H & H Pretzel Co.

National Labor Relations Board - Board DecisionsDec 30, 1985

277 N.L.R.B. 1327 (N.L.R.B. 1985)

H & 1-1 PRETZEL COMPANY Raymond R. Hufford d/b/a H & H Pretzel Compa- ny and Bakery Drivers Union Local No. 52, International Brotherhood of Teamsters, Chauf- feurs, Warehousemen and Helpers of America. Cases 8-CA-15922 and 8-CA-16376 30 December 1985 DECISION AND ORDER BY CHAIRMAN D'OTSON AND MEMBERS DENNIS AND BABSON On 15 March 1984 Administrative Law Judge Thomas A. Ricci issued the attached decision and recommended Order dismissing the complaint in its entirety. The General Counsel and the Charging Party filed-exceptions and supporting briefs. The National Labor Relations Board has delegat- ed 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 decided to affirm the judge's rulings, findings,I and conclusions only to the extent consistent with this Decision and Order. The judge found and we agree, for the reasons stated by him, that the Respondent did not violate either Section 8(a)(3) or Section 8(a)(5) of the Act by unilaterally changing its method of operation to a distributor-dealership and the terminating its employee-drivers who did not wish to work under the new arrangement. We also adopt, for the reasons stated by the judge, his further finding that the Respondent did not violate Section 8(a)(5) by failing to furnish the Union ' with business and fi- nancial records it requested. The judge, however, further found that the Re- spondent did not violate Section 8(a)(5) by refusing to recognize and bargain with the Union after it converted its operation to a distributor-dealership and utilized the services of "independent contrac- tors" to perform the work previously performed by i The Charging Party has excepted to some of the judge's credibility findings. The Board's established policy is not to overrule an administra- tive law judge's credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect Standard Dry Wall Products, 91 NLRB 544 (1950), enfd 1'88 F 2d 362 (3d Cir 1951) We have carefully examined the record and find no basis for re- versing the findings In sec. III of his decision, the judge stated that the parties' last collec- tive-bargaining agreement which expired on 2 July' 1982 provided foi a weekly guaranteed wage of $2 10 The record shows that the agreement provided for a minimum guaranteed wage of,$210 per week Further, the record does not support the judge's statement that the Re- spondent on' 29 June 1982 abandoned its proposal to convert its driver/employees into independent contractors Rather, the record shows that the Respondent's negotiator Charles Lazarro informed the Union's negotiator George Faulkner, by letter of 1 July, that Faulkner's belief that the Respondent had withdrawn its proposal to convert to independ- ent contractors was incorrect. These inadvertent errors are corrected They are, however, insufficient to affect the results of our decision. 1327 employees. The General Counsel and',the Charging Party except to this finding and we" find merit in this exception. Thus, contrary to our colleague who dissents in these dismissals, we agree with the judge that the Respondent's change in operations was motivated by a need to reduce labor costs rather than discri- minatorily motivated and that the Respondent ade- quately met and bargained to impasse with the Union over this matter. We note that prior to the commencement of negotiations, the Respondent on 19 May 1982 wrote to the Union advising of its plan to convert operations to utilize "independent contractors" rather than employees after the expi- ration of the then existing collective-bargaining contract. Thereafter, at the ensuing bargaining ses- sions, the Respondent proposed converting the status of its drivers from employees to independent contractors. Alternatively, the Respondent pro- posed to continue employing the drivers as em- ployees in exchange for the Union's agreeing to certain economic concessions. In the meantime, by letter of 17 June 1982, the Respondent advised the Union of its economic problems, enclosed financial data for the years 1974 to 1981, and invited the Union to examine company records for substantia- tion. The Union, however, did not then accept the Respondent's invitation. Instead, as found by the judge, the Union maintained throughout the negoti- ations a fixed resolve not to consent to any reduc- tions in the labor costs. On 30 June 1982, the mem- bership rejected the Respondent's final offer and by letter of 1 July the Union for the first time request- ed examination of the Company's books. The Re- spondent did not grant the request and, thereafter, implemented its proposal to use what it termed "in- dependent contractors." As noted, we agree with the judge that the Respondent bargained to impasse over its proposed change in operations and did not violate Section 8(a)(5) by refusing to grant the Union's request for information pertaining to its fi'- nancial records. In this regard, the record shows that the Re- spondent is engaged in the wholesale distribution of certain snack foods. The Union has been the col- lective-bargaining representative of the Respond- ent's driver-salesmen. The parties' most recent col- lective-bargaining agreement was effective from 1 July 1979 through 2 July 1982.2 The parties com- menced negotiations in June prior to the expiration of the then existing contract. At these sessions the Respondent proposed converting the status of its drivers from employees to independent contractors. Alternatively, the Respondent proposed to contin- 2 Hereafter all dates refer to 1982 unless noted otherwise 277 NLRB No. 143 1328 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ue employing the drivers as employees in exchange for the Union's agreeing to certain economic con- cessions . As found by the judge, the parties bar- gained to impasse and the Respondent thereafter converted its operation into a distributor-dealership and executed agreements with what it termed "dealers" to sell and deliver the snack products. Only 3 of the Respondent's 12 employee-drivers agreed to work under the new arrangement, and the Respondent engaged 9 outsiders to reach a full complement of 12 "dealers." Prior to the conver- sion of the operation, the Respondent owned the trucks used for deliveries. After the conversion, the trucks were held by Ray Car Leasing, a company owned by Raymond Hufford, the Respondent's sole proprietor, and all dealers now drive trucks leased from Ray Car. The agreement between the Respondent and its dealers provides, inter alia, that: the relationship between them shall be that of "in- dependent contractor." The dealer is to distribute the product on a route-allocated by the Respond- ent. All customers and accounts are specified to be the sole property of the Respondent, and the Re- spondent may take up to $500 in business from the dealer's area upon giving 30 days' notice. The Re- spondent is to provide sales pads, tickets, and racks.-The dealer is to purchase his inventory from the Respondent at the established street price less 16 percent and agrees not to transport or sell any other goods absent the Respondent's written con- sent . The dealer is to pay all expenses of his busi- ness operation including fuel, oil, and taxes of any kind. The agreement also provides that in the event of vacation, sickness, and relief periods the dealer will serve his territory with competent, experi- enced employees. The dealer is to ensure that any individual employed by him shall be at least 18 years old and experienced and shall comply with the obligations of the agreement . The dealer is re- sponsible for the expenses of employees and the employee is to be conclusively presumed to be the employee and or agent of the dealer. The agreement specifies that the workweek is to be Monday through Friday and that Saturday may be used as a makeup day in the event of illness or for the handling of special promotions. The agree- ment specifies the minimum number of stops to be made weekly to serve customers. For example, cus- tomers who purchase $50 worth of merchandise weekly are to be served once per week; while cus- tomers who purchase at least $100 worth of mer- chandise weekly are to be served at least four times per week. The agreement also sets forth minimum standards of cleanliness to be observed as to per- sonal and vehicular appearance. It specifies that shirts be cleaned daily and trousers pressed at least every 2 days. The agreement also specifies a sched- ule for the washing and waxing of vehicles and specifies that vehicles are to be painted in accord with the_ color scheme and design specified by the Respondent. The vehicles may carry no advertis- ment except as directed or approved by the Re- spondent, and the Respondent is to reimburse the dealer for the cost of painting. Under the agree- ment, the Respondent had the right to compel the dealer to attend meetings. The Respondent also has the right to perform any of the dealers' obligations under the agreement should the dealer fail to do so and the Respondent may recover the expenses it incurs in so doing by deducting that amount from any money due the dealer . The Respondent also has the right to unilaterally terminate the agree- ment for breach of its provisions or for any dishon- est, illegal , or immoral conduct on the part of the dealer which would bring the Respondent into dis- repute. In concluding that the Respondent had no obli- gation to recognize and bargain with the Union after its change of operation, the judge considered and rejected the General Counsel's contention that the bargaining obligation remained after the changeover because the Respondent exercised such direct control over the work of the "independent contractors" that they must be deemed "employ- ees." The judge found that, even assuming that the salesmen were not "independent contractors," there was no bargaining obligation because after the changeover only 3 of the original 12 remained with the Respondent, and there was no evidence that the 9 new individuals wished to be represented by the Union. We disagree with the judge's analysis and con- clusions. First, we find that the dealers which the Respondent engaged after its changeover are "em- ployees" within the meaning of the Act. Second, we find that the Respondent violated Section 8(a)(5) by withdrawing recognition and refusing to bargain with the Union on behalf of its dealer/employees. In determining the status of individuals alleged to be "independent contractors," the Board applies a "right of control" test. If the person for whom the services are performed retains the right to con- trol the manner and means by which the results are to be accomplished, the person who performs the services is an employee. If only the results are con- trolled, the person performing the services is an in- dependent contractor. A. S. Abel Publishing Co., 270 NLRB 1200 (1984). In the instant case we find that the Respondent so extensively controlled the manner and means utilized by its dealers in accomplishing the result H & H PRETZEL COMPANY that the dealers must be found to be employees and not independent contractors. We note that, pursu- ant to its agreement with the dealers, the Respond- ent set the workweek, the frequency of calls on customers, dictated the color and design of the ve- hicles used, and even regulated the personal hy- giene of the dealers and the cleanliness of their ve- hicles. The Respondent could compel the dealers to attend meetings and they were prohibited from transporting or selling any goods other than the Respondent's. The dealers also were prohibited from carrying any advertisement other than that approved by the Respondent. The-Respondent fur- ther retained the right to take away up to $500 in business from the dealer's area and retained the right to perform any of the dealer's obligations under the agreement should the dealer fail to do so. We note, moreover, the lack of any evidence of the dealers having any proprietary interest or invest- ment in the business. The Respondent supplies the sales pads, tickets, and racks to be used and the ve- hicles used are owned by a company owned by the Respondent's proprietor and leased to the dealers. While the dealers are permitted under the agree- ment to hire "employees," the Respondent has the right to require that these employees also comply with the agreement, be at least 18 years old, and experienced. Finally, we note that the Respondent has broad authority to unilaterally terminate the agreement. In these circumstances, we find that the Respondent so extensively controls the manner and means of the result to be achieved by its dealers that the dealers are the employees of the Respond- ent and not independent contractors. Dan Dee West Virginia Corp., 180 NLRB 534 (1970). We further conclude that the Respondent was obligated to recognize and bargain with the Union on behalf of its dealer/employees following the conversion and that its failure to do so was viola- tive of Section 8(a)(5). In this regard, we note that following the expiration of a collective-bargaining agreement, a union enjoys a rebuttable presumption of majority status. An employer can rebut this pre- sumption by establishing that its refusal to bargain was based on its good• faith doubt, based on objec- tive considerations, of the union's majority status or that at the time of the refusal to bargain, a ma- jority of the unit employees did not wish to have the union as their collective-bargaining representa- tive. Stratford Visiting Nurses Assn., 264 NLRB 1026 (1982). The Respondent did not rebut this presumption. Its withdrawal of recognition was premised solely on its contention that it no longer employed employees. As noted above, we have re- jected that contention. Thus, the Respondent failed to establish that it had a good-faith doubt that the 1329 Union represented a majority of its -employees or that a majority of its employees no ,longer wished to have the Union as their collective-bargaining agent. While 9 of the Respondent's 12 employees were newly hired, we disagree with .the judge's- conclu- sion that this relieved the Respondent of- its -bar- gaining obligation. We note that employee turnov- er alone is an insufficient basis to establish that the union no longer enjoyed majority support. Kenyon Printing & Office Supply,, 252 NLRB 1099 (1980). Accordingly, we shall require the Respondent to recognize and bargain with the Union on request. ORDER The National Labor Relations Board orders that the Respondent, Raymond R. Hufford d/b/a H & H Pretzel Company, Cleveland, Ohio, its officers, agents, successors , and assigns, shall 1. Cease and desist from (a) Refusing to recognize and bargain with Bakery Drivers Union Local No. 52, International Brotherhood of Teamsters, Chauffeurs, Warehouse- men and Helpers of America as the exclusive bar- gaining representative of the employees in the bar- gaining unit. (b) In any like or related manner interfering with, restraining, or coercing employees in the ex- ercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action neces- sary to effectuate the policies of the Act. (a) On request, bargain with the Union as the ex- clusive bargaining representative of the employees in the following appropriate unit on terms and con- ditions of employment and, if an understanding is reached, embody it in a signed agreement, and pro- vide the Union, on request, information necessary for collective bargaining-, All drivers/salesmen employed by the Em- ployer at its Cleveland, Ohio facility, but ex- cluding all office clerical employees, profes- sional employees, guards and supervisors as defined in the Act. (b) Post at its Cleveland, Ohio facility copies of the attached notice marked "Appendix."3 Copies of the notice, on forms provided by the Regional Director for Region 8, after being signed by the Respondent's authorized representative, shall be posted by the Respondent immediately upop re- 3 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 Nation- al 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 " 1330 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ceipt and maintained for 60 consecutive days in conspicuous places including all places where no- tices to employees are customarily posted. Reason- able steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material. (c) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Respondent has taken to comply. MEMBER DENNIS , concurring in part and dissent- ing in part. I agree that the Respondent's drivers remained employees under the Act after the Respondent pur- portedly made them independent contractors, and that the Respondent's withdrawal of recognition violated Section 8(a)(5). I do not agree, however, that the Respondent lawfully refused the Union's request for information, that the parties reached impasse, or that the Respondent lawfully terminat- ed employees after implementing the independent contractor plan. The parties met on 3, 23, and 29 June 1982 to bargain about renewing the collective-bargaining agreement . On 3 June the Respondent presented a 19-page document proposing to convert drivers to independent contractors. On 23 June the parties made little progress ; the Respondent for the first time claimed financial distress . On 29 June the Re- spondent proposed retaining the employer-employ- ee relationship and demanded cutbacks in benefits. On 30 June the union membership rejected the Re- spondent's latest proposal, but voted to seek to audit the Company's books to verify the financial distress claim . On 1 July the Union requested per- mission to inspect the Respondent's financial records. On 2 July, the Respondent implemented the independent contractor plan, and on 3 July the Respondent terminated unit members who declined to work as "independent contractors." When an employer asserts financial inability to meet a union 's bargaining demands, the employer must, on the union's request, disclose information verifying the claim. NLRB v. Truitt Mfg. Co., 351 U.S. 149 (1956). The Union requested financial in- formation only a few days after the Respondent professed financial inability to meet the Union's de- mands and only hours after union members voted to request information in order to consider the Company's financial plight. I fail to see how the judge could characterize the Union's request as a "stalling tactic."' I would find the Union made a I The judge's demeaning the parties' longstanding bargaining relation- ship is gratuitous and unsupported by the record good-faith request for information, and the Re- spondent's refusal to provide the information to verify its previous assertion of financial distress violated Section 8(a)(5). By 2 July, when the Respondent implemented the independent contractor plan, only three bar- gaining sessions had taken place, and only at the final session (29 June) had the Respondent even conceded the possibility of continuing a bargaining relationship. Thus, at the last moment the Respond- ent opened up a new area for discussion, indicating that it was willing to move from its previous posi- tion. The Union, however, had no meaningful op- portunity to evaluate the new proposal because the Respondent refused to provide information neces- sary to verify the Company' s financial inability claim, and the Respondent almost immediately foreclosed fruitful discussion by unilaterally imple- menting an earlier proposal. I cannot agree on these facts that the parties reached impasse on 2 July.2 Towne Plaza Hotel, 258 NLRB 69, 78 (1981). I would therefore find the Respondent violated Section 8(a)(5) by unilaterally implementing changes in terms and conditions of employment before reaching impasse. I would also find that the Respondent unlawfully conditioned continued em- ployment on abandoning the Union, thereby violat- ing Section 8(a)(3). Marquis Elevator Co., 217 NLRB 461 (1975). 2 Contrary to my colleagues, I attach little weight to the Respondent's 17 June 1982 letter supplying a one-page summary of net profitability for the years 1974 to 1981 The one-page summary certainly should not fore- close the Union from seeking more detailed information about the Re- spondent's claimed financial inability 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 ordered us to post and abide by this notice. WE WILL NOT refuse to recognize and bargain with Bakery Drivers Union Local No. 52, Interna- tional Brotherhood of Teamsters, Chauffeurs, War- ehousemen and Helpers of America as the exclu- sive representative of the employees in the bargain- ing unit. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exer- cise of the rights guaranteed you by Section 7 of the Act. H & H PRETZEL COMPANY 1331 WE WILL, on request, bargain with the Union as the exclusive bargaining representative of all em- ployees in the following unit with respect to terms and conditions of employment and, if an under- standing is reached, embody such understanding in a signed agreement and provide the Union, on re- quest, information necessary for collective bargain- ing: All drivers/salesmen employed by the Em- ployer at its Cleveland, Ohio facility, but ex- cluding all office clerical employees, profes- sional employees, guards and supervisors as defined in the Act. RAYMOND R. HUFFORD D/B/A H[ & H PRETZEL COMPANY Nancy Recko, Esq., for the General Counsel. Charles W. Lazzaro, Esq., of Cleveland, Ohio, for the Re- spondent. George H. Faulkner, Esq., of Cleveland, Ohio, for the Charging Party. DECISION STATEMENT OF THE CASE THOMAS A. Ricci, Administrative Law Judge. A hear- ing in this proceeding was held at Cleveland, Ohio, on December 12, 1983, on complaint of the General Counsel against H & H Pretzel Company (the Company or the Respondent). The complaint issued August 15, 1983, upon a charge filed July 23, 1982, by Bakery Drivers Union Local No. 52, International Brotherhood of Team- sters, Chauffeurs, Warehousemen and Helpers of Amer- ica (the Union or the Charging Party). The sole issue presented is whether or not the Respondent refused to bargain with the Union in violation of Section 8(a)(5) of the Act. Briefs were filed after the close of the hearing by all parties. On the entire record and from my observation of the witnesses, I make the following findings. 1. THE BUSINESS OF THE RESPONDENT The Respondent , with its principal office and place of business in Cleveland , Ohio, is engaged in the wholesale distribution of snack food items. Annually, in the course of its business , it purchases and receives at its Cleveland facility goods and materials valued in excess of $50,000 directly from points outside the State of Ohio. I find that the Respondent is engaged in commerce within the meaning of the Act. II. THE LABOR ORGANIZATION INVOLVED I find that Bakery Drivers Union Local No 52, Inter- national Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America is a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICE This is a refusal-to-bargain case, the Respondent charged with having failed in its statutuory duty to rec- ognize the Charging Union as the established representa- tive of its employees. The essential violation is said to have taken many forms-a predetermined, fixed decision by management to give no consideration at all to the Union's demands, a refusal to discuss the Union's con- tract proposals in good faith, unilateral changes made by the Company in conditions of employment, and eventual discharge of employees because they chose to remain union members. The release of the employees is also said to have constituted violations of Section 8(a)(3) of the Act, but, in reality, as the record shows, it is advanced as an integral part of the 8(a)(5) violation. Denying any wrongdoing, the Respondent defends on the ground it did bargain in good faith, as the statute commands, and that because an impossible impasse was reached in the proper negotiations, it had a right to put in effect the proposal it had tried to sell the Union with- out success, including the changing of the status of its former employees to that of independent contractors. An important aspect of this case must be made clear at the start. There is no direct evidence of antiunion animus on the part of the Respondent-no so-called 8(a)(1) vio- lations of any kind. The disagreement that gave rise to the dispute arose over the indisputable fact that the Company's economic condition had worsened very badly during the year before the events. The Company had had an amicable relationship with the Union for many years. Their last collective-bargaining agreement was a 3-year contract due to expire on July 2, 1982. Its major economic items-those which were discussed at greatest length during the negotiations which took place-was a basic guaranteed wage of $2.10 per hour, health and welfare contributions of $38 per week per man, and pension fund contributions of $43 per week per employee. To prove to the Union the necessity of its re- quirement that labor costs be reduced, the Company gave the Union a statement of its financial operations covering a number of years. The summary, sent to the Union's attorney while the negotiations were going on, was placed into evidence by the General Counsel, and shows clearly that while the wages and fringe benefits kept mounting progressively over the years, the Compa- ny's profits had dropped steadily starting in 1979 to prac- tically nothing for the year 1981. After 30 years of deal- ing with the Teamsters, the Respondent was perhaps aware that there was very little chance of persuading that Union to agree to a substantial, if any, reduction in the money it was paying the employees for their labor. Therefore, Raymond Hufford, the owner of the Com- pany, began to think-as far back as some months before expiration of the last union contract-of using independ- ent contractors to deliver the products instead of hourly paid employees. This Company distributes a number of standard food products; its drivers are essentially sales- men, going on their routes both delivering the goods and generating sales. If they are hourly paid they will go about their work in a certain way-the amount of sales having little effect on their earnings and, of course, they 1332 DECISIONS OF NATIONAL LABOR RELATIONS BOARD will be somewhat indifferent to that aspect of their work. If, instead, the amount of money they take home at the end of the week is directly determined by the success of their sales efforts, it stands to reason they will try harder, will work more diligently for both their benefit and that of their employer. In addition, independent contractors do not have to be paid for pension and health and wel- fare insurance, a benefit the Teamsters was very unlikely to forgo in any contract it signed. These were all direct labor costs the Respondent -felt had to be reduced if it was to stay in business. On March 22, 1982, more than 3 months before expira- tion of the contract then in effect, the Union informed the Company it intended to terminate that contract and to submit a proposal for renewal and to bargain about it. On May 18 the Union wrote a second letter requesting the Company to meet with it on June 6 to negotiate a new agreement . The next day, on May 19, 1982, not having received any proposal from the Union, counsel for the Company wrote to the Union telling it the Com- pany was planning to convert its employees to independ- ent contractors, but that nothing definitive would be done along those lines until the contract had expired on July 2. The letter also said that thereafter, if the drivers were no longer employees, the Union would have no standing to represent them after July 2. The Union filed a Labor Board charge based on that letter, and later withdrew it. Right there, before the parties even met in any negotiations, the Union's determination to pay no at- tention to the Company's economic position was re- vealed. The parties met in a regular collective-bargaining ses- sion on June 3 in an attempt to agree upon renewal of the contract about to expire. The Union gave the Com- pany a detailed, written proposal for modifications of the agreement then in effect. Where the old contract called for $2.10 weekly "guaranteed wage," the new proposals made it $240, with successive $30-per-week increases during the second and third years of a proposed 3-year contract. Where the weekly "scale of wages" in the old contract called for "$30 plus 12 percent commission," the new one provided for "$50 plus 13 percent commis- sion" the first year, and "$70 plus 13 percent commis- sion," and "$90 plus 13 percent commission," the second and third years. A further change in the existing contract called for in the Union's proposal was to raise the exist- ing $38-per-week contribution to the health and welfare fund to- $48 a week, and the pension contributions from $43 a week to $46 a week. Against all this, the Company proposed changing the status of its drivers to independent contractors. Although the company representatives talked to the union agents about why it could not agree with their proposals, there was no talk at all about the Company's proposal, for the Union simply rejected it out of hand. At the hearing, George Faulkner, the Union's president and principal witness, tried to create' the impression the Respondent never said during the bargaining that its reason for want- ing to cut costs was economic necessity. He even said what the Company wrote to the Union's attorney, who was present at the bargaining sessions, was not the same as telling anything to the Union! His testimony leaves much to be desired, for it was in complete variance with correspdndenc 'placed in evidence by the General Coun- sel. Never theless, the Union called the drivers to a meet- ing on June'`6,'showed them the Company's proposal, and they rejected it. On June 9, the Union wrote to the Company request- ing another bargaining conference. The Company re- sponded on'June 17 in a letter to the Union's attorney. Among other things, that letter read: It was my understanding, that at our meeting of June 3, 1982, wherein we exchanged proposals, that we were to be given an opportunity to study your intended new agreement, and that you would present our proposal to your members. You filed your complaint with the National Labor Relations Board on the morning of June 8, 1982, and a meet- ing was had with the members of Local #52 that evening. So it was not possible for the Union's members [sic] were made aware of our proposal prior to your filing charges against the employer. Be that as it may, the Company's position was that it was not economically feasible for them to contin- ue under the terms of the present contract, and inas- much as your new proposal, shows a substantial in- crease in benefits, resulting in additional costs to the Company, that the. Company would inevitably go broke. Enclosed you will find the gross sales, wages, fringes, net profit and net profit percent of gross sales for the years 1974 to 1981. The figures submit- ted were taken from tax returns filed with the Inter- nal Revenue Service, and you are welcome to any and all company records if you care to substantiate the same. I might further state that the following accounts of the employer-to wit: Fisher Foods, Lawsons and Pick-N-Pay, have shown a steady decrease in their volume as pertains to purchases from the company. There is no indication that this trend will be re- versed. The new proposal submitted by Local 52 in- creases the cost of the Company in the face of de- clining gross 'sales, and inasmuch as the Company lost money in 1981, acceptance of your new propos- al will prove to be disastrous. If there is any other documentation that you would need in order to fully appreciate the financial condition of the employer, please do not hesitate to ask for same. That same day, June 17, the Company also wrote di- rectly to the Union to the attention of Faulkner, its presi- dent. That letter told him also: "I tried to explain that it was an economic impossibility to continue under the terms of the existing contract, and that the terms of your new proposal will be devastating to the Company. You showed no interest in our plight, nor did you make any attempt to understand." H & H PRETZEL COMPANY 1333 The parties met again in negotiations on June 23, this time with the assistance of the Federal mediator. They talked about many things but neither of them changed position. The Union did not alter its last written propos- al, and evinced no interest in that of the Respondent. The Union asked for a stipulation that any agreement reached in the future for contract renewal would be ret- roactive to July 2, the expiration date of the current agreement. The Company said it would grant that demand at most for a week or two, provided the parties were close to agreement by that time. They were not. At the suggestion of the mediator, both parties agreed to come up with revised proposals. On June 25 the Company received the Union's revised proposal. On June 28 the Company gave the Union a completely revised proposal of its own for contract re- newal. A third negotiating meeting took place on June 29. The Company had studied the Union's proposals; they changed the direct hourly wage demands by lowering them somewhat, but they still remained substantially higher than those in the contract due to expire in 3 days. As to the substantial increases initially asked for in health and welfare payments and pension contributions, the Union's new proposal held firm-insisting upon increases in the payments to start immediately. With the Compa- ny's protestations that it could not afford to continue in business if it had to continue to pay the established pay scale of the moment, let alone- any increases in those rates, there was very little talk about the Union's slight change of position. The Respondent's proposals that day tell a completely different story; they are completely dispositive of this entire proceeding. The Respondent at that point aban- doned entirely the idea of converting its drivers into in- dependent contractors. Unable to convince the Union via one route-the independent contractor concept-of the absolute necessity of reducing its costs very substantially, it offered another route it hoped the Union might accept. It proposed a regular contract renewal with the Union, continuing all the drivers as regular employees, union members all, on condition that the Union agree to certain economic concessions necessary for the Employer's sur- vival. The Company was willing to continue the guaran- teed wage scale of $210 a week, but asked for a '1-year contract only. The Company also proposed discontinuing the payments into the Union's health and welfare and pension funds. It also asked that the employees work 5 instead of 4 days per week.' The parties then discussed in detail every part of the Company's proposals, and fi- nally the Union agreed to submit it to the union member- ship for acceptance or rejection. This was June 29. Twelve days earlier the Union had been told, in the clearest possible language, that the Company's economic position compelled such measures if it was to continue in business. The Union had been in- vited, explicitly, to come and examine the Company's I Requiring the drivers to work 5 instead of 4 days weekly did not mean they would have to work a fifth day for nothing Their pay was tied to what they did on the job, the "guaranteed wage" clause being only an assured minimum regardless of what happened on the route books to verify, if it so desired, the assertion of economic need. Not one word from anyone on behalf of the Union on June 29 about questioning the Company' s insistence that it had no choice but to insist upon a number of eco- nomic concessions from the Union. In the light of the General Counsel's later attempt to distort the whole pic- ture of this case, this was a most revealing fact! The Company's two proposals-the first to switch to independent contractors and the second to continue reg- ular employees at reduced cost-put the employees in just about the same position insofar as earnings were concerned. The next day, June 30, at a union meeting, the em- ployees voted to reject the Company's final offer. The next day, July 1, a Thursday, the Union wrote to the Company advising it of the rejection and indicating a desire to continue the bargaining process. Also that same day-the crossed letters were exchanged by hand deliv- ery-the Respondent wrote back to the Union, saying: "We have reached the zero hour," and passing the mes- sage that further talk would be fruitless. Immediately after the union contract had expired on July 2, the Company put in effect its proposal, which the Union had rejected, and started using what it called inde- pendent contractors instead of direct employees. Not knowing for sure what the Union's reaction would be to its idea, but reasonably expecting it to be rejected, the Company had told its drivers, as far back as May, of its intentions. Of course they also knew of the Company's desire to achieve the necessary economic retrenchment that way because on June 9 they had voted the idea down at the Union's meeting . The Company also publi- cized its intention in the newspaper , and a number of people applied for the positions. The General Counsel's argument of impropriety in this planning to the contrary, there was nothing wrong in the Company taking such anticipatory precaution. It knew it had to keep paying the full cost called for in the existing contract with the Union-fringe benefits included-up to July 2. It also knew these payments had to stop because it simply could not afford them. So, to be prepared, it got things started in advance. But no one was taken on and no one ceased work, until after the contract had expired. Three of the 12 salesmen accepted the offer, and continued on as con- tractors. The rest refused the offer and never worked again for this Company. Nine outsiders accepted the offer, and a full complement of salesmen continued at 12 from the beginning of July on. IV. ANALYSIS AND CONCLUSION How long must an employer who wants to reduce his labor costs at the expiration date of a collective-bargain- ing agreement-whatever his reasons-have to keep talk- ing, and be bound by existing conditions of employment? How many negotiation conferences must take place before, when the contract has expired, he is free to run his business in a way he was unable to sell to the Union, without the risk of being charged with making unilateral changes and violating the statute? No two cases are alike. The answer depends on a number of related fac- tors. 1334 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The fundamental disagreement between the parties in this case arose from the fact the Company felt a need to reduce the cost for labor that the existing contract im- posed on it. It could not continue to pay the money- whether in the way of wages or fringe benefits. It told the Union that from the start. It even sent the Union's agents a prepared summary of its labor costs proving that aspect of its operations was costing too much. But more important, it more than once directly and explicitly offered to show its books and records to prove its eco- nomic need. The Union's negotiators never took the Company up on that offer. This is proof positive it did not care about the Company's position; it had no inten- tion of ever consenting to any reductions in the existing labor costs. With such a fixed persistence shown by the Union twice rejecting the Company's offer, even con- tinuing union recognition and employee status, which is always a main concern of any labor organization, does it not, follow that further talking would have led nowhere? The most convincing proof of the fact the Company wanted no more than reduction of costs is the fact it gave up completely on its original idea of economizing by going the independent contract route, and offered, in the end, to continue doing business as the Union wished, but with lesser payments for work than the old contract called for. The idea,' suggested by the General Counsel, or the Union, that the Respondent was determined at all times to get rid of the Union is utterly shattered by the last offer-which the Union rejected. If ever a picture of collective bargaining shows the parties had reached what the cases refer to as impasse, this is it, and with the con- tract having expired on July 2, the Company had a right to go about its business as it thought best, and resort to the method of work it had tried twice, from the start, unsuccessfully to sell to the Union. To hold, as the Union argues, that the statute required this Respondent to just keep on meeting with the Union and going - on with useless talking , would simply mean that the Union continues to enjoy the old contract bene- fits, which makes it happy, and the Employer continues suffering what it considers impossible economic condi- tions. And that such a condition understandably was the Union's objective in this case is shown by the fact that in its last letter to the Company's attorney, dated July 1, after the Union's final rejection of the Company's last offer, it asked for detailed examination of the Company's books to check on whether it really needed money con- cessions it had been demanding all along. It will not do, after the impasse had been reached, after the Employer very directly offered to show its books during the bar- gaining, and with the Union showing no interest at all on that subject, to try to keep the bargaining alive in this way-with the Company continuing to pay the fringe benefits of the past. On December 2, 1982, 6 months after the events, after the Regional Director had decided not to issue any com- plaint on this charge, and after the Union appealed that decision to Washington, the General Counsel sustained the Region's decision to dismiss the charge. I agree with the General Counsel's statement that the belated, after- thought decision by the Union to demand proof of the Company's claimed inability to continue the payments of the past, was but a "dilatory request." I make no finding that the Company violated the statute by refusing to fur- nish pertinent information to the Union. There was no violation of Section 8(a)(3) of the Act; the Respondent did not "terminate" the nine salesmen who left the Company in July. It offered them the changed conditions of employment it had a right to put into effect. Three accepted and nine chose to leave. It was their choice to leave and not a discharge by the Em- ployer. In his brief the General Counsel comes up with a new idea not raised during the hearing. He says that the sales- men were not converted to independent contractors, that their work is so minutely directed by the Respondent that they must be deemed regular employees instead. If this is so, he argues, the duty to bargain with their ma- jority representative continued, even assuming the Com- pany did have a right to implement its last offer follow- ing the impasse. With this, he askes for an affirmative order to bargain now. It is not a tenable position. Of the 12 employees in the unit when the contract expired, only 3 chose to remain. Nine are new, and there is no evi- dence they now, or ever, wished to be represented by the Union. There is no way it can be said the Union rep- resented a majority of the employees after its last con- tract expired-even assuming, which I do not find, that the changeover did not make independent contractors of the salesmen. I shall recommend dismissal of the complaint in its en- tirety. [Recommended Order for dismissal omitted from pub- lication.]