McKenzie Engineering Co.

National Labor Relations Board - Administrative Judge Opinions

Mar 23, 2006

33-CA-011408 (N.L.R.B. Mar. 23, 2006)

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Ft. Madison, IA
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
ATLANTA BRANCH OFFICE
DIVISION OF JUDGES

McKENZIE ENGINEERING CO.

and Case 33–CA–11408

CARPENTERS LOCAL UNION 410,
UNITED BROTHERHOOD OF CARPENTERS
AND JOINERS OF AMERICA, AFL-CIO

Deborah A. Fisher, Esq., for the General Counsel.
David J. Lauth, Esq., and Jennifer Dellmuth, Esq.,
for the Respondent.
Karl Masters, Esq., for the Charging Party.

SUPPLEMENTAL DECISION

Statement of the Case

MICHAEL A. MARCIONESE, Administrative Law Judge. I heard this compliance case
in Peoria, Illinois, on November 2 and 3, 2005. The hearing was held pursuant to a remand
ordered by the Court of Appeals, which had denied enforcement to part of the Board’s
Supplemental Decision and Order reported at 336 NLRB 336 (2001). McKenzie Engineering Co.
v. NLRB, 373 F.3d 888 (8th Cir. 2004). The issue on remand is the amount of back pay owed to
the four named discriminatees who were previously found to have been unlawfully discharged
on November 1, 1995. McKenzie Engineering Co., 326 NLRB 473 (1998). The General
Counsel, the Respondent, and the Charging Party were ably represented by counsel at the
hearing and all parties have filed briefs. The Respondent also filed a reply brief, which had been
permitted in order to allow the parties to address any new calculations or theories advanced in
the initial briefs. Having considered the evidence presented at the hearing and the arguments
made by counsel, I now make the following

Findings of Fact

I. History of the Case

The Respondent, headquartered in Ft. Madison, Iowa, is a marine construction
contractor working along the Mississippi River. Robert McKenzie is the Respondent’s owner and
president. From its founding until the unfair labor practices found in the underlying case, the
Respondent had a collective-bargaining relationship with the Charging Party Union. In
McKenzie Engineering Co., 326 NLRB 473 (1998), the Board found, inter alia, that the
Respondent violated Section 8(a)(1) and (5) of the Act by repudiating its collective bargaining
agreement with the Union and Section 8(a)(1) and (3) of the Act by discharging Fred Arnold, Jr.,
Donald Patterson, Steve Perry and Mark Spiekermeier on February 1, 1995 because of their
membership in the Union and as part of an overall plan to repudiate the collective bargaining
agreement. As part of the remedy for these violations, the Board ordered the Respondent to
offer reinstatement to the four discriminatees and to make them whole for lost wages and

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benefits. On June 25, 1999, the Court of Appeals enforced the Board’s order in relevant part but
determined that issues raised by the Respondent regarding the appropriateness of the
reinstatement remedy should be resolved at the compliance stage of the proceeding. McKenzie
Engineering Co. v. NLRB, 182 F.3d 622 (8th Cir. 1999). On November 6 and 7, 2000, a
compliance hearing was held before Administrative Law Judge Marion Ladwig to resolve the
reinstatement and back pay issues. Judge Ladwig issued his supplemental decision on July 20,
2001, which the Board adopted on September 28, 2001. McKenzie Engineering Co., 336 NLRB
336. The Board’s Supplemental Decision and Order directed the Respondent to make whole the
four discriminatees by paying a total of $130,515.70, plus interest. The Board ordered further
that back pay for Arnold, Patterson and Spiekermeier would continue to accrue until such time
as the Respondent made a valid offer of reinstatement to them. No further reinstatement
remedy was ordered for Perry and back pay was tolled for him because he died in October 1999
while the case was pending. The Respondent’s appeal of the Board’s Supplemental Order led
to the Court of Appeals’ decision remanding the case for this hearing.

In denying enforcement of the Board’s back pay order, the Court concluded that the
Board’s order, as it related to the four wrongfully discharged employees, was not supported by
substantial evidence. Specifically, the Court concluded that the Board’s back pay order
improperly assumed that each of the surviving three discriminatees would have worked full-time
for the Respondent until the date of the court’s decision, which at that time would have been
400 weeks. Because there was no evidence in the record that any non-supervisory employee
had ever worked for the Respondent for that length of time or that any of the discriminatees had
ever held a single job for anywhere near that long, the Court determined that the award was a
windfall to the employees and unduly punitive toward the Respondent. At the same time, the
Court rejected the Respondent’s contentions that back pay should be limited to the 31-week
average length of employment of its employees or to the period prior to expiration of the last
collective bargaining agreement on April 30, 1997. According to the Court, there was “abundant
evidence in the record to support the conclusion that the fired employees would (or could) have
continued their employment with the Respondent beyond 31 weeks.” The Court further found
that any doubt whether the discriminatees would have continued working for the Respondent
beyond the expiration of the collective bargaining agreement must be resolved against the
Respondent under well-established legal precedent. See NLRB v. Madison Courier, Inc., 472
F.2d 1307, 1321 (D.C. Cir. 1972), cited by the Court.

After rejecting both the Board’s and the Respondent’s claims as to the appropriate
amount of back pay, the Court determined that that there was substantial evidence to support
the conclusion that each of the discriminatees would have worked for the Respondent for
substantial lengths of time had they not been fired. The Court concluded that the record would
support an award of back pay based on “the amount of time the employees spent working for
the employer with whom they had the longest tenure following their dismissal.” In order to
illustrate this, the Court used Patterson’s work history between his termination and the
compliance hearing, noting that he had worked for one of his interim employers, the Des Moines
Historical Society, for 169 weeks out of the 255 weeks in the back pay period to date. The Court
then stated

Based on this work record, Patterson should receive back pay (and fringe benefits
until April 30, 1997) for sixty-six percent of the time (169 divided by 255) expended
by McKenzie on subsequent projects until McKenzie offers him reemployment.

The Court directed the Board, on remand, to

take additional evidence on the fired employees’ work histories and issue a back-

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pay award that is not inconsistent with this opinion. An award that follows our
suggested formula will be based more strictly on the work histories of the
discharged employees (which appear to reflect the McKenzie labor pool as a whole)
and will be more precisely “tailored to expunge only the actual, and not merely
speculative, consequences of the unfair labor practices.”

373 F.2d 888, 894-895 (2004). (citation and footnote omitted; emphasis in original).

Following the remand, the Respondent offered reinstatement to the three surviving
discriminatees (Arnold, Patterson and Spiekermeier) on September 29, 2004. Because the
parties were unable to agree on a method to apply the Court’s formula to determine the back
pay owed the discriminatees, the General Counsel issued a new compliance specification and
notice of hearing on February 25, 2005, which it amended at the hearing. On March 17, 2005,
the Respondent filed its answer to the compliance specification, which it amended on October
28, 2005. At the hearing, the General Counsel presented the testimony of Gregory Ramsay, the
Region’s compliance officer, describing the formula he devised to comply with the Court’s order.
The Respondent presented McKenzie who described three alternative formulas he devised
based on various interpretations of the Court’s opinion. My task in this decision is to determine
which of these competing formulas is consistent with the Court’s remand order. As the Court
acknowledged, it is impossible to precisely determine the amount of back pay that should be
awarded. The goal, in this as in any compliance proceeding, is to find a formula reasonably
designed to produce an award that is as close an approximation as possible to the amount the
discharged employee would have earned absent the unlawful discrimination. Id., at fn. 3.

II. The Adjustment Factor

As the Respondent concedes in its brief, many of the facts necessary to determine back
pay were decided in the earlier compliance proceeding and affirmed on appeal and are thus no
longer in dispute. There is no dispute that the back pay period for each discriminatee runs from
the November 1, 1995 date of discharge until the date each either left the workforce or was
offered reinstatement. Perry’s back pay period ended with his death on October 21, 1999;
Arnold’s back pay period ended with his retirement on May 24, 20011; while Patterson’s and
Spiekermeier’s back pay continued to accrue until the Respondent offered them reinstatement
on September 29, 2004. The Respondent stipulated in the earlier proceeding and concedes
here that the methodology used by the General Counsel to determine gross back pay was
reasonable. The Respondent has also agreed to the wage rates used to determine gross back
pay, i.e. the contract hourly rate of $17.65 for Arnold and Spiekermeier; the foreman’s rate of
$18.65 for Patterson; and the apprentice rate for Perry, which gradually increased during his
back pay period from $8.83 to $15.00 per hour. The Respondent, with minor exceptions to be
discussed, has also accepted the interim earnings reported for the discriminatees in the
specification and the interim expenses claimed by Patterson, the only discriminatee to make
such a claim.

In the first compliance proceeding in 2000, the Respondent challenged the mitigation
efforts of only one discriminatee, Spiekermeier. Judge Ladwig found that Respondent failed to
prove that Spiekermeier was not diligently seeking work or that he refused any available
employment. That finding was not challenged on appeal and is conclusive here through the date
1 Arnold, who was called as a witness by the Respondent, testified in this proceeding that he
returned to the workforce at some point before 2004. Nevertheless, neither the General
Counsel nor the Charging Party seeks back pay for any period after May 24, 2001.

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of the last hearing. The Respondent did not contend then that either Patterson or Arnold was
not diligently seeking work during the back pay period. In this proceeding, the Respondent again
challenged Spiekermeier’s efforts to find interim employment and also raised for the first time a
claim that Patterson had not sufficiently mitigated back pay. These issues will be discussed later
in this decision.

With respect to the issue on remand, the parties agree as to the length of time each
discriminatee worked for the employer with whom he worked the longest during the back pay
period, one factor in applying the Court’s formula. There is no dispute that Arnold worked 173
weeks at Allied Construction Services, Inc. out of the 289 weeks in his back pay period; that
Patterson worked 341 weeks, out of a total of 463 weeks, for the Des Moines County Historical
Society; that Spiekermeier worked 130 weeks, out of the 463 weeks in his period, for Allied
Construction Services, Inc. and that Perry worked 139 weeks for Orba Johnson Transshipment
during his back pay period.2 Dividing the weeks worked at each individual’s longest interim
employer by the total weeks in each back pay period provides a number, referred to by the
parties as the adjustment factor, which the Court suggested be used to determine back pay.
The difference between the parties’ varied approaches is whether the weeks worked are
calendar weeks or a standard 40-hour week, and whether the resulting adjustment factor should
be applied to gross back pay or net back pay. The parties also disagree whether the adjustment
factor should be applied to the fringe benefit contributions owed on behalf of three of the
discriminatees.3

Ramsay, the Region’s compliance officer, testified that, upon receipt of the remand
order, he re-calculated the back pay owed to Arnold, Patterson, Perry and Spiekermeier by
starting with the figures that had been developed by Ronald Symkowiak, his predecessor as
compliance officer, and extending the calculations beyond the November 2000 date of the
compliance hearing to the end of the respective back pay period for each discriminatee. Before
applying the adjustment factor that the Court of Appeals devised, Ramsay updated the gross
back pay amounts by using the same methodology that Symkowiak had used to determine the
gross back pay for the period preceding the first compliance hearing.4 Specifically, Ramsay
went through the Respondent’s payroll records to determine the number of hours that
employees who replaced the discriminatees worked for the Respondent during the period from
October 19, 2000, the last pay period for which Symkowiak had information, until September 29,
2004, the date the Respondent finally offered reinstatement to the two remaining
discriminatees.5 He then assigned these hours to the discriminatees in order of seniority, first to
Patterson, then to Spiekermeier, then to Arnold and then to Perry. He only assigned hours to
Arnold and Perry through the end of their respective back pay periods. After assigning hours to
the discriminatees, Ramsay calculated the quarterly gross back pay for each discriminatee by
multiplying the number of hours assigned per quarter by the hourly rate set forth above for each
discriminatee. Ramsay then subtracted from this gross quarterly back pay amount whatever
2 The General Counsel calculated Perry’s back pay period at 206 weeks while the
Respondent counted it as 206.5 weeks.
3 There is no dispute that, under the Respondent’s collective bargaining agreement with the
Union, no fringe benefit contributions were owed on behalf of Perry because of his status as an
apprentice.
4 As noted above, the Respondent had stipulated at the first hearing that this methodology
was reasonable.
5 Ramsay excluded any hours worked by supervisors, drivers, and other employees who
had union affiliations other than the Charging Party. This is the same procedure followed by
Symkowiak.

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interim earnings had been received by the discriminatees in that quarter, as reflected in the
attachments to the amended compliance specification. This calculation resulted in a net back
pay figure for each quarter of the back pay period for each discriminatee. Ramsay then applied
an adjustment factor to the net back pay figure for each quarter based on his interpretation of
the Court’s opinion. Finally, he calculated a total net back pay figure for each discriminatee by
adding their respective quarterly adjusted net back pay amounts.

Ramsay calculated each discriminatee’s adjustment factor by taking the number of
weeks each worked for the interim employer with whom he had the longest tenure and dividing
that number by the total number of weeks in each discriminatee’s back pay period. This is the
approach the Court suggested by way of illustration using Patterson as an example.6
Specifically, the adjustment factor Ramsay calculated for Arnold was 173 divided by 289, or
60%; the adjustment factor calculated for Patterson was 341 divided by 463, or 74%; the
adjustment factor calculated for Perry was 139 divided by 206, or 67%7; and the adjustment
factor calculated for Spiekermeier was 130 divided by 463, or 28%. Applying these adjustment
factors to the net back pay for each discriminatee results in the following back pay figures,
which the General Counsel claimed at the hearing was the amount owed by the Respondent to
satisfy the Board’s remedial order as modified by the Court’s decision8:

Fred Arnold, Jr. $ 5,462.87
Donald Patterson 69,900.47
Steve Perry 3,826.43
Mark Spiekermeier 22,000.35

Ramsay also updated Symkowiak’s calculations of the fringe benefit contributions owed
on behalf of Arnold, Patterson and Spiekermeier but he did not apply the adjustment factor to
these amounts. Ramsay testified that he concluded it was not necessary to reduce these
amounts because the total period for which fringe benefit contributions were owed, 77 weeks,
was far exceeded by the longest tenure each of these three discriminatees had with a single
interim employer during the back pay period.9 Based on this conclusion, the General Counsel is
seeking the following amounts for fringe benefits for each discriminatee:

Fred Arnold, Jr. $4,264.76
Donald Patterson 5,951.94
Mark Spiekermeier 5,312.37

The Respondent has accepted these figures as correct for the gross amount of fringe benefit
contributions owed but, as will be discussed below, disagrees with Ramsay’s failure to reduce
these amounts by the Court’s adjustment factor.

6 As noted above, the parties are in agreement, with one minor exception, as to the two
factors in this equation.
7 Using the number of weeks that Respondent calculated for Perry’s total back pay period,
i.e. 206.5, results in the same percentage used by Ramsay as the adjustment factor for Perry.
8 Counsel for General Counsel submitted revised calculations with her brief that she moved
be admitted as General Counsel Exhibit 18. I will address this motion in the next section of this
decision.
9 Under the Board’s order, fringe benefit contributions were only owed through April 30,
1997, the date the last collective bargaining agreement between the Respondent and the Union
expired.

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McKenzie testified for the Respondent that he also calculated back pay for the
discriminatees based on his interpretation of the Court’s opinion. Unlike Ramsay, however,
McKenzie came up with three ways to adjust the discriminatees’ back pay applying the Court’s
opinion. One method adopted by McKenzie was to use the adjustment factor calculated by
Ramsay and apply it to gross back pay, rather than net back pay.10 The Respondent then
subtracted the total interim earnings reported by the General Counsel from the adjusted gross
back pay figure to arrive at net back pay. This approach results in total net back pay for each
discriminatee as follows:

Fred Arnold, Jr. $ 1,439.47
Donald Patterson 37,796.67
Steve Perry 2,970.57
Mark Spiekermeier 10,560.8711

Although this approach reduced the back pay due each discriminatee, it was not McKenzie’s
preferred approach.

McKenzie preferred basing the adjustment factor on the number of full-time equivalent
(FTE) weeks, rather than calendar weeks, that each discriminatee worked for the interim
employer with whom he had the longest tenure during the back pay period. According to
McKenzie, he interpreted the Court’s reference to “weeks” in its decision to a 40-hour week
because that represents a standard work week in this country. McKenzie testified further that
virtually everyone in his company works a 40-hour week. However, he was forced to concede,
on cross-examination, that the Respondent’s payroll records contradict this testimony. A review
of the hours worked by employees hired after the Respondent discharged the discriminatees
shows that they routinely worked less than 40 hours a week. Counsel for the General Counsel
also pointed out, on cross-examination, that the total hours assigned to each discriminatee in
calculating gross back pay averaged far less than 40 hours a week when averaged over each
discriminatee’s back pay period. Nevertheless, McKenzie insisted that his was the fairest
approach and the most consistent with the Court’s opinion.

In applying his FTE-based formula, McKenzie divided the total hours worked by each
discriminatee for the longest employer by 40 to come up with a number of FTE weeks. He then
divided that by the total weeks in each discriminatee’s back pay period to arrive at his
adjustment factor. Specifically, for Arnold, the records from Allied Construction Services showed
that he worked a total of 6024.5 hours over 173 weeks. Divided by 40 hours, Arnold had 150.6
FTE weeks. McKenzie divided this by the 289 weeks in Arnold’s back pay period to reach an
adjustment factor of 52.11%. McKenzie testified that correspondence from the Des Moines
County Historical Society, Patterson’s longest-tenured interim employer, showed that he
averaged 25 hours a week over the 341 weeks he worked there. McKenzie testified that this
represents 62.5% of a 40 hour week which McKenzie used to translate Patterson’s 341 weeks
to 213.125 FTE weeks. When this latter number is divided by the 463 weeks in Patterson’s back
pay period, the result is an adjustment factor of 46.03%. Records from Orba Johnson
Transshipment showed that Perry worked a total of 5900 hours, including overtime, for that
employer during the 139 weeks he worked there. McKenzie calculated that this represented
10 Ramsay acknowledged, on cross-examination, that he initially used this approach when
he first attempted to re-calculate back pay under the terms of the Court’s order.
11 The Respondent used different interim earnings amounts for two quarters of
Spiekermeier’s back pay period (Q2 and Q3 of 2000) based on actual earnings reported by the
interim employer, Allied Construction Services, for those quarters.

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147.5 FTE weeks and, when divided by the 206.5 weeks in Perry’s back pay period, results in
an adjustment factor of 71.43%. Finally, Spiekermeier was shown to have worked for Allied
Construction Services a total of 4381.5 hours over the 130 weeks he worked for that employer
which McKenzie converted to 109.5 FTE weeks. When this latter number is divided by the 463
weeks in Spiekermeier’s back pay period, he is left with an adjustment factor of 23.65%.

McKenzie testified that he applied his FTE-based adjustment factor to both gross back
pay and to net back pay. In doing so, he came up with the following amounts:

Discriminatee McKenzie FTE-Based Adjustment
Applied to
Gross Back Pay Net Back Pay

Arnold $1,078.36 $ 4,744.50
Patterson 9,635.10 43,479.98
Perry 3,338.47 4,079.44
Spiekermeier 8,223.27 16,705.72

When asked which of these two calculations he believed most closely approximated the
adjustment envisioned by the Court of Appeals, McKenzie said the first, which resulted in the
least amount of back pay being owed to the discriminatees.

The Respondent also applied the adjustment factor to the gross fringe benefit
contributions calculated by the General Counsel. According to the Respondent, this is
consistent with the Court’s view that the discriminatees would not have worked every job
available with the Respondent during the back pay period. The fringe benefit contributions
should be reduced for the same reason that the Court devised an adjustment factor to apply to
lost wages. Applying the General Counsel’s adjustment factor to gross fringe benefit
contributions results in the following amounts:

Arnold $2,558.86
Patterson 4,404.44
Spiekermeier 1,487.46

Applying the Respondent’s FTE-based adjustment factor results in the following fringe benefit
contributions being owed:

Arnold $2,222.37
Patterson 2,739.68
Spiekermeier 1,256.38.

The task here, as directed by the Court of Appeals, is to re-calculate back pay in a
manner “not inconsistent with [the Court’s] opinion” that more closely approximates what each
discriminatee would have earned absent the Respondent’s unlawful discrimination against
them. It is clear from the Court’s opinion that an award based on the discriminatee’s
employment history as well as the Respondent’s history of employing workers would meet this
goal. As presented by the parties at the hearing, there are two issues to address before re-
calculating back pay. The first is whether the adjustment factor should be based on calendar
weeks, as advanced by the General Counsel and the Charging Party, or on FTE weeks, as
proposed by the Respondent. The second issue is whether the adjustment factor should be
applied to gross back pay, as the Respondent would, or to net back pay, as would the General
Counsel and the Charging Party.

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In arguing for an adjustment factor based on FTE weeks, the Respondent focuses on
language in the Court’s opinion indicating that back pay should be based on the amount of
“time” each discriminatee spent working for the longest interim employer. The Respondent
argues that “time” means actual hours spent working for the interim employer, not calendar
weeks. This ignores the Court’s use of calendar weeks in the example it provided to show how
the back pay should be calculated for Patterson. The Respondent attempts to avoid the obvious
application of that example by suggesting that the court was unaware that Patterson only
averaged 25 hours a week at the Des Moines Historical Society, the interim employer used in
the Court’s example. The General Counsel took the obvious approach and used calendar
weeks, just as the Court had done in the Patterson example. I conclude that the General
Counsel’s approach is the most consistent with the intent of the Court in its remand order and
the evidence in the record.

The General Counsel, in determining the adjustment factor that would be used to re-
calculate back pay, used the same formula the Court used, carried it forward based on updated
evidence regarding Patterson’s employment history since the first compliance hearing, and then
applied the same formula to the other discriminatees. Nothing in the Court’s opinion suggests
that it intended a further calculation to convert the hours worked by the discriminatees into a
standard 40-hour week before employing the formula it cited as an example. The Court could
not have been unaware of the fact that the discriminatees were not working a standard 40-hour
week at their interim employment because the record from the November 2000 compliance
hearing contained this evidence. Moreover, the evidence in that record also showed that the
employees hired by the Respondent after it discharged the discriminatees were not working a
standard 40-hour work week. Because the Court wanted the back pay award to more closely
reflect the work history of the discriminatees and those hired to replace them, use of calendar
weeks, without regard to the actual hours worked in those weeks, is the more reasonable and
logical approach.

The Court, after calculating Patterson’s adjustment factor by dividing the number of
weeks he worked for the Des Moines Historical Society by the total number of weeks in his back
pay period, directed that “Patterson should receive back pay (and fringe benefits until April 30,
1997) for sixty-six per cent of the time (169 divided by 255) expended by McKenzie on
subsequent projects until McKenzie offers him reemployment.” At first glance, it would appear
that the approach taken by the Respondent, and initially by the Region’s compliance officer, of
applying the adjustment factor to gross back pay, would be consistent with the Court’s opinion.
However, if the adjustment factor is not applied to interim earnings as well, then the Respondent
would be given credit for interim earnings that do not match gross back pay, a result
inconsistent with the Board’s long-established formula for computing back pay on a quarterly
basis. See F. W. Woolworth Co., 90 NLRB 289 (1950). The quarterly method of calculating back
pay, adopted there, was intended to avoid the unfairness of interim earnings in one period
reducing or eliminating a make whole remedy in other periods. Similarly, here, if the
discriminatee’s interim earnings are not reduced by the adjustment factor to reflect the lower
available hours in the gross back pay period, the Respondent would get the benefit of the
employee’s success in obtaining interim employment for periods when, under the Court’s
opinion, it would not have employed the discriminatees. The General Counsel’s approach, i.e.
applying the adjustment factor to the net quarterly back pay amount, is a short hand way of
reducing gross back pay and interim earnings to reflect the actual work history of the
Respondent’s employees during the back pay period while matching interim earnings to gross
back pay.

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Although I have found the General Counsel’s approach of applying an adjustment factor
based on calendar weeks to net quarterly back pay consistent with the Court’s remand order, I
disagree with the approach taken by the General Counsel to the fringe benefit contributions
owed under the Board’s remedial order. It is inconsistent to reduce back pay to reflect less work
opportunities while not reducing the fringe benefit contributions that would be owed as a result
of this work. It is clear from the Patterson example in the Court’s opinion, as quoted above, that
the Court intended that any fringe benefit contributions owed on his behalf would also be
reduced by the 66% factor calculated by the Court. Otherwise, the discriminatees would be
given credit for all hours available during the period prior to the expiration of the collective
bargaining agreement for purposes of calculating fringe benefits even though they are not being
given credit for all those hours in terms of missed work opportunities. This is similar to the
unfairness described above resulting from the Respondent’s failure to match interim earnings to
gross back pay. Accordingly, I shall recommend that the adjustment factor calculated by the
General Counsel be applied to reduce the fringe benefit contributions owed on behalf of Arnold,
Patterson and Spiekermeier for the period from the date of discharge until the April 30, 1997
expiration of the collective bargaining agreement requiring those contributions.

Before applying the adjustment factor to re-calculate back pay, I must first resolve two
other issues. The first is the General Counsel’s post-hearing motion to receive revised back pay
calculations as General Counsel Exhibit 18 and the second is the Respondent’s claims that
Spiekermeier and Patterson did not properly mitigate back pay.

III. Corrections to Pre-2000 Calculations

Compliance Officer Ramsay testified that he uncovered several obvious mathematical
errors in his predecessor’s calculations while re-calculating back pay pursuant to the Court’s
remand. According to Ramsay, he corrected these errors when he updated the back pay
calculations before applying the adjustment factor described above. Specifically, as reflected in
General Counsel’s Exhibit 2(a), Ramsay corrected Arnold’s back pay for the fourth quarter of
1999 where his predecessor erroneously assigned only one hour of gross back pay instead of
the 440 hours he would have been entitled to by application of the agreed-upon formula. This
resulted in an increase in the net back pay claimed for Arnold. Ramsay also made corrections in
the interim earnings reported for Patterson for all of 1999 through the first three quarters of 2000
based on more accurate information. This resulted in a slight increase in Patterson’s net back
pay. Ramsay also made several corrections to the assigned hours for Spiekermeier in 1996,
1998 and 1999 which resulted in a decrease in both the net back pay and fringe benefit
contributions claimed on his behalf. The combined effect of these corrections was a decrease of
$101.20 in the total amount sought by the General Counsel.

During cross-examination by Respondent’s counsel, Ramsay acknowledged several
other errors in the calculations made before the 2000 compliance hearing. All of these involved
a discrepancy between interim earnings figures that had been reported on the compliance
specification used at the first hearing in 2000 and earnings figures in documents that had been
submitted during the compliance investigation. For example, the pre-2000 calculations showed
interim earnings for Spiekermeier from Allied Construction Services, in second and third
quarters of 2000, of $2,665.02 and $11,608.80, respectively. The payroll records submitted by
Allied showed actual earnings for those quarters to be $10,805.41 and $8,995.40,
respectively.12 Ramsay could not explain the discrepancy because he was not involved in
12 The payroll records relied upon by Respondent were not available at the time the 2000
calculations were done.

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preparing the calculation for the 2000 compliance specification. However, he conceded that,
had he been making the calculations from scratch, he would have used the figures reported by
Allied for those quarters. Respondent’s counsel also pointed out, on cross-examination, that
there were discrepancies between the interim earnings reported for Arnold and Perry in 1996
and the amounts reflected on W-2 forms submitted with their 1996 tax returns.13 Ramsay
admitted that he did not review all of the interim earnings reports for the period prior to the
November 2000 hearing for accuracy.

When these discrepancies were raised at the hearing, I asked the parties to address in
their briefs whether it was proper, in light of the limited purpose of the remand, to re-visit
calculations that were part of the record in the prior proceeding. Because the Respondent
presumably could have pointed out such inaccuracies in the proceeding before Judge Ladwig,
or by exceptions filed with the Board or in its appeal to the Court, it arguably would be precluded
from doing so now. Based on these concerns, Counsel for General Counsel filed with her brief,
and moved for admission into evidence, a revised back pay calculation, identified as General
Counsel Exhibit 18, which rescinded the corrections Ramsay had made to the pre-2000
calculations.14 Counsel for General Counsel argued that there was no authority in the Court’s
remand order for re-opening the calculations that had been part of the record in that case. She
cited FKW, Inc., 321 NLRB 93 (1996) for the proposition that Respondent had waived any
objections to those calculations by not pursuing them in a timely manner. In its Reply Brief, the
Respondent opposed the General Counsel’s motion, arguing that it was appropriate, in the
interest of ensuring accuracy in back pay calculations, to make these corrections of obvious
errors.

The Court of Appeals, in denying enforcement to the Board’s supplemental decision in
this case, did not address the accuracy of the calculations. The Court remanded the proceeding
for the limited purpose of re-calculating back pay based on its determination that the
discriminatees would not have been continuously employed by the Respondent during the back
pay period. It instructed the Board, and by extension the administrative law judge, to take
additional evidence on the discriminatees’ work history and issue a back pay award consistent
with its opinion. To comply with the Court’s remand, it is only necessary to update the work
history of each discriminatee in order to arrive at the adjustment factor devised by the Court and
apply that to determine an appropriate back pay award. It was not necessary to re-visit the
calculations that had been done before the 2000 compliance hearing and it is unlikely the Court
intended such a result. As is evident from the testimony of Ramsay, mathematical errors are not
uncommon in these proceedings. Those corrections made by Ramsay on his own motion
amounted to an insignificant decrease in the back pay liability.

The changes sought by the Respondent were more substantial but also go beyond the
terms of the remand order. The Respondent’s efforts to “correct” the interim earnings reported
for Arnold, Perry and Spiekermeier in certain quarters in 1996 and 2000 would reduce its back
pay liability. Under well-established Board law, the Respondent bears the burden of proof with
respect to all aspects of a back pay calculation that would reduce gross back pay, such as
interim earnings. NLRB v. Brown & Root, Inc., 311 F.2d 447 (8th Cir. 1963); Rainbow Coaches,
280 NLRB 166 (1986). Because the corrections now sought affect the calculations that existed
13 The total of all Arnold’s W-2s for 1996 was $776.50 more than the interim earnings
reported for that year. Similarly, the total of all W-2s for Perry for 1996 was $1742 more than the
amount reported in the compliance specification.
14 General Counsel’s Exhibit 18, which was attached to her brief as Attachment D, is
attached to this decision as Appendix A.

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prior to the November 2000 hearing, the Respondent’s counsel could have questioned Mr.
Ramsay’s predecessor regarding any discrepancies between Arnold’s and Perry’s W-2s and the
amounts in the compliance specification at that hearing, in much the same way he did here.15
Even with respect to the more accurate information received after the hearing from interim
employer Allied Construction regarding Spiekermeier’s earnings in the second and third quarter
of 2000, there is no reason why the Respondent could not have obtained this information, which
existed at the time, by subpoena for use at the November 2000 hearing. Respondent in fact
stipulated to the accuracy of the interim earnings amounts at that hearing, choosing not to
challenge the compliance officer’s calculations.

Having considered the matter and the arguments of the parties, and in the interest of
finality, I shall grant General Counsel’s motion and shall receive General Counsel’s Exhibit 18
into evidence, thereby rescinding the corrections made by Ramsay to his predecessor’s back
pay calculations for the period prior to the November 2000 hearing. I shall also reject the
corrections proposed by the Respondent to those same calculations. See Bethea v. Levi
Strauss & Co., 916 F.2d 453, 456-457 (8th Cir. 1990).

IV. The Respondent’s Mitigation Defenses

The Respondent sought to reduce its back pay liability by asserting that Spiekermeier
and Patterson failed to mitigate back pay, and that Arnold and Spiekermeier failed to report all
their interim earnings. As previously noted, any such issues raised in the previous compliance
hearing for the period preceding that hearing are settled. The Respondent has focused in this
hearing on the period since November 2000.

A. Arnold

The Respondent contends that Arnold failed to report all his interim earnings for
calendar year 2001. The Respondent relies upon Arnold’s 2001 income tax return which
includes a W-2 from Temp Associates-Burlington Inc. showing $23,817.27 in “wages, tips and
other compensation”. The General Counsel, in the compliance specification, reported interim
earnings of $812.40 in the first quarter of 2001 and $954.27 in the second quarter of 1991 for a
total of $1,766.67 for the year, far less than what was claimed on his income tax return.
Because the W-2 from Temp Associates does not indicate when this income was earned, the
Respondent suggests it be spread equally among the quarters in the 2001 back pay period.
Even if this amount is spread among all four quarters of the calendar year, it would exceed the
gross back pay sought for Arnold in the second quarter, which is the only quarter for which such
a claim is made. Under the Respondent’s view, Arnold would have no net back pay for 2001,
even before applying the adjustment factor.

The Respondent called Arnold as a witness and asked him to verify that the W-2 from
Temp Associates reflected $23,817.27 of income for 2001. Arnold was asked no other
questions about this subject. Arnold testified that he worked until he suffered a stroke on May
24, 2001 and that he retired after that.16 However, he volunteered that he did return to work at
some later point although he could not recall when. Notwithstanding this testimony, neither the
15 The Respondent was represented by the same law firm at that hearing, although by
different counsel. The Respondent in fact stipulated at that hearing to the interim earnings as
reported in the specification.
16 Arnold’s 1991 tax return does show receipt of funds from the Union’s pension fund in
2001.

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General Counsel nor the Charging Party sought additional back pay beyond May 24, 2001.

Because the General Counsel is only seeking back pay for Arnold for the period prior to
May 24, 2001, any unreported interim earnings would have to be shown to have been received
for work performed prior to that date to reduce back pay. It should also be noted that General
Counsel does not seek back pay for the first quarter of 2001 based on a determination that
Arnold would not have been employed by the Respondent in that quarter. Thus, any income
received in the first quarter would be irrelevant. In order to reduce its back pay obligation to
Arnold, the Respondent would have to establish that interim earnings in addition to those
reported by the General Counsel were earned by Arnold in the second quarter of 2001. This the
Respondent has failed to do.

It is important to note that the Respondent had the opportunity to question Arnold about
the wages received from Temp Associates but chose not to do so. Instead, the Respondent
would have me assume that at least enough of this income was earned in the second quarter to
wipe out the remaining $1767.83 of net back pay claimed on Arnold’s behalf. Because Arnold
returned to work at some unknown date after May 24, 2001, it is possible that all or a portion of
these wages were earned after the back pay period ended. Based on Arnold’s prior earnings
history, it is unlikely he would have earned all of the $23,817.27 reflected on the W-2 in the
approximately 20 week period before May 24, which would tend to support a finding that he did
return to work before the end of 2000. Because of the uncertainty surrounding when this
additional income was earned, and the Respondent’s failure to seek clarification from Arnold
while he was on the witness stand, I must find that the Respondent has failed to meet its burden
of proof on this issue. Accordingly, I shall not recommend that any portion of the W-2 earnings
from Temp Associates be used to offset the back pay sought for Arnold for 2001.17

B. Patterson

The Respondent argues that Patterson should be denied any back pay for the period
from 2001 through the first quarter of 2004 because he failed to properly mitigate damages by
remaining employed on a part-time basis at the Des Moines Historical Society. Patterson
admitted in his testimony that he did not look for other work during this period because he
already had a job. Only after he was laid off by the Historical Society, on March 5, 2004, did
Patterson look for other work. Evidence in the record shows that he obtained employment after
this layoff through the Union’s hiring hall and had substantial interim earnings through the
remainder of the back pay period.

When the Respondent questioned Patterson at the hearing about his work with the
Historical Society, Counsel for General Counsel objected that the issue of mitigation had been
settled in the prior proceeding. There is no dispute that, although the Respondent had evidence
at the November 2000 hearing regarding the part-time nature of Patterson’s work with the
Historical Society, it did not question his efforts to find other work. In his decision following that
hearing, Judge Ladwig noted specifically that the Respondent did not contend that Patterson
was not diligently seeking work during the back pay period to that point in time. The Respondent
17 Although the Respondent cited cases in which the Board has denied back pay to a
discriminatee in any quarter for which the discriminatees has willfully concealed interim
earnings, the Respondent made no effort here to show any willful failure to disclose by Arnold.
See Ad Art, Inc., 280 NLRB 985, n. 2 (1986); American Navigation, 268 NLRB 426 (1983). In
fact, there was no concealment because it was Arnold who submitted the tax returns and W-2 to
the Regional Office.

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did not raise any issue regarding Patterson’s mitigation efforts in its appeals to the Board or the
Court of Appeals. In fact, it was Patterson’s employment with the Historical Society that the
Court used as an example to illustrate how an award of back pay should be determined on
remand. Because there was no change in the nature or extent of work Patterson was
performing for the Des Moines Historical Society after the 2000 hearing, the issue whether this
constituted proper mitigation is precluded by the prior findings.

Even assuming the issue may be raised on remand as to the period since the last
hearing, I conclude based on the evidence before me that Patterson properly mitigated his
losses by remaining employed with the Des Moines Historical Society until he was laid off in
March 2004. I note that the work he performed at the Historical Society was carpentry work.
Because he was able to work indoors during the winter, he could work year round and was not
subject to the seasonal variation of other carpentry work. Moreover, the location of this job,
close to Patterson’s home, avoided expenses he might have incurred to take a job at a distance
from his home which would not have lasted as long.

Under well-established Board law, the sufficiency of a discriminatee’s efforts to mitigate
are to be determined by the totality of evidence. The discriminatee’s efforts must be considered
in the context of the entire back pay period. Midwestern Personnel Services, 346 NLRB No. 58
(February 28, 2006) and cases cited therein. Here, under the methodology employed by the
General Counsel to determine the amount of gross back pay owed to Patterson, a method
stipulated to be reasonable, it was determined that Patterson would have worked an average of
approximately 28 hours a week during the back pay period (13,048 hours divided by 463 weeks
in the back pay period). This is before application of the adjustment factor devised by the Court,
which would reduce work deemed to be available with the Respondent even further. Even if one
considers the amount of work available with the Respondent on a quarterly basis, there are only
six quarters, out of thirty-six total quarters in the back pay period, in which Patterson would have
worked 40 hours a week or more for the Respondent. There were eleven quarters in the back
pay period in which the General Counsel determined that Patterson would have worked 25
hours or less per week for the Respondent. In this context, Patterson’s decision to remain
steadily employed, averaging 25 hours a week, for almost seven years with one interim
employer, is sufficient to satisfy his duty to mitigate. Accordingly, I find that the Respondent has
failed to meet its burden of proving that Patterson failed to exercise reasonable diligence in
searching for work during the back pay period.

C. Spiekermeier

The Respondent argues that Spiekermeier should receive no back pay for the period
from the third quarter of 2002 through the end of the back pay period, i.e. the third quarter of
2004, because he did not diligently search for work in that period.18 Respondent argues further
that Spiekermeier is not entitled to any back pay for 2003 and 2004 because he failed to report
all his income from self-employment. It should be noted that the General Counsel is not seeking
back pay for every quarter in these periods. Under the accepted methodology for determining
gross back pay, the General Counsel determined that Spiekermeier would not have worked for
the Respondent in the first two quarters of 2003 and the first quarter of 2004.
18 Judge Ladwig found in the prior compliance proceeding that the Respondent failed to
meet its burden of showing that Spiekermeier did not diligently search for work prior to
November 2000. The Board adopted this finding and the Court of Appeals, in remanding the
case for a re-calculation of back pay, did not raise any issue with this finding. This finding is
preclusive in this proceeding.

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The General Counsel’s compliance specification shows no interim earnings for
Spiekermeier for six quarters of the back pay period, from July 1, 2002 through December 31,
2003. The General Counsel reports a total of $5,234.40 in interim earnings for the first three
quarters of 2004. Spiekermeier testified that he was unable to find work from mid 2002 until the
end of the back pay period and that, sometime in 2003, he started his own construction
business from which he derived about $5000 in net income in 2004. Spiekermeier admitted that
his efforts to find work before starting his business were limited to contacting the Union’s
business agent, Jim Decker, about once each quarter to ask about work. According to
Spiekermeier, Decker told him there was no work for him. Decker corroborated this testimony to
the extent that he testified that work was slow in 2003 and 2004 and that he had many members
out of work. Respondent argues the fact that Patterson was sent on a job by the Union in 2004
establishes that there was work available for Spiekermeier. However, the Respondent did not
establish the existence of any specific job that Spiekermeier was offered and declined.
According to Decker, when he had calls for carpenters, he sent out the first person to call in,
assuming equal qualifications. Decker also testified that the Union’s hiring hall was not exclusive
and that employers were free to hire directly and to request employees by name.

Spiekermeier testified that, because there was no work available through the Union, he
decided to go into business for himself. Although Spiekermeier had difficulty recalling specific
jobs he worked on in 2003 and 2004, he estimated that he spent about 25 hours a week
working in his business. His wife kept the books and an accountant prepared the tax returns,
which are in evidence. Spiekermeier’s income tax returns for 2003 and 2004 show gross
revenue from his business of $46,748 and $55,734, respectively, with a net loss for 2003 and
net income of $5,816 for 2004. Spiekermeier testified at the hearing that he occasionally
withdrew money from his business account to give to his wife to pay bills or for personal
expenses. He estimated this amounted to about $5000 in the course of a year.

It is well-established that the Respondent bears the burden of proving affirmatively that
Spiekermeier failed to exercise reasonable diligence in searching for work during the back pay
period. NLRB v. Mooney Aircraft, 366 F.2d 809, 812-813 (5th Cir. 1966); NLRB v. Brown & Root,
Inc., supra; Midwestern Personnel Services, supra. The Board has consistently held that an
honest, good faith effort is all that is necessary and that a discriminatee need not be successful
in seeking employment to establish reasonable diligence. A discriminatee need only follow his
usual method of looking for work to satisfy the duty to mitigate. Moreover, the sufficiency of a
discriminatee’s efforts is based on all of the circumstances, including his efforts over the entire
back pay period, and is not based on isolated portions. See Midwestern Personnel Services,
supra, and cases cited therein. The Board has long held that self-employment is sufficient to
satisfy the duty to mitigate and that net earnings, rather than gross revenue, from self-
employment is what should be deducted as interim earnings. Heinrich Motors, 166 NLRB 783
(1967), enfd. 403 F.2d 145, 148 (2d Cir. 1968); Cassis Management Corp., 336 NLRB 961, 968
(2001); Performance Friction Corp., 335 NLRB 1117, 1122-1123 (2001).

I find that the Respondent has not met its burden of establishing a failure to mitigate by
Spiekermeier. By focusing on six quarters of the back pay period in 2002 and 2003, out of a
total of 36 quarters, the Respondent ignores Spiekermeier’s work history throughout the back
pay period. The compliance specification shows that Spiekermeier had at least some interim
earnings in every quarter until the third quarter of 2002 and that, in several quarters, his interim
earnings exceeded what he would have earned if he had continued working for the Respondent.
Moreover, because of the adjustment factor devised by the Court, Spiekermeier’s back pay
award is reduced to 28% of what General Counsel initially claimed he would have been entitled
to under the Board’s remedial order. When considered in this context, Spiekermeier’s efforts

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throughout the back pay period are more than adequate under Board law.

I find further that Spiekermeier’s decision to start his own business and his efforts in that
regard were sufficient to satisfy his duty to mitigate. Heinrich Motors, supra. The Respondent
argues, however, that Spiekermeier had far more income from his business than he reported on
his tax returns, pointing to the deposits made to the bank account which Spiekermeier identified
as his business account. However, it is impossible to determine from the face of these bank
statements the source of the money deposited. There is nothing in the record to establish that
all of the money deposited to this account represented revenue from work performed by
Spiekermeier. The only reliable evidence in the record of the amount of revenue Spiekermeier
derived from his business is what was reported on his federal tax return prepared by the
accountant. Absent evidence that these returns are fraudulent, I will not speculate that
Spiekermeier had other income from self-employment. I note that, in Midwestern Personnel
Services, supra, the Board adopted the administrative law judge’s finding that it was appropriate
to use net income from self-employment, as reported on a discriminatee’s tax returns, as interim
earnings. The Respondent also contended here that any income from self-employment that
Spiekermeier re-invested in the business by purchasing capital assets should be treated as
interim earnings. The Board rejected this same contention when it adopted the judge’s findings
in Midwestern Personnel Services, supra, in the face of exceptions to that finding.

The Respondent also argues that the amounts which Spiekermeier withdrew from his
business for personal expenses should be counted as interim earnings, citing Boland Marine,
285 NLRB 624, 628 (1987). I note that the amounts claimed as interim earnings in the General
Counsel’s specification for the first three quarters of the back pay period are equivalent to the
amount Spiekermeier acknowledged withdrawing from the business for personal use. Absent
evidence of any other withdrawals, I am not prepared to speculate as to the amount by which
Spiekermeier’s back pay should be reduced further. It is the Respondent’s burden to prove such
offsets from gross back pay.

Based on the above, I find that the Respondent has not met its burden of proving that
the back pay owed to Spiekermeier should be reduced either because of a failure to mitigate or
because of unreported interim earnings. I note that the Respondent has offered no evidence
that Spiekermeier willfully concealed any income from the General Counsel or the Board. Thus,
the Board’s decision in American Navigation, supra, is inapposite.

On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended19

ORDER

The Respondent, McKenzie Engineering Co., Fort Madison, Iowa, its officers, agents,
successors, and assigns, shall make the following payments in accordance with the National
Labor Relations Board’s Decision and Order in 326 NLRB 473 (1998), as enforced by the Court
of Appeals at 182 F.3d 622 (8th Cir. 1999), plus interest on the back pay amounts as computed
in New Horizons for the Retarded, 283 NLRB 1173 (1987), and interest on the fringe benefit
contributions to be determined in accordance with Merryweather Optical Co., 240 NLRB 1213,
19 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and
Regulations, the findings, conclusions, and recommended 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.

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1216, fn. 7 (1979):

Employee Back Pay Fringe Benefits

Fred Arnold $ 3,567.02 $ 2,558.56
Donald Patterson 69,891.35 4,404.44
Steve Perry 3,826.43 0
Mark Spiekermeier 22,885.10 1,519.24

Total 100,169.90 8,482.24

Dated, Washington, D.C., March 23, 2006.

____________________
Michael A. Marcionese
Administrative Law Judge
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Ft. Madison, IA