Peerless Pressed Metal Corp.

F PEERLESS PRESSED METAL CORPORATION Peerless Pressed Metal Corporation and Local 209, International Union of Electrical, Radio and Ma- chine Workers, AFL-CIO. Case 1-CA-7238 July 31, 1972 DECISION AND ORDER On May 28, 1971, Trial Examiner Myron S. Waks issued the attached Decision in this proceeding. Thereafter, Respondent filed exceptions to the Trial Examiner's Decision and a supporting brief. The Board has considered the record and the Trial Examiner's Decision in light of the exceptions and brief and finds merit to certain of Respondent's exceptions. Accordingly, we adopt the Trial Examin- er's rulings, findings, and conclusions only to the extent consistent with our decision herein. The Trial Examiner found that Respondent violat- ed Section 8(a)(5) and (1) of the Act by unilaterally instituting a wage incentive system for certain of Respondent's employees. Respondent contends, in part, that its authority to institute that system was sanctioned by the collective-bargaining agreement, the collective-bargaining negotiating history, and the past practices of the parties. Respondent further contends that the dispute should be resolved by an arbitrator pursuant to the collective-bargaining contract. As we agree with Respondent's contention that this dispute concerns primarily an interpretation of the contract, we find merit in Respondent's contention that the dispute should have been resolved pursuant to the contractual procedures. Respondent operates a sheetmetal job shop at its plant in Watertown, Massachussetts. The Union has represented Respondent's production and mainte- nance employees under successive contracts since 1957. The contract in effect when the instant dispute occurred was effective from March 23, 1970, until March 23, 1973, and contained grievance machinery culminating in binding arbitration available to either party, to resolve "any question involving the inter- pretation or application of the provisions of this Agreement which remain unsettled after having been fully processed under the provisions of Article XVI (Grievances) ...." Prior to the advent of the Union, Respondent maintained wage incentive systems in its plant. Beginning with the 1957 negotiated contract, and i In so finding we do not rely on Respondent's assertion that the merit increase provision of the agreement could be construed as authorizing the institution of an incentive plan That claim seems to us so nearly frivolous that it would not evidence a good-faith disagreement as to the interpretation of the contract 2 Collyer Insulated Wire, 192 NLRB No. 150. As in Collyer, the parties herein have had, for 14 years, an established and successful collective- bargaining relationship The Union did not allege that Respondent's actions were unlawfully motivated and Respondent has indicated its willingness to 561 continuing to the present, the contractual wage provisions have provided for percentage or stated amount increases over prior hourly wage rates. In 1965, Respondent acquired a new division and instituted a wage incentive system for those employ- ees. During the 1967 and 1970 contract negotiations incentive systems were discussed by the parties, but no express agreement was reached on this issue. In this connection, Respondent contends that the Union gave the impression that it could not stop Respondent from instituting a wage incentive system. The Union contends that Respondent rejected a union counterproposal on incentive systems and then dropped its own proposal. On August 4, Union President Szymanczyk asked Respondent's president, Sparrow, if the employees on the Western Electric job were working under an incentive wage system. Sparrow replied that the system had been put into effect and there was nothing to prevent it in the contract. Szymanczyk responded that he was not sure of that and that he needed further advice from the Union's district office. The instant charge was filed on August 11, without any further discussion. In view of the above facts, it is clear that the core of the dispute involved a good-faith disagreement between the parties concerning the interpretation of the contract,' with both parties relying on past practice and negotiating history to uphold their respective positions. As we stated in Collyer,2 where "the contract and its meaning . . . lie at the center of" the dispute and the parties' contract contains voluntary arbitration machinery to resolve such disputes, deferral to arbitration will best effectuate the purposes of the Act. Such is the situation here.3 Accordingly, for the reasons expressed in Collyer, shall defer herein to the parties' contractual settle- ment procedures. REMEDY Without prejudice to any party and without deciding the merits of the controversy, we shall order that the complaint herein be dismissed, but we shall retain jurisdiction for a limited purpose. As we noted in Collyer, supra, our decision represented a develop- mental step in the Board's treatment of these problems, and the controversy here arose at a time when the Board decisions may have led the parties to settle the dispute pursuant to the arbitration provision of the contract 3 We do not agree with our dissenting colleagues that our decision here is predicated upon any finding or inference that the Respondent 's claim based on bargaining history is necessarily meritorious. That is an issue which we leave for resolution within the arbitration procedures established by the parties Indeed, it is our dissenting brethren who must reach, and decide, the merits of the Respondent's claim in order to conclude, as they would, that a statutory violation has occurred 198 NLRB No. 5 562 DECISIONS OF NATIONAL LABOR RELATIONS BOARD conclude that the Board approved dual litigation of this controversy before the Board and before an arbitrator. We are also aware that the parties herein have not resolved their dispute by the contractual grievance and arbitration procedure and that, there- fore, we cannot now inquire whether the resolution of the dispute will comport with the standards set forth in Spielberg.4 In order to eliminate the risk of prejudice to any party we shall retain jurisdiction over this dispute solely for the purpose of entertain- ing appropriate and timely motions for further consideration upon a proper showing that either (a) the dispute has not, with reasonable promptness after the issuance of this decision, been resolved by amicable settlement in the grievance procedure or submitted promptly to arbitration, or (b) the griev- ance or arbitration procedures have not been fair and regular or have reached a result which is repugnant to the Act.5 ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the complaint herein be, and it hereby is, dismissed; provided, however that: Jurisdiction of this proceeding is hereby retained for the limited purposes indicated in that portion of our Decision and Order herein entitled "Remedy." MEMBERS FANNING AND JENKINS, dissenting: Contrary to the majority view we would decide the allegations of Section 8(a)(5) and (1) on their merits and, in agreement with the Trial Examiner's Deci- sion, find that the Respondent has violated the Act and adopt the Remedy provided. For the reasons fully expressed in our separate dissents in Collyer Insulated Wire, supra, we have legal and policy misgivings about deferring to the parties' contractual settlement in cases involving "unilateral change of contract," despite the availabil- ity of arbitration provisions in the contract. Howev- er, even if we were inclined to accept the majority views in Collyer, we find that the instant case is an inappropriate vehicle for the application of those views. For the reasons discussed below, we are concerned that the majority has enlarged the Collyer doctrine, and has done so with insufficient evidenti- ary and legal rationale. The record shows that beginning in 1957 the Respondent has had successive collective-bargaining contracts with the Union. The negotiations of the first contract between the parties in 1957 resulted in a wage provision providing for hourly rates only, and the prior existing wage incentive systems were discontinued. According to the credited testimony of William Burke, then president of the Union and a union negotiator, the parties agreed mutually at the onset of the negotiations to drop all incentive systems because of the high incident of accidents at the plant. Burke also credibly testified that this mutual agreement of the parties occurred before the parties went into the first contract writing and for this reason the contract provided only for hourly wage rates, and made no express reference to the elimination of incentive wages. The record further shows that the wage rates in the plant continued to be hourly rates until 1965 when the Respondent acquired a new division called Leaktite Division. About 3 months prior to its acquisition, Respondent President Sparrow ap- proached Burke, still union president, to discuss the Respondent's possible acquisition and to seek ap- proval of the Union to continue the incentive system under which the employees of Leaktite operated. Burke explained that he would have to take up this matter with the other union officers and the membership and would give Sparrow an answer at a later date. Thereafter, at a union meeting Burke presented the Respondent's proposal and expressed himself favorably toward it, explaining that the acquisition of Leaktite, if profitable, would benefit the members, since the employees would share in the increased profits through merit increases, which the contract specifically covered. Burke then met with Sparrow and informed him of the agreement of the Union to have the incentive system for employees in the Leaktite division continue. Following the acquisition of Leaktite the unit employees in the Respondent's other operations continued to work under an hourly wage rate. During the negotiations which led to the 1967 contract Sparrow expressed satisfaction with the results of the incentive system in the Leaktite operation and stated that he would like to consider putting in incentive systems for other long-range jobs when they were received, such as jobs which ran for a year or more. According to Sparrow, Vecchia, then vice president of the Union, and one of its four-man bargaining team, expressed no enthusiasm, but gave Sparrow the "impression" that the Union could not stop the Respondent from using an incentive system. 'Vecchia's version was that Sparrow asked him what 'he had against employees making money through a bonus system, and he replied that he "had nothing against money if you want to give money to these people you go right ahead and give it to them. I can't stop you." The evidence shows that there was no 4 Spielberg Mfg Co, 112 NLRB 1080 5 Collyer Insulated Wire, supra PEERLESS PRESSED METAL CORPORATION discussion about an incentive system for any particu- lar job. The wage provision in the 1967 to 1970 contract provided only for hourly wage rates and contained no reference of any agreement for incen- tive systems. During negotiations for the current contract which was effective on March 23, 1970, and runs until March 23, 1973, incentive systems were discussed at the first negotiating session, but the Union rejected the Respondent's proposal and offered as a counter- proposal a profit-sharing plan. Sparrow told the Union to "forget it" and ended the discussion. The matter was not discussed at subsequent bargaining sessions . No provisions providing for incentive systems appears in the current contract. On August 4, 1970, employee Szymanczyk, presi- dent of the Union Local, was told that certain employees on one of Respondent's long-range jobs were working under an incentive system. Szymanc- zyk made an inquiry to Sparrow, Respondent's president, and was told that the incentive system had indeed been put into effect for certain employees. Sparrow took the position that there was nothing in the contract that prevented the Respondent from instituting an incentive system. After discussing the matter with union officials, on August 11, 1970, the Union filed a charge with the Board. The Respon- dent has continued to apply the disputed incentive system. On the basis of the above undisputed facts and in the face of credibility findings by the Trial Examiner, the majority nevertheless concluded that "the core of the dispute involved a good-faith disagreement between the parties concerning the interpretation of the contract." From this pronouncement the majori- ty concluded that the doctrine enunciated in Collyer applied, since the contract and its meaning was at the center of the dispute. In our opinion, there is here no evidence, such as may have been present in Collyer, to support the conclusion that the application of the incentive wage system to plant jobs remained "open." Certainly, no support for the majority's view is to be found in the wording of the contract, which since 1957 has consistently not covered the subject matter, nor in past practice, nor in bargaining history. Instead, the evidence is all to the contrary. Significantly, in 1965 when the Respondent wished to continue the incentive system of the employees in the Leaktite operation, the union president was consulted, and the procedures necessary to superim- pose an incentive wage plan upon the contractually 6 The majority concedes (fn. 1, above) that the merit increase provision cannot be construed to authorize incentive rates and that Respondent's claim on this point is nearly frivolous. Neither the majority nor Respondent points to any other contract provision which is in dispute by the parties and 563 established wage structure was fully understood by the Respondent. In fact at that time the record shows that at the Union's suggestion Sparrow called a meeting of the employees and explained the techni- calities of the job and fully explained the reasons why an incentive system was necessary for the success of the Leaktite operation. Indeed by conced- ing that Respondent's claim that the incentive system could be based on the merit raise provision of the contract is "nearly frivolous" our colleagues seem to admit that this is not a case involving the application of a contract provision. Thus the present case constitutes a still further extension of the Collyer policy of refusing to consider alleged violations of the statute , to a case in which: Unilateral action by an employer without prior discussion with the union does amount to a refusal to negotiate about the affected conditions of employment under negotiation, and must of necessity obstruct bargaining, contrary to congressional policy. [N.L.R.B. v. Katz, 369 U.S. 736, 747.] Here, as in Katz, "the matter of . . . increases had been raised at [prior] conferences . . . but no final understand- ing had been reached." Katz at 745-746. Yet the Supreme Court held that such circumstances did not, contrary to our colleagues, leave the issue "open" or to be treated as involving a contract interpretation. Rather, the Court held the granting of the increase was "tantamount to an outright refusal to negotiate." Katz at 746. Accordingly, we see no ground here for deferring to the grievance-arbitration procedure of the contract. It is clear that there is no substantial claim of contractual privilege and no provision in the existing contract which could be remotely interpreted as permitting the establishment of a wage incentive system.6 Apparently, the majority places much weight upon the testimony of Sparrow that he received the "impression" from discussing the matter with one union member, a vice president of the Union and one of the Union's four-man bargaining team, that the Union could not stop Respondent from instituting a wage incentive system. Under well-established Board and court precedent this incident standing alone, or in conjunction with other record evidence, is an insufficient basis for concluding that the Union has in any manner waived a statutory right.? Thus, we conclude that Collyer is not applicable to the facts of this case. Moreover, in our view the deferral of the dispute in question to the arbitration provisions of the contract is prejudicial to settlement of such issues by agree- ment upon a contract, in that it inferentially accom- plishes what it disclaims: it interprets the contract and thereby gives support to a finding that the institution of an incentive wage system is an integral part of the existing contract. Such result, in the face of the agreed-upon exclusion of incentive rates, the thus amenable to arbitration. 9 See C & C Plywood Corp., 148 NLRB 414, 416, and cases cited in footnotes ; N.L.R.B. v. C & C Plywood Corp., 385 U.S. 421, reversing 351 F.2d 224 (C.A. 9). 564 DECISIONS OF NATIONAL LABOR RELATIONS BOARD bargaining history, the practices of the parties, and the Respondent's abandonment of its effort to get the Union to agree to incentive rates, can only encourage repudiation of collective-bargaining agreements and create instability in labor-management relations, contrary to the purpose and provisions of Section 8(d) of the Act. We are convinced that the sweeping application of the Collyer doctrine which our colleagues are applying here will not only lead to contractual chaos, but tend to encourage unnecessary industrial con- flict. The effect of the majority decision would appear to extend Collyer so broadly so as to preclude any remedy under the Act we administer where parties with established collective-bargaining rela- tionships act unilaterally, regardless of the terms of the contract or the factual situation. It is unrealistic to presume that the issues and problems which this will foster will be simply solved by the "mystique of arbitration." For the above reasons we would decide the allegations in the complaint on their merits. The Trial Examiner in his Decision, in our opinion, has properly analyzed the evidence and applied applica- ble Board and court precedents, and we would adopt it. TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE MYRON S. WAKS, Trial Examiner: This case, tried at Boston, Massachusetts, on April 6, 1971, upon a charge filed by Local 209 International Union of Electrical, Radio and Machine Workers AFL-CIO, on August 11, 1970,1 and a complaint issued on February 4, 1971, alleges that Respondent unilaterally instituted an incentive program for some of its employees in violation of Section 8(a)(1) and (5) of the Act. Respondent admitted certain allega- tions of the complaint, but denied the commission of any unfair labor practices. Upon the entire record in this case, including my observation of the witnesses, and after due consideration of the briefs filed by the parties, I make the following: FINDINGS OF FACT 1. THE BUSINESS OF THE COMPANY The pleadings establish and I find that Respondent, a I Unless otherwise indicated all dates referred to herein occurred in 1970. 2 The complaint alleges (par. 10) as the violative conduct in this case that "On or about August 3, 1970, Respondent instituted an incentive program for certain employees [women who adhere insulating surface to the interior of the "Western Electric box" ] without any prior notification, discussion or bargaining with the Union," as constituting the violative conduct of the Respondent, and it is this conduct which was asserted as the violation by General Counsel throughout the hearing and in its brief ; the question whether Respondent's unilateral institution of an incentive pay system for its employees constituted a modification under sec. 8(d) of the written terms Massachusetts corporation, operating a sheet metal job shop in Watertown, Massachusetts, annually ships prod- ucts valued in excess of $50,000 to points located outside the Commonwealth of Massachusetts, and annually receives materials valued in excess of $50,000 directly from points located outside the Commonwealth of Massachu- setts. Upon these admitted facts, I find that Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED It is further admitted, and I find, that Local 209, International Union of Electrical, Radio and Machine Workers, AFL-CIO, is a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES The Respondent Company operates a sheet metal job shop, handling as many as 1,500 to 2,000 different jobs a year; occasionally the Respondent has undertaken a long run job such as the "Western Electric box" job involved in this case. The sole question which is in dispute in this proceeding is whether the Respondent violated Section 8(a)(5) and (1) of the Act when admittedly it instituted an incentive wage system for those of its employees whose job it is to adhere a phenolic substance to the interior of the Western Electric box.2 It is admitted that at all times since 1956, the Union has been and is now, the statutory bargaining representative under Section 9(a) of the Act for all Respondent's production and maintenance employees, including the employees put under the incentive program.3 The Respondent, beginning in 1957 has had successive collective-bargaining agreements with the Union .4 The present contract is effective from March 23, 1970, until March 23, 1973. Article XXI of the present contract states: WAGES Effective as of March 14, 1970, the hourly rates of pay in existance [sic] prior thereto of employees in the collective bargaining unit shall be increased by 5%; effective March 24, 1971, these increased rates shall be further incrased [sic] by 4%; effective March 24, 1972, these rates shall be still further increased by 4%. The minimum increases in each of the three (3) years will be ten (10) cents per hour. These new rates shall be in effect during the term of this agreement; provided, however, that nothing herein contained shall prevent the Company from making promotional or merit increases. of the contract between the parties (See C & S Industries, Inc., 158 NLRB 454) was not presented for adjudication at this proceeding and is not passed on by the Trial Examiner. 3 The appropriate unit for the purpose of collective bargaining within the meaning of Sec. 9(b) is: All production and maintenance employees including the timekeeper, of Respondent employed at its Watertown, Massachusetts, plant, exclusive of office clerical employees, professional employees, guards and all supervisors as defined by Section 2(11) of the Act. * Unless otherwise indicated the facts set forth hereinafter are not in dispute. PEERLESS PRESSED Merit increases shall continue to be given by the Company at its sole discretion. Beginning March 24, 1970 for each 5 percent rise in the Consumer Price Index (C.P.I.) the hourly rate for all Union employees will rise by $.02/HR. Any decrease of 5 percent in the C.P.I. will reduce the hourly rate by $.02/HR. The base reference date for the C.P.I. as agreed between the parties will be February 1, 1970. On or about August 4, employee Albert R. Szymanczyk, the president of Local 209, was advised by fellow employee Edward Vecchia of a rumor that certain women employees on the Western Electric job were working under an incentive pay system. That same day, Szymanczyk request- ed and was granted permission to see Richard Sparrow, the company president in his office. Szymanczyk asked Sparrow to "dispel the rumor" he had heard that the women cementing the phenolic on the Western Electric job were under an incentive pay system. Sparrow replied that the incentive system for these employees had been put into effect the previous day. When Szymanczyk questioned whether Sparrow had the right to do this under the contract, Sparrow took the position that there was nothing in the contract that prevented him from doing so. Szymanczyk stated he was not sure of this and that he would need further advice from the Union's district office; this concluded the meeting. On August 11, the Union filed the charge herein. The Company has continued the disputed incentive system to date. Prior to the onset of union representation in 1957, the Company had maintained incentive systems in the plant. Beginning with the first negotiated contract with the Union in 1957 and continuing through successive contracts to the present, the contractual wage provisions, like that in the present contract, has provided merely for percentage increases, or increases in stated amounts over the prior existing hourly wage rate. Thus the successive contracts between the parties have provided for hourly wage rates only. As noted, the negotiation of the first contract between the parties in 1957 resulted in a wage provision providing for hourly wage rates only and the prior existing wage incentive systems were discontinued. According to the credited testimony of William Burke who was then president of Local 209 and present at the negotiations, the parties mutually agreed at the outset of the negotiations to drop all incentive systems for the reason that there had been too many accidents at the plant during the period incentives were in effect. Burke explained further that this mutual agreement of the parties occurred before the parties went into the first contract writing and for this reason the contract, while it in fact provided only for hourly wage rates, made no express reference to the elimination of incentive wages .5 The wage rates for all unit employees in the plant continued to be hourly rates until 1965 when the Company 5 Burke impressed me as an honest and reliable witness. Sparrow did not expressly deny that such a mutual understanding was reached but only that he could not "recall" it and believed that if there had been such an understanding it would have been included in the written agreement . I note, too, that Burke's testimony is supported by the fact that starting with the first contract all previously existing incentive wage payments stopped and all employees were put on a straight hourly wage rate. METAL CORPORATION 565 acquired a new division called the Leaktite Division. About 3 months prior to its acquisition, Company President Sparrow approached Burke, still union president, to discuss the possibility of purchasing Leaktite,6 and to seek the Union's approval to continue the incentive system the employees of Leaktite were then receiving if the Company were to acquire Leaktite. Burke explained to Sparrow that although he was the Union's president he could not make the decision on his own but would have to take the matter up with the other union officers and the membership. Burke stated he would discuss the matter at the next regularly scheduled meeting of the Union, and would give Sparrow an answer at a later date. Thereafter, at a union meeting Burke explained to the other members, as Sparrow had to him, that the acquisition of Leaktite if profitable would benefit them all since the employees would share in the profits through merit increases (which was provided for in the contract). Burke then met with Sparrow and informed him of the agreement of the union officers and membership to have the incentive system "come along" with Leaktite for the employees involved in that operation. At Burke's suggestion Sparrow called a meeting of the employees and inter alia explained the technicalities of the job and the reason why an incentive system was necessary for the success of the Leaktite production. Following the acquisition of Leaktite 7 the other employ- ees continued to work under an hourly wage rate. During the negotiations which lead to the 1967 contract, Sparrow expressed his satisfaction with the results of the incentive system in the Leaktite operation and stated that he would like to consider putting in incentive systems for long run jobs when they were received. According to Sparrow since the Company as a job shop handled from 1,500 to 2,000 jobs a year, each of which involved relatively few employees and relatively few pieces, an incentive system ordinarily was not practicable. However, occasionally, the Company received a job which would run for a year or more like the Western Electric mounting job which at the time of the 1967 contract negotiations was then 50 percent completed. It was to this kind of job that Sparrow expressed his interest in applying an incentive system. According to Sparrow, Vecchia, then vice president of the Union and one of its four-man bargaining team,8 indicated that the Union was not delighted with the idea but gave Sparrow the "impression" that the Union could not stop the Company from doing it. Vecchia testified that Sparrow asked him what he had against people making money through a bonus system and he had replied that he "had nothing against money if you want to give money to these people you go right ahead and give it to them. I can't stop you." There was no discussion about an incentive system for any particular job at that time. The wage provision in the 1967-70 contract like those before it provided only for 6 Leaktite unlike the job work performed by the Company was continuously engaged in the manufacture of sheet metal paint buckets. 7 While a functionally separate operation , Leaktite employees were included in the bargaining unit. 8 Representing the Union in addition to Vecchia was Castignoli, president of the Union, Syzmanczyk, the union's secretary -treasurer, and Pat Castaldo, a union steward. 566 DECISIONS OF NATIONAL LABOR RELATIONS BOARD hourly wage rates and contained no mention of any agreement for incentive systems. During the negotiations of the current contract (which occurred between the first of February and March 21) incentive systems were discussed at the first meeting of the parties. Sparrow proposed the use of an incentive wage plan to the Union; no specific job was discussed. The Union rejected the Company's proposal of introducing an incentive system and offered as a counterproposal a profit- sharing plan. Sparrow in turn rejected the Union's counterproposal telling the Union to "forget it" and the matter was never discussed again during negotiations or at any later time before the institution of the incentive system which is the subject of this litigation .9 Concluding Findings The duty to bargain with the statutory representative set forth in Section 8(a)(5) of the Act as defined in Section 8(d) requires an employer to bargain concerning all matters relating to "wages, hours and other terms and conditions of employment;" this duty is a continuing one.10 Further, it is well settled that wage incentives are a mandatory subject of bargaining.ll And an employer may not unilaterally effect changes concerning these matters without prior notifica- tion to and bargaining with the Union.12 In addition, in fulfilling its statutory obligation concerning a change in a matter which is a mandatory subject of bargaining the initiative rests with the employer to provide prior notice to, consultation and bargaining with, the union before such change is put into effect. Notice to the union of a fait accompli does not eradicate the initial violation inherent in an employer's unilateral action, for the statutory obligation to bargain requires, among other things, that negotiation precede rather than follow changes in conditions of employment.13 The facts establish that from the onset of its representa- tive status in 1957 the Union has opposed the introduction of incentive systems in the plant, and further that before their first contract was drafted in 1957 the parties had orally agreed that there would be no incentive systems since their prior use had caused too many accidents. Moreover, the fact is that from 1957, apart from the special agreement restricted to employees in the Leaktite division, there have been no incentive wage systems in the plant until the institution on August 3 of the incentive wage system in dispute in this proceeding. Thus, whether or not there was a verbal agreement in 1957 prohibiting the use of incentive wage systems, it is clear that, except for the specially agreed-upon plan for Leaktite employees, the Company's method of wage payments had been restricted to hourly wage rates. Accordingly, the institution of incentive wages for the employees doing the cementing work in the Western Electric box job constituted a change in the wage system from that followed by the Company for a period of 14 years. Furthermore, it is undisputed that the Company did not inform the Union that it was instituting the incentive wage plan for the employees doing the cementing work on the Western Electric box job until after it had been put into effect on August 3, and that notification resulted from the special inquiry made on August 4 by Szymanczyk, who before that date was unaware of the Company's action. Respondent in defense of the lawfulness of its conduct has advanced at the hearing and in its brief several basic contentions which after consideration I find to be without merit. 1. Respondent urges that the pre-1957 practice of incentive wage payments in the plant and the absence of any express prohibition pertaining thereto permitted the complained of conduct. However, as has been discussed supra, starting with its first contract in 1957, and thereafter, all incentive wage systems were dropped; the wage payment practice followed by the Company for the last 14 years, apart from the specially agreed-upon incentive plan for Leaktite, has been the payment of hourly wage rates. It is the contemplated change in an existing practice as it relates to wages or other working conditions which imposes on the employer the statutory obligation to give prior notification to and bargaining with the Union; this obligation is not altered by the absence of an express term in the contract prohibiting such change.14 2. Respondent further contends that the discussions pertaining to incentive wage plans during the 1967 and 1970 contract negotiations fulfilled its statutory obligation to give prior notice and bargaining with the Union before instituting the incentive wage plan involved herein. But the discussions during the 1967 negotiations consisted merely of Sparrow's expression that he was pleased with the way Leaktite had worked out and that he would like to consider putting in incentive systems for other long run jobs in the future and intended to do it. In the 1970 negotiations when incentives were also discussed Sparrow again proposed that incentive wage systems be used for long run jobs. On neither occasion, however, was any particular job dis- cussed, although according to Sparrow, at the 1970 negotiations he had the Western Electric box job in mind. The Board has rejected the view that an employer satisfies its statutory bargaining obligation by simply notifying the representative of its employees that it contemplates modifying working conditions at some indefinite time in the future, stating "Such notification cannot serve to create 8 The facts set forth are based on the testimony of Szymanczyk with which Sparrow's testimony is not basically in conflict. According to Sparrow, at the negotiation meeting he stated that he intended to go ahead with an incentive system on long run jobs. Sparrow testified he had the Western Electric job box in mind; however, he did not testify that he indicated any specific job to the Union. Sparrow further testified that the Union responded that it still did not want incentive systems and came back with a counterproposal for profit-sharing. Sparrow then told the Union he was not interested in profit-sharing and the discussion ended right there. According to Sparrow, International Union Representative Carter, a member of the bargaining team, commented that the Union did not want anything taken away from them. '° T.T.P. Corporation, Jam Handy Productions Division, 190 NLRB No. 48. 11 C & S Industries, Inc., 158 NLRB 454; Providence Journal Company, 180 NLRB No. 103; N.LR.B. v. C & C Plywood Corp., 385 U.S. 421. 12 N.LR.B. v. Katz, et at d/b/a Williamsburg Steel Products Co., 369 U.S. 736; C & C Plywood Corporation, supra; Providence Journal Company, supra. 13 Central Illinois Public Service Company, 135 NLRB 1407, 1416-17; affd. 324 F.2d 916 (C.A. 7); General Electric Company, 177 NLRB No. 43. 14 Central Illinois Public Service Company, supra Seattle First National Bank, 176 NLRB No. 97. PEERLESS PRESSED METAL CORPORATION for the employer a continuing option to affect a unilateral change in working conditions whenever it chooses." C & S Industries, Inc., supra, 456. 3. Although Respondent's position in this respect is not entirely clear, it appears to be its further contention that the Union had waived its statutory right to be consulted in advance with regard to the imposition of the incentive wage plan in question. Apart from the Union's past history of opposition to incentive wage plans as a method of compensation, the record establsihes that when Sparrow during the 1970 negotiations preceding the current contract proposed the use of an incentive plan for long run jobs it was rejected by the Union. The Union's counterproposal for a profit-sharing plan rejected by the Company ended any discussion on the matter and incentive wages were not discussed thereafter. To the extent that Respondent, as it claims, may have understood Vecchia's statement during the 1967 negotiations-i.e., that he could not stop the Company from paying the employees more money-as providing Respondent with a green light to institute an incentive wage plan in the future,15 it was plainly disabused of this by the clear position taken by the Union in the 1970 negotiations which led to the current con- tract.16 The foreoing and the other evidence disclosed by the record provides no support for the Respondent's contention that the Union waived its statutory right to be notified and provided with the opportunity for bargaining before Respondent instituted a change in the method of wage payments. The Board has consistently held, as stated in Proctor Manufacturing Co., 131 NLRB 1166, 1169: The Board's rule, applicable to negotiations during the contract term with respect to a subject matter which has been discussed in precontract negotiations but which has not been specifically covered in the resulting contract, is that the Employer violates Section 8(a)(5) if, during the contract term, he refuses to bargain or takes unilateral action with respect to the particular subject, unless it can be said from an evaluation of the prior negotiations that the matter was "fully discussed" or "consciously explored" and that the Union "con- sciously yielded" or clearly and unmistakably waived its statutory right to bargain over the matters in dispute. Nor does this record support a finding as Respondent also apparently urges that the parties reached an impasse on the issue concerning Respondent's freedom to institute incen- tive wage plans, thus justifying the Respondent to act unilaterally in that regard. The evidence shows that it was the Respondent and not the Union which cut off further exploration of the subject matter of incentives. For upon the Union's initial rejection of Respondent's incentive wage proposal and its counterproposal of profit-sharing, it was Sparrow who said "forget it" and ended further discussion on the matter. So far as appears, there was at no 15 It is unlikely in any event that Vecchia's statement in the context made was meant to represent the Union's firm approval of any and all incentive plans which might eventually evolve for a particular job in the future. Since the Respondent itself had no job in mind, Vecchia's general statement could not be reasonably understood as providing Respondent carte blanche with regard to the future introduction of any wage incentive plan without any discussion as to the terms involved. I note, too, that in any event no action was taken based on this statement during the 1967-70 567 time any specific discussion of any particular job to be covered by the proposed incentive plan, the employees involved, the production standard to be used, or the incentive rates to be applied. 4. Finally, Respondent urges (for the first time in its brief) that the Company's action was lawfully undertaken under the wage provision of the contract permitting the employer to make "merit increases" at its "sole discretion," an argument I find to be without substance. By its terms "merit increases" are a fixed reward for past work performance by a particular employee, whereas "incentive wage" rates are a continuing inducement to the employee which promises greater future earnings when and as the employee produces additional units above a fixed stand- ard.17 That the usual meaning of these terms and the resulting difference in wage payment was intended and understood by the employer and Union is evidenced by the Union's agreement to "merit increases" and its historical opposition to incentive wage plans. I find that when Sparrow in response to Sczymanczyk's inquiry regarding the Company's institution of incentive wages was told they had been put in effect, both parties fully understood that what was being discussed was something other than merit wage increases. Accordingly, I conclude that Respondent's unilateral institution of an incentive wage plan for its employees adhering insulating surfaces to the interior of the Western Electric box job without prior notice to and bargaining with the Union violated Section 8(a)(1) and (5) 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 the operations of the Employer 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 now thereof. THE REMEDY Having found that Respondent has engaged in unfair labor practices in violation of Section 8(a)(1) and (5) of the Act, I shall recommend that it be ordered to cease and desist therefrom and take certain affirmative action designed to effectuate the policies of the Act. Specifically, I shall recommend that Respondent, upon request of the Union, return to the status quo ante by discontinuing the payment of incentive wages for the employees who adhere insulating surfaces to the interior of the Western Electric box job and that it bargain with the Union concerning the payment of incentive wages for these employees or any other changes in terms or conditions of employment. contract. 16 In view of the Union's rejection of Sparrow's incentive wage proposal during the 1970 negotiations, I find, contrary to Respondent's argument, that International Union Representative Carter's comment at that time that "we don't want anything taken away from us" pertained to the Union's historical opposition to incentive wage plans. 17 See C & C Plywood Corp., 148 NLRB 414,417. 568 DECISIONS OF NATIONAL LABOR RELATIONS BOARD On the basis of the foregoing findings of fact, and upon the entire record in the case, I make the following: CONCLUSIONS OF LAW 1. Peerless Pressed Metal Corporation is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. At all times material Local 209, International Union of Electrical, Radio and Machine Workers, AFL-CIO, has been the exclusive bargaining representative of the employ- ees in the following unit: All production and maintenance employees, including the timekeeper, of Respondent employed at its Water- town, Massachusetts, plant exclusive of office clerical employees, professional employees, guards and all supervisors as defined in Section 2(11) of the Act. 3. Respondent has engaged in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act by unilaterally instituting an incentive wage system for certain employees (women who adhere insulating surfaces to the interior of the "Western Electric Box") without any prior notification to, or discussion or bargaining with, the Union. 4. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. [Recommended Order omitted from publication.]