Quality Castings Co.

National Labor Relations Board - Board Decisions

Nov 15, 1962

139 N.L.R.B. 928 (N.L.R.B. 1962)

928 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
of Section 9(b) of the Act , and the Regional Director shall issue a
certification of representatives to the U.A.W. for such unit. In all
other circumstances , we find that each voting group constitutes a
separate unit appropriate for purposes of collective bargaining within
the meaning of Section 9(b), and the Regional Director shall for each
such unit issue a certification of representatives or certification of
results of election , as may be appropriate.
[Text of Direction of Elections omitted from publication.]
Quality Castings Company and United Steelworkers of America,
AFL-CIO. Case No. 8-CA-2420. November 15, 1962
DECISION AND ORDER
On December 7, 1961, Trial Examiner William J. Brown issued
his Intermediate Report in the above-entitled proceeding, finding that
the Respondent had engaged in and was engaging in certain unfair
labor practices and recommending that it cease and desist therefrom
and take certain affirmative action, as set forth in the attached Inter-
mediate Report. Thereafter, the Respondent filed exceptions to the
Intermediate Report and a supporting brief.
The Board has reviewed the rulings of the Trial Examiner made at
the hearing and finds that no prejudicial error was committed. The
rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the exceptions and brief, and the entire record in
the case, and hereby adopts the findings, conclusions, and recom-
mendations of the Trial Examiner with the modifications noted
hereafter.
The Respondent Company is charged with discriminating against
64 former employees by distributing profits under a new formulation
of its profit-sharing plan so as to disqualify such individuals because
of their earlier participation in a strike against the Respondent.
The Respondent has had a profit-sharing plan in effect since 1945.
In September 1959, the United Steelworkers Union was certified as
the bargaining representative and thereafter the Union and the Re-
spondent engaged in contract negotiations, including a discussion of
proposals with respect to the profit-sharing plan. The parties were
unable to reach agreement and the employees went on strike on
April 10, 1960. Shortly after the strike began, employees began re-
turning in substantial numbers. By the time the strike was officially
terminated on May 19,1960, all but 64 of approximately 250 employees
had returned to work. The 64 employees who had remained on strike
were not rehired for economic reasons. Pursuant to an agreement be-
139 NLRB No. 66.
QUALITY CASTINGS COMPANY 929
tween the Respondent and Union these individuals were placed on a
preferential hiring list which was to be in effect for 1 year.
On or about October 18, 1960, the Union was decertified as the
bargaining representative of the employees. On November 20, 1960,
the Respondent made a profit-sharing distribution pursuant to a
newly devised formulation of its plan. To be eligible under the new
formulation, employees must have worked 50 percent of the scheduled
worktime during the preceding 9-month period, January through
September 1960. The new plan also provided a sliding scale of pay-
ments to employees based upon the number of days an employee was
absent "without excuse" from his job. Under the scale, employees
with 3 or fewer days of "no-excuse" absence would receive a 100 per-
cent share in the attendance pool while employees whose unexcused
absence total reached 33 days would receive approximately 10 percent
of the attendance pool.
Under the new formula, the 64 employees who had remained on
strike to its conclusion and were not rehired, did not qualify for
participation since they did not meet the 50-percent eligibility re-
quirement. As noted previously, it is the exclusion of these 64 from
the November 1960 distribution that is in issue here.
The Trial Examiner found that the changes made in the profit-
sharing plan penalized the 64 strikers because the previously existing
plan would have allowed "some participation notwithstanding their
strike activity." He concluded, therefore, that the Respondent must
have intended to penalize these individuals because of their strike
activity, citing The Radio Ofcers' Union, etc. (A. H. Bull Steam-
ship Company) v. N.L.R.B., 347 U.S. 17.
The Respondent readily admits that it changed its profit-sharing
plan because of the strike but contends that the changes were made
to permit more strikers to share in the profits than would have been
possible under the old plan Thus, Respondent claims that if it had
applied the forfeiture clause of the old plan, practically all of the
strikers would have been ineligible to receive any share of the profits.
We do not follow Respondent's reasoning. The forfeiture clause in
the old plan provided that any employee who was absent without
excuse for 3 or more consecutive days, or for a total of 10 days during
a profit-sharing period, forfeited profit-sharing rights.' However,
the record also indicates that the plan prior to the strike had been on a
1 This clause, as amended in 1946, stated:
If an employee is absent three or more consecutive days and/or ten days during
the three month period without notifying his foreman , he thereby forfeits his rights
to any share of this profit sharing plan for that particular three month period. If
this absence should occur between two periods , such as two days in one period and
one day in another , the employee will be penalized proportionately.
Testimony established that such clause meant more than mere notification but implied
the Respondent 's acceptance of a legitimate excuse for the absence.
930 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
3-month (quarterly) basis,z and that absences in one period had no
effect on an individual's right to share in the profits of the previous
quarter. Thus, the strikers' "absence" from April 10, 1960, the begin-
ning of the strike, and thereafter, would not have affected their
participation in first-quarter profits, and Respondent's switch from
a 3-month to a 9-month standard, based on 50-percent attendance
for the period encompassing the strike, clearly worked to the detriment
of the 64 strikers.
However, even accepting arguendo Respondent's contention that,
under the old plan as well as the new, the 64 strikers would forfeit all
share of the profits, in such instance we would necessarily conclude
that both clauses were discriminatory, for, as so interpreted, both
clauses would rest on the faulty premise that time on strike may
lawfully be considered the equivalent of normal absence for purposes
of determining profit-share forfeiture.'
We recognize, of course, that an individual's right to profit sharing
is justifiably related to his contribution to work output, and toward
this end the Respondent cannot be required to make distributions to
individuals for the period they were absent on strike. Neither, how-
ever, can the Respondent state that strike time is merely another
form of absence, equating it to other forms of absence discouraged
by it,4 and then proceed to impose a total and nonproportionate for-
feiture on employees because they engaged in such absences-in effect
because they engaged in Section 7 activities.
The dissent suggests that Respondent has "long faced a problem
of absenteeism," and that such a problem justified its utilization of
the forfeiture rule in this case. However, the dissent is proceeding
from the same faulty premise as the Respondent. Contrary to the
dissent, and notwithstanding the obvious fact that strike absences
intensify an employer's production problems, strikers are given pro-
tection under the Act not available to workers whose absences are
caused by other reasons. While the Act gives no protection to workers
who are absent because of illness, athletic events, or family celebra-
tions, it does protect employees who are absent because of a strike,
and "excuse" such absences, in the sense contemplated by Respondent.
Respondent's contrary treatment subverts the protection afforded by
2 As found by the Trial Examiner , the plan clearly appears to have been a quarterly
one, with deviations occurring only once or twice, for unexplained reasons, in 1949-50.
A notice posted by Respondent on October 30, 1959 , referred to the plan as "quarterly,';
and Respondent concedes in its brief that Respondent 's "general custom" was to dis-
tribute profit shares for 3-month periods.
$ We see no distinction , other than semantic, between "nonqualification" and "for-
feiture," particularly in the circumstances of this case.
' The same point can be made with respect to Respondent's characterization of strike
activity as "unexcused," and its disproportionate reduction in shares paid strikers under
the eliding scale . As Respondent 's president testified, in the Company's view ". . . a no-
excuse day was a no-excuse day whether it was that it was because of the strike or
whether [ whatever ] it was in that whole period."
QUALITY CASTINGS COMPANY 931
the statute, and its total denial of all profit-sharing benefits to the
strikers because of their "absence" discriminates against them as
directly as if they were discharged for such activities. Surely the
Respondent could not lawfully enforce a general discharge rule for
absenteeism against the 64 strikers, merely because their participation
in the strike for its duration constituted "excessive absenteeism" under
the Respondent's formula. We therefore find that the 100-percent
profit-sharing forfeiture for the 9-month period imposed by Respond-
ent on the 64 strikers, and based on their participation in protected
concerted activities, was violative of Section 8(a) (3) and (1), re-
gardless of Respondent's motivation in imposing such a penalty.'
In addition to our finding of 8 (a) (3) and (1) on the above grounds,
we are convinced on the facts of this case that the Respondent's actual
motive in formulating its November 20 distribution was to discrimi-
nate against the 64 strikers. Thus, we note Respondent's president's
own testimony, in response to a question from the General Counsel,
that : "This chart was drafted so that individuals who remained
away on strike for more than 3 days or whoever abandoned the strike
and returned to work sometime before the May 19 termination date,
were penalized to a certain extent, but not to the extent of losing
their whole share in the profit-sharing plan." The inference seems
clear that Respondent's correlative intention was to eliminate com-
pletely those strikers who did not return to work before the May 19
termination date, i.e., the strikers here in question. Respondent, of
course, had the benefit of hindsight in reformulating the plan, and
it seems significant that the 50-percent formula required 41/2 months
of employment between January and September 1961 for eligibility,
whereas the 64 strikers who remained to the end necessarily had
just under that amount, 31/2 months. We note also that the actual
profit-sharing distribution under this formula was made 1 month
after the Union was decertified as bargaining representative of Re-
spondent's employees. In view of the above, and the entire record,
we are convinced that Respondent's purpose or motive in formulating
its plan was to eliminate from profit sharing the 64 individuals here
in question (while at the same time, of course, rewarding with neces-
sarily larger shares those who returned before May 19). As we find
that Respondent was discriminatorily motivated in formulating its
plan to exclude completely the 64 strikers, we conclude on this ground
5 See Erie Resistor Corporation , 132 NLRB 621 , and cases cited therein, enforcement
denied 303 F. 2d 359 ( C.A. 3), cert. granted 31 L.W. 3108 ( No. 288 ). And see Swan
Rubber Company , 133 NLRB 375 , enfd. sub nom . Swarco , Inc. v. N .L R B., 303 F 26 668
(C.A. 6). Cf. Pittsburgh -Des Moines Steel Co. v. N .L.R.B., 284 F. 2d 74 (C.A. 9 ), where
the Ninth Circuit stated that unlawful intent may not be inferred except where "the
Employer 's discrimination is based solely on union membership or activity." Without
necessarily agreeing with the Ninth Circuit's analysis , we are satisfied in this case that
Respondent 's application of the forfeiture or 50-percent provision to time on strike in
this case constituted discrimination based directly on protected union activities.
672010-63-vol . 139-60
932 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
also that Respondent's November 20 distribution was in violation of
Section 8(a) (3) and (1).'
THE REMEDY
We shall order the Respondent to make whole the discriminatees in
the following manner. In determining the amount of profit sharing
to be distributed to the 64 discriminatees, the Respondent shall utilize
the same 9-month period, January through September 1960, but shall
not treat time on strike as "unexcused absence," so as to cause the 64
strikers to forfeit all profit-sharing benefits, or to suffer a dispropor-
tionate loss because of their strike activities. That is, in computing
the discriminatees' profit shares, Respondent shall not apply either
the sliding scale or the 50-percent standard in such a way as to equate
strike time with unexcused absence, or to cause a forfeiture or dis-
proportionate reduction in the 64 strikers' share because of their strike
activities. The discriminatees' share may, however, be reduced pro
rata for their absence from the job while on strike or while absent
for any other reason.' In sum, the discriminatees are entitled to their
share of the profits for the time worked. The amounts due are to be
determined in the compliance stage of this proceeding and shall in-
clude interest thereon at 6 percent per annum to be computed in the
manner set forth in Isis Plumbing & Heating Co., 138 NLRB 716 8
ORDER
Upon the entire record in this case, and pursuant to Section 10(c)
of the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent, Quality Castings
Company, its officers , agents, successors , and assigns , shall:
1. Cease and desist from :
(a) Discouraging membership in the United Steelworkers of
America , AFL-CIO, or any other labor organization , by discrimina-
torily denying a profit-sharing distribution to individuals because of
their participation in a strike.
(b) In any like or related manner interfering with , restraining,
or coercing its employees in the exercise of the right to self-
organization, to form labor organizations , to join or assist the
E Olin Mathieson Chemical Corporation v. N L.R B., 352 U.S. 1020 . The fact that some
strikers who returned before May 19 may, as contended by Respondent , have benefited
from the new provisions cannot excuse Respondent's intent to impose a total penalty on
the 64 strikers here involved.
'As noted above, inasmuch as profit-sharing distributions are wages , although in the
form of deferred compensation , the Respondent cannot be required to make such distribu-
tions to individuals for the period they were absent on strike. General Electric Company,
80 NLRB 510 , 511. Republic Steel Corporation v. N L R.B., 114 F. 2d 820, 821.
s Member Leedom, while adhering to the view expressed in the dissenting opinion in
Isis Plumbing & Heating Co., supra, that the award of interest exceeds the remedial
authority of the Board, for purposes of this decision , is acceding to the majority Board
policy of granting interest on moneys due.
QUALITY CASTINGS COMPANY 933
United Steelworkers of America, AFL-CIO, or any other labor organ-
ization, to bargain collectively through representatives of their own
choosing, and to engage in concerted activities for the purpose of
collective bargaining or other mutual aid or protection, or to refrain
from any or all such activities, except as authorized by Section 8 (a) (3)
of the Act, as modified by the Labor-Management Reporting and
Disclosure Act of 1959.
2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act :
(a) Make whole the employees listed in Appendix B, attached
hereto, in the manner set forth in The Remedy section of this Decision,
for the loss they suffered by reason of the Respondent's discrimina-
tion, with interest thereon at 6 percent per annum.
(b) Preserve and, upon request, make available to the Board or its
agents, for examination and copying, all payroll records, social secu-
rity payment records, timecards, personnel records and reports, and
all other records necessary to determine the amount of payment due
under the terms of this Order.
(c) Post at its plant at Orrville, Ohio, copies of the attached notice
marked "Appendix A." s Copies of said notice, to be furnished by
the Regional Director for the Eighth Region, shall, after being duly
signed by the Respondent or its representatives, be posted by Re-
spondent immediately upon receipt thereof, and be maintained by it
for 60 consecutive days thereafter, in conspicuous places, including
all places where notices to employees are customarily posted. Reason-
able steps shall be taken by Respondent to insure that said notices are
not altered, defaced, or covered by any other material.
(d) Notify the Regional Director for the Eighth Region, in writ-
ing, within 10 days from the date of this Order, what steps Respond-
ent has taken to comply herewith.
CHAIRMAN MCCULLOCH and MEMBER RODGERS, dissenting:
In November 1960, the Respondent adopted a new profit-sharing
plan. One of the standards set for participation in this plan required
that employees to be eligible must have worked 50 percent of the
scheduled work hours during the preceding 9-month period. The sole
issue here is whether this standard was inherently discriminatory or
was adopted for the unlawful purpose of disqualifying 64 individuals
from sharing in the plan because they had taken part in a strike
against the Respondent some 7 months earlier. The majority finds
that "regardless of Respondent's motivation," the profit-sharing plan
imposed a "penalty" on 64 individuals because of their former strike
')In the event that this Order is enforced by a decree of a United States Court of
Appeals, there shall be substituted for the words "Pursuant to a Decision and Order" the
words "Pursuant to a Decree of the United States Court of Appeals , Enforcing an Order."
934 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
activity and is therefore violative of Section 8(a) (3) and (1) of the
Act. In addition, the majority finds that under the circumstances
herein, the Respondent intended to discriminate against these 64
former strikers. We disagree.
First, we believe that the majority is in error in labeling the 50-
percent provision a "forfeiture" clause. In fact this provision was a
"qualifying" or eligibility standard, and it was an objective standard
unrelated to union membership or union activities.
It appears from the record that the Respondent had long faced a
problem of absenteeism. The line character of its production process
made this a serious matter. Early in the operation of its profit-
sharing plan, in fact from 1946 on, therefore, rather than making
profit shares simply proportional to time worked, the Respondent had
specifically provided for disqualification in the event of 3 or more
consecutive days or 10 days' absence without notice during a 3-month
period because absenteeism adversely affected profits.10 It seems clear
to us that this profit-sharing-qualification provision, to encourage
regularity in attendance, had been adopted for valid business reasons.
The 50-percent provision here in question related to the same
objective.
Since profits (for profit sharing) result from the work input of
employees and not from their absence from work, it seems reasonable
to set a minimum standard of work participation for qualifying for
profit participation. Since the standard was a reasonable one, it is
difficult to see how anyone can argue that it was inherently discrimina-
tory. The majority, in finding that a violation exists here irrespective
of Respondent's motivation, has adopted a per se approach. As
pointed out by the Court of Appeals for the Ninth Circuit in rejecting
the per se approach," the true intent of an employer is irrelevant
1o When questioned as to why attendance was so Important to profit sharing , Yonto,
Respondent 's president, stated:
It seemed to be one of the things that affected our operation most-was attendance
at work. We-ours Is a production line set up . If we had key men that were off,
It affected our whole operation , so attendance was paramount to us, that is why
attendance was weighed so heavily In our profit-sharing plan.
"Pittsburgh -Des Moines Steel Co. v. N .LR.B., 284 F. 2d 74 ( C.A. 9). In this case,
the respondent -employer adopted a nondiscriminatory annual bonus plan the effect of
which was to penalize employees who engaged in a strike . The court rejected the Board's
finding that the employer must have Intended the foreseeable consequences of Its plan
and therefore that it Intended to discriminate in adopting such plan. The court held that
the crux of a violation of Section 8(a) (3) is the "true purpose or real motive of the
employer in taking the action complained of," and that the evidence did not support such
a finding in the case.
In his concurring opinion In Local 857, International Brotherhood of Teamsters et al
(Los Angeles -Seattle Motor Express ) v. N.L.R.B., 365 U.S. 667, Mr. Justice Harlan made
a careful analysis of the requirement of motive In 8(a) (3) cases. He said (365 U.S.
667, 679) :
a mere showing of foreseeable encouragement of union status Is not sufficient
basis for a finding of violation of the statute . It has long been recognized that an
QUALITY CASTINGS COMPANY 935
only in those limited situations where discrimination is based only on
union membership or union activity. The standard used here is not
based on union membership or union activity, or applied solely to the
alleged discriminatees, and therefore cannot be held unlawful per se.
Further error in the majority's per se approach is evidenced by its
basis misconception of the purpose of the Act. The Act was not in-
tended to indemnify an individual from all economic losses incurred as
a result of a strike. When an individual chooses to go on strike he
may incur many economic losses including the loss of wages, the loss
of wage credits for social security purposes, the temporary loss of
medical and life insurance coverage, the loss of retirement wage
credits, et cetera. These are all benefits which accrue to the individual
as the result of his employment relationship which could be lost or
temporarily suspended as the natural result of an employee's pro-
longed absence from work. Profit sharing is also a fringe benefit
which is affected by absence from work and, as the majority concedes,
is wages in the form of deferred compensation. Since we cannot order
an employer to pay economic strikers their normal wages which they
did not earn while on strike, neither can we order an employer to pay
economic strikers their share of profits which they did not earn while
on strike. While stating that they recognized that an individual's
profit share is justifiably related to his work contribution, the major-
ity, nevertheless, seeks to substitute its judgment for that of the Re-
spondent by holding that an individual, even though he was absent for
more than 50 percent of the scheduled working hours, must be given
a share of the profits regardless of whether such individual contributed
to the making of such profits. In view of the undisputed testimony
that attendance affects profits, it is more likely that an individual who
worked less than 50 percent of the time detracted from profits rather
than contributed to them. By reaching such result, the majority
equates "striking time" to "working time" for purposes of qualifying
for profit sharing.
The record clearly establishes that an employee must have worked
to qualify because the 50-percent provision was not applied solely
to absences for striking but applied to all absences, excused or un-
employer can make reasonable business decisions , unmotivated by an intent to dis-
courage union membership or protected concerted activities, although the foreseeable
effect of these decisions may be to discourage what the act protects For ex-
ample . . . an employer can properly make the existence or amount of a year-end
bonus depend upon the productivity of a unit of the plant, although this will fore-
seeably tend to discourage the protected activity of striking. Pittsburgh -Des-Moines
Steel Co . v. Labor Board , 284 F. 2d 74 . . .
. . In general , this Court has assumed that a finding of a violation of § 8(a)(3)
or § 8(b ) ( 2) requires an affirmative showing of a motivation of encouraging or dis-
couraging union status or activity
936 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
excused.12 Thus an individual who was granted a leave of absence
or who was absent for illness to such extent that he did not qualify
under the 50-percent provision, would not be entitled to participate
in the profit sharing, even though his absences were excused. Con-
sequently, even if we accept the majority's contention that strike
absence is "excused," such individuals would still not qualify for
profit sharing. In the majority's view, strikers are to be given "prefer-
ential" treatment even over workers whose absences are excused by
the Employer. We do not read the Act as requiring preferential
treatment to strikers in these circumstances. Nor does the statute
prohibit nondiscriminatory application of an objective standard.
The nondiscriminatory application of the 50-percent provision is
confirmed by the fact that in addition to the 64 individuals alleged
to be discriminatees, some 7 other individuals not alleged to have
suffered discrimination also failed to qualify for a share of the profits
because of this 50-percent provision. It appears to be the theory of
the majority that the Respondent devised the 50-percent work stand-
ard in order to penalize the strikers who remained on strike to its
end. Although the record is not clear as to why these 7 failed to meet
the standard, i.e., whether their absences from work were because
of illness, layoff, leave of absence, or some other reason, it is clear
that they were treated no differently from the 64 alleged discrimi-
natees, and it is also clear that they were not among the group of
individuals who remained on strike to the end.
While conceding that the 64 alleged discriminatees were not re-
hired at the conclusion of the strike on May 19, 1960, for valid eco-
nomic reasons, the majority ignores the fact that for a period of
more than 4 months, i.e., from May 19 to September 30, 1960, which
was a part of the qualifying period for profit sharing, the alleged
discriminatees were not employed because of an economic decline
in Respondent's business. Consequently, their failure to qualify for
profit sharing is correctly attributable to their failure to be reem-
ployed upon termination of the strike and not as the majority con-
tends because of their 40-day participation in a strike which, in
any event, constituted only a small part (less than one-sixth) of
an overall qualifying period of approximately 270 days. It is indis-
putable that if economic conditions had permitted their rehiring these
12 At p 26 of the record , Yonto, Respondent ' s president, was asked to explain the
50-percent provision and the following colloquy took place:
A (Mr. YONTO) To be eligible to receive a profit-sharing payment an employee
must work 50 percent of the scheduled working hours from the first of the year to
October , 1960 . . . .
Q. So that , during the period , according to Item 1, employees must have worked
50 percent of the hours which are contained in that period'?
A. Yes.
QUALITY CASTINGS COMPANY 937
alleged discriminatees would not have been disqualified by the 50-
percent provision.
To find the 50-percent eligibility requirement unlawful, the ma-
jority alludes to another of the profit-sharing plan's provisions, a
so-called sliding scale of payments based on the number of days an
employee was absent unexcused. Even assuming that with respect
to this provision, strike time was equated to unexcused absence, the
sliding scale has no relevance in determining the legitimacy of the
50-percent standard as it was merely determinative of how much
of the profits a participant would receive after lie qualified for par-
ticipation under the 50-percent provision. Consequently it has no
bearing on qualification under the 50-percent provision. If there
were discrimination by reason of the application of the sliding scale
provision-certainly none of the 64 individuals involved here suf-
fered because the provision was never applied to them. Moreover,
none of the employees to whom the sliding-scale provision was in
fact applied is alleged to have suffered discrimination. We, there-
fore, cannot accept the logic of basing a finding of discrimination
against the 64 here concerned upon a theory not here in issue.
We find Erie Resistor, cited in support of its finding by the ma-
jority, clearly distinguishable. There the plan granting supersenior-
ity for all time to those who worked during the strike, to those
who had abandoned the strike, and to replacements of strikers, was
adopted solely because of the strike and in an effort to defeat it.
Here, in contrast, the profit-sharing plan, with disqualification for
absenteeism, was adopted for legitimate business reasons unconnected
with the strike, and it applied to all absentees, whether strikers or
not. In fact, as recited below, a factor in the substitution of the 50-
percent eligibility requirement for the 3-day forefeiture clause under
the old plan was to avoid a blanket exclusion of strikers from the
benefits of the plan. Thus, the change in the plan alleged as a viola-
tion of the law abated rather than worsened the impact of the so-
called "penalty" provision on the strikers. We do not, like the ma-
jority, therefore find this change inherently discriminatory.
Secondly, we do not believe that the evidence establishes that the
50-percent work standard was adopted for a discriminatory pur-
pose. We note first that there is a complete absence of union animus.
Apart from the profit-sharing plan in issue here, it is not alleged,
and there is no evidence showing that the Respondent engaged in
any unfair labor practices from the time the Union was certified as
the employees' bargaining representative in September 1959, to the
date of the hearing herein in September 1961. It is clear that after
the Union was certified the Respondent entered into negotiations
with it. It was neither charged nor does the record indicate in any
938 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
way that the Respondent did not bargain in good faith. The strike
which began on April 10, 1960, was wholly an economic strike re-
sulting solely from the parties' failure to reach an agreement.
As noted, the 50-percent work standard was not applied in a dis-
criminatory manner because 7 other employees not among the group
of 64 individuals who remained on strike, also failed to qualify for
participation.13 In any event, there is an inherent fallacy in the
majority's conclusion that the Respondent intended to discriminate.
If the Respondent had applied the 3-day forfeiture clause under the
old plan, a large number of its employees who had struck and thus
absented themselves from work would not have received any profit
share at all. But it is undisputed that the Respondent sought to
avoid such a result and for this reason adopted the November 1960
standards which greatly relaxed the qualification requirement.14 We
fail to perceive, therefore, how a discriminatory intent (and a viola-
tion of the Act) can be read into an employer's actions which have
the purpose not of penalizing employees for striking but of avoiding
such penalty.
Finally, the majority opinion appears to echo the view of the ma-
jority in a strikingly similar case-Community Shops, Inc." In Com-
munity Shops, a Board majority found that a rehire formula un-
lawfully discriminated against certain employees who had engaged
in an economic strike during the previous year because it gave no
work credit to employees for the weeks they were on strike. The
Court of Appeals for the Seventh Circuit unanimously rejected
the Board's holding,18 and in so doing cited Justice Harlan's opinion
in the Local 357 case," that "it has long been recognized that an em-
ployer can make reasonable business decisions, unmotivated by an
13 The majority's alternative argument that under the old plan an employee's share of
the profits for the first quarter would have been unaffected by the strike on April 10, is
unpersuasive in view of the fact that: (1) Profit sharing was the subject of negotiations
between the parties and at the time the quarterly distribution would normally have been
made on or about April 20, the strike was still in progress ; (2) profit sharing was based
on anticipated annual profits which might well have been jeopardized by the strike itself ;
(3) by letter dated January 28, 1960, the Company informed employees that continued
profit sharing was dependent on the outcome of negotiations with the Union ; and (4) the
majority apparently concedes the 9-month qualifying period was not discriminatory be-
cause it utilizes the same period in its remedial order.
14 From a 3-day forfeiture clause under the old plan, the Respondent established the
50-percent qualifying provision in issue here. As to Respondent's motive, Yonto, Re-
spondent's president, testifying as to why the 3-day forefeiture clause under the old
plan was not used, stated:
A. We felt it would be unfair to give all this money to a few men. We would
have had $350,000
Q Where-why would it be more unfair than [under] your old plan?
A. Because at the first three days we probably have 15 or 20 people in to work . . .
if we had stuck to the three day, no excuse-those people would have received the
whole amount.
16130 NLRB 1522. Member Rodgers dissented from the Board's decision while Chair-
man McCulloch did not participate.
10 N.L R B v Community Shops, Inc., 301 F. 2d 263 (C.A. 7).
17 Local 357, International Brotherhood of Teamsters, et al. (Los Angeles-Seattle Motor
Express) v. N L R.B , 365 U.S. 667.
QUALITY CASTINGS COMPANY 939
intent to discourage union membership or protected concerted activi-
ties, although the foreseeable effects of these decisions may be to
discourage what the Act protects." The Court concluded that the
rehire formula there in issue was not discriminatory by its nature
because there was evidence of a legitimate business motivation and
because the formula applied equally to both strikers and nonstrikers
alike. We think the court's holding in Community Shops is gov-
erning here where, as we have noted, there is no evidence of union
animus, and the standard in question was an objective one, which was
applied nondiscriminatorily.i$
For the foregoing reasons, we would find that the Respondent did
not violate the Act in adopting its November 1960 profit-sharing plan
and, accordingly, we would dismiss the complaint herein.
is In disagreeing with the majority finding, Chairman McCulloch finds it unnecessary
to rely on the Community Shops case.
APPENDIX A
NOTICE TO ALL EMPLOYEES
Pursuant to a Decision and Order of the National Labor Relations
Board and in order to effectuate the policies of the National Labor
Relations Act, as amended, we hereby notify our employees that:
WE WILL NOT discourage membership in the United Steel-
workers of America, AFL-CIO, or any other labor organization,
by discriminatorily denying a profit-sharing distribution to indi-
viduals because of their participation in a strike.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce our employees in the exercise of the right to
self-organization, to form labor organizations, to join or assist
the above-named Union or any other labor organization, to bar-
gain collectively through representatives of their own choosing,
and to engage in concerted activities for the purpose of col-
lective bargaining or other mutual aid or protection, or to refrain
from any or all such activities except as authorized in Section
8(a) (3) of the Act, as modified by the Labor-Management Re-
porting and Disclosure Act of 1959.
WE WILL make whole the 64 employees listed in Appendix B for
losses suffered by reason of their exclusion from the November
1960 profit distribution, with interest thereon at 6 percent per
annum.
All our employees are free to become or remain members of the
United Steelworkers of America, AFL-CIO, or any other labor
organization, except as their rights may be restricted by an agree-
940 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ment executed in conformity to Section 8(a) (3) of the National
Labor Relations Act, as amended.
QUALITY CASTINGS COMPANY,
Employer.
Dated---------------- By-------------------------------------
(Representative) (Title)
This notice must remain posted for 60 consecutive days from the
date of posting, and must not be altered, defaced, or covered by any
other material.
Employees may communicate directly with the Board's Regional
Office, 720 Bulkley Building, 1501 Euclid Avenue, Cleveland 15, Ohio,
Telephone Number Ma. 1-4465, if they have any question concerning
this notice or compliance with its provisions.
APPENDIX B
James Phillips Clabe Moore Nelson Tackett
Walter Watson Pearly Copley Johnnie Broadnex
Doy Butler Kenneth Mullett Savannis Duncan
Lawrence Wallace Burnell G. Ellison Fred Phillips
Theodore Keller Karfa Thacker Standard Gilkerson
Frederick Griffin Ray Gray Harold D. Aukerman
J. D. Johnson Dallas Watts Lucius Hood
Cymore Gaines William Ray Harrison Barnett
Thomas Montgomery Bill Wiley George V. Amos
Spencer Powell Lloyd H. Wayne Alton L. Hood
Clarence Messenger Romulo Alejandro Alvin Scaggs
Thomas Tittle Leonard Williams Ronald R. Mullett
Donald Dalessandro Raymond Breeden Everett Hunter
Kenneth Musser Clarence Mann George Marks
B. Orge Foster Carelton Conway Leo Domanic
Ross Deerman Euell Tucker Earl Rinehart
Earl Coffie Jimmie D. Bailey Moses Felix
Andrew Baker Harlan Gilkerson Ed Dudley
James Kay John D. Gilkerson Franklin Thomas
Charles Acord Henry Burkhammer Vernice Franklin
Kenneth Ott Lee Johnson
Harry D. Krise Walter Miller
INTERMEDIATE REPORT
STATEMENT OF THE CASE
This proceeding under Section 10(b) of the National Labor Relations Act, as
amended, hereinafter called the Act, was heard at Wooster, Ohio, on September 14,
1961, before Trial Examiner William J. Brown, all parties being represented by
counsel as above indicated, and afforded full opportunity to present evidence and
argument on the issues. The complaint alleges an unfair labor practice under
Section 8(a)(3) and (1) of the Act in the exclusion of certain employees from a
profit-sharing distribution on November 20, 1960. Subsequent to the hearing briefs
were received from all parties which have been fully considered.
Upon the entire record of this proceeding, and on the basis of my observation
of the witness,' I make the following:
3 The sole witness was Respondent's president, Anthony Yonto
QUALITY CASTINGS COMPANY 941
FINDINGS OF FACT
1. THE BUSINESS OF THE RESPONDENT EMPLOYER
The Respondent is an Ohio corporation having its offices and principal place of
business at Orrville, Ohio, where it is engaged in the manufacture of gray iron and
magnesium castings. Respondent annually ships from its Orrville plant finished
products valued in excess of $50,000 directly to points outside the State of Ohio.
It is engaged in commerce within the meaning of Section 2(6) and (7) of the Act
and assertion of the Board's jurisdiction is warranted.
H. THE LABOR ORGANIZATION INVOLVED
United Steelworkers of America, AFL-CIO, is a labor organization within the
meaning of Section 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
A. Introduction and summary of events
Respondent, as stated above, is engaged in the manufacture of gray iron and
magnesium castings. Its manufacturing process is essentially an assembly line
operation on which it employs about 250 workers. Since 1945 it has had in effect
a profit-sharing plan for all employees, out of which they have received substantial
amounts each year, amounting in 1959, for example, to a total profit-sharing pool of
$230,714. An individual's share of the profit-sharing pool has at all times been
dependent upon three factors as applied to his own case: seniority, aptitude as rated
on a percentage basis by his supervisor, and absenteeism. Absenteeism has been
regarded as a major problem to the Respondent in its production process and for
this reason it has penalized excessive absenteeism heavily in the determination of
profit-sharing allocations.
The plan as originally adopted in 1945 called for the distribution of profits on a
quarterly basis on or before the 20th of the month following the given 3-month
quarter for which the profit picture was determined. There were occasional times,
the record indicating only 1 or 2 years, however, when the Respondent made its
profit determination and payment on a 4-month basis.
The Union was certified as representative of the Respondent's production and
maintenance employees in September 1959 and collective-bargaining negotiations
followed thereafter up until their collapse followed by a strike commencing April 10,
1960, and terminating officially on May 19, 1960. From the outset of the strike
Respondent's plant continued operations with about 80 to 100 employees and almost
immediately striking employees commenced returning in substantial numbers 2 At
the conclusion of the strike there were 64 employees who had remained on strike
throughout the duration of the walkout There was no work available for them at
the termination of the strike and they were placed on a preferential hiring list to
remain in effect for 1 year. As of the date of the hearing they had not been rehired
by Respondent.
On November 20, 1960, the Respondent made a profit-sharing distribution, the
first made for the year 1960, from which the 64 employees referred to above were
excluded. The sole issue in the instant proceeding is the propriety of their exclusion
from that distribution Respondent asserts that: (1) proceedings herein are barred
by Section 10(b) of the Act inasmuch as the gravamen of the charge against them is
the failure to make any distribution of profits in April 1960 for the 3 months
immediately preceding April 1; and (2) in any event the distribution made on
November 20, 1960, was properly paid pursuant to a new and nondiscriminatory
plan adopted shortly prior to the November 1960 distribution.
B. The old plan
In September 1945 the Respondent inaugurated and announced to employees its
"Employees Profit Sharing Plan." Provisions of the plan were contained in a book-
let, General Counsel's Exhibit No. 3, distributed to all employees; the plan was
amended and supplemented from time to time in various actions taken by the
Company and announced to employees in the form of bulletin board notices, and in
various issues of "The Heat Sheet," a company publication distributed periodically
2Yonto expressed his belief that many were motivated in abandoning the strike by a
fear of losing their share of profits by unexcused absence or by an expectation of reaping
a windfall through the loss on the part of other strikers of their shares.
942 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
to employees. The initial announcement and the various later publications consti-
tuting the plan as it was in effect at the time of the advent of the Union are in
evidence as General Counsel's Exhibits Nos. 3 through 9 and Respondent's president,
Anthony Yonto, testified that these exhibits constituted the entire plan as it was in
effect in September 1959.
As initially announced in September 1945, the plan called for the Company to
distribute a "generous portion" of its earnings to all employees. Profits were de-
termined at the end of each 3-month period and distributions were made on or about
the 20th of the month following the expiration of each particular 3-month period.
The amount allocated by the Company for profit sharing was divided equally into
three pools denominated seniority, aptitude, and attendance. To share in the
seniority pool an employee must have had 1 year's service on the expiration of which
he would receive one-tenth of a full share; after 2 years he would receive two-tenths,
etc , until he receives a full share after 10 years' service. The aptitude pool was
distributed on the basis of each foreman's rating of employees under his supervision
on the basis of their ability, cooperation, progressiveness, and like factors. Thus
an employee rated 90 percent on these factors by his foreman would receive nine-
tenths of a full share. The attendance pool was distributed on the basis of a
percentage of attendance. Thus an employee who missed 6 working days out of a
60-day working period would miss one-tenth and would receive 90 percent of a full
share. Additionally the plan provided that absence for 3 or more consecutive days
or for a total of 10 days during the particular 3-month period without notice to the
foreman forfeited the employee's right to any share of the plan for that particular
period. The plan was specific that all absence would be penalized as indicated.
There was a provision that an employee must serve a 1-week notice of leaving to
be entitled to his share of the profits for the period in which he leaves. New em-
ployees received one-half shares of the aptitude and attendance pools until they were
employed for a full year. By an amendment adopted January 16, 1946, the per-
centage deduction for absenteeism was made to apply to each of the pools in which
the employees would participate. A notice to all employees issued in January 1959
(incidentally indicating that the profit-sharing plan in that particular period was paid
every 4 months), also emphasized the importance of absenteeism in the administra-
tion of the plan.
It appears from the uncontradicted testimony of President Yonto that the quar-
terly distributions of profit-sharing payments to employees were made on the basis
of estimated profits and subject to final adjustment when profits for the year were
actually known at the end thereof. Traditionally there has been a fifth pay-
ment made on the basis of actual profits and the record indicates that to be eligible
for this fifth payment an employee must have been in the employ of the Com-
pany at the time it was made to share in it.
C. The plan following union organization
From an early stage in the process of bargaining between the Respondent and
the Union following the latter's certification on September 11, 1959, the profit-
sharing plan was the subject of bargaining and several proposals with respect
thereto were advanced by the Union. On October 30, 1959, the Respondent posted
a notice on the bulletin board (General Counsel's Exhibit No. 2). which reviewed
the profit-sharing distribution history and referred to the fact that the sum of
$34,500 would be distributed from the plan for the period July 1 to September 30,
1959. It iterated the belief of the board of directors in profit-sharing and their
desire to continue the same, and stated that in view of the bargaining with the
Union on the subject the Company was uncertain whether or not any profit-sharing
payments would be made for the last quarter of 1959 or thereafter.
Yonto testified that there was a profit-sharing plan continually in existence until
the posting of the notice on October 30, 1959. He testified that the purpose of
the notice was to advise employees of the nossibility that the plan would not be
continued. Subsequent to the posting of the notice, a profit-sharing distribution
was in fact made in December 1959. Yonto explained that the Respondent did
not decide at any particular point to discontinue profit sharing, but that it did
decide to discontinue the particular plan at the time of the posting of the notice
of October 30. 1959 It also appears from the testimony of Yonto that apnroxi-
matelv on October 30, 199, the Emnlover discontinued its practice of making a
bulletin board roosting of an estimate of the amount of money paid into the profit-
sharing plan which had regularly been made every few days nrior thereto. This
is referred to by Respondent, together with the notice of October 30, as notice to
employees that the existing plan was discontinued as of that date.
QUALITY CASTINGS COMPANY 943
Yonto testified that the November 20, 1960, profit-sharing distribution was
made pursuant to a new plan set forth in two documents in evidence as General
Counsel's Exhibits Nos. 11 and 12. Unlike the earlier practice these do not appear
to have been posted for the benefit and information of employees. According to
Yonto, however, they were explained to employees at a meeting a couple of days
before the 1960 payment was made. Under the new plan eligibility was restricted
to those who worked 50 percent of the scheduled working hours from January 1
to October 1, 1960. The attendance and aptitude -jool modifications for absenteeism
were to be arrived at according to the graph in evidence as General Counsel's Ex-
hibit No. 12. That graph reduces the attendance and aptitude pool percentage on
a straight line curve from 100 percent for not more than 3 days' absence down to
10 percent for 33 days' absence. According to Yonto, the avowed purpose of
establishing the sliding-scale graph was to allow those individuals who remained on
strike for more than 3 days, but who returned sometime before the May 19 ter-
minal date of the strike, to participate in the profit-sharing distribution.
In 1961 there have been two distributions of profits, each on a 4-month basis.
The 1961 distributions are made pursuant to an entirely new plan, part of the dis-
tribution being on a deferred basis, but the cash part being distributed basically on
the original 1945 type plan. Yonto conceded that under the plan in effect from
1945 through 1959, absence from work in a period subsequent to that which formed
the basis for the profit distribution would not affect employees' participation. In
other words, if the distribution were to be on the basis of profits in the first 3
months of the year, absenteeism in April would not affect the employees' share
of the profits; on the other hand, if the Respondent were to go on a 4-month period.
then April absenteeism would affect and possibly eliminate his participation .3
D. Conclusions
The General Counsel and the Charging Union have urged upon me the position
that the 1945 plan was in fact never terminated but was discriminatorily amended
in November 1960; the Respondent, on the other hand, urges that the 1945 plan
was terminated and that this is shown both by the October 30, 1959, notice and
by the Respondent's failure, from that date, to post, as its prior practice had been,
notices for the information of employees as to the accumulations in the profit-
sharing pool. The matter of termination of the 1960 plan and institution of a
new one is not, however, the ultimate issue herein. The question is simply whether
Respondent discriminated as to a condition of employment either for the specific
purpose or with the necessary and foreseeable effect of discouraging membership
in the Union. This in the instant case boils down to the question as to whether
the 1960 distribution was made on a basis differing from prior distributions, whether
the changes adopted had the necessary effect of penalizing the strikers, and what
was the reason for the change 4
Respondent contends that the 3-day absence rule would have required payment
of a large sum of money to the relatively small number of employees who either
did not strike or returned to work in the first 3 days of the strike; the sliding scale
devised would permit a limited participation for those employees who returned to
work after the third day of the strike but before its termination.
Respondent has failed, however, to explain or justify the change in eligibility
requirements. Under the plan as it had been in effect and administered from
1945 to the date of the 1960 distribution, employees whose attendance was unaf-
fected by the 3-day absence in the period in which the profits were earned would
fully participate, notwithstanding subsequent absence at a later time. The only
exception to this practice appears to have been with respect to year end equalizing
payments of additional profits on the basis of actual experience as distinguished
from the estimate. But the adoption of the new rule in November 1960, together
with the conversion of the profit period from a 3 or 4-month to a 9-month basis
resulted in the exclusion from all participation of the 64 strikers. That it also,
as contended by Respondent, excluded a small number of others (estimated as six
or seven) is quite immaterial. The circumstances of their exclusion are not ex-
plained.
8 The plan clearly appears to be a quarterly plan with a history of departing only once
or twice, for unexplained reasons , in 1949 and /or 1950. The October 30, 1959, notice
plainly regards the plan as one for quarterly distribution.
4 The profit-sharing distributions were wages and terms or conditions of employment.
Peyton Packing Company, Inc., 129 NLRB 1275.
944 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The General Counsel relies on Pittsburgh-Des Moines Steel Company, 124 NLRB
855, and the Respondent relies on the circuit court's reversal of the Board's decision,
284 F. 2d 74 (C.A. 9). I find the instant case a stronger one in favor of the
General Counsel's position than Pittsburgh-Des Moines Steel Company. In that
case the Board found a violation of the Act in the application of the terms of a
long standing plan, a feature of which had the necessary effect of penalizing em-
ployees' profit participation on the basis of their participation in a strike. In the
instant case the long standing plan would have allowed some participation notwith-
standing their strike activity. The Respondent changed the existing plan and there
is no compelling justification to rebut the inference that Respondent must have
intended the plain and necessary effect of its action. The Radio Officers' Union
et al. (A. H. Bull Steamship Company) v. N.L.R.B., 347 U.S. 17.
I find that the Respondent's action in excluding the 64 strikers from participation
in the November 1960 profit distribution was discrimination against them on the
basis of their participation in concerted activities 5 and an unfair labor practice
within the scope of Section 8(a)(3) and (1) of the Act. Respondent's plea of the
6-month limitation of Section 10(b) is not substantial; the charge was filed April
11, 1961, within 6 months of the discriminatory exclusion complained of.
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE
The activities of the Respondent set forth in section III, above, found to constitute
unfair labor practices, occurring in connection with the operations of Respondent
described in section I, above, have a close, intimate, and substantial relation to trade,
traffic, and commerce among the several States, and tend to lead to labor disputes
burdening and obstructing commerce and the free flow of commerce.
V. THE REMEDY
In view of the findings herein that the Respondent has engaged in unfair labor
practices within the scope of Section 8(a)(3) and (1) of the Act, it will be recom-
mended that Respondent cease and desist therefrom and take certain affirmative
action designed to effectuate the policies of the Act. It will be recommended that
Respondent make the 64 employees listed in Schedule A attached to the complaint,
they being the employees remaining on strike during the full period thereof, whole
for any loss they may have suffered by reason of the discrimination against them
by payment to them of sums of money equal to those which they would have
received were it not for their exclusion from participation in the November 1960
profit-sharing distribution by reason of factors promulgated subsequent to March 31,
1960. It will be recommended that Respondent preserve and, upon request, make
available to the Board, payroll and other records necessary to facilitate the com-
putation of the amounts due under the terms of this recommendation.
Upon the basis of the foregoing findings of fact, and upon the entire record in
this case, I hereby make the following:
CONCLUSIONS OF LAW
1. The Respondent is engaged in commerce within the meaning of Section 2(6)
and (7) of the Act.
2. The Union is a labor organization within the meaning of Section 2(5) of
the Act.
3. By discriminating in regard to the profit-sharing participation of the 64 em-
ployees listed in Schedule A to the complaint, thereby discouraging membership in
the Union, the Respondent has engaged in unfair labor practices within the meaning
of Section 8(a)(3) and (I) of the Act.
4. The aforesaid unfair labor practices affect commerce within the meaning of
Section 2(6) and (7) of the Act.
[Recommendations omitted from publication.]
" Respondent's contention that it had no knowledge of the identity of union members Is
not sufficient to exonerate it even if accepted at face value. The strike was a union
strike and it would be totally unrealistic to regard discrimination for participation
therein as unrelated to union membership.