Paragon Systems, Inc.

National Labor Relations Board - Board Decisions

Aug 26, 2016

364 NLRB No. 75 (N.L.R.B. 2016)

364 NLRB No. 75
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Ex-
ecutive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
Paragon Systems, Inc. and National Association of
Special Police and Security Officers. Case 05–
CA–127523
August 26, 2016
DECISION AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS HIROZAWA
AND MCFERRAN
On September 30, 2015, Administrative Law Judge Eric
M. Fine issued the attached decision. The Respondent and
the General Counsel filed exceptions, supporting briefs,
and answering briefs, and the Respondent filed a reply
brief.
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 decided to affirm
the judge’s rulings, findings, and conclusions only to the
extent consistent with this Decision and Order.
The issue in this case is whether the Respondent was a
“perfectly clear” successor under NLRB v. Burns Security
Services, 406 U.S. 272, 294–295 (1972), and Spruce Up
Corp., 209 NLRB 194, 195 (1974), enfd. per curiam 529
F.2d 516 (4th Cir. 1975), with an obligation to bargain
with the Union prior to setting initial terms and conditions
of employment that differed from those under the prede-
cessor’s collective-bargaining agreement with the Union.
For the reasons discussed below, we find, contrary to the
judge, that the General Counsel failed to prove that Para-
gon was a “perfectly clear” successor as alleged in the
complaint. As a result, we find that Paragon did not vio-
late Section 8(a)(5) and (1) by changing certain terms and
conditions of employment when it began operations with-
out giving the Union notice or the opportunity to bargain.
I. FACTS
Paragon provides armed security services to the Federal
Government. In June 2013,1 Paragon was awarded a con-
tract to provide guard services at the Federal Emergency
Management Agency (FEMA) building in Washington,
D.C. Paragon was scheduled to take over operational con-
trol at the FEMA building effective September 1, replac-
ing Knight Protective Services, which had an existing col-
lective-bargaining agreement (CBA) with the Union cov-
ering protective security officers (PSOs).2

1 All dates are in 2013 unless otherwise noted.
2 The CBA’s effective dates were October 1, 2012 through September
30, 2015.
In mid-June, shortly after being awarded the contract,
Paragon arranged for a memo to be posted at the FEMA
building advising PSOs employed by Knight that Paragon
had been awarded the contract and inviting PSOs to attend
a job fair on June 29. The memo stated, “Paragon Systems
is currently accepting applications from incumbent PSOs.
To be considered for employment, all candidates must
complete all parts of the Paragon application process.”
The memo also directed applicants to Paragon’s website
to complete an online application and notified applicants
that they should bring the original and one copy of certain
documents to the job fair, including a driver’s license or
state ID, social security card, birth certificate, and high
school diploma, transcript, or GED certificate. The memo
stated that offers of employment “are contingent upon suc-
cessfully passing all pre-employment requirements, at-
tending all scheduled training and passing all contract-re-
quired performance standards.”
Paragon is subject to Executive Order 13495, “Non-
Displacement of Qualified Workers” (E.O. 13495), which
requires contractors with a Federal Government service
contract to offer a right of first refusal to suitable employ-
ment to those nonmanagerial and nonsupervisory employ-
ees whose employment will be terminated as a result of
the award of the successor contract. See 74 Fed.Reg. 6103
(2009).3
Paragon assumed operational control at the FEMA
Building on September 1 and made the following changes
to PSOs’ terms and conditions of employment without no-
tifying the Union: (1) PSOs no longer had the option of
receiving health, welfare, and pension benefits as part of
their wages; (2) PSOs no longer received a paid 30-minute
break during each 8-hour shift; (3) the threshold for full-
time employment status was changed from 32 to 40 hours
per week; and (4) the uniform allowance was discontin-
ued.
At some point after September 1, Paragon recognized
the Union as the collective-bargaining representative for
PSOs. Paragon and the Union agreed to a CBA in August
2014.
II. THE JUDGE’S DECISION
The judge agreed with the General Counsel’s contention
that Paragon’s job fair memo was tantamount to an invita-
tion to the Knight PSOs to accept employment with Para-
gon, and therefore that Paragon was a “perfectly clear”
successor at the time that it posted the job fair memo in
mid-June. Because the memo failed to announce that
Paragon intended to establish new terms and conditions of
3 The Department of Labor’s rules relating to administration of E.O.
13495 are codified at 29 CFR Sec. 9.1 et seq.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD2
employment, the judge found that Paragon forfeited its
right to set initial terms and conditions under the Board’s
Spruce Up analysis and that Paragon violated Section
8(a)(5) and (1) by unilaterally changing the terms and con-
ditions of PSOs’ employment when it took over operations
in September.
III. POSITIONS OF THE PARTIES
Paragon excepts to the judge’s findings and argues that
it acted lawfully when it took over operations and set its
own initial terms and conditions of employment. Paragon
argues that the job fair memo simply informed PSOs that
Paragon had been awarded the contract, was currently ac-
cepting applications from incumbent PSOs, and would be
holding a job fair, but that the memo did not announce any
intent to employ Knight PSOs and was not an invitation to
Knight PSOs to accept employment.4
The General Counsel argues that the judge correctly
found that Paragon invited Knight PSOs to accept employ-
ment with Paragon when it posted the job fair memo in
mid-June and that Paragon was a “perfectly clear” succes-
sor at that time. The General Counsel does not argue in
the alternative that, assuming Paragon did not become a
“perfectly clear” successor until it distributed job offer let-
ters to Knight PSOs at the June 29 job fair, the offer letters
given to employees failed to clearly announce Paragon’s
intent to establish a new set of terms and conditions of em-
ployment and were insufficient to meet Paragon’s obliga-
tions under Spruce Up, above. Nor did the General Coun-
sel except to the judge’s failure to find that, assuming
Paragon was free to set initial terms and conditions, the
alleged unlawful changes were not among its announced
initial terms.5
For the reasons discussed below, we find merit to the
Respondent’s exceptions.
IV. DISCUSSION
Under NLRB v. Burns Security Services, supra, 406 U.S.
at 281–295, a successor employer is not bound by the sub-
stantive terms of a collective-bargaining agreement nego-
tiated by its predecessor and is ordinarily free to set initial
terms and conditions of employment unilaterally. The
Court explained that the duty to bargain will not normally
arise before the successor sets initial terms because it is
not usually evident whether the union will retain majority
status in the new work force until after the successor has
hired a full complement of employees. Id. at 295. The
Court recognized, however, that “there will be instances

4 Paragon also excepts to the judge’s finding that the complaint is not
barred by Sec. 10(b). We affirm the judge’s finding, for the reasons he
gave. We do not rely, however, on the judge’s statement that the Union
exercised reasonable diligence “given the Union’s resources.” We find
that the Union exercised reasonable diligence regardless of its resources.
in which it is perfectly clear that the new employer plans
to retain all of the employees in the unit and in which it
will be appropriate to have him initially consult with the
employees’ bargaining representative before he fixes
terms.” Id. at 294–295.
In Spruce Up Corp., supra, 209 NLRB 194, the Board
interpreted the “perfectly clear” caveat in Burns as “re-
stricted to circumstances in which the new employer has
either actively or, by tacit inference, misled employees
into believing they would all be retained without change
in their wages, hours, or conditions of employment, or at
least to circumstances where the new employer . . . has
failed to clearly announce its intent to establish a new set
of conditions prior to inviting former employees to accept
employment.” Id. at 195 (fn. omitted).
A successor’s obligation to bargain about initial terms
of employment can arise prior to the successor’s extension
of formal offers of employment to the predecessor’s em-
ployees or before the hiring process begins. A successor
employer has an obligation to bargain over initial terms
when it “displays an intent to employ the predecessor’s
employees without making it clear that their employment
will be on different terms from those in place with the pre-
decessor.” Creative Vision Resources, LLC, 364 NLRB
No. 91, slip op. at 3 (2016). See also Nexeo Solutions,
LLC, 364 NLRB No. 44, slip op. at 2 fns. 7, 8 (2016) (bar-
gaining obligation attached when successor informed em-
ployees that they would transfer to new business); Can-
teen Co., 317 NLRB 1052, 1053 (1995) (bargaining obli-
gation attached when successor expressed to union its de-
sire to have employees serve a probationary period), enfd.
103 F.3d 1355 (7th Cir. 1997); Fremont Ford, 289 NLRB
1290, 1296–1297 (1988) (obligation attached when suc-
cessor indicated to union that it had doubts about the re-
tention of only a few employees); Henry M. Hald High
School Assn., 213 NLRB 415 (1974) (obligation attached
when successor gave assurances to employees that it
would employ them).
Contrary to the judge, we find that Paragon did not dis-
play an intent to retain Knight PSOs when it posted the job
fair memo. On its face, the memo does not state that PSOs
who complete the application or attend the job fair will be
offered employment. Instead, the memo states that Para-
gon is “currently accepting applications” and that all can-
didates must complete all parts of the application process
“[t]o be considered for employment.” The memo does not
suggest that hiring is inevitable, and we find that the memo
5 The General Counsel did, however, except to the judge’s failure to
recommend that the Board overrule Spruce Up. We decline to rule on
the General Counsel’s request in this case.
PARAGON SYSTEMS, INC. 3
was simply an invitation to Knight PSOs to complete an
application. The memo did not express Paragon’s intent
to hire Knight PSOs and was not an invitation to PSOs to
accept employment with Paragon. Nor is there any evi-
dence in the record of other communications by the Re-
spondent indicating an intent to hire the Knight PSOs.
Compare Cadillac Asphalt Paving Co., 349 NLRB 6, 10
(2007) (successor expressed intent to hire predecessor’s
employees when it asked employees to complete applica-
tions and W-4 forms “to update [successor’s] records”) .
We further find that Paragon’s obligation under E.O.
13495 to offer Knight PSOs the right of first refusal does
not warrant a contrary result in the circumstances pre-
sented here. The job fair memo makes no reference to the
Executive Order or PSOs’ right of first refusal, and it can-
not be viewed as offering PSOs the right of first refusal.
Moreover, there is no evidence that Knight PSOs had been
through a transition from one contractor to another before
or otherwise knew of Paragon’s legal obligation. As a re-
sult, there is no evidence indicating that PSOs would ex-
pect that completing an application and/or attending the
job fair would lead to continued employment such that
they would interpret the job fair memo as an actual offer
of employment and therefore be misled into believing that
Paragon was offering them employment with unchanged
terms and conditions. See Data Monitor Systems, Inc.,
364 NLRB No. 4, slip op. at 4 (2016). Compare Adams
&Associates, Inc., 363 NLRB No. 193, slip op. at 4 (2016)
(finding successor subject to E.O. 13495 was a “perfectly
clear” one based on its communications to the predeces-
sor’s employees).
Because we find that Paragon did not demonstrate its
intent to retain Knight PSOs by posting the job fair memo
in mid-June, we reverse the judge and find that the General
Counsel has failed to prove that Paragon was a “perfectly
clear” successor at that time. As a result, we dismiss the
complaint.
ORDER
The complaint is dismissed.
Dated, Washington, D.C. August 26, 2016
______________________________________
Mark Gaston Pearce, Chairman

1 All dates are 2013 unless otherwise indicated. Respondent’s unop-
posed motion to correct the transcript; and the parties “Joint Motion to
Withdraw the General Counsel’s Argument That Respondent Unilater-
ally Changed Employee Breaks After September 1, 2013” are granted.
2 In making the findings, I have considered the witnesses’ demeanor,
the content of their testimony, and the inherent probabilities of the record
______________________________________
Kent Y. Hirozawa, Member
______________________________________
Lauren McFerran, Member
(SEAL) NATIONAL LABOR RELATIONS BOARD
Chad M. Horton, Esq., for the general Counsel.
Thomas P. Dowd, Esq., of Washington, D.C., for the Respond-
ent.
Chalfrantz Perry, of Washington, D.C., for the Charging Party.
DECISION
STATEMENT OF THE CASE
ERIC M. FINE, Administrative Law Judge. This case was tried
in Washington, D.C. on February 19, 2015. The National Asso-
ciation of Special Police and Security Officers (the Union) filed
the charge on April 24, 2014, and the first amended charge on
May 20, 2014, against Paragon Systems, Inc., (Paragon or Re-
spondent).1 The General Counsel issued the complaint on No-
vember 26, 2014, alleging Paragon violated Section 8(a)(5) and
(1) of the Act by, without notice to and affording the Union the
opportunity to bargain, making changes in the following terms
of employment of employees represented by the Union: (a) Re-
duced and/or cancelled employee breaks; (b) Redefined the
threshold for full-time employment status from 32 to 40 hours
per week; (c) Discontinued a uniform allowance; (d) Discontin-
ued the option of paying health and welfare benefits directly to
employees’ paychecks; and (e) Discontinued the option of pay-
ing pension benefits directly to employees’ paychecks.
On the entire record, including my observation of the witness-
es' demeanor, and after considering the briefs filed by the Gen-
eral Counsel and Paragon, I make the following2
FINDINGS OF FACT
I. JURISDICTION
Paragon, a corporation, with an office and place of business in
Herndon, Virginia (Respondent’s facility) has been engaged in
the business of providing security services to commercial and
governmental entities, including the Federal Emergency Man-
agement Agency (FEMA), at 500 C Street, SW and 1201 Mary-
land Avenue, SW, in Washington D.C. Annually, Paragon per-
formed services in excess of $50,000 in states other than the Dis-
trict of Columbia. Paragon admits and I find it is an employer
engaged in commerce under Section 2(2), (6), and (7) of the Act
and the Union is a labor organization under Section 2(5) of the
Act.
as a whole. In certain instances, I have credited some but not all of what
a witness said. See NLRB v. Universal Camera Corp., 179 F. 2d 749, 754
(2d Cir. 1950), reversed on other grounds 340 U.S. 474 (1951). All tes-
timony and evidence has been considered. If certain testimony or evi-
dence is not mentioned it is because it is cumulative of the credited evi-
dence, not credited, or not essential to the findings herein.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD4
II. ALLEGED UNFAIR LABOR PRACTICES
A. Background
The Federal Protective Service (FPS) is a division of the De-
partment of Homeland Security, and is responsible for oversee-
ing and providing security of various Federal buildings and fa-
cilities.3 In June 2013, the FPS awarded Paragon a Federal con-
tract to provide guard services at various federal buildings in the
District of Columbia, including the FEMA building in Washing-
ton, D.C. Under the contract, Paragon was scheduled to take
over operational control of guard services at FEMA building ef-
fective September 1 replacing Knight Protective Services, Inc.
(Knight). The Union was the certified bargaining representative
for the protective service officers (PSOs) who worked for Knight
at the FEMA Building and the Union had a collective-bargaining
agreement with Knight effective for October 1, 2012 through
September 30, 2015 (the Knight CBA). As a Federal contractor
with a government service contract, Paragon was subject to the
requirements of Executive Order 13495, Non-Displacement of
Qualified Workers as well as the McNamara-O’Hara Service
Contract Act, 41 U.S.C. §§ 351–358.4
Shortly after the FEMA Federal contract was awarded to Para-
gon, Paragon arranged for a memorandum to be posted at the
FEMA Building for incumbent Knight PSOs advising them
Paragon was awarded the contract to begin providing guard ser-
vices effective September 1, and inviting the incumbent PSOs to
attend a job fair on June 29 at the Marriott hotel in Greenbelt,
Maryland. The memorandum included the following:
Paragon Systems is currently accepting applications from in-
cumbent security officers. To be considered for employment,
all candidates must complete all parts of the Paragon applica-
tions process.
Applicants shall go to (listed website) or the company website
(listed website) under careers and complete an online applica-
tion.
The memorandum stated applicants must bring the following
documents (the original and a copy) to the job fair. The docu-
ments listed included a driver’s license or state ID, social secu-
rity card, birth certificate, and high school diploma, transcript or
GED certificate. The memo stated:
Offers of employment are contingent upon successfully pass-
ing all pre-employment requirements, attending all scheduled
training and passing all contract-required performance stand-
ards. A Medical exam, including a Fit Test and a drug screen
is also required.
Applicants will also be asked to provide availability times in
order for the medical exam and the fit test to be scheduled.

3 The findings here are made relying on a written stipulation of facts
entered by the parties, credited testimony and documentary evidence
submitted at the hearing.
4 Executive Order 13495, states: “The Federal Government's
procurement interests in economy and efficiency are served
when the successor contractor hires the predecessor’s employ-
ees. A carryover work force minimizes disruption in the delivery
of services during a period of transition between contractors and
provides the Federal Government the benefit of an experienced
The offer letter distributed to Knight employees on June 29
was dated June 29, and had each individual employee’s name on
it. It stated it was regarding “potential” employment with Para-
gon as a security officer. The letter stated, “On behalf of Paragon
Systems, I would like to extend to you a contingent offer of em-
ployment to serve as a Security Officer . . .” “Effective date of
this offer is September 1, 2013.” The offer contained an appen-
dix which included a wage rate and chart listing certain benefits.
The offer letter discussed health/medical coverage and stated
that if the employee elected not to receive health/medical cover-
age, then the health and welfare hourly rate indicated in the ap-
pendix assigned to their geographic area will automatically be
contributed into a Company-sponsored 401(k) retirement plan,
pretax, for the employee’s benefit. The offer letter stated “You
will not have the option of receiving a cash payment in lieu of
health and retirement benefits.” The offer letter stated:
Shift schedules will be determined in accordance with
the operational needs of the contract, with consideration
given to employee seniority. Breaks will be provided in ac-
cordance with Company policy and in compliance with any
applicable State and Federal law requirements and subject
to the operational needs of the contract.
All full-time employees who have continuously been
employed by the Company, or its predecessors to the con-
tract between the Company and the Department of Home-
land (EG.29 CFR 4.173), shall be entitled to vacation pay
in accordance with Appendix A.
. . .
Paid holidays and sick leave are also available in ac-
cordance with Appendix A, and in accordance with certain
eligibility requirements.
Additionally, to the extent indicated in Appendix A, in-
dividuals working in specific localities will receive an
hourly pension earning for each regular hour worked that
will be contributed on your behalf to the Company-spon-
sored retirement plan, pretax. You will have your own ac-
count within the 401(k) plan, and the money that you are
entitled to receive will be placed in that account.
Employment is contingent upon successfully passing all
pre-employment requirements (including pre-employment
interviews), attending all scheduled training, weapons qual-
ification, and passing all contract-required performance
standards including the physical exam with a physical abil-
ities test. A pre-employment drug screen is also required.
Your employment will be at will, meaning that there is
no restriction on your ability to leave your employment at
and trained work force that is familiar with the Federal Govern-
ment's personnel, facilities, and requirements.” Executive Order
13495, therefore, generally requires that successor service con-
tractors performing on Federal contracts offer a right of first re-
fusal to suitable employment under the contract to those employ-
ees (other than managerial and supervisory employees) under the
predecessor contract whose employment will be terminated as a
result of the award of the successor contract.
PARAGON SYSTEMS, INC. 5
any time or for any reason, and there is similarly no re-
striction on the Company’s ability to terminate employment
at any time and for any reason not prohibited by law.
. . .
In compliance with Executive Order 13495 (Non-Dis-
placement of Qualified Workers under Service Contracts),
you are hereby given a first right of refusal for this job open-
ing. If you intend to accept employment you will need to
hand deliver, or fax a copy of your acceptance form to
(number provided) or mailed to the above address by July
6, 2013.
Additionally, a copy of Paragon Systems’ Health, Den-
tal, and 401(k) Plan Summary Descriptions can be re-
quested by calling Human Resources. . . .
The June 29 contingent offer letter contained a base pay rate
of $24.29, a health and welfare rate of $5; and a pension rate of
$1.11 for the 500 C Street location; 1201 Maryland Avenue Lo-
cations. However, the Knight CBA provided in its appendix that
for a guard, the rate was $24.29, but effective October 31, 2012,
the guard rate was increased to $26.80. The Knight CBA pro-
vided for four classifications with the lowest pay as of October
31, 2012 being $24.30, and the highest rate being $28.60. The
Knight CBA provided for wage increases for all four classifica-
tions effective October 31, 2013. The Knight CBA provided ef-
fective October 31, 2012, the Employer health and welfare con-
tribution was to be $6 per hour and pension contribution was to
be $1.19 per hour, with the rate prior to that time being $5 and
$1.11 per hour respectively. Thus, the June 29 offer letter un-
derstated wages, health and welfare, and pension benefits con-
cerning the amounts the bargaining unit employees were receiv-
ing from Knight at the time the offer letter was distributed. The
Knight CBA granted sick leave and vacation based on a formula
accruing minutes per hours worked. It did not distinguish sick
leave based on full or part time status. The Paragon offer letter
offered vacation based a formula for hours for years of service,
and just stated 6 sick days. It stated full-time employees will be
entitled to vacation as listed in the appendix to the letter, but it
did not define who was a full-time employee. The offer letter
stated paid holidays and sick leave are also available in accord
with the appendix based on certain unspecified eligibility re-
quirements.
Paragon subsequently held a mandatory new hire orientation
meeting on August 24, for employees who had been hired to fill
PSO positions at the FEMA Building. At this meeting, PSOs
were given copies of Paragon’s Security Officer Handbook as
well as followup information about PSO work schedules and
break schedules based on the operational needs of the Federal
contract. The Paragon Security Officer Handbook is over 50
pages in length singled spaced. It contains a table of contents,
which does not specifically mention full-time status, breaks, va-
cation, or uniforms. At page 24 of the handbook it discusses
uniforms and appearance. Within that provision, it discusses
“wash and wear” uniforms and their maintenance. It states “If
you are issued a uniform that requires dry cleaning, the local con-
tract office will make arrangements to either provide clean uni-
forms to you, or reimburse you for dry cleaning expenses.” At
page 39, of the handbook under the heading “Definitions”, it
states, “A full-time employee regularly works a minimum of 40
or more hours per week on a continuing basis and has completed
the introductory period.” At page 41, there is a heading “On-
Duty Meal Period”. It states therein after defining on duty meals
as involving posts that do not allow officers to leave the job site
for meal periods, that “you will be paid on-duty meal periods you
take.” It states, “as some assignments, officers take off-duty, un-
paid meal periods. If you take an unpaid meal period, you will
be relieved of duties during that period.” At page 47, the hand-
book states, “Eligible employees will be paid vacation pay in ac-
cordance with the terms of the Paragon vacation pay policy, ap-
plicable CBA or Wage Determination and applicable state and
federal law.” It states, “Paragon does not pay for sick days un-
less stipulated in the CBA.” The employees attending the Au-
gust 24 orientation signed for receipt of the handbook.
The parties stipulated to the following:
Article VII of the Knight CBA set forth employee break
structure, and provides, in relevant part: (a) employees
working more than four (4) hours but less than eight (8)
hours shall receive one (1) paid 15-minute break; (b) em-
ployees working eight (8) hours but less than 12 hours shall
receive one (1) paid 30-minute break and two (2) paid 15-
minute breaks; and (c) employees working 12 or more hours
shall receive one (1) paid 30-minute break and three (3)
paid 15-minute breaks. Effective September 1, 2013, Para-
gon has altered the length and number of employee breaks,
as well as the paid or unpaid status of said breaks. When
Paragon assumed operational control on September 1,
2013, it put in place a break structure different from the
break structure set forth in the Knight CBA.
Article VI of the Knight CBA states that employees who
are regularly scheduled to work at least 32 hours per work-
week shall be considered “full-time.” Effective September
1, 2013, Paragon considered a “full-time employee” to be
an individual who regularly works a minimum of 40 or
more hours per week on a continuing basis.
Article XXIII of the Knight CBA states that, effective
October 1, 2012, employees shall receive a uniform allow-
ance of sixty-five cents ($0.65) per hour worked. These
monies were paid to employees as wages in their
paychecks. Effective September 1, 2013, Paragon did not
provide an hourly uniform allowance.
Article XXIV of the Knight CBA provides, in part, that
employees may receive the cash equivalent of the Health
and Welfare fringe benefit amount if the employee can pro-
duce evidence of comparable medical group coverage in an
employer-sponsored medical plan, either through a spouse
or another employer. If an employee could present such
evidence, he or she could receive the cash equivalent of the
Health and Welfare fringe benefit as wages in his or her
paycheck. The benefit was paid based on hours worked, up
to 80 hours of bi-weekly pay. Effective September 1, 2013,
Paragon did not provide employees with the option of re-
ceiving the cash equivalent of the Health and Welfare fringe
benefit as wages in an employee paycheck.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD6
Article XXVI and the Appendix of the Knight CBA set
forth the employer’s pension contribution. Effective Octo-
ber 31, 2012, the employer’s pension contribution was
$1.19/hour worked, up to a maximum of 80 hours of bi-
weekly pay. Knight and the Union had an established past
practice wherein unit employees could receive the em-
ployer’s pension contribution as wages in their paycheck.
Effective September 1, 2013, Paragon did not provide unit
employees with the option to receive the employer pension
contribution as wages in their paycheck. Rather, Paragon
directed its pension contribution to a company-sponsored
401(k) plan maintained for each unit employee.
The parties stipulated the differing terms and conditions of
employment described above were announced and implemented
by Paragon without bargaining with the Union. Paragon as-
sumed operational control of security for the FEMA Building on
September 1 with a workforce consisting of a majority of PSOs
who formerly worked for Knight at the FEMA Building. There-
after, Paragon recognized the Union as the collective bargaining
representative of the PSOs at the FEMA Building, and bargained
with the Union for a new collective bargaining agreement. Para-
gon and the Union reached a collective-bargaining agreement on
or about August 15, 2014 covering the time period of August 15,
2014 through November 30, 2017.
Myron Birdsong, a security officer working for Paragon, was
called by the General Counsel as a witness. He began his em-
ployment with Paragon in September 2013 working at FEMA at
the headquarters building located at 500 C Street, Southwest.
Prior to working for Paragon, Birdsong was employed by
Knight where he began working at the FEMA headquarters in
2011. Birdsong estimated there were about 50 to 60 bargaining
unit employees who worked at the FEMA headquarters. In ad-
dition to the 500 C Street address, there is a FEMA annex
building in Southwest which houses bargaining unit employ-
ees. Birdsong has been a member of the Union since 2011, but
has never has held a union office.
Birdsong learned Paragon was taking over the contract from
Knight in the spring of 2013, through word of mouth, and he
saw the memo from Paragon posted in the control room which
announced Paragon’s June 29 job fair. Birdsong testified the
control room is where the security officers have their guard
mount, which is their daily briefing from their supervisors.
Birdsong estimated he saw the memo posted about a month
before the job fair. Birdsong applied for employment with Para-
gon online as instructed by Paragon’s job fair memo. Birdsong
completed the online application in advance of the job fair. Bird-
song received an email confirming he had submitted the applica-
tion. Birdsong credibly testified the online job application did
not indicate anything was going to change concerning his work-
ing conditions. He testified the application said nothing about:
the uniform allowance, paid or unpaid breaks, the length of
breaks, how he would receive his health and welfare or pension
contribution. It did not say how many hours were needed to be
a full-time employee. Birdsong testified the email confirmation
for the application did not contain any information regarding
these matters.
However, the application stated:
If hired, I agree and understand that I will conform with the
policies practices and procedures of Paragon. I further agree
that my employment is “at-will” This means that either Para-
gon or I may terminate the employment relationship at any
time, with or without notice, and with or without cause. I un-
derstand that Paragon retains the right to establish compensa-
tion benefits and working conditions for all of its employees.
Accordingly, I understand and agree that Paragon retains the
sole right to modify my compensation and benefits, position,
duties, and other terms and conditions of employment, includ-
ing the right to impose disciplinary action that Paragon, at its
sole discretion, determines to be appropriate. No employee or
representative of Paragon, other than the President of Paragon,
Inc., has the authority to alter the at will nature of my employ-
ment relationship, or make any agreement inconsistent to the
foregoing.
Birdsong attended the June 29 job fair at the Greenbelt, Mar-
riott. Birdsong testified that, upon arriving at the job fair, he
went to a desk, signed in and then received a packet to be filled
out. Birdsong testified the person he encountered first was Para-
gon Representative Rick Waddell. Lori Raines, who worked in
HR for Paragon, also attended the job fair. Raines had some as-
sistants with her. Birdsong testified he was directed to go inside
the room where he completed his paperwork. It took Birdsong
about 20 minutes to complete the packet which contained tax
forms, a direct deposit form, an offer letter, some EEO policy
papers, and things of that nature. Birdsong testified there was a
uniform sizing document in the packet.
The offer letter in Birdsong’s packet was dated June 29, and
has his name on it. It contained the information described above
with respect to the June 29 offer letters to all Knight employees
who received one. Birdsong testified he read and signed the of-
fer letter and turned it in to Paragon officials on June 29. Bird-
song testified the offer letter contained different working condi-
tions than were in place with Knight. He testified first was the
rate of pay located on the third page, the $24.29 for 500 C Street.
Birdsong testified that Paragon remedied that before they took
over the contract. Birdsong testified that another change was that
health and welfare was no longer going to be given to the officers
as a wage that it was going to be put in their 401(k) plan. Bird-
song testified that other than those two items there were no an-
nounced changes in working conditions in the offer letter.
Birdsong testified that when they completed filling out their
hiring packets received on June 29 at the Marriott, the officers
waited to be called up front. There was a panel there that re-
viewed the hiring packet with the officers. Waddell and Raines
were sitting at the table along with about five assistants. Bird-
song met with a man at the table and Birdsong provided him with
his hiring packet, social security card, birth certificate, driver’s
license, and a blank voided check for them to make direct depos-
its of his pay. Birdsong testified he submitted qualifications in-
cluding certificates of training that he had. Birdsong testified he
met with the person at the table for about 20 to 25 minutes, and
then he left. Birdsong testified that he was told at the table there
would be an orientation soon, and it would be announced. Bird-
song testified the man at the table did not ask him any questions
about his professional or educational background. He did not
PARAGON SYSTEMS, INC. 7
inquire why Birdsong was interested in working at Paragon.
Birdsong testified when he left the Greenbelt Marriott on June
29, he was under the impression he had been hired.
Birdsong testified, on cross-examination that at the job fair
Paragon responded to a lot of questions the officers asked. Bird-
song, himself, asked questions including whether Paragon was
going to go by the CBA. Birdsong testified they had CBA in
their building and there were officers at the job fair from differ-
ent sites that had different CBA’s than the one where Birdsong
worked. Birdsong testified the officers at his building wanted to
know whether Paragon was going to honor their collective-bar-
gaining agreement because their pay was higher than that in the
surrounding areas. Birdsong testified that he as well as others
asked this question stating this was the main concern. He testi-
fied he asked this when the floor was open for questions. Bird-
song testified he read the bullets points in Paragon’s offer letter
including the statement that “You will not have the option of re-
ceiving a cash payment in lieu of health and retirement benefits.”
He testified he understood from it that he would not have the
option of receiving a cash payment in lieu of health and retire-
ment benefits. Birdsong testified that he understood that was
different from what happened under the Knight CBA. He testi-
fied as to pension benefits at Knight he had the ability to get that
paid directly to him. He testified he understood from Paragon’s
letter that under Paragon he would have his own 401(k) account
and the money he was entitled to receive would be placed in that
account. However, Birdsong testified that aside from the change
in the placement of health and welfare funds the Paragon offer
letter was not specific that other employment conditions were
going to change.
At one point on cross-examination, Birdsong testified the em-
ployees kept asking Waddell if their rate of pay would change,
and if Paragon would be honoring the CBA, and he testified
Waddell responded, “everything will remain the same.” Bird-
song testified they asked Waddell if Paragon would honor their
CBA, to which he replied, “everything would remain the same.”
Birdsong testified the number one question at the June 29 job fair
was whether they were going to be paid the collective-bargaining
wage rate. Birdsong testified the wage rate in the offer letter was
low and everyone wanted to know if this was what Paragon was
offering because they had a CBA, and they were getting paid a
certain rate, and if they signed the offer letter are they bound to
it. He testified the answer given was no this was just an offer
letter. He testified they were told the wage rate in the offer letter
was wrong, and they would be paid the wage rate in the collec-
tive-bargaining agreement which was what Waddell was telling
them. Then the following exchange took place:
Q. And was Rick Waddell being broader than that? Was
he saying, and not only will we pay you what's in the
wage rate, we're going to do everything exactly the way it
was done in the Knight contract even though you're sign-
ing this and saying that changes are going to be made?
Did he say—
A.He wouldn't give up that information like that, no.
We bombarded him with questions, and with the bom-
bardment of questions, he had, you know, to give some
answer to the questions that were being asked.
Following the job fair, Birdsong saw a memo posted by Para-
gon at work stating, “On August 24, 2013, we will be holding a
Mandatory New Hire Orientation at the following location.”
The memorandum gave the time as 10 a.m., and listed the
Greenbelt Marriott as the place. It stated, “During the Orienta-
tion you will receive a presentation with information on the
company and your benefits. In addition, the following items
will be handed out: Employee Handbook; Benefits Packet.”
Birdsong attended the August 24 orientation, which was at-
tended by Paragon officials Waddell and Raines, along with oth-
ers. Birdsong testified that, at orientation, they were given an
employee handbook and a benefit packet. He testified this was
the first he had seen the Paragon employee handbook. Bird-
song estimated the orientation lasted no more than 2 hours. He
testified the orientation began by Raines discussing the benefit
package. Raines used a Power Point. Birdsong testified
Raines stated if they had insurance they could opt out of the
insurance and put their moneys in the 401(k) plan. Birdsong
testified Raines did not speak about a uniform allowance, or
the pension. He testified she did not talk about how many
hours they needed to work to be a full-time employee, or about
breaks.
Birdsong testified that Waddell spoke at the orientation for
about 45 minutes. He testified Waddell talked about the Com-
pany and went over the handbook, but Waddell did not go over
every page of the handbook. Birdsong did not recall in particular
any policies Waddell discussed from the handbook. Waddell
opened the floor to questions. Birdsong testified the main ques-
tion was whether Paragon was going to pay them the same pay
they had been receiving with the prior company because they had
a CBA in place. They wanted to know if Paragon would honor
the CBA and pay them their rate of pay. In this regard, Paragon’s
offer letter pay rate was lower, and the employees were con-
cerned Paragon was going to drop their pay. Birdsong testified
Paragon fixed the pay rate before he started working for Paragon.
Birdsong testified Waddell also talked about vacation pay, and
he was asked questions about health and welfare. Waddell was
asked if they were going to be receiving their health and welfare
as a wage and he said no. Waddell said it would be going to the
benefit plan. Birdsong testified that when he worked for Knight
they received an hourly pension contribution of $1.19 an hour as
a wage in their paycheck. Birdsong testified it did not go into
their 401(k). Waddell said they would no longer receive the pen-
sion contribution as a wage that it would go into the 401(k) plan.
Birdsong testified he asked if the collective bargaining agree-
ment would change. He testified Waddell said in response that
everything would remain the same. Birdsong testified Waddell
did not discuss break structures or tell them they would be re-
ceiving an unpaid lunch break. He testified they were not told
the hourly uniform allowance they received at Knight would be
discontinued. He testified neither Waddell nor Raines discussed
how many hours an employee needed to work to be full time.
Birdsong testified he never interviewed with Paragon before they
assumed operations. Birdsong testified he received and re-
viewed the Paragon employee handbook at the orientation meet-
ing. The handbook is over 50 pages in length and at page 39, it
states, “A Full-time employee regularly works a minimum of 40
or more hours per on a continuing basis and has completed the
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD8
introductory period.”
Birdsong testified Waddell spoke about the offer letter at the
orientation. Birdsong testified “the only thing I remember is the
questions that were asked of him about the offer letter, you
see, and about the CBA. Because we were under the impression
that nothing would change, regardless of what the full-time in
your—in this handbook, that says 40 hours, on our site, per our
CBA, 32 hours is full time. So when you tell us that nothing
is going to change, then this, what I just read to you, means noth-
ing because you’re telling me nothing’s going to change. So
we're not worried that—we're not concerned. That's not concern.
It doesn't raise a red flag.” Then the following exchange took
place:
Q. When he said nothing's going to change, was he
talking about the wage rate?
A.Like I said, we asked—we bombarded him with
questions in accordance to the CBA, you know, it was
this question, that question, this question, that question,
you see. It wasn't just a broad statement or, yes, we will
honor your—the whole CBA. Of course, he wouldn't say
anything like that. We had to—we tried to ascertain was
he—were they going to honor our CBA. So we kept saying,
you know, we have a CBA. Our CBA says this. Our CBA
says that.Will that change? Will this change? No.
As can be seen from the above discourse concerning Bird-
song’s testimony, he vacillated between stating that at the job
fair and orientation that Waddell in response to questions stated
Paragon would honor Knight’s CBA and nothing would change,
to stating, “Of course, he wouldn’t say anything like that.” Not-
ing this was only brought out on cross-examination, I do not find
based on Birdsong’s testimony that Waddell made statements at
either the job fair, or the orientation that Paragon would honor
Knight’s CBA. Rather, I find as Birdsong testified that errors in
Paragon’s June 29 offer letter generated a lot of questions from
the officers, and that Waddell’s response to these questions while
assuring them that Paragon would honor the wages set forth in
the Knight CBA, created confusion as to what other Knight CBA
benefits Paragon might honor. I do not find Birdsong’s occa-
sional testimony that Waddell stated Paragon would honor the
Knight CBA to be an intentional misrepresentation. Rather, I
find Birdsong’s memory on Waddell’s specific statements was
clouded by the passage of time, and as well as the barrage of
questions from security officers that Respondent’s offer letter
engendered. I find misstatements by Respondent in its June 29
offer letter about wages, and pension and health and welfare rates
concerning those in the Knight CBA and assurances by Waddell
at those meetings that Paragon would honor the CBA in certain
respects created confusion amongst the employees as to what
Paragon was actually offering.
Birdsong testified their hourly rate of pay with Knight did not
change after they were hired by Paragon. Birdsong testified the
health and welfare contribution being received as wages
changed, but their employees already knew that. Birdsong testi-
fied the employees had no clue that breaks were going to change.
Birdsong testified where it states in the offer letter that, “Breaks
will be provided in accordance with company policy,” did not
signify to him there was going to be a change because Paragon’s
break policy could have been the same as Knight’s.
Birdsong testified he learned he was no longer receiving a uni-
form allowance when the employees looked at their first
paychecks from Paragon. For Knight, there was a line item on
the check for uniform allowance, which was absent from the
checks from Paragon. Birdsong testified that prior to September
1 no one from Paragon had told him that the hourly uniform al-
lowance was going to be discontinued. Birdsong later testified
that by the first two checks they received they figured out they
were not receiving a uniform allowance, and he testified that was
about a month or so.
Birdsong testified when he was employed by Knight the em-
ployees received an hour in paid breaks. There was one 30-mi-
nute and two 15-minute breaks per 8 hours worked, or the em-
ployee could just take the whole hour at a time. Birdsong testi-
fied they worked 7 hours at Knight and got paid for 8. Birdsong
testified when Paragon took over operations on September 1,
his breaks did not change initially. He testified the break struc-
ture changed around a month after Paragon took over. Bird-
song testified that around a month after Paragon took over he
no longer received a paid lunchbreak. Birdsong testified after
Paragon took over and made the changes to breaks, when Bird-
song worked an 8-hour shift he was only paid for 7 hours and
30 minutes. Birdsong testified the first paycheck he received
from Paragon the hours he was paid included the time he spent
on his lunchbreak. He testified that in subsequent checks the
hours did not match up. Birdsong testified it was a couple of
months after he got there that he realized he was not being paid
for his lunchbreaks by Paragon. Birdsong testified he could tell
by calculating the hours in his check and the amount of pay that
for around the first 2 months he was being paid 40 hours and
therefore he was being paid for his lunchbreak. He testified this
changed around 2 months after Paragon came in and the super-
visors announced the employees would no longer be paid for
their lunch break. He testified at that time he made calculations
and determined he was not being paid a full 40 hours. He testi-
fied when the supervisors announced the change the employees
had to start signing in for their breaks.
Birdsong testified he learned Paragon had increased the
hourly threshold for full-time status from 32 to 40 hours much
later on. He testified it was over a year. Birdsong testified this
had a tremendous effect because it impacted their personal leave
and vacation pay. It also affected the rate of pay they were re-
ceiving to go into their 401(k). He testified a full-time employee
gets the full vacation benefit, a part time receives a prorated ben-
efit.
Grady Baker works for Paragon as vice president of opera-
tions. Baker testified Paragon provides armed force protection
to the Federal Government in various aspects, including security
officers working as guards in Federal buildings. Baker testified
Paragon’s operations are in 42 states in the United States and
many of the territories including Saipan, American Samoa, and
Guam. Baker testified there have been over 30 contract transi-
tions to Paragon since the President’s executive order pertaining
to the right of first refusal of a job offer to the predecessor con-
tractor’s employees, with at least 15 in 2014. Baker testified
there were two occasions in 2014 where less than 50 percent of
PARAGON SYSTEMS, INC. 9
the predecessor’s employees came to Paragon on Federal con-
tracts. He testified he did not recall it happening in 2013. Baker
testified with the vast majority of contracts in the last 2 years
more than 50 percent of the predecessor’s employees have been
hired by Paragon making it through the vetting process and beginning
work. Baker testified over 90 percent of the employees Paragon
employs are union represented.
Baker testified the items specified in a wage determination
that have to be met by the contractor are: hourly wages, health
and welfare minimums, minimum requirements for vacation, and
some locales prescribe how breaks are to be conducted. Baker
testified there are provisions and guidelines for amounts to pay
for uniform maintenance allowance (UMA). Baker testified
when Paragon is going to bid on a location and there is no CBA
in place he looks at the wage determination to determine what
Paragon has to pay as a minimum amount. Baker testified, if the
predecessor contractor has a CBA, Paragon is bound by the
wages and fringe benefits of that contract. He testified whatever
the employees are making per hour, the health and welfare, va-
cation, vesting is all predetermined and is owed to the employ-
ees. Baker testified Paragon has to ensure when they go into a
new contract they are paying at least those collectively bargained
minimums because those wages become the wage determination
for the applicable contract and this is made clear by the contract-
ing officers when they put out the solicitations on behalf of the
Federal agencies. Baker testified when they are interested in bid-
ding for a contract most times Paragon receives a copy of the
predecessor’s CBA. Baker testified he reviews the predecessor’s
CBA wage appendices because that is what Paragon is required
to meet, and how they determine what to put in the offer letter
for wages. He testified Paragon does not look at the predeces-
sor’s other provisions or economic or noneconomic terms of em-
ployment because Paragon has their own company policies and
practices which they propose and were awarded the contract
based on. Baker testified they are not interested how other com-
panies do their business unless they are beating Paragon in the
competitive market.5
Baker testified that, prior to the FEMA contract; he has been
involved with Paragon taking over a Federal contract from a
competitor over 50 times since 2008, when Baker started with
Paragon. Baker testified he is the liaison between whoever they
contracted with and Paragon, and he is also responsible for
making sure that Paragon sets up the logistics such as job fairs to
make sure they have enough personnel to be able to staff the
contract on day one. Baker testified when Paragon has taken
over contracts from a competitor in about 45 to 46 of the 50-
plus contracts the competitor’s employees were represented by
a union. Baker testified he is aware of no instances where Para-
gon adopted the predecessor’s union contract. Baker testified,

5 I did not find this particular aspect of Baker’s testimony to be con-
vincing in that it appeared to be formulated in support of Paragon’s legal
position. For example, the Knight CBA was not terribly complex, and I
do not credit Baker’s claim that when they had access to it that he and
Respondent’s other officials did not review its contents, whether or not
they felt obliged to follow its terms. I would also note that Paragon’s
offer letter specifically stated employees would not have the option of
concerning the FEMA contract, Baker was responsible for en-
suring they had enough people recruited, hired, trained, quali-
fied, and ready to work on day one. Baker testified Paragon used
Knight’s union contract at the FEMA building to price out what
Paragon was legally obligated to pay in terms of wages and
fringe benefits. Baker testified Paragon does not assume that the
Union will be representing the employees because, “it’s not in
every instance that we get a majority membership to come
aboard especially in this region.”
Baker testified Paragon has developed a procedure on how to
communicate to incumbent employees the terms Paragon is
offering. Paragon’s first communication to incumbent employ-
ees is the job fair announcement. He testified Paragon posts it at
the location for the incumbent workforce with permission of the
client. Copies are also left with the incumbent management if
they are willing to speak with Paragon, and Paragon asks them
to pass it out without disrupting operations. Baker testified the
posting announces Paragon won the contract they are working
on and Paragon is hosting a job fair, and to be at this place at the
specified time and to make sure to bring things to prove who you
are, including your social security card, driver’s license, et cetera
and to apply on line.
Baker testified Paragon trains its personnel who conduct the
job fairs for questions at the job fair. He testified Paragon rep-
resentatives are taught to direct the officers to the offer letter con-
cerning questions about pay, and if they have further questions
they can direct them to Baker, the HR representative, one of
Paragon’s attorneys, or someone senior in the company. He tes-
tified Paragon job fair representatives are trained for the fre-
quently asked questions one of which is if Paragon is going to
honor the CBA of the predecessor. Baker testified people are
trained to say no to that question.
Baker testified Rick Waddell’s title at Paragon was the project
manager for the D.C. region. He testified Waddell was no
longer working for Paragon at the time of the trial and he was
living in West Virginia.6 Baker testified Waddell went through
training in terms of what to say in response to questions about the
CBA a n d questions about the job offer. Baker testified he
attended seven of the job fairs Waddell conducted while working
for Paragon, including the FEMA job fair. Baker testified at
those job fairs he heard Waddell receive questions about whether
Paragon was going to adhere to the predecessor's CBA. Baker
testified when they specifically asked are you going to be
adopting the CBA, Baker and Waddell gave them the same answer
“which is we currently do not have a CBA with Knight Protective Se-
curity or your union. If at the end of the process, a union
presents itself, we'll enter into negotiations in good faith.”
Baker testified Paragon wants the officers to complete the ap-
plications before coming to the job fair because “We can't issue
receiving health and welfare payments as part of their paycheck, rather
it would be placed in their 401(k) plan. Thus, the offer letter changed a
benefit provided by Knight listed in its CBA which was not contained in
the CBA appendices, but in the heart of the agreement at article XXIV.
6 Baker testified Lori Raines also no longer works for Paragon and
had moved to Florida.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD10
contingent offers of employment until you've applied, offi-
cially applied with the company unless you express interest,
and everybody who works for Paragon from top to bottom has
to apply online through our HMS system before being consid-
ered for positions.” He testified Paragon wants people to apply
in advance of the job fair to know who is coming to the fair, and
how much support personnel Paragon will need at the meeting.
Baker testified Paragon’s job fair memo asks people to bring cer-
tain documents so they can prove who they are because that is
part of the interview process. Baker testified they present them-
selves with their social security card, they fill out I-9s, and
they provide their driver’s license data. Baker testified the
job fair announcement memo states offers of employment are
contingent upon successful passing of all the pre-employment
requirements. Baker testified contingent means, “we're giving
you an offer, but it’s not a guarantee of employment on Septem-
ber 1st. That's just the first part of the process. We’re giving
you a contingent offer of employment meaning if you meet all
the terms and conditions, if you accept our employment, and if
you qualify with all the bona fides that I explained earlier for
your training, your medical certifications, et cetera, then essen-
tially you’ll have a place to work on 1 September.” Baker testi-
fied the job fair memo is not an offer of employment. He testi-
fied, “an offer of employment is an offer letter. This is just how
to go and apply for a job with us.”
Baker testified when someone comes to a job fair if they are
an incumbent they check in and if they have applied in Paragon’s
system it is likely Paragon has an application and a packet for
them which include a contingent offer letter. He testified Para-
gon will ask them for their paper work. Baker testified for the
incumbent work force Paragon has their credentials and knows
to that point they are an officer in good standing on the current
contract. For the incumbent officer, they come in and receive
their packet with the offer letter and behind that there is benefit
paperwork, the I-9, direct deposit forms, benefits explanation
forms, and all of the information someone would need to be put
into Paragon’s system. Baker testified the offer letter is on top
in the file and the first thing the incumbent sees.
Baker attended the June 29 job fair. He testified it started at
10 a.m. and Baker left around 4 p.m. Paragon was billed for the
use of the facility until 5: 30 p.m. Baker testified there was min-
imal activity at the time he left. Baker testified when people ar-
rived they signed in. They were directed inside where there were
folders containing their information including contingent offer let-
ters. They went back to the tables, took a seat, read through the
information, and filled out the paperwork. He testified once they
were done filling out the information, they came back and signed
in again, at which time they were called up to have the paper-
work reviewed and went through the interview process with
attending Paragon representatives. Baker testified when they
turned in the paper work they had to complete their uniform
size survey and give Paragon their measurements. Baker tes-
tified Paragon had people with a tape there who would did a fitting
for the officers’ body armor. Baker testified they were told they
would be instructed a s t o when the next range dates would

7 Despite this testimony, Baker later testified that the job fair was in
a very large room, that there were as many as 60 officers there in the
be, when the training dates would be, and this would be com-
municated through their site manager.
Baker testified there was no specific question and answer ses-
sion at the June 29 job fair. Baker testified there were questions
and answers when they would come up with their packets, and if
they had questions, then we would answer them. However, he
also testified people raised their hands and asked questions.
Baker testified Waddell was asked questions at the job fair, and
that Baker was present for all of the questions that Waddell was
asked that Baker knew of.7 Baker testified someone asked about
the pay rate, that the rate listed on the back of the contingent offer
letter for FEMA was incorrect and wanted to know if this was
what they were getting paid. Baker testified the answer was no
that they would be getting paid what you are getting today.
Baker testified Waddell said, “I’m not sure what’s in your CBA,
but if there’s, if there’s a CBA out there or wage determination
we don’t know about, we’ll research that.“If there’s money that
we owe you, we’re—we’re going to pay you what’s legally
owed.” Baker testified he did not hear Waddell address that
point more than once.
Baker testified that other questions asked of Waddell in the
meeting, where about the types of uniforms they would be re-
ceiving, could they wear their own boots. Baker testified, “I
mean it was all kinds of various questions. Are we going to
be on 12-hour shifts? Currently, you know, we work 12s.” Baker
testified, “The majority of the answers were we don’t know at
this time. The offer, you know, you have your offer letter. We
still don’t know who’s going to be there yet because there
were—we were recruiting for more than one location at this
job fair.“ Baker testified there were five sites they were recruit-
ing under this contract. He testified there were a ton of questions
going back and forth. Baker testified there were no questions
about whether people would get a uniform allowance or a shoe
allowance. Baker testified they did not promise anyone that they
would get a uniform or shoe allowance. Baker testified the job
fair was conducted in a large room with the capacity to hold 300
people. He testified at the initial rush there were about 60 people
in the room. Baker testified he was not standing next to Waddell
the whole time Baker was there. Baker testified he did not hear
every question Waddell was asked. Baker testified he did not
hear anyone at the job fair raise a question to himself or Waddell
about whether Paragon was going to keep everything the same
as under the Knight contract. He testified he also did not hear
anyone ask a generalized question as to whether everything was
going to be the same as under Knight. Baker did not hear
Waddell state that everything was going to be the same as under
Knight.
Concerning the June 29 contingent offer letter of employment,
it states shift schedules to be determined in accordance with the
operational needs of the contract. Baker testified this meant
depending on the number of personnel they had, they will de-
vise the shift schedule, such as whether they would be 12 or 8
hour shifts. Baker testified, at the time of the job fair, he did
not know how the shift schedules would be set up on September
1. It is stated in the letter breaks will be provided in accordance
morning rush, and he was not at Waddell’s side for the whole time Baker
was there.
PARAGON SYSTEMS, INC. 11
with the company policy and in compliance with any applicable
state, federal law requirements subject to the operational needs
of the contract. Baker testified their company policy is, unless
otherwise stipulated b y the statement of work provided by the
government, t h e y follow the wage determination laws for
the minimum break requirements. Baker testified there was
nothing in the FEMA statement of work that required P a r a -
g o n to set up breaks in any particular fashion. Baker denied
hearing Waddell tell anyone at the job fair that breaks would
be done in the same manner as they were done by Knight.
Baker testified that, after the job fair is completed, then the
predecessor’s incumbents have to qualify for the new con-
tract. To qualify, they have to go through use of force training
with Paragon, which pertains to the use of their firearm. He
testified, if they had OC training or if they had baton certification
which is expired, they have to go through that use of force train-
ing with Paragon. Baker testified Paragon does its own
use of force training. He testified they have to go for new med-
ical testing. He testified the medical requirements from the old
contract to the new one had changed at FEMA. The new one
required a seven-panel urinalysis as opposed to a five panel.
They also had to be sized for uniforms and for their body armor,
which was a new requirement. Then they are sent for the fit
testing which is not only the medical testing, but also a cardi-
ovascular test.
Baker testified the next meeting with the incumbent employ-
ees was the orientation meeting. Baker testified there were eight
orientations in Waddell’s region while Waddell worked for Para-
gon. Baker testified he spoke at seven of them, and only missed
one, which was the one pertaining to the FEMA building. Baker
testified he spoke to Waddell and others about how to respond
to employee questions at orientations. Baker testified they know
the typical questions people are going to ask because they have
heard them before. Baker testified, at the sessions he attended
with Waddell, there were questions about whether Paragon was
going to honor the CBA in place with the predecessor. Baker
testified that, during the seven orientations he attended with
Waddell, Waddell gave two answers, one was no union has pre-
sented itself to the company and we are not currently in negoti-
ations or, two, no, we are not adopting it and we will enter into
negotiations once we figure out who shows up on day one be-
cause we are not there yet. Baker testified Waddell never said
anything suggesting Paragon would continue to employ the of-
ficers under the same terms and conditions as the predecessor's
CBA. Baker testified Waddell never made the generalized state-
ment that everything was going to remain the same while Baker
was present.
Baker testified employees were given a copy of the hand book
at the orientation meeting as part of Respondent’s practice. The
employee handbook contains a section on uniforms and appear-
ance. It states that the officer will be issued either “wash and
wear” or “dry clean-only” uniforms. It gives maintenance in-
structions for each and states if they were provided dry clean
only uniforms they will be provided clean uniforms or reim-
bursed for dry cleaning expenses. Baker testified it is Paragon’s
policy that if they are able to provide wash and wear uniforms
and uniform replacements at no cost to the employee, then they
were not going to pay the uniform allowance for dry cleaning.
Baker testified Paragon provides wash and wear uniforms at the
FEMA location and does not provide a uniform allowance there.
Baker testified that on the first day of the contract, September
1, the direction from Paragon was that officers were to receive
one 15-minute break per 4 hours of work and one unpaid meal
break for 30 minutes. If they worked 8 hours, they would get
two paid 15-minute breaks and one unpaid 30-minute break.
However, Baker testified that was not what actually started the
first pay period. He testified they found in the first pay period
the supervisors were not deducting the 30-minute break in the
payroll system on a consistent basis. Some of them were, and
some were not. Baker testified for the first pay period some of
the officers may have been paid a full hour in breaktime for an
8-hour period, which would include a 30-minute lunch and two
15-minute breaks. Baker testified he found out about this prob-
lem the first pay period when they were doing payroll review.
Baker testified, “We immediately corrected it going forward.”
He testified, “I called Rick Waddell and said, hey, your super-
visors at the site are paying for breaks, are paying for some of
these breaks, not all, but you need to get on your folks and make
sure that they're following company policy.” Baker testified
Waddell would have received the same reports Baker received
concerning the officers being paid for their lunch breaks. How-
ever, Waddell did not pick up the error in payment on his own
at the time Baker called him about it. Baker testified the prob-
lem about paying some of the officers for the 30-minute lunch-
break was corrected in October at the time of the second pay
period on October 3. The prior and first paycheck had issued on
September 19.
B. Analysis
1. Respondent’s 10(b) defense
Section 10(b) states in pertinent part that “[N]o complaint
shall issue based on any unfair labor practice occurring more
than six months prior to the filing of the charge with the Board.”
Section 10(b) is an affirmative defense which must be pleaded
and if not timely raised, is waived. E.g., Federal Management
Co., 264 NLRB 107 (1982). The burden of proving an affirma-
tive defense is on the party asserting the defense. See Chinese
American Planning Council, 307 NLRB 410 (1992), review de-
nied 990 F.2d 624 (2d Cir. 1993); and Kelly’s Private Care Ser-
vice, 289 NLRB 30 (1988). The burden is met by showing the
filing party had actual knowledge or constructive knowledge of
the alleged unfair labor practice more than 6 months prior to the
filing of the charge. Duke University, 315 NLRB 1291 fn. 1
(1995); Mine Workers Local 17, 315 NLRB 1052 (1994). No-
tice, may be found even in the absence of actual knowledge if a
charging party has failed to exercise reasonable diligence, i.e.,
the 10(b) period commences running when the charging party
either knows of the unfair labor practice or would have “discov-
ered” it in the exercise of “reasonable diligence.” Oregon Steel
Mills, 291 NLRB 185, 192 (1988), enfd. mem. sub nom. Gilmore
Steel Corp. v. NLRB, 134 LRRM 2432 (9th Cir. 1989), cert. de-
nied 496 U.S. 925 (1990). M & M Automotive Group, Inc., 342
NLRB 1244, 1246 (2004). See also NLRB v. Dynatron/Bondo
Corp., 176 F.3d 1310, 1317 (11th Cir.1999). Whether and when
a charging party should reasonably have known of an unfair la-
bor practice requires a case-specific factual determination. See,
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD12
e.g., East Bay Automotive Council v. NLRB, 483 F.3d 628, 634
(9th Cir. 2007) (concluding that substantial evidence supported
the NLRB's finding that labor organization “did not have actual
or constructive knowledge” of unfair labor practices); Michael
Konig, 318 NLRB 337 (1995) (concluding that evidence was in-
sufficient to establish that exercise of reasonable diligence by la-
bor organization would have led to earlier discovery by the or-
ganization of unfair labor practice); Moeller Bros. Body Shop,
Inc., 306 NLRB 191 (1992), (concluding complaint to be un-
timely because facts demonstrated that labor organization, exer-
cising reasonable diligence, should have discovered unfair labor
practices more than six months before it filed its complaint).
In Duke University, 315 NLRB 1291, 1292 fn. 1 (1995), it was
stated:
Having adopted the judge's credibility findings with respect to
the testimony of full-time drivers Louise Davis and Melton
Thompson and International Vice President of Amalgamated
Transit Union Tommy Mullins, we agree that the Union did not
have actual notice of the Respondent's unfair labor practices
prior to 1993. We further find that there is no basis for con-
cluding that the Union should have known of the conduct be-
fore July 1993. As the judge found, the Respondent was refus-
ing to recognize the Union at the relevant times, and thus the
Union was not able to perform its function as collective-bar-
gaining representative. Clark Equipment Co., 278 NLRB 498
(1986). The Respondent also relies on Southeastern Michigan
Gas, 198 NLRB 1221 fn. 2 (1972). In that case, the Board left
open the issue of whether the 10(b) period would begin to run
only on notice to the union when the changes are not open and
obvious. The Respondent apparently infers from this that the
10(b) period would begin to run prior to notice to the union,
i.e., on notice to employees, where the changes are open and
obvious to the employees. Whatever the merit of this interpre-
tation, it has no relevance here. The changes here were not
open and obvious to employees until within the 10(b) period.
The nature of the Respondent's policy changes at issue here
were subtle and evolving, the full impact of which could not
readily be appreciated by the employees outside the 10(b) pe-
riod.
Similarly, In Concourse Nursing Home, 328 NLRB 692, 693–
694 (1999), the Board reversed the judge in concluding that Sec-
tion 10(b) did not bar a union from seeking pension contributions
for the respondent employer’s licensed practical nurses (LPNs)
for periods before June 1, 1995. As part of a CBA that expired
on September 30, 1994, the parties agreed to a 35-month mora-
torium on future contributions to the Union's pension fund be-
cause of a surplus in the fund. The moratorium ended on May
30, 1994, and the respondent was obligated to resume making
payments to the fund beginning in June. The union’s pension
fund did not receive any contributions from the respondent for
the unit employees covering the month of June until the follow-
ing October. The fund determined, after receiving the respond-
ent’s October pension check, that the payment total was less than
the fund should have received. All the pension fund contribu-
tions the respondent made during the ensuing months were also
“short” by the calculations of the fund's accountants. There, the
pension fund office administered 9 or 10 separate funds and re-
ceived monthly contributions from a total of 170–200 employers
contributing to the various funds. The frequency of inadequate
or otherwise incorrect payments to the funds was so great that
the fund office prepared a form letter that it sent monthly to those
employers whose contributions were less than the proper
amount. In October, the Union’s fund office sent a “short notice”
letter to the respondent stating that its pension fund contributions
for “July” were deficient. The fund sent similar letters notifying
the respondent of pension underpayments the following months.
After receiving no response to the “short notice” letters, a fund
representative contacted an agent of respondent in May or June
1995 to discuss the shortages. The fund representative was told
the respondent was refusing to make pension contributions for
its LPNs until further notice. The respondent employer repre-
sentative stated he had filed some sort of petition regarding the
LPNs which precipitated this action. Thereafter, the Respondent
ceased all pension contributions for months since June 1995.
There in reversing the judge and in finding Section 10(b) did not
serve as a bar to the charge the Board took into account the vol-
ume of incorrect pension payments the union’s pension fund re-
ceived, the history between the parties, and stated “an unfair la-
bor practice charge will not be time barred if the ‘delay in filing
is a consequence of conflicting signals or otherwise ambiguous
conduct by the other party.’ Based on the totality of the evi-
dence, we conclude that the situation here was, at the least, suf-
ficiently ambiguous as to whether the Union had “clear and un-
equivocal notice . . .” Id. at 694.
An employee’s knowledge of the occurrence of an unfair labor
practice is not automatically imputed to the employee's labor or-
ganization. See Stone Boat Yard v. NLRB, 715 F.2d 441, 445 (9th
Cir.1983) (concluding that knowledge possessed by union mem-
bers was not attributable to union because there was no evidence
in the record that the members were agents of the union). The
knowledge of bargaining unit employees concerning their terms
and conditions of employment being imputed to their bargaining
representative for purposes of determining when the 10(b) limi-
tations period commences depends on the factual context. See
Michael Konig, 318 NLRB 337, 339 (1995). In Courier-Jour-
nal, 342 NLRB 1093, 1103 (2004), the Board affirmed the fol-
lowing:
It is appropriate given the factual context here to impute Hei-
ne's knowledge to the Union. Heine was not merely an em-
ployee. He was a steward and had been a member of the press-
room department bargaining committee for a year at the time
of the July 1, 2001, changes. He attended all of the pressroom
department bargaining sessions for a new contract. In Baytown
Sun, 255 NLRB 154, 160 (1981), a union steward's knowledge
was imputed to the union for purposes of determining whether
the charge was timely where the steward was closely tied to the
union, was a member of the union's negotiating committee, and
had attended all of the negotiating sessions between the em-
ployer and the union. [FN14] Given the factual context in this
case, I conclude that, as with the steward in Baytown Sun, su-
pra, Heine's pre-September 15 knowledge of the July 1 in-
creases should be imputed to the Union.
. . .
PARAGON SYSTEMS, INC. 13
I have considered the decision in Catalina Pacific Concrete
Co., 330 NLRB 144 (1999), which the General Counsel cites
in its brief. In that case the Board concluded that notice to a
“nominal” steward who had crossed the union picket line and
was working during a strike, and who the employer itself
claimed was a statutory supervisor, was not adequate to initiate
the limitations period. Id. at 144, 149. The Board explained that
despite such individual's “nominal status as a steward, the [em-
ployer] could hardly have reasonably believed that notice of
unilateral changes to someone it was claiming as one of its su-
pervisor[s] was an acceptable method of communicating with
the Union about those changes.” Id. at 144. In the instant case,
Heine was not only a steward, but a member of the negotiating
committee who had participated in all the bargaining sessions
for a successor to the press-room department agreement that
expired on August 7, 2000. His status as a union official was
not “nominal,” but, as in Baytown Sun, supra, very real.
In Brimar Corp., 334 NLRB 1035, 1037 fn. 1(2001), the
Board majority stated:
We agree with the judge that Sec. 10(b) of the Act does not bar
the complaint's allegations. We adopt the judge's finding that
Union Steward Robbie McCaskill's November 1996
knowledge of the Respondent's newly implemented “Work-
station Form” is not imputed to the Union for the purpose of
triggering the 6-month period prescribed in Sec. 10(b) of the
Act for the timely filing of unfair labor practice charges. In
doing so, we agree with the judge's finding that McCaskill, alt-
hough a steward, had no role in matters relating to bargaining,
and the Respondent had no reason to believe otherwise. See
Catalina Pacific Concrete Co., 330 NLRB 144 (1999); cf. Bay-
town Sun, 255 NLRB 154, 160 (1981) (union steward's
knowledge imputed to union for purposes of determining the
charge was not timely filed under Sec. 10(b) where the steward
in question was found to be more than a steward in that she was
closely tied to the union, she was a member of the Union's ne-
gotiating committee, and had attended all of the 25 or 30 nego-
tiating sessions between the respondent and the union.)
In the present case, there is no contention or evidence that the
Union was provided with actual notice by Paragon of the
changes in working conditions the parties stipulated took place
on September 1, 2013. In fact, Paragon submitted a regional di-
rector dismissal letter in another case arguing its procedures per-
taining to its being a successor have been approved by this
agency. First, obviously a regional office dismissal letter is not
a Board determination and is certainly not binding on me as the
facts of the investigative file in that instance were not litigated
before me. Perhaps, more instructive was the Regional Direc-
tor’s determination that Paragon had specifically notified the un-
ion, on multiple occasions, prior to taken operational control that
it intended to enter into negotiations for a new CBA rather than
adopt the existing agreement. There is no contention that such
notice was provided to the Union by the Respondent in the pre-
sent case.
Gaby Fraser works for the Union as director of operations.
She is the only paid employee of the Union. Fraser’s duties in-
clude communications with employers, grievance handling at
certain levels of the grievance procedure, serving as the Union’s
chief negotiator, running the day to day operations of the Union,
and filing unfair labor practice charges. She testified the Union
is certified or recognized as a collective bargaining representa-
tive for 19 bargaining units covering between 1200 to 1500 em-
ployees. Fraser testified the Union has shop stewards at around
75 percent of its sites, and the stewards report to Fraser. Fraser
testified that while the stewards can file Board charges, that is
normally her function. Fraser testified when Paragon took over
the contract the officers who were shop stewards at Knight at the
FEMA location were let go. Fraser testified she did not have any
connection to FEMA.
Fraser credibly testified she first received copies of the Para-
gon offer letter to employees at FEMA in the early spring of
2014. Fraser testified she learned Paragon was not offering the
employees’ health and welfare fringe benefit as a wage through
phone calls she received in early March 2014 from security of-
ficers working at the FEMA site. Fraser described a conversa-
tion concerning breaks, pension, and health and welfare with an
officer from the FEMA site. Fraser testified that, during the call,
the officer stated they do not get health and welfare in their pay
anymore. Fraser asked why the officer did not tell Fraser, and
was told there was nothing Fraser could have done about it. Fra-
ser testified the employee stated they do not get pension either
and she mentioned breaks. Following this conversation, Fraser
called some other officers, and she testified she checked with the
two former shop stewards who used to work at the FEMA loca-
tion and they confirmed it. Fraser testified the officers were not
receiving the breaks they used to receive. Fraser testified they
used to have two 15 minute and one 30 minute paid break. She
testified now they were saying they were sometimes getting a 15
or a 30 minute break for the entire day or nothing for the entire
day. In her pre-hearing affidavit, Fraser listed a series of changes
that took place in working conditions at FEMA under Paragon.
Item 1 was listed as, "reduced and/or cancelled employee
breaks." Item 6 was listed as “health and welfare and pension
monies being diverted to the company plan.” Fraser’s affida-
vit states, "I first learned of change 1 and 6 on March 7 or 21,
2014, during a site visit that I will talk about later in my
affidavit.” While at the trial, Fraser testified she learned of these
changes during phone calls with officers, and in her affidavit she
recalled it was through a site visit, I have credited her testimony
that she first learned of these changes in March 2014, and she
attempted to verify the changes through follow up contacts as
she described in her testimony at the trial.
Fraser testified she learned in April 2014 that full-time status
had changed at FEMA from 32 hours to 40 hours when Paragon
took over. Fraser testified when she was talking to one of the
officers at FEMA about anniversaries she learned Paragon paid
off the officers at the Cohen Building, but they did not pay off at
GSA or at FEMA concerning sick leave and vacation. Fraser
testified when she was talking to the FEMA officer she was told
some of the officers got paid and some did not based on full and
part-time status. Fraser testified Paragon changed full-time to 40
hours, and officers who used to work 36 and 37 hours were now
being prorated for vacation and sick leave because they were no
longer considered full-time. She testified under the Knight CBA
32 hours was considered full-time. Fraser testified from what
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD14
she understood this happened late February or early March when
the officers were paid out. In her pre-hearing affidavit, Fraser
stated she learned Paragon changed the rate of vacation accrual
and anniversarydates; that sick leave was not paid out, and that Paragon
changed the definition of full-time status from 32 hours to 40
hours, around the first or second week of April 2014, during a
conversation with one of the FEMA shop stewards.8
Fraser testified she learned the FEMA employees were no
longer receiving a uniform allowance by talking to a Board agent
in May 2014, at which point Fraser called some FEMA officers
to verify. Similarly, in her pre-hearing affidavit, Fraser testified
she learned of Paragon’s change with respect to a uniform allow-
ance during a conversation with a Board agent on around May
19, 2014.
Birdsong’s testimony reveals that errors in Paragon’s offer let-
ter to employees about wage rates spawned multiple questions
by officers to Waddell at the job fair and orientation about the
wage rates Paragon was offering, to which Waddell responded
Paragon would honor the CBA concerning wage rates. While
Birdsong admitted at points in his testimony that Waddell did not
state Paragon would honor the Knight CBA as to all benefits, I
find Waddell’s responses created further confusion amongst ap-
plicants as to what would actually change. Birdsong testified
their hourly rate of pay with Knight did not change after they
were hired by Paragon. Birdsong testified the health and welfare
contribution being received as wages changed, but they employ-
ees already knew that. Birdsong testified the employees had no
clue breaks were going to change. Birdsong testified that where
it states in the offer letter that, "Breaks will be provided in ac-
cordance with company policy," did not signify to him there was
going to be a change because Paragon’s break policy could have
been the same as that with Knight. Moreover, while Paragon
may have had to adjust scheduling employees break times and
shifts, it should have known before the employees were hired
that it was no longer going to pay them for their 30 minute lunch
break, yet they were never directly informed of this before they
started working. In fact, Paragon’s supervisors were not even
clear on this change because as per Baker’s testimony at least
through the first pay check, some of the supervisors were enter-
ing payroll information causing employees to be paid for their
30 minute lunch break which was only subsequently corrected
by Paragon. Birdsong testified the first paycheck he received
from Paragon the hours he was paid included the time he spent
on his lunch break. He testified that in subsequent checks the
hours did not match up. Birdsong testified that it was a couple
of months after he started with Paragon that he realized he was
not being paid for his lunch breaks by Paragon. Birdsong testi-
fied by calculating the hours in his check and the amount of pay
that for around the first 2 months he was being paid 40 hours and
therefore he was being paid for his lunch break. He testified this
changed around 2 months after Paragon came in and the super-
visors announced the employees would no longer be paid for
their lunchbreak. He testified when the supervisors announced
the change the employees had to start signing in for their breaks.

8 Fraser’s testimony concerning the status of the shop stewards at the
trial and in her affidavit is somewhat murky. The employees serving as
stewards were not identified, and while Fraser testified Paragon did not
No hard evidence was placed on the record either by Paragon or
the General Counsel as to when the Paragon employees stopped
being paid for their 30 minute lunch break, and Birdsong and
Baker’s recollections differed as to how quickly this happened.
Regardless, Paragon never directly informed employees prior to
their being hired that they would not be paid for their lunch
break, and its continuing to do pay them for those breaks for
whatever period after they were hired, along with errors in their
offer letter and representations about those errors created confu-
sion to employees based on Paragon’s actions as to what benefits
they were being offered.
Birdsong testified he learned he was no longer receiving a uni-
form allowance when the employees looked at their first pay
checks from Paragon. For Knight, there was a line item on the
check for uniform allowance, which was absent from the checks
from Paragon. Birdsong testified that, prior to September 1, no
one from Paragon told him the hourly uniform allowance was
going to be discontinued. Birdsong later testified that by the first
two checks they received they figured out they were not receiv-
ing a uniform allowance, and he testified that was about a month
or so. While Paragon’s handbook discussed the differences in
Paragon’s policy between wash and wear uniforms and those that
had to be dry cleaned, this was a multipage document and was
not tendered to employees until close to two months after they
were required to submit acceptance of Paragon’s offer of em-
ployment, and only about a week before they were to start their
employment with Paragon. Even at the August 24 orientation
meeting if the employees were aware enough to notice from the
multipage handbook that no uniform allowance was to be paid
for wash and wear uniforms, there is no showing that they were
told at that time that those were the type of uniforms they would
be receiving.
Birdsong testified he learned Paragon had increased the
hourly threshold for full-time status from 32 to 40 hours much
later down the road. He testified it was over a year. Birdsong
testified this had a tremendous effect because it would impact
their personal leave and vacation pay. It would also affect the
rate of pay they were receiving to go into their 401(k). He testi-
fied a full-time employee gets the full vacation benefit, a part
time receives a prorated benefit. Fraser testified that it was re-
ported to her in April 2014, that some employees received pro-
rated pay for sick leave and vacation because Paragon had
changed full-time status to 40 hours. Paragon had reported to
employees in their June 29 offer letter that full-time employees
would be receiving vacation pay, and it also reported a certain
amount of paid sick leave based on some unspecified regula-
tions. It was not until August 24, at the orientation meeting that
Paragon gave out its handbook, which contained a statement that
full-time employees were those who worked 40 hours. The
handbook did not explicitly tie this statement to vacation pay or
sick leave, and the separation of time in the two documents re-
veals that Paragon was rolling out benefit information sporadi-
cally in an unclear and confusing way.
The parties stipulated that Paragon and the Union reached a
retain them, she claimed to have had post transition conversations with
the stewards following the Paragon takeover both in her affidavit and in
her testimony at the trial.
PARAGON SYSTEMS, INC. 15
CBA on or about August 15, 2014. Thus, Paragon would have
had access to the role stewards and or any other employees
played in those negotiations. Paragon has not established there
were job stewards at FEMA during the 10(b) period, nor has it
established that any employee had a significant status pertaining
to negotiations or connection to the Union to impute employee
knowledge of benefit changes to the Union. See Brimar Corp.,
334 NLRB 1035, 1037 fn. 1(2001). Moreover, the manner in
which Paragon announced and rolled out its benefit package to
employees engendered confusion as to those benefits, and in the
circumstances here I do not find that Fraser failed to exercise
reasonable diligence based on the reports she received in the tim-
ing of her filing of the initial and amended unfair labor practice
charge. Duke University, 315 NLRB 1291, 1292 (1995). Ac-
cordingly, I do not find Respondent has established its 10(b) de-
fense.
Cases such as R. J. E. Leasing Corp., 262 NLRB 373, 381–
382 (1982), cited by Paragon are not persuasive here. There, an
employee filed an 8(a)(2) charge against an employer for enter-
ing a pre-hire agreement with a union. There was no union
charging party as there is here. The judge with Board approval
rejected the employer’s 10(b) defense stating the time period did
not begin to run until the employees knew of the pre-hire agree-
ment. An employee was the charging party and the issue of
whether an employee’s knowledge of events should be imputed
to a union was not addressed because there was no charging party
union. Similarly, I did not find cases such as NLRB v. Triple C
Maintenance, Inc., 219 F.3d 1147 (10th Cir. 2000) ,and Texas
World Services Co., 928 F.2d 1426 (5th Cir. 1991), cited by
Paragon to be on point to the issues presented here. I also do not
find Paragon’s reliance on Moeller Bros. Body Shop, 306 NLRB
191 (1992); and Mathews-Carlson Body Works, Inc., 325 NLRB
661 (1998) to warrant a finding that the Union did not act with
reasonable diligence in monitoring Respondent’s actions at
FEMA. Those cases both involved ongoing bargaining relation-
ships were the respondent employers over a period of years were
underreporting the number of alleged bargaining unit members
and failing to make fund payments on behalf of those nonre-
ported. In Mathews it was noted that the size of the work force
was in plain view of one of the union officials outside the 10(b)
period when he had visited the site; and in Moeller it was noted
the union failed to enforce certain contract provisions over a
number of years that would have disclosed the respondent em-
ployer’s failures, that the union never appointed a job steward,
and it made very infrequent visits to the employers over a de-
scribed 5-year period. Here, Fraser testified the Union had shop
stewards with the predecessor employer which were not retained
by Respondent. She is the only paid employee of a union repre-
senting 19 bargaining units covering between 1200 to 1500 em-
ployees. Respondent took over the contract on September 1,
2013. Fraser testified she received reports of unilateral changes
beginning in March 2014, at which time she began to investigate
the validity of those reports. Overtime, additional changes were
reported to her. Fraser filed the initial charge in this matter April
24, 2014, and in view of the Union’s resources I have concluded
the Union exercised sufficient diligence to defeat Respondent’s
10(b) defense. This is particularly so, when Respondent a large
company had in a copy of the Knight CBA and could have noti-
fied the Union in writing at September 1, 2013, or earlier that did
not plan to honor the Knight contract, and more specifically
could have informed the Union of the changes it intended to
make.
2. Respondent is a perfectly clear successor under the Board’s
Spruce Up Analysis
The General Counsel proffers in essence two theories. One
that the Respondent became a perfectly clear successor under the
Board’s analysis in Spruce Up Corp., 209 NLRB 194, 195
(1974), enfd. 529 F.2d 516 (4th Cir. 1975). The General Counsel
argues in the alternative that the Board should be overturn
Spruce Up as it is inconsistent with the language in the Court’s
decision in NLRB v. Burns Security Services, 406 U.S. 272, 294–
295 (1972). It is asserted that Respondent is a perfectly clear
successor under the much less restrictive language in the Court’s
Burns decision. Since I am constrained to follow current Board
law, I have explored and determined that Respondent is a per-
fectly clear successor under the Board’s Spruce Up analysis for
the reasons set forth below.
A statutory successor is not bound by the substantive terms of
the predecessor's collective bargaining agreement and is ordinar-
ily free to set initial terms and conditions of employment. NLRB
v. Burns Security Services, 406 US 272, 280, 281 (1972). While
the Court in Burns held that a successor employer is generally
free to set the initial terms, it also held that “there will be in-
stances where it is perfectly clear the new employer plans to re-
tain all of the employees in the unit in which it will be appropri-
ate to have the employer initially consult with the employees'
bargaining representative before it fixes terms.” The Board in-
terpreted the “perfectly clear” exception in Spruce Up, 209
NLRB 194 (1974), enfd. per curium 529 F.2d 516 (4th Cir.
1975). There, the Board concluded that the “perfectly clear” ex-
ception and the consequent forfeiture of the right to set initial
terms should be restricted to circumstances, where the new em-
ployer has either actively or by tacit inference misled employees
into believing that they would all be retained without change in
their wages, hours or conditions of employment or at least to cir-
cumstances, where the new employer has failed to clearly an-
nounce its intent to establish a new set of conditions prior to in-
viting former employees to accept employment. Id. 195.
Machinists v. NLRB, 595 F.2d 664, 674–676 (D.C. Cir. 1978),
the court stated as to the Board’s Spruce Up decision that:
Even when Burns is read, as the Board does, to limit compul-
sory initial-terms bargaining to situations wherein the succes-
sor has indicated that incumbents will be retained and has not
concurrently announced downward changes in employment
terms, predecessor-employees are afforded an important meas-
ure of protection. Once the duty to bargain has thus attached,
the successor is obliged to consult the incumbent union before
institution of less satisfactory terms. That is significant because
unconditional retention-announcements engender expecta-
tions, oft times critical to employees, that prevailing employ-
ment arrangements will remain essentially unaltered. Even
when incumbents are not affirmatively led to believe that exist-
ing terms will be continued,[FN48] unless they are apprised
promptly of impending reductions in wages or benefits, they
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD16
may well forego the reshaping of personal affairs that neces-
sarily would have occurred but for anticipation that successor
conditions will be comparable to those in force.
The Board was hardly at liberty to ignore these con-
cerns, and its construction of Burns is responsive to them.
On the one hand, incumbents informed of the availability of
employment with the successor entity but contemporane-
ously notified of substantial changes in the conditions
thereof are not lulled into a false sense of security. When,
on the other hand, the announcement of job-availability is
unaccompanied by any such warning, incumbents may re-
solve to cast their lot with the successor, secure in the
knowledge that they can invoke the aegis of collective bar-
gaining should alterations in the terms of the employment
be proposed.49
__________________
49 When the employment offer and a subsequent announcement
of changed terms both occur prior to actual hiring, the an-
nouncement could deter some employees from accepting, not-
withstanding that it is made some time after the successor first
makes known his plan to retain incumbents. If, for example,
the successor indicates that he intends to reemploy his prede-
cessor's workforce a month hence, and when employees arrive
to submit applications two weeks later he informs them that
substantially different terms will be instituted, some incum-
bents may decide to look for work elsewhere. Nevertheless, a
duty to bargain with respect to the proposed changes could pos-
sibly be properly imposed on either of two grounds. For lack
of sufficient time to rearrange their affairs, incumbents might
be forced to continue in the jobs they held under the successor
employer, notwithstanding notice of diminished terms, and
perpetuation of the workforce and as well the representational
status of the incumbent union may be assured. Even were that
less plain, a bargaining obligation may be essential to protect
the employees from imposition resulting from lack of prompt
notice. Thus a prospective employment relationship may be
presumed when a successor has boldly declared an intention to
retain incumbents but has not concurrently proposed substan-
tially reduced benefits. And such an inference may be left un-
disturbed by revelation of employment terms after the employ-
er's initial announcement but before actual hiring commences.
The successor would have no legitimate complaint about man-
datory bargaining in such circumstances because its necessity
is a product of his own misleading conduct.
In Hilton’s Environmental, Inc., 320 NLRB 437, 438 (1995),
the Board in applying the “perfectly clear” caveat articulated in
Burns as explained in Spruce Up stated:
Applying these principles to the facts of this case, we
find that the “perfectly clear” caveat is applicable in this
case. Thus, as discussed above, the Respondent had solic-
ited applications from the employees on September 8, and
had assured them the following day that all would be hired
unless some problem arose as a result of information dis-
closed on their applications or in the interview process.
Contrary to the Respondent, there was no clear announce-
ment at this time that it intended to establish new terms and
conditions of employment. See Fremont Ford, 289 NLRB
1290 (1988) (employer told union it had doubts about re-
tention of only a few unit employees; employer's stated de-
sire to change seniority and institute a flat rate insufficient
to indicate intent to establish new employment conditions).
To the contrary, the Respondent's entire course of deal-
ing with the employees, including accepting the December
1991 letters of intent that stated that the employees would
work for the Respondent at the contractual wage rate, and
the Army's having advised the Union, prior to the Septem-
ber 8 solicitation of applications, that the Respondent's con-
tract with the Army was subject to the Service Contract Act
and that the Son’s collective-bargaining agreement would
therefore be incorporated into the contract, all indicated that
the Respondent did not intend to establish new terms and
conditions of employment. See Canteen Co., above; Weco
Cleaning, above; Fremont Ford, above. Accordingly, we
find that the Respondent violated Section 8(a)(5) by unilat-
erally changing existing terms and conditions of employ-
ment[FN 10]
In Canteen Co., 317 NLRB 1052 (1995), enfd. 103 F.3d 1355
(7th Cir. 1997), the new company, prior to assuming control of
operations on July 1, 1992, personally contacted the predecessor
employees to say it wanted them to apply for employment. It
was noted the respondent also had several discussions with the
union representing the predecessor's employees in June concern-
ing its desire to establish a new job classification. The parties
discussed the sample contract they would use to begin negotia-
tions for a new collective-bargaining agreement. On June 22, the
respondent told the union that it wanted the predecessor's em-
ployees to serve a probationary period and the union agreed. On
that date, the parties agreed to meet on June 30 to negotiate a
collective-bargaining agreement. In its discussions with the un-
ion, the respondent did not mention anything about making any
changes in the initial terms and conditions and the Board, stated:
We agree with the judge that the Respondent violated
Section 8(a)(5) of the Act when, on or after June 23, the
Respondent told three of the four predecessor employees
that they could continue working the food services opera-
tion, but at significantly reduced wages. Specifically, we
find that by June 22, when the Respondent expressed to the
Union its desire to have the predecessor employees serve a
probationary period, the Respondent had effectively and
clearly communicated to the Union its plan to retain the pre-
decessor employees. Therefore, as it was “perfectly clear”
on June 22 that the Respondent planned to retain the prede-
cessor employees, the Respondent was not entitled to uni-
laterally implement new wage rates thereafter.
Our colleagues in dissent contend that the “perfectly
clear” caveat in Burns, as interpreted in Spruce Up, should
apply only when the new employer has failed to announce
initial employment terms prior to, or simultaneously with,
the extension of unconditional offers of hire to the prede-
cessor employees. None of the cases cited in the dissent,
including Burns and Spruce Up, expressly limit the caveat
to such a late point in the transition from one employer to
another. To the contrary, the judge correctly cited Roman
Catholic Diocese of Brooklyn, 222 NLRB 1052 (1976), enf.
denied in relevant part sub nom. Nazareth Regional High
PARAGON SYSTEMS, INC. 17
School v. NLRB, 549 F.2d 873 (2d Cir. 1977), as a control-
ling example of the imposition of an obligation to bargain
about initial terms of employment prior to the new employ-
er's extension of formal offers of employment to the prede-
cessor's employees.
The facts and the Board’s findings in Hilton Environ-
mental, supra, and Canteen Co., supra, demonstrate that an
actual offer of employment is not required to establish the
“perfectly clear” successor's obligation to bargain.9 Rather,
it has an obligation to bargain over initial terms of employ-
ment when it displays an intent to employ the predecessor's
employees without making it clear to those employees their
employment will be on terms different from those in place
with the predecessor employer. See also, Elf Atochem North
America, Inc., 339 NLRB 796, 808 (2003); DuPont Dow
Elastomers, LLC, 332 NLRB 1071, 1073-1074, 1074 fn. 7
(2000), enfd. 296 F.3d 495 (6th Cir. 2002) (perfectly clear
successor found where the unions were informed that alt-
hough the successor employer would not honor the prede-
cessors CBA’s it would maintain employees’ wages and
benefits under those contracts); Helnick Corp, 301 NLRB
128, 134 (1991); Turnbull Enterprises, 259 NLRB 934,
938-940 (1982); and CME, Inc., 225 NLRB 514 (1976).10
Similarly, in Cadillac Asphalt Paving, 349 NLRB 6, 10-11
(2007) the Board stated:
The record clearly establishes that Respondent LLC is a
“perfectly clear” successor to Respondent Paving. On July
1, LLC assumed control of Paving's operations. On July 7,
LLC President Rickard announced the joint venture in a
meeting with Paving's entire work force. After Rickard
spoke, MPMC Safety Director Marlene Van Patton asked
all the employees to complete job applications and W-4
forms to update LLC's records. The employees, including
the drivers, completed and submitted their applications that
day. After completing his paper-work, driver Steve Pierce
asked LLC General Manager Sandell, who was also present
at the meeting, about LLC's 401(k) plan. Sandell responded
that LLC did not have a 401(k) plan for hourly employees.
Aside from the 401 (k) remark, LLC did not announce any
changes to the employees' terms and conditions of employ-
ment at this meeting. The following day, July 8, the em-
ployees returned to work without any changes in operations
or duties.
Although not mentioned by the judge in his decision,
LLC's hiring process entailed no further measures. Unit
driver Pierce testified that LLC did not conduct job inter-
views. There is no evidence that LLC sought additional ap-
plicants from any source other than Paving's work force.

9 In enforcing the Board’s order in Canteen, the court stated, “In this
case, Canteen instituted unilateral changes in the initial terms of employ-
ment by offering drastically reduced rates of pay to the predecessor's ex-
perienced employees without prior negotiation. The employees' refusal
to accept employment was found by the ALJ and the Board to be a con-
structive denial of employment. We agree that Canteen's conduct was
“inherently destructive” of the rights of those employees. As a result,
As noted above, at no time before or during the July 7
meeting did LLC mention changes to the employees' nego-
tiated wages, benefits, or other terms and conditions of em-
ployment. In fact, prior to this meeting, when employee and
Teamsters steward Pierce asked LLC agent Fred Aiken
about the Respondents' plans for the Teamsters, Aiken as-
sured Pierce that everything would remain the same. As a
result, the drivers reasonably assumed that their terms and
conditions of employment would remain the same when
LLC took over Paving's operations. Nothing said at the July
7 meeting dispelled their assumption.[FN31]
Thus, by offering job applications and W-4 forms to
Paving's employees on July 7, LLC invited the employees
to accept employment without announcing its intention to
set initial terms and conditions of employment. In these
circumstances, we find, in agreement with the judge, that
Respondent LLC is a “perfectly clear” successor to Re-
spondent Paving and that Respondent LLC violated Section
8(a)(5) and (1) of the Act by refusing to recognize and bar-
gain with the Teamsters and by failing to continue the terms
and conditions maintained by Paving at the time of succes-
sion, i.e., the health and welfare and pension fund contribu-
tions in accord with terms of the expired 1998-2003 MRBA
labor agreement32
___________________________
32 See Elf Atochem North America, Inc., 339 NLRB 796
(2003); Helnick Corp., 301 NLRB 128 fn. 1 (1991). We do
not adopt the judge's finding that LLC violated Sec. 8(d),
which provides, in relevant part, that “where there is in effect
a collective-bargaining contract … no party to such contract
shall terminate or modify such contract.” Because LLC, as a
successor, has no prior agreement with the Teamsters, it
could not violate Sec. 8(d) by implementing terms and con-
ditions of employment that varied from the predecessor's col-
lective-bargaining agreement. See U.S. Generating Co., 341
NLRB 1127, 1135 (2004).
In the present case, in June 2013, the FPS awarded Paragon a
federal contract to provide guard services at the FEMA building
in Washington, D.C., among other locations. Paragon was
scheduled to take over operational control of the guard services
at FEMA building effective September 1 replacing Knight,
which had an existing CBA with the Union covering security of-
ficers working at the FEMA building and another facility effec-
tive for the period October 1, 2012 through September 30, 2015.
Baker, Paragon’s vice president of operations, testified Para-
gon provides armed force protection to the federal government
and the scope of Paragon’s operations in the United States is
42 of the 50 states and many of the territories. Baker testified,
if the predecessor contractor has a CBA, Paragon is bound by the
wages and fringe benefits of that contract. He testified whatever
Canteen had the burden of justifying its actions. See, Canteen Corp. v.
NLRB, 103 F.3d 1355, 1366 (7th Cir. 1997).
10 In C.M.E., Inc., at 514–515, the Board held the respondent made it
“perfectly clear” that it planned to retain all or substantially all of the
employees in the unit as of February 25, and the obligation to bargain,
including the setting or altering of initial terms of employment, com-
menced on that date rather than May 6, when the union subsequently
made a formal request for recognition and bargaining.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD18
the employees are making per hour, the health and welfare, va-
cation, vesting is all predetermined and is owed to the employ-
ees. Baker testified Paragon has to ensure when they go into a
new contract that they are paying at least those collectively bar-
gained minimums because those wages become the wage deter-
mination for the applicable contract and this is made clear by the
contracting officers when they put out the solicitations on behalf
of the federal agencies. Baker testified when they are interested
in bidding for a contract most times Paragon receives a copy of
the predecessor’s CBA. Baker testified he reviews the predeces-
sor’s CBA wage appendices because that is what Paragon is re-
quired to meet, and that is how they determine what to put in the
offer letter for wages. Baker testified, concerning the FEMA
contract, Baker was responsible for ensuring they had enough
people recruited, hired, trained, qualified, and ready to work on
day one. Baker testified Paragon used Knight’s CBA at the
FEMA building to price out what Paragon was legally obligated
to pay in terms of wages and fringe benefits. Baker testified
there have been over 30 contract transitions to Paragon since the
president’s executive order pertaining to the right of first refusal
of a job offer to the predecessor contractor’s employees, with at
least 15 in 2014. Baker testified there were two occasions in
2014 where less than 50 percent of the predecessor’s employees
came to Paragon on Federal contracts. He testified he did not
recall it happening in 2013. Baker testified the vast majority of
contracts in the last 2 years more than 50 percent of the prede-
cessor’s employees have been hired by Paragon making it through
the vetting process and beginning work.
The parties stipulated that shortly after the FEMA Building
federal contract was awarded to Paragon in June, Paragon ar-
ranged for a memorandum to be posted at the FEMA Building
for incumbent Knight PSOs advising them Paragon was awarded
the federal contract to begin providing guard services effective
September 1, 2013 and inviting the incumbent PSOs to attend a
job fair on June 29, 2013 at the Marriott hotel in Greenbelt, Mar-
yland. The memorandum included the following:
Paragon Systems is currently accepting applications from in-
cumbent security officers. To be considered for employment,
all candidates must complete all parts of the Paragon applica-
tions process.
Applicants shall go to (listed website) or the company website
(listed website) under careers and complete an online applica-
tion.
The memorandum stated applicants must bring the following
documents (the original and a copy) to the job fair. The docu-
ments listed included a driver’s license or state ID, social secu-
rity card, birth certificate, and high school diploma, transcript or
GED certificate. The memo stated:
Offers of employment are contingent upon successfully pass-
ing all pre-employment requirements, attending all scheduled
training and passing all contract-required performance stand-
ards. A Medical exam, including a Fit Test and a drug screen
is also required.
Applicants will also be asked to provide availability times in
order for the medical exam and the fit test to be scheduled.
Then Knight employee Birdsong learned Paragon was tak-
ing over the contract from Knight in the spring of 2013,
through word of mouth, and he saw the memo from Paragon
posted in the control room which announced Paragon’s June
29 job fair. Birdsong estimated he saw the memo posted about
a month before the job fair. Birdsong applied for employment
with Paragon online as instructed by Paragon’s job fair memo.
Birdsong completed the online application in advance of the job
fair. Birdsong received an email confirming he had submitted
the application. Birdsong testified the online job application did
not indicate anything was going to change concerning his work-
ing conditions. He testified the application said nothing about:
the uniform allowance, paid or unpaid breaks, the length of
breaks, how he would receive his health and welfare or pension
contribution. It did not say how many hours were needed to be
a full-time employee. Birdsong testified that at the time he ap-
plied he did not receive an employee handbook. He testified the
email confirmation for the application did not contain any infor-
mation regarding these matters. However, the application stated:
If hired, I agree and understand that I will conform with the
policies practices and procedures of Paragon. I further agree
that my employment is “at-will.” This means that either Para-
gon or I may terminate the employment relationship at any
time, with or without notice, and with or without cause. I un-
derstand that Paragon retains the right to establish compensa-
tion benefits and working conditions for all of its employees.
Accordingly, I understand and agree that Paragon retains the
sole right to modify my compensation and benefits, position,
duties, and other terms and conditions of employment, includ-
ing the right to impose disciplinary action that Paragon, at its
sole discretion, determines to be appropriate. No employee or
representative of Paragon, other than the President of Paragon,
Inc., has the authority to alter the at will nature of my employ-
ment relationship, or make any agreement inconsistent to the
foregoing.
Birdsong attended the June 29 job fair at the Greenbelt, Mar-
riott. Birdsong testified that, upon arriving at the job fair, he
went to a desk and signed in and then he received a packet to be
filled out. Birdsong testified he was directed to go inside the
room where he completed his paperwork, which took about 20
minutes. He testified the packet contained tax forms, a direct
deposit form, an offer letter, some EEO policy papers, and things
of that nature. Birdsong testified there was a uniform sizing doc-
ument in the packet. The offer letter in Birdsong’s packet was
dated June 29, and has his name on it. The offer letter stated, in
part, “On behalf of Paragon Systems, I would like to extend to
you a contingent offer of employment to serve as a Security Of-
ficer. . . .” “Effective date of this offer is September 1, 2013.”
The offer letter, including listing certain terms of employment,
stated “Employment is contingent upon successfully passing all
pre-employment requirements (including pre-employment inter-
views), attending all scheduled training, weapons qualification,
and passing all contract-required performance standards includ-
ing the physical exam with a physical abilities test. A pre-em-
ployment drug screen is also required.” The offer letters distrib-
uted by Paragon on June 29, contained the same information to
all of the Knight employees who received one. Birdsong testi-
fied he read and signed the offer letter and turned it in to Paragon
officials on June 29.
PARAGON SYSTEMS, INC. 19
Birdsong testified that when they completed filling out their
hiring packets received on June 29 at the Marriott, the officers
waited to be called up front. Then Birdsong met with a man at the
table and Birdsong provided him with his hiring packet, social security
card, birth certificate, driver’s license, and a blank voided check for
them to make direct deposits of his pay. Birdsong testified he submit-
ted qualifications including certificates of training that he had. Bird-
song testified he met with the person at the table for about 20 to
25 minutes, and then he left. Birdsong testified that he was told
at the table there would be an orientation soon, and it would be
announced. Birdsong testified the man at the table did not ask
him any questions about his professional or educational back-
ground. He did not inquire why Birdsong was interested in
working at Paragon. Birdsong testified when he left the Green-
belt Marriott on June 29, he was under the impression he had
been hired. This was because he had signed the offer letter as
instructed, and they said based on what was in his packet he had
everything and he was good to go.
Similarly, Baker testified when someone comes to a job fair
if they are an incumbent they check in and if they have applied
in Paragon’s system it is likely Paragon has an application and a
packet for them which includes a contingent offer letter. He tes-
tified Paragon will ask them for their paper work. Baker testified
for the incumbent workforce Paragon has their credentials and
knows they are an officer in good standing on the current con-
tract. For the incumbent officer, they come in and receive their
packet with their offer letter, benefit paperwork, the I-9 form,
direct deposit forms, benefits explanation forms, and all of the
information needed to be put into Paragon’s system. Baker tes-
tified the offer letter is on top in the file and the first thing the
incumbent sees. Baker testified this is the procedure for all job
fairs.
Baker testified that, after the job fair is completed, then the
predecessor’s incumbents have to qualify for the new con-
tract. To qualify, they have to go through use of force training
with Paragon, which pertains to the use of their firearm. He
testified, if they had OC training or if they had baton certification
which is expired, they have to go through that use of force train-
ing with Paragon. Baker testified Paragon does its own use of force
training. He testified they have to go for new medical testing. He tes-
tified the medical requirements from the old contract to the new one
had changed at FEMA. The new one required a seven-panel uri-
nalysis as opposed to a five panel. They also had to be sized
for uniforms and for body armor, which was a new require-
ment. Then they are sent for the fit testing which is not only
the medical testing, but also a cardiovascular test.
Baker testified Paragon wants the officers to complete the ap-
plications before coming to the job fair because, “We can't issue
contingent offers of employment until you've applied, offi-
cially applied with the company unless you express interest,
and everybody who works for Paragon from top to bottom has
to apply online through our HMS system before being consid-
ered for positions.” He testified Paragon wants people to apply
in advance of the job fair to know who is coming to the fair, and
how much support personnel Paragon will need at the meeting.
Baker testified Paragon’s job fair memo asks people to bring cer-
tain documents. Baker testified they present themselves with
their social security card, they fill out I-9s, and they provide
their driver's license data. Baker testified the job fair announce-
ment memo states offers of employment are contingent upon suc-
cessful passing of all the pre-employment requirements. Baker
testified contingent means, “we're giving you an offer, but it's
not a guarantee of employment on September 1st. That's just the
first part of the process. We're giving you a contingent offer of
employment meaning if you meet all the terms and conditions, if
you accept our employment, and if you qualify with all the bona
fides that I explained earlier for your training, your medical cer-
tifications, et cetera, then essentially you'll have a place to work
on 1 September.” Baker testified the job fair memo is not an
offer of employment. He testified “an offer of employment is an
offer letter. This is just how to go and apply for a job with us.”
The General Counsel argues that Paragon’s early June memo
announcing the job fair was an invitation for incumbent employ-
ees to apply for continued employment at the FEMA buildings
and constituted or was tantamount to an invitation to accept em-
ployment under Spruce Up. The General Counsel contends that
because Paragon failed to announce its intent to establish new
terms and conditions before it issued this memo and made appli-
cations available, it was a “perfectly clear successor, and it vio-
lated Section 8(a)(5) by subsequently making all of the alleged
unilateral changes to employees terms and conditions of employ-
ment. In support of this contention the General Counsel notes
that the June memo invited the Knight employees to apply, told
them how to apply, and directed them to bring documents includ-
ing an original and copy of their driver’s license, birth certificate,
Social Security card, and high school diploma to a scheduled job
fair. It is pointed out that nothing in the memo indicated Paragon
would be setting terms different than those contained in the
Knight CBA. It is asserted that the documents requested most
often are tendered after an employment decision is made. The
General Counsel argues that Paragon’s employment application
also failed to announce its intention to set different terms of em-
ployment. The General Counsel argues, in the circumstances,
here that the fact Paragon had not extended formal offers of em-
ployment at the time it issued the job fair member does not ne-
gate a finding of a perfectly clear successor. It is asserted that is
particularly so here where Paragon was legally obligated to offer
employment to its predecessor’s employees under the president’s
executive order.
For the reasons state above as advanced by the General Coun-
sel I find that Paragon was a perfectly clear successor to Knight
at the time it posted its job fair memo, solicited incumbent em-
ployees to apply, and requested them to bring the above listed
employment related documents to what it described as a job fair.
As Baker’s testimony revealed the on line application was
needed to input Knight’s employees into Paragon’s system and
the completion of that application was sufficient for Paragon to
generate an offer letter for each Knight employee who applied,
and then at the meeting they were asked to sign additional em-
ployment related forms, and provide information for them to be
fitted for body armor and uniform sizing. Since the completion
of the online application was sufficient to generate an offer letter,
it clear that Paragon had exhibited a fixed intent to hire the em-
ployees who applied, as it was required to do by the President’s
executive order. This conclusion is bolstered by Birdsong’s
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD20
credited testimony that he was not interviewed by Paragon’s of-
ficials for the position aside from their determining his employ-
ment related documents were in order. As well as Baker’s testi-
mony that he was responsible to have the project fully staffed by
the September 1 start date.
Thus, I find that at the time Paragon solicited applications in
the circumstances here it established itself as a perfectly clear
successor, and by its failure to clearly announce that it intended
to establish a new set of working conditions at the time it invited
employees to apply, and thereafter unilaterally changing those
conditions it violated Section 8(a)(5) and (1) of the Act. See Hil-
ton’s Environmental, Inc., 320 NLRB 437, 438 (1995); Canteen
Co., 317 NLRB 1052 (1995), enfd. 103 F.3d 1355 (7th Cir.
1997); Fremont Ford, 289 NLRB 1290, 1296–1297 (1988); Elf
Atochem North America, Inc., 339 NLRB 796, 808 (2003);
DuPont Dow Elastomers, LLC, 332 NLRB 1071, 1073–1074
(2000); Helnick Corp, 301 NLRB 128, 134 (1991); Turnbull En-
terprises, 259 NLRB 934, 938–-940 (1982); and CME, Inc., 225
NLRB 514 (1976). I do not find that Paragon would logically
expect a majority Knight’s work force which were staffing the
federal building would have failed to pass the necessary exams
and medical requirements to retain their positions with Paragon.
See Road & Rail Services, 348 NLRB 1160, 1169–1170 (2006).
This is confirmed by Baker’s testimony that in the vast majority
of its contracts it hires a majority of the predecessors work force.
Moreover, the equities here way heavily in favor of finding a
perfectly clear successor, given the back drop of the executive
order according these employees a right of first refusal to a posi-
tion with Paragon concerning their prior positions with Knight at
the FEMA location. First, Respondent posted its job fair memo
in early June inviting them to a job fair on June 29, and instruct-
ing them to fill out an on line application in advance of the job
fair and to bring several employment related documents gener-
ally tendered to a new employer. The job fair memo gave no
indication that the employees benefits at Paragon would change
from those at Knight. Moreover, while Brady’s testimony indi-
cated that in the large majority of instances Paragon retained a
majority of the predecessor’s employees, no notice was provided
to the Union that Paragon intended to change these employees
benefits. These actions by Paragon had several adverse effects
on the Knight employees. First, the time spent time filling out
applications and traveling to the job fair without warning that
their benefits would change. Second, they could have been mis-
led to delaying seeking alternate employment which they may
have done had they been provided with that information at the
outset including the particulars of the benefit changes. See Ma-
chinists v. NLRB, 595 F.2d 664, 674–675 fn. 49 (D.C. Cir. 1978),
where the court stated “Even when Burns is read, as the Board
does, to limit compulsory initial-terms bargaining to situations
wherein the successor has indicated that incumbents will be re-
tained and has not concurrently announced downward changes

11 I make this finding only should a reviewing authority disagree with
my prior analysis, because I have previously found Respondent’s bar-
gaining obligation affixed when it solicited the employees to apply, and
for the reasons stated subsequent conduct would not alter that obligation.
12 The Board majority Paragon Systems, Inc., 362 NLRB No. 166,
slip op. at 3 fns. 6, 7 (2015), distinguished but did not overrule Windsor
Convalescent Center of North Long Beach, supra. In Paragon, supra,
in employment terms, predecessor-employees are afforded an
important measure of protection. Once the duty to bargain has
thus attached, the successor is obliged to consult the incumbent
union before institution of less satisfactory terms. That is signif-
icant because unconditional retention-announcements engender
expectations, oft times critical to employees, that prevailing em-
ployment arrangements will remain essentially unaltered. Even
when incumbents are not affirmatively led to believe that exist-
ing terms will be continued, unless they are apprised promptly of
impending reductions in wages or benefits, they may well forego
the reshaping of personal affairs that necessarily would have oc-
curred but for anticipation that successor conditions will be com-
parable to those in force.” There the court noted even when the
employment offer and subsequent announcement of changed
terms both occur before the actual hiring, a duty to bargain with
respect to the proposed changes could possibly be imposed on
either of two grounds; for lack of sufficient time to rearrange
their affairs, incumbents might be forced to continue in the jobs
they held under the successor employer, notwithstanding notice
of diminished terms, and even were that less plain, a bargaining
obligation may be essential to protect the employees from impo-
sition resulting from lack of prompt notice. “Thus a prospective
employment relationship may be presumed when a successor has
boldly declared an intention to retain incumbents but has not
concurrently proposed substantially reduced benefits. And such
an inference may be left undisturbed by revelation of employ-
ment terms after the employer's initial announcement but before
actual hiring commences. The successor would have no legiti-
mate complaint about mandatory bargaining in such circum-
stances because its necessity is a product of his own misleading
conduct.”
I also find that while, as set forth above, Respondent’s bar-
gaining obligation accrued when it solicited the predecessor em-
ployees to apply, that under Board law statements in the Re-
spondent’s employment applications that they would be hired as
at will employees and wherein Respondent it reserved unto itself
the right to change benefits, but did not state it would do so, or
list any specific benefit changes also amounted to a failure to
give the applicants sufficient information to alter Respondent’s
status as a perfectly clear successor.11 See Windsor Convalescent
Center of North Long Beach, 351 NLRB 975, 980–981 (2007),
enf. denied in relevant part 570 F.3d 354 (D.C. Cir. 2009),12
where the Board majority found that even assuming the respond-
ent informed applicants that they would only be employed on a
temporary basis, that as a result they were not eligible for certain
benefits, and that other terms and conditions would be set forth
in personnel policies in a subsequently issued handbook the
Board found the respondent was nevertheless a perfectly clear
successor because the respondent failed announce its intent to
establish a new set of conditions prior to inviting the employees
to accept employment. In Windsor Convalescent Center of
the Board pointed out that in Windsor the Board had found the respond-
ent to be a “perfectly clear” successor, which as pointed out by the ALJ
in Paragon was not being alleged against Paragon in that litigation. See,
Paragon at pages 6 to 7. Since the General Counsel has taken the posi-
tion that Paragon is a perfectly clear successor in the current case a sep-
arate set of issues and parameters are raised here.
PARAGON SYSTEMS, INC. 21
North Long Beach, at 981, the Board majority stated, “there is
no evidence that the Respondent, prior to the takeover, informed
Candlewood employees that those who were retained would be
working under different core terms and conditions of employ-
ment. On this record, we find that the Respondent ‘failed to
clearly announce its intent to establish a new set of conditions
prior to inviting former [Candlewood] employees to accept em-
ployment.’” See also, Canteen Co., 317 NLRB 1052 (1995),
enfd. 103 F.3d 1355 (7th Cir. 1997), where the Board found an
employer to be a perfectly clear successor, although it had in-
formed the union that it wanted the predecessor’s employees to
serve a probationary period. It is commonly known that employ-
ees serving a probationary period are considered to be akin to
employees at will during that period.
The court in S & F Market Street Healthcare LLC v. NLRB,
570 F.3d 354, 359–362 (D.C. Cir. 2009),13 in reversing the Board
in Windsor Convalescent, supra and concluding that the respond-
ent employer was not a perfectly clear successor, stated as fol-
lows:
On the undisputed facts of this case, no employee could have
failed to understand that significant changes were afoot. The
cover letter attached to each job application foretold “signifi-
cant operational changes,” identified various pre-employment
checks and tests to be passed, and explained that any employ-
ment offered would be both temporary and at will. The Board
discounted the cover letter on the ground that it “lacked any
mention of intended changes to employees' terms and condi-
tions of employment.” Id. at 981. Yet under Candlewood's col-
lective-bargaining agreements with the Union, as any em-
ployee would know, each employee with 90 days on the job
had vested “seniority rights” and could not be terminated ex-
cept for cause, which the Union could contest through the ne-
gotiated grievance and arbitration procedure. By announcing
that any employment with S & F would be at will, therefore, S
& F was announcing a very significant change in the terms and
conditions of employment-both for those who had been em-
ployed by Candlewood for 90 days or more and for those who
expected to be. In addition, by requiring its new employees to
agree to its own alternative dispute resolution policy, S & F
made it clear the grievance mechanism the Union had negoti-
ated with Candlewood would not be available.
. . . .
Nevertheless, the Board concluded “there is no evi-
dence that [S & F], prior to the takeover, informed Candle-
wood employees that those who were retained would be
working under different core terms and conditions of em-
ployment.” 351 N.L.R.B. at 981. We see two errors of law
in this restatement of the “perfectly clear” standard.
First, the focus upon “core” terms and conditions mis-
states the rule, which is that the successor employer must
simply convey its intention to set its own terms and condi-
tions rather than adopt those of the previous employer.
Granting that a trivial change in employment conditions

13 While the court in S & F Market Street Healthcare LLC reversed
the Board’s perfectly clear successor finding in Windsor Convalescent
Center of North Long Beach, and disagreed with the Board’s “core terms
may not suffice, there is no requirement in Burns or Spruce
Up that the intended change(s) involve “core” terms. What-
ever that term may mean, however, it surely includes insti-
tuting at-will employment and eliminating the negotiated
grievance and arbitration procedure.
Second, the Board's holding achieves precisely what
Burns and Spruce Up sought to avoid. In those cases the
Supreme Court and the Board respectively started from the
presumption that a successor employer may set its own
terms and conditions of employment and reserved the “per-
fectly clear” exception for cases in which employees had
been misled into believing their terms and conditions would
continue unchanged. See Burns, 406 U.S. at 294-95, 92
S.Ct. 1571; Spruce Up, 209 N.L.R.B. at 19. In this case, the
Board presumed the predecessor's terms and conditions
must remain in effect unless the successor employer specif-
ically announces it will change “core” terms and conditions.
Thus does the exception in Burns swallow the rule in Burns.
Under the proper standard, S & F clearly comes within the
protection of the rule rather than the straightjacket of the
exception: It was never “perfectly clear that the new em-
ployer plan[ned] to retain all of the employees in the unit,”
Burns, 406 U.S. at 294–[2]95, 92 S.Ct. 1571, let alone that
it did so “with no notice that they would be expected to
work under new and different terms,” Spruce Up, 209
N.L.R.B. at 195 n. 7. On the contrary, the Company an-
nounced it would retain only those who met certain
preemployment tests and stated its intent to set new initial
terms and conditions of employment.
Since I find that Paragon’s bargaining obligation with the Un-
ion attached at the time Paragon solicited the predecessor em-
ployees to apply; which predates the time of the employees’ ac-
tual applications and any statements contained therein, this case
is distinguishable from the court’s decision in S & F Market
Street Healthcare LLC v. NLRB, 570 F.3d 354 (D.C. Cir. 2009).
However, this case is also distinguishable from S & F Market in
other significant ways. There, as reported by the court, the re-
spondent employer purchased the predecessor, and prior to as-
suming control concluded it would need to increase the level of
care and replace the staff. It then decided closer to its July 1
takeover that it could not replace the entire staff because doing
so would be too disruptive to the residents. Rather, it decided to
hire some of the predecessor’s employees for up to 90 days,
while it continued to recruit new employees. When in June it
had applications distributed to existing staff it included a cover
sheet stating that it intended to implement significant operational
changes and current employees must submit the attached appli-
cation for employment. It advised that only employees who meet
the company’s operational needs will be interviewed and any of-
fer of employment will be contingent on your passing a pre-em-
ployment physical, drug test and acceptable reference and back-
ground checks. The court noted the job application itself re-
quired the applicant to affirm their understanding that passing
the tests and checks was a condition of employment, that any
and conditions” requirement, I am required to follow Board precedent,
not reversed by the Supreme Court. See Waco, Inc., 273 NLRB 746, 749
fn. 14 (1984).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD22
employment would be at will, and that S & F could change ben-
efits, policies at any time. During subsequent interviews at the
end of June, each employee who submitted an application was
interviewed; and each applicant was informed their employment
would be temporary and would last no more than 90 days. The
employees who were accepted were sent a letter dated June 30,
stating it was an offer of temporary employment; that as a tem-
porary employee they were not eligible for company benefits,
and that other terms of your employment will be set forth in the
respondents’ personnel policies and its employee handbook. It
stated their employment was at will and would end no later than
the expiration of the 90 day period, unless they were selected for
regular employment. Those hired also had to sign an agreement
to be bound by an alternative dispute resolution policy. Within
the first 3 months of operation the successor had replaced a ma-
jority of those hired from the predecessor’s staff with new em-
ployees.
In the current case, Paragon’s intent to hire and retain the pre-
decessor employees is clear, as it was required to offer employ-
ment to those employees under the existing executive order.
There is no claim that this was done on a temporary basis, or
that the employees were informed of such. In fact, all the em-
ployees had to do was apply on line which engendered their be-
ing given an offer letter at the June 29 job fair, and I have con-
cluded that the offer letter was proffered with no substantive job
interview other than their submitting the requisite paper work at
the job fair. Along these lines, it was the purpose of the execu-
tive order that “the Federal Government's procurement interests
in economy and efficiency are served when the successor con-
tractor hires the predecessor's employees. A carryover work
force minimizes disruption in the delivery of services during a
period of transition between contractors and provides the Federal
Government the benefit of an experienced and trained work force
that is familiar with the Federal Government's personnel, facili-
ties, and requirements.” In this regard, Baker testified when
someone comes to a job fair if they are an incumbent they check
in and if they have applied in Paragon’s system it is likely Para-
gon has an application and a packet for them which includes a
contingent offer letter. He testified Paragon will ask them for
their paper work. Baker testified for the incumbent work force,
Paragon has their credentials and knows to that point they are an
officer in good standing on the current contract. Baker testified
that at the job fair once they were done filling out the information,
they were called up to have the paperwork reviewed and went
through the interview process with attending Paragon representa-
tives. Baker testified when they turned in the paper work they
had to complete their uniform size survey and give Paragon
their measurements. Baker testified Paragon had people with
a tape there who would did a fitting for the officers’ body armor.
Baker testified they were told they would be instructed as to
when the next range dates would be, when the training dates
would be, and this would be communicated through their site
manager. There was no contention that any of the predecessor
employees who applied had their applications rejected at the job
fair. This, along with job fair announcement requiring the in-
cumbent applicants to bring several employment related docu-
ments to the job reveals Respondent had a fixed intent prior to
their arrival to offer them positions, as it was required to do under
the executive order.
Baker testified that, after the job fair is completed, the predeces-
sor’s incumbents have to qualify for the new contract. To qualify,
they have to go through use of force training with Paragon, which
pertains to the use of their firearm. He testified, if they had OC
training or if they had baton certification which is expired, they
have to go through that use of force training with Paragon. Baker
testified they have to go for new medical testing. He testified the
medical requirements from the old contract to the new one had
changed at FEMA in that the applicants were now required to pass
a seven-panel urinalysis as opposed to a five panel. Thus, Baker’s
testimony reveals these employees had to meet similar require-
ments in terms of training and testing to be employed by the pre-
decessor employer; and that Respondent’s testing and examination
requirements were essentially status quo requirements which
would not signal to these employees that Respondent was going
to change their wages and benefits. In this regard, Baker testified
that for the vast majority of these contracts Respondent hires
over 50% of the predecessor employees, and that 90% of Re-
spondent’s employees are union represented. There was no
claim that a significant number of the predecessor’s employees
here failed Respondent’s testing requirements, or in fact that any
of them did so. This point is somewhat conceded in Respond-
ent’s brief because they contend they did not offer the incumbent
PSOs employment until Respondents gave them their offer let-
ters. However, those offer letters were contingent on passing
Respondent’s testing requirements. Thus, unlike S & F Market,
I have concluded based on the cases cited and for the reasons
mentioned that Respondent’s bargaining obligation with the Un-
ion attached when Respondent solicited the predecessor employ-
ees to apply, which predated their applications. Moreover, I find
the terms set forth in the applications when subsequently re-
viewed did not signal to these employees that Respondent in-
tended to change their wages, hours, and benefits.
The court noted in S & F Market that the Board did not explain
its “core terms and conditions of employment” reference in
Windsor Convalescent Center and for the reasons stated by the
court drew a different result than that reached by the Board.
While I cannot speak for the Board, I note that in Litton Finan-
cial Printing Division v. NLRB, 501 U.S. 190, 198–201 (1991),
the Court held that a post contract layoff dispute not arising un-
der the terms of the contract was not arbitrable, under the expired
arbitration clause. In this regard, the Court stated that:
The Board has determined, with our acceptance, that an em-
ployer commits an unfair labor practice if, without bargaining
to impasse, it effects a unilateral change of an existing term or
condition of employment. See NLRB v. Katz, 369 U.S. 736, 82
S.Ct. 1107, 8 L.Ed.2d 230 (1962). In Katz the union was newly
certified and the parties had yet to reach an initial agreement.
The Katz doctrine has been extended as well to cases where, as
here, an existing agreement has expired and negotiations on a
new one have yet to be completed. See, e.g., Laborers Health
and Welfare Trust Fund v. Advanced Lightweight Concrete
Co., 484 U.S. 539, 544, n. 6, 108 S.Ct. 830, 833, n. 6, 98
L.Ed.2d 936 (1988).
Numerous terms and conditions of employment have
been held to be the subject of mandatory bargaining under
PARAGON SYSTEMS, INC. 23
the NLRA. See generally 1 C. Morris, The Developing La-
bor Law 772–844 (2d ed. 1983).
. . .
In Hilton–Davis Chemical Co., 185 N.L.R.B. 241
(1970), the Board determined that arbitration clauses are ex-
cluded from the prohibition on unilateral changes, reason-
ing that the commitment to arbitrate is a “voluntary surren-
der of the right of final decision which Congress . . . re-
served to [the] parties. . . . [A]rbitration is, at bottom, a con-
sensual surrender of the economic power which the parties
are otherwise free to utilize.” Id., at 242. The Board further
relied upon our statements acknowledging the basic federal
labor policy that “arbitration is a matter of contract and a
party cannot be required to submit to arbitration any dispute
which he has not agreed so to submit.” Steelworkers v. War-
rior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct.
1347, 1353, 4 L.Ed.2d 1409 (1960). See also 29 U.S.C. §
173(d) (phrased in terms of parties' agreed-upon method of
dispute resolution under an existing bargaining agreement).
Since Hilton–Davis, the Board has adhered to the view that
an arbitration clause does not, by operation of the NLRA as
interpreted in Katz, continue in effect after expiration of a
collective-bargaining agreement.
. . .
We think the Board's decision in Hilton–Davis Chemi-
cal Co. is both rational and consistent with the Act. The rule
is grounded in the strong statutory principle, found in both
the language of the NLRA and its drafting history, of con-
sensual rather than compulsory arbitration. See Indiana &
Michigan, supra, at 57–58; Hilton–Davis Chemical Co., su-
pra. The rule conforms with our statement that “[n]o obli-
gation to arbitrate a labor dispute arises solely by operation
of law. The law compels a party to submit his grievance to
arbitration only if he has contracted to do so.” Gateway
Coal Co. v. Mine Workers, 414 U.S. 368, 374, 94 S.Ct. 629,
635, 38 L.Ed.2d 583 (1974). We reaffirm today that under
the NLRA arbitration is a matter of consent, and that it will
not be imposed upon parties beyond the scope of their
agreement.
In Finley Hospital, 359 NLRB 156, 157–158 (2012), the Board
majority stated:
The declared policy of the Act, as stated in Section 1, is to
“encourage [e] the practice and procedure of collective bargain-
ing” and to protect the “full freedom” of workers in the selection
of bargaining representatives of their own choice. Section
8(a)(5) makes it an unfair labor practice for an employer “to re-
fuse to bargain collectively with the representatives of his em-
ployees.” Because it is critically important that collective bar-
gaining be meaningful, it has long been established that an em-
ployer violates Section 8(a)(5) when it unilaterally changes rep-

14 Of course, it is even an open question as to whether an employer
with an obligation to recognize and bargain with a union, even absent a
collective-bargaining agreement, could terminate an employee “at will”
resented employees' wages, hours, and other terms and condi-
tions of employment without providing their bargaining repre-
sentative prior notice and a meaningful opportunity to bargain
about the changes. NLRB v. Katz, 369 U.S. 736, 742–743 (1962).
Under this rule, an employer’s obligation to refrain from unilat-
erally changing these mandatory subjects of bargaining applies
both where a union is newly certified and the parties have yet to
reach an initial agreement, as in Katz, and where the parties' ex-
isting agreement has expired and negotiations have yet to result
in a subsequent agreement, as in this case. Litton Financial
Printing Division v. NLRB, 501 U.S. 190, 198 (1991). In the
latter circumstances, an employer must continue in effect con-
tractually established terms and conditions of employment that
are mandatory subjects of bargaining, until the parties either ne-
gotiate a new agreement or bargain to a lawful impasse. Id . at
198–199.
The Supreme Court's decision in NLRB v. Noel Canning, 134
S.Ct. 2550 (2014), rendered the Board’s decision in Finley Hos-
pital, 359 NLRB 156, 157–158 (2012) invalid. However, in Fin-
ley Hospital, 362 NLRB No. 102 (2015), a Board majority sub-
sequently affirmed the ruling finding an unlawful unilateral
change concerning the discontinuance of a contractually estab-
lished wage increase following the expiration of the collective-
bargaining agreement. The Board stated, “even without a con-
tractual obligation, the employer still has a duty to bargain under
Section 8(a)(5). That duty requires that the employer not make
changes to existing terms and conditions of employment without
satisfying its statutory bargaining obligation. Changes may be
made if the employer notifies the union and bargains new terms-
-or if the parties bargain and reach a lawful impasse. See, e.g.,
Des Moines Register & Tribune Co., 339 NLRB 1035, 1036–
1038 fn. 6 (2003), review denied 381 F.3d 767 (8th Cir. 2004).
When the employer ignores its statutory duty to bargain and
makes changes unilaterally, it is bypassing the union and depriv-
ing its employees of their right to be represented in bargaining
over their terms and conditions of employment.”
As noted from the above discourse, unless certain circum-
stances exist from an expired CBA, or the dispute arose under
the prior contract, arbitration does not survive the expired CBA
during contractual hiatus periods. Ergo discipline taking place
following the expiration of a CBA would not ordinarily be arbi-
trable, bringing that type of discipline more akin to termination
at will; and differentiating it from the core conditions of employ-
ment such as wages, hours, and fringe benefits for which it is
commonly known must be bargained to impasse with a newly
certified union or following the expiration of a CBA before an
employer can make changes to those aspects of employees work-
ing conditions. Given this differentiation by the Court and the
Board, the average employee might not so readily conclude that
a successor employer by merely stating their employment would
be at will standing alone would signify to that employee that the
successor employer was planning to make changes to their
wages, hours or working conditions when they were hired.14 In
that is without prior consultation with the employee’s collective-bargain-
ing representative. See, Alan Richey, Inc., 359 NLRB No. 40 (2012), ren-
dered invalid by the Court’s decision in NLRB v. Noel Canning, 134 S.C.
2550 (2014).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD24
fact, to accept such a stance would allow every “perfectly clear”
successor to eviscerate its bargaining obligation set forth by the
Court in Burns by the use of two words, “at will.” The Board in
Sahara Las Vegas Corp., 284 NLRB 337, 343 (1987), enfd. 886
F.2d 1320 (9th Cir. 1989), rejected a similar attempt by a succes-
sor employer when it attempted to label the predecessor work
force it hired as probationary employees in an effort to delay its
bargaining obligation. There, the ALJ stated, with Board ap-
proval, that:
[T]he Respondent has shown no special circumstances here
warranting the postponement of that obligation. The proba-
tionary period imposed by the Respondent comes across on this
record as little other than a meaningless device having no dis-
cernible impact on employee tenure or the Respondent's staff-
ing plans which, for all that's shown here, were complete as of
August 20. For this reason, I am at a complete loss to compre-
hend what policy under the Act would be served to accord the
sweeping effect the Respondent desires here to the probation-
ary period. Indeed, the Respondent's argument on this point is
so lacking in merit when weighed against the existing case law
that I am compelled to look elsewhere for an explanation of its
refusal to adhere to its legal obligations. That explanation is, in
my judgment, fully explained in Lewis' testimony, noted
above, the essence of which is that the Respondent intended to
retain complete unilateral control over its casino employees
consistent with the historical pattern of this industry in Las Ve-
gas.
While the Respondent here labeled the employees as “at will”
in its employment application, I find from the beginning Re-
spondent intended to hire these skilled and trained employees,
did hire them, and as the record shows retained the majority of
them at the time they were hired. I find that the use of “at will”
and similar terminology in Respondent’s employment applica-
tion as was the case in Sahara Las Vegas Corp, would be little
more than a device to enable sophisticated employers to termi-
nate their initial bargaining obligation as “perfectly clear” suc-
cessor employers, as had been Respondents’ practice when they
had taken over other prior government contracts.15
Moreover, the Court stated in NLRB v. Burns Security Ser-
vices, 406 US 272, 280, 281 (1972), that “It does not follow,
however, from Burns' duty to bargain that it was bound to ob-
serve the substantive terms of the collective-bargaining contract
the union had negotiated with Wackenhut and to which Burns
had in no way agreed.” However, the Court went on to state,
“there will be instances in which it is perfectly clear that the new
employer plans to retain all of the employees in the unit and in
which it will be appropriate to have him initially consult with the
employees' bargaining representative before he fixes terms.”
The reduction in wages and benefits was impliedly viewed dif-
ferently by the Court then the requirement that a successor be

15 For example, Paragon’s reference in its employment application
that “No employee or representative of Paragon, other than the President
of Paragon, Inc. has the authority to alter the at will nature of my em-
ployment relationship, or make any agreement inconsistent to the fore-
going,” can be construed as a response to offset a possible fact pattern as
strictly bound by the predecessor’s CBA, or the grievance-arbi-
tration procedure contained therein. See also, DuPont Dow Elas-
tomers, LLC, 332 NLRB 1071, 1073–1074, 1074 fn. 7 (2000),
enfd. 296 F.3d 495 (6th Cir. 2002), where a perfectly clear suc-
cessor was found where the unions there were informed that alt-
hough the successor employer would not honor the predecessors
CBA’s it would maintain employees’ wages and benefits under
those contracts. In Bellingham Frozen Foods, Inc., 626 F.2d
674, 678–679, fn.1 (9th Cir. 1980), the court stated “When it is
‘perfectly clear’ that the employer intends to hire a majority of
his workforce in a unit represented by a union from the ranks of
his predecessor, his duty to bargain commences immediately.”
However, citing Burns, the court stated the obligation is to rec-
ognize and bargain with the union, but it is not bound to the sub-
stantive terms of the predecessor’s CBA not agreed to or assumed
by it. Similarly, in Cadillac Asphalt Paving, 349 NLRB 6, 10-11
fn. 32 (2007), the Board found the respondent was a perfectly clear
successor that violated Section 8(a)(5) and (1) of the Act by refus-
ing to recognize and bargain with the union and by failing to con-
tinue the terms and conditions maintained by the predecessor at the
time of succession, i.e., the health and welfare and pension fund
contributions in accord with terms of the expired 1998-2003
MRBA labor agreement, but that the respondent did not violate
Section 8(d) of the Act by implementing terms and conditions of
employment that varied from the predecessor's collective-bargain-
ing agreement. In this regard, the Board has found a successor em-
ployer to be a perfectly clear successor, although it had informed
the union there that it wanted the predecessor’s employees to serve
a probationary period. See Canteen Co., supra. Thus, it would not
seem informing employees their employment would be at will
would necessarily constitute a signal to those employees that an em-
ployer intended to change their wages, hours, and fringe benefits.
While I find Paragon’s bargaining obligation with the Union
attached at the time they solicited the predecessor employees to
apply; which predates the time of the employees’ actual applica-
tions, I also find the applications themselves further confirmed
the Respondents intent to hire and did not specifically apprise the
employees that there would be a change or reduction in wages or
benefits. In reaching this conclusion, I have considered the fact
that the application stated the applicants employment would be
“at-will” and that Paragon retained the right to establish compen-
sation, benefits and working conditions for all of its employees;
and the right to modify my compensation and benefits, position,
duties, and other terms and conditions of employment, including
the right to impose disciplinary action that Paragon, at its sole
discretion, determines to be appropriate. It also stated that “No
employee or representative of Paragon, other than the President
of Paragon, Inc. has the authority to alter the at will nature of my
employment relationship, or make any agreement inconsistent to
the foregoing.” While the Paragon application stated that Para-
gon retained the right to establish compensation and benefits, it
did not state Paragon planned to exercise that right, nor apprise
set forth by the court in S & F Market Street Healthcare LLC v. NLRB,
supra, where there were alleged statements by supervisors offsetting the
successor employer’s employment related documents.
PARAGON SYSTEMS, INC. 25
employees of what changes, if any, Paragon intended to make.16
In this regard, Birdsong credibly testified the online job appli-
cation did not indicate anything was going to change concerning
his working conditions. He testified the application said nothing
about: the uniform allowance, paid or unpaid breaks, the length
of breaks, how he would receive his health and welfare or pen-
sion contribution. It did not say how many hours were needed
to be a full-time employee. Birdsong testified that at the time he
applied he did not receive an employee handbook. He testified
the email confirmation for the application did not contain any
information regarding these matters. Birdsong’s testimony is
supported by the fact that there is no claim by Birdsong or Baker
that the “at will” reference drew any questions by any employees
to Respondent’s officials. Yet, at the June 29 job fair when the
employees received an offer letter which reported an incorrect
pay rate, Birdsong testified the officers wanted to know whether
Paragon was going to honor their CBA because their pay was
higher than that in the surrounding areas. Birdsong testified that
he as well as others asked this question stating this was the main
concern. Similarly, Birdsong testified that at the August 24 ori-
entation, questions continued as to whether Paragon was going
to pay them the same pay they had been receiving with the prior
company because they had a CBA in place, and they wanted to
know if Paragon would honor the CBA and pay them their rate
of pay because when they signed the offer letter it was lower,
and the employees were concerned Paragon was going to drop
their pay. Birdsong testified Waddell also talked about vacation
pay, and he was asked questions about health and welfare.
Waddell was asked if they were going to be receiving their health
and welfare as a wage and he said no. Waddell said it would be
going to the benefit plan. During the orientation Waddell also
said they would no longer be receiving the pension contribution
as a wage that it would go into the 401(k) plan. Thus, the am-
biguous language in the application drew no questions about
benefit changes, signifying that the employees did not under-
stand the application language to be a notice of change of bene-
fits, or it surely would have caused them to raise questions to
management as to what those benefit changes would be. Rather,
it was only after Respondent announced specific benefit changes
in its June 29 offer letter did employees raised questions about
the announced changes. Significantly, the employees did not

16 While in Paragon Systems, Inc., 362 NLRB No. 166 (2015), the
Board majority accepted language similar to the language in the Para-
gon’s application there are differences here. First, Paragon Systems,
Inc., did not involve the issue of whether Paragon was a perfectly clear
successor, as is raised in the current case. Moreover, although I have
found Respondent’s perfectly clear successor status was perfected prior
to the predecessor employees receiving their offer letters, the June 29
offer letters stated, “Shift schedules will be determined in accordance
with the operation need of the contract with consideration given to em-
ployee seniority. Breaks will be provided in accordance with Company
policy and in compliance with any applicable State and Federal law re-
quirements and subject to the operational needs of the contract.” While,
some may say the employees should have been be able to predict in ad-
vance from this ambiguous language that Respondent was going to cease
paying the employees for their theretofore compensated 30 minute lunch
break as the Board majority found with respect to guard mount breaks in
question Respondent’s officials at that time about any changes
that were not specifically announced. Confirming Birdsong’s
testimony that he did not expect such changes and only learned
of them after he began working for Respondent.
Here, the equities also favor the Union’s claim. The record
reveals that during its June 29 job fair Paragon passed out of let-
ters to incumbent employees stating employees were being ex-
tended a contingent offer of employment with an effective date
of September 1. Included in the letter was the statement, “Shift
schedules will be determined in accordance with the operational
needs of the contract. Breaks will be provided in accordance
with Company policy and in compliance with any applicable
State and Federal law requirements and subject to the operational
needs of the contract.” Birdsong credibly testified the employees
had no clue from this language that breaks were going to change.
Birdsong credibly testified that where it states in the offer letter
that, “Breaks will be provided in accordance with company pol-
icy,” did not signify to him there was going to be a change be-
cause Paragon’s break policy could have been the same as that
with Knight. Birdsong’s testimony is buttressed by Brady’s ad-
mission that some of the supervisors at Paragon did not know
that employees were not to be paid for their lunch breaks until
after Paragon began operations. So while working for Knight
the officers would receive 40 hours pay when their shift was
scheduled for 40 hours, for Paragon they only received 37-1/2
hours pay for the same 40 hours. While Paragon’s June 29 offer
letter detailed vacations for what it said were full-time employ-
ees, it did not define what a full-time employee was at the time.
Moreover, the definition of full-time employee in the Knight
CBA was someone working 32 hours per week. It was not until
August 24, at an orientation meeting that the employees received
a hard copy of Paragon’s multi page handbook which contained
an isolated statement that full-time employees were those work-
ing a 40 hour week. Yet, in order to qualify for employment with
Paragon, its June 29 offer letter stated the officers had to accept
Paragon’s offer by July 6. Thus, the employees prior to being
required to accept Paragon’s offer were not told what the true
changes to their vacations would be, or even what vacations or
sick leave were to be accorded those considered part time. This
conclusion is bolstered by Birdsong and Fraser’s credited testi-
mony that the employees did not detect their diminished vacation
and sick leave until months after they began employment with
Paragon Systems, the facts are different here because not all of Respond-
ent’s supervisory staff had same ability to divine such a policy change.
In this regard, Birdsong testified when Paragon took over operations on
September 1, his breaks did not change initially. He testified the break
structure changed around a month after Paragon took over, and he was
paid for his 30 minute lunch break by Paragon until that time. Even
Baker admitted some employees continued to be paid for their 30 mi-
nute lunch break after the transition to Paragon, explaining some su-
pervisors continued to put them in for the breaks, although he claimed
this was for a shorter period for which Birdsong testified. While the
actual records were not placed in evidence, it is more likely Birdsong
gave the more accurate account since the change directly affected his
earnings. Thus, the Board has more information here that not only was
there credible testimony from an employee that he did not expect benefit
changes from Respondent’s statements, Respondents actions in continu-
ing to pay some of the employees for these breaks reveal some of its
supervisory staff drew the same conclusions as did the employee.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD26
Paragon. The same can be said about Paragon’s termination of
Knight’s dry cleaning allowance for employees’ uniforms which
was only vaguely disclosed to the officers on August 24 when
they first received a hard copy of Paragon’s handbook. Here
again, there was more ambiguity as the handbook did not tell
them specifically they would not be getting the allowance, be-
cause even if they read and understood the handbook provision,
there is no contention at that time whether they were told the
types of uniforms they would be receiving as it pertained to the
handbook explanation. Thus, Paragon misstated benefits i.e.
wage rates, health and welfare, and pension in its offer letter, and
gave information as to benefit cuts over time in a piece meal
fashion to employees. Since Paragon had a copy of the Knight
CBA prior to its June job fair posting, I can only conclude that
the way it notified and obfuscated its benefit package to employ-
ees was done intentionally to giving them a false sense of secu-
rity as to their terms and conditions of employment should they
work for Paragon.17 I find this was done to help persuade the
employees to accept employment to allow Paragon to meet its
staffing goals, which also supports my conclusion that Paragon
should be found to be a perfectly clear successor and that it has
violated Section 8(a)(5) and (1) of the Act by the unilateral
changes allege in the complaint.
I have rejected Respondent’s contention in its brief that its
June 29 job fair memo was merely an invitation for employees
to submit applications that under Spruce Up the time when a suc-
cessor employer must announce an intent to change terms and
condition of employment is prior to or simultaneously with an
invitation of the prior work force to accept employment. It as-
serts in the present case the easily identifiable point at which
Paragon offered employment to the incumbent employees was
June 29, when they received their personalized offer letters at the
job fair meeting. For the reasons stated and the case law cited, I
find Respondent’s bargaining obligation attached in early June
with the publication of its job fair memo. Since I find the bar-
gaining obligation attached with the job fair memo, my conclu-
sions render a nullity Respondent’s contention that its June offer
letter unambiguously announces that things were going to be dif-
ferent than under what took place with Knight. I also do not find
that cases such as Ridgewell’s, Inc., 334 NLRB 37 (2001), enfd.
38 Fed.Appx. 29 (D.C. Cir. 2002), support Paragon’s position
here. In Ridgewell’s the respondent employer met with a union
prior to the employer even obtaining the applicable subcontract,
and informed the union that it would use the predecessors em-
ployees as independent contractors, and the Board held that was
sufficient to place the union on notice that those employees
would not be hired under the terms of the predecessors CBA.
That is different than the circumstances here where Paragon
made no such announcement to the union but through a general
announcement solicited all of the predecessors employees to ap-
ply, was legally obligated to offer them employment, and by that
solicitation I have concluded demonstrated a fixed intent to em-
ploy them without announcing it would have changed the terms
of their employment. Similarly, in Resco Products, 331 NLRB

17 See, Paragon Systems, Inc., 362 NLRB No. 182 (2015), where
Paragon was recently found to have violated the Act by its discharge of
three employees due to their union activities.
1546 (2000), the successor employer’s first contact with the pre-
decessors employees included an offer of employment including
terms different than that for which they worked under the prede-
cessor. In the instant case, Paragon’s first contact with Knight’s
employees was its job fair memo in which it solicited their em-
ployment applications but failed to inform them of any differing
terms.
Here, Paragon in early June published a job fair memo inviting
employees to apply for work on line, and asked them to attend a
job fair on June 29, notifying them they were to bring certain
employment related documents, and their duplicates. Yet, prior
to this announcement, Paragon had had in its possession a copy
of Knight’s CBA, but it failed to inform the employees or their
union that Paragon intended to make changes in that CBA if they
accepted employment with Paragon. At the June 29, job fair
Paragon provided employees with a “contingent” offer letter,
which it allowed the employees to sign and tender to Paragon on
that date, which Birdsong did, which also gave them a deadline
of July 6, to tender acceptance of that offer letter. The offer letter
did inform employees that they were to be considered at will em-
ployees, that they would no longer be allowed to retain health
and welfare, and pension benefits as pay, but that it would be
deposited into their 401(k) plans. The offer letter set forth annual
leave for full-time employees, but failed to disclose a full-time
employee was required to work 40 hours instead of 32 hours;
failed to inform them what the benefits for sick leave and annual
leave would be for part time employees, failed to explain that
they would no longer be getting a uniform allowance, and that
they would no longer be paid for their 30 minute lunch break.
Differences which could have been easily gleaned by Paragon
from Knight’s CBA. Moreover, the offer letter misstated the
wages, health and welfare, and pension benefits Paragon was ob-
ligated to provide thereby creating a lot of questions amongst
employees, and leading to confusion as to what Paragon was ac-
tually offering due to vague assurances made by Waddell on
June 29 that Paragon would honor certain aspects of Knight’s
CBA in response to the multitude of employee questions raised
on June 29, in response to Paragon’s inaccurate offer letter. Any
confusing engendered by Paragon’s misstating such basic bene-
fits as wages, health and welfare, and pension rates in its offer
letter should inure to Paragon and not the employees. This does
not appear to be the type of timely notice of a reduction in wages
and benefits to employees for informed choices that the court
was contemplating in Machinists v. NLRB, 595 F.2d 664, 674–
676 (D.C. Cir. 1978).
The predecessor contract reveals as of September 2013, some-
one classified as a guard was receiving $26.80 per hour; a $.65
hourly uniform allowance; and $6.00 per hour for health and
welfare; and $1.19 per hour pension each of which they had the
opportunity to opt to receive as directly paid to them as part of
their paycheck. Based on 40 hours total their gross pay came to
$1072 pay; $26 uniform allowance; $240 health and welfare; and
$47.60 pension for the potential of receiving $1385.60 gross pay
for a 40 hour week. Following Respondent’s takeover this same
PARAGON SYSTEMS, INC. 27
employee lost their 30 minute paid lunch break equivalent to a
loss of 2.5 hours of pay per week, lost the option of retaining
their health and welfare and pension as part of their pay check
and lost their uniform allowance allowing them only $1005 gross
pay based on a 40 hour week. Thus, Respondent effectively re-
duced their option of gross weekly pay by $380.60 per week, or
a cut of 27% in gross pay. The Respondent did this by bypassing
the Union; and dribbling out information to the employees in an
ambiguous and incomplete fashion. While Respondent was re-
quired to contribute the health and welfare money and pension
to a designated 401(k) for each employee depending on the em-
ployees circumstances as per health insurance, there was no
showing if there was any vesting requirement for the 401(k) con-
tributions; or what penalties the employees would have to over-
come to get access to the money. Moreover, this was an imme-
diate hit to the employees available gross income.
It can be argued that the employee no longer had to accrue dry
cleaning expenses for wash and wear uniforms. On the other
hand, this assumes the employees had free access to a
washer/dryer on their premises. Rather, they may still have had
cleaning costs for which they were no longer compensated as
well as time for cleaning the uniforms. They could have also
have found ways to dry clean the uniforms without spending the
whole prior allowance. Regardless, their disposable gross in-
come was substantially reduced when Respondents took over
based on ambiguous and piece meal information given to the em-
ployees.
In sum, I find Respondent became a perfectly clear successors
under Spruce Up, through its early June memo announcing the
June 29 job fair requesting the predecessor employees to apply,
that they fill out an online application, and bring certain enumer-
ated employment related documents to said job fair. I find, at
the same time, Respondent failed to timely inform the applicants
their wages and benefits would change. Thus, by thereafter fail-
ing to reach out and consult with the Union as to the substantial
changes in wages and benefits Respondent intended to imple-
ment, and by providing piecemeal information directly to the
employees about those changes the Respondent has engaged in
unilateral changes and bypassed and undermined the Union in
violation of Section 8(a)(5) and (1) of the Act.
2. The General Counsel’s request that the Board reverse Spruce
Up
The General Counsel contends the Board’s decision in Spruce
Up Corp., 209 NLRB 194, 195 (1974), enfd. 529 F.2d 516 (4th
Cir. 1975), should be overturned as it is inconsistent with the
language in the Court’s decision in NLRB v. Burns Security Ser-
vices, 406 U.S. 272, 294–295 (1972). The General Counsel re-
quests that I issue an order urging the Board to revisit and over-
turn Spruce Up, and that Respondent be found to be “perfectly
clear” successor as contemplated by Burns because the evidence
establishes Respondent intended to both retain the predecessor’s

18 I recently provided a similar analysis in another case involving this
Respondent. See, American Eagle Protective Services Corp. and Para-
gon Systems, Inc., Joint Employers, JD-55–15 (Sept. 22, 2015). I in large
part repeat it here because the same issue is raised, and to allow clarity
to the extent a party desires to file exceptions to; and/or agree with my
employees and was required to offer them employment. It is ar-
gued Respondent planned to retain the predecessors’ work force
and thus it should be found to be “perfectly clear” successor as
defined by the Court in Burns. It is contended Respondent’s bar-
gaining obligation attached upon determining it would enter the
service contract and rely predominantly on their predecessors’
work force to meet its staffing needs, due to its obligation to offer
incumbent employees a right of first refusal under Executive Or-
der 13495. It is contended that, at that point, Respondent was
obligated to notify the Union of its intention to change working
conditions, and thereafter give the Union an opportunity to bar-
gain. It is asserted that because Respondent intended to hire pre-
decessor’s work force in compliance with the Executive Order it
is a “perfectly clear” successor under Burns and violated section
8(a)(5) and (1) of the Act by failing to consult with the Union
before fixing initial terms.
The General Counsel has as early as 2003 recommended the
Board reverse its Spruce Up holding as reflected in Elf Atochem
North America, Inc., 339 NLRB 796, 803 (2003). The Board
elected not to address the arguments made at that time. It appears
the Board may now want to address the General Counsel’s argu-
ments because the disagreement between the two branches of the
Agency, as it did here, helped to foster this litigation because the
parties did not have clear guidelines with which to reach a reso-
lution of their dispute. In Elf Atochem North America, Inc., it
was noted at 803 that the General Counsel asserted the Board
should reverse Spruce Up and find an obligation to bargain exists
over initial terms of employment whenever a successor plans to
retain the existing workforce without regard to whether changes
in employment conditions are contemplated or when they are an-
nounced. The General Counsel there cited NLRB v. Advanced
Stretchforming, Inc., 208 F.3d 801, 807–811 (9th Cir. 2000);
Chairman Gould’s concurring opinion in Canteen Co., 317
NLRB 1052, 1054–1055 (1995), enfd. 103 F.3d 1355 (7th Cir.
1997), and the dissenting opinions of Board Members Fanning
and Penello in the Spruce Up decision as support for the position
that the case be reversed.
I find it unnecessary to recommend to the Board that Spruce
Up be reversed as the General Counsel requests. This is a policy
matter reserved to the Board. I will, however, provide the Board
with an analysis of existing case law to the extent it might prove
useful.18 Some 13 years after the Board’s Spruce Up decision,
in Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27,
39–40 (1987), the Court stated:
During a transition between employers, a union is in a peculi-
arly vulnerable position. It has no formal and established bar-
gaining relationship with the new employer, is uncertain about
the new employer’s plans, and cannot be sure if or when the
new employer must bargain with it. While being concerned
with the future of its members with the new employer, the un-
ion also must protect whatever rights still exist for its members
analysis as it relates to the current case. I am aware that recently in GVS
Properties, LLC, 362 NLRB No. 194 (2015), the Board cited the Spruce
Up decision with approval. However, that case does not appear to in-
clude, as here, a contention by the General Counsel that Spruce Up be
reversed.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD28
under the collective-bargaining agreement with the predeces-
sor employer.FN6 Accordingly, during this unsettling transition
period, the union needs the presumptions of majority status to
which it is entitled to safeguard its members’ rights and to de-
velop a relationship with the successor.
The position of the employees also supports the appli-
cation of the presumptions in the successorship situation. If
the employees find themselves in a new enterprise that sub-
stantially resembles the old, but without their chosen bar-
gaining representative, they may well feel that their choice
of a union is subject to the vagaries of an enterprise's trans-
formation. This feeling is not conducive to industrial peace.
In addition, after being hired by a new company following
a layoff from the old, employees initially will be concerned
primarily with maintaining their new jobs. In fact, they
might be inclined to shun support for their former union,
especially if they believe that such support will jeopardize
their jobs with the successor or if they are inclined to blame
the union for their layoff and problems associated with it.7
Without the presumptions of majority support and with the
wide variety of corporate transformations possible, an em-
ployer could use a successor enterprise as a way of getting
rid of a labor contract and of exploiting the employees’ hes-
itant attitude towards the union to eliminate its continuing
presence.
The Board and courts have also long held that by dealing di-
rectly with bargaining unit employees an employer unlawfully
bypasses a union and in doing so undermines its representation
status in the bargaining unit. See Medo Photo Supply Co. v
NLRB, 321 U.S. 678, 683 (1944); Georgia Power Co., 342
NLRB 199 (2004), enfd. 427 F.3d 1354 (11th Cir. 2005); and
Ken’s Building Supplies, 142 NLRB 235 (1963), enfd. 333 F.2d
84 (6th Cir. 1964). In Medo Photo Supply Co. v. NLRB, supra, at
683–685, the Court stated:
The National Labor Relations Act makes it the duty of the
employer to bargain collectively with the chosen represent-
atives of his employees. The obligation being exclusive, see
s 9(a) of the Act, 29 U.S.C. s 159(a), 29 U.S.C.A. s 159(a),
it exacts ‘the negative duty to treat with no other.’ National
Labor Relations Board v. Jones & Laughlin, 301 U.S. 1, 44,
57 S.Ct. 615, 628, 81 L.Ed. 893, 108 A.L.R. 1352; and see
Virginian Railway Co. v. System Federation, 300 U.S. 515,
548, 549, 57 S.Ct. 592, 599, 600, 81 L.Ed. 789. Petitioner,
by ignoring the union as the employees' exclusive bargain-
ing representative, by negotiating with its employees con-
cerning wages at a time when wage negotiations with the
union were pending, and by inducing its employees to aban-
don the union by promising them higher wages, violated s
8(1) of the Act, which forbids interference with the right of
employees to bargain collectively through representatives of
their own choice.
That it is a violation of the essential principle of collec-
tive bargaining and an infringement of the Act for the em-
ployer to disregard the bargaining representative by negoti-
ating with individual employees, whether a majority or a
majority, with respect to wages, hours and working condi-
tions was recognized by this Court in J. I. Case Co. v. Labor
Board, 321 U.S. 332, 64 S.Ct. 576; cf. Order of Railroad
Telegraphers v. Railway Express Agency, Inc., 321 U.S.
342, 64 S.Ct. 582; see also National Licorice Co. v. Labor
Board, 309 U.S. 350, 359-361, 60 S.Ct. 569, 575, 576, 84
L.Ed. 799. The statute guarantees to all employees the right
to bargain collectively through their chosen representatives.
Bargaining carried on by the employer directly with the em-
ployees, whether a minority or majority, who have not re-
voked their designation of a bargaining agent, would be
subversive of the mode of collective bargaining which the
statute has ordained, as the Board, the expert body in this
field, has found. Such conduct is therefore an interference
with the rights guaranteed by s 7 and a violation of s 8(1) of
the Act. 2 There is no necessity for us to determine the ex-
tent to which or the periods for which the employees, hav-
ing designated a bargaining representative, may be fore-
closed from revoking their designation, if at all, or the for-
malities, if any, necessary for such a revocation. Compare
National Labor Relations Board v. Century Oxford Mfg.
Co., 2 Cir., 140 F.2d 541. But orderly collective bargaining
requires that the employer be not permitted to go behind the
designated representatives, in order to bargain with the em-
ployees themselves, prior to such a revocation.
In Fall River Dyeing & Finishing Corp. v. NLRB, supra at 42,
the Court stated the following pertaining to Board action in suc-
cessorship cases:
We turn now to the three rules, as well as to their application
to the facts of this case, that the Board has adopted for the
successorship situation. The Board, of course, is given con-
siderable authority to interpret the provisions of the NLRA.
See NLRB v. Financial Institution Employees, 475 U.S. 192,
202, 106 S.Ct. 1007, 1012, 89 L.Ed.2d 151 (1986). If the
Board adopts a rule that is rational and consistent with the
Act, see ibid., then the rule is entitled to deference from the
courts. Moreover, if the Board's application of such a ra-
tional rule is supported by substantial evidence on the rec-
ord, courts should enforce the Board's order. See Beth Israel
Hospital v. NLRB, 437 U.S. 483, 501, 98 S.Ct. 2463, 2473,
57 L.Ed.2d 370 (1978); Universal Camera Corp. v. NLRB,
340 U.S. 474, 488, 71 S.Ct. 456, 464, 95 L.Ed. 456 (1951).
These principles also guide our review of the Board’s action
in a successorship case. See, e.g., Golden State Bottling Co.
v. NLRB, 414 U.S., at 181, 94 S.Ct., at 423.
As well documented in this decision, and in many others, in
NLRB v. Burns Security Services, 406 US 272, 281–282 (1972),
the Court stated “Although a successor employer is ordinarily
free to set initial terms on which it will hire the employees of a
predecessor, there will be instances in which it is perfectly clear
that the new employer plans to retain all of the employees in the
unit and in which it will be appropriate to have him initially con-
sult with the employees' bargaining representative before he
fixes terms.”
In Spruce Up Corporation, supra at 195, the Board majority
stated:
Although, at the February meeting, Fowler expressed a
general willingness to hire the barbers employed by the for-
mer employer, he at the same time indicated that he was
PARAGON SYSTEMS, INC. 29
going to be paying different commission rates. Fowler
thereby made it clear from the outset that he intended to set
his own initial terms, and that whether or not he would in
fact retain the incumbent barbers would depend upon their
willingness to accept those terms. When an employer who
has not yet commenced operations announces new terms
prior to or simultaneously with his invitation to the previous
work force to accept employment under those terms, we do
not think it can fairly be said that the new employer “plans
to retain all of the employees in the unit,” as that phrase was
intended by the Supreme Court. The possibility that the old
employees may not enter into an employment relationship
with the new employer is a real one, as illustrated by the
present facts. Many of the former employees here did not
desire to be employed by the new employer under the terms
set by him-a fact which will often be operative, and which
any new employer must realistically anticipate. Since that
is so, it is surely not “perfectly clear” to either the employer
or to us that he can “plan to retain all of the employees in
the unit” under such a set of facts.
We concede that the precise meaning and application of
the Court's caveat is not easy to discern. But any interpre-
tation contrary to that which we are adopting here would be
subject to abuse, and would, we believe, encourage em-
ployer action contrary to the purposes of this Act and lead
to results which we feel sure the Court did not intend to flow
from its decision in Burns. For an employer desirous of
availing himself of the Burns right to set initial terms would,
under any contrary interpretation, have to refrain from com-
menting favorably at all upon employment prospects of old
employees for fear he would thereby forfeit his right to uni-
laterally set initial terms, a right to which the Supreme
Court attaches great importance in Burns. And indeed, the
more cautious employer would probably be well advised
not to offer employment to at least some of the old work
force under such a decisional precedent. We do not wish-
nor do we believe the Court wished-to discourage continu-
ity in employment relationships for such legalistic and arti-
ficial considerations. We believe the caveat in Burns, there-
fore, should be restricted to circumstances in which the new
employer has either actively or, by tacit inference, misled
employees into believing they would all be retained without
change in their wages, hours, or conditions of employment7
or at least to circumstances where the new employer, unlike
the Respondent here, has failed to clearly announce its in-
tent to establish a new set of conditions prior to inviting for-
mer employees to accept employment.
The principles set forth by the majority in Spruce Up do not
translate easily to the circumstances here, which could not have
been foreseen by the majority at the time Spruce Up issued.
First, the respondent in Spruce Up informed the union there on
February 6, that “all the barbers who are working will work.”
However, the union was also informed at that time what the re-
spondent planned to pay the barbers. The new commission rates
were unsatisfactory to the many of the barbers leading to a strike.
Thus, during the first meeting the employer clearly indicated it
was altering a core term of employment; and it let the union
know the new rate. It did not make the type of ambiguous state-
ment the progeny of Spruce Up has morphed into as sufficient to
deprive employees bargaining rights such as “at will”; or the
statements put forth here such as we reserve the right to change
working conditions without specifying the change, or even that
there definitely would be a change.
Secondly, the Board majority’s concern that to retain the right
to set initial conditions an employer would have to “refrain from
commenting favorably at all upon employment prospects of old
employees for fear he would thereby forfeit his right to unilater-
ally set initial terms,” is inapplicable to the current category of
employees, because the Executive Order gives them the right of
first refusal to their current positions so whether the Respondent
comments favorably about their retention or not has nothing to
do with the continuity of their employment relationship. Thus,
the underpinning of the majority of the Spruce Up rationale is
not applicable here. It surely, cannot outweigh the fact as enun-
ciated by the Court that failure to recognize a union during a suc-
cessorship transition serves to undermine the union; which is fur-
ther compounded when while stripping the employees of repre-
sentation during this transition period, the successor employer is
encouraged to engage in direct dealing with those employees,
although it plans to hire, or is required to hire those employees
thereby subsequently being required to recognize and bargain
with the union. See the Courts pronouncements in Fall River
Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 39–40, (1987);
Medo Photo Supply Co. v. NLRB, supra, at 683–685; and Burns
itself stating, “there will be instances in which it is perfectly clear
that the new employer plans to retain all of the employees in the
unit and in which it will be appropriate to have him initially con-
sult with the employees' bargaining representative before he
fixes terms.” The Court added no qualification to that require-
ment, and even in circumstances when a successor employer is
forthright in detailing early on its plans to alter the predecessor’s
benefits, its discussing those planned changes with the union in
place with a give and take may in fact help it to maintain its plans
to keep the predecessors staff through the ameliorative effects of
collective bargaining. As detailed by the dissent in Spruce Up
such a process does not prevent an employer from bargaining to
a lawful impasse to place its initial terms in effect, but the em-
ployees will be given a fair option of knowing the specifics of
the employer’s offer in advance, and be more secure in the fact
that they have not been stripped of union representation in the
process.
With respect to this class of government contract employers
they are required to set wages and benefits in part based on the
predecessor’s CBA under the SCA; and give a right of first re-
fusal to those employees under the Executive Order. As set forth
above, the main concern of the Spruce Up majority that requiring
successors to bargain during the transition period when their
plans entail hiring a majority of the predecessor’s, may make
them not comment favorably about those employees hiring pro-
spects is not relevant as the employees here are already assured
a job offer. Moreover, the current Spruce Up standard poten-
tially strips away bargaining rights for large groups of employees
during a sensitive period for a union as well as those employees,
as the evidence reveals that Respondent is a nationwide em-
ployer. In this instance, the single contract with FEMA involved
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD30
guards employed at multiple buildings and those within the bar-
gaining unit involved a fairly significant number of bargaining
unit employees. Baker’s testimony revealed Respondent’s op-
erations are in 42 of the 50 states in the United States and many
of the territories including Saipan, American Samoa and
Guam. Baker testified Respondent has taken over more than 50
contracts since he arrived there in 2008. Baker testified that with
the vast majority of contracts in the last 2 years more than 50
percent of the predecessor’s employees have been hired by Para-
gon making it through the vetting process and beginning work. For the
reasons set forth above, the underpinnings of the majority’s ra-
tionale in Spruce Up do not appear to apply to this group of em-
ployers; and there appears no basis to undermine the Union here;
and in similar circumstances to strip employees of their right rep-
resentation when the successor is required proffer them an offer
of employment.
However, the Spruce Up majority’s concerns also can be ques-
tioned concerning employers in general. The Board majority
surmised that employers who might want to preserve their Burns
right to set initial terms would “have to refrain from commenting
favorably at all upon employment prospects of old employees for
fear he would thereby forfeit his right to unilaterally set initial
terms.” This conclusion seems to be somewhat undermined by
the fact if it is in the employer’s interest to keep predecessors
work force in tact due to their skills, training, expertise,
knowledge of the operation, client goodwill, lack of availability
of adequate substitutes, time targets in resuming or maintaining
operations, or any number of a variety of factors that would come
into play in such a decision it would appear the employer would
have to let the employees know about it sooner than later to re-
tain their services. The Spruce Up majority also went on to state,
“And indeed, the more cautious employer would probably be
well advised not to offer employment to at least some of the old
work force under such a decisional precedent.” However, the
failure to offer predecessor employees employment to avoid a
statutory bargaining obligation is a violation of Section 8(a)(3)
and (1) of the Act. It seems to be a slender reed to eviscerate
employees important representation rights because an employer
may be tempted to violate the Act in another fashion. This can
be construed as giving an employer a pass on its obligations un-
der Section 8(a)(5); so it will not be tempted to violate Section
8(a)(3) of the Act. The Board is capable of upholding the rights
incorporated in both sections of the Act; does not have to sacri-
fice one at the expense of the other; and it is likely that the vast
majority of employers will voluntarily comply if those rights are
clearly delineated in cases of this context.
Member Fanning took the view in his dissent in Spruce Up
that, “The fact that some employees may refuse the offer of em-
ployment has nothing to do with the ‘plans’ or intent of the of-
fering employer.” It was stated, “Nor can there be any economic
injury to the successor in bargaining in good faith prior to the
commencement of operations, for, assuming good-faith bargain-
ing on his part, if the union cannot persuade him that other terms
are more equitable, he is perfectly free to impose those terms as
the opening terms and conditions of employment upon the com-
mencement of operations.” It was pointed out, “The majority's
contrary construction of this aspect of the Burns decision leads
to the anomalous, if not absurd, result that a bargaining obliga-
tion over the establishment of the successor's initial terms and
conditions of employment arises when the successor plans to re-
tain the former employees at the terms their union had already
established through collective bargaining with the predecessor
employer but not when he plans to retain them at terms different
from those previously established. The majority would bring to
bear ‘the mediatory influence of negotiation’[FN38] where there is
no controversy, but deny its appropriate use where there is con-
troversy. They thus turn the Act on its head, and to no useful
end.” Spruce Up, supra at 205-206.
Similarly, Member Penello pointed out that in Burns “The
Court there said nothing about a conditional intent to hire.” In
agreement with Member Fanning, he stated, “The majority are
attempting to revise substantially what the Court said, for their
view would, in effect, abrogate the exception, as the only case
when a violation would occur under their test would be the un-
likely situation where a successor says he will continue the em-
ployees under the exact terms and conditions as existed before
the takeover. If he says that he ‘plans’ to alter the status quo in
any way, while at the same time indicating a desire to retain the
old employees, they would find this amounts to a conditional in-
tent to hire. I cannot accept that the Supreme Court would an-
nounce a rule of law that is so restrictive as to amount to a nul-
lity.” It was stated as to the successor’s obligation to consult
with the employees bargaining representative before he fixes
terms “I regard this duty as merely an obligation to refrain from
dealing with the unit employees individually concerning their fu-
ture working conditions until it has notified the union and bar-
gained to an impasse. Having thus negotiated with the union, the
successor is then free to fix his terms whether the union agrees
or not. In my view this is not too heavy a burden to put on any
employer in order to protect the employees' Section 7 rights ‘to
bargain collectively through representatives of their own choos-
ing’ with respect to matters affecting the employees' interests.”
Id. 207-208.
In Canteen Co. supra at 1054–1055, Chairman Gould stated,
in a concurring opinion that “I write separately, however, to ex-
press my opinion that the Spruce Up standard represents an un-
duly restrictive reading of the Supreme Court's definition of cir-
cumstances in which a successor employer must bargain about
initial terms and conditions of employment.” The chairman
stated, “I question the validity of Spruce Up and believe that it
grafts on an additional requirement for finding a ‘perfectly clear’
successor which is neither warranted nor intended by the Su-
preme Court in Burns. The Supreme Court stated that the test
was only whether ‘the new employer plans to retain all of the
employees in the unit’ for the new employer to be a ‘perfectly
clear’ successor.” The Chairman agreed with Member Fanning
and Penello’s prior dissents, stating:
The fact is that in many, if not most, business rearrangements,
the successor employer perceives a need for change or greater
flexibility in the employment relationship. This is the essential
dynamic involved in the instant case as well as countless others.
To eliminate instances where employers express an intent to pro-
vide changed employment conditions from the obligation to ne-
gotiate under the “perfectly clear” standard announced in Burns
PARAGON SYSTEMS, INC. 31
would both render the holding on this point meaningless and also
disregard the careful balance between competing interests artic-
ulated by the Court in both Burns and Fall River Dyeing.
In Machinists v. NLRB, 595 F.2d 664, 674–675 (D.C. Cir.
1978), the court similarly stated pertaining to the effect of the
Board majority’s Spruce Up doctrine that “To be sure, in view
of the substantial harmony existent in the parties' positions, only
minor adjustments in initial terms may then remain to be negoti-
ated, and it must be acknowledged that compulsory bargaining
usually yields greater returns when labor-management differ-
ences are of more appreciable magnitude.” Thus, the court
acknowledged the limited nature of the bargaining remaining un-
der Spruce Up decision as pointed out by Members Fanning,
Penello; and Chairman Gould. The court, however, went on to
state in affirming the Board majority’s Spruce Up analysis that
in basic fairness to employees that unless incumbent employees
“are apprised promptly of impending reductions in wages or ben-
efits, they may well forego the reshaping of personal affairs that
necessarily would have occurred but for anticipation that succes-
sor conditions will be comparable to those in force.”
Here, the executive order required Respondent to accord in-
cumbents first refusal for their positions; the SCA required the
Respondent be presented with the predecessor’s CBA and for
Respondent to analyze that CBA to make sure it complied with
the SCA in according the incumbent employees lawfully re-
quired wages and benefits. In early June a job fair notice was
posted announcing a June 29 job fair off the work site to be con-
ducted by Paragon. As announced in the early June job fair
memo, the employees who elected to attend the June 29 job fair
were required to fill out an on line application in advance of the
job fair, which stated they were to be hired as employees at will,
and that Paragon retained the right to change existing terms and
conditions of employment. They were not told that Paragon ac-
tually intended to make changes to core terms of employment, or
if so, what those changes would be. They were told to bring a
substantial amount of documentation with them to the job fair in
the job fair announcement, and that they would have to meet cer-
tain employment related requirements, most of which they had
met to be hired and retain employment with the predecessor con-
tractor. For those who attended the June 29 job fair, they were
given a contingent offer letter, which indicated they would lose
the ability to retain health and welfare and pension contributions
as a form of wages; but they were not told specifically that they
would no longer be paid for their 30 minute lunch break, or that
they would lose their uniform allowance, or that there would be
a requirement that they work 40 hours a week to be considered a
full-time employee, instead of 32 as had been the then current
requirement. Moreover, their wage rates, health and welfare
rates, and pension rates were misstated in the offer letter leading
confusion as to its terms by the recipients. As I have found
above, information continued to be presented to them thereafter
in a piecemeal fashion concerning substantive wage and benefit
changes some of it being gleaned after they started their new
jobs.
It is likely, that anyone reading this decision, if they are chang-
ing jobs, would want to have a clear presentation from their pro-
spective employer specifically what their new wages and fringe
benefits would be, to make a reasoned decision with their fami-
lies and in a timely enough fashion to preserve their options of
seeking alternative employment if the new wage and benefit
package proved unsatisfactory. Here, the employees were in-
stead presented with legal constructs, for which legal minds de-
bate the significance, and then siphoned out information in a
manner in which the Respondent determined would arguably
meet the Board’s standards in order to dilute the effect of Re-
spondent’s planned substantial changes and undercut the ability
of the employees to seek alternate employment. At the same
time the employees were stripped of union representation during
this transition period.
I would note that in Burns, the Court stated, “there will be in-
stances in which it is perfectly clear that the new employer plans
to retain all of the employees in the unit and in which it will be
appropriate to have him initially consult with the employees' bar-
gaining representative before he fixes terms.” The affirmative
duty to consult was placed on the employer, for it is the employer
that knows its plans as to employee retention and changes of ben-
efits. Here, there was no demand by the Union to bargain over
the initial terms of employment prior to Respondent beginning
operations. However, the Respondent has not raised lack of such
a demand as a defense in their answer, at the trial, or in their post-
hearing brief. Had it been raised, I would have recommended its
rejection, because the Court’s pronouncement places an affirm-
ative duty on the employer to consult with the union. Along
these lines, this is similar to direct dealing when an employer
unlawfully by passes a union concerning changes to terms of em-
ployment and deals directly with employees. It appears, under
the Court’s intent under Burns a perfectly clear successor would
be required to inform the union specifically what changes in the
current benefits it intends to make, in a timely fashion, and then
bargain with the union to impasse before implementing those
changes. Under the current Spruce Up rationale when employers
intend or are required to hire the predecessor’s work force, em-
ployees can be both denied union representation at a vulnerable
period, and as well of the specifics of their new employment ar-
rangement so they cannot make informed judgments as to their
future. It would seem that both of these ends would serve to
undermine a sitting union in the eyes of employees, and the bar-
gaining process in general.
CONCLUSIONS OF LAW
1. Respondent, Paragon Systems, Inc. (Paragon) is an em-
ployer engaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
2. The National Association of Special Police and Security
Officers (the Union) is a labor organization within the meaning
of Section 2(5) of the Act.
3. At all material times, the following described unit has been
an appropriate unit for the purposes of collective-bargaining
within the meaning of Section 9(b) of the Act:
All full-time and regular part-time Protective Service Officers
employed by the Employer at the Federal Emergency Manage-
ment Agency, 500 C Street, SW and 1201 Maryland Avenue,
SW, Washington, DC; excluding temporary personnel as de-
fined in Section 1.4 of the collective-bargaining agreement, of-
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD32
fice clericals, managerial personnel, project managers, supervi-
sors as defined by the National Labor Relations Act, and all
other personnel including sergeants, lieutenants, captains, site
managers, officers and directors of the Employer, assistant
project managers, confidential employees, and non-guard
employees.
4. At all material times, the Union has been, and is now, the
exclusive representative for the employees in the bargaining unit
described above in paragraph 3 (the unit employees) for the pur-
poses of collective-bargaining within the meaning of Section
9(a) of the Act.
5. Respondent, a perfectly clear successor employer, during
the period of September 1, 2013 through August 14, 2014, vio-
lated Section 8(a)(5) and (1) of the Act by failing to follow cer-
tain terms and conditions of employment and related past prac-
tices set forth in the collective-bargaining agreement between
Knight Protective Services, Inc. and the Union for the unit em-
ployees, by unilaterally changing the following terms and con-
ditions of employment without providing the Union with notice
and an opportunity to bargain: (a) eliminating a paid 30-minute
employee lunch break; (b) eliminating an hourly uniform allow-
ance; (c) redefining the threshold for full-time employment status
from 32 hours per week to 40 hours per week; (d) discontinuing
the employee option to receive the hourly health and welfare
benefit as a wage in the employee’s paycheck; and (e) discontin-
uing the employee option to receive the pension benefit as a
wage in the employee’s paycheck.
6. The unfair labor practices described above constitute unfair
labor practices having an effect on commerce within the mean-
ing of Section 2(6) and (7) of the Act.
THE REMEDY
Having found Respondent has engaged in conduct violating
Section 8(a)(5) and (1) of the Act, it is ordered to cease and desist
therefrom, and to take the following affirmative action deemed
necessary to effectuate the policies of the Act.
Respondent is ordered to recognize and, on request, bargain
with the Union as the exclusive collective-bargaining representa-
tive of its employees in the unit found here to be appropriate.
The parties voluntarily reached a new collective-bargaining
agreement effective August 15, 2014. Thus, I find Respondent
liable to employees and employees should be made whole for
losses resulting from the unilateral changes found here for the
period September 1, 2013 through August 14, 2014, the day be-
fore the effective date of the new CBA. See Elf Atochem, Inc.,
339 NLRB 796, 796 fn. 4 (2003). Since the parties reached a
new collective-bargaining agreement, the General Counsel is not
seeking a remedy where the Respondent is required to rescind
any of the unilateral changes. Thus, employees affected by Re-
spondent’s unilateral changes, should be made whole for losses
incurred during the period of September 1, 2013 through and in-
cluding August 14, 2014, as a result of those unlawful changes,
and Respondent should be ordered to make unit employees whole

19
If no exceptions are filed as provided by Sec. 102.46 of the Board’s
Rules and Regulations, the findings, conclusions, and recommended Or-
der 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.
for such losses plus interest at the rate prescribed in New Hori-
zons, 283 NLRB 1173 (1987), compounded daily as prescribed
in Kentucky River Medical Center, 356 NLRB 6 (2010). Re-
spondent shall then, for each affected employee, file a report with
the Social Security Administration allocating backpay to the ap-
propriate calendar quarter, and shall compensate each affected
employee for the adverse tax consequences, if any, of receiving
one or more lump-sum backpay award covering periods for
longer than one year. Don Chavas, LLC d/b/a Tortillas Don Cha-
vas, 361 NLRB No. 10 (2014). Included in this recommended
remedy is the requirement that, upon request of the Union on
behalf of any particular affected employees, employees shall re-
ceive, as a lump-sum payment, the total amount of health and
welfare contributions and/or pension contributions made on the
employees’ behalf by Respondent to each employee’s 401(k) ac-
count between September 1, 2013 through and including August
14, 2014. Respondent shall bear all costs, fees, and tax conse-
quences for withdrawal of said monies from employees’ 401(k)
accounts.
On these findings of fact and conclusions of law and on the
entire record, I issue the following recommended19
ORDER
It is hereby ordered that Respondent Paragon Systems, Inc.,
its officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Refusing to bargain in good faith with The National Asso-
ciation of Special Police and Security Officers (the Union) con-
cerning the rates of pay, wages, hours, and working conditions
of employees in the following appropriate unit:
All full-time and regular part-time Protective Service Officers
employed by the Employer at the Federal Emergency Manage-
ment Agency, 500 C Street, SW and 1201 Maryland Avenue,
SW, Washington, DC; excluding temporary personnel as de-
fined in Section 1.4 of the collective-bargaining agreement, of-
fice clericals, managerial personnel, project managers, supervi-
sors as defined by the National Labor Relations Act, and all
other personnel including sergeants, lieutenants, captains, site
managers, officers and directors of the Employer, assistant pro-
ject managers, confidential employees, and non-guard employ-
ees.
(b) Unilaterally changing terms and conditions of employment
established by the predecessor employer’s collective-bargaining
agreement and practices related thereto in effect during the pe-
riod of October 1, 2012 through September 30, 2015.
(c) In any like or related manner interfering with, restraining,
or coercing employees in the exercise of the rights guaranteed
them by Section 7 of the Act.
2. Take the following affirmative action necessary to effectu-
ate the policies of the Act.
(a) On request, bargain collectively and in good faith concern-
ing wages, hours, and other terms and conditions of employment
PARAGON SYSTEMS, INC. 33
with the Union as the exclusive representative of employees in
the above-described unit.
(b) On the request of the Union on behalf of any or all affected
employees, pay the employees, as a lump-sum payment, the total
amount of health and welfare and/or pension contributions made on
the employees’ behalf by Respondent to the employee’s 401(k) ac-
count between and including September 1, 2013 and August 14,
2014. Respondent shall pay all costs, fees, and tax consequences
associated with the withdrawal of these monies from employees’
401(k) accounts.
(c) Make employees, in the above-described unit, whole for
any losses they may have suffered as a result of the unilateral
changes in their terms and conditions of employment during the
period from September 1, 2013 and through and including Au-
gust 14, 2014, in the manner set forth in the remedy section of
this decision.
(d) Preserve and, within 14 days of a request, or such addi-
tional time as the Regional Director may allow for good cause
shown, provide at a reasonable place designated by the Board or
its agents, all payroll records, social security payment records
and reports, and all other records, including an electronic copy
of such records if stored in electronic form, necessary to analyze
the amount of backpay due under the terms of this Order.
(e) Within 14 days after service by the Region, post at their
operations 500 C Street, SW and 1201 Maryland Avenue, SW,
Washington, D.C. copies of the attached notice marked “Appen-
dix.”20 Copies of the notice, on forms provided by the Regional
Director for Region 5, after being signed by the Respondent’ au-
thorized representatives, shall be posted by the Respondents im-
mediately upon receipt and maintained for 60 consecutive days
in conspicuous places including all places where notices to em-
ployees are customarily posted. Reasonable steps shall be taken
by the Respondent to ensure that the notices are not altered, de-
faced, or covered by any other material. In addition to physical
posting of paper notices, notices shall be distributed electroni-
cally, such as by email, posting on an intranet or an internet site,
and/or other electronic means, if the Respondent customarily
communicates with its employees by such means. In the event
that, during the pendency of these proceedings, the Respondent
goes out of business or is displaced as the security guard contrac-
tor or subcontractor at the facilities involved in this proceeding,
the Respondent shall duplicate and mail, at its own expense, a
copy of the notice to all current employees and former bargaining
unit employees employed by the Respondent at any time since
September 1, 2013.
(f) Notify the Regional Director, in writing, within 20 days
from the date of this Order what steps Respondents have taken to
comply.
Dated, Washington, D.C. September 30, 2015
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD

20 If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice reading “Posted by Order of the National
Labor Relations Board” shall read “Posted Pursuant to a Judgment of the
An Agency of the United States Government
The National Labor Relations Board has found that we violated
the National Labor Relations Act and has ordered us to post and
abide by this notice.
FEDERAL LAW GIVES YOU THE RIGHT TO:
Form, join, or assist a union
Choose a representative to bargain with us on your be-
half
Act together with other employees for your benefit and
protection
Choose not to engage in any of these protected activities.
WE WILL NOT refuse to bargain collectively with The National
Association of Special Police and Security Officers (the Union)
as the exclusive bargaining representatives of employees in the
following unit:
All full-time and regular part-time Protective Service Officers
employed by the Employer at the Federal Emergency Manage-
ment Agency, 500 C Street, SW and 1201 Maryland Avenue,
SW, Washington, DC; excluding temporary personnel as de-
fined in Section 1.4 of the collective-bargaining agreement, of-
fice clericals, managerial personnel, project managers, supervi-
sors as defined by the National Labor Relations Act, and all
other personnel including sergeants, lieutenants, captains, site
managers, officers and directors of the Employer, assistant pro-
ject managers, confidential employees, and non-guard employ-
ees.
WE WILL NOT unilaterally change terms and conditions of em-
ployment established by the collective-bargaining agreement and
practices in effect related to that agreement between the Union
and our predecessor.
WE WILL NOT in any like or related manner interfere with, re-
strain, or coerce our employees in the exercise of their rights guar-
anteed in Section 7 of the Act.
WE WILL, on request, bargain with the Union as the exclusive
bargaining representative of the above-described bargaining unit.
WE WILL, make whole employees in the above-described unit
for any losses suffered between September 1, 2013 and through
and including August 14, 2014, as a result of our unilateral
changes in their terms and conditions of employment, plus inter-
est, including our during this time period: (a) eliminating a paid
30-minute employee lunchbreak; (b) eliminating the hourly uni-
form allowance; (c) redefining the threshold for full-time employ-
ment status from 32 hours per week to 40 hours per week; (d)
discontinuing the employee option to receive the hourly health
and welfare benefit as a wage in the employee’s paycheck; and
(e) discontinuing the employee option to receive the pension ben-
efit as a wage in the employee’s paycheck.
PARAGON SYSTEMS, INC.
The Administrative Law Judge’s decision can be found at
United States Court of Appeals Enforcing an Order of the National Labor
Relations Board.”
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD34
www.nlrb.gov/case/05–CA–127523 or by using the QR code be-
low. Alternatively, you can obtain a copy of the decision from
the Executive Secretary, National Labor Relations Board, 1015
Half Street, S.E., Washington, D.C. 20570, or by calling (202)
273-1940.