Daily News of Los Angeles

National Labor Relations Board - Board Decisions

Dec 30, 1994

315 N.L.R.B. 1236 (N.L.R.B. 1994)

1236
315 NLRB No. 158
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 304 NLRB 511.
2 369 U.S. 736 (1962).
3 205 NLRB 500 (1973).
4 Daily News of Los Angeles v. NLRB, 979 F.2d 1571, 1573 (D.C.
Cir. 1992).
5 Id. at 1574.
6 Id. at 1573.
7 Id. at 1576.
8 A small minority (fewer than 10 percent) received increases in
amounts ranging from 12 to 40 percent.
9 The Respondent denied merit increases to 18.5 percent of the
unit employees in 1986 and to 17.3 percent in 1987.
10 Accordingly, we disagree with the characterization of the merit
increase program in the instant case by the 10th Circuit in its recent
decision in Phelps Dodge Mining Co. v. NLRB, 17 F.3d 1334
(1994), as not constituting a term and condition of employment.
Nothing in the D.C. Circuit’s decision in this case suggests that the
court disagreed with the Board’s finding in this regard. To the con-
trary, that court reversed and remanded this case to the Board for
a reanalysis of our decision under Katz, an analysis which, as the
Phelps Dodge court acknowledges, applies only to subjects which
constitute terms and conditions of employment within the meaning
The Daily News of Los Angeles, a Division of Cooke
Media Group, Inc. and Los Angeles Newspaper
Guild, The Newspaper Guild Local 69, AFL–
CIO. Case 31–CA–17751
December 30, 1994
SUPPLEMENTAL DECISION AND ORDER
BY CHAIRMAN GOULD AND MEMBERS STEPHENS,
BROWNING, AND COHEN
On August 27, 1991, the National Labor Relations
Board issued its Decision and Order in this proceeding
finding, in agreement with the judge, that the Respond-
ent violated Section 8(a)(5) and (1) by unilaterally
withholding annual merit wage increases from employ-
ees during negotiations with the Union for an initial
contract.1 In finding the violation, the Board relied on
the Supreme Court’s decision in NLRB v. Katz2 and
the Board’s decision in Oneita Knitting Mills3 to con-
clude that where, as here, the Respondent maintained
an established practice of granting merit raises that
were fixed as to timing but discretionary in amount, it
was precluded from discontinuing that practice without
bargaining to agreement or impasse with the Union.
Thereafter, the Respondent filed a petition for re-
view of the Board’s Decision and Order with the
United States Court of Appeals for the District of Co-
lumbia Circuit. On December 11, 1992, the court
issued a decision which found that the Board’s holding
prohibiting the discontinuance of annual merit in-
creases that were discretionary in amount was incon-
sistent with Board precedent and was ‘‘by no means
compelled by the logic of Katz.’’4 The Court stated
that although Katz ‘‘stand[s] for the proposition that an
employer may not unilaterally continue discretionary
increases,’’5 the ‘‘opinion said not a word about dis-
continuance of a past pattern of discretionary wage in-
creases, and . . . the Board here offered no expla-
nation of the extension.’’6 Accordingly, the court re-
manded the case to the Board to reconcile the conflict
with its precedent on this issue and ‘‘for consideration
of whether an employer is bound under Katz to persist
in a merit raise program that is entirely discretionary
as to amount.’’7
On April 9, 1993, the Board notified the parties that
it had accepted the remand from the court of appeals
and invited the parties to submit statements of position.
Thereafter, all parties filed statements of position.
Having accepted the remand, the Board must ob-
serve the court’s opinion as the law of the case and,
necessarily, its judgment that the Board’s finding re-
garding the unlawful discontinuance of the discre-
tionary merit raise practice is not compelled by Katz.
Nevertheless, upon reconsideration in light of the
court’s opinion and the parties’ statements of position,
the Board has decided for the reasons stated below to
reaffirm its finding of a violation on the basis that a
reasonable interpretation of Katz supports the conclu-
sion that the Respondent violated the Act.
Discussion
The facts pertaining to the Respondent’s merit re-
view program are undisputed. Briefly stated, since
1986 when the Respondent took over the newspaper
operations of its predecessor, it continued an existing
practice of annually evaluating the performance of all
its employees—the editorial department employees at
issue here as well as the unrepresented employees. The
performance appraisals were regularly given at the
time of the employees’ employment anniversaries and
resulted in wage raises of between 3 and 5 percent
generally for those who received them.8 The raises
were based on merit and the amount of each raise was
determined solely by the Respondent in its discretion.
In short, the Respondent’s overall review program con-
sisted of appraising every employee once a year, con-
sidering each employee for a merit wage increase, and
granting a merit increase to at least 80 percent of the
employees.9
After the Union was certified as the bargaining rep-
resentative of the editorial employees and negotiations
commenced for a contract, the Respondent continued
to evaluate all of its employees annually and to grant
merit increases to its unrepresented employees. It dis-
continued, however, granting merit increases to the
editorial department employees.
Notwithstanding the element of discretion retained
by the Respondent in setting the amount of merit
raises, the Board found, and we do not understand the
court as disagreeing, that the merit review program
was an established practice and a term and condition
of employment regularly expected by the employees.10
1237DAILY NEWS OF LOS ANGELES
of Sec. 8(d) of the Act. See, e.g., Eastern Maine Medical Center v.
NLRB, 658 F.2d 1, 8 (1st Cir. 1981), where the court noted that
‘‘[i]ndefiniteness as to amount and a flavor of discretion do not . . .
prevent [merit raises] from becoming part of the conditions of em-
ployment.’’
11 Chemtronics Inc., 236 NLRB 178, 190 (1978).
12 Southwestern Steel Inc., 806 F.2d 1111, 1113 (D.C. Cir. 1986),
enfg. 276 NLRB 1569 (1985); Sheeran v. American Commercial
Lines, 683 F.2d 970, 977 (6th Cir. 1982).
13 J. P. Stevens & Co. v. NLRB, 623 F.2d 323 (4th Cir. 1980),
enfg. in part 239 NLRB 738 (1978).
14 Oil, Chemical & Atomic Workers (Kansas Refined Helium) v.
NLRB, 547 F.2d 575 (D.C. Cir 1976); Bastian-Blessing v. NLRB,
474 F.2d 49, 53 (6th Cir. 1973), enfg. 194 NLRB 609 (1971).
15 Seafarers Local 777 v. NLRB, 603 F.2d 862, 888–890 (D.C. Cir.
1978), enfg. in part 229 NLRB 1329 (1977); see also Wil-Kil Pest
Control Co. v. NLRB, 440 F.2d 371, 374–375 (7th Cir. 1971) (same
regarding use of company car).
16 Millard Processing Services, 310 NLRB 421 (1993).
17 Garment Workers Local 512 (Felbro, Inc.) v. NLRB, 795 F.2d
705, 710–712 (9th Cir. 1986), enfg. 274 NLRB 1268 (1985), citing
Peerless Roofing Co. v. NLRB, 641 F.2d 734, 735 (9th Cir. 1981)
(unilateral discontinuance of pension fund contributions violates Sec.
8(a)(5)).
This finding provides the starting point for analyzing
the primary question presented to us by the court:
whether the Respondent, during contract negotiations
with the Union, was privileged under Katz to dis-
continue an established condition of employment in
which all unit employees were annually considered for,
and a vast majority were awarded, merit increases.
I. THE KATZ ISSUE
A. Unilateral Conduct Which Effectuates a
Change in a Mandatory Term and Condition of
Employment is Prohibited by Katz
The Board and the court agreed in this case that the
starting point for discussion is the Supreme Court’s de-
cision in Katz.
In Katz, the employer, during negotiations for an ini-
tial contract and without notification to or bargaining
with the union, put into effect a new sick leave plan
and granted across-the-board wage increases and dis-
cretionary merit increases to a selected number of em-
ployees. The Court, equating this conduct with a literal
refusal ‘‘even to negotiate in fact—‘to meet . . . and
confer’—about any of the mandatory subjects,’’ stated
that the employer’s unilateral action violated Section
8(a)(5) ‘‘for it is a circumvention of the duty to nego-
tiate which frustrates the objectives of Section 8(a)(5)
much as does a flat refusal.’’ 369 U.S. at 743. The
Court went on to explain:
Unilateral action by an employer without prior
discussion with the union does amount to a re-
fusal to negotiate about the affected conditions of
employment under negotiation, and must of neces-
sity obstruct bargaining, contrary to the congres-
sional policy. It will often disclose an unwilling-
ness to agree with the union. It will rarely be jus-
tified by any reason of substance. [Id. at 747.]
Indeed, the Court viewed unilateral conduct so per-
nicious to the collective-bargaining process that it held
that a showing of subjective bad faith on the employ-
er’s part is unnecessary to establish a violation.
Although the court’s opinion in this case suggests
that the holding of Katz is limited by its facts, i.e., the
unilateral continuance of a merit wage program, nei-
ther the Board nor courts have given such a narrow
reading to Katz in subsequent decisions. Thus, the
Board and courts have applied Katz to enjoin unilateral
conduct by employers in a wide variety of contexts, in-
cluding the prohibition of a unilateral discontinuance
of an employer practice of providing employees with
coffee and rolls and permitting them to smoke in a
warehouse;11 the prohibition of an employer’s unilat-
eral discontinuance of a hiring hall arrangement;12 the
prohibition of a unilateral decrease from 1 hour to 15
minutes of paid free time for employees working dou-
ble shifts, the unilateral alteration of a method to com-
pute holiday pay, and the unilateral modification in the
model of respirators to be worn by employees;13 the
prohibition of a unilateral substitution of one insurance
plan for another;14 the prohibition of a unilateral modi-
fication of a policy governing the right of taxi drivers
to take their cabs home at night;15 the prohibition of
a unilateral increase in hourly shift schedules, a unilat-
eral increase in health insurance premiums to be paid
by employees, and a unilateral decrease in bus service
provided to employees;16 and the prohibition of a uni-
lateral implementation of an economic layoff.17 See
also John H. McGuckin, Jr., Clipping the Fringes: An
Employer’s Duty to Bargain Prior to Unilaterally
Changing Employee Benefits, 10 U.S. F. L. Rev. 175
(1975) (reviewing Katz’ application to unlawful
discontinuances of Christmas bonuses).
In none of these cases was it determinative whether
a continuance or a discontinuance, or an increase or a
decrease, or an alteration or modification of a condi-
tion of employment had been effectuated. Rather, each
of the unilateral acts was struck down on the authority
of Katz because a condition of employment had been
unilaterally changed. As stated by the Fifth Circuit in
NLRB v. Dothan Eagle, 434 F.2d 93, 98 (1970):
The cases make it crystal clear that the vice in-
volved in both the unlawful increase situation and
the unlawful refusal to increase situation is that
the employer has changed the existing conditions
of employment. It is this change which is prohib-
ited and which forms the basis of the unfair labor
practice charge.
. . . .
In other words, whenever the employer by
promises or by a course of conduct has made a
1238 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
18 See also NLRB v. Southern Coach & Body Co., 336 F.2d 214,
217 (5th Cir. 1964) (‘‘there must be an actual change in working
conditions’’ to establish an 8(a)(5) violation under Katz).
19 548 F.2d 644 (6th Cir. 1977), enfg. 218 NLRB 1246 (1975).
20 949 F.2d 249 (8th Cir. 1991), enfg. 300 NLRB 324 (1990).
21 455 F.2d 1357 (1971), enfg. 183 NLRB 163 (1970).
22 Id. at 1361. For a fuller description of the merit review policy
and the circumstances leading to its discontinuance, see 183 NLRB
at 170.
23 659 F.2d 1173 (D.C. Cir. 1981).
particular benefit part of the established wage or
compensation system, then he is not at liberty uni-
laterally to change this benefit either for better or
worse during . . . the period of collective bar-
gaining. Both unprecedented parsimony and
deviational largess are viewed with a skeptic’s
eye during . . . bargaining. In those cases where
the employer was found guilty of an unfair labor
practice for withholding benefits during . . . the
process of collective bargaining, the basis of the
charge was a finding that the employer has
changed the established structure of compensation.
[Emphasis in the original.]18
In our view, the standard set forth in Dothan Eagle,
which looks to whether a change has been imple-
mented in conditions of employment, captures best
what lies at the heart of the Katz doctrine. It neither
distinguishes among the various terms and conditions
of employment on which an employer takes unilateral
action nor does it discriminate on the basis of the na-
ture of a particular unilateral act. It simply determines
whether a change in any term and condition of em-
ployment has been effectuated, without first bargaining
to impasse or agreement, and condemns the conduct if
it has.
B. The D.C. Circuit and Other Courts have
Applied Katz in Concluding that Unilateral
Changes Resulting in Discontinuance of Merit
Raises Violate the Act
In NLRB v. Allied Products Corp.,19 the employer
unilaterally discontinued merit increases which, like
here, were fixed as to timing but discretionary in
amount. With reasoning almost identical to the stand-
ard set forth in Dothan Eagle, the Sixth Circuit ex-
plained:
The Act is violated by a unilateral change in the
existing wage structure whether that change be an
increase or the denial of a scheduled increase. Be-
cause the Company unilaterally changed an exist-
ing condition of employment, instead of maintain-
ing the status quo, the Board properly found that
it had committed an unfair labor practice. [Id. at
653, emphasis in the original.]
Similarly, the Eighth Circuit has affirmed the
Board’s finding that the discontinuance of merit in-
creases violated Section 8(a)(5). In Litton Microwave
Cooking Products v. NLRB,20 the employer had a prac-
tice of granting employees a merit increase every Feb-
ruary since 1978 in amounts determined by employer
discretion. After the union was certified and while the
parties were engaged in bargaining for an initial con-
tract, Litton withheld the increases in February 1981.
Relying on Katz, the court held that ‘‘[B]ecause em-
ployers may not unilaterally change conditions of em-
ployment,’’ Litton’s discontinuance of the February in-
creases without bargaining with the union violated the
Act. 949 F.2d at 252–253.
Most significantly, the D.C. Circuit in Auto Workers
(Udylite Corp.) v. NLRB21 also extended Katz to find
unlawful unilaterally discontinued merit raises. The
facts of that case are virtually indistinguishable from
the instant case. As described by the court in Auto
Workers, ‘‘[b]efore the Union’s certification, the Com-
pany had a policy of granting wage increases accord-
ing to annual merit reviews. This policy was discon-
tinued after certification and during the negotiations.
Although an interim plan was agreed upon, certain
merit review increases were withheld until the end of
the strike,’’ which commenced shortly after the interim
agreement and continued for 4 more months.22 Affirm-
ing the Board’s finding of a violation, the court held:
Even assuming that increases pursuant to the
merit review plan were wholly discretionary, the
plan operated according to Company policy, and
employees would at least have expected that they
would be evaluated according to the plan. Al-
though the Company asserts that it undertook its
action in order to comply with Katz, compliance
with the law required that it consult with the
Union prior to suspension of the program. [Id. at
1365.]
Further, despite the court’s suggestion in the present
case that its decision in NLRB v. Blevins Popcorn
Co.23 was too ambiguous to support the broad rule that
Katz applies to unilateral discontinuances of merit in-
creases, we find that that decision also supports the
Board’s finding in this case. In finding unlawful the
unilateral discontinuance of discretionary merit in-
creases in that case, the court stated:
Under [these] circumstances, if the company
wished to discontinue entirely the practice of
granting annual wage increases, it was required to
bargain with the union first; Katz requires an em-
ployer to consult with the union before changing
an existing condition of employment. [659 F.2d
1189, emphasis added.]
This is precisely what the Board required of the Re-
spondent in the instant case. The only ambiguity in
1239DAILY NEWS OF LOS ANGELES
24 NLRB v. Blevins Popcorn Co., 117 LRRM 2342, 2345 (S.M. re-
port (1982)).
25 See also NLRB v. McClatchy Newspapers, 964 F.2d 1153, 1163
(D.C. Cir. 1992), in which this court cited Blevins Popcorn in sup-
port of the proposition that Katz applies to unilateral discontinuances
of discretionary merit raises.
26 205 NLRB 500 fn. 1 (1973).
27 Southeastern Michigan Gas Co., 198 NLRB 1221 (1972).
28 By contrast, when an employer continues, after a union has been
certified, to grant fixed nondiscretionary wage increases unilaterally,
no 8(a)(5) violation results because there has been no change in the
terms and conditions of employment. Rather, in this situation, as
Katz explained, there is ‘‘in effect . . . a mere continuation of the
status quo.’’ 369 U.S. at 746.
29 295 NLRB 376 (1989).
30 264 NLRB 1020 (1982).
31 218 NLRB 1246 (1975).
32 196 NLRB 137 (1972).
Blevins Popcorn was whether the employer bargained
with the union before discontinuing the increases, and
as to that factual question the case was remanded to
a Special Master. On remand, the Special Master found
that the company had failed ‘‘to fulfill the obligation
to consult with the Union’’ before discontinuing the
merit raises.24 Accordingly, because the ‘‘Company’s
practice of granting merit increases in December was
an existing condition of employment, notwithstanding
the discretionary element, [and] could not be unilater-
ally discontinued without prior consultation with the
Union,’’ (id. at 2345), the Special Master found the
company in civil contempt of an earlier order by the
court that it bargain in good faith. The court of appeals
affirmed the Special Master. 117 LRRM 2392 (D.C.
Cir. 1983).25
C. Discontinued Merit Raises that Constitute a
Change in a Term of Employment Have
Consistently Been Found Unlawful by the
Board under Katz
Contrary to the court’s suggestion, the Board has
consistently applied Katz to prohibit an employer from
unilaterally changing an existing term and condition of
employment during bargaining, regardless of whether
the change involved a continuance or discontinuance
of the existing term.
In accord with this prohibition imposed by Katz, the
Board sought to explain in its original decision in the
instant case what an employer’s obligation is when, as
here, the existing term of employment involves the an-
nual grant of discretionary merit raises. The Board
stated that the same bargaining obligation applies
whether the issue involved is the employer’s unilateral
granting of merit increases or its unilateral discontinu-
ance of them, reciting the following passage from
Oneita Knitting Mills,26 a case, like here, involving an
employer who had a practice of annually reviewing
employees in order to determine the amount of a merit
increase to award:
An employer with a past history of a merit in-
crease program neither may discontinue that pro-
gram (as we found in Southeastern Michigan) nor
may he any longer continue to unilaterally exer-
cise his discretion with respect to such increases,
once an exclusive bargaining agent is selected.
[Citing Katz.] What is required is a maintenance
of preexisting practices, i.e., the general outline of
the program, however the implementation of that
program (to the extent that discretion has existed
in determining the amounts or timing of the in-
creases), becomes a matter as to which the bar-
gaining agent is entitled to be consulted.
The court found that our reliance on Oneita was mis-
placed because the violation found therein was the em-
ployer’s continuance in granting the merit raises, uni-
laterally, after the union’s certification, ‘‘so the deci-
sion is clearly not a holding on the present issue.’’ 979
F.2d at 1573. The court further noted that although the
Southeastern Michigan27 case cited in Oneita was
similar to the instant case to the extent that it involved
an unlawfully discontinued wage increase program, the
court found that it too did not support the Board’s
holding because the discontinued increases in South-
eastern Michigan were ‘‘fixed nondiscretionary raises’’
rather than, as here, discretionary increases. Id.
We agree that neither Oneita nor Southeastern
Michigan presents facts precisely congruent with those
in this case, but we nevertheless view these cases as
instructive and supportive of our original conclusions.
Although Oneita presents the reverse of the instant sit-
uation in that the Respondent here withheld increases
while the employer in Oneita granted them, a bargain-
ing obligation arose in both instances because a change
in employment conditions was effectuated. Further,
contrary to the court’s suggestion, the duty to bargain
is equally applicable in cases like Southeastern Michi-
gan where an employer seeks to discontinue fixed non-
discretionary wage raises because there, also, the dis-
continuance produces a change.28 Again, it is the uni-
lateral change in the terms and conditions of employ-
ment that results in the finding of an 8(a)(5) violation,
not the type of wage increase that is continued or dis-
continued.
Accordingly, because the employers’ conduct in
both Oneita and Southeastern Michigan constituted a
unilateral change in a condition of employment, we be-
lieve that both of those cases support the Board’s find-
ing of a violation in this case. Similarly, the additional
cases earlier cited by the Board in the instant case, i.e.,
Central Maine Morning Sentinel,29 Rochester Institute
of Technology,30 Allied Products Corp.,31 and General
Motors Acceptance Corp.,32 are consistent with the
Board’s finding of an 8(a)(5) finding in this case. Each
of these cases involved, as here, an established practice
1240 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
33 The court mistakenly stated that Rochester was the case where
employees received merit raises between 10 and 25 cents per hour.
Rather, Allied Products was the case where employees received
these amounts. However, since it is not known in Allied Products
what the employees’ base wages were, it is not possible to convert
into percentages the 10- to 25-cent raises for the purpose of compar-
ing those range amounts with the one at issue here. For essentially
the same reason, a similar comparison is impossible with respect to
the discontinued $30-merit raises in General Motors.
34 Udylite Corp., 183 NLRB 163, 170 (1970), enfd. sub nom. Auto
Workers v. NLRB, 455 F.2d 1357 (D.C. Cir. 1971).
35 311 NLRB 482 (1993).
36 313 NLRB 336 (1993).
37 269 NLRB 1091 (1984).
38 311 NLRB at 483.
39 The trend of the April wage increase had been progressively
downward from 6 percent when first given in 1984 to 2 percent
when last given in 1988.
40 Unlike our concurring colleagues, we find it unnecessary in this
case to address the Board’s discussion in Stone Container of Bottom
Line Enterprises, 302 NLRB 373 (1991).
in which unrepresented employees received merit in-
creases that were granted at regular specified periods
each year but that were discretionary in amount. And,
in each case, the Board applied Katz to find that the
employers violated the Act by discontinuing those
raises during negotiations with the unions that had
been newly certified as the employees’ collective-bar-
gaining representative.
Contrary to the court, we do not believe that these
cases can be meaningfully distinguished on the basis
that the range of merit raise discretion exercised by the
employers therein was narrower than that exercised by
the Respondent. First, we note that accurate compari-
sons in this regard are possible in only two of the four
cited cases, and as to these, we do not find that the
discretionary range of the merit raise amounts was sig-
nificantly different than in this case. Here, the range of
discretion was exercised generally within a 3- to 5-per-
cent range compared to the 4- to 8.9-percent range in
Central Maine and the 0- to 13-percent range in Roch-
ester.33 Second, and perhaps most importantly, the dis-
cretionary range of the increases here resembled close-
ly the range of discretion of the merit raises which this
court found were unlawfully discontinued in Auto
Workers, supra, i.e., ‘‘generally not in excess of 8 per
cent of base salary.’’34 Finally, we are unaware of any
precedent or reason that supports the court’s sugges-
tion that an employer must operate within a narrow
range of discretion in order to find unlawful a unilat-
eral change with respect to merit raises.
We do not regard our recent decisions in American
Packaging Corp.35 and Stone Container Corp.,36 or the
Board’s decision in American Mirror Co.,37 as being
contrary to the legal principles discussed above.
In American Packaging the employer had for many
years prior to the union’s 1990 certification granted its
employees production-based bonuses every September
1, the amounts of which were determined at the em-
ployer’s discretion after reviewing the past year’s costs
and profits. During the course of negotiations for an
initial contract, the union advised the employer that it
should use the same formula that it had used in the
past in calculating the 1990 bonuses, but that if the
employer determined that no bonuses were due its non-
union employees under that formula, the union did not
expect a bonus to be paid to the union employees. As
requested, the employer applied its formula and deter-
mined that in light of its worst performance year to
date, no production bonuses were earned by any of its
employees—union and nonunion. On these facts, the
Board found that notwithstanding its failure to pay
1990 bonuses, the employer did not act unlawfully be-
cause, in effect, it had not permanently discontinued
the bonus program. On the contrary, it bargained with
the union, the union waived its right to bargain about
the bonus amount to be paid the employees by advis-
ing the employer that it should use its established for-
mula in calculating the bonuses, and the employer ap-
plied that formula and ‘‘legitimately determined that
no year-end bonus was earned for 1990’’38—a result
implicitly contemplated by the union by its agreement
to forgo a 1990 bonus if one were not granted to the
nonunion employees. Further supporting the conclusion
that the bonus program was not unlawfully discon-
tinued was the fact that the employer granted the bo-
nuses the following year.
Similarly, in Stone Container the employer did not
propose to discontinue permanently the annual April
wage increase program that was an established condi-
tion of employment in that case, and the Board therein
specifically distinguished the instant case on that basis.
Rather, following the union’s July 1988 certification,
the employer acceded to the union’s request to bargain
about the April 1989 increase and, in response to the
union’s proposal that ‘‘it would not protest the grant-
ing of a wage increase in April’’ (id. at 336), the em-
ployer undertook its ‘‘annual wage and benefit sur-
vey’’ (id.) and proposed for economic reasons that it
could not give an increase that April.39
Thus, the critical distinction between the present
facts and those operative in Stone Container and Amer-
ican Packaging is that the latter two employers applied
the preexisting system for granting raises while the Re-
spondent did not. The absence of increases in Stone
Container and American Packaging flowed from the
employers’ application of their merit review program,
not, as here, from the Respondent’s unilateral decision
to withhold raises even if the raises would have been
given under an application of the preexisting merit
raise program.40
American Mirror is factually inapposite here be-
cause that case did not concern a merit wage increase
program that was a term and condition of employment.
Rather, the raises there had been given at random ir-
1241DAILY NEWS OF LOS ANGELES
41 261 NLRB 831 (1982).
42 Allied Products Corp., 218 NLRB at 1246 (1975), enfd. 548
F.2d 644 (6th Cir. 1977). See also NLRB v. Central Illinois Public
Service Co., 324 F.2d 916, 919 (7th Cir. 1963), and cases cited
therein.
43 John Zink Co., 196 NLRB 942 (1972); Herman Sausage Co.,
122 NLRB 168, 172 (1958), enfg. 275 F.2d 229 (5th Cir. 1960).
44 Bagel Bakers Council of Greater New York v. NLRB, 555 F.2d
304, 305 (2d Cir. 1977).
45 NLRB v. Overseas Motors, 818 F.2d 517, 521 (6th Cir. 1987),
citing NLRB v. Brown & Root, Inc., 311 F.2d 447 (8th Cir. 1963).
46 See also NLRB v. Iron Workers Local 433, 660 F.2d 770 (9th
Cir. 1979).
regular intervals in the past and, hence, the employer’s
withholding of them did not constitute a change, as
here, in a clearly established pattern that had become
a term of employment. See, e.g., Postal Service, 261
NLRB 505 (1982); Ithaca Journal-News, 259 NLRB
394 (1981).
Finally, the Board in its first decision in this case
distinguished Anaconda Ericcson Inc.41 on the basis
that the amounts of the raises therein were discre-
tionary, the parties during negotiations had begun bar-
gaining over wages, and the union did not uncondition-
ally agree to the wage increase. The court found this
attempted distinction by the Board ‘‘cursory’’ and that
‘‘[n]one of these three factors seems to explain the dif-
ferent outcomes’’ in the two cases. 979 F.2d at 1575.
Upon reconsideration, we agree with the court that
it is not possible to reconcile the Board’s decision in
Anaconda Ericcson with the Board’s other decisions in
this area, discussed above. The December 1 wage in-
crease in Anaconda was a term and condition of em-
ployment, and the employer was obligated to bargain
with the union over the amount of the increase. The
union’s proposal of an 85-cent increase and the em-
ployer’s counterproposal of a 5-cent increase did not,
as the court noted in its decision, constitute an impasse
in bargaining or a waiver of the union’s right to bar-
gain. In no event was the employer privileged to de-
cide unilaterally to withhold a wage increase from its
employees altogether as it did. Accordingly, we over-
rule Anaconda to the extent that the decision addresses
the unilateral discontinuance of merit increases.
II. THE ECONOMIC DEFENSE AND THE REMEDY
In addition to the Katz issue, the court invited the
Board on remand to address two additional issues not
raised by the parties but having ‘‘an obvious bearing
on the internal logic of the Board’s policy.’’ 979 F.2d
at 1576. The first issue deals with the court’s concern
as to how the Board can devise an acceptable remedy,
assuming a violation here, that makes employees
whole for the loss of a wage increase that is based on
employer discretion. The second issue posed by the
court is whether the unilateral discontinuance of the
merit wages should be regarded as a lawful economic
bargaining weapon.
A. Fashioning an Appropriate Remedy in this
Case is Feasible
Pursuant to the Board’s established and court-ap-
proved policy, ‘‘in cases, like here, involving a viola-
tion of Section 8(a)(5) based on a respondent’s unilat-
erally altering existing benefits, it is [customary] to
order restoration of the status quo ante to the extent
feasible, and in the absence of evidence showing that
to do so would impose an undue or unfair burden upon
the respondent.’’42 Such a remedy in the form of a re-
imbursement order for lost wages is warranted to ‘‘pre-
vent the wrongdoer from enjoying the fruits of his un-
fair labor practices and gaining undue advantage at the
bargaining table when he bargains about the benefits
which he has already discontinued.’’43
To remedy the violation found in this case, the
Board applied these policy considerations by ordering
that the employees be paid the ‘‘difference between
their actual wages and the wages they would have oth-
erwise received’’ if the merit increases had not been
unilaterally discontinued. The court, however, ques-
tioned how the Board proposed to enforce its order
since, inasmuch as the amounts of the withheld merit
raises were determined by employer discretion, deter-
mining the amounts of the withheld wage increases
that are based on discretion is ‘‘unascertainable.’’ 979
F.2d at 1577.
We do not share the court’s pessimism. The court’s
hypothesis is based on the premise that if a backpay
award cannot be determined with precision, one should
not be awarded. We disagree. A ‘‘backpay award is
only an approximation, necessitated by the employer’s
wrongful conduct.’’44 Therefore, the ‘‘Board is re-
quired only to adopt a formula which will give a close
approximation of the amount due . . .; it need not find
the exact amount due.’’45
Contrary to the court, we find that the Board’s re-
medial order will enable a backpay award to be
ascertained for each employee affected by the Re-
spondent’s unlawful conduct. Thus, it will be recalled
that although the Respondent discontinued granting
merit increases to the editorial employees at issue here,
it continued to issue annual merit reviews to them and
to all its unrepresented employees. Pursuant to those
reviews, the Respondent also continued to grant merit
increases to its unrepresented employees. This informa-
tion, along with other factors, such as the amounts of
the merit increases awarded to the editorial employees
during the years prior to their discontinuance, should
be sufficient to enable the General Counsel at the com-
pliance proceeding to construct a formula which will
give a close approximation of the amount due. See,
e.g., Overseas Motors, supra at 520.46
1242 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
47 361 U.S. 477 (1960).
48 380 U.S. 300 (1965).
49 418 F.2d 1208, 1212 (D.C. Cir. 1969).
50 388 U.S. 26 (1967).
51 The Second Circuit, however, would disagree. In language that
can be fairly described as holding that it is a per se violation of Sec.
8(a)(3) to unilaterally decrease wages and benefits, the court stated
that, if such conduct was permitted
an employer would appear to be entitled, in the hope of improv-
ing his bargaining position, to alter all conditions of employment
after union certification, reducing wages to the legal minimum
and allowing the work environment to deteriorate. The devastat-
ing impact that such action would have upon employee exercise
of Section 7 rights is indisputable. While the business purpose
would be ‘‘substantial,’’ we could not characterize it as ‘‘legiti-
mate.’’ [NLRB v. United Aircraft Corp., 490 F.2d 1105, 1110
(2d Cir. 1973).]
52 See U.S. Gypsum, 284 NLRB 4, 13 (1987) (the ‘‘applicable
cases hold that an employer’s motive is not an element essential to
a finding that a unilateral change is violative of Section 8(a)(5)’’).
B. Unilateral Conduct is not a Permissible
Economic Weapon for Bargaining
The second issue which the Board was invited to
consider on remand is whether the unilateral dis-
continuance of the merit wages should be regarded as
a lawful economic bargaining weapon in the same
sense that the ‘‘harassing tactics’’ employed in NLRB
v. Insurance Agents’ International Union (Prudential
Insurance Co.)47 and the lockout invoked in American
Ship Building Co. v. NLRB48 were found to be lawful
economic weapons. For the reasons set forth below, we
conclude that such unilateral action is not a lawful eco-
nomic weapon.
The court in the instant case noted that in Lane v.
NLRB49 it applied American Ship to find that a
preimpasse lockout does not violate Section 8(a)(3) as
long as it satisfied the standard set forth in NLRB v.
Great Dane Trailers,50 i.e., the employer is not moti-
vated by union animus and the lockout has both a ‘‘le-
gitimate and substantial business justification’’ having
an impact on employees which is only ‘‘comparatively
slight.’’ The court reasoned, therefore, that if, as in
Lane, a preimpasse lockout can be lawful under the
test of Great Dane, ‘‘it makes no sense to have a per
se ban on decreasing wages or benefits, which is clear-
ly a less drastic economic weapon [and s]uch a policy
defies not only logic but also the . . . admonition in
Insurance Agents’ not to distinguish a ‘greater’ eco-
nomic weapon, such as a strike or lockout, from a
‘lesser’ economic weapon.’’ 979 F.2d at 1577.
It must be remembered, however, that the balancing
test of Great Dane applies only to analyzing whether
Section 8(a)(3) has been violated. Therefore, if a lock-
out and a unilateral decrease in wages or benefits were
subjected to the balancing test of Great Dane, and
even assuming, arguendo, that a unilateral decrease in
wages and benefits is a less drastic economic weapon
than a lockout, then, perhaps, it might make no sense
to have a per se ban only on the former.51 But in the
instant case we are concerned only with whether the
Respondent’s unilateral action violated Section 8(a)(5),
a violation of which does not turn on antiunion moti-
vation or on any of the factors weighed under Great
Dane’s balancing test in determining whether Section
8(a)(3) has been violated.52 Rather, the question under
Section 8(a)(5) simply is whether an employer has re-
fused to bargain in good faith, and Katz has stated em-
phatically that it has not bargained in good faith when,
as here, it acts unilaterally with respect to terms and
conditions of work.
The Supreme Court decisions in Insurance Agents
and American Ship confirmed the principle that al-
though an employer and a union are both obligated
under the Act to bargain in good faith, both parties
may, without violating their duty to bargain, exert eco-
nomic pressure on each other in an effort to secure
agreement to each others’ bargaining proposals. In In-
surance Agents, economic pressure took the form of
half-day walkouts and refusals by employees to per-
form various job duties. The Court, reversing the
Board’s finding that the union’s tactics constituted
bad-faith bargaining under Section 8(b)(3), explained
that during negotiations for a collective-bargaining
agreement the ‘‘presence of economic weapons in re-
serve, and their actual exercise on occasion by the par-
ties, is part and parcel of the system that the . . . Act
[ ] ha[s] recognized.’’ 361 U.S. at 489. The Board was
admonished that the authority granted it by Congress
to enforce the statutory requirement that parties bar-
gain in good faith did not include the power to outlaw
the various forms of economic weaponry that the par-
ties to the bargaining might summon to their aid.
This reasoning was applied subsequently by the
Court in American Ship in assessing the legality of a
postimpasse lockout as an economic weapon in support
of an employer’s bargaining position. The Board found
that the lockout violated Section 8(a)(3) and (1) be-
cause it interfered with and discriminated against em-
ployees in the exercise of their protected right to bar-
gain collectively. The Court reversed, finding no such
interference with or discrimination against the employ-
ees’ bargaining rights, and again, citing Insurance
Agents, scolded the Board for improperly injecting
itself into the bargaining process ‘‘to deny weapons to
one party or the other because of its assessment of that
party’s bargaining power.’’ 380 U.S. at 308. Although
there was no issue involving Section 8(a)(5) in Amer-
ican Ship, the Court stated in dicta that its holding in
Insurance Agents had ‘‘even more direct application to
the Section 8(a)(5) question’’ than it did to the 8(a)(3)
question in American Ship.
Thus, while the Supreme Court has made clear in
American Ship and Insurance Agents that the Board is
not warranted in becoming involved in the substantive
1243DAILY NEWS OF LOS ANGELES
53 American Ship, 380 U.S. at 317, quoting from Insurance Agents,
361 U.S. at 497.
54 A number of writers on this issue have also noted that in Amer-
ican Ship and Insurance Agents the Supreme Court adopted a long
held academic view that the Board should not attempt to determine
what economic tactics should be used in negotiations as long as the
parties are otherwise engaged in a lawful effort to reach an agree-
ment. See, e.g., George Schatzki, The Employer’s Unilateral Act—
A Per Se Violation Sometimes, 44 Tex. L. Rev. at 485 (1966); Wal-
ter E. Oberer, Lockouts and the Law: The Impact of American Ship
and Brown Food, 51 Cornell L.Q. 193 (1966); William B. Gould IV,
A Primer on American Labor Law 100–103 (3d ed. 1993).
55 Borden, Inc., 196 NLRB 1170 (1972), and Molders Local 155
v. NLRB, 442 F.2d 742, 748 (D.C. Cir. 1971).
aspect of the bargaining process by ‘‘functioning as an
arbiter of the sort of economic weapons the parties
may use in seeking acceptance of their bargaining de-
mands,’’53 it is also clear that not all economic weap-
ons seriously affecting employee rights may be em-
ployed with impunity merely because employed in aid
of one’s bargaining position. This point was empha-
sized in Katz where the Court was careful to note that
the availability of economic weaponry under Insurance
Agents is subject to one crucial qualification—the
party utilizing it must at the same time be engaged in
lawful bargaining. Thus, while recalling that in Insur-
ance Agents it found that the Board may not decide the
legitimacy of economic pressure tactics ‘‘in support of
genuine negotiations,’’ Katz made clear that the Board
‘‘is authorized to order the cessation of behavior which
is in effect a refusal to negotiate.’’ 369 U.S. at 747.
The Court emphasized that in dismissing the refusal-
to-bargain allegation in Insurance Agents, the union
therein, unlike the employer in Katz, ‘‘had not in any
way foreclosed discussion of any issue, by unilateral
actions or otherwise.’’ Id.54
Similarly, in upholding the legality of the lockout as
an economic weapon in American Ship, the Court
thought it important to stress the employer’s ‘‘legiti-
mate bargaining position’’ (380 U.S. at 310) and to ob-
serve that there was ‘‘no allegation that the employer
used the lockout in the service of designs inimical to
the process of collective bargaining,’’ thus specifically
distinguishing cases ‘‘where the Board has concluded
on the basis of substantial evidence that an employer
has used a lockout as a means . . . to evade his duty
to bargain collectively.’’ (Id. at 308.) Accordingly, the
Court concluded that use of the lockout was not ‘‘in-
consistent with the right to bargain collectively’’ (id.
at 310) because the sole purpose of its use was ‘‘mere-
ly to bring about a settlement of a labor dispute on fa-
vorable terms.’’ (Id. at 313.)
Thus, since the Respondent’s unilateral action in this
case was ‘‘inconsistent with the right to bargain collec-
tively’’ under Section 8(a)(5), such action is not privi-
leged under a Great Dane analysis and such analysis
is unwarranted.
The court invited the Board also to consider Profes-
sor Gorman’s observation that in two similar cases
where the Board and this court found violations for the
denial of economic benefits during bargaining,55 the
‘‘tribunal[s] . . . [may have] engag[ed] in the kind of
‘picking and choosing’ among allowable economic
weapons for which the Board was reprimanded in [In-
surance Agents and American Ship Building].’’ 979
F.2d 1578, quoting Robert A. Gorman, Basic Text on
Labor Law 434 (1976).
Contrary to Professor Gorman’s suggestion, the
Board and court decisions in Borden and Molders
Local 155 represent a straightforward application of
Katz. The judge in Borden specifically rejected the em-
ployer’s contention that an American Ship analysis
should be applied in deciding whether the employer’s
unilateral cancellation of its employee insurance bene-
fit program violated Section 8(a)(5). Similarly, in
Molders Local 155, the court, having found that the
employer’s unilateral withdrawal of fringe benefits and
wage increases for the admitted purpose of inducing
employees to strike in violation of Section 8(a)(3),
found that it necessarily followed that the unilateral ac-
tion also violated Section 8(a)(5) and, therefore, con-
cluded that ‘‘[u]nlike the situation in Insurance
Agents’, then, there was in the present case ‘some spe-
cific warrant for [the Board’s] condemnation of the
precise tactics involved here.’’’ 442 F.2d at 748.
Conclusion
For the foregoing reasons, we conclude that the
finding of a violation in this case is based on a reason-
able interpretation of Katz and, therefore, we affirm the
Board’s original decision.
ORDER
The National Labor Relations Board reaffirms the
Board’s original Order reported at 304 NLRB 511
(1991), and orders that the Respondent, The Daily
News of Los Angeles, a Division of Cooke Media
Group, Inc., Woodland Hills, California, its officers,
agents, successors, and assigns, shall take the action
set forth in the Order.
MEMBERS STEPHENS AND COHEN, concurring.
We join in the opinion for the majority except that
we do not fully subscribe to the reasoning in the dis-
cussion concerning the bargaining obligation of an em-
ployer regarding a past practice that is scheduled to
recur during negotiations for a contract. We write sep-
arately to state our views on the subject.
Where there is a past practice concerning an annual
event (e.g., an annual wage increase), and the event is
scheduled to recur during negotiations for a contract,
the employer satisfies its bargaining obligation if it
gives reasonable advance notice and opportunity to
1244 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 See Stone Container, 313 NLRB 336 (1993). The employer’s
bargaining position may be to continue the practice for that year, to
modify it, or to delete it for that year.
2 Of course, absent impasse, the employer may have to continue
bargaining after implementation, and such bargaining could include
demands for retroactive application of any agreement ultimately
reached.
3 We agree with our colleagues that the employer in Anaconda
Ericcson, 261 NLRB 831 (1982), violated the Act, but our conclu-
sion rests solely on the fact that the implemented increase there dif-
fered from the final offer.
bargain about that scheduled event.1 Assuming that the
employer gives such notice and opportunity, it can im-
plement its final proposal as to that matter even if the
parties have not reached impasse, either overall or on
the specific matter.2 In essence, the time for the sched-
uled event arrives before the parties have reached im-
passe. In such circumstances, we would permit the em-
ployer to act ‘‘on schedule,’’ so long as there has been
a reasonable notice and opportunity for bargaining.3
On the other hand, if the employer’s proposal is for
a permanent change in the practice, i.e., a change that
would operate in the current year and in future years,
the employer cannot make the permanent change (so as
to affect future years) until an impasse has been
reached.
In the instant case, the Respondent changed the
practice for the current year without reasonable notice
and opportunity to bargain. In addition, the Respondent
made a permanent change, affecting future years, with-
out reaching an impasse. Accordingly, under the tests
set forth above, we conclude that the Respondent’s
conduct was unlawful.