Operating Engineers Local 487 Health Fund

National Labor Relations Board - Board Decisions

Sep 15, 1992

308 N.L.R.B. 805 (N.L.R.B. 1992)

805
308 NLRB No. 111
OPERATING ENGINEERS LOCAL 487 HEALTH FUND
1 All dates are in 1989 unless otherwise indicated.
2 In Roane-Anderson Co., 95 NLRB 1501, 1503 (1951), the Board
noted that the ‘‘decisive elements in establishing an employer-em-
ployee relationship are complete control over the hire, discharge, dis-
cipline, and promotion of employees, rates of pay, supervision, and
determination of policy matters.’’
International Union of Operating Engineers Local
487 Health and Welfare Trust Fund and Heavy
Construction Association of South Florida, Inc.
Case 12–CA–13516
September 15, 1992
DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
DEVANEY AND OVIATT
On February 5, 1992, Administrative Law Judge
Lawrence W. Cullen issued the attached decision. The
Respondent filed exceptions and a supporting brief,
and the General Counsel and Charging Party filed an-
swering briefs.
The National Labor Relations Board has delegated
its authority in this proceeding to a three-member
panel.
The Board has considered the decision and the
record in light of the exceptions and briefs and has de-
cided to affirm the judge’s rulings, findings, and con-
clusions only to the extent consistent with this Deci-
sion and Order.
The judge found that the Respondent (or Fund) vio-
lated Section 8(a)(3) and (1) of the Act by terminating
the benefits of employees because they worked for em-
ployers who had withdrawn recognition from the
Union. The Respondent asserts that it is not subject to
the Board’s jurisdiction because it is not an ‘‘em-
ployer’’ within the meaning of Section 2(2) of the Act.
For the reasons stated below, we agree with the Re-
spondent that employer status has not been established
in this proceeding. Accordingly, we shall dismiss the
complaint.
I.
The Respondent is a multiemployer employee wel-
fare benefit plan established in 1969 by agreement of
Local 487, International Union of Operating Engineers,
AFL–CIO (the Union) and contractor-employers rep-
resented by the Heavy Construction Association of
South Florida, Inc. (the Association). The plan is sub-
ject to the Employee Retirement Income Security Act
of 1974 (ERISA), and is administered by a board of
trustees which consists of an equal number of union
and employer representatives. The chairman of the
board of trustees is Minous Shears. Shears also serves
as the Union’s business manager and chief executive
officer.
The declaration of trust, signed by the trustees, pro-
vides that they may ‘‘employ or contract’’ for the serv-
ices of an administrative manager. The Respondent
contracted with American Administrators to administer
the Fund’s day-to-day operations. Sue Michael, Amer-
ican Administrators’ senior vice president and account
representative for the Fund, testified that the Fund had
been a client of American Administrators for 7 or 8
years. Prior to August 8, 1989,1 Michael handled all
inquiries regarding benefit eligibility from both em-
ployers and employees.
In May, five employers represented by the Associa-
tion withdrew recognition from the Union. Michael
testified that Shears asked her to obtain an opinion
from the Fund’s attorney as to whether the employees
of the companies that ‘‘had gone nonunion’’ could
continue to receive health and welfare benefits from
the Fund. Michael contacted the Fund’s attorney and
told him that there were several employers who were
no longer signatories to contracts with the Union and
that the employees who continued to work for those
employers were not on the Union’s work list. She
asked him whether the employees’ benefits should
continue on the basis of their accumulated hours, or
should be discontinued because they were no longer
available for work. The attorney replied that the bene-
fits could be terminated. On August 9, Michael termi-
nated the benefits of all employees who were working
for nonunion employers, retroactive to June 1.
In finding that the Board has jurisdiction over the
Respondent, the judge rejected the Respondent’s con-
tention that it is not a statutory ‘‘employer’’ because
it has no employees. While expressing ‘‘no opinion on
the validity of the Respondent’s theory that there can-
not be a statutory employer without a statutory em-
ployee,’’ the judge found that the ‘‘factual premise of
the argument has not been established’’ because Mi-
chael and/or American Administrators was an ‘‘em-
ployee’’ of the Fund.
Contrary to the judge, we find, for the reasons set
forth in section II below, that Michael and/or Amer-
ican Administrators is not an ‘‘employee’’ of the Re-
spondent. Accordingly, unlike the judge, we find it
necessary to address the Respondent’s theory that a
statutory employer must employ a statutory employee.
For the reasons set forth in section III below, we agree
with the Respondent.
II.
The Board has historically applied the common law
right-of-control test to determine whether one is an
employee within the meaning of Section 2(3).2 This
test has been articulated by the Board as follows:
Under this test, an employer-employee relation-
ship exists where the person for whom the serv-
ices are performed reserves the right to control
806 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
3 Restatement 2d, Agency § 220(2) lists the factors to be consid-
ered in determining whether one acting for another is a servant or
an independent contractor. These factors include:
(a) the extent of control which, by the agreement, the master
may exercise over the details of the work;
(b) whether the one employed is engaged in a distinct occupa-
tion of business;
(c) the kind of occupation, with reference to whether, in the
locality, the work is usually done under the direction of the em-
ployer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instru-
mentalities, tools, and the place of work for the person doing
the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether the work is part of the regular business of the em-
ployer;
(i) whether the parties believe they are creating the relation of
master and servant; and
(j) whether the principal is or is not in business.
4 In his answering brief, the General Counsel acknowledges that
‘‘the Fund may not directly employ employees,’’ but asserts that ‘‘it
does employ individuals—the six trustees who manage the Fund.’’
However, the General Counsel provides no authority for the propo-
sition that the Board may consider the Fund to be an ‘‘employer’’
on the basis of its employment of the six managing trustees, and the
General Counsel’s view is inconsistent with our determination infra
that a statutory employer must employ a statutory employee. Accord-
ingly, we find no merit in the General Counsel’s contention.
not only the end to be achieved, but also the
means to be used in reaching such end.
Deaton Truck Lines, 143 NLRB 1372, 1377 (1963),
enfd. 337 F.2d 697, 698–699 (5th Cir. 1964). This test
is based on common law agency principles, and par-
allels the nonexhaustive criteria for identifying the
master-servant relationship as set forth in Section
220(2) of the Restatement (Second) of Agency.3 The
application of this test is not a mechanical one, but de-
pends on the facts of each case.
In finding that Michael and/or American Adminis-
trators was an employee of the Fund, the judge noted
that the entity for whom Michael and/or American Ad-
ministrators performed services was the Fund. He fur-
ther noted that the declaration of trust gave the trustees
final authority over the administrator and found noth-
ing in the declaration giving the administrator authority
to terminate benefit payments. He further found that
Michael acted on the request of trustee Shears in seek-
ing the opinion of the Fund’s attorney, thereby initiat-
ing the termination of plan benefits, without consulting
her own superior in American Administrators.
Applying the right-of-control test to the facts of this
case, we find, contrary to the judge, that Michael
and/or American Administrators is not an employee of
the Fund. In particular, we rely on the following evi-
dence.
First, American Administrators was free to make all
decisions concerning the hiring and firing of its per-
sonnel, without input or approval of the Fund trustees.
There is no evidence in the record that the Fund trust-
ees exercise any control over American Administra-
tors’ decisions to discipline, promote, supervise, or
compensate its personnel, including Senior Vice Presi-
dent Michael. Indeed, Michael testified that she consid-
ers John Day, American Administrators’ president and
chief operating officer, to be her ‘‘boss.’’
Second, American Administrators was free to make
all decisions in the routine administration of the Fund,
including participant eligibility and employer contribu-
tions, without input, approval or ratification by the
trustees. As account representative, Michael testified
that she was responsible for overseeing the accounts,
computers, and a portion of the claims. American Ad-
ministrators used its own methods, consistent with the
requirements set out in the plan documents, and was
not required to seek regular direction from the Fund
with respect to its duties. Although Shears requested
Michael to obtain the Fund attorney’s advice regarding
the eligibility of the nonunion employees, she termi-
nated the benefits of such employees based on the at-
torney’s advice and without further consultation with
or approval from the trustees.
Third, American Administrators provided and main-
tained its own computers and equipment in administer-
ing the day-to-day operations of the Fund and operated
from its own offices in Miami, Florida. American Ad-
ministrators received all mail for the Fund at this ad-
dress and handled all inquiries regarding eligibility at
this office.
Fourth, the Fund did not withhold taxes for Amer-
ican Administrators or any of its personnel.
Finally, during the 7 years that American Adminis-
trators serviced the Fund, it remained free at all times
to service other clients.
On the basis of the foregoing, we find that Michael
was employed solely by American Administrators (and
was not also an ‘‘employee’’ of the Fund) because the
Fund exercised no control over her terms and condi-
tions of employment. We further find that American
Administrators had an independent contractor relation-
ship with the Fund (not an employee-employer rela-
tionship) because American Administrators controlled
the manner and means of performing their tasks. The
‘‘final authority’’ of the Fund trustees, relied on by the
judge, is directed toward accomplishing the end to be
achieved, i.e., the distribution of health and welfare
benefits to employees entitled to receive them. Accord-
ingly, we conclude, contrary to the judge, that jurisdic-
tion may not be asserted over the Respondent on the
ground that Michael and/or American Administrators
was an ‘‘employee’’ of the Fund within the meaning
of Section 2(3) of the Act.4 Therefore, it is necessary
to turn to the issue the judge did not address—whether
807OPERATING ENGINEERS LOCAL 487 HEALTH FUND
5 Previous cases finding that welfare and pension funds are statu-
tory employers are distinguishable. In those cases, the funds at issue
had employees of their own. In none of the cases was a fund
charged with an unfair labor practice when it had no employees of
its own. See, e.g., Chain Service Restaurant, 132 NLRB 960 (1961),
enfd. in relevant part 302 F.2d 167 (2d Cir. 1962) (fund employed
five employees to perform administrative tasks); Miners’ Welfare,
Pension & Vacation Funds, 256 NLRB 1145 (1981) (fund employed
administrator and bookkeepers); Joint Industry Board of the Elec-
trical Industry, 238 NLRB 1398 (1978) (fund employed dentists and
dental clerical employees); Teamsters Health & Welfare Fund I, 233
NLRB 814 (1977) (fund violated Act with regard to its own employ-
ees).
The judge relied on Chain Service Restaurant, supra, in finding
that the Fund met the Board’s jurisdictional standards. In that case,
the Board found that the trust fund met the Board’s discretionary
commerce standards based on the fund’s purchase of insurance poli-
cies, valued in excess of $50,000, for employers who met the
Board’s jurisdictional standards. In that case, the Board did not have
to determine whether a fund must employ employees to be a statu-
tory employer because there, unlike here, the fund had employees of
its own.
6 Black’s Law Dictionary (5th ed. 1979) defines ‘‘employer’’ as
follows:
Employer. One who employes the services of others; one for
whom employees work and who pays their wages or salaries.
The correlative of ‘‘employee.’’
the Fund is a statutory employer despite the absence
of any statutory employees.
III.
Section 8(a) of the Act prohibits unfair labor prac-
tices committed by ‘‘an employer.’’ Section 2(2) of the
Act defines ‘‘employer’’ as follows:
The term ‘‘employer’’ includes any person acting
as an agent of an employer, directly or indirectly,
but shall not include the United States or any
wholly owned Government corporation, or any
Federal Reserve Bank, or any State or political
subdivision thereof, or any person subject to the
Railway Labor Act, as amended from time to
time, or any labor organization (other than when
acting as an employer), or anyone acting in the
capacity of officer or agent of such labor organi-
zation.
This definition is not particularly helpful in resolving
the issue of whether an entity must employ statutory
employees to be a statutory employer. Nor has the
Board previously addressed this question.5
However, the legislative history of Section 2(2)
gives a clear indication that Congress contemplated
that an ‘‘employer’’ would employ ‘‘employees.’’ As
noted above, excluded from the definition of ‘‘em-
ployer’’ is ‘‘any labor organization (other than when
acting as an employer).’’ In Office Employees Local 11
v. NLRB, 353 U.S. 313, 317–318 (1957), the Supreme
Court stated that this phrase had its origin in a Senate
report which offered the following explanation for it:
The reason for stating that ‘‘employer’’ ex-
cludes ‘‘any labor organization, other than when
acting as an employer’’ is this: In one sense every
labor organization is an employer, it hires clerks,
secretaries, and the like. In its relations with its
own employees, a labor organization ought to be
treated as an employer, and the bill so provides.
[Id., quoting S. Rep. No. 1184, 73d Cong., 2d
Sess. 4.]
Thus, Congress believed that a union, which it gen-
erally excluded from the definition of an employer,
should be treated as an employer when it assumed the
attributes of an employer, i.e., it had ‘‘relations with
its own employees’’ such as ‘‘clerks, secretaries, and
the like.’’
Furthermore, in Allied Chemical & Alkali Workers
v. Pittsburgh Plate Glass Co., 404 U.S. 157 (1971),
the Court examined the legislative history of a related
statutory term (‘‘employee’’) and stated that Congress
did not intend that it be ‘‘stretched beyond its plain
meaning.’’ Id. at 166. The Court noted that in 1947
Congress amended the Act to exclude independent
contractors from the definition of ‘‘employee’’ and
quoted from a House report explaining the amendment:
In the law, there always has been a difference,
and a big difference, between ‘‘employees’’ and
‘‘independent contractors.’’‘‘Employees’’ work
for wages or salaries under direct supervision.
. . . It is inconceivable that Congress, when it
passed the act, authorized the Board to give to
every word in the act whatever meaning it
wished. On the contrary, Congress intended then,
and it intends now, that the Board give to words
not far-fetched meanings but ordinary meanings.
[Id. at 167–168, quoting H. Rep. No. 245, 80th
Cong., 1st Sess. 18 (1947).]
The Court held in Pittsburgh Plate Glass that the ‘‘or-
dinary meaning’’ of ‘‘employee’’ does not include re-
tired workers because they have ceased to work for an-
other for hire.
Similarly, in the instant case, the ‘‘ordinary mean-
ing’’ of ‘‘employer’’ does not include an entity that
has no employees. Rather, the plain meaning of ‘‘em-
ployer’’ is one who employs employees to work for
wages and salaries.6 Indeed, we believe it would be
‘‘far fetched,’’ and therefore contrary to congressional
intent, to hold that an ‘‘employer’’ need not employ
any employees.
808 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
7 In his answering brief, the General Counsel argues for the first
time that jurisdiction could be asserted over the Fund on various
agency theories. Thus, the General Counsel claims that the Fund is
an agent of the employers that contributed to the Fund and that
Union Trustee/Union Business Manager Shears was acting as an
agent of the Union in causing the allegedly discriminatory termi-
nation of benefits. We find that these theories are not properly be-
fore us for consideration because they were neither alleged in the
complaint nor fully litigated at the hearing. As the judge stated in
sec. III,C, par. 1 of his decision: ‘‘The complaint alleges that the
Fund itself is an employer engaged in commerce and that it has
committed unfair labor practices. This case therefore does not
present the issues of whether the Fund is an agent of an employer
or a labor organization.’’ We note that the General Counsel did not
except to this or any other part of the judge’s decision.
Citing, inter alia, Motor Car Dealers Assn., 225 NLRB 1110
(1976), the General Counsel also points out that the Board has held
multiemployer associations to be employers even though they had no
employees of their own. However, as the General Counsel acknowl-
edges, this precedent is based on the theory that when a multiem-
ployer association acts as bargaining agent for its employer-mem-
bers, the association falls within that part of Sec. 2(2) that refers to
a ‘‘person acting as an agent of an employer.’’ For the reasons stat-
ed above, we find that such an agency theory for asserting jurisdic-
tion over the Fund has not been timely raised in this case.
1 All dates are in 1989 unless otherwise specified.
2 G.C. Exh. 1(a).
3 G.C. Exh. 1(b).
4 G.C. Exhs. 1(c), 1(h).
Finally, we note that the Supreme Court recently
stated that when a statute, in that case ERISA, does
not helpfully define the term ‘‘employee,’’ the Court
presumes that Congress means a common law agency
definition unless it indicates otherwise. Nationwide
Mutual Insurance Co. v. Darden, 112 S.Ct. 1344, 60
U.S.L.W. 4242, 4243 (1992). In Darden, the Court
construed the term ‘‘employee’’ to incorporate the tra-
ditional agency law criteria for identifying master-serv-
ant relationships. Here, similarly, the statute does not
helpfully define ‘‘employer’’ and, therefore, it would
seem appropriate to consider agency law principles.
The Restatement of Agency defines ‘‘Master’’ as ‘‘a
principal who employs an agent to perform service in
his affairs and who controls or has the right to control
the physical conduct of the other in the performance
of the service.’’ A ‘‘servant’’ is ‘‘an agent employed
by a master to perform service in his affairs’’ and is
controlled or subject to the right to control by the mas-
ter. See Restatement 2d, Agency § 2 (1958). Thus,
drawing on these agency law definitions, we find that
an ‘‘employer’’ is one who employs an agent to per-
form services and retains the right to control the man-
ner and means by which the result is to be accom-
plished. In other words, an ‘‘employer’’ employs an
‘‘employee.’’
In sum, consistent with congressional intent, the
plain meaning of the term ‘‘employer,’’ and traditional
agency principles, we find that an ‘‘employer’’ is one
who employs ‘‘employees’’ to work for compensation.
Inasmuch as we have found that, so far as the record
here shows, the Fund does not employ any statutory
employees, we conclude that the General Counsel has
not shown that it is a statutory employer, and we shall
dismiss the complaint for lack of jurisdiction.7 We ex-
press no view on the merits of the unfair labor practice
allegations of the complaint.
ORDER
The complaint is dismissed.
Maria Kaduck-Perez, Esq. and Eduardo Soto, Esq., for the
General Counsel.
Joseph H. Kaplan, Esq. and Angela Nixon, Esq. (Kaplan &
Bloom, P.A.), of Miami, Florida, for the Respondent.
W. Russell Hamilton III, Esq. (Morgan, Lewis & Bockius),
of Miami, Florida, for the Charging Party.
DECISION
STATEMENT OF THE CASE
LAWRENCE W. CULLEN, Administrative Law Judge. This
case was heard by me in Miami, Florida, on October 7,
1991. Thereafter, the General Counsel, the Respondent, and
the Charging Party filed briefs. On the entire record, includ-
ing my observation of the demeanor of the witnesses, I make
the following
FINDINGS OF FACT AND CONCLUSIONS OF LAW
I. FILING AND SERVICE OF THE CHARGE, AND ISSUANCE
OF THE COMPLAINT
The record contains a copy of an unfair labor practice
charge filed on August 18, 1989,1 by Heavy Construction
Association of South Florida, Inc. (the Association), alleging
that ‘‘I.U.O.E. Local 487 Health and Welfare Trust Fund’’
(Respondent or the Fund), with a listed address of ‘‘1637
N.W. 27th Avenue, Miami, FL 33125,’’ had violated Section
8(a)(3) of the National Labor Relations Act (the Act).2 The
record also contains a copy of a standard cover letter signed
by the Regional Director for Region 12 sent to the addressee
listed above by certified mail, with enclosure of a copy of
the charge. Attached to the cover letter is a postal receipt
card indicating the same address and signed by a purported
agent.3
The complaint issued on May 31, 1991, and an amend-
ment on October 4, 1991.4 It alleges that Respondent, a trust
fund created pursuant to a collective-bargaining agreement
between the Association and International Union of Operat-
ing Engineers Local 487 (the Union), terminated the benefits
of certain employees on August 9, 1989, retroactive to June
1, 1989, because the employees were employed by employ-
ers which no longer had a collective-bargaining relationship
with the Union. The complaint asserts that such action was
inherently destructive of rights guaranteed by Section 7 of
the Act, and discriminated against the employees in violation
of Section 8(a)(1) and (3) of the Act.
The complaint also alleges and the answer denies that the
charge had been served on Respondent.
The Fund was established pursuant to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
That statute provides that service of legal process upon a
809OPERATING ENGINEERS LOCAL 487 HEALTH FUND
5 29 U.S.C. § 1132(d). The statute reads:
An employee benefit plan may sue or be sued under this title
(ERISA) as an entity. Service of summons, subpoena, or other
legal process of a court upon a trustee or an administrator of
an employee benefit plan in his capacity assuch shall constitute
service upon the employee benefit plan. In a case where a plan
has not designated in the summary plan description of the plan
an individual as agent for the service of legal process, service
upon the Secretary shall constitute such service.
6 G.C. Exh. 4, p. iii.
7 G.C. Exh. 10.
8 G.C. Exh. 2, p. 15.
9 Sec. 102.111, Board’s Rules and Regulations.
10 R. Br.
11 Bob Young, Inc. (Bob Young), Central Florida Equipment Rent-
al (Central Florida), Mantell Engineering Contractors, Inc. (Mantell),
Marks Bros. Co. (Marks), Rose Septic Tank Co., Inc. d/b/a Rose En-
gineering Contractors (Rose), and Williams Paving (Williams).
12 Bob Young, Central Florida, Rose, Marks, and Williams.
13 G.C. Exh. 5.
14 At the time of hearing, the Fund had another administrator.
15 See infra sec. B,2,a.
16 G.C. Exh. 10.
17 G.C. Exh. 12.
18 Of the employees whose benefits were terminated, 53 were the
subject of internal union charges resulting in their suspension from
membership and fines of $2000.
trustee or an administrator of an employee benefit plan con-
stitutes service upon the employee benefit plan.5
A Summary Plan Description (SPD) of the Fund states
that the agent for service of process shall be:
Board of Trustees
American Administrators
1637 N.W. 27th Avenue
Miami, Florida 331256
In response to a request for advice from the administrator,
the Fund’s attorney wrote a letter to it ‘‘c/o American Ad-
ministrators, Inc.,’’ at the same address.7
A ‘‘Restated Agreement and Declaration of Trust’’ (the
Declaration), signed by the trustees of the Fund, provides
that they may ‘‘employ or contract’’ for the services of an
administrative manager8 and the record establishes that the
manager was American Administrators. The Board’s Rules
provide in relevant part that service of a charge may be made
by certified mail and that the return receipt constitutes proof
of service.9
The Fund was represented by counsel at the hearing, and
did not claim surprise or lack of service. Respondent’s brief
states no reason for its denial that proper service of the
charge was made.10 In the absence of any statement of posi-
tion or evidence to the contrary, I find that the charge was
mailed by certified mail, and was received by the Fund’s ad-
ministrator, which under ERISA constitutes service on the
Fund. The Board’s Rules do not require service on the trust-
ees of such a fund. The Board has long held that procedural
requirements regarding proof of service should be liberally
construed, and that when charges have in fact been received,
technical defects in the form of service do not affect the va-
lidity of service. Control Services, 303 NLRB 481 (1991).
I therefore conclude that the charge was properly filed and
served on Respondent.
II. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Termination of Benefits
The record shows that six companies11 had longstanding
collective-bargaining relationships with the Union, which
provided for their making contributions to an employee bene-
fit fund. In April 1989, five of them12 designated the Asso-
ciation as their collective-bargaining representative and, in
May 1989, withdrew recognition from the Union. The sixth
company, Mantell, has not executed a collective-bargaining
agreement with the Union.13 The Union picketed these com-
panies. The Fund continued to pay benefits to the employees
of these companies until August 9.
American Administrators’ senior vice president and ac-
count representative for the Fund was Sue Michael. She testi-
fied that, the Fund had been a client of American Adminis-
trators for 7 or 8 years.14 Prior to August 8, a representative
of one of the companies that had withdrawn recognition from
the Union (Marks) called Michael and asked her what would
happen to the insurance benefits of his employees. Michael
replied that they would continue to be covered ‘‘as long as
their hours were sufficient.’’15 Individual employees made
similar inquiries.
There were six trustees of the Fund, three from the Union
and three from the employers. The chairman of the board of
trustees was Minous Shears, who was also the Union’s busi-
ness manager and chief executive officer. Sue Michael testi-
fied that Shears called her and asked her to get an opinion
from the Fund’s attorney as to whether the employees of the
six companies that ‘‘had gone nonunion’’ could continue to
receive benefits from the Fund. Michael did not discuss the
matter with any other trustee. She asked the Fund’s attorney
whether benefits for such employees should continue on the
ground that they had ‘‘accumulated hours,’’ or should be dis-
continued on the ground that they were no longer ‘‘available
for work.’’ Counsel replied by letter dated August 8, 1989,
that the benefits could be terminated.16 Michael testified that
this interpretation was made by counsel and by Shears.
The Union sent Michael a list of 56 names of employees
who were working for nonunion companies.17 Michael termi-
nated the benefits of all employees on the list, retroactive to
June 1, and sent letters dated August 9 to those for whom
she had a correct address.18 She did so solely on the basis
of the list provided to her by Shears, and did not discuss the
matter with any other trustee nor conduct an independent in-
vestigation.
Michael was asked the reason for the terminations, and an-
swered that she was told that the employees were no longer
‘‘available for work.’’ Asked the reason that they were thus
unavailable, Michael responded that the employees ‘‘were
working for a nonunion company, but the main reason was
that they were no longer available for work.’’ Michael testi-
fied that this was the first time that an employee’s benefits
had been terminated because he was not working for a con-
tributing employer.
The parties stipulated that at least one of the employers
that had withdrawn recognition from the Union began cover-
ing the alleged discriminatees under an existing health plan.
810 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
19 G.C. Exh. 4, pp. (i)-(vii).
20 Ibid.
21 The following examples are given in the SPD (G.C. Exh. 4, p.
(iii):
600 Hours During Eligibility
Contribution Period Month
February-July January
March-August February
April-September March
22 Ibid.
23 The SPD (ibid.) gives the following examples:
Less than 600 hours Termination
During Contribution Date
Period
February-July January 1
March-August February 1
April-September March 1
24 Ibid., p. vii.
25 Ibid., p. 8. This section does not state what constitutes ‘‘suffi-
cient employer contributions.’’
26 G.C. Exh. 2, p. 5.
27 Id. p. 3.
B. The Eligibility Rule, its Interpretation
and Application
1. Documentary evidence of the eligibility requirements
The Fund has been in existence for many years. Although
some of the witnesses testified about the intentions of the
draftsmen of other funds, none testified about the intentions
of draftsmen of the Fund in issue in this proceeding.
The language describing the Fund is set forth in several
documents. One is the declaration described above, which is
signed by the Fund’s six trustees, together with an amend-
ment.19
The record also contains a ‘‘Group Insurance Program and
Summary Plan Description’’ (SPD). This document contains
two sections, each stating that it is not a part of the ‘‘Certifi-
cate of Insurance.’’20
Section 2 of the SPD has a subsection entitled ‘‘Eligibility
Rules,’’ a new employee becomes eligible for benefits at the
beginning of his seventh month of employment with a con-
tributing employer who has made a minimum of 800 hours
in contributions during the prior 6-month period.
Continued eligibility for a particular month—the ‘‘eligi-
bility month’’—is established by the employer’s supplying at
least 600 hours of contributions during the ‘‘contribution pe-
riod.’’ The latter is found by counting backward 5 months
from the eligibility month, and then another 6 months.21 The
rule provides that ‘‘[a]ll eligible employees who satisfy a
minimum hour requirement of 600 hours during the cor-
responding six month contribution period will continue to be
eligible during the respective eligibility month.’’22
Section two also contains a subsection entitled ‘‘Termi-
nation.’’ This provides that ‘‘[e]ligibility for benefits will ter-
minate on the first day of the eligibility month following the
corresponding contribution period in which the employee has
not accumulated 600 hours,’’ or, if earlier, the date the em-
ployee enters full-time military service, or the date ‘‘the Plan
terminates.’’23
The right to ‘‘terminate’’ a plan is reserved to the board
of trustees and to the employers and the Union who are sig-
natories to the plan’s trust agreement. This may be done re-
garding a particular employer when he ceases to be a con-
tributing employer or is declared by the board of trustees to
be in default. A particular employee may be terminated when
he ceases to be an ‘‘eligible’’ employee. In the event of ter-
mination, the board of trustees will provide that all remaining
plan assets be used in a manner which best carries out the
basic purpose for which the plan was established.’’24
A preamble to the ‘‘Certificate of Insurance’’ (the Certifi-
cate) states that it contains the ‘‘essential features’’ of the
policy, but ‘‘is not and will not become the contract of insur-
ance.’’ The language interpreted by the Fund’s attorney
comes from the certificate and reads as follows:
ELIGIBLE CLASS OR CLASSES OF EMPLOYEES
You are eligible for insurance if you are an employee
of a contributing employer and perform work which is
under the jurisdiction of and under the terms of the col-
lective bargaining agreements creating the International
Union of Operating Engineers Local Union 487 Health
and Welfare Trust Fund, provided that sufficient em-
ployer contributions are made on your behalf.
. . . .
TERMINATION OF INSURANCE (EMPLOYEES)
Your insurance ends when the first of these events
takes place:
. the date the group policy ends.
. the date the group policy is changed to end insur-
ance for the class to which you belong.
. the premium payments for your insurance are dis-
continued.
. the date you enter the armed services, or
. the date you fail to meet any continuing eligibility
requirements.25
The declaration signed by the trustees states that the Fund
was created for the benefit of ‘‘participants and their bene-
ficiaries.’’26 A ‘‘participant’’ is defined as ‘‘any Employee
or former Employee of an Employer who is or may become
eligible to receive a benefit if any type.’’27
2. Interpretations of and justification for the eligibility
requirements, and conclusions
a. Summary of the evidence
Pursuant to Trustee and Business Manager Shears’ request,
Plan Administrator Michael sent the Fund’s attorney a copy
of the language of the certificate, quoted above. There is no
evidence that she sent a copy of the language on the same
subject from the SPD. The letter from the Fund’s attorney
quotes the certificate language, and continues:
Apparently, there are employees who are now working
for employers which are not contributing employers or
who are not available for work with contributing em-
ployers. The question is, can the Trust Fund terminate
benefits for such employees (of course, with COBRA
rights staying in effect).
811OPERATING ENGINEERS LOCAL 487 HEALTH FUND
28 G.C. Exh. 10.
29 Cf. fn. 27, supra, and related text.
30 29 U.S.C. § 1021(c)).
31 G.C. Exh. 14.
32 Ibid.
33 Full-time military service or ‘‘plan termination’’ also ended ben-
efits.
In my opinion, the answer to this question is affirma-
tive. The Trust Fund may terminate benefits under these
conditions.28
Michael was asked to explain the same language. She tes-
tified that, in order to determine whether an employee was
eligible, she would have to consider the hours of contribu-
tions specified in section 2 of the SPD. Michael was unable
to find the requirement of ‘‘available for work,’’ or a rule
that an employee working for a noncontributing employer
was not available for work, anywhere except in the attor-
ney’s letter. She affirmed that an employee who had been
laid off and was not working anywhere would be entitled to
benefits provided that he had the required hours during the
contribution period. She gave similar advice to one of the
companies that withdrew recognition from the Union.
Union Business Manager/Trustee Shears declared that he
considered an employee ‘‘available to work’’ if the employee
signed the Union’s out-of-work list. If the employee did not
do so, he was not entitled to benefits, regardless of the num-
ber of hours in his contribution period. Shears attempted to
get several of the employees who went with nonunion com-
panies to sign the out-of-work list, without success.
Shears further testified that he found jobs for some of the
employees of the companies that withdrew recognition from
the Union. These jobs were in other cities, and with employ-
ers who themselves did not make contributions to the Fund,
although they had collective-bargaining agreements with sis-
ter locals of Local 487. Shears explained this action on the
ground that the individuals were unemployed, and had signed
the Union’s out-of-work list. However, Shears further stated
that ‘‘at least one’’ of these employees transferred to another
union and was taken off the out-of-work list. Shears believed
but was not certain that his ‘‘6 month eligibility had ex-
pired.’’ The administrator was not notified that the employee
was no longer on the out-of-work list.
Leon Joyner, an actuary and the Fund’s consultant, testi-
fied that he advised the trustees to ‘‘terminate’’ the plans of
the noncontributing members. According to Joyner, this ad-
vice was given to the trustees in September 1990, i.e., after
the benefits of the alleged discriminatees had already been
terminated.
Joyner asserted an economic reason for the termination—
the position of the remaining participants would be better if
the rights of those working for noncontributing employers
were terminated. Joyner claimed that when employees
stopped working for contributing employers, they ‘‘ceased to
be participants.’’29
Joyner stated his ‘‘understanding’’ that the plans of the
noncontributing employers had been terminated. However, he
was unaware of any filings with the Secretary of Labor with
respect to such terminations or that any action had been
taken by the Board of Trustees to declare a particular em-
ployer in default. ERISA requires an administrator of a fund
that is ‘‘winding up its affairs (without regard to the number
of participants remaining in the plan’’ to file a report with
the Secretary of Labor.30 The Fund’s annual return for the
year ending March 31, 1990, filed pursuant to ERISA and
the Internal Revenue Code, denies that the plan had been ter-
minated or amended, and denies that there had been any ret-
roactive reduction of benefits of a participant as a result of
amendment of the plan.31 There is no evidence of termi-
nation of the plan for any employer in Michael’s testimony.
I conclude that there was no such formal termination.
Joyner and another actuary, James McKeough, testified
that the purpose of terminating noncontributing employers is
to preserve the economic viability of the plan. They asserted
that individuals whose benefits are scheduled to terminate
would tend to claim benefits in greater amounts if given a
6-month period of entitlement after which their right to bene-
fits would terminate. Other than a recitation of what hap-
pened to a personal friend of McKeough, there is no objec-
tive evidence to support this claim. It may be noted that each
employee had to be credited with 800 hours of contributions
during the first 6 months of employment before becoming
entitled to benefits. The plan’s tax return for the year ending
March 31, 1990, shows an increase in net assets of over
$150,000 to just under $1.5 million.32 Minous Shears, a
trustee for many years, could not recall whether the eligi-
bility rule was adopted for economic reasons.
b. Conclusions
I conclude that the eligibility rules applied by American
Administrators were those set forth in the SPD rather than
the certificate. Plan Administrator Sue Michael explicitly tes-
tified that she would have to consider the contribution hours
required by the SPD in order to determine whether an em-
ployee was eligible for benefits. These contribution require-
ments are not set forth in the certificate.
Michael’s answer to an employer who inquired about ter-
mination and her testimony at the hearing show that she ap-
plied the SPD rules to continued eligibility and termination
of benefits. Thus, the SPD continued eligibility as long as the
employee had the required contribution hours, and terminated
it only when these requirements were not met.33 Consistent
with these rules, Michael testified that an employee who had
been laid off would continue to be covered as long as he had
the required contribution hours. Trustee Chairman Shears, in
commenting on a member who had transferred to another
union and thus left the out-of-work list, stated that he did not
know whether the individual’s ‘‘6 months of eligibility had
expired.’’
It follows that the opinion of the Fund’s attorney applied
to rules which were not actually being utilized by the plan’s
administrator. The differences between the SPD and certifi-
cate requirements are significant. In place of the SPD provi-
sion that continued eligibility is established by the employ-
er’s supplying the required contributions during the applica-
ble period, the certificate incorporates requirements about
working under the Union’s jurisdiction pursuant to a collec-
tive-bargaining agreement, provided that the employer sup-
plies ‘‘sufficient contributions’’—but fails to state what they
are.
In place of the simple SPD provision that benefits termi-
nate on the first day of the sixth month following the ab-
sence of sufficient contributions during the contribution pe-
812 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
34 G.C. Exh. 1(c).
35 G.C. Exh. 1(g).
36 G.C. Exh. 1(h).
37 G.C. Exh. 14, p. 6 of Form 5500, p. 3 of auditor’s report.
38 G.C. Exh. 2, p. 12.
39 Ibid.
40 Id. p. 15.
41 Office administration, preparation of reports, collection of con-
tributions, and custody of documents. Ibid.
42 H. Rep. No. 245, 80th Cong., 1st Sess. 18 (1947), cited in
Chemical Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 167
(Br. Ct., 1971), R. Br. p. 16.
riod, the certificate terminates benefits on the occurrence of
various events, including failure to meet ‘‘any continuing eli-
gibility requirement.’’ Respondent ties this language to the
certificate’s eligibility requirements, and concludes that the
alleged discriminatees were not eligible because they were
no longer working under the jurisdiction of the Union pursu-
ant to a contract creating the Fund. However, this was not
the rule administered by the Fund’s administrator.
As Shears admitted, benefits were continued for employees
who worked for out-of-state employers who did not contrib-
ute to the Fund. This is inconsistent with Respondent’s the-
ory of eligibility. Shears’ explanation— that these employees
signed the Union’s out-of-work list and were thus ‘‘available
for work’’—is a rationalization and apparently is the source
of the Union’s strained ‘‘out-of-work’’ interpretation of the
certificate’s language. Neither the ‘‘available for work’’ lan-
guage nor signing an out-of-work list as evidence of such
availability appears anywhere in the SPD or the certificate.
Further, the evidence shows that the Fund did not consist-
ently apply the rule which it announced at the hearing. In
fact, there is no evidence that it applied the rule to anybody
except the alleged discriminatees herein.
The evidence is insufficient to establish that any of the
events terminating benefits under the SPD or the certificate
took place. It is also insufficient to establish that the alleged
discriminatees’ benefits were terminated to maintain the eco-
nomic integrity of the Fund.
Fund Consultant Joyner testified that he was unaware of
any termination of benefits before or after 1989 because the
employee went to work for a nonunion employer. Sue Mi-
chael testified that this was the first time that an employee’s
benefits had been terminated because he was not working for
a contributing employer. Michael further affirmed that the
benefits were terminated because the employees were work-
ing for nonunion companies and also because they were un-
available for work. The evidence supports her first conclu-
sion, but not the second.
III. RESPONDENT’S STATUS AS A STATUTORY EMPLOYER
A. Summary of the Pleadings and Evidence
The complaint34 alleges and Respondent’s answer35 admits
that during calendar year 1988 Respondent received mone-
tary contributions in excess of $50,000 annually from the
employers, including Williams Paving; that the Fund has pro-
vided services valued in excess of $50,000 to said employers,
and that Williams Paving, a Florida corporation with a place
of business in Miami, Florida, has been engaged in the busi-
ness of paving, grading, and site preparation. At the hearing,
Respondent amended its answer so as to deny that it pro-
vided services to employers.
The amendment to the complaint36 alleges and Respondent
stipulated that the employers, corporations with places of
business in south Florida, have been engaged as contractors
in the construction business, and that during calendar year
1988 they purchased and received at their Florida facilities
goods and materials valued in excess of $50,000 directly
from suppliers located outside the State of Florida.
Respondent stipulated that during calendar year 1988, two
of the employers each contributed in excess of $50,000 to
the Fund, pursuant to the collective-bargaining agreement.
Other evidence establishes that in each of the two fiscal
years ending March 31, 1989, and 1990, Respondent re-
ceived in excess of $1 million in contributions from employ-
ers and in excess of $100,000 in interest income.37
Minous Shears testified that the Fund never had any em-
ployees or paid any salaries. Sue Michael affirmed that she
was employed by American Administrators, and that the
Fund had been a ‘‘client’’ of American Administrators for 7
or 8 years. She identified a superior officer of American Ad-
ministrators.
The declaration states in relevant part:
Section 5.1 Conduct of Trust Business. The Trustees
shall have general supervision of the operation of this
Trust Fund and shall conduct the business and activities
of the Trust Fund in accordance with this Trust Agree-
ment and applicable law. The Trustees shall hold, man-
age and protect the Trust Fund and collect the income
therefrom and contributions thereto.38
The trustees have authority to procure insurance for par-
ticipants in the plan,39 and as noted, the employers provide
contributions on behalf of the employees.
The declaration gives the trustees authority ‘‘to employ or
contract for’’ the services of an individual, firm or corpora-
tion, to be known as ‘‘administrative manager.’’40 The latter
has designated duties, including those ‘‘directed’’ by the
trustees, and others.41
B. Positions of the Parties
Respondent argues that it is not a statutory ‘‘employer’’
because it has no ‘‘employees.’’ In support of this argument,
the Fund cites the legislative history and case law on the def-
inition of ‘‘employee.’’ ‘‘Employees work for wages or sala-
ries under direct supervision. . . . It is inconceivable that
Congress when it passed the Act, authorized the Board to
give to every word in the Act whatever meaning it wished.
On the contrary, Congress intended then, and it intends now,
that the Board give to words not far-fetched meanings but or-
dinary meanings.’’42
Addressing next the definition of ‘‘employer,’’ Respondent
cites dictionary definitions suggesting that an ‘‘employer’’ is
one who pays wages or salaries.
Finally, Respondent refers to cases where the Board has
held that trust funds were statutory employers who had vio-
813OPERATING ENGINEERS LOCAL 487 HEALTH FUND
43 Oregon Teamsters’ Security Plan Office, 119 NLRB 207 (1957);
Miners’ Welfare, Pension & Vacation Funds, 256 NLRB 1145, fn.
1, 1156 (1981); Chain Service Restaurant, 132 NLRB 960 (1961),
enfd. in relevant part 302 F.2d 167 (2d Cir. 1962).
44 R. B. p. 18.
45 Joint Industry Board of the Electrical Industry, 238 NLRB 1398
(1978); International Shipping Assn., 297 NLRB 1059 (1990); and
Teamsters Health & Welfare Fund I, 233 NLRB 814 (1977).
46 G.C. Br. p. 5.
47 Cf. Garland-Sherman Masonry, 305 NLRB 511 (1991); Com-
mercial Property Services, 304 NLRB 134 (1991).
48 See also cases in the prior section cited by General Counsel and
Respondent.
49 Sec. 2(3).
50 Sec. 2(2).
51 Wright Line, 251 NLRB 1083 (1980), enfd. 662 F.2d 899 (1st
Cir. 1981), cert denied 455 U.S. 662, 989, approved in NLRB v.
Transportation Management Corp., 462 U.S. 393 (1983).
lated the Act,43 and argues that they had done so with re-
spect to their own employees.44
The Fund also refers to A. M. Steigerwald, 236 NLRB
1512 (1978), and concedes that it may stand for the propo-
sition that an entity such as a trust fund (in Steigerwald, a
credit union) may be liable for misconduct toward employees
other than its own. Respondent argues, however, that the
credit union had its own employees, and was therefore a stat-
utory employer.
The General Counsel cites the same cases, and others.45
Because Board law holds that an employer may discriminate
against employees other than its own, the General Counsel
argues that it is of ‘‘no import’’ that the Fund itself had no
employees.46
C. Conclusion
It will be useful to distinguish issues which are not present
in this proceeding. The complaint alleges that the Fund itself
is an employer engaged in commerce and that it has commit-
ted unfair labor practices. This case therefore does not
present the issues of whether the Fund is an agent of an em-
ployer or a labor organization.47
In the leading case on the issue of whether such a trust
fund is an employer, the Board held that the trust fund’s pur-
chase of insurance policies for the employers’ employees
constituted services rendered to the employers. Since the em-
ployers met the Board’s jurisdictional standards, the trust
fund was found to be an employer engaged in commerce.
Chain Service Restaurant, 132 NLRB 960, 975 (Conclusion
of Law 1). The Court of Appeals for the Second Circuit re-
jected the trust fund’s arguments to the contrary, and accept-
ed the Board’s position. NLRB v. Chain Service Restaurant,
302 F.2d 167, 173–174 (2d Cir. 1962).
The facts herein show that the Fund procures insurance
policies for the benefit of participants, employees of the em-
ployers, and that the employers make contributions therefor.
The employers themselves meet the Board’s direct inflow
standard, and, accordingly, the Fund also meets the Board’s
jurisdictional standards. Siemons Mailing Service, 122 NLRB
81, 85 (1958).48
The next issue is Respondent’s contention that it is not an
‘‘employer’’ because, it asserts, it has no ‘‘employees.’’ The
Act states that ‘‘the term ‘employee’ shall include any em-
ployee, and shall not be limited to the employees of a par-
ticular employer, unless the Act explicity states otherwise,’’
with other inclusions and specific exclusions.49
The term ‘‘’employer’ includes any person acting as an
agent of an employer, directly or indirectly,’’ with specified
exclusions.50
It is the Board’s responsibility to determine whether an
employer-employee relationship exists within the meaning of
these definitions. It has announced the following standard in
resolving problems of this nature:
The Board, in conformity with congressional intent, has
followed the usual tests of the law of agency and has
applied the common law ‘‘right of control’’ test. Under
this test, an employer-employee relationship exists
where the person for whom the services are performed
reserves the right to control not only the end to be
achieved, but also the means to be used in reaching
such end. Deaton Truck Lines, 143 NLRB 1372, 1377
(1963).
It is obvious in this case that the entity for whom Michael
and/or American Administrators performed services was the
Fund. It is also obvious from the declaration that the trustees
retained final authority over the administrator. Indeed, under
the language of the declaration, the trustees may have ‘‘em-
ployed’’ the administrator. There is nothing in the declaration
giving the administrator authority to terminate benefit pay-
ments. Finally, the facts show that Michael acted upon the
instruction of the chairman of the board of trustees in termi-
nating the benefits. There is no evidence that she consulted
her own superior in American Administrators before doing
so.
I therefore conclude, under the ‘‘right of control’’ test, that
Michael and/or American Administrators was an ‘‘em-
ployee’’ of the Fund. In doing so, I express no opinion on
the validity of Respondent’s theory that there cannot be a
statutory employer without a statutory employee. I merely
conclude in this case that the factual premise of the argument
has not been established. Shears’ contrary testimony is sim-
ply an erroneous legal opinion.
Since the evidence shows that the Fund meets the Board’s
jurisdictional standards, I find that it is an employer engaged
in commerce within the meaning of the Act.
IV. LEGAL ANALYSIS AND CONCLUSIONS
The General Counsel has the burden of establishing a
prima facie case that is sufficient to support an inference that
protected conduct was a motivating factor in Respondent’s
decision to terminate the benefits of the employees. Once
this is established, the burden shifts to Respondent to dem-
onstrate that the terminations would have taken place even
in the absence of the protected conduct.51
It is well established that the alleged discriminatees were
exercising their statutory rights in choosing to work for non-
union employers. As set forth above, the evidence shows that
the employees’ benefits were terminated because they chose
to work for these employers. The purported rules advanced
by the Fund to justify the termination of benefits are no-
where to be found in the documents establishing the Fund,
and were not in fact the rules applied by the Fund’s adminis-
814 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
52 G.C. Br. pp. 12–14. The General Counsel also cites Texaco,
Inc., 291 NLRB 508 (1988); Texaco, Inc., 291 NLRB 613 (1988);
Nuclear Fuel Service, 290 NLRB 309 (1988); Energy Cooperative,
290 NLRB 635 (1988); Gulf Oil Co., 290 NLRB 1158 (1988); and
Youngstown Steel Door Co., 288 NLRB 949 (1988).
53 G.C. Exh. 12.
trator. There is no evidence that the benefits of other em-
ployees had ever been terminated for working for a nonunion
or noncontributing employer. The purported rules were not
administered uniformly, and benefits were continued for
other employees working for noncontributing employers. The
Fund’s explanation for this inconsistency—equating the sign-
ing of an out-of-work roster with availability for work—sim-
ply revealed further lack of uniformity in administration of
this purported rule. It is well established that the administra-
tion of work rules selectively applied so as to affect only
protected activity constitutes evidence of discriminatory mo-
tivation.
Although the employees affected by the benefit termi-
nation were not the Fund’s employees, an employer may vio-
late Section 8(a)(3) and (1) of the Act not only with respect
to its own employees but also by actions affecting employees
that do not stand in an immediate employer-employee rela-
tionship with it. International Shipping Assn., 297 NLRB
1059 (1990).
The General Counsel has thus established a prima facie
case that the alleged discriminatees’ benefits were terminated
because they exercised their statutory right to work for a
nonunion employer, i.e., that the terminations were unlaw-
fully motivated.
Respondent has not met its burden of proving that it would
have terminated benefits in the absence of the protected ac-
tivity. Its reliance on an ‘‘eligibility rule’’ has no merit for
the reasons given above. It has not established a legitimate
business reason for the terminations, i.e., preservation of the
economic integrity of the Fund. There is no evidence that
any of the ‘‘rules’’ in the record— either the one advanced
by Respondent or the one actually administered by the ad-
ministrator—was promulgated in order to preserve the
Fund’s economic integrity. The advice of the Fund’s actuar-
ial consultant that termination was necessary for this purpose
was not given until after the benefits had already been termi-
nated. The opinions of Respondent’s witnesses—that contin-
ued paying of benefits to the departed employees would be
economically detrimental—is not supported by objective evi-
dence. The Fund’s net worth actually increased during the
period when benefits were terminated. There is no way of
knowing whether this increase was caused in part by the ter-
minations. However, since the Fund’s normal practice was to
continue benefits for departed employees until their eligi-
bility—established by prior employer contributions—had ex-
pired, the termination of benefits resulted in a windfall to the
Fund to the extent that it did not pay benefits which it other-
wise would have paid.
The General Counsel and the Charging Party agree with
the reasons set forth above in determining that Respondent’s
conduct was unlawful. The General Counsel supplies an al-
ternative rationale, indeed, it appears, his primary rationale.
Thus, the General Counsel analogizes the discriminatees to
striking employees, and applies the test announced by the
Board in Texas, Inc., 285 NLRB 241 (1987), to the dis-
continuance of benefit payments to disabled employees on
commencement of a strike, and by the Supreme Court in
NLRB v. Great Dane Trailers, 388 U.S. 26 (1967). Under
this rationale, according to the General Counsel, he has es-
tablished that Respondent’s conduct was ‘‘inherently destruc-
tive’’ of employee rights or was motivated by antiunion ani-
mus. Further according to the General Counsel, this conduct
had an ‘‘adverse effect’’ on the employees’ Section 7 rights
and Respondent has submitted no legitimate business jus-
tification for the terminations.52
Although I do not consider this rationale inapplicable to
the facts in this case, it is unnecessary to rely on it in light
of my findings.
The complaint alleges that the benefits of 59 employees
were unlawfully terminated, and the evidence establishes the
names of 56 of these individuals.53 However, Plan Adminis-
trator Sue Michael testified that American Administrators
compiled a computer generated list of all employees whose
benefits had been terminated. According to Michael, this list
and other files were turned over to American Administrator’s
successor as the Fund’s administrative manager, First Benefit
Company.
I shall defer to the compliance stage of this proceeding the
determination of the names of individuals in addition to
those already listed whose benefits were unlawfully termi-
nated.
In accordance with my findings above, I make the follow-
ing
CONCLUSIONS OF LAW
1. The Respondent, International Union of Operating Engi-
neers Local 487 Health and Welfare Trust Fund, is an em-
ployer engaged in commerce within the meaning of Section
2(2), (6), and (7) of the Act.
2. Various employers are required to make contributions
into the aforesaid trust fund pursuant to collective-bargaining
agreements which they have with International Union of Op-
erating Engineers Local 487.
3. Six employers previously signatory to collective-bar-
gaining agreements with the Union withdrew their recogni-
tion of the Union in the spring of 1989.
4. Various employees of these employers engaged in the
protected activity of continuing to work for them after the
employers’ withdrawal of recognition from the Union.
5. On August 9, 1989, Respondent terminated the benefits
of the aforesaid employees because they continued to work
for the employers that had withdrawn their recognition of the
Union.
6. Respondent’s terminations of the benefits of employees
because they engaged in protected activity discriminated
against them with respect to a term or condition of employ-
ment, encouraged union membership, and constituted unfair
labor practices within the meaning of Section 8(a)(3) and (1)
of the Act.
7. Respondent’s unfair labor practices affect commerce
within the meaning of Section 2(6) and (7) of the Act.
THE REMEDY
Inasmuch as I have found that Respondent has engaged in
certain unfair labor practices, I shall recommend that it be
ordered to cease and desist therefrom and take certain affirm-
ative actions designed to effectuate the purposes of the Act.
815OPERATING ENGINEERS LOCAL 487 HEALTH FUND
54 G.C. Br. pp. 17–18.
55 G. Zaffino & Sons, 289 NLRB 571 (1988); Best Glass Co., 280
NLRB 1365 (1986).
56 Interest on and after January 1, 1987, shall be computed at the
‘‘short-term Federal rate ‘‘for the underpayment of taxes as set out
in the 1986 amendment to U.S.C. sec. 6621.
57 Teamsters Local 814 (Santini Bros.), 208 NLRB 184 (1974);
Sheet Metal Workers Local 223 (Continental Air Filters Co.), 196
NLRB 55 (1972); Carpenters Local 964, 181 NLRB 948 (1970);
Sheet Metal Workers Local 80, 161 NLRB 229, 238 (1966).
58 Tidee Products, 194 NLRB 1234 (1972); Heck’s Inc., 215
NLRB 765 (1974).
59 Misic v. Building Service Employees Health, 789 F.2d 1374,
1377–1379 (9th Cir. 1986) (ERISA); Klamath-Lake Pharmacy v.
Klamath Medi. Serv. Bureau, 701 F.2d 1276, 1282–1283 (9th Cir.
1983) (antitrust laws); Martin v. Morgan Drive Away, 665 F.2d 598,
602 (5th Cir. 1982 (same); U.S. v. $364,960.00 in U.S. Currency,
661 F.2d 319, 326-327 (5th Cir. 1981) (Federal forfeiture laws);
Nissho-Iwai Co. v. M/T Stolt Lion, 617 F.2d 907, 912 (2d Cir. 1980)
(Carriage of Goods by Sea Act).
60 C.P. Br. pp. 14–20.
The General Counsel recommends a make-whole order
that would compensate the discriminatees for any losses they
may have suffered as a result of Respondent’s unlawful dis-
continuance of their medical insurance.54 As noted, there is
record evidence of the names of 56 discriminatees, whose
names appear on Appendix A hereto (not published), and I
am deferring to the compliance stage of this proceeding de-
termination as to any additional individuals.
It is customary to include reimbursement of substitute
health insurance premiums and out-of-pocket medical ex-
penses in make-whole remedies for benefits lost.55 However,
the record shows that some of these expenses may already
have been paid by employers who provided substitute cov-
erage under existing health plans. There is no reason for du-
plicate benefit payments, and, accordingly, the amounts oth-
erwise found to be due from the Fund to employees should
be reduced by the amount of such payments under the sub-
stituted coverage. The Fund’s liability should further be lim-
ited by each employee’s remaining eligibility at the time his
right to coverage was terminated. The Fund should be re-
quired to pay interest as provided in New Horizons for the
Retarded, 283 NLRB 1173 (1987).56
The Charging Party recommends that Respondent should
also be required to make whole those employers who pro-
vided the discriminatees’ replacement health care coverage
during the periods for which they would have been eligible
during Respondent’s plan but for its unlawful termination of
coverage.
In support of this recommendation, the Charging Party ad-
vances several arguments. It notes the Board’s broad reme-
dial powers under Section 10(c) of the Act, and cites
Shepard v. NLRB, 459 U.S. 144 (1983). The Association
points to the fact that such expenses incurred by an employee
as a result of employer wrongdoing are included in a back-
pay order. Quantec, Inc., 298 NLRB No. 118 (June 18,
1990). Union wronging toward employers is appropriately
remedied by requiring the union to reimburse the employ-
ers.57 The Charging Party also notes the Board’s requirement
that an employer pay a union’s litigation expenses in certain
circumstances.58
The Association next argues that the employers who pro-
vided replacement coverage were merely ‘‘stepping into the
shoes’’ of the employees, who clearly are entitled to direct
reimbursement from Respondent (as I have found). The
Charging Party cites ‘‘analogous situations’’ where courts
have recognized the right of a third party to obtain relief de-
rivatively under other federal laws.59
The Charging Party advances policy arguments in favor of
the recommended remedy. First, failure to reimburse the em-
ployer for the costs of substituted coverage would be a dis-
incentive for such coverage, and would place the employee
on his own resources to pay for medical care. This, in turn,
would ‘‘coerce’’ him toward refraining from exercising his
Section 7 rights. Second, medical care, once lost, may result
in irreparable damage, and there is a national policy against
gaps in medical coverage. Employers who provide protection
against such gaps should be encouraged and assisted. Third,
if the employee assigns his insurance rights to the provider
of medical services, the latter can recover, and the employer
should be in the same position. Fourth, if the Fund is not or-
dered to make those payments which it would have been re-
quired to make absent its own wrongdoing, it will profit fi-
nancially from that wrongdoing.60
Although these arguments are not of equal cogency, col-
lectively they are persuasive. Determination of an expense at-
tributable to a discriminatee who has been included in an ex-
isting health care plan with nondiscriminatees may present
accounting problems, but these can be resolved in supple-
mental proceedings. Accordingly, I shall recommend that the
Board accept this policy, and require Respondent to make
whole those employers who provided substituted health care
coverage, with interest as described above, to the extent that
the employee had continuing eligibility when Respondent ter-
minated his benefits.
Inasmuch as Respondent has no office visited by the
discriminatees, I shall recommend that notices be mailed to
each discriminatee at his or her last known address.
[Recommended Order omitted from publication.]