to the Union and refusing to bargain over the decision
and effects of transferring outside of New York City oper-
ations to Control and then subcontracting the out of New
York City work.
(d) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of the rights guar-
anteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Make whole the employees for any losses they may
have suffered as a result of the unilateral changes in the
medical insurance benefits.
(b) On request, bargain with the Union concerning the ef-
fects on the New York City employees of closing the New
York City operations and make whole the employees in the
manner set forth in the remedy section of this decision.
(c) Reinstitute the outside of New York City operations,
offer employees in the unit reinstatement and make them
whole and, on request, bargain with the Union in the manner
set forth in the remedy section of this decision.
(d) Post at the Latham facility and mail to each unit em-
ployee copies of the attached notice marked ‘‘Appendix.’’12
Copies of the notice, on forms provided by the Regional Di-
rector for Region 2, after being signed by the Respondents’
authorized representative, shall be posted by the Respondents
immediately upon receipt and maintained for 60 consecutive
days in conspicuous places including all places where notices
to employees are customarily posted. Reasonable steps shall
be taken by the Respondents to ensure that the notices are
not altered, defaced, or covered by any other material.
(e) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondents have
taken to comply.