Quality Castings Co.

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 Officers' 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.