Ellis-Bagwell Drug Wholesale Co.

ELLIS-BAGWELL DRUG WHOLESALE COMPANY Eilis-Bagwell Drug Wholesale Company and Barbara Ann Porter. Case 26-CA-6593 November 17, 1977 DECISION AND ORDER BY CHAIRMAN FANNING AND MEMBERS JENKINS AND MURPHY On July 28, 1977, Administrative Law Judge Charles W. Schneider issued the attached Decision in this proceeding. Thereafter, Respondent filed excep- tions and a supporting brief and General Counsel filed a response to the exceptions and a brief in support of the Administrative Law Judge's Decision. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the record and the attached Decision in light of the exceptions and briefs and has decided to affirm the rulings, find- ings,' and conclusions of the Administrative Law Judge, to modify the remedy so that backpay and interest is to be computed in the manner prescribed in Florida Steel Corporation, 231 NLRB 651 (1977),2 and to adopt his recommended Order. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board adopts as its Order the recommend- ed Order of the Administrative Law Judge and hereby orders that the Respondent, Ellis-Bagwell Drug Wholesale Company, Memphis, Tennessee, its officers, agents, successors, and assigns, shall take the action set forth in the said recommended Order. I The Respondent has excepted to certain credibility findings made by the Administrative Law Judge. It is the Board's established policy not to overrule an Administrative Law Judge's resolutions with respect to credibility unless the clear preponderance of all of the relevant evidence convinces us that the resolutions are incorrect. Standard Dry Wall Products, Inc., 91 NLRB 544 (1950). enfd. 188 F.2d 362 (C.A. 3. 1951). We have carefully examined the record and find no basis for reversing his lindings. 2 See, generally, Isis Plumbing & Heating Co., 138 NLRB 716 (1962). The Administrative Law Judge had recommended that interest on the backpay due be computed at 9 percent as sought by the General Counsel. As noted, however, we conform that award to that set out in our later-issued decision in Florida Steel, supra. DECISION STATEMENT OF THE CASE CHARLES W. SCHNEIDER, Administrative Law Judge: On March 17, 1977, Barbara Ann Porter, the Charging Party, filed the instant unfair labor practice charge against Ellis- Bagwell Drug Wholesale Company, Memphis, Tennessee, the Respondent, pursuant to the National Labor Relations 233 NLRB No. 96 Act, 29 U.S.C. 151, et seq. On April 1, 1977, the General Counsel, by the Regional Director for Region 26, issued a complaint and notice of hearing on the charge. Service of the charge, the complaint, and the notice of hearing, were duly made on the Respondent. On April 7, 1977, the Respondent filed an answer denying the commission of unfair labor practices. Upon due notice, a hearing was held before me on May 5, 1977, in Memphis, Tennessee. The General Counsel, the Charging Party, and the Respondent appeared at the hearing, and all parties were afforded full opportunity to be heard, to introduce and to meet material evidence, to present oral argument, and to file briefs. The Respondent filed a brief on June 8, 1977, and the General Counsel filed a brief on June 9. These have been considered. Upon consideration of the entire record, the briefs, and from my observation of the witnesses and their demeanor, I make the following: FINDINGS OF FACT 1. JURISDICTION Respondent is now, and has been at all times material herein, a corporation doing business in the State of Tennessee with an office and place of business located in Memphis, Tennessee, where it is engaged in the wholesale distribution of drugs and related products. During the past 12 months, Respondent, in the course and conduct of its business operations, purchased and received at its Mem- phis, Tennessee, location, products valued in excess of $50,000 directly from points located outside the State of Tennessee, and during the same period of time sold and shipped from its Memphis, Tennessee, location, products valued in excess of $50,000 directly to points located outside the State of Tennessee. Respondent is now, and has been at all times material herein, an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. Retail, Wholesale and Department Store Union, AFL- CIO, Local 772, herein called the Union, is now and has been at all times material herein a labor organization within the meaning of Section 2(5) of the Act. 11. THE UNFAIR LABOR PRACTICES The Issue The issue is whether Barbara Ann Porter was discharged for her union and concerted activities as contended by the General Counsel, or for improper conduct as contended by the Respondent. The Facts Porter, an office employee, was hired by the Respondent in April 1975 and discharged on March 7, 1977. It is conceded that Porter was a capable employee. Up to the time of her discharge she had received no reprimands or criticism of her work or of her conduct as an employee. At the time of her discharge, Porter divided her time between two jobs in the Respondent's office: one in the data processing department correlating inventory and 605 DECISIONS OF NATIONAL LABOR RELATIONS BOARD receiving records, the other handling overflow telephone orders in the sales department, and doing other miscella- neous clerical work in that department. In the inventory control work her supervisor was Jerry Rhodes, data processing manager. In the sales work her supervisor was Sales Manager William L. Russell, who, according to his testimony, made the decision to discharge Porter. Around February 1977, a campaign on behalf of the Union began among the Respondent's warehouse employ- ees. Ultimately an election was held in April 1977 which the Union lost. Porter's undenied and credited testimony is that, being interested in the possibilities of improving working conditions among the office employees, she contacted employees in the warehouse twice concerning union organization, and that on the second occasion she was advised that office employees could not join a warehouse union and would have to form their own. It is also undenied that during this period of time Porter discussed events in the warehouse campaign with members of the office force, as well as the matter of working conditions in the office. Supervisory officials in the office force, including Sales Manager Russell and Data Process- ing Manager Rhodes, were aware of such discussions among the office employees. Porter further testified that she sought to ascertain the attitude of the office employees toward a union of office employees, and that she indicated her own approval of such a development, though Data Processing Manager Rhodes and several employees identified by Porter as being among those to whom she spoke denied hearing Porter express any sentiments in favor of a union. In the totality of the case, and in view of the admitted or uncontradicted facts, I do not deem that conflict critical on the ultimate disposition of the case. However, insofar as the testimony is in conflict, I credit Porter's account. About February 25, 1977, the Respondent mailed a letter, apparently composed by Company President Robert Ellis III, to each warehouse employee, expressing the Respondent's views concerning the union campaign. The letter read as follows: Dear E-B Employee: Although the company has made greater progress in your working conditions this last 2 1/2 years than ever before, still a few seem not to be satisfied. It is my understanding that a number of you have been approached and told statements which I question. So that you may have both the points of view, I would like you to consider how the company has improved your benefits before someone persuades you to side against the management-me! Over the last few years, we have increased the pay rate of all employees. In fact, everyone received rate increases, some at lower rates received even a little more to help in todays world. The company at its own expense improved working conditions by air conditioning more working areas to make it comfortable for you. Many companies feel it is the employees obligation to report to work on time. At the company's expense, I was fortunate to acquire a parking lot which has just been paved to make it more convenient for you to work here. The company greatly improved your health insur- ance and expanded its coverage. Furthermore, the retirement program initiated many years ago, needed upgrading. I can assure you benefits were increased enormously. I joined the program myself which should indicate that I am sincere. It was freely admitted to me by one of the people trying to persuade you to sign up with another organization, "That working conditions here are good." An enjoyable working atmosphere is possibly due to the close harmony of all people down here. I believe this would change greatly if a labor organization were allowed to disrupt our company. Of interest to newer employees, this same individual tried to organize this company before and lost badly. I suggest if those people who are talking the company down truly felt it was a bad place to work, they would have left long ago. Obviously, it must be more to it than you or I have been told. Many Americans, 7 1/2 million, are looking for jobs. You have a good job. It is reasonable to expect that improved benefits will continue to be forthcoming based on what just outlined. [sic] I request you give this some serious consideration before you accept someone's words who is not in authority to represent the company. I want all our employees to be happy and successful here and have taken many steps in your behalf. My hope is that you will not be deceived by professional paid organizers, who are more concerned in selling memberships than your real future. What you should do is an individual choice. I recommend you sign nothing nor take sides without finding out all facts. I will be happy to answer your questions. Stick with what you know. Please don't bet on a previous loser. Jeff Robert The Jeff and Robert in the lower left hand margin of the letter are, respectively, Jeff White, warehouse supervisor, and President Ellis. Hearing of the letter, Porter sought to secure a copy of it, according to her testimony because of a report that the letter contained the Respondent's views as to union organization-a matter which she (and other office employees to whom she talked) considered of interest to office employees. On Monday, February 28, Porter found several dozen discarded copies of the letter in the wastebasket in the Respondent's mimeograph room. After reading the letter, and concluding that it was not confiden- tial, Porter took about a dozen copies and distributed them among office employees. She also posted one copy on the bulletin board in the office. Her motivation, as expressed in her testimony, was that: I felt that since the letter was addressed to Ellis-Bagwell employees and not to an individual and there was 606 ELLIS-BAGWELL DRUG WHOLESALE COMPANY nothing confidential in it, that all Ellis-Bagwell employ- ees should know what Mr. Ellis' position was on the union. Before distributing and posting the letter, Porter did not ask either of her supervisors for permission to do it. However, when Data Processing Manager Rhodes became aware of Porter's distribution of the document, he indicated no disapproval. At the time of Porter's distribution and posting of the letter, Sales Manager Russell was in New York city. On his return, on Friday, March 4, 1977, Russell learned of Porter's action. He then checked with Data Processing Manager Rhodes and other employees in the office to learn the extent of the distribution. Russell's further testimony is that on Monday morning, March 7, he reported the incident to President Ellis and told Ellis that it was time to terminate Porter's services. There is no indication in the evidence that Russell asked Rhodes for, or received from Rhodes, an evaluation of Porter's performance as a subordinate of Rhodes, or asked Rhodes' opinion as to her discharge. Later in the day, about 4:20 p.m., Russell called Porter into the office and discharged her. The testimony of Porter and Russell is in substantial agreement as to the essentials of the discharge interview, though there is some immaterial disagreement as to detail. Russell told Porter that she had "gotten herself so involved in things completely out of her purview that the time had come to terminate her." He also said that she had interfered in an area that was none of her business. Russell then asked Porter where she had got the letter and the reason for her action. Porter told him where she had got the letter. As to the reason for her action, she said, in sum, that she was interested in what President Ellis had to say about employee benefits and outside organizations. Finally, Russell gave Porter some advice. His testimony in this respect is as follows: I also said that I'd like to give you a little bit of advice. When you go to work some where else, and I'm sure that you will, you are a very capable individual and you can accomplish pretty much anything you want to provided you stay within your own area and out of other people's work area.' Sales Manager Russell did not interview Porter prior to her discharge, because, according to Russell, "I had already made up my mind what I was going to do," that is, to discharge her. His testimony as to why he asked Porter where she had got the letter is that it was because at that time he did not know. In view of the facts that in distributing the letter Porter had made no secret as to where she got it, and that Russell had questioned I The disagreement in Porter's and Russell's testimony is as to whether Russell also said, as Porter testified he did, that the area in which Porter had interfered was a "sensitive" one, and that Porter was "fanning the flames." Russell denied using those words. The discrepancy is of no evident materiality. 2 Thus the testimony of Sales Manager Russell: ... [S]he kept herself so involved in other people's business and carrying rumors around the office and that sort of thing. ... And the fact of having made distribution of any letter, regardless of what, was a strict violation of good office discipline. employees about the distribution, that testimony seems surprising. However, accepting it as true, it establishes that Russell decided upon the discharge before ascertaining Porter's source. Thus, for all the Respondent knew, a warehouse employee may have given Porter his or her letter. On the evening of her discharge, Porter telephoned Data Processing Manager Rhodes at his home and told him of the discharge. Rhodes said that Sales Manager Russell had been upset about the letter, but that he (Rhodes) had expected that the incident would "blow over." Rhodes further told Porter that he would give Porter a good recommendation. Contentions and Conclusions The General Counsel contends that the foregoing facts establish that Porter was discharged for union and concerted activities. The Respondent asserts that, though the discharge was triggered by the letter incident, and would not have been effected but for it-the discharge was the result of a combination of factors: the letter and other conduct of Porter's consisting of interference with other employees' work and spreading gossip and rumors.2 I am unable to credit the Respondent's evidence to the effect that matters other than Porter's distribution of the letter were factors in her discharge. In the first place, Sales Manager Russell described Porter as a "very capable" employee. I cannot accept the assertion that an employee of such general deportment as the Respondent portrays would be deemed capable. Secondly, it is noteworthy that Porter was never given a reprimand during the entire period of her employment by the Respondent; nor was her work, conduct, or deportment, ever criticized. I find it implausible that a supervisor with Russell's obviously high standards would tolerate such conduct without at least reproof. In the third place, neither Porter's nor Russell's version of the discharge interview reveals reference to any basis for her discharge other than the distribution of the letter. If Porter's general deportment had been a factor in her discharge, I believe that Russell, a careful and poised witness, would have told Porter so. Fourthly, Data Processing Manager Rhodes admittedly told Porter that he would give her a good recommendation. In my experience, supervisors do not normally volunteer to give good recommendations to employees who have been discharged for unsatisfactory performance; and there is neither evidence nor suggestion here that Rhodes' state- ment represented anything other than his genuine appraisal of Porter as an employee. Finally, there is no substantial probative evidence in the record of any such conduct by And again: 1W le had been dissatisfied with Mrs. Porter's activities in spending time with other employees, interfering with their work, spreading gossip and rumors around. In other words, disseminating information that she had picked up by looking at other things which were not in her area of business, creating gossip in the office and rumors and things of that sort with which we were dissatisfied and this [the distnbution of the letter] was the thing that brought it to a head." 607 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Porter, and such evidence as there is to that effect borders on the trivial.3 In sum, much of the evidence as to Porter's asserted peccadillos and shortcomings scarcely rises to the level of gossip. I cannot accept the assertion that such things affected her work, or that the Respondent seriously thought so. I therefore conclude that the Respondent's contentions as to Porter's work performance or deportment, offered as a basis for her discharge, constitute a pretext and afterthought, and in fact had nothing to do with the decision to terminate her employment. In my judgment the letter incident constituted the sole basis for that decision. Of course, if the other matters were factors in the discharge, they will not excuse it if Porter's actions in the letter incident constituted a protected concerted activity. The question then is, was the discharge because of the letter an unfair labor practice? I have concluded that it was. It is conceded that the letter was not confidential. Sales Manager Russell's testimony is that he did not care whether the office employees saw the letter: "That was not the point at all." Porter did not violate any written or oral rule of the Respondent in distributing the letter. The improprieties which the Respondent found in Porter's conduct in connection with the letter were stated by Sales Manager Russell at various points in his testimony. Thus, he testified, the office employees were "not concerned" in the warehouse campaign, and he did not want them involved in it; distribution of correspon- dence was "not a part of [Porter's] position"; Porter's action was a "violation of ordinary office discipline and procedure. The distribution of materials in which she was not concerned" to "other people to whom the letter is not directed." Porter thus overstepped her prerogatives. 4 In the circumstances presented, those considerations are not adequate justification under the statute for the discharge of Porter. Employees are entitled under the Act, in circumstances such as these, to dispense and to receive information relevant to union organization and concerted activity. While there are limitations as to the type of material, and the time, place, and manner of distribution, none are applicable here. The information was not confidential, the time, place, and manner of distribution were not factors in the discharge, the Respondent had no objection to the office employees seeing the letter, and the 3 Thus, on one occasion, according to Russell, he gave some work to another employee. Martha Major, in the presence of Porter, and as he did so Porter asked what it was, whereupon Russell rebuked her by telling her that it did not concern her. On another occasion, Russell asked Porter to make herself more available for sales telephone work, but there is no indication in the evidence that Russell was reproving Porter in any way in this instance. In such circumstances I can give no credence or probative value to vague, unspecific, generalizations by Russell and two of the office employees (both opposed to the Union) about her conduct, such as that it was "common talk" among the employees that Porter "spread rumors"; that she was "a very curious individual": that she "liked . . . rumors and gossip"; that she "liked to visit"; "liked to talk"; had a reputation for talking "to everybody"; was "known as a gossiper"; "didn't do the [inventory I work," though she had time enough to do it, despite the fact that Porter admittedly offered to help that witness with her work when Porter was caught up. Nor to testimony to the effect that she caused "dissension" and resentment among employees by disclosing their salaries to each other, testimony which upon exploration proved quite baseless, the evidence ultimately resolving itself material in the letter was of potential interest to all employees of the Respondent, office as well as warehouse. That some-or even all-of the office employees may not have been interested in a union, or even opposed to one, is of no materiality. As an employee, Porter had the right to engage in the activity of advising even uninterested employees of the Respondent, at appropriate times and in appropriate places, as to the Respondent's position vis-a-vis union organization and its position as to working condi- tions, whether in the warehouse or in the office, if they were willing to listen. For clearly such matters may affect all employees of the Respondent, and appropriate dissemi- nation of information as to them by an employee is essential to the informed exercise of the rights provided by Section 7 of the Act. It is clear that Porter's distribution of the letter proceeded from her interest in the conditions of employ- ment of office employees, and her own interest in stimulating concerted and union activity among those employees. The Respondent's view as to conditions of employment of the warehouse employees, and its views on union organization among those employees, was of bearing on concerted or union activity, actual or potential, among the office employees. But even if they were not, Porter's action in distributing the letter was protected by the statute. Section 7 guarantees the right of employees, among other things, "to assist" labor organizations, and to engage in "other concerted activities ... for mutual aid or protection." Thus, even if Porter's effort had been only to assist the warehouse employees, her action in doing so would have been lawful and protected. In disseminating the information, Porter may be considered, in the circum- stances, to have joined in the union and concerted activities of the warehouse employees. In these circumstances I conclude that the Respondent discharged Porter because of her union and concerted activities protected by Section 7 of the Act, thus violating Section 8(a)(l) of the Act. In addition, and independently, I find that, in the attendant circumstances, the discharge of Porter was a discrimination in her employment violative of Section 8(aX3) of the Act. For the discharge of an employee for disseminating to fellow employees informa- tion relevant to union and concerted activities among employees inevitably tends to discourage union member- ship. into a statement that Porter once assertedly told the witness that an employee had said that she had earned $300 in outside employment. Nor in testimony by the same witness to the effect that Porter had sought to eavesdrop by listening at the closed door of Sales Manager Russell's office. examination disclosing that on one occasion on her way to the water fountain Porter, in full view of the office staff, jokingly put her water glass to the wall of Russell's office as if it were a hearing device and pretended to be listening. 4 As Sales Manager Russell put it in his testimony: There was nothing confidential in the letter. It was merely the fact that Mrs. Porter had taken it upon herself to involve [herselfl in correspondence in which she was not concerned which was done by our secretary and was correspondence done by the president of the company, whether it was confidential or not confidential, should not have made any difference whatsoever. Distribution of it was not Mrs. Porterl's I prerogative, duty, or any other thing. 608 ELLIS-BAGWELL DRUG WHOLESALE COMPANY 111. THE REMEDY Having found that the Respondent has engaged in unfair labor practices, it will be recommended that it cease and desist therefrom and take certain affirmative action necessary to effectuate the policies of the Act. The Respondent having discharged Barbara Ann Porter in violation of Section 8(a)(1) and (3) of the Act, it will be recommended that the Respondent be ordered to offer Porter reinstatement to her former position or, if such position is no longer available, to a substantially equivalent one, without prejudice to her seniority and other rights and privileges. It will be further recommended that the Respondent be ordered to make Porter whole for any loss of earnings suffered by her. Interest The General Counsel requests that the interest rate on the backpay due Porter be 9 percent, rather than 6 percent as presently ordered by the Board in such cases. Originally the Board did not direct interest payments on backpay awards. However, in 1962 in the case of Isis Plumbing & Heating Co., 138 NLRB 716 (1962), the Board concluded that effectuation of the policies of the Act required the adoption of a requirement for the payment of interest at the rate of 6 percent on the amount of wages due. This requirement was subsequently extended by the Board to other types of monetary awards.5 In the Isis case the Board's decision did not indicate the basis for the selection of the 6-percent figure, except what may be inferred from the Board's explanation that interest payments would be in conformity with general principles of law, achieve a more equitable result, and encourage compliance with Board orders (supra, 720). At that time the 6-percent rate appeared to conform to governmental, judicial, and financial practice.6 The National Cash Register Company, 190 NLRB 581, 586 (1971): United States v. Philmac Mfg. Co., 192 F.2d 517, 519 (C.A. 3, 1951), where the Court said that the 6-percent rate was then "one hallowed by time," and "sufficiently orthodox that its selection cannot be described as arbitrary action." The General Counsel now requests the increase because of changes in such practices. Since 1962 the Board has declined, when requested or when recommended, to change the 6-percent figure. 7 However, so far as appears, those requests were not accompanied by any probative data supportive of the request. I See, as illustrative, Seafarers International Union of North America. Great Lakes District, 138 NLRB 1142 (1962) (reimbursement for illegal dues deduction); Central Illinois Public Service Companv, 139 NLRB 1407 (1962) (discontinuance of discount gas pnces to employees); K-D Manufacturing Compan), 188 NLRB 303 (1971) (Chnstmas gifts); Nickev Chevrolet Sales, Inc., 195 NLRB 395 (1972) (loss of sales prizes and use of demonstrator automobile); Associated Truck Lines, Inc., 196 NLRB 222 (1972) (increase in union initiation fee); Borden, Inc., Dairy & Services Division, 196 NLRB 1170 (1972) (insurance premiums and insurance claims); Bowen Transports, Inc., 196 NLRB 665 (1972) (pension payments and medical expenses); Local 3036, Neu, York City Taxi Driver Union, A F- ('10 (En Operating Corp.), 204 NLRB 427 (1973) (tips). 6 At the time Isris issued, 6 percent was the rate on federal tax claims, veterans reemployment claims, state statutes regulating legal interest, and many money judgments. The purpose of Board remedies in unfair labor practice cases is, to the extent practicable, to undo the effects of the unfair labor practices, and to deter their repetition, particularly those of a discriminatory nature; specifically, to restore the individual, where appropriate, to his job, and if possible, to compensate him for economic losses consequent upon the unfair labor practices. If the remedy adopted does not substantially accomplish those objec- tives, the Board's policies are to that extent subverted. The correlation of interest rates on backpay awards to econom- ic and other relevant factors may adversely affect the accomplishment of that objective. The loss of pay may force a discriminatorily discharged employee, not only into the job market, but into the money market as well. If the Board's award does not reimburse him adequately, he may be discouraged from exercising his statutory rights in the future. Equally, the offending employer or union may find it more profitable to pay the employee the inadequate interest rate and divert his earnings to more lucrative investments, or use them to avoid financing at higher rates of interest. In such circumstances the backpay award, instead of being a deterrent to unfair labor practices, may operate to subsidize them, thus encouraging disregard of the Act. 8 The same may be true, of course, where changes in operations are made in violation of the Act, or where illegal union dues or fines are exacted from employees. Unlike the previous cases in which the Board declined to increase the interest rate, in this case the General Counsel has provided substantial economic and other data of a public nature as to the increase in interest rates since the Isis case. In this respect it may thus be said that the issue is substantially one of first impression. These data, in general, consist of statistics and economic information compiled by the Federal Reserve Board and others, tables showing the legal rates of interest in the various states, and changes in interest rates on Federal obligations, corporate bonds, the mortage market, and consumer or installment loans. The findings herein as to financial and economic information are from that data. Interest rates are flexible and vary, not only with time, but according to other factors; the type of loan (install- ment, business, mortage), the amount of the loan, the fact and nature of any security, and the character of the borrower. Maximum "legal" rates of interest, those specified by laws of the various States or other local jurisdictions, have increased substantially over the years. In 1970 no State had a legal rate as high as 8 percent. Today there are eight such.9 The legal rates may, however, be illusory. They are often applicable only in the absence of 7 See B & G Chrysler-Plymouth. Inc., and its successor Bill George Chrysler-Plymouth. Inc., 186 NLRB 282 (1970); Regal Aluminum, Inc., 190 NLRB 468 (1971); The National Cash Register Company, supra; Russell Motors, Inc.; Amalgamated Local Union 3553, 198 NLRB 351 (1972): Fuqua Homes Missouri, Inc. 201 NLRB 130 (1973); Mercy Peninsula Ambulance Service, Inc., 217 NLRB 829 (1975); Hyster Company, 220 NLRB 1230 (1975). 8 See Oversight Heanngs on the National Labor Relations Act before the Subcommittee on Labor-Management Relations of the House Committee on Education and Labor, 94th Congress, Second Session, 761 (1976), where somewhat similar points were made. 9 It is of interest to note that in The National Cash Register case, supra. where the Trial Examiner, affirmed by the Board, declined to recommend a (Continued) 609 DECISIONS OF NATIONAL LABOR RELATIONS BOARD contrary agreement of the parties, and subject to escalation by various qualifiers. In a realistic sense, the "maximum" interest rate tends in fact to be the "minimum" rate prescribed by lenders, or the rate applicable when the parties have not agreed upon a higher one. Thus, the actual maximum allowable rate of interest is less than 8 percent in only two States (Pennsylvania and Michigan), and in the majority it ranges from 8 percent to 12 percent, often excluding consumer and installment loans, which may be higher. The data discloses substantial increases in interest rates over the years since the issuance of Isis. On small consumer loans, those likely to be resorted to by a wage earner suddenly deprived of his pay, the rate of interest may be as high as 45 percent (Colorado, Florida). The average prime rate (bank loans to short term borrowers or businesses having the highest credit-worthiness) increased from 4-1/2 percent, the year Isis issued, to 6.25 percent in January 1977, with intervening fluctuations as high as 12 plus percent. Thus, in January 1977 the increase in the prime rate was 38.9 percent over 1962. Basic rates on court money judgments have been increased in almost half of the U.S. jurisdictions over the past 8 years, and are now as high as 10 percent in some cases. Allowable interest on certain obligations owed to or by the U.S. government, such as under or over tax payments, was raised by Congress in 1975 to 9 percent (26 U.S.C. 6621). However, that rate is adjustable biennially by the Secretary of the Treasury in accordance with fluctuations in the prime rate, and as of February 1, 1976, the most recent adjustment, was 7 percent. The legislative history of that enactment discloses that the interest rate of grade Aaa corporate bonds rose from 3.6 percent in 1935 to around 9 percent in 1974. Yields on federally insured mortages (VA, FHA) in private secondary markets rose from 4 to 4-1/2 percent in the immediate post World War II years, and 5.46 percent in 1963, to an average 8.93 percent in August 1976, the latest figure given. Thus, such rates have increased 63.5 percent since the issuance of Isis. On uninsured loans, mortage rates may, of course, be substantially higher. Mortgages, along with bank, building and loan, and other types of savings accounts, are a likely source of financial tide-over to a discriminatorily discharged employee. In sum, the data indicate that the 6-percent interest rate on backpay awards no longer reflects economic realities. As to the discriminatee, the 6-percent rate may be considered punitive, since it does not recompense him fully for his losses, thus effectively penalizing him for engaging in the activity which the Act was designed to protect, and in a very real sense discouraging his further involvement in it. So far as the offender is concerned, the 6 percent rate encourages and subsidizes continued defiance of the Act. change in the interest rate, the Trial Examiner said (fn. 12): "In none lof the States] is the legal rate as high as the 8 percent requested by the Charging Party." '0 See U.S. v. Philmac Mfg. Co., 192 F.2d 517, 519 (C.A. 3, 1951), where, over objection that comparable interest rates were substantially lower, the Court found valid a 6-percent rate of interest established by a government renegotiation board for the recapture of excess profits. What the Court said there may be applicable here: In these circumstances, I consider the General Counsel's request for an increase in the interest rate on backpay awards warranted by the facts and the policy consider- ations. As the Supreme Court of Rhode Island said of the 6-percent legal interest rate in that state 7 years ago: "This is hardly a realistic rate in today's money market ... " Anderson v. Anderson, 103 R.I. 202, 26 A2d 56, 61 (1970). Manifestly, Board policy should have a reasonable measure of stability, and ought not to be subject to temporary fluctuations in conditions, or modified without substantial cause. However, when conditions change basically, the premises for the policy may no longer be applicable and the policy itself no longer apt. In such case, considerations of stability should not preclude reexamina- tion of the policy. The status quo is itself usually the product of change, as the history of the Board's dealing with the interest problem demonstrates. It should not be supposed that that reform is the final word. While there is always some vertical movement in the money market, the predominant long term trend of interest rates since Isis has been upward. The basic movement can no longer be described as a temporary fluctuation. The trend has been so pronounced as to cause other agencies of government to raise their interest rates. In these circumstances, revision of the Board's policy seems in order. As to the amount of the increase, 9 percent is a reasonable figure. It is the basic rate prescribed by Congress in 1975. It is 1 percent less than the interest rate on money judgments in a number of States. It is substantially less than what a jobless discriminatee would have to pay to finance his household and other necessary expenses through small loans. In accordance with the views expressed by the Board in the Isis case, in adopting the 6- percent interest requirement, the 9-percent rate seems "in conformity with general principles of law," achieves "a more equitable result," and "[encourages] compliance with Board orders." (Id, 720). As in Isis "the additional burden imposed on the wrongdoer . . . is, in all but the unusual case, a relatively minimal burden." (Ibid.) It may be added that it also removes a potential impediment and restraint upon employees' exercise of the rights accorded them by the Act. Finally, without being punitive, the increased rate may stimulate prompter payment of backpay claims.' 0 I therefore recommend that Porter's backpay award include a provision for interest thereon at the rate of 9 percent per annum, as necessary to fully effectuate the policies of the Act. On the basis of the foregoing findings and conclusions, and pursuant to Section 10(c) of the Act, I hereby issue the following recommended: [Ilt has seemed pretty clear to courts handling cases arising under the Renegotiation statutes that one of the objectives to be attained was prompt collection from those who owed the government money. A substantial rate of interest aided in attaining this objective. See also the legislative history of the 1975 amendment to 26 U.S.C. 6221 raising the Federal interest rate to 9 percent, indicating that a purpose of the legislation was to provide an incentive for prompt payment of taxes and refunds. 610 ELLIS-BAGWELL DRUG WHOLESALE COMPANY ORDER" The Respondent, Ellis-Bagwell Drug Wholesale Compa- ny, Memphis, Tennessee, its officers, agents, successors, and assigns, shall: i. Cease and desist from: (a) Discharging or otherwise discriminating against employees because they engage in union or concerted activities. (b) In any other manner interfering with, restraining, or coercing employees in the exercise of the rights guaranteed in Section 7 of the Act. 2. Take the following affirmative action designed to effectuate the policies of the Act: (a) Offer Barbara Ann Porter reinstatement to her former position or, if that position no longer exists, to a substantially equivalent position, and make her whole for any loss she may have suffered by reason of our discrimination against her in the manner set forth in the Remedy section above. (b) 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 to analyze the amount of backpay due under the terms of this Order. (c) Post at its place of business copies of the attached notice marked "Appendix."' 2 Copies of said notice, on forms to be provided by the Regional Director for Region 26, after being duly signed by the Respondent's representa- tive, shall be posted by the Respondent immediately upon receipt thereof, and be maintained by it for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respondent to ensure that said notices are not altered, defaced, or covered by any other material. (d) Notify the Regional Director for Region 26, in writing, within 20 days from the date of this Order, what steps the Respondent has taken to comply herewith. " In the event no exceptions are filed as provided by Sec. 102.46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, and recommended Order herein shall, as provided in Sec. 102.48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and Order, and all objections thereto shall be deemed waived for all purposes. 12 In the event the Board's Order is enforced by a Judgment of the United States Court of Appeals, the words in the notice reading "Posted by Order of the National Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board." APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR R.ELATIONS BOARD An Agency of the United States Government After a hearing, the National Labor Relations Board has ruled that we discharged Barbara Ann Porter in violation of the National Labor Relations Act because of her union and concerted activities. To remedy the effects of such action by us, the Board has directed that we take certain remedial action. In compli- ance with the Order of the Board, we hereby notify our employees that: WE WILL NOT discharge, or in any other manner discriminate against, employees for engaging in union or concerted activities. WE WILL NOT in any manner interfere with our employees' exercise of the rights guaranteed them by the National Labor Relations Act. WE WILL offer Barbara Ann Porter immediate and full reinstatement to her former position or, if such position no longer exists, to a substantially equivalent position, without prejudice to her seniority or other rights and privileges, and reimburse her, with interest, for any loss of pay she suffered by reason of her discharge by us. ELLS-BAGWELL DRUG WHOLESALE COMPANY 611