Holmes & Narver

National Labor Relations Board - Board Decisions

Sep 30, 1992

309 N.L.R.B. 146 (N.L.R.B. 1992)

146
309 NLRB No. 12
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 The Respondent has requested oral argument. The request is de-
nied as the record, exceptions, and briefs adequately present the
issues and the positions of the parties.
2 There is no evidence of any collective-bargaining agreement be-
tween the Respondent and the Union that gave the Respondent the
right to lay off the employees unilaterally.
Holmes & Narver/Morrison-Knudsen and Inter-
national Brotherhood of Electrical Workers,
AFL–CIO, Local Union 558 and UA Plumbers
& Steamfitters, Local Union No. 377. Cases 10–
CA–23988 and 10–CA–24005
September 30, 1992
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY, OVIATT, AND RAUDABAUGH
On February 23, 1990, Administrative Law Judge
Philip P. McLeod issued the attached decision. The
Respondent filed exceptions, a supporting brief, and an
answering brief. The Charging Party filed exceptions,
a supporting brief, and an answering brief.
The Board has considered the decision and the
record in light of the exceptions and briefs1 and has
decided to affirm the judge’s rulings, findings, and
conclusions and to adopt the recommended Order. In
adopting the judge’s finding that the Respondent vio-
lated Section 8(a)(5) by failing to bargain with the
Union before laying off nine employees in March
1989, we rely on the reasons set forth below.
The Respondent held the prime contract to provide
operations and maintenance service at a U.S. Army fa-
cility, Redstone Arsenal. The Respondent had three de-
partments at Redstone: logistics, support services, and
engineering. The Army exercised its option not to
renew the Respondent’s contract, which expired Sep-
tember 30, 1989, and opened the contract for competi-
tive bidding. The Respondent submitted a bid on Janu-
ary 6, 1989, in which the Respondent proposed per-
forming essentially the same work it was then perform-
ing but with fewer employees. The Respondent did not
notify or bargain with the Union, which represented its
employees, about the bid.
The Respondent did not place its bid to the Army
in evidence, and the testimony of the Respondent’s
witnesses does not reveal its details. It appears, how-
ever, that the bid contemplated changes in the logistics
and support services departments. The engineering de-
partment, by far the Respondent’s largest, was not
changed.
In mid-January, the Respondent’s president, New-
man Howard, telephoned John Dobson, the Respond-
ent’s project director at Redstone. Howard directed
Dobson to come as close as possible to the organiza-
tion the Respondent had bid in its proposal, to lend
credibility to its contract bid.
Dobson, who had never seen the actual bid, relayed
Howard’s instructions to the heads of the logistics and
support services departments. Dobson testified that the
directors of the logistics and support services depart-
ments had proposed to the persons writing the bid that
the functions of these two departments be combined.
He also stated that within the motor pool operations,
which was in the logistics department, the directors
had intended to have only two divisions instead of
three. Dobson acknowledged, however, that the logis-
tics and support services departments had not in fact
been combined.
Dobson testified that the department heads ‘‘rec-
ommended [to Dobson] laying off certain employees
and restructuring jobs in order to reduce the total work
force in accordance with the new contract proposal.’’
Dobson then reviewed these recommendations and ap-
proved them.
When he was asked to describe the specific organi-
zational changes that he had implemented, Dobson
could remember only one change, and that was in the
way the motor pool was structured: ‘‘[W]e let one su-
pervisor go and made several coordinators in lieu of
him . . . .’’ According to Dobson, the general job du-
ties of the rank-and-file employees in the motor pool
did not change, but an employee could be doing addi-
tional work after the pool’s reorganization. Dobson tes-
tified:
When we are combining some areas of operation,
a mechanic is still a mechanic, but he may be
working on some additional types of vehicles that
would have been in another division previously.
These changes resulted in the motor pool’s needing
fewer employees.
On March 7, 1989, the Respondent notified nine
employees that they were being laid off immediately.
At the hearing, Dobson identified a majority of these
employees as coming from the motor pool. Dobson
was able to identify only one employee, a mail clerk,
who was laid off from a department other than the
motor pool.
The Respondent did not notify the Union in advance
of the decision to lay off the employees.2
The judge found that the Respondent’s unilateral de-
cision to lay off the nine employees violated Section
8(a)(5). In addition to Fibreboard Corp. v. NLRB, 379
U.S. 203 (1964), and First National Maintenance
Corp. v. NLRB, 452 U.S. 666 (1981), the judge relied
on Otis Elevator Co., 269 NLRB 891 (1984), and
LaPeer Foundry & Machine, 289 NLRB 952 (1988).
We agree with the judge’s conclusion that the Re-
spondent’s decision here to combine jobs, to reassign
work, and to lay off employees was a mandatory sub-
147HOLMES & NARVER
3 Subsequent to the judge’s decision, the Board overruled Otis Ele-
vator in its decision in Dubuque Packing Co., 303 NLRB 386
(1991). See also Postal Service, 306 NLRB 640 (1992). To the ex-
tent that LaPeer relies on Otis Elevator, we disavow the judge’s reli-
ance on LaPeer.
4 We find no merit in the Respondent’s argument that the layoffs
had nothing to do with labor costs, but were merely made to add
‘‘credibility’’ to its new contract bid proposal. The Respondent did
not put the bid into evidence, and in the absence of a showing that
the layoffs made its bid more ‘‘credible’’ or competitive by some
means other than reducing labor costs, we agree with the judge that
a reduction of labor costs was a significant factor, if not the only
factor, in the Respondent’s decision to lay off the nine employees.
We also note that the changes allegedly included in the bid pro-
posal were at the Respondent’s own election, as a means of justify-
ing its bid. They were not shown to be imposed by external con-
straints. Thus the Respondent’s argument here is even less compel-
ling than the employer’s argument in Postal Service, 306 NLRB 640
(respondent not justified in unilateral reduction of hours as means of
satisfying Congressional reduction in budget).
5 Lessons Learned, Dispelling the Myths of Downsizing, Right As-
sociates (1992).
6 This is, of course, not to say that one approach is necessarily bet-
ter than another. The bargaining obligation defined in Sec. 8(d) re-
quires the Respondent only to give good-faith consideration to pro-
posals the Union might make on the subject. Dubuque Packing Co.,
supra.
ject of bargaining and that the Respondent unlawfully
failed to bargain with the Union over that decision.3
At the outset, we note that our decision here does
not purport to establish a rule as to all layoffs. We are
dealing with layoffs that are made in connection with
a decision to continue doing the same work with es-
sentially the same technology, but to do it with fewer
employees by virtue of giving some of the employees
more work assignments. Even our concurring colleague
agrees that such a decision does not fall within the cat-
egory of decisions ‘‘involving a change in the scope
and direction of the enterprise . . . akin to the decision
whether to be in business at all,’’ which the Supreme
Court has clearly held to fall outside the bargaining
obligation imposed by Section 8(a)(5) and Section
8(d). First National Maintenance Corp. v. NLRB,
supra, 452 U.S. at 677, citing Fibreboard Corp. v.
NLRB, supra, 379 U.S. at 223 (Stewart, J. concurring).
Thus, the Respondent did not abandon a line of busi-
ness or cease a contractual relationship with a particu-
lar customer, or make any other change that signifi-
cantly altered the scope and direction of its business.
Indeed, the Respondent has not even demonstrated that
the work in the motor pool changed appreciably.
Unlike our colleague, we are satisfied that the deci-
sion at issue here falls within the category of ‘‘man-
agement decisions, such as the order of succession of
layoffs and recalls, production quotas, and work
rules,’’ that are ‘‘almost exclusively ‘an aspect of the
relationship’ between employer and employee’’; such a
decision is clearly a mandatory subject. First National
Maintenance Corp. v. NLRB, supra, 452 U.S. at 677,
citing Allied Chemical Workers Local 1 v. Pittsburgh
Plate Glass Co., 404 U.S. 157, 178 (1971).
The Respondent did no more than consolidate and
change the jobs in the motor pool—a small unit—and
lay off a few employees elsewhere. Indeed, the Re-
spondent’s decision might fairly be analogized to in-
creasing the production quotas of certain employees so
that others may be laid off. We therefore do not see
the need of engaging in any extended multistep analy-
sis to determine whether the parties must bargain over
layoffs thus linked to work reassignments. See, e.g., St.
John’s Hospital, 281 NLRB 1163, 1166, 1168 (1986),
enfd. 825 F.2d 740 (3d Cir. 1987) (adding significant
new job duties, previously performed by others, to the
work of unit employees is a mandatory bargaining sub-
ject); Cincinnati Enquirer, 279 NLRB 1023, 1031–
1032 (1986) (phasing out job duties by transferring
these duties to others, which resulted in elimination of
unit position, is a mandatory subject of bargaining).
But even assuming arguendo that the decision here
is what our concurring colleague characterizes as a
‘‘third category’’ decision, we would reach the same
result without applying the multipart test of Dubuque
Packing Co., 303 NLRB 386 (1991)—a test that was
devised for plant relocations, which potentially involve
complicated capital decisions regarding changes of
plant facilities. Like the subcontracting in Fibreboard,
supra, the decision here did not involve capital invest-
ment, did involve labor cost considerations,4 and, as a
common subject of bargaining in industrial practice, is
clearly amenable to bargaining. 379 U.S. at 213–214.
See also First National Maintenance Corp. v. NLRB,
supra, 452 U.S. at 679–680. As to this last factor—
amenability to bargaining—we note that even if there
is no basis for wage and benefit bargaining to avert the
layoffs because, as the Respondent argues, it was al-
ready providing wages and benefits at the lowest level
possible under the law, we disagree that there are no
other bargainable, cost-saving alternatives to
downsizing. In fact, a recent survey5 shows that many
companies that downsize make efforts to minimize em-
ployee separations by implementing a variety of alter-
natives, which—had the Respondent been willing to
bargain—the Union might have offered as concessions
or accepted as proposals. Among the many alternatives
to downsizing, other than reducing wages, are modified
work rules, nonpaid vacations, restricted overtime, job
sharing, shortened workweek, and reassignment of
work and job reclassifications.6
We also note that categorizing the decision at issue
here as a mandatory subject of bargaining is in accord
with the reasoning of Justice Stewart in the Fibreboard
concurrence that was embraced by the Court in First
National Maintenance, supra. The layoffs here are
properly deemed mandatory subjects because they are
integral to a decision ‘‘closely analogous to . . . situa-
148 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 307 NLRB 809 (1992).
2 In Dubuque Packing Co., 303 NLRB 386 (1991), the Board an-
nounced the following balancing test for determining whether an em-
ployer’s economically motivated decision to relocate unit work is a
mandatory subject of bargaining: Initially, the burden is on the Gen-
eral Counsel to establish that the employer’s decision involved a re-
location of unit work unaccompanied by a basic change in the nature
of the employer’s operation. If the General Counsel successfully car-
ries his burden in this regard, he will have established prima facie
that the employer’s relocation decision is a mandatory subject of
bargaining. At this juncture, the employer may produce evidence re-
butting the prima facie case by establishing that the work performed
at the new location varies significantly from the work performed at
the former plant, establishing that the work performed at the former
plant is to be discontinued entirely and not moved to the new loca-
tion, or establishing that the employer’s decision involves a change
in the scope and direction of the enterprise. Alternatively, the em-
ployer may proffer a defense to show by a preponderance of the evi-
dence: (1) that labor costs (direct and/or indirect) were not a factor
in the decision or (2) that even if labor costs were a factor in the
decision, the union could not have offered labor cost concessions
that could have changed the employer’s decision to relocate.
tions within the traditional framework of bargaining.’’
379 U.S. at 224. One of the ‘‘situations’’ that Justice
Stewart identified as constituting a traditional bargain-
ing subject was ‘‘assignment of work among poten-
tially eligible groups within the plant.’’ Id. As shown
above, the layoffs here were the direct outcome of the
decision to reassign work so that the same amount of
work could be done by fewer employees.
In sum, we find that the decision impelling the lay-
offs here is a traditional subject of bargaining, properly
deemed a mandatory subject without the necessity of
inquiries into the impact on labor costs or the Union’s
ability to grant wage and benefit concessions. We ac-
cordingly adopt the judge’s conclusion that the Re-
spondent violated Section 8(a)(5) by laying off nine
employees without notifying or bargaining with the
Union.
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the Respondent, Holmes &
Narver/Morrison-Knudsen, Huntsville, Alabama, its of-
ficers, agents, successors, and assigns, shall take the
action set forth in the Order.
MEMBER RAUDABAUGH, concurring.
I concur in my colleagues’ finding that the Respond-
ent violated Section 8(a)(5) by failing to bargain with
the Union before laying off nine employees in March
1989. I disagree, however, with their analysis of the
issue of whether the layoff decision was a mandatory
subject of bargaining.
In analyzing whether a given management decision
is a mandatory subject of bargaining, we must begin
with the three categories of management decisions de-
scribed by the Supreme Court in First National Main-
tenance Corp. v. NLRB, 452 U.S. 666 (1981).
As noted, the Court divided management decisions
into three categories. The first category consists of
management decisions, such as choice of advertising,
product type and design, and financing arrangements,
which ‘‘have only an indirect and attenuated impact on
the employment relationship’’; there is no obligation to
bargain over these decisions. In the second category
are management decisions, such as ‘‘the order of suc-
cession of layoffs and recalls, production quotas, and
work rules, which are almost exclusively ‘an aspect of
the relationship between employer and employees’’’;
as to these there is an obligation to bargain. The third
category consists of management decisions that have a
direct impact on employment, such as the elimination
of jobs, but which have as their focus only the eco-
nomic profitability of the business. For these decisions,
the Court held that bargaining would be required
‘‘only if the benefit, for labor-management relations
and the collective-bargaining process, outweighs the
burden placed on the conduct of the business.’’ Id. at
676–679.
It is my view that the Respondent’s decision to lay
off employees fell within the third category of manage-
ment decisions. It was a decision that had as its focus
only the economic profitability of the business, and
this decision had a direct impact on employment.
Thus, it fits within the third category.
My colleagues erroneously conclude that the deci-
sion falls within the second category of management
decisions. As noted above, the second category in-
cludes ‘‘the order of succession of layoffs.’’ There is
a clear distinction between a management decision
concerning those matters and a management decision
concerning whether to have a layoff. The latter deci-
sion involves the entrepreneurial judgment as to how
many people will be employed. The Supreme Court
was careful to exclude that kind of decision from its
examples of decisions in the second category. I would
adhere to the Court’s careful language.
My colleagues also confuse the instant decision to
lay off with the impact of that decision on those em-
ployees remaining after the layoff. There is no allega-
tion in the case concerning a refusal to bargain about
that impact.
In sum, the decision in this case falls within the
third category.
If a management decision falls within the third cat-
egory, bargaining is required only if the benefit of
such bargaining, for labor-management relations and
the collective-bargaining process, outweighs the bur-
dens that bargaining would place on the conduct of the
business. As I stated in my concurrence in Torrington
Industries,1 the Dubuque test is a burden-of-proof
mechanism for applying this balancing test.2 Although
Dubuque involved a relocation, the opinion does not
state that the test therein is confined to relocation
149HOLMES & NARVER
causes. Indeed, the reasoning and logic of the opinion
has a broader application. Accordingly, I would apply
that test here.
Applying this test, I find that the General Counsel
has met his burden of establishing that the Respond-
ent’s decision to lay off employees did not involve any
basic change in the direction or scope of the Respond-
ent’s enterprise. I agree with the judge that the General
Counsel proved that the only significant difference in
the Respondent’s new bid was that there would be
fewer employees performing the same quantity of
work. Although the Respondent characterized this as a
‘‘reorganization,’’ the judge found, and the record
shows, that the Respondent’s business remained essen-
tially the same under its bid for the new contract. I
thus find that the General Counsel carried his initial
burden of establishing a prima facie case that the Re-
spondent’s decision was a mandatory subject of bar-
gaining.
I further find that the Respondent failed to rebut the
prima facie case. As noted above, I reject, as did the
judge, the Respondent’s claim that the layoffs were
akin to seeking a change in the direction or nature of
its business. The work to be accomplished under the
new contract bid was the same as that under the old
contract, and the Respondent has failed to prove that
the manner of its performance was significantly dif-
ferent. In addition, the Respondent has failed to show
that labor costs were not a factor in its decision. To
the contrary, I agree with the judge, for the reasons
stated by him, that the Respondent’s decision to lay off
employees was motivated by its desire to reduce labor
costs. Finally, the Respondent has failed to establish
that the Union could not have offered labor cost con-
cessions that could have changed the layoff decision.
Although, as the Respondent contends, the Respondent
may have been paying its employees minimum wages
and benefits, it does not follow that the Union was
powerless through bargaining to affect the Respond-
ent’s decision. Had the Respondent been willing to
bargain, the Union might have offered concessions
other than a decrease in wages, such as modified work
rules, overtime reductions, reassignment of work, and
reclassifications, that would have resulted in savings to
the Respondent.
In sum, although I disagree with the majority’s anal-
ysis of the Respondent’s obligation to bargain about its
decision to lay off employees, I concur in their conclu-
sion that the Respondent was obligated to bargain with
the Union over the decision and that the Respondent’s
failure to do so violated Section 8(a)(5).
Victor A. McLemore, Esq., for the General Counsel.
Norman A. Quandt, Esq. (Clark, Paul, Hoover & Mallard),
of Atlanta, Georgia, for the Respondent.
John F. Dickerson, of Reidsville, North Carolina, for the
Charging Party.
DECISION
STATEMENT OF THE CASE
PHILIP P. MCLEOD, Administrative Law Judge. I heard this
case on August 16 and 17, 1989, in Huntsville, Alabama.
The charges which gave rise to this proceeding were filed on
March 2 and 9, 1989, by International Brotherhood of Elec-
trical Workers, AFL–CIO, Local 558, and United Association
of Journeymen and Apprentices of the Plumbing and Pipe-
fitting Industry, Local 377 (the Union). An order consolidat-
ing cases, consolidated complaint and notice of hearing
issued on April 14, 1989, which alleges, inter alia, that
Holmes & Narver/Morrison-Knudsen (Respondent), violated
Section 8(a)(1) and (5) of the National Labor Relations Act,
as (the Act), by unilaterally reducing the amount paid into
individual employee SEP accounts and by unilaterally laying
off employees without notifying the Union or giving it an
opportunity to bargain about these matters.
In its answer to the complaint, Respondent admitted cer-
tain allegations including the filing and serving of the charge;
its status as an employer within the meaning of the Act; the
status of International Brotherhood of Electrical Workers,
Local 558, and United Association of Journeymen and Ap-
prentices of the Plumbing and Pipefitting Industry, Local 377
as labor organizations within the meaning of the Act; and the
status of certain individuals as supervisors and agents of Re-
spondent within the meaning of Section 2(11) of the Act. Re-
spondent denied having engaged in any conduct which would
constitute an unfair labor practice within the meaning of the
Act.
At the trial, all parties were represented and afforded full
opportunity to be heard, to examine and cross-examine wit-
nesses, and to introduce evidence. Following the close of the
trial, all parties filed timely briefs with me which have been
duly considered.
On the entire record in this case and from my observation
of the witnesses, I make the following
FINDINGS OF FACT
I. JURISDICTION
Holmes & Narver/Morrison-Knudsen is a joint venture
which prior to September 30, 1989, held the prime contract
with the United States Army Missile Command for the pur-
pose of providing operations and maintenance services at the
Redstone Arsenal in Huntsville, Alabama. In the course and
conduct of its business operations, Respondent annually re-
ceived in excess of $50,000 for the services provided by it
to the U.S. Army.
Respondent is, and has been at all times material, an em-
ployer engaged in commerce within the meaning of Section
2(6) and (7) of the Act.
II. LABOR ORGANIZATION
International Brotherhood of Electrical Workers, Local
Union 558 and United Association of Journeymen and Ap-
prentices of the Plumbing and Pipefitting Industry, Local 377
are, and have been at all times material, labor organizations
within the meaning of Section 2(5) of the Act.
150 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
III. THE UNFAIR LABOR PRACTICES
A. Background
Pursuant to a contract with the United States Army Missile
Command, Holmes & Narver Services, Inc. and Morrison-
Knudsen Services, Inc. operated as a joint venture to provide
operations and maintenances services at the Redstone Arse-
nal in Huntsville, Alabama. Operations and maintenance
services provided by Respondent included operation and
maintenance of boiler, heating, waste water treatment and
sewage plants, maintenance on vehicles, building and
grounds maintenance, operation of food service facilities, and
even certain construction work.
Respondent was originally granted this service contract on
a 1-year basis, with four 1-year extensions available to the
Government at its option. Respondent held the contract in
this manner from October 1, 1985, through September 30,
1989. Following a Board-conducted election, the Union, a
joint collective-bargaining representative, was certified on
December 22, 1988, in a unit described as:
All full time and regular part-time employees engaged
in construction, alterations, maintenance, repair and
motor pool employees employed by Holmes &
Narver/Morrison-Knudsen at the Redstone Arsenal in
Huntsville, Alabama, including the administrative em-
ployees, but excluding all equipment operators, heavy
mechanics, heavy mechanic helpers, temporary employ-
ees, office clerical employees employed at the head-
quarter’s building, confidential employees, guards, and
supervisors as defined in the Act.
The fourth contract extension period ran from October 1,
1989, through September 30, 1990, but the Government
chose not to exercise its option to renew for that period. In-
stead, the Government chose to let the contract out for bid
for the period beginning October 1, 1989. As is discussed in
greater detail below, Respondent bid on, but did not receive,
the contract beginning October 1, 1989. Accordingly, Re-
spondent’s services at the Redstone Arsenal officially termi-
nated effective September 30, 1989.
B. Respondent’s Past Practice Regarding Setting of
Wages and Fringe Benefits
In providing services at the Redstone Arsenal, Respondent
operated pursuant to the Service Contract Act and regulations
promulgated thereunder. This act requires Respondent to pay
certain minimum wages and benefits as prescribed by the
U.S. Department of Labor (D.O.L.). More than 400 of Re-
spondent’s 550 employees fell into this category, and were
commonly referred to as ‘‘wage board employees.’’ Re-
spondent also employed approximately 20 employees in con-
struction related work whose wages and benefits were gov-
erned by the Davis-Bacon Act. The remaining work force
consisted of supervisory and managerial personnel.
D.O.L. prepares and issues wage determinations every year
reflecting prevailing Huntsville area wages and benefits for
the various job classifications at the Redstone Arsenal. Al-
though the contract between Respondent and the U.S. Army
Missile Command was officially known as a ‘‘firm fixed
price’’ contract, a number of price adjustment provisions are
included. Among others, the contract allowed Respondent to
apply for ‘‘equity adjustments’’ offsetting any increased
costs of wages and benefits mandated by wage determina-
tions issued annually by D.O.L. While these wage determina-
tions established only minimum levels for the various job
classifications, it is undisputed that Respondent, throughout
the period of its contract at the Redstone Arsenal, always
paid the exact minimum level of wages and benefits pre-
scribed in these wage determinations.
When Respondent was first awarded the contract to oper-
ate and maintain the Redstone Arsenal, it made a determina-
tion from the outset to provide employees with specific
fringe benefits: (1) a medical plan, (2) life insurance, (3)
long-term disability insurance, (4) accidental death and dis-
memberment insurance, (5) jury duty leave, (6) bereavement
leave, and (7) an individual SEP fund for each employee.
The SEP fund was established for the specific purpose of re-
ceiving the annual residual health and welfare money which
Respondent was obligated to pay pursuant to the wage deter-
minations and which was not spent on the other fringe bene-
fits provided. It was known at the outset, therefore, and em-
ployees were advised that contributions to SEP accounts
would vary from time to time based on two factors: one,
fluctuations in the total ‘‘pool’’ of health and welfare money
specified in the annual wage determinations of D.O.L. and,
two, the costs of the other health and welfare benefits which
Respondent was providing to employees. During the life of
Respondent’s contract at the Redstone Arsenal, there have
been numerous changes, both up and down, in the level of
monthly employer contributions to individual employee SEP
fund accounts. The most common reason for these changes
was the result of routine monitoring of employee benefit
costs and the need to adjust the contribution level to insure
that the wage determination figure was reached by the end
of the particular contract year. Other reasons for changes in-
cluded periodic adjustments in medical insurance premiums,
changes in the wage determinations issued by D.O.L., and a
one-time health insurance ‘‘rebate’’ which was divided indi-
vidually among employees and placed in their SEP accounts.
C. Events Surrounding the January 1989 SEP
Fund Change
In late September 1988, Respondent received its annual
package of wage determinations from D.O.L. for the next
contract year beginning October 1. On the basis of those de-
terminations, Respondent prepared a proposed ‘‘equity ad-
justment’’ for increased costs called for by those determina-
tions. Respondent submitted those proposed adjustments to
the U.S. Army in late October 1988.
In mid-November 1988, during a conversation with a rep-
resentative of D.O.L., Industrial Relations Manager Bill
Priattie learned that a minor change in regulations effective
October 1, 1988, had resulted in a major change in the for-
mula for determining the minimum pool of money to be
spent on employee health and welfare benefits. The change
entailed using ‘‘actual hours worked’’ to determine the pool,
which would significantly reduce the pool as it was then
being formulated. From November 1988 to January 1989, a
series of conversations and meetings occurred between Re-
spondent and a representative of D.O.L. regarding calculation
of this benefit pool paid to employees for health and welfare
benefits. As a result of these meetings, Respondent deter-
mined that it was actually paying employees significantly
151HOLMES & NARVER
1 Although the layoffs were effective immediately, the employees
were paid through Friday, March 10, 1989.
more than the minimum health and welfare benefits estab-
lished in the wage determinations effective October 1, 1988.
Respondent then took two actions. First, it notified the U.S.
Army that its proposed equity adjustments submitted in Oc-
tober 1988 were erroneous and would be revised downward
to reflect the correct costs utilizing the new formula. Second,
Respondent notified employees that it was adjusting the level
of monthly contributions to individual SEP accounts in ac-
cordance with the correct, revised formula. Industrial Rela-
tions Manager Priattie notified employees of this change by
letter dated January 12, 1989. In fact, Respondent adjusted
its formula in order to recoup the overpayment of benefits
made to the employees’ SEP accounts since October 1988.
Respondent does not contend that it notified or bargained
with the Union prior to implementing this adjustment to its
monthly SEP fund contribution. Rather, Respondent concedes
that a meeting which it held with the Union on January 11,
1989, was simply for the purpose of giving the Union ad-
vance notice of Respondent’s action and was merely for the
purpose of paying a ‘‘courtesy call’’ on the Union rather
than for the purpose of engaging in bargaining over this SEP
account adjustment.
D. Events Surrounding the March 1989 Layoffs
As indicated above, the U.S. Army chose not to exercise
its option to renew the contract with Respondent beginning
October 1, 1989. Instead, the Government chose to open the
contract for competitive bidding. In early January 1989, Re-
spondent submitted its formal proposal for the new service
contract. In order to make its bid more attractive, Respondent
proposed performing essentially the same work it had per-
formed previously with fewer employees than called for in
earlier contracts.
In mid-January 1989, Newman Howard, president of
Holmes & Narver Services, Inc., telephoned John Dobson,
project director for Respondent at the Redstone Arsenal, and
instructed Dobson ‘‘to attempt to get our present organiza-
tion as closely as possible to that organization that we bid
in our proposal.’’
Following the call from Howard, Project Director Dobson
contacted the heads of Respondent’s logistics department and
support services department. Dobson testified:
I told them that we were directed to reorganize as
closely as possible to the structure that we had bid and
asked for their recommendations as to how this could
be accomplished, considering the scopes of work of the
two contracts. In later discussions, these two depart-
ment heads recommended laying off certain employees
and restructuring jobs in order to reduce the total work
force in accordance with the new contract proposal.
After reviewing the recommendations of the department
heads, nine employees were selected for layoff. On March 7,
1989, the nine employees were notified they were being laid
off immediately.1 All nine employees were permanently ter-
minated. Payroll records reflect the reason for termination as
‘‘layoff due to department reorganization.’’
During February and continuing in March 1989, Respond-
ent and the Union held several meetings to attempt to nego-
tiate a collective-bargaining agreement. Ironically, on March
7, Respondent and the Union held a negotiating session
wherein they discussed layoff and seniority provisions of the
proposed contract. Nevertheless, Respondent admits that it
did not notify or offer to bargain with the Union over the
March layoff.
Analysis and Conclusions
On January 12, 1989, Respondent unilaterally reduced its
contributions to individual employee SEP accounts. Respond-
ent took this action after learning from a D.O.L. representa-
tive that a minor change in regulations affecting Respondent
had resulted in a major change in the formula Respondent
was required to use for determining the minimum pool of
money to be spent on employee health and welfare benefits.
Respondent learned that as a result of this change, it had
been paying significantly more than required since October
1, 1988. The Charging Party correctly notes that D.O.L. sets
only minimum levels of compensation, and D.O.L. did not
require Respondent to reduce individual employee SEP ac-
count payments. The Charging Party argues that although the
reduced payments were based on business considerations,
since Respondent was not compelled to make them, no legal
justification exists for reducing the payments unilaterally.
Respondent argues that the January 1989 adjustment in
payments to SEP accounts was done within an existing
framework and past practice of making such adjustments
whenever changes occurred in various external factors over
which Respondent had no real control. Respondent argues
that because the January 1989 change occurred within this
existing framework and past practice of other similar
changes, Respondent was not required to first notify the
Union before making that change. I find merit in Respond-
ent’s argument.
Counsel for General Counsel and the Charging Party do
not dispute, and the facts clearly establish, that during the
life of Respondent’s contract at the Redstone Arsenal, there
have been numerous changes, both up and down, in the level
of monthly employer contributions to individual employee
SEP fund accounts. All of these changes were precipitated by
one of two factors known from the outset both to Respondent
and to employees: one, fluctuations in the total ‘‘pool’’ of
health and welfare money specified in the annual wage deter-
minations of D.O.L. and, two, the cost of other health and
welfare benefits which Respondent was providing to employ-
ees. It is undisputed that Respondent consistently paid the
exact minimum required by annual D.O.L. ‘‘wage determina-
tions.’’
There is no question that the revised wage determination
formula effective October 1, 1988, threatened Respondent
with a severe financial burden since there was no guarantee
Respondent would be reimbursed by the U.S. Army for any
costs exceeding the minimum required by the wage deter-
mination formula. Accordingly, Respondent reduced its pay-
ments pursuant to the revised wage determination formula
just as it had increased payments in the past based on in-
creases in those wage determinations. The significant fact is
that Respondent had an established past practice and an es-
tablished formula for adjusting benefit contributions in re-
sponse to external changes, whether they be changes in the
152 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2 I also reject Respondent’s argument that the Union waived its
right to bargain about the effects of the layoff on employees. Any
waiver of a statutory right to bargain must be clear and unmistak-
able. When the Union learned of the layoff, it informed Respondent
that it believed Respondent had an obligation to bargain about the
layoff decision. Respondent took the position, which it still takes
today, that it had no obligation to bargain with the Union. Inasmuch
as the decision itself was presented to the Union as a fait accompli,
it can hardly be concluded that the Union waived any statutory right.
Alpha Biochemical Corp., 293 NLRB 753 (1989).
pool of money specified in annual wage determinations of
D.O.L. or costs of other health and welfare benefits which
Respondent was providing to employees. Since Respondent
had a longstanding past practice of regularly adjusting
monthly SEP fund contributions pursuant to a formula which
ensured that its overall year-end expenditure of health and
welfare benefits met, but did not exceed, the exact bench
mark set by D.O.L. wage determinations, Respondent’s ad-
herence to this past practice is not offensive to principles of
good-faith bargaining in such circumstances. Accordingly, I
find that Respondent’s January 1989 change in the amount
paid into individual employee SEP accounts did not violate
Section 8(a)(1) or (5) of the Act, and I shall dismiss that al-
legation of the complaint.
All parties agree that resolution of the issue concerning the
unilateral layoff of employees depends on the interpretation
and application of Fibreboard Paper Products Corp. v.
NLRB, 379 U.S. 203 (1964); First National Maintenance
Corp. v. NLRB, 452 U.S. 666 (1981); Otis Elevator Co., 269
NLRB 891 (1984); and LaPeer Foundry & Machine, 289
NLRB 952 (1988). In Fibreboard, supra, the Supreme Court
enforced the seminal Board decision finding that before mak-
ing unilateral changes, an employer was first required to no-
tify the union representing its employees and give it an op-
portunity to bargain about changes in wages, hours, or work-
ing conditions ‘‘whether the decision may be characterized
as subcontracting, reorganization, consolidation, or reloca-
tion, if the decision in fact turns on direct modification of
labor costs and not a change in the basic direction or nature
of the enterprise.’’ Consistent with this decision, the Su-
preme Court in First National Maintenance Corp., supra,
held that an employer is not required to bargain over a deci-
sion to close part of its operations, since such a change in-
volves the basic direction or nature of the enterprise. The
Court held, however, that an employer was obligated to bar-
gain over the affects of such a decision, although not over
the decision itself.
Applying these cases, the Board in Otis Elevator, supra,
held that an employer’s decision to discontinue a portion of
its operations and to consolidate that portion with another
portion in order to improve efficiency and marketability was
based on a change in the nature of the business and not on
labor costs. Accordingly, the Board found that the employer
was not required by the Act to first notify the union and give
it an opportunity to bargain over that decision. As they relate
to the case at hand, the cited cases stand for the proposition
that a layoff precipitated by a desire to reduce labor costs re-
quires that the employer first notify and offer the union rep-
resenting its employees an opportunity to bargain about that
decision, while a layoff precipitated by a change in the basic
direction or nature of the enterprise does not require such no-
tification and bargaining. In LaPeer Foundry & Machine,
supra, the Board explained the rationale behind requiring an
employer to notify the union representing its employees and
offer it an opportunity to bargain in situations where a layoff
is precipitated by a desire to reduce labor costs. The Board
explained:
This requirement will ensure that the employees’ bar-
gaining representative will have the opportunity to pro-
pose less drastic alternatives to the proposed layoff.
Moreover, the employer’s duty to bargain will require
meaningful negotiations concerning the decision to lay-
off, and not merely the notification to the Union of a
decision that is a fait accompli.
Respondent suggests in its posthearing brief that ‘‘it may
be legitimately questioned whether [Respondent’s] underly-
ing motivation neatly fits into either of these two cat-
egories,’’ i.e., reduction of labor costs verses a change in the
nature or direction of the business. Respondent argues, ‘‘it is
apparent this action did not turn on labor costs and was more
akin to seeking a change in the direction or nature of its
business.’’ I reject this argument, and for the reasons ex-
plained more fully below, I find that Respondent’s March
1989 layoff was precipitated primarily, if not solely, by a de-
sire to reduce labor costs.
Respondent offered no evidence that the operations and
maintenance contract for which it was bidding for the period
beginning October 1, 1989, had been changed in any signifi-
cant way as compared to past contracts. Throughout the hear-
ing, Respondent explained the necessity of the March 1989
layoffs by noting that in laying off these people it was ‘‘add-
ing credibility to the bid’’ for the new contract. Project Man-
ager Dobson admitted, however, that he never even consulted
the contract bid to assure conformance with any proposed re-
organization or change in structure. While Dobson claimed
that he simply relied on his own understanding of what was
in the bid, a gross inconsistency is suggested by the fact that
layoffs were supposedly based on conformance with a new
bid and were intended to lend credibility to that bid while,
on the other hand, the decision makers never even looked at
that bid while making their choice for layoffs. This is ex-
plained by the fact that the significant difference between
Respondent’s new bid and its past contracts is that in order
to make its bid more attractive, Respondent proposed per-
forming essentially the same work it had performed pre-
viously but with fewer employees. The conclusion is inescap-
able that Respondent’s desire and intent was to reduce labor
costs. The ‘‘credibility’’ which was lent to Respondent’s bid
by laying off employees in March 1989 was to show the
U.S. Army that essentially the same work could be per-
formed by fewer employees, thereby reducing labor costs and
making Respondent’s bid more competitive. Respondent at-
tempts to avoid the obvious by arguing that the purpose for
its layoff was to enhance the credibility of its contract bid.
Respondent enhanced the credibility of its contract bid only
by a reduction in employee costs to the Government. In the
final analysis, the March 1989 layoff was precipitated by Re-
spondent’s desire to reduce labor costs. Accordingly, I find
that by failing to notify the Union in advance and give it an
opportunity to bargain about that decision, Respondent vio-
lated Section 8(a)(1) and (5) of the Act.2
153HOLMES & NARVER
3 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and rec-
ommended Order shall, as provided in Sec. 102.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.
4 Because Respondent no longer has the contract to operate and
maintain the Redstone Arsenal, it is impossible to require Respond-
ent to post the attached notice, which is the normal remedy in cir-
cumstances such as these. Accordingly, I am ordering Respondent to
mail a copy of the attached notice to employees in the bargaining
unit on the date of the layoff.
CONCLUSIONS OF LAW
1. Respondent Holmes & Narver/Morrison-Knudsen is an
employer engaged in commerce within the meaning of Sec-
tion 2(6) and (7) of the Act.
2. International Brotherhood of Electrical Workers, Local
Union 558 and UA Plumbers & Steamfitters, Local Union
377 are, and have been at all times material, labor organiza-
tions within the meaning of Section 2(5) of the Act.
3. On December 22, 1988, the Union was certified as the
exclusive collective-bargaining representative of Respond-
ent’s employees in the following appropriate collective-bar-
gaining unit:
All full time and regular part-time employees engaged
in construction, alterations, maintenance, repair and
motor pool employees employed by Holmes &
Narver/Morrison-Knudsen at the Redstone Arsenal in
Huntsville, Alabama, including the administrative em-
ployees, but excluding all equipment operators, heavy
mechanics, heavy mechanic helpers, temporary employ-
ees, office clerical employees employed at the head-
quarter’s building, confidential employees, guards, and
supervisors as defined in the Act.
4. Respondent’s unilateral reduction of the amount paid
into individual employee SEP accounts did not violate Sec-
tion 8(a)(1) and (5) of the Act.
5. Respondent unilaterally laid off employees in order to
reduce labor costs without notifying the Union or affording
it an opportunity to bargain, and Respondent thereby violated
Section 8(a)(1) and (5) of the Act.
6. The unfair labor practices which Respondent has been
found to have engaged in, as described above, have a close,
intimate and substantial relation to trade, traffic, and com-
merce, among the several States and tend to lead to labor
disputes burdening and obstructing commerce and the free
flow of commerce within the meaning of Section 2(6) and
(7) of the Act.
THE REMEDY
Having found that Respondent has engaged in certain un-
fair labor practices in violation of Section 8(a)(1) and (5) of
the Act, I shall recommend that it be ordered to cease and
desist therefrom and to take certain affirmative action de-
signed to effectuate the policies of the Act.
The Board held in LaPeer Foundry, supra, that an unlaw-
ful failure to negotiate over a layoff decision in violation of
Section 8(a)(5) of the Act requires that the employer’s back-
pay liability run from the date of the layoffs until the date
the employees are reinstated to their same or substantially
equivalent positions or have secured equivalent employment
elsewhere. Backpay shall be based on the earnings that the
employees normally would have received during the applica-
ble period, less any net interim earnings, with appropriate in-
terest. Since Respondent was not awarded the contract at the
Redstone Arsenal beginning October 1, 1989, I shall order
that backpay run, with appropriate interest, from the date of
the layoff on March 7, 1989, until the date the contract be-
tween Respondent and the U.S. Army ceased on September
30, 1989.
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended3
ORDER
The Respondent, Holmes & Narver/Morrison-Knudsen,
Huntsville, Alabama, it officers, agents, successors, and as-
signs, shall
1. Cease and desist from
(a) Unilaterally laying off employees in order to reduce
labor costs without first notifying the Union and affording it
a reasonable opportunity to bargain about such a decision
and its effect on employees.
(b) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of the rights guar-
anteed them in Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Make whole employees laid off on or about March 7,
1989, by paying them a sum of money equal to the amount
each normally would have earned from the date of the layoff
to September 30, 1989, when the contract between Respond-
ent and U.S. Army terminated, less net interim earnings, with
backpay to be computed in the manner prescribed in F. W.
Woolworth Co., 90 NLRB 289 (1950), plus interest as com-
puted in New Horizons for the Retarded, 283 NLRB 1173
(1987).
(b) Notify the Union, in writing, that although it is impos-
sible to fully restore the status quo ante due to the fact that
Respondent no longer has a contract with the U.S. Army to
operate and maintain the Redstone Arsenal, it is willing to
meet and bargain with the Union to negotiate concerning the
effect that the March 1989 layoff may have had on employ-
ees.
(c) Mail a copy of the attached notice marked ‘‘Appen-
dix’’ on forms provided by the Regional Director for Region
10, after being duly signed by Respondent’s authorized rep-
resentative, to each employee on its payroll at the Redstone
Arsenal project on or about March 7, 1989, who were in the
bargaining unit represented by the Union.4
(d) Notify the Regional Director in writing within 20 days
from the date of this Order what steps Respondent has taken
to comply.
154 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
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 vio-
lated the National Labor Relations Act and has ordered us
to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives of
their own choice
To act together for other mutual aid or protection
To choose not to engage in any of these protected
concerted activities.
WE WILL NOT unilaterally lay off employees at the Red-
stone Arsenal in Huntsville, Alabama, in order to reduce
labor costs without first notifying IBEW, Local Union 558
and UA Plumbers and Steamfitters, Local Union No. 377
and affording them a reasonable opportunity to bargain about
such a decision and its effect on employees.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce employees in the exercise of the rights
guaranteed them in Section 7 of the Act.
WE WILL make whole employees laid off on or about
March 7, 1989, by paying them a sum of money equal to
the amount each normally would have earned from the date
of the layoff to September 30, 1989, when our contract at
the Redstone Arsenal terminated, less net interim earnings,
with appropriate interest.
WE WILL notify the Union, in writing, that although it is
impossible to fully restore the status quo ante due to the fact
that we no longer have the contract with the U.S. Army to
operate and maintain the Redstone Arsenal, we are willing
to meet and bargain with the Union to negotiate concerning
the effect that the March 1989 layoff may have had on em-
ployees.
HOLMES & NARVER/MORRISON-KNUDSEN