Consumers Energy Co.

National Labor Relations Board - Board Decisions

Jun 26, 1998

325 N.L.R.B. 963 (N.L.R.B. 1998)

963
325 NLRB No. 178
CONSUMERS ENERGY CO.
1 In adopting the judge’s finding that the amendment to the pen-
sion plan was not unlawful, we note that the General Counsel has
failed to sustain his burden of establishing that the pension credits
given to those holding full-time union office actually placed those
employees at an advantage with respect to retirement benefits, and
thereby encouraged union activism.
Consumers Energy Company and Vincent F. Gulli
Michigan State Utility Workers Council, AFL–CIO
and Vincent F. Gulli. Cases 7–CA–37934 and 7–
CB–10768
June 26, 1998
DECISION AND ORDER
BY CHAIRMAN GOULD AND MEMBERS FOX AND
LIEBMAN
On August 1, 1997, Administrative Law Judge Irwin
H. Socoloff issued the attached decision. The General
Counsel filed exceptions and a supporting brief, and
the Respondent Union and the Respondent Company
filed answering briefs.
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-
clusions and to adopt the recommended Order.
ORDER
The recommended Order of the administrative law
judge is adopted and the complaint is dismissed.
Dwight Kirksey, Esq., for the General Counsel.
M. M. Nestor, Esq., of Jackson, Michigan, for the Respond-
ent Company.
George Kruszewski, Esq., of Detroit, Michigan, for the Re-
spondent Union.
DECISION
STATEMENT OF THE CASE
IRWIN H. SOCOLOFF, Administrative Law Judge. On
charges filed on December 1, 1995, by Vincent F. Gulli, an
individual, against Consumers Energy Company and Michi-
gan State Utility Workers Council, AFL–CIO (respectively,
Respondent Company and Respondent Union), the General
Counsel of the National Labor Relations Board, by the Re-
gional Director for Region 7, issued a consolidated complaint
dated January 30, 1996, alleging violations by the Respond-
ents of Section 8(a)(3) and (1) and (b)(2) and 1(A) and Sec-
tion 2(6) and (7) of the National Labor Relations Act (the
Act). The Respondents, by their answers, denied the commis-
sion of any unfair labor practices.
Pursuant to notice, trial was held before me in Detroit,
Michigan, on March 5, 1997, at which the General Counsel
and the Respondents were represented by counsel and were
afforded full opportunity to be heard, to examine and cross-
examine witnesses, and to introduce evidence. Thereafter, the
Company and the Union filed briefs which have been duly
considered.
On the entire record in these cases, and from my observa-
tions of the witnesses, I make the following
FINDINGS OF FACT
I. JURISDICTION
The Respondent Company, a corporation, has an office
and place of business in Jackson, Michigan, and is engaged
as a public utility in the storage, sale, and distribution of nat-
ural gas and related products. During the year ending De-
cember 31, 1995, a representative period, the Company had
gross revenues in excess of $250,000 and purchased and re-
ceived in Michigan goods and materials valued in excess of
$50,000, which were sent directly from points located out-
side the State of Michigan. I find that Consumers Energy
Company is an employer engaged in commerce within the
meaning of Section 2(2), (6), and (7) of the Act.
II. LABOR ORGANIZATIONS
The Respondent Union and Utility Workers Union of
America, AFL–CIO are, each, labor organizations within the
meaning of Section 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
A. Background
The Michigan State Utility Workers Council (Counsil), an
intermediate entity, is the governing body for the 23 separate
Michigan based local unions which comprise it, and rep-
resents employees of the Respondent Company and of Mid-
land Cogeneration Venture. The Council has represented
Consumers Energy Company’s operating, maintenance, and
construction employees since the mid-1940s.
Consumers has maintained a noncontributory retirement or
pension plan since 1944, covering all of its full-time employ-
ees, including those represented by the Council. Although the
successive collective-bargaining agreements between the
Company and the Union refer to the pension plan, the plan
itself, and negotiated changes, have been separately set forth
in a stand alone pension plan booklet.
The Council is governed by the 69 delegates sent from its
23 constituent locals. Between meetings of the delegates, its
affairs are run by an executive board consisting of four part-
time vice presidents and three full-time officers—the presi-
dent, secretary-treasurer, and executive vice president. While
the part-time vice presidents, throughout their terms in office,
are, and remain, employees of Consumers, the full-time offi-
cers must take a leave of absence from the Company and
they receive compensation, solely, from the Union. However,
those officers are not covered by a council pension plan and,
instead, they continue coverage under the company plan.
In the instant case, the General Counsel contends that the
Respondents violated the Act when, in September 1995, they
agreed to an amendment to the pension plan, which they
have thereafter maintained, under which the earnings credited
for pension benefits to full-time officers of the Respondent
Union exceed the earnings which can be credited for such
benefits to any employee employed by the Respondent Com-
pany, and represented by the Respondent Union, who is not
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964 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 Specifically, the negotiated amendment to the pension plan, under
attack, here, by the General Counsel, provides:
Earnings of Officers of Michigan State Utility Worker’s Coun-
cil-Effective for Officers in Office on or after September 1, 1995.
An employee on authorized leave of absence to serve as presi-
dent of the Michigan State Utility Worker’s Council will be
credited with Earnings at 15% more than the Standard Rate for
Labor Grade 20 or equivalent including cost of living allow-
ances, for the duration of such leave of absence to serve as
president; and up to three other such employees on authorized
leave of absence to serve as other officers of the Michigan State
Utility Worker’s Council will be credited with Earnings at 15%
more than the Standard Rate for Labor Grade 18 or equivalent
including cost of living allowances, for the duration of their
leaves of absence to serve as officers, except that such amounts
will not be less than the Standard Rate for the job from which
such an employee received an authorized leave of absence, in-
cluding cost of living allowances.
2 288 NLRB 374 (1988), enfd. sub nom. WPIX, Inc. v. NLRB, 870
F.2d 858 (2d Cir. 1989).
on authorized leave of absence to serve as an officer of the
Respondent Union. The Respondents urge that, even with the
negotiated change, full-time officers of the Union are at a
disadvantage, vis-a-vis members of the bargaining unit who
are not full-time officers, regarding retirement benefits and,
accordingly, the negotiated amendment to the pension plan
does not tend to encourage, by grant of an employment bene-
fit, the holding of office in the Union, in contravention of
statutory provisions.
B. Facts
The facts in this case are not in dispute and may be sum-
marized, as follows:
The minimum retirement age under the Consumers pen-
sion plan is 55, and at least 5 years of service, preceding re-
tirement, are required. Benefits are calculated by multiplying
the average of an employee’s highest 5 years of earnings
(high 5) by 2.1 percent for each work year up to 20 years,
and by 1.5 percent for each of the next 15 years of work.
Prior to 1983, those employees who also served as full-
time union officers risked disadvantage at retirement since,
for their years on leave of absence, to hold union office, they
received no earnings from Consumers credited for pension
benefits. If the leave of absence occurred in the years preced-
ing retirement, then, earlier years, when contractual wages
were less, were relied on to determine the ‘‘high 5’’ utilized
for the pension benefits calculation. To meet the potential
problem, the Respondents, in the 1983, contract negotiations,
agreed to amend the pension plan to provide that an individ-
ual on authorized leave, to serve as president of the Council,
would be credited, for pension plan purposes, with service
time and with earnings at 15 percent more than the standard
rate for labor grade 14 for each year of such leave. The other
full-time officers were to be credited with service time and
earnings at 10 percent above the labor grade 14 rate. Under
the amendment, amounts so credited could not exceed the
standard rate for labor grade 19, the highest labor grade at
the time.
The above-referenced provision was not altered in the
course of contract negotiations which occurred in 1986,
1989, and 1992. In the 1992 negotiations, the Union did pro-
pose, and the Company did agree, to include bargaining unit
members in Consumers’ savings and investment plan, a
401(k) plan previously maintained, only, for salaried and
other nonbargaining unit personnel. The Union also sought to
include full-time council officers under the plan but the
Company refused, saying it would be unlawful to do so. Ac-
cordingly, the three full-time council officers were not
brought under this plan and they, unlike participants in the
savings and investment plan, have no pre-tax basis available
to set aside money for retirement purposes.
Under the 401(k) plan, employees can contribute up to 12
percent of their wages on a tax-deferred basis. They can con-
tribute another 4 percent, after taxes. Consumers makes
matching contributions of at least 50 percent, and up to 100
percent, of the first 6 percent of employee wages contributed,
depending on the degree of the Company’s attainment of
earnings goals.
During contract negotiations in 1995, the Respondent
Union proposed numerous changes in employee retirement
benefits, including one to revise the formula for crediting
earnings, under the pension plan, to full-time council offi-
cers. In resisting most of the various proposals of the Coun-
cil, the Respondent Company argued that the existing retire-
ment provisions were generous when looked at as a whole,
that is, including pension, 401(k), and social security. How-
ever, it agreed to the pension plan formula change for union
officers after the Union argued that such was necessary in
order to eliminate a portion of the disadvantage to those offi-
cers resulting from the fact that they cannot participate in the
savings and investment, or 401(k), plan. Under the new pro-
vision, the president of the Council is credited with earnings,
for pension plan purposes, at 15 percent more than the stand-
ard rate for labor grade 20, the highest labor grade under the
collective-bargaining agreement. Up to three other employees
on leave of absence to serve as full-time officers of the
Council are so credited with earnings at 15 percent more
than the standard rate for labor grade 18. Unlike the 1983
provision, for crediting earnings to these officers, the 1995
agreement, contains no cap on the amount of earnings which
can be credited.1
There is considerable record evidence that the change to
the pension plan negotiated in 1995, did not put the Coun-
cil’s full-time officers in a better overall financial position
with respect to retirement than other bargaining unit employ-
ees because of the officers’ inability to participate in the sav-
ings and investment plan. While comparisons are, nec-
essarily, speculative, and dependent, inter alia, on the
amounts contributed to the 401(k) plan and the return
achieved on that account, the financial projections as con-
tained in this record show, generally, that a nonofficer in
labor grade 20 who retires after having participated fully in
the savings and investment plan, and having realized the tax
advantages of such participation, will, overall, have available
a greater monthly income than retirees who have served one
or more terms as full-time union officers and were, for the
periods of such service, unable to participate in the 401(k)
plan. This is so, even allowing for an increased ‘‘high 5,’’
for pension plan purposes, achieved by virtue of the 1995
agreement.
C. Conclusions
In Electrical Workers IBEW Local 1212 (WPIX, Inc.),2 the
Board held that, henceforth, in deciding whether a particular
collective-bargaining provision that makes some distinction
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965CONSUMERS ENERGY CO.
3 Cf. Dairylea Cooperative, Inc., 219 NLRB 656 (1975), enfd. sub
nom. NLRB v. Teamsters Local 338, 531 F.2d 1162 (2d Cir. 1976).
4 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.
among employees on the basis of union status or activity vio-
lates Section 8(b)(1)(A) and (2) of the Act, it would apply
the following three-step analysis:
First we look to see whether the provision treats em-
ployees differently on the basis of union status or activ-
ity. Next we look at whether this distinction tends to
encourage the union status or activity in question. If the
answer to either of these first two questions is no, then
we need not reach the third step. If the answer to both
is yes, then we determine whether the disparate treat-
ment that tends to encourage or discourage union activ-
ity is justified by policies of the Act. [Footnote omit-
ted.]
Applying that test to the facts in the instant case, the 1995
amendment, to the pension plan clearly treats employees dif-
ferently on the basis of union status or activity. Full-time
union officers, only, are credited, for pension purposes, with
earnings up to 15 percent above the standard rate for labor
grade 20, the highest labor grade as set forth in the collec-
tive-bargaining agreement. Thus, the answer to the first ques-
tion, under the WPIX test, is yes. However, in this case, as
in WPIX itself, the answer to the second question is no, as
the distinction does not tend to encourage employees to be-
come active unionists, or to seek selection or election to tem-
porary union jobs, but, rather, removes, in part, a condition
that would discourage employees from taking such jobs.
Thus, in fashioning the 1995 amendment, the parties sought
partially to alleviate the potential retirement losses suffered
by full-time officers because they are not eligible to partici-
pate in the 401(k) plan, a severe disincentive to serve in a
temporary union job. Further, the record evidence shows,
even after the negotiated change, full-time officers were not
necessarily placed in a better position with respect to retire-
ment benefits than the remainder of the bargaining unit and,
more likely, they remained in a worse position. This is so
as any potential gains in pension plan benefits from the for-
mula change are apt to be more than offset by losses from
the inability to participate in the savings and investment plan.
Thus, the 1995 amendment, to the pension plan, when
viewed in conjunction with all existing retirement provisions,
would not tend to encourage employees to take temporary
union jobs in order to gain an employment benefit. Instead,
there remains a disincentive to do so. Also, as in WPIX, em-
ployees who do not take full-time union office, but remain
on the job with the Respondent Employer, are not disadvan-
taged due to the pension plan amendment. They remain in
the same situation, and will receive the same retirement ben-
efits, as before.3
As the record evidence demonstrates that the pension plan,
as amended, confers on a full-time union officer a new bene-
fit which is speculative if, indeed, the officer realizes any
benefit at all, and which is insufficient entirely to overcome
the disincentive to hold office due to lost opportunities to
participate in the 401(k) plan, it cannot be said to accord an
unlawful preference to employees serving as union officials.
Accordingly, by negotiating and maintaining the 1995
amendment to the plan, the Respondents have not violated
the Act.
CONCLUSIONS OF LAW
1. Consumers Energy Company is an employer engaged in
commerce and in operations affecting commerce within the
meaning of Section 2(2), (6), and (7) of the Act.
2. Michigan State Utility Workers Council, AFL–CIO is a
labor organization within the meaning of Section 2(5) of the
Act.
3. The Respondents have not violated the Act as alleged
in the complaint.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended4
ORDER
The complaint is dismissed.
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