Niles-Bement-Pond Co.

NILES-BEMENT-POND COMPANY 165 NILES-BEMENT-POND COMPANY and AMALGAMATED LOCAL No. 405, INTERNATIONAL UNION, UNITED AUTOMOBILE , AIRCRAFT & AGRICUL- TURAL IMPLEMENT WORKERS OF AMERICA , C. I. O. Case No. 1-CA- 841. November 29,1951 Decision and Order On June 4, 1951, Trial Examiner Sidney Lindner issued his Inter- mediate 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 copy of the Inter- mediate Report attached hereto. Thereafter, the Respondent filed exceptions to the Intermediate Report. The Board has reviewed the rulings of the Trial Examiner and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the Intermediate Report, the exceptions, and the entire record in the case, and hereby adopts the findings, conclusions, and recommendations of the Trial Examiner with the following corrections 1 and additions : The issue in this case is whether the bonus paid by the Respondent at Christmas was a gift, as the Respondent argues, or part of "wages" within the meaning of Section 9 (a) of the Act, as the Trial Examiner found. Although we, no less than our dissenting colleague, believe in the Christmas spirit, we agree with the Trial Examiner's finding. As more fully discussed in the Intermediate Report, the Respondent paid its employees a year-end or Christmas bonus in the years 1938 through 1950, except for 1946 when a strike occurred. In 1938, 1939, and 1940 the bonus consisted of 1 week's pay, termed by the Respond- ent a "special" or "additional" compensation. From 1941 through 1945 the bonus was expressed as a percentage of each employee's yearly earnings 2 In 1947 and 1948, the bonus took the form of 1 week's pay, and in 1949 it reverted to a percentage of yearly earnings. On Decem- ber 11, 1950, the Respondent announced that the new retirement plan 1 The Intermediate Report contains certain inadvertances , none of which affects the Trial Examiner's ultimate conclusions , nor our concurrence therein Accordingly, we note the following corrections: (1) The exclusion of "all other supervisory employees" from the appropriate unit is corrected to read "and all other supervisors "; ( 2) the Respondent referred to the Christmas bonus as "special compensation " or "additional compensation" in 1938, 1939, and 1940 rather than , as the Trial Examiner found, "over the years"; and (3 ) the language of the Court of Appeals for the First Circuit in the W W. Cross case , cited by the Trial Examiner , is corrected to read "direct and immediate benefits flowing from the employment relationship " 2 The 5-percent bonus paid at Christmas 1941 was expressed by the Respondent to be "in addition to the 5-percent bonus announced on September 2, 1941." 97 NLRB No. 30. 986209-52-vol 97--12 166 DECISIONS OF NATIONAL LABOR RELATIONS BOARD "will be several times the cost in dollars of the year-end distribution made to employees in recent years. In spite of this fact . . . each employee . . . will receive a check at Christmas time of one dollar for each year of continuous service with a minimum of five dollars." On December 21, the Respondent rejected the Union's re- quest to negotiate on the 1950 bonus. It is thus apparent that over a period of 12 years, the Respondent's employees enjoyed a bonus arrangement whereby they received, at the end of each year, compensation directly related in amount and supplementary to their wages or earnings.3 True the Respondent never announced a bonus plan in advance but determined upon the amount to be distributed shortly before actual payment at Christmas time. However, the absence of a formal plan, in our view, does not alter the essential wage character of the Respondent's bonus arrange- ment. The fact that the bonus was paid regularly over a substantial period of time is sufficient to justify the expectation on the part of the employees that, absent a change in circumstances, they would continue to receive a year-end bonus upon which they might rely as part of their "wages." I That the bonus constituted an integral part 3 "A bonus is not a gift or gratuity , but a sum paid for service, or upon a consideration in addition to or in excess of that which would ordinarily be given." Kenicott v. Wayne County, 16 Wall. 452, 471. Cf. McComb v. Shepard Niles Crane & Hoist Corporation, 171 F. 2d 69 (C. A. 2, 1948), cert. den. 336 U. S. 960, where the court held that a "prosperity " bonus based upon hourly rates, which was paid over a substantial period of time at regularly recurrent intervals, was part of the employees' wage expectancy and therefore included within the term "regular rate" in Section 7 (a) of the Fair Labor Standards Act for purposes of overtime compensation . See also Walling v. Richmond Screw Anchor Co, 154 F. 2d 780 (C. A. 2) ; Walling v. Garlock Packing Co., 159 F. 2d 44 (C. A. 2) ; Walling v. Wall Wire Products Co., 161 F. 2d 470 (C. A. 6) to the effect that a bonus regularly paid by an employer at recur- rent intervals becomes as much a consideration for the work performed by employees as wages though the amount of the bonus paid remains in the discretion of the employer. Cf. Powell, et al. v. Republic Creosoting Co., 172 Wash. 155, 198 F. 2d 919; Knapp v. Imperial Oil & Gas Products Co, 130 F. 2d 1 (C. A. 4) for examples of an implied contract to pay a bonus arising out of regular payments made in the past as consideration for employee services. The 1949 amendments to Section 7 (a) of the Fair Labor Standards Act, to which our dissenting colleague makes reference , define "regular rate," to exclude inter alia ". . . (1) sums paid as gifts; payments in the nature of gifts made at Christmas time or on other special occasions , as a reward for service, the amounts of which are not measured by or dependent on hours worked , production or efficiency ..." 29 U. S. C. Sec. 207 (d) (1). As administratively interpreted , a Christmas bonus paid pursuant to contract is included within the term "regular rate" under the amended statute whether the contract be express or implied . Moreover, if the payment "is so substantial that it can be assumed that employees consider it a part of the wages for which they work, the bonus cannot be considered to be in the nature of a gift." And if the payment "is measured by hours worked . .. the payment is geared to wages and hours during the bonus period and is no longer to be considered as in the nature of a gift." Interpretative Bulletin No. 80, 29 C. F. R. 778.6 (e). Section 9 (a) of the Act refers not only to "rates of pay" but also to "wages or other conditions of employment." It is well established that "wages" must be construed to include emoluments of value accruing to employees out of their employment relationship in addition or supplementary to actual "rates of pay." Inland Steel Company, 77 NLRB 1, enfd. 170 F. 2d 247 (C. A. 7), cert. den 326 U. S 960; W. W. Cross & Co., Inc V. N. L. R. B., 174 F. 2d 875 (C. A. 1) A Christmas "gift" to employees paid in connection with the employment relationship and expressed as a percentage of earnings during the NILES-BEMENT-POND COMPANY 167 of the Respondent's wage structure was underscored by the sharp re- duction in the 1950 bonus owing to the increased cost of the newly negotiated retirement plan. Clearly, in the Respondent's calculation, the retirement plan supplanted, in part, the bonus as a wage enhance- ment. In view of the foregoing, we find that the Respondent's bonus constitutes "wages" and is therefore a subject encompassed within the Respondent's statutory obligation to bargain, and that, by re- fusing to bargain thereon, the Respondent violated Section 8 (a) (5) and (a) (1) of the Acts In so finding, we do not hold, as our dissenting colleague maintains, that "an employer must obtain permission to make a Christmas gift to his.employees...." Of course an employer is free to make a genuine Christmas gift to his employees. The realities of the in- dustrial world establish, however, that a year-end bonus which has become part of the employees' wage expectancy, though it may be paid at Christmas and therefore carry with it the Christmas spirit of gift giving, amounts fundamentally to deferred compensation for services performed during the preceding year. We are convinced, therefore, that the policy of the Act to encourage collective bargaining in the interest of industrial peace is best served by requiring an employer to negotiates on the subject matter of such a bonus. The Christmas spirit, as we conceive it, does not stop short of the bargain- ing table, for bargaining in good faith is in itself a continuing effort to achieve good will between an employer and his employees. 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, Niles-Bement- Pond Company, West Hartford, Connecticut, its officers, agents, suc- cessors, and assigns, shall: t. Cease and desist from : (a) Refusing to bargain collectively with respect to its Christmas bonus, with Amalgamated Local No. 405, International Union, United current year is taxable "wages" under the Social Security Act and taxable compensation for employee income tax purposes. S. S. T. 251 , IRB• 1938-1 , 450; I. T. 1600 II-1-CB 184; N. H. Van Sicklen, Jr. v. Commissioner of Internal Revenue, 33 B. T. A. 544. Bonuses including year-end and Christmas bonuses come within the definition of "wages, salaries, and other compensation" In the Defense Production Act of 1950, as amended, and are subject to stabilization control. 50 U. S. C. 2152 (e), 2102; Public Law No 96, 82 Cong., 1st Sess., General Wage Regulation No. 14, 16 F. R 7509, 7987; Questions and Answers on G. W. R. No. 14, DLR (Nov. 11, 1951) ; Salary Stabilization Regulation No. 2, 16 F. R. 8342 ; S. S it. No 2, Interpretation 2, 16 F. R 11541 5 Tower Hosiery Mills, 81 NLRB 658 (Member Murdock participating), enfd. 180 F. 2d 701 (C. A. 4) ; Singer Manufacturing Company, 24 NLRB 444, enfd. 119 F. 2d 131 (C. A. 7). 01 Of course the employer's duty to bargain does not compel his agreement to pay a bonus of any particular amount, or, in fact, to pay a bonus at all. 168 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Automobile, Aircraft & Agricultural Implement Workers of America, C. I. 0., as the exclusive representative of all full-time, hourly rated production and maintenance employees at the Respondent's West Hartford, Connecticut, plant, including timekeepers and clerks on factory department payrolls, but excluding time-study employees, apprentices, employees in production control departments, technical and engineering employees, clerical employees on office department payrolls, medical department employees, professional employees, guards, executives, foremen, assistant foremen, supervisors, work lead- ers, and all other supervisors as defined in the Act. (b) Taking any unilateral action on its Christmas bonus affecting the employees in the aforesaid appropriate unit without prior con- sultation with Amalgamated Local No. 405, International Union, United Automobile, Aircraft & Agricultural Implement Workers of America, C. I. O. 2. Take the following affirmative action which the Board finds will effectuate the policies of the Act : (a) Upon request, bargain collectively with respect to its Christ- mas bonus,: with Amalgamated Local No. 405, International Union, United Automobile, Aircraft & Agricultural Implement Workers of America, C. I. 0., as the exclusive representative of all employees in the aforesaid appropriate unit and, if an understanding is reached, embody such understanding in a signed agreement if requested by Amalgamated Local No. 405, International Union, United Automo- bile, Aircraft & Agricultural Implement Workers of America, C. I. 0. (b) Consult with Amalgamated Local No. 405, International Union, United Automobile, Aircraft & Agricultural Implement Workers of America, C. I. 0., prior to taking any action which would affect the employees in the aforesaid appropriate unit with respect to its Christ- mas bonus. (c) Post at its plant at West Hartford, Connecticut, copies of the notice attached hereto, marked "Appendix A." ° Copies of said notice, to be furnished by the Regional Director for the First Region, shall, after being duly signed by the Respondent's representative, be posted by the Respondent upon receipt thereof and maintained by it for a period of sixty (60) consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respondent to insure that said notices are not altered, defaced, or covered by any other material. (d) Notify the Regional Director for the First Region in writing, within ten (10) days from the date of this Order, what steps the Re- spondent has taken to comply herewith. ' In the event this Order is enforced by a decree of a United States Court of Appeals, there shall be inserted before the words "A Decision and Order," the words "A Decree of the United States Court of Appeals Enforcing." NILES-BEMENT-POND COMPANY 169 MEMBER MURDOCII, dissenting : This case involves the question of the right of an employer to give his employees a Christmas bonus without first bargaining about the matter with a collective bargaining representative, and thereafter to refuse to negotiate about the bonus after specific request by the union. The record shows that the Employer herein first notified its em- ployees in 1938 that "in line with the Christmas spirit and wishing to show its appreciation," 1 week's extra pay would be given them. The Company continued this practice of giving a Christmas bonus through the years. Sometimes the amount was based upon a, certain percentage of the employee's annual or semiannual earnings rather than a flat week's pay. In December 1950 the Employer sent the employees a letter in which he referred to his practice of extending season's greet- ing and pointed out that under a retirement plan for the employees going into effect the Company would be paying out several times the cost of a bonus; but that nevertheless each employee "will receive a check at Christmas time which will consist of one dollar for each year of continuous service, with a minimum of five dollars." The Union apparently did not take kindly to the idea of this greatly re- duced Christmas bonus and demanded a meeting to discuss the matter. The Employer took the position that the Christmas bonus was a Christmas gift and that it was not obligated to and would not discuss the amount of the gift with the Union. My colleagues agree with the Trial Examiner and adopt the Intermediate Report which finds that the Employer violated Section 8 (a) (5) both by taking unilateral action in regard to the Christmas bonus and also by the subsequent refusal to negotiate about the matter. I cannot agree. I recognize that the majority decision is consistent with Board precedent. After carefully reconsidering 8 the issue, however, I am of the opinion that for this Board to take the position that an employer cannot make a Christmas gift to his employees without first bargain- ing about it with their representative, is to reach a result destructive of the Christmas spirit and not necessary to the practice and procedure of collective bargaining which the statute seeks to encourage and protect. "To bestow freely" is the sine qua non of a gift Particularly at the Christmas season men are moved to make gifts to those they cherish, to those they employ, and to those less fortunate. Whether the motivation be strictly religious or simply a manifestation of the feeling of good will toward men which permeates the atmosphere at that season, we recognize that a sometimes selfish world is better be- cause of the practice. Even grudging, callous characters have been 8 As footnote 5 of the majority opinion pointedly mentions , I participated in the Tower Hosiery decision which held that there had not been a refusal to bargain on a Christmas bonus, although assuming the existence of an obligation to bargain on such a subject. 170 DECISIONS OF NATIONAL LABOR RELATIONS BOARD transformed and moved to participate in the giving of this season 9 But if we say that an employer must obtain permission to make a Christmas gift to ,his employees and must be willing to haggle about whether he should make any gift or about the value of his gift, we have in large measure destroyed the concept, spirit, and practice of Christmas giving in the labor-management field. I cannot believe Congress intended this. That the majority may make a technical argument for the inclusion of Christmas bonuses within the statu- tory term "wages" does not persuade me, feeling as I do, that Congress just did not intend compulsory bargaining on Christmas gifts. I find support for my view that Congress did not intend compul- sory bargaining on Christmas gifts, in the action which Congress took in the 1949 amendments to the Fair Labor Standards Act. Sec- tion 7 (d) was added to exclude from the "regular rate" of pay on which overtime must be paid: "(1) sums paid as gifts; payments in the nature of gifts made at Christmas time or on other special occa- sions, as a reward for service, the amounts of which are not measured by or dependent upon hours worked, production, or efficiency." If Congress does not believe that such Christmas bonuses should be con- sidered part of an employee's regular wages on which his overtime will be computed, by analogy I do not believe that Congress envisages Christmas bonuses as a part of wages for purposes of compulsory col- lective bargaining. Furthermore, the fact that a Christmas bonus is paid with regularity so that the employees are led to expect it, a factor the majority relies on in treating these bonuses as wages, is deemed irrelevant in applying the Fair Labor Standards Act immunity to such bonuses - I must confess that many of the citations in the majority's mam- moth size footnote 4 strike me as of little relevance to the issue before us. None of the Fair Labor Standards Act cases cited in the first paragraph thereof (bearing the names McComb and Walling as plain- tiffs) involved Christmas bonuses; they involved monthly or quarterly bonuses. Indeed, the Richmond Screw Anchor case which is cited specifically distinguished the monthly bonus there involved (which it held should be treated as part of wages for overtime purposes) from 9 See Dicliens' Christmas Carol, Mr. Scrooge. 10 Interpretative Bulletin No. 80. CCH Labor Law Service Vol. 3, Paragraph 24, 104 06 (e). If the bonus paid at Christmas or on other special occasion is a gift or in the nature of a gift it will be excluded from the regular rate under this subsection even though It is paid with regularity so that the employees are led to expect it and even though the amounts paid to different employees or groups of employees vary with the amount of the salary or regular hourly rate of such employees , or according to their length of service with the firm so long as the amounts are not measured by or directly dependent upon hours worked, production or efficiency . A Christmas bonus paid (not pursuant to contract) in the amount of two weeks' salary to all employees and an tequal additional amount for each five years' service with the firm for example, would be excluded from the regular rate under this category . (Emphasis supplied.) NILES-BEMENT-POND COMPANY 171 Christmas bonuses even then exempt under a quoted administrative interpretation of the Wage Hour Administrator. The • final short answer to these citations is the fact that all of them antedated the 1949 amendments to the Fair Labor Standards Act which clarified and codified the Christmas bonus exemption. The further citation by the majority to the fact that Christmas bonuses have been held in- cluded in the phrase "wages, salaries and other compensation" under the Defense Production Act of 1950, likewise is of little significance in view of the very different purposes of that Act from the National Labor Relations Act and the Fair Labor Standards Act. It is obvious that the objective of that law to stabilize wages and prices could not be achieved unless Christmas bonuses were subject to the control of Wage and Salary Stabilization Boards; unrestricted use and abuse of Christmas bonuses plainly might subvert the entire wage stabiliza- tion program. I must also confess that the majority's effort simultaneously to en- dorse the Christmas spirit and the Intermediate Report leaves me, as I am sure it must leave others, in some confusion as to what the scope of the employer's obligation to bargain about Christmas gifts actually is now. The majority say, "we do not hold, as our dissenting colleague Maintains, that `an employer must obtain permission to make a Christmas gift to his employees ...' Of course an employer is free to make a genuine Christmas gift to his employees" (Emphasis supplied.) I assume the majority's concept of a genuine Christmas gift encompasses handkerchiefs and neckties, and perhaps even hams 11 But if an employer wants to make his Christmas gift in the form of a check, then it would appear that he is getting into dangerous territory insofar as his obligations under the National Labor Relations Act are concerned. The majority say that "a year-end bonus which has become part of the employee's wage expectancy, though it be paid at Christmas and therefore carry with it the Christmas spirit of gift giving" is part of wages and must be bargained about. (Empha- sis supplied.) Is the employees' "expectancy" the decisive consider- ation? Does this mean that the first year the employer gives a Christmas bonus when there is no "expectancy" it is a "genuine Christmas gift" and he is free both to act unilaterally, and to refuse• subsequently to bargain about the adequacy of the amount of the check? How many Christmases may the employer give the bonus before it becomes part of the employees' "expectancy" thereby losing its immunities as a Christmas gift and becoming a bargainable matter? Does the first bonus provide the necessary expectancy? How controlling is the significance of the circumstance recited in 11 However , I noted a recent news article reporting that among the bargaining demands made of a pr king house by a union , was a free ham to each employee at Christmas time. 172 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the majority opinion that the bonus paid in this case over a 12-year period was "directly related in amount" to wages, in the light of footnote 4? The majority there cites rulings that Christmas gifts are taxable as "wages" under the Social Security Act and as income for income tax purposes if "expressed as a percentage of earnings." If an employer is careful not to express his Christmas bonus as a percentage of the employees' earnings or as "dependent on hours worked" does it remain a genuine Christmas gift instead of becoming "wages" about which he must bargain? In this connection it may be noted that the employer in the instant case had abandoned his practice of paying a bonus on a percentage or a week's pay basis, and gave his employees a modest gift on the basis of $1 per each year of employment-obviously an.amount not "directly related in amount" to their wages. In conclusion I would note that however much the result reached by the majority may commend itself from a doctrinaire standpoint, it certainly cannot be essential to the preservation of collective bar- gaining on wages, hours, and conditions of employment. A union is free to make unlimited wage demands on the employer when it nego- tiates a contract. If it is not content to take a flat hourly or weekly rate but wishes a larger share in good years it is entirely free under my views to seek an annual bonus arrangement in addition and the employer is obligated to bargain about it. But a genuine Christmas gift has no place on the bargaining table. CHAIRMAN HERZOG took no part in the consideration of the above Decision and Order. 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, we hereby notify our employees that : WE WILL bargain collectively, upon request, with AMALGAMATED LOCAL No. 405, INTERNATIONAL UNION, UNITED AUTOMOBILE, AIRCRAFT & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, C. I. 0., as the exclusive representative of all the employees in the bargaining unit described herein, with respect to our Christmas bonus, and, if an understanding is reached, embody such under- standing in a signed agreement if requested by the above-named union. WE WILL NOT in the future unilaterally act on the Christmas bonus distributed to the employees in the bargaining unit NILES-BEMENT-POND COMPANY 173 described herein without prior consultation with the above-named union. The bargaining unit is: All full-time, hourly rated production and maintenance em- ployees at our West Hartford, Connecticut, plant, including timekeepers and clerks on factory department payrolls, but excluding time-study employees , apprentices, employees in production control departments , technical and engineering employees , clerical employees on office department payrolls, medical department employees, professional employees, guards, executives , foremen, assistant foremen, supervisors, work leaders, and all other supervisors as defined in the Act. NILES-BEMENT-POND COMPANY, Employer. By ------------------------------------ (Representative ) (Title) Dated -------------------- This notice must remain posted for 60 days from the date hereof, and must not be altered, defaced, or covered by any other material. Intermediate Report STATEMENT OF THE CASE Upon a charge and amended charge duly filed by Amalgamated Local No. 405, International Union, United Automobile, Aircraft & Agricultural Implement Workers of America, C. I. 0, herein called the Union, the General Counsel of the National Labor Relations Board, by the Regional Director for the First Region (Boston, Massachusetts), issued his complaint, dated March 22, 1951, alleging that the Respondent had engaged in and was engaging in unfair labor practices affecting commerce within the meaning of Section 8 (a) (1) and (5) and Section 2 (6) and (7) of the National Labor Relations Act, 61 Stat. 136, herein called the Act. Copies of the complaint, the charges, and a notice of hearing were duly served upon the Respondent and the Union. With respect to the unfair labor practices the complaint alleged in substance that the Respondent had refused to bargain collectively with the Union as the exclusive bargaining representative of the Respondent's employees in an appro- priately described unit in respect to a Christmas bonus and thereafter on or about December 21, 1950, the Respondent directly and unilaterally, without prior con- sultation with the Union, granted its employees a Christmas bonus. The Respondent in its duly filed answer admitted the allegations of the coin- plaint as set forth above, but denied that it had engaged in or was engaging in any unfair labor practices. Pursuant to notice, a hearing was held on May 7, 1951, at Hartford, Connecti- cut, before Sidney Lindner, the Trial Examiner duly designated by the Chief Trial Examiner. All of the parties were represented at the hearing by counsel. Full opportunity to be heard, to examine and cross-examine witnesses, and to introduce evidence bearing upon the issues was afforded all parties. Toward 174 DECISIONS OF NATIONAL LABOR RELATIONS BOARD the close of the hearing a motion of the General Counsel to conform the pleadings to the proof with respect to minor matters was granted without objection. At the close of the hearing counsel for the parties argued orally before the under- signed. Opportunity was afforded all parties for the filing of briefs and/or proposed findings and conclusions of law. Briefs have been received from counsel for the Respondent and from counsel for the Union and have been duly considered. Upon the entire record in the case and from his observation of the witnesses, the Trial Examiner makes the following : FINDINGS OF FACT I. THE BUSINESS OF THE RESPONDENT Niles-Bement-Pond Company, a New Jersey corporation, maintains its prin- cipal office and place of business in West Hartford, Connecticut, where it is engaged in the manufacture, sale, and distribution of machine tools, small tools, gauges, and aircraft engine accessories. The principal raw materials used by the Respondent in the conduct of its business operations consist of steel forgings and castings. The value of the Respondent's purchases and its sales annually exceeds $1,000,000. Over 50 percent of the Respondent's pur- chases is shipped to its West Hartford plant from points located outside the State of Connecticut. A like amount of its sales is made and shipped to points outside the State of Connecticut. The Respondent admits that at all times material herein, it has been engaged in commerce within the meaning of the Act. H. THE ORGANIZATION INVOLVED Amalgamated Local No. 405,' International Union, United Automobile, Air- ^craft & Agricultural Implement Workers of America, C. I. 0., is a labor organi- :cation admitting to membership employees of the Respondent. III. THE UNFAIR LABOR PRACTICES A. The appropriate unit and representation by the Union of a majority therein It is admitted and the undersigned finds that all full-time, hourly rated pro- duction and maintenance employees of the Respondent, including timekeepers and clerks on factory department payrolls employed at its West Hartford plant, exclusive of time-study employees, apprentices, employees in production control departments, technical and engineering employees, clerical employees on office department payrolls, medical department employees, professional employees, guards, executives, foremen, assistant foremen, supervisors, work leaders, and all other supervisory employees as defined in Section 2 (11) of the Act, constitute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9 (b) of the Act. It is further admitted-and the undersigned finds that at all times since December 2, 1948, when a majority of the employees in the above-described unit by a secrbt election conducted under the supervision of the Regional Director for the First Region of the Board designated the Union as their rep- resentative for the purposes of collective bargaining, that the Union, by virtue of Section 9 (a) of the Act, has been and is now the exclusive representative of all the employees in the aforesaid unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, and other conditions of employment. NILES-BEMENT-POND COMPANY 175 B. The refusal to bargain 't'here are no contested material issues of fact in this proceeding. It was stipulated at the hearing that the Respondent paid its production and maintenance employees a Christmas or year-end bonus from 1938 regularly with the exception of 1946' In 1938 the employees received the following notice of a Christmas bonus : "In line with the Christmas spirit and wishing to show its appreciation for the loyalty, efficiency, and fine cooperation of its employees, management recom- mended that one week's extra pay, a special compensation, be given to all em- ployees on the payroll as of December 1st." 1939: the Respondent notified its employees : "It is a pleasure to announce at this time that one week's extra pay, a special compensation, will be given to all employees on the payroll as of December 1. 1939, with the exception of such employees as were hired on a temporary basis who worked during the moving operations." 1940: the employees received the following notice : "We are arranging to mail our Christmas checks and the six percent additional compensation fol- lowing the procedure of last year. Only employees on the payroll as of Decem- ber 1, 1940 will receive one week's extra pay as compensation." 1941: "It has been our custom to give all our employees one week's pay based on the 40-hour week without overtime. This year we propose to change this method to five percent of the total earnings for the last six months. A five per- cent Christmas bonus will be paid in addition to the five percent bonus announced on September 2, 1941." 1942: "A bonus of 5 percent will be paid based on total earnings for the year 1942." In 1943 and 1944 the employees were notified with a similar notice to that received in the year 1942. 1945: "The total result of the Company's operations for the year will once again justify the employees' bonus for the year 1945, five percent." In 1946 no bonus was paid because of the strike of the employees. 1947: "A bonus of one week's pay will be mailed on December 19, 1947 to all employees with at least one year's service who are strictly on an hourly or salary basis and who are on the payroll on that date. The bonus for employees who have been with the Company less than one year will be prorated. Payment will be based on 40 hours." 1948: "A bonus of one week's pay to all employees with at least one year's service who are strictly on an hourly or salary basis and who are on the payroll December 17, 1948. The bonus for employees who have served less than one year will be prorated. Payment will be based on 40 hours." 1949: "The Board of Directors therefore has approved the bonus of one and one-half percent to be based on the total individual employee's earnings for the year 1949, which will be paid to all employees strictly on an hourly or salary basis who are actively on the payroll of the Company December 19, 1949." The collective bargaining contract presently in force between the Respondent and the Union was entered into on November 30, 1950. Article VI of the said contract deals with the subject of wages and hours, no mention is made therein of the year-end or Christmas bonus. There is nothing in the record to show that in the negotiations between the parties leading to the execution of the said contract the matter of the year-end or Chrismas bonus was discussed. 1 In 1946 the Respondent's employees struck for approximately 2014 weeks and a bonus was not paid to them. 176 DECISIONS OF NATIONAL LABOR RELATIONS BOARD On December 11, 1950, the Respondent notified its employees by the following letter that a Christmas bonus would be paid to them at a later date : Dear Fellow Employee : It has been my practice around this time of the year to write you, on behalf of our Company, to extend the season's greetings to you and your families. This year our hearts are heavy at the serious turn of World Affairs, and we are deeply concerned at the possibility of more bad news and heavy burdens impending for all of us. It will be necessary for each and every one to aid in our nation's problems, and we feel confident every Niles em- ployee will do his Or her part in the task that lies before us. With the probability of the imposition of wage and price ceilings, we have negotiated a new contract which should be eminently fair to all of our em- ployees and the Company alike. The Retirement Plan now going into effect is one of the finest available in industry. It goes well beyond other plans recently given so much pub- licity. To describe the various features and benefits in a short letter is impossible, so we are having booklets prepared covering all of the provisions. You will receive a copy in the very near future. However, we might say that the Retirement Plan will be funded by payment by the Company to an insurance company of 10% of the annual profits of the Company before de- duction for income taxes. You will, therefore, have an added personal interest in the successful operation of our Company. For the year 1950, the estimated amount to be paid into the retirement fund will be several times the cost in dollars of the year-end distribution made to employees in recent years. In spite of this fact, however, we are pleased to announce that each employee on a strictly hourly and/or salary basis will receive a check at Christmas time which will consist of one dollar for each year of continuous service, with a minimum of five dollars. These checks will be mailed about December 21st and carry with them the best wishes of the management. We all pray that ere many months have passed the leaders of all nations may, under Divine Guidance, resolve the serious problems that now threaten the future of all mankind. Sincerely yours, F. U. CONRAD, President and General Manager. Frank Cocheo, business agent of the Union , testified that when Respondent's December 11 letter was called to his attention he immediately contacted George McDonough, Respondent's industrial relations manager , to arrange a meeting to discuss what he considered to be the unilateral action of the Respondent with respect to the Christmas bonus. McDonough advised that due to the unavaila- bility of management's representatives and because insufficient time had been given to make arrangements , a meeting could not be held that day. Cocheo followed up his telephone conversation with a letter to McDonough in which he repeated his request for a meeting with management to discuss the payment of the "Christmas bonus " and the "Retirement Plan." McDonough in a reply letter dated December 15 acknowledged the Union's letter and advised that the Respondent would not undertake to discuss any Christmas bonus or gift to its employees . McDonough stated that it had been clearly understood in years past that the Respondent's action in regard to the Christmas bonus was not a matter for collective bargaining and that its deter- mination at the end of any calendar year was solely within the judgment of' the Respondent and not a matter for discussion with the Union . McDonough closed his letter with the statement that a meeting would be arranged for the NILES-BEMENT-POND COMPANY 177 following week and assumed that the discussion would be solely on the pension plan, noting that he could not understand what, if anything, there was to discuss on that issue at that time. On December 21 the meeting previously arranged was held . Present were Cocheo, William Lawlor, president of the Union , William Zeman , attorney for the Union , and union committee members and McDonough , Richard Banfield, secretary-treasurer of the Respondent, and Walfrid Lundborg, attorney for the Respondent. Cocheo testified that he told the Respondent's representatives that the Union desired to discuss along with the retirement plan the question of the payment of a Christmas bonus to the employees . Cocheo stated that because of the Respond- ent's action in regard to the Christmas bonus the Union had already prepared un- fair labor practice charges 2 but would withdraw the charges if the Respondent would negotiate the payment of its Christmas bonus at this meeting . Other Union representatives at the meeting commented to the effect that in their opinion the matter of the Christmas bonus and the retirement plan were "closely tied together" as was indicated in the letter of December 11, supra. Lundborg, acting as spokesman for the Respondent, told the Union's repre- sentatives that in the judgment of the Respondent the amount of the Christmas bonus granted its employees was appropriate at that time. Lundborg stated that the year -end or Christmas bonus was a Christmas gift to the employees and the Respondent would not discuss the amount of the said gift with the Union and that it alone would determine how it would distribute its money in the form of dividends to the stockholders or bonuses to its employees with- out inviting the Union into "the inner circles of the Company." Lundborg further stated that the matter of the Christmas bonus was one for the sole deter- mination by the Respondent and the Respondent was under no compulsion to even talk about it with the Union's representatives. The meeting lasted about 25 minutes; no further discussion regarding the Christmas bonus took place between the parties. Conclusions The issue presented in this case, reduced to its essentials, is whether or not the requests of a duly designated bargaining representative to discuss and negotiate with an employer the Christmas bonus or year-end payment to its employees, comes within the recognized scope of collective bargaining, so that an employer's refusal to negotiate or even to discuss such a matter would constitute a violation within the meaning of Section 8 ( a) (5) of the Act. It is the contention of the Respondent raised at , the hearing and set forth in its brief that a Christmas bonus is a gift and gratuity from an employer to an employee which is not an element of the employee's compensation and is not a part of wages within the meaning of the Act . The General Counsel argues that the Christmas bonus falls within the statutory term "wages" and the Respondent's unilateral action in respect thereto and its'subsequent refusal to discuss or negotiate on such matters tends to frustrate the purpose of collective bargaining agreements . Counsel for the Union contends that the year-end or Christmas bonus in effect at the Respondent 's plant over a number of years and distributed to the employees with regularity of repetition became a part of the established wage structure. The Board in several cases has dealt with the subject of Christmas bonus as a bargainable issue. In the Tower Hosiery Mills case, 81 NLRB 658, enfd. 2 The original charge filed by the Union in this matter was filed on December 18, 1950. 178 DECISIONS OF NATIONAL LABOR RELATIONS BOARD 180 F. 2d 701 ( C. A. 4), the employer in a like manner to the Respondent herein gave its employees a Christmas bonus for a number of years voluntarily and took the position when asked by the union to include a "bonus provision" in a proposed contract, that its bonus payments had not been a part of wages but had been conditional each year upon the amount of its earnings and there- fore it would not commit itself in writing to pay a bonus . The Board while agreeing with the employer that it was not compelled to enter a binding obliga- tion to pay a Christmas bonus in a specified amount, when its practice had been to determine at the end of each year whether or not its earnings justified the payment of a bonus , nevertheless specifically stated that the employer was under an obligation to bargain with the union on the subject of the Christmas bonus. In the Singer Manufacturing Company case, 24 NLRB 444, enfd. 119 F. 2d 131 (C. A. 7), the employer's practice had been to grant its employees among other benefits a bonus at Christmas . In its negotiations for a collective bargaining contract 8 the union proposed in effect that the agreement provide for a continu- ance of the employer 's practice with regard to paid legal holidays and vacations, and that "payment of a yearly bonus, as in the past , be continued in the future subject to discretion of the Company ." The employer in rejecting the union's proposals pleaded that he was "perfectly justified in retaining something that he may give to his employees." That it was "not necessary that every gratuitous act of an employer benefiting employees be converted into a contractual obliga- tion" ( emphasis supplied ). Further that an employer "is entitled to give and feel that he may give benefits aside and in addition to his legal obligations and upon occasions to have his employees know and appreciate that he is in his, relations with them going beyond the strict letter of his legal obligations." The Board in its Decision and Order found : "Paid holidays, vacations, and bonuses constitute an integral part of the earnings and working conditions of the employees and . . . are matters which are generally the subject of col- lective bargaining. "Whether or not it be considered an outright withdrawal of the matter of paid holidays , vacations, and bonuses from the sphere of collective bargaining, the [employer's] insistence upon treating such matters as gratuities to be granted and withdrawn at will , constitutes a refusal to bargain collectively with the [Union ] with respect to such matters. We have repeatedly held it to. be a refusal to bargain collectively where an employer unilaterally acts with respect to matters which normally are the subject matters of collective bargain- ing after his employees have requested an opportunity to bargain collectively with regard to such matters . The [employer's] position with respect to paid holidays, vacations , and bonuses differs only in the immaterial circumstance that by taking such a position the [employer ] threatened unilateral action so far as these important matters were concerned , in the future, . . ." It is thus clear that the Board , affirmed by the courts of appeals , faced with the plea that a Christmas bonus is a gratuity from an employer to an employee has determined that the Christmas bonus is a wage, an integral part of the employee's earnings, and a subject for collective bargaining. It might be well to note that even though the Respondent characterizes the Christmas bonus distributed to its employees as a gift or gratuity and there- fore not wages , it has over the years of its distribution referred to it as "special compensation" and "additional compensation ." Indeed, could anything be 8 The negotiations took place in June and October 1938. The employer had been paying a Christmas bonus since 1936. NILES-BEMENT-POND COMPANY 179 clearer than that such "special compensation" or "additional compensation" is wages as was pointed out in the Decision of the Court of Appeals for the First Circuit in W. W. Cross d Co., Inc. v. N. L. R. B., 174 F. 2d 875, wherein, it was stated that the statutory term "wages" was intended to embrace at least those "emoluments resulting from employment in addition or supple- mentary to `actual rates of pay"' which are in the nature of "direct and im- mediate benefits falling from the employment relationship." It is accordingly clear from the foregoing that the argument here advancedi by the Respondent is without merit and it is so found. Upon the foregoing and upon the entire record it is found that the Re- spondent by unilaterally acting with regard to the Christmas bonus distributed to its employees and by refusing to discuss or negotiate with the Union the subject matter of the Christmas bonus, has failed and refused to bargain col- lectively and has thereby interfered with, restrained, and coerced its employees. in the exercise of the rights guaranteed in Section 7 of the Act. IV. THE EFFECT OF IRE UNFAIR LABOR PRACTICES UPON COMMERCE It is found that the activities of the Respondent, set forth in Section III, above, occurring in connection with the operations of the 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 dis,,- putes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY It having been found that the Respondent has engaged in certain unfair labor, practices, it will be recommended that the Respondent cease and desist there- from and take certain affirmative action which the undersigned finds will ef- fectuate the policies of the Act. It has been found that the Respondent by acting unilaterally with regard to its Christmas bonus and without consulting with the Union on this subject, has refused to bargain collectively. It is accordingly necessary, in order to effectuate the policies of the Act, to require the Respondent, upon request, to, bargain collectively with the Union as the exclusive representative of its em- ployees, in the appropriate unit with respect to the Christmas bonus, and to refrain in the future from acting unilaterally in connection therewith and the undersigned will so recommend.' Because of the limited scope of the Respondent's refusal to bargain and be- cause of the absence of any indication that danger of other unfair labor prac- tices is to be anticipated from the Respondent's conduct in the past, it will not 4 Counsel for the Union in his brief raised the contention that the Board should, in addi- tion to ordering the Respondent to cease and desist from making any unilateral changes in, the Christmas bonus or year-end payment and to bargain collectively with the Union with respect to said Christmas bonus, order the Respondent to pay the 1950 year -end payment or Christmas bonus retroactively to its employees on the minimum basis of the established plan of the years 1938 through 1949. The undersigned does not believe in view of the. limited type of violation of Section 8 (a) (5) herein found that the aforesaid suggested remedy is in order. On the contrary the order to be recommended will effectively insure to the Union the full enjoyment of its rights in the future to use the bargaining processes. for the purpose of presenting to the Respondent its demands regarding the Christmas bonus or for the restitution of monies to the employees allegedly adversely affected by the 1950, distribution of the Christmas bonus It is to be assumed that the Respondent will comply with the recommended order in good faith. Under these circumstances, an order of the type requested by the Union would appear to represent an unnecessary economic determina- tion of the merit of the Union's bargaining position with regard to the Christmas bonus See Central Metallic Casket Co, 91 NLRB 572; Inland Steel Company, 77 NLRB 1; Weyer- haeuser Timber Co., 87 NLRB 672 180 DECISIONS OF NATIONAL LABOR RELATIONS BOARD be recommended that the Respondent cease and desist from the commission of any other unfair labor practices. Nevertheless, in order to effectuate the policies of the Act, the undersigned will recommend that the Respondent cease and de- sist from the unfair labor practices found and from in any manner interfering with the efforts of the Union to bargain collectively with it. Upon the basis of the above findings of fact and upon the entire record in the case, the undersigned makes the following : CONCLUSIONS OF LAW 1. Amalgamated Local No. 405, International Union, United Automobile, Air- craft & Agricultural Implement Workers of America, C. I. 0., is a labor organi- zation within the meaning of Section 2 (5) of the Act. 2. All full-time, hourly rated production and maintenance employees at the Respondent's West Hartford Plant, including timekeepers and clerks on factory department payrolls, exclusive of time-study employees, apprentices, employees in production control departments, technical and engineering employees, clerical employees on office department payrolls, medical department employees, pro- fessional employees, guards, executives, foremen, assistant foremen, supervisors, work leaders, and all other supervisory employees as defined in the Act, con- stitute a unit appropriate for the purposes of collective bargaining, within the meaning of Section 9 (b) of the Act. 3. The Union was on December 2, 1948, and at all times thereafter has been, the exclusive representative of all of the employees in the aforesaid unit for the purposes of collective bargaining within the meaning of Section 9 (a) of the Act. 4. By failing and refusing at all times since December 21, 1950, to bargain with the Union with respect to its Christmas bonus and by unilaterally acting on the Christmas bonus the Respondent has failed and refused to bargain col- lectively with the Union as the exclusive representative of the employees in the appropriate unit and has thereby engaged in and is engaging in unfair labor practices within the meaning of Section 8 (a) (5) of the Act. 5. By said acts the Respondenf has interfered with, restrained, and coerced its employees in the exercise of the rights guaranteed in Section 7 of the Act and has engaged in and is engaging in unfair labor practices within the meaning of Section 8 (a) (1) of the Act. 6. The aforesaid unfair labor practices are unfair labor practices affecting commerce within the meaning of Section 2 (6) and (7) of the Act. [Recommended Order omitted from publication in this volume.] VULCAN TIN CAN COMPANY AND VULCAN STAMPING AND MANUFAC- TURING CO., INC. and UNITED ELECTRICAL, RADIO AND MACHINE WORKERS OF AMERICA, UE, PETITIONER. Case No. 13-RC-1749. November 29, 1951 Supplemental Decision and Order Pursuant to a Decision and Direction of Election dated April 24, 1951,1 an election by secret ballot was held on May 27, 1951, under the 1 Vulcan Tin Can Company, 94 NLRB 10. 97 NLRB No. 32.