Tellepsen Petro-Chem Constructors

TELLEPSEN PETRO-CHEM CONSTRUCTORS Tellepsen Petro-Chem Constructors and Millwrights Local Union No. 2232 affiliated with United Broth- erhood of Carpenters and Joiners of America, AFL- CIO. Case 23-CA-3653 May 20, 1971 DECISION AND ORDER BY CHAIRMAN MILLER AND MEMBERS BROWN AND JENKINS On October 30, 1970, Trial Examiner Arthur M. Goldberg issued his Decision in the above-entitled pro- ceeding, finding that Respondent had not engaged in certain unfair labor practices alleged in the complaint and recommending that the complaint be dismissed in its entirety, as set forth in the attached Trial Ex- aminer's Decision. Thereafter the General Counsel filed exceptions to the Decision and a brief in support thereof. 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 Ex- aminer made at the hearing and finds that no prejudi- cial error was committed. The rulings are hereby affirmed. The Board has considered the Trial Ex- aminer's Decision, the exceptions, the briefs, and the entire record in the case, and hereby adopts the findings, conclusions, and recommendations of the Trial Examiner as modified below.' ORDER Pursuant to Section 10(c) of the National Labor Re- lations Act, as amended, the National Labor Relations Board adopts as its Order the recommended Order of the Trial Examiner and hereby orders that the com- plaint herein be, and it hereby is, dismissed in its en- tirety. ' In view of the special circumstances of this case, as disclosed by the record, we agree with the Trial Examiner that the Respondent did not violate Section 8(a)(5) by unilaterally subcontracting its work on the Shell Oil project In so finding we rely on the following unique factors involved herein The Respondent's actions were not a willful disregard of the Act, the issue involved has never before arisen in the approximately 20 years of bargaining history between the parties, there is no indication that this issue will arise or be common practice in the future, the bargaining history has been not to give the Union advance notice of layoffs when a subcontract is terminated, employees who are laid off obtain employment by seeking work on their own with another contractor or through the Union's hiring hall and are not considered part of Respondent's permanent labor force, the impact upon the employees involved appears to have been minimal, and there is no showing that the Union has ever made a request to bargain Against this background, we are persuaded that the policies of the Act would not be effectuated by finding a violation of Section 8(a)(5) on the record before us 433 MEMBER BROWN, dissenting: Contrary to my colleagues, I would reverse the Trial Examiner's Decision and find that Respondent's con- duct was violative of Section 8(a)(5) and (1) of the Act. It is undisputed that the Respondent, unilaterally and without any notice to the incumbent Union, subcon- tracted the bargaining unit's work and then terminated its entire crew of eight who had been employed for several months on the Shell Oil Company project. This subcontracting action was without historical or bar- gaining precedent.2 And, clearly, the terminated em- ployees were adversely affected. The Trial Examiner's finding that the six or seven employees who did not find employment with the subcontractor were referred to jobs with other employers during the week following their termination is without any record support.' This is the classic situation involved in Fibreboard Paper Products Corp. v. NL.R.B., 379 U.S. 203. I would therefore find the violations alleged and remedy them by requiring Respondent to bargain in the future about such subcontracting as has taken place here and to make whole the employees involved for any loss of pay suffered as a result of their unlawful termination. ' Thus, Respondent had never before subcontracted millwright work once its millwrights had begun work, and subcontracting in such circum- stances was not sanctioned by industry practice, bargaining history, or the applicable contract ' Also not apparent to me from this record is the majority's impression that the impact of the discharge of these employees was "minimal " There is simply an absence of evidence in the matter of what new work they may have found "on their own with another contractor or through the Union's hiring hall " TRIAL EXAMINER'S DECISION ARTHUR M. GOLDBERG, Trial Examiner: Based upon a charge filed on June 4, 1970,' by Millwrights Local Union No. 2232, affiliated with United Brotherhood of Carpenters and Joiners of America, AFL-CIO (herein called the Mill- wrights or the Charging Party), the complaint herein issued on July 15 alleging that Tellepsen Petro-Chem Constructors (herein called Tellepsen or the Respondent) violated Section 8(a)(1) and (5) of the National Labor Relations Act, as amended (herein called the Act). The putative violation arose from Respondent contracting out Millwright work on a con- struction project for the Shell Oil Company (herein called Shell) without notice to or negotiation with the Millwrights and from the discharge of its own union employees. The answer denied all material allegations of the complaint and raised as an affirmative defense the claim that the subject matter of subcontracting had been raised, discussed, and re- jected during the negotiations which led to the current collec- tive-bargaining agreement between the Millwrights and the employer associations representing the Respondent and that as a result Respondent retained the unilateral right to subcon- tract work. Prior to the opening of the hearing herein, the Associated General Contractors of America, Inc., Houston Chapter (herein called AGC), and the Construction Employers' As- sociation of Texas (herein called CEA), upon motions duly made, were granted leave to intervene by the Regional Direc- tor of the Board's Region 23 because they are parties to the ' Unless otherwise noted all dates herein were in 1970 190 NLRB No. 76 434 DECISIONS OF NATIONAL LABOR RELATIONS BOARD collective-bargaining agreement between the Charging Party and Tellepsen and have a substantial interest in the instant litigation. All parties, including the Intervenors , participated in the hearing in Houston, Texas, on August 25 and were afforded full opportunity to be heard , to introduce evidence, to exam- ine and cross-examine witnesses, and to present oral argu- ment. Oral argument was' waived and briefs were filed by General Counsel, Respondent, CEA, and AGC on October 5. Based upon the entire record in the case , my reading of the beefs, and from my observation of the witnesses and their demeanor, I make the following: FINDINGS OF FACT I THE BUSINESS OF THE RESPONDENT Tellepsen Petro-Chem Constructors, a division of Tel- lepsen Construction Company, a corporation duly authorized to do business in the State of Texas , is engaged in the building and construction industry throughout the United States. During a representative 1-year period Respondent, in the course and conduct of its business operations , received reve- nue in excess of $50,000 from its interstate operations. At all times material herein Respondent has had a contract with Shell Oil Company to construct and install gasoline facilities at Shell's Deer Park, Harris County, Texas, facility. The complaint alleged, the answer admitted, and I find that Respondent is and has been at all times material herein an employer engaged in commerce within the meaning of Sec- tion 2(6) and (7) of the Act, and meets the Board's standards for assertion of its jurisdiction. II THE LABOR ORGANIZATION INVOLVED Millwrights Local Union No. 2232, affiliated with the United Brotherhood of Carpenters and Joiners of America, AFL-CIO, is and has been at all times material herein a labor organization within the meaning of Section 2(5) of the Act. III THE ALLEGED UNFAIR LABOR PRACTICES A. The Contract, the Unit, and the 1968 Negotiations CEA, AGC, the Carpenters District Counsel of Houston and Vicinity (herein called the Carpenters), and the Mill- wrights are parties to a collective-bargaining agreement dated July 12, 1968, with an expiration date of July 1, 1971. By virtue of its membership in CEA, Respondent is a party to that contract. The limits of the bargaining unit must be culled from sev- eral clauses of the collective agreement set forth below. ARTICLE I Recognition Contractors recognize the Union as bargaining agent for all Millwrights and other classifications of employees listed herein that it may lawfully represent who may be employed by Contractors parties to this Agreement in the area described in Article III hereof. Article III, entitled "Territorial Jurisdiction" states that the "Agreement shall apply to the area covered by the Car- penters District Council" and then lists the counties covered, including Harris County where the Shell facility involved in this proceeding is situated. Under the terms of section 3 of article IV of the contract, entitled "Estimated Forces," it is provided that the Union shall be a source for skilled manpower. That contract provi- sion reads: Section 3 : In order to economically and efficiently serve the building public it is important to have experienced and skilled workmen. Contractors subject to this Agree- ment recognize that [the Union] is a source of such skilled manpower, and will, therefore, use it as a source when in need of Millwrights . The Union agrees that when Contractors subject to this Agreement request me- chanics, it will exert every effort to supply skilled Mill- wrights. Contractors shall be the sole judge of any appli- cants' qualifications . Contractors shall exercise their right to hire and to reject any job applicant without regard to Union membership or non-membership. The collective-bargaining agreement is entirely silent on the subject of subcontracting or contracting out. During the 1968 negotiations leading to the execution of the current contract the unions included among their proposals the fol- lowing provisions: Article XI Whereas the contractor and the Union desire to make an agreement applying in the event of subcontracting in accordance with Section 8(e) of the Labor -Management Relations Act: Therefore, the contractor and the Union mutually agree with respect to work to be done at the site of construction, alteration, painting, or repair of any build- ing structure, -or other works, that if the contractor should contract or subcontract any of the aforesaid work falling within the normal jurisdiction of the Union, said contractors shall contract or subcontract only to firms that are parties to an executed, current collective bar- gaining agreement with the Carpenters District Council of Houston and Vicinity. The production or fabrication of millwork, forms other than patented forms, and prefabricated wooden structural framing, other than glulam members , shall be subject to the terms of this Agreement in all cases and to the extent that such is permitted by law, except for materials fabricated in a shop having a contract with the United Brotherhood of Carpenters and Joiners and fur- ther excepting all manufactured items other than mill- work. Article XII. The contractor agrees not to subcontract work nor- mally performed at the site of construction within the jurisdiction of the Union where such work would then be performed off the construction site. On their part the employers (CEA and AGC) included among their contract proposals a new function of manage- ment clause which read. In the exercise of the functions of management, the Contractors shall have the right to plan, direct and con- trol operations of all its work, hire employees, direct the working forces in the field, assign employees to their jobs, discharge, suspend or discipline, transfer, promote or demote employees, lay off employees because of lack of work, or for other legitimate reasons, require em- ployees to observe the Contractor's rules and regulations not inconsistent with this Agreement, regulate the use of equipment and other property of the Contractor, decide the amount of equipment used and number of men needed, subject to the provisions of this Agreement, and shall be free to contract work anywhere and decide the source from which materials and equipment are ob- tained, provided, however, that the Contractors will not use their rights for the purpose of discrimination against any employee. [Emphasis supplied.] TELLEPSEN PETRO-CHEM CONSTRUCTORS 435 Respondent and the Intervenors maintain that the under- scored section of their proposed function of management provision was intended only to insure the right of contractors to undertake to perform work at any geographic location. Notes prepared by Richard V. Lewis, executive director of AGC, of the June 18, 1968, bargaining session contain the following paragraphs relating to discussion of the function of management proposal: Mr. Bell [employer negotiator] explained the contrac- tors' problems concerning management rights and man- agement trainees indicating that more would be dis- cussed on these items at subsequent meetings when the contractors were explaining their requests in further de- tail. Mr. Fountain [union negotiator] said the union might agree with part of the contractor management clause but would have to disagree on the part about subcontracting. He went on to read the union's proposals on subcon- tracting and buying limitations. H. A. Jorgensen, executive secretary of CEA, testified that as far as he could "see reflected in the minutes" the employer representatives did not disabuse the union negotiators of the idea that the employers' proposal pertained to subcontract- ing. The unions' proposal on subcontracting was discussed at bargaining sessions on June 18, 19, and 25 , 1968. The final proposal submitted to the unions by the employers omitted any reference to subcontracting . The employers' package was accepted by the Carpenters District Council and the Mill- wrights and as noted above, the contract is silent on the subject of subcontracting. B. Respondent's Subcontract of Millwright Work More than 1 year prior to the underlying events herein Respondent entered into a contract with Shell calling for the Respondent to construct additions to the Shell facilities in Harris County, Texas, within the Millwright's geographic jurisdiction. Included in the project undertaken by Tellepsen was the setting and aligning of pumps, work requiring the services of millwright. Tellepsen undertook to perform the millwright work with craftsmen on its own payroll obtained from the Charging Party. In May 1970 Tellepsen determined that the costs on this portion of the project performed by millwrights were exceeding estimates and that the work was behind schedule. On May 27, without notice to the Charging Party, Respondent entered into a contract with Ashley, Hick- ham-Ur, a contractor ;specializing in millwright work, pro- viding for Ashley, Hickham-Ur to take over and complete the millwright work on the Shell project On the afternoon of Friday, May 29, Tellepsen terminated the eight millwrights , one foreman, and seven journeymen it then employed on the Shell job.' Ashley, Hickham-Ur is not a party to the collective-bar- gaining agreement between the Intervenors and the Mill- wrights and Carpenters District Council of Houston. How- ever, by virtue of its being party to a national agreement with the United Brotherhood of Carpenters and Joiners, Ashley, Hickham-Ur is required to adhere to the terms and condi- tions of the collective-bargaining agreements of affiliates of the United Brotherhood in force in any area in which Ashley, Hickham-Ur undertakes to perform work within the jurisdic- tion of the United Brotherhood. There is no evidence that Ashley, Hickham-Ur did not completely comply with all substantive provisions of the collective-bargaining agreement between the Intervenors and the Millwrights. There are two procedures by which a contractor may ob- tain millwrights from the Charging Party. First, the contrac- tor may contact the Union, state his personnel needs, and the Union will refer the requisite number of men. Second, the contractor may himself select the millwrights he wishes to employ and send them to the Union to be referred back to the job. Utilizing the second procedure, Ashley, Hickham-Ur on June 3 commenced work on its subcontract at the Shell facility employing only members of the Millwrights, one or two of whom had worked for Tellepsen on the same job ' t that time Ashley, Hickham-Ur employed six millwrights. Record testimony established that in performance of its contracts Tellepsen on certain occasions employs its own millwrights and on other jobs subcontracts the millwright work. Gordon C. Whiteside, who handles labor relations for Tellepsen and characterized his position as that of adminis- trative assistant and has been with Tellepsen for 16 years, testified that to his knowledge Tellepsen had never before subcontracted millwright work after starting a job with its own millwrights. Those millwrights laid off by Tellepsen on May 29 who did not find employment with Ashley, Hickham-Ur were referred to jobs with other employers under contract with Millwrights during the week following their termination by Respondent. C. Findings and Conclusions The theory of violation as stated in General Counsel's brief is "that the Respondent's action in terminating its millwright employees and subcontracting their work to another contrac- tor without notice to or consultation with the Union falls squarely within the ambit of the Supreme Court' s decision in Fibreboard Paper Products Corp., 379 U.S. 203." In Fibreboard the Court held that "the contracting out of work performed by members of the bargaining unit might appropriately be called a `condition of employment.' The words even more plainly cover termination of employment which, as the facts of this case indicate, necessarily results from the contracting out of work performed by members of the established bargaining unit." 379 U.S. at p. 210. Thus, the Court concluded that the subject of contracting work out of the bargaining unit is a mandatory subject of bargaining un- der Section 8(d) of the Act. In its decision the Court noted that "the work of the entire unit has been contracted out." 379 U.S. at p. 213 In the instant case the bargaining unit is composed of all millwrights and other classifications of employees listed in the collective-bargaining agreement who may be employed by contractors party to the contract in the 23 Texas counties listed therein. By virtue of its membership in CEA Tellepsen is a party to the contract and any millwrights it may employ are part of the bargaining unit. Ashley, Hickham-Ur, through operation of its agreement with the United Brotherhood of Carpenters and Joiners' which requires it to adhere to any collective agreement in force in any area in which Ashley, Hickham-Ur performs work within the jurisdiction of the United Brotherhood and its affiliates, was also bound to the contract covering the Shell facility project, and in turn mill- wrights employed by Ashley, Hickham-Ur fall within the bargaining unit. Thus, this case does not present the usual circumstances of subcontracting where the work is removed from the bargaining unit and performed by the subcontrac- tor's employees who are not part of the unit. Here, the work and the jobs remained within the unit defined in the contract i A ninth millwright had voluntarily quit on Wednesday, May 27, and had not been replaced ' That contract was not made part of the record 436 DECISIONS OF NATIONAL LABOR RELATIONS BOARD and only the identity of the employing agent was changed. The millwrights who were hired by Ashley, Hickham-Ur were members of the bargaining unit and Tellepsen' s mill- wrights who were terminated by Respondent on May 29 remained within the unit and on the payroll of other contrac- tors party to the agreement. In sum, it cannot be said in this case that "the changes had an adverse impact on the bargain- ing unit" by diminishing "the whole number of jobs per- formed by its members." International Union, United Au- tomobile, Aerospace & Agricultural Implement Workers of America (UAW) v. N. L. R. B. [General Motors Corp., South Gate], 381 F.2d 265, 266. (Herein called General Motors, South Gate.) I am urged by Respondent and the Intervenors to conclude as a matter of law that the holding of Fibreboard does not apply to the construction industry. Under the facts of this case I do not deem it necessary for me to determine that broad issue Certainly, if the subcontract in this case had been to a subcontractor employing members of another union the transfer of work from members of the Millwrights to mem- bers of the other union would have diminished the number of jobs available to members of the bargaining unit. In such an event it could not be gainsaid that the rationale of Fibre- board would apply. To the extent that employment condi- tions in the construction industry differ from those of indus- trial employment' with bargaining units not normally confined to employees of one particular employer but instead more often encompassing all employers in an area who utilize journeymen possessing a particular skill,' Fibreboard would appear to have limited application. Apart from the foregoing considerations, based upon the Board's holding in Westinghouse Electric Corporation (Mans- field Plant), 150 NLRB 1574, I conclude that the Respondent did not violate its bargaining obligations when it contracted the millwright work on the Shell project to Ashley, Hickham- Ur. As in Fibreboard and General Motors, South Gate, West- inghouse involved the "letting [of] contracts giving to outside contractors and their employees work of a nature which could have been performed by equipment and manpower within the bargaining unit." Even under such circumstances the Board noted that "it is wrong to assume that, in the absence of an existing contractual waiver, it is a per se unfair labor practice in all situations for an employer to let out unit work without consulting the unit bargaining representative." 150 NLRB at p 1576. The Board pointed out that where it had found the unilateral contracting out of unit work to be violative of Section 8(a)(5) and (1) of the Act it had invariably appeared that the subcontracting involved a departure from previously established operating procedures, effected a change in working conditions, or significantly impaired job tenure, job security, or reasonably anticipated work oppor- tunities for bargaining unit personnel. In dismissing the com- plaint in Westinghouse the Board spelled out five criteria to which it looked for determining whether the unilateral act of subcontracting violated the Act. Those were: 1. Whether the contracting out of the work was moti- vated solely by economic considerations; 2. whether the subcontracting comported with the em- ployer's traditional business operations; 3. whether the subcontracting questioned varied signifi- cantly in kind or degree from what had customarily been done under past established practices; 4 whether the subcontract had a demonstrable adverse impact on employees in the unit and, 5 whether the union had the opportunity to bargain about changes in subcontracting practices at general negotiating meetings. I find that as to each criterion the facts of this case comport to those in Westinghouse and that "for all these reasons cumulatively, [I] conclude that Respondent did not violate its statutory bargaining obligation by failing to invite union par- ticipation in" the decision to subcontract the work in ques- tion. Westinghouse at p. 1577. First, the decision to subcon- tract the millwright work on the Shell job was occasioned solely by the fact that the work was behind schedule and over estimated costs, without question economic considerations. Second, Tellepsen had traditionally subcontracted work on its projects. Third, while there was no evidence that such subcontracts had been let in the past after the work in ques- tion had been started by Respondent's own employees, the widespread use of subcontractors in the construction indus- try' militates against a finding that the subcontract to Ashley, Hickham-Ur was a substantial variation from the Respond- ent's past established practice. Fourth, there was no demon- strable adverse impact on unit employees as the work re- mained in the unit and the few days of work lost by Tellepsen's laid-off millwrights was no more than to be ex- pected in an industry where "there is no such thing as a steady job." And fifth, the record established that the Mill- wrights had full opportunity to bargain and indeed did bar- gain during the general negotiating meetings in 1968 about changes in subcontracting practices.' CONCLUSIONS OF LAW 1. Tellepsen Petro-Chem Constructors is an employer en- gaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. Millwrights Local Union No. 2232, affiliated with United Brotherhood of Carpenters and Joiners of America, AFL-CIO, is a labor organization within the meaning of Section 2(5) of the Act 3. All millwnghts and other classifications of employees listed in the collective-bargaining agreement who may be employed by contractors parties to the agreement in the area described in article III of said agreement constitute a unit appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act 4 Respondent has not committed unfair labor practices as alleged in the complaint. Upon the foregoing findings of fact, conclusions of law, and the entire record, and pursuant to Section 10(c) of the Act, I hereby issue the following recommended: ORDER The complaint is dismissed in its entirety. Glenn T Bynum, who had been foreman over Tellepsen's millwrights and was called as a witness by General Counsel, testified, "There is no such thing as a steady job in construction " ' For an exception to this general concept of bargaining units in the construction industry see Green Construction Company, 180 NLRB No 85 See the construction industry proviso to Section 8(e) of the Act In this connection it should be noted that the subcontract to Ashley, Hickham-Ur complied with the Millwright's 1968 contract demand that work falling within the normal jurisdiction of the Union be contracted only to firms parties to the current collective-bargaining agreement