K-D Manufacturing Co.

K-D MANUFACTURING COMPANY 57 K-D Manufacturing Company and Allied Industrial Workers of America, AFL-CIO, Local No. 487. Case 16-CA-2873 TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE January 9, 1968 DECISION AND ORDER BY CHAIRMAN MCCULLOCH AND MEMBERS BROWN AND JENKINS On September 11, 1967, Trial Examiner James R. Webster issued his Decision in the above-enti tled proceeding, finding that Respondent had en- gaged 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 Trial Examiner's Decision. Thereafter, Respondent filed exceptions to the Trial Examiner's Decision and a supporting brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the Na- tional Labor Relations Board has delegated its powers in connection with this case to a three- member panel. 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 Trial Examiner's Decision, the exceptions, the brief, and the entire record in the case, and hereby adopts the findings, conclusions,' and recommenda- tions2 of the Trial Examiner. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board adopts as its Order the Recom- mended Order of the Trial Examiner, as modified below, and hereby orders that Respondent, K-D Manufacturing Company, Waco, Texas, its officers, agents, successors, and assigns, shall take the ac- tion set forth in the Trial Examiner's Recom- mended Order, as so modified: In 1(e) of the Order, delete "In any like or related manner ..." and substitute therefor "In any other manner ...." 'The Board does not adopt the Trial Examiner's inference that Respondent would have executed a written agreement with the Union provided it contained certain provisions . This inference is contrary to his finding, which is supported by substantial evidence, that Respondent did not bargain in good faith with the Union. Further, the Board does not adopt the Trial Examiner's finding that Respondent granted wage increases to its employees in February 1967 without utilizing the collective-bargaining process. The evidence is that the Union agreed to these wage increases. 2 The Trial Examiner inadvertently recommended a narrow form of cease-and-desist order in paragraph 1(e) of his Recommended Order while he used a broad form order in the fourth paragraph of the Notice To All Employees Due to the nature of Respondent's violations, the Board modifies the Recommended Order to correspond with the Notice JAMES R. WEBSTER, Trial Examiner: This case, with all parties represented, was heard in Waco, Texas, on April 26 and 27, 1967, on a complaint of the General Counsel and answer of K-D Manufacturing Company, herein called Respondent. The complaint was issued on Februa- ry 17, 1967, on charges filed January 10 and 11, 1967. The complaint alleges that Respondent refused to bargain collectively with the Union, made unilateral changes in working conditions, promulgated a broad no-solicitation rule, and illegally threatened employees, thereby violating Section 8(a)(1), (3), and (5) of the National Labor Rela- tions Act, herein called the Act. The General Counsel and Respondent have filed briefs herein and they have been carefully considered. Upon the entire record and my observation of the witnesses, I hereby make the following: FINDINGS OF FACT I. THE BUSINESS OF THE RESPONDENT Respondent is a Texas corporation with its principal of- fice and place of business in Waco, Texas, where it is en- gaged in the manufacture of industrial material-handling equipment. During the past 12 months, Respondent has manufactured, sold, and distributed products valued in excess of $100,000, of which products valued in excess of $50,000 were shipped from Respondent's Waco plant directly to States of the United States other than the State of Texas. Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The Allied Industrial Workers of America, AFL-CIO, Local No. 487, herein called the Union, is a labor or- ganization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES A. Issues 1. Whether Respondent's failure to give Christmas gifts to employees in the bargaining unit in December 1966 constituted a change of its Christmas policy or prac- tice, and whether the giving of Christmas gifts by Re- spondent constitutes a condition of employment and therefore a subject of collective bargaining. 2. Whether on or about September 23, 1966, M. M. Key, Jr., executive vice president of Respondent, promul- gated a broad no-solicitation rule, and whether he, at that time, threatened discharge for any union activity in viola- tion of said rule. 3. Whether on or about November 16, 1966, Vice President Key stated to employees that negotiations would be futile if the Union won the impending election. 4. Whether Respondent has bargained in good faith with the Union. B. Prefactory Statement In September 1966, the Union began organizing the employees in Respondent's Waco plant. Earlier in the 169 NLRB No. 10 58 DECISIONS OF NATIONAL LABOR RELATIONS BOARD year Respondent had moved its plant from Cleburne, Texas, to Waco, Texas. On or about November 17, 1966, a majority of the employees in an appropriate unit, by a secret-ballot election conduct by the Board, designated and selected the Union as their bargaining representative. On November 28, 1966, the Union was certified as the exclusive bargaining representative of the employees in said bargaining unit, and at all times since that date the Union has been the representative for the purposes of collective bargaining of the employees in the following unit: All production and maintenance employees at Respondent's Waco, Texas, plant, including shipping and receiving employees, but excluding office cleri- cal employees , draftsmen , professional employees, guards, and supervisors as defined in the Act. C. The Broad No-Solicitation Rule When Respondent first learned of the union activities of its employees in September 1966, Vice President Key spoke to an assembly of the employees on the matter. He told them that he had received a letter from the Union to the effect that the employees wanted it to represent them; that he could not see why they wanted a union and that if they had come to him they probably could have worked 1 Respondent contends that, in connection with umon activities and representation of the employees in prior years by another umon , a no-sol- icitation rule prohibiting solicitation on company time only was promul- gated in 1964, and that in September 1966 Key restated the rule. Key de- nied that he prohibited solicitation "on company property " or that any disciplinary action was threatened , but his testimony on this point is equivocal , and in a number of instances elicited by leading questions by his counsel, whereas that of the two employees who testified on this point is unequivocal Key's testimony is as follows: A ... and I reacquainted them with the no-solicitation rule on company time. Q. Is this the same rule you referred to in your previous testimony? A. Yes. Q You communicated it to them orally in a speech? A. Yes. Q. What else? A. As I previously testified, I think, that I referred to the union cards. Q. You say you think you referred to the union cards" You don't know whether you did? A That point about the union cards, I am hazy, there had been some question about union cards, and, as I believe I testified a while ago, I referred , I suggested that if they wanted to sign union cards, that was fine, but that they didn't have to, and in my opinion they would be better off to wait and find out something about the facts of unionism. Q I believe your testimony was, "You shouldn 't sign more addi- tional cards," isn't that what you told them? A. I would say I could have said that. I don't recall the exact lan- guage of it Q. How marry times did you mention the union cards? A. Once. Q. Just once" A. (No response.) Q. Now, what did you tell the employees about what would hap- pen if they violated that no-solicitation rule? the matter out; that he knew the working conditions in the old building which they were then occupying were pretty bad but that they would soon be moving to a new building and working conditions there would be better. On the matter of union-authorization cards, he told them they would be better off to wait and find out something about unionism and that he would bring someone in to tell them what unionism was all about; that he wanted to get one thing straight with them and that was that there would be no signing of union cards or talking union on company time or company property; that, if he caught anyone doing it, he would automatically be fired. i Since the only rule or policy on solicitation that has been made known to Respondent's employees in Waco is that stated by Key in his speech in September 1966, I find that his statement of a broad no-solicitation rule on that occasion, with penalty of discharge for its violation, con- stitutes a violation of Section 8(a)(1) of the Act. D. Vice President Key's Speech on November 16,1966 On November 16, 1966, the day before the representa- tion election, Vice President Key again spoke to an as- sembly of employees. Respondent's attorney, John Price, also spoke on this occasion. Their talks and most of the question-and-answer part of the proceedings that fol- A. I did not say what the disciplinary action would be. Q And did you give that rule to the employees and say you only mentioned work time and didn't mention company property" A. That's correct. Q. Is that rule complete as it stands? A. To me, it's complete . It's our rule. Q. It tells the employees that they can't solicit on work time? A. That's right. Q It doesn't tell them where they can sohcit? Don't they have a right to solicit? A. On their time, it's fine with me. Q. Suppose they want to do it at the plant on their time? A. That's fine; lunch , break, that's fine Q. Did you tell them that? A. No, I told them what the rule was. Q. You didn't tell them anything that would happen to them if they did violate that rule9 A. I did not Q. Prior to making that speech at 5th and Mary, did you consult your attorney? A Yes. Q What did you consult him about? I am not asking what he said, but what about? A I counseled with him on what action I should take in view of the letter I had received. Q Was the rule concerned in that discussion? A Yes. Q. Was the company rule - A Yes. Q Was there any change in the rule as a result of that consulta- tion? A No. Q. All right, sir Now, on the day - when was it before you made this speech that you consulted with the attorney, if you recalh A The day? It seems tome either the day of the speech or the day before the speech I consulted with my attorney. K-D MANUFACTURING COMPANY lowed were recorded by Respondent on a portable tape recorder. The employees were advised of the recording.2 Attorney Price spoke first and, among other things, he explained the provisions of the Act relative to collective bargaining and the rights of the employees. He stated: It [Respondent] can conduct its business in a sound businesslike manner; it does not have to agree to change its operations or give the employees anything just because they have a union speaking for them. The obligation to bargain simply requires the Com- pany to keep an open mind, to listen to the em- ployees' representative, consider what is said, back up any refusal with reasonable argument, make what- ever counterproposals sound business would dictate, or otherwise try to reach an agreement if possible. Our point here is, certainly, commonly accepted ideas about union are simply not true. A common misconception is that if a union represents the em- ployees, the Company must automatically give the Union something or that in bargaining the Union can apply some force to make the Company do something other than what good business judgment dictates; put another way, many employees believe they can get more through having a union bargain for them than the Company would give them without a union. Such beliefs are simply not true.. . . The mere fact the Union is doing the bargaining does not trigger any obligation for a company to change its method of operation nor does the fact a union does the bargaining mean that the Company would give the employees something it would not otherwise give. On the matter of a strike, Attorney Price told the em- ployees: I think Backinger [Union Representative Bert Backinger] is going to lead you along the primrose path just like he had led many other guys. I think he is going to. He's going to have you, either having some of your fellow workers or you, going on strike. ... Whether you don't is entirely up to you; we have nothing to say about it. But, we want you to know ahead of time that if there is a strike here - every man here has an individual right to either go or not - we are going to have a place open and operating for this work to be carried on. We're going to serve our customers. We hope you guys will come in to work, but if you don't we'll just have to get someone that will, just like you would if you were running the Company. The employees were assured by Price that they had a legal right to have the Union represent them and that, if they wanted the Union to represent them, they could vote for it at the representation election. All employees were encouraged to vote and were told that the election would be by secret ballot. During Key's talk, Attorney Price added: Mr. Key has set wages in this shop in accordance with what he thought was good business judgment. He's going to set wages in the future in accordance 2 Respondent introduced in evidence the tape recording containing the talks made by Attorney Price and Vice President Key to the employees on November 16, 1966, and discussion that followed. The official re- porter transcribed Key's talk on pp 453 through 465 of the transcript of record, but encountered difficulty in the transcription as his talk developed into a discussion or question-and-answer proceedings. The talk by Attorney Price is on one side of the tape and Key's talk and the general 59 with what he thinks is good business judgment. He's not going to set them because you are for or against the Union. Having the Union is not going to change his mind about whether it's good business judgment or not. Now, second thing I want you to understand, if you have a Union, he [Respondent] can only tell the Union exactly the same thing I am telling you now. That is all. Business judgment will have to set wages. Regarding an impending increase in wages to comply with Federal minimum wage laws, Attorney Price told employees: ... Say a Union representative, Mr. Backinger, is going to make all the claim for the raises. But the truth of the matter is, he couldn't keep wages down if he wanted to, and Backinger couldn't raise them or not raise them. The one factor that is going to affect the raise in wages here is the Law of the United States. On the same day as the talks by Attorney Price and Key, Respondent posted at the plant material on the matter of union representation which included the follow- ing: We do not say voting for the union is futile because we don't know what you expect from it. If you fully understand what the union can do and what it cannot do and you vote fcr it expecting no more or no less, then obviously, voting for it would not be futile. Our point in what we have said is that you should not be misled in what to expect. We can tell you very frankly what to expect from the Company. We are going to do as we have always done - run the com- pany using sound business judgment as our guide in making each decision on what we have before us at the time the decision must be made. Having a union represent the employees will not change this procedure. We will fulfill our obligation under the law- no more, no less. Regarding the matter of a strike, Key told employees: I know that Bert, [Union Representative Bert Backinger] or that any Union, I, I feel like are going to ask you to strike. I know they're telling you they're not. But if you just stop and think about it, I don't know what you got but a strike - and you got that right now. Hell, you can walk out right now in mass. Hit that clock and go, hell, hit it and- Don't hit the clock and go -just go, if it's such a great deal. I just, I know that to run this business, we've got to compete with other businesses in this area that work you type of people. We've got to have the em- ployees, and we've got to belly up to the bar and pay for it. And I feel like we're doing it. If we're not, and if there's such a damn much better job across the street, man, I'd hit it. I wouldn't wait for Bert to take me, I'd hit it now. discussion is on the other side of the tape The Testimony of employees Austin and Shivers as to statements made by Respondent on this occasion is strikingly similar to that on the recording, except that they attribute to Key some of the statements made by Price The proceedings were recorded on a portable, battery-operated Norelco 150 tape recorder with tape cartridge. 60 DECISIONS OF NATIONAL LABOR RELATIONS BOARD E. The Christmas Gifts For many years, at least since 1953, Respondent has given Christmas gifts to employees in December of each year. The gifts have been baskets of fruit, hams, or tur- keys, and in two instances cash bonuses were given. Also, gifts have been given each year to certain customers of Respondent. In 1962, Respondent incurred a financial loss and its board of directors adopted a policy relative to Christmas gifts as follows: Also the question of gifts to Employees and customers was raised by M. M. Key, Jr. He desired some direction in regard to Company gifts to em- ployees and customers at Christmas time. It was agreed by all concerned that such gifts were to be considered principally matters of a personal nature, with business considerations of minor nature. It was agreed that the officers should establish the amount of money to be spent for these type gifts and that this money should be distributed according to the per- sonal feelings of the officers in conjunction with the holiday spirit as it might exist each year. These gifts are to be considered gifts in the strict Bence [sic] of the word and are not to be considered, in the case of customers, as goodwill offerings for obtaining busi- ness nor in the case of employees, wages or money earned for work performed. It is decided in this re- gard, not to give money to either employees or customers. In that year Christmas gifts were given to at least some of the employees. In 1966, the Company incurred a financial loss of ap- proximately $50,000; this was due partly to a fire that oc- curred in its plant which, at that time, was located in Cleburne, Texas. Christmas gifts were given to all super- visory personnel and all office employees, and to select customers of Respondent, but no gifts were given to any of the employees in the collective-bargaining unit. Respondent contends that Christmas gifts are personal gifts and are not a part of wages or a condition of employ- ment, and were not given in 1966 pursuant to Respond- ent's policy that gifts would be given when conditions warrant it, and that in 1966 a sizable financial loss oc- curred, During the year Respondent had moved its plant from Cleburne, Texas, to Waco, Texas, and all em- ployees, with the exception of one, were new and had worked for Respondent less than 1 year; and, as a second shift was started in November 1966, about one-third of the employees had worked less than 2 months by December 25. On December 22, 1966, Key posted the following notice to employees: In response to the request of 26 employees that the work hours be changed on Friday, December 23, 1966, I have been advised, by my attorney, that such a change, in response to the request of the em- ployees, would be a violation of the law. Therefore, the hours of work on Friday will be the normal scheduled hours. F. The Bargaining Negotiations On November 28, 1966, the Union requested, by letter, a list of employees in the bargaining unit, their original hiring dates and rates of pay, and a list of all fringe benefits. By letter dated December 9, 1966, the Union repeated its request for the information set forth in its letter of November 28. By letter dated December 13, 1966, Attorney John Price forwarded to the Union a list of job classifications with wage rates and names of em- ployees in each classification, and a document covering vacations, holidays, and other employee benefits. Price suggested that, if the union bargaining committee is to be composed of five employees, the negotiations be con- ducted after worktime, or he agreed to negotiate during worktime if it were composed of no more than two em- ployees. He also stated that he did not wish to negotiate with the committee alone without Union Representative Backinger present. By letter dated December 16, Backinger advised Price that it was agreeable with the Union to negotiate after work hours. He also requested that Respondent negotiate with the union employee committee on occasions when and if it became impossible for him to be present. By letter dated December 19, Price advised Backinger that he would negotiate with either Backinger or any other person or with the union employee committee alone if desired. By letter dated January 3, 1967, Price wrote Backinger that Respondent proposed to take its annual inventory on Saturday, Sunday, and possibly Monday, January 7, 8, and 9, 1967. A list of employees scheduled for the inven- tory - six different employees for each day - was en- closed. He also advised that Respondent proposed to change the workweek from 58 hours to 50 hours. Price suggested that, in the event the Union wished to consult with the Company concerning either of these matters, he would be available for a meeting on Friday, January 6, 1967. The Union requested negotiations on the plan for taking inventory and on the reduction of hours of work. A meeting was held on January 6, 1967, in Waco, Tex- as, at the Viking Motel with Attorney Norman Bennett, an associate of John Price, representing Respondent and Backinger, and an employee committee representing the Union. At the meeting Backinger asked Bennett the reason for the change in Respondent's past practice in taking inventory. In the past the entire work force had worked on inventory and, when inventory was completed, they continued with their normal duties. Under the new plan for taking inventory, many em- ployees would lose work and wages, since Respondent's approximately 30 employees were working 58 hours a week. Backinger also inquired about the reason for the reduction of overtime hours. The Union proposed that the method of taking inventory remain as it had been in the past, and that the hours remain the same. Bennett stated that he did not know the past practice on inventories and would need to call Vice President Key at the plant on this matter. Bennett made a telephone call to Key and reported back to the Union that the Company was not willing to go along with the past practice of taking inventory and that they wanted to continue to cut the hours. Bennett explained that the men selected for the in- ventory were selected on the basis of seniority with the exception of one man, Sanders. Respondent was of the opinion that Sanders, because of his age, would not be as qualified for inventory as other employees and he was not included on this worklist, although he was one of the senior employees. Backinger then suggested that Respondent take inven- tory by using 15 of its employees on Saturday, January 7, and 15 on Sunday, January 8. Also, the Union stated that certain of the employees Respondent had scheduled to work on Sunday, January 8, did not wish to work on that K-D MANUFACTURING COMPANY day for religious reasons, but Bennett insisted that the schedule be adhered to. Regarding the reduction of hours from 58 to 50, Bennett stated that customer demands at that time did not require that Respondent's employees work 58 hours. Members on the union bargaining com- mittee stated that Respondent had a backlog of orders. Bennett stated that he would consider their argument. After the intermission or break during negotiations, and after his telephone conversation with Key, he reported that Respondent did not consider its backlog of orders enough to require 58 hours of work a week. Backinger stated that he understood that, if production needs required Respondent to work 60 hours, it would work 60 hours, and, if it required 50 hours of work, it would work 50 hours. The meeting ended without any change of position by Respondent on the matter of inventory or on the reduc- tion of hours. Backinger recognized that production needs govern the amount of overtime hours worked each week, but was opposed to a reduction pending further negotiations on the matter. He continued to request that all employees share in the inventory work. The inventory was conducted in accordance with the schedule proposed by Respondent, and on January 7, 1967, the employees were notified that effective Monday, January 9, 1967, their hours of work would be reduced to 50 hours per week. By letter dated January 9, 1967, Backinger forwarded to Price a copy of the Union's contract proposal, and meeting dates were suggested. On January 17, having received no reply, Backinger wrote Price again regarding a meeting date. On January 23, having received no reply, he called Price's office and talked with Norman Bennett, and a meeting date of January 30 was agreed upon. A meeting was held in Waco, Texas, on January 30, 1967. This meeting was devoted primarily to a review of the Union's contract proposals and a discussion of these proposals. At this meeting, Bennett informed the union negotiator that to conform to the new Federal minimum wage law requiring a minimum wage of $1.40 per hour, ef- fective February 1, 1967, the minimum wages of Re- spondent's laborers would be raised 10 cents per hour to the $1.40 minimum rate, and, in order to retain the existing differential between jobs, Respondent proposed to raise wages of all classifications 10 cents per hour, effective the first pay period after February 1, 1967. The Union accepted these increases with the understanding that it would not preclude further bargaining on wages. At this meeting the Union explained proposals 1 through 9 of its contract. The meeting lasted approximately 3 hours. The next meeting was scheduled for February 11. At the meeting of February 11, the parties continued to discuss the Union's proposals. After this was con- cluded, Backinger requested Bennett to bring a contract proposal to the next meeting. The next meeting was set for February 21. At the meeting of February 21, agreement was reached on article I entitled "Mutual Recognition of Rights" ex- cept that, at the suggestion of Respondent, the title of this section was changed to "Purpose." Agreement was reached on article'II entitled "Recognition," the parties agreeing to word this section in accordance with the Board's certification of the Union. Backinger asked Bennett if he had brought a contract proposal, and Bennett replied that he had not as he still had some questions, At this, meeting Bennett proposed that the hours of the employees be reduced again from 50 to 40 61 per week effective March 1, 1967. Bennett explained that production needs did not demand that they work 50 hours a week. Backinger requested a list of new employees hired and a list of those that had quit. Bennett agreed to bring in counterproposals at the next meeting to some of the contract provisions. On February 24, 1967, Backinger wrote Bennett requesting that the reduction in hours not be put in effect until the Union had an opportunity to review the follow- ing records to be furnished by Respondent: (1) purchas- ing orders, shipping and receiving records, and any other necessary records to enable the Union intelligently to determine whether Respondent's contention on the reduction of hours is correct or incorrect; (2) the names, classification, dates of hire, rates of pay on date of hire, and present rates of pay of all employees currently on the payroll. The next meeting was held on February 27, and at this meeting Bennett furnished the information requested con- cerning employees. As to the remaining records requested, Bennett handed to Backinger a written ex- planation of Respondent's position setting forth that its proposed change of hours from 50 to 40 per week was based on: (1) customer demands and production needs, and (2) the inefficiency of operating on an overtime basis paying premium rates. He denied that customer demands and production needs had decreased, and stated that the second reason stated is the reason for the reduction in hours. Bennett set forth in his written explanation that Respondent did not see how the information requested by the Union for the purchase orders, shipping and receiving records, etc., was necessary for intelligent bargaining in view of Respondent's position that overtime hours were cut because of the inefficiency of operating on an over- time basis. He stated that Respondent would not make this information available to the Union unless it could demonstrate that such information is necessary to enable the Union to bargain intelligently. At this meeting Respondent submitted a counter- proposal on 13 contract sections. One listed 27 reasons for discharge. Another provided that, on assignment to available work, the most qualified employee would be selected. Another provided for a grievance procedure of three steps - first to the plant superintendent, then to Vice President M. M. Key, Jr., and then to President M. M. Key, Sr., with each step to be taken within 48 hours and to be in writing. No provision for union participation was made. Later in negotiations Respondent revised each of these three proposals. In view of Respondent's intention to reduce hours, Backinger suggested an interim wage increase be given to offset the reduction in hours until such time as the parties could get a contract negotiated. Bennett stated that he did not think the Company would increase its cost and that he would give the Union an answer in writing. The proposed reduction of hours from 50 to 40 per week was not put into effect on March 1, since bargaining had not been completed on this item; the Company had not at that time furnished the Union with all information requested. The next meeting was held on March 8, 1967. At this meeting Respondent showed to Backinger information requested on the matter of orders and subcontracting. Co- pies of these records were not furnished to the Union, and the identity of subcontractors was concealed,' Respond- ent agreed that, if the Union did not believe the informa- tion to be correct, an impartial third party could verify it. Backinger was still opposed to a reduction of hours and 62 DECISIONS OF NATIONAL LABOR RELATIONS BOARD also requested an interim increase. Bennett explained that "we didn't want to increase our cost at this time." Backinger asked Bennett if he would even consider an in- crease. Bennett replied, "Sure, I will. You make it sound like we haven't considered it before. We have been con- sidering it ever since you first proposed it way back when, and we are considering [it] now. But on the basis of our consideration of it, we don't want to, at this time, increase our cost." At the end of the discussion, Bennett stated, "Mr. Backinger, it looks like we have a deadlock here, doesn't it?" He asked Backinger what he proposed that they do. One of the committee members stated that Respondent should let them work 4 days a week so that they could get other jobs. Bennett rejected this proposal and stated that it would not produce the most efficient and effective work force. He asked then if there was anything else. There was no reply. He stated, "Well, since we are deadlocked, we are going to go ahead and put the reduction of hours in effect anyway." At this meeting Bennett handed to Backinger a docu- ment entitled "Cost Items." On this document there was listed the articles and sections in the Union's contract proposal which Respondent regarded as cost items, and Respondent's position on these was that "the company will not agree to increase the cost of running the business at this time." This list included such items as wages, over- time, premium pay, rest periods, washup periods, report- in pay, call-in pay, holidays, sick leave, funeral leave, jury pay, voting leave, and vacations. In support of its posi- tion, Respondent's argument was set forth in part as fol- lows: 1. The company uses its best business judgment in making its decision as to whether or not to increase its costs. If a collective bargaining contract were en- tered into, it would bind the company to pay certain wages and benefits to the employees for a period of time in the future regardless of the conditions .... Before the advent of the union, it has always retained the right to adjust the wages and benefits based on the economic conditions of the business. We do not believe it is sound business judgment to even contract to pay existing wages and benefits for a period of time in the future; but because the law requires this, we will agree to do so. However, the law does not require us to agree to pay increased wages and benefits for a period of time in the future; and based on the uncertainties of the future and specifically the economic uncertainties of the future, we at this time do not think it is sound business judgment to contract for increased costs for an ex- tended period of time for a period of time in the fu- ture. A decision to do so would be an unwise busi- ness decision. 2. The company believes it is paying a fair wage and giving the employees fair benefits. However, the union has asked that the company increase the wages and benefits. The company does not want to do this because this increase is money that the company wants to keep for itself. Backinger objected to the fact that Respondent's grievance procedure did not include the Union or a union representative. At the next meeting, held on March 16, 1967, Respondent submitted a new counterproposal on grievances which added that a representative of the Union may be present at any meeting held for the purpose of adjusting grievances. On March 9, 1967, Respondent posted a notice to em- ployees announcing a reduction in hours to 40 hours per week, effective March 13, 1967. The next meeting was held on March 16, 1967. At this meeting Respondent submitted additional contract proposals. One was on expiration date of contract and provided for the termination of the contract at the end of 1 year following the date of the signatures of the parties. Another proposal provided that the Company shall have the unlimited right to contract out any of its work. Also at this meeting the Company submitted a written state- ment of its position on a checkoff clause. One of the reasons given by the Company for its position is set forth as follows: 1. The company does not want to know either who is in the union or who is not in the union. A com- mon practice of this union is to file charges with the Labor Board charging the company with discrimina- tion because of union membership as is demon- strated by the charge on file at this time. One of the best defenses against this charge is for the company to not know either who is in the union or who is not in the union. If the checkoff provision were made a part of the contract, the company would certainly know who is in the union. Also in the Company's statement of position on checkoff it set forth that the Company deducts insurance premiums from employee wages, contributions to the United Fund, and uniform rental charges. It explains that the Company makes these deductions because "it has a real and direct interest" in these matters. "The company does not believe that it has the same real and direct in- terest in the union that it has in the case of the other deductions." Also Respondent explains that since a checkoff would be valid and binding for a period of 1 year or the period of the collective-bargaining agreement, the Company does not wish to make a contract abridging the rights of the employees to get out of the Union when they see fit to do so. The next meeting was held on March 30. At this meet- ing further negotiations were held on Respondent's proposals, and Backinger testified that agreement was reached on some of the items, particularly on some of the grounds for discharge. On the management-rights clause Backinger proposed that the Union agree to Respond- ent's section 1 of this clause and Respondent agree to the Union's section 2 of this clause. Bennett stated that Respondent only wanted tentative agreements. Backinger stated that he wanted firm agreements on the matters agreed to. Bennett explained that Respondent wanted a total contract and did not want to be held to its agreement on some items if agreement could not be reached on a total contract. The next and last meeting prior to the hearing herein was held on April 24, 1967. At this meeting Respondent submitted proposals concerning bulletin boards, safety and health, wages, seniority, and management rights, and a statement of position on arbitration. The proposals on wages, seniority, and management rights contained some changes or concessions from prior proposals. The management-rights clause no longer included as an ap- pendix the list of grounds for discharge, and the language of the clause was revised; the seniority clause was revised to give some recognition to tenure of service and to govern selection for work assignment where qualifica- tions are equal. In its initial proposal, Respondent did not recognize seniority as a criteria for assignment of work. K-D MANUFACTURING COMPANY In its wage proposal Respondent included some language from the Union's proposal on temporary assignment of employees (article XV, section 3) - that an employee temporarily assigned to a position or classification which has a pay rate higher than his current pay rate shall receive the higher pay rate, and, in the event an employee is temporarily assigned to a lower classification with a lower pay rate, his rate shall not be cut unless his classifi- cation is changed to that having the lower rate. Also in this proposal Respondent set forth that an employee will receive a 5-cent-per-hour wage increase at the end of each 6 months until he is 10 cents below the maximum rate in his classification. Thereafter he will receive a wage increase to the top rate when, in the judgment of the Com- pany, his work performance merits the said increase. Laborers will receive an automatic wage increase of 5 cents after 30 days and another 5-cent wage increase after 60 days. G. Conclusions As Attorney Price pointed out to employees on November 16, 1966, the Act sets forth specific require- ments of an employer for good-faith bargaining and sets forth certain acts that are not required of him. The Act requires an employer to (1) meet at reasonable times, (2) confer in good faith with respect to wages, hours, or other terms and conditions of employment, and (3) execute a written contract incorporating any agreement reached if requested. He is not required to agree to a proposal or to make a concession. In this case Respondent met at reasonable times, conferred with the union bargaining committee, made arguments in support of its positions, and made some concessions from original positions taken. But the principal issue is whether or not Respond- ent did so in "good faith." I am convinced that Respondent would execute a writ- ten bargaining agreement with the Union, provided it does not increase Respondent's costs, does not provide for arbitration or checkoff of union dues, and provided it otherwise contains Respondent's contract proposals. It had done so before with another union. Willingness or desire for a bargaining agreement is one of the recognized indicia of good-faith bargaining. But, did Respondent herein merely bargain hard and seek to have the Union accept its contract terms, or did it give lipservice to the specific requirement of the Act without, in fact, bargain- ing with the "good faith" required? I am convinced and find that Respondent has not bargained in good faith with the Union.3 This is based on the totality of Respondent's conduct considered in context with the indicia of bad- faith bargaining as follows: Following the certification of the Union in November 1966, Respondent very point- edly made retaliations against the employees without adequate or plausible explanation. Respondent singled out the bargaining unit as a group to receive no Christmas gifts in December 1966, and gave gifts to all other em- ployees. Employees' request for a change in working hours on Friday, December 23, 1966, was brusquely de- nied on the grounds that "such a change in response to the request of the employees would be a violation of the law." In. January 1967, Respondent changed its method of taking annual inventory with the result that many em- 63 ployees lost worktime, and no reason for the change was presented. On Jnanuary 9, 1967, the weekly hours of the employees was reduced by 8 and again on March 13, 1967, they were further reduced by 10, thereby eliminat- ing a total of 18 overtime hours per week without making any reparation or consideration for the significant drop in earnings this occasioned. Respondent rejected a counter- proposal by the Union that the workweek of 40 hours be condensed to 4 days - the employees had been working 40 hours in 4 days; and, in fact, Respondent made a con- tract proposal that "accepting employment from other concerns for shifts other than the one working for the company" would be grounds for discharge. On November 16, 1966, Respondent made it quite clear to the employees that negotiations would be futile if they expected to get anything by having the Union as their bargaining representative. During negotiations Respondent itemized the cost provisions in the Union's contract proposal and rejected them as a category stating that: We do not believe it is sound business judgment to even contract to pay existing wages and benefits for a period of time in the future; but because the law requires this, we will agree to do so. However, the law does not require us to agree to pay increased wages .... However, the union has asked that the company increase the wages and benefits. The com- pany does not want to do this because this increase is money that the company wants to keep for itself. Respondent is taking an adamant position on cost items on the contention that "the law does not require" the making of a concession. Respondent is not approaching contract negotiations with a free and open mind. Em- ployees were told at the outset that Respondent "does not have to agree to change its operations or give the em- ployees anything just because they have a Union speak- ing for them," and that Respondent would do no more than the law requires. Respondent is overlooking the "good-faith" requirement in Section 8(d) of the Act and Respondent is using the other provisions of this section of the Act as limitations on the extent of its collective bar- gaining, and in so doing Respondent is not bargaining with the Union in good faith. Respondent does not state to employees that negotia- tions would be futile - that is, that no agreement would be or could be reached; he stated to them on November 16, 1966, that, if they expected to gain anything through the Union, negotiations would in that respect be futile. Respondent's announcement to employees of a precon- ceived adamant position against giving anything to the employees through the Union constitutes a violation of Section 8(a)(1) of the Act, and is an indicia of Respond- ent's bad faith in collective bargaining. In February 1967, Respondent was required to raise its minimum wage rate to $1.40 per hour. This required a change in the beginning wage rate for laborers, but Respondent used this requirement as a means of increas- ing wages of all employees 10 cents per hour, thereby granting a wage increase without utilizing the collective- bargaining process, and by a means calculated to deny to the Union any credit for the increase. All negotiations have been conducted with Attorney Norman Bennett as the sole representative of Respond- 3 Stark Ceramics , Inc., 155 NLRB 1258, enfd. 375 F.2d 202 (C.A 6); Roy E. Hanson, Jr , Mfg, 137 NLRB 251 64 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ent. However skilled he may be in the profession of law and the phraseology of legal documents , his knowledge of the problems at Respondent 's plant is secondhand. Respondent refused to discuss with the Union its failure to give Christmas gifts in December 1966. I reject its contention that the failure to give gifts in 1966 was in accordance with company policy and that such gifts were not a condition of employment.4 Furthermore, I find that such denial of Christmas gifts in 1966 also constitutes a 'discrimination against the employees in the bargaining unit because of their union activities , and constitues a violation of Section 8(a)(3) of the Act. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of the Respondent set forth in section III, above, occurring in connection with Respondent's operations described in section I, above, have a close, in- timate, and substantial relationship to trade, traffic, and commerce among the several States and tend to lead to labor disputes burdening and obstructing commerce and the free flow thereof. Upon the basis of the foregoing findings of fact and the entire record in this case, I make the following: CONCLUSIONS OF LAW 1. K-D Manufacturing Company is an employer en- gaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2. Allied Industrial Workers of America, AFL-CIO, Local No. 487, is a labor organization within the meaning of Section 2(5) of the Act. 3. All production and maintenance employees at Respondent's Waco, Texas , plant, including shipping and receiving employees , but excluding office clerical em- ployees , draftsmen, professional employees , guards, and supervisors as defined in the Act, constitute a unit ap- propriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act. 4. At all times since November 17, 1966 , the Union has been the execlusive representative of all employees of Respondent in the aforesaid appropriate unit for the purposes of collective bargaining within the meaning of Section 9(a) of the Act. 5. By announcing a no-solicitation rule prohibiting sol- icitation on employee time on company property, and by threatening employees with discharge for violation of said rule, as described in section III, C , Respondent has en- gaged in an unfair labor practice in violation of Section 8(a)(1) of the Act. 6. By threatening employees that Respondent would give them nothing through the Union as their bargaining representative , Respondent has engaged in an unfair labor practice in violation of Section 8(a)(1) of the Act. 7. By discriminatorily denying Christmas gifts to em- ployees in the appropriate unit and by making a change in its policy on Christmas gifts in December 1966, and by failing and refusing to notify and discuss this matter with the Union, Respondent has engaged in unfair labor prac- tices within the meaning of Section 8(a)(1), (3), and (5) of the Act. 8. By refusing to bargain collectively in good faith with the Union, as described in section III, E , F, and G, Respondent has thereby engaged in an unfair labor prac- tice in violation of Section 8(a)(5) and (1) of the Act. 9. The aforesaid unfair labor practices affect com- merce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that Respondent engaged in certain un- fair labor practices, I shall recommend that it cease and desist therefrom, and that it take certain affirmative ac- tion as provided in the Recommended Order below, which I find necessary to remedy and to remove the ef- fects of the unfair labor practices and to effectuate the policies of the Act. Having found that Respondent discriminatorily denied Christmas gifts to all employees in the appropriate unit in December 1966, I shall recommend that Respondent make each employee who was on the payroll on December 24, 1966, whole for loss of earnings suffered by reason of this discrimination against them, by paying to each of them a sum of money equal to that which Respondent would normally have spent on each Christ- mas gift, together with interest thereon at the rate of 6 percent per annum as prescribed in Isis Plumbing & Heating Co., 138 NLRB 716. On the matter of the reduction in hours per week from 58 to 40, there is no allegation nor proof that this was dis- criminatorily motivated rather than based on economic considerations; Respondent advised the Union in ad- vance about the reductions in hours and the parties con- ferred and bargained on the matters. Although I have found that Respondent has not bargained with the Union in good faith, I do not believe that under the circum- stances herein a remedy providing for the return to the status quo ante on hours, that is a return to 58 hours per week, would be appropriate. RECOMMENDED ORDER Upon the basis of the foregoing findings of fact, conclu- sions of law, and the entire record, and pursuant to Sec- tion 10(c) of the Act, I hereby recommend that Respond- ent, K-D Manufacturing Company, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Announcing or promulgating a no-solicitation rule which prohibits union solicitation on employee time and on company property , and threatening discharge for union solicitation in violation of said rule. (b) Threatening employees that they would get nothing through the Union as their bargaining representa- tive. (c) Discouraging membership in Allied Industrial Workers of America, AFL-CIO, Local No. 487, or any other labor organization, by denying Christmas gifts to employees or by otherwise discriminating against em- ployees in regard to their hire and tenure of employment or any term or condition of employment. "The Beacon Journal Publishing Company, 164 NLRB 734,65 LRRM 1126; N.L.R.B. v. Exchange Parts Co., et al., 339 F.2d 829 (C.A. 5). K-D MANUFACTURING COMPANY (d) Making changes in its policy on Christmas gifts without first notifying and bargaining with the Union on said matter, or otherwise refusing to bargain collectively with said Union as the exclusive bargaining representa- tive of its employees in the following described ap- propriate unit: All production and maintenance employees at Respondent's Waco, Texas, plant, including shipping and receiving employees, but excluding office cleri- cal employees, draftsmen, professional employees, guards, and supervisors as defined in the Act. (e) In any like or related manner interfering with, restraining, or coercing its employees in the exercise of their rights to self-organization, to form, join, or assist the above-named Union or any other labor organization of their choice, and to engage in any other concerted activi- ties for the purpose of collective bargaining or other mu- tual aid or protection as guaranteed by Section 7 of the Act, or to refrain from any or all of such activities. 2. Take the following affirmative action which I find will effectuate the policies of the Act: (a) Upon request, bargain collectively with Allied In- dustrial Workers of America, AFL-CIO, Local No. 487, as the exclusive bargaining representative of all em- ployees in the above-described bargaining unit, and, if an understanding is reached, embody such understanding in a signed agreement. (b) Make whole all employees in the appropriate bar- gaining unit who were on the payroll on December 24, 1966, for loss of earnings, in the form of Christmas gifts, that they suffered as a result of the discrimination against them, in the manner set forth in the section of this Deci- sion entitled "The Remedy." (c) Preserve and, upon request, make available to the Board or its agents, for examination and copying, all payroll records, social security payment records, timecards, personnel records and reports, and all other records necessary or useful in computing the amount of earnings lost by each employee. (d) Post at its plant in Waco, Texas, copies of the at- tached notice marked "Appendix."5 Copies of said notice, on forms provided by the Regional Director for Region 16, after being duly signed by an authorized representative, shall be posted by it immediately upon receipt thereof, and be maintained by it for 60 consecu- tive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respon- dent to insure that said notices are not altered, defaced, or covered by any other material. (e) Notify the Regional Director for Region 16, in 5 In the event that this Recommended Order is adopted by the Board, the words "a Decision and Order" shall be substituted for the words "the Recommended Order of a Trial Examiner" in the notice. In the further event that the Board's Order is enforced by a decree of a United States Court of Appeals, the words "a Decree of the United States Court of Ap- peals Enforcing an Order" shall be substituted for the words "a Decision and Order " 6 In the event that this Recommended Order is adopted by the Board, this provision shall be modified to read. "Notify the Regional Director for Region 16, in writing, within 10 days from the date of this Order, what steps Respondent has taken to comply herewith " 65 writing, within 20 days from the date of receipt of this Decision, what steps Respondent has taken to comply herewith.6 APPENDIX NOTICE TO ALL EMPLOYEES Pursuant to the Recommended Order of a Trial Ex- aminer 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 em- ployees that: WE WILL NOT announce or promulgate a rule prohibiting union solicitation on employee time on company property, and we will not threaten discharge or other disciplinary action for engaging in union solicitation on employee time on company pro- perty. WE WILL NOT discourage membership in Allied Industrial Workers of America, AFL-CIO, Local No. 487, or any other labor organization of our em- ployees, by denying Christmas gifts to employees or by discriminating against them in any other manner in regard to hire or tenure of employment or other terms and conditions of employment. WE WILL NOT threaten employees that they will get nothing through the Union as their bargaining representative. WE WILL NOT make changes in our policy of giving Christmas gifts to employees without first notifying and bargaining with the above-named Union con- cerning such matters. WE WILL NOT in any other manner interfere with, restrain, or coerce our employees in the exercise of their rights to self-organization, to form labor or- ganizations, to join or assist the above-named Union or any other labor organization, to bargain collective- ly through representatives of their own choosing, and to engage in other concerted activities for the pur- pose of collective bargaining or other mutual aid or protection, and to refrain from any and all such ac- tivities. WE WILL, upon request, bargain collectively with Allied Industrial Workers of America, AFL-CIO, Local No. 487, as the exclusive bargaining represent- ative of all employees in the unit described below with respect to rates of pay, wages, hours of employ- ment, and other terms and conditions of employ- ment, and, if an understanding is reached, embody such understanding in a written and signed agree- ment. The bargaining unit is: All production and maintenance employees at our Waco, Texas, plant, including shipping and receiving employees, but excluding office cleri- cal employees, draftsmen, professional em- ployees, guards, and supervisors as defined in the Act. WE WILL make whole all employees in the bargain- ing unit who were on the payroll on December 24, 1966, for loss of earnings suffered by them by reason of our discriminatory refusal to give Christmas gifts to said employees that year. All our employees are free to become, remain, or 66 DECISIONS OF NATIONAL LABOR RELATIONS BOARD refrain from becoming or remaining , members of the above-named or any other labor organization. K-D MANUFACTURING 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. If employees have any question concerning this notice or compliance with its provisions , they may communicate directly with the Board's Regional Office, Federal Office Building, Room 8A24, 819 Taylor Street, Fort Worth, Texas 76102 , Telephone 334-2921.