Essex International, Inc.

ESSEX INTERNATIONAL, INC. 575 Essex International, Inc. and International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW, Petitioner. Case 7-RC-12422 February 12, 1975 DECISION AND CERTIFICATION OF RESULTS OF ELECTION BY MEMBERS JENKINS, KENNEDY, AND PENELLO Pursuant to a Stipulation for Certification Upon Consent Election executed by the parties and approved by the Regional Director for Region 7 of the National Labor Relations Board on May 15, 1974, an election by secret ballot was conducted in the above-entitled proceeding on June 13, 1974, under the direction and supervision of the Regional Director among the employees in the unit agreed to be appropriate. At the conclusion of the balloting, the parties were furnished a tally of ballots in accordance with the Board's Rules and Regulations, Series 8, as amended, which showed that there were approximately 433 eligible voters and that 416 valid votes were cast, of which 206 were for and 210 against the Petitioner, 3 were challenged, and 2 were void. The challenged ballots are not sufficient in number to affect the results of the election. On June 20, 1974, the Petitioner filed timely objections to conduct affecting the results of the election. After a preliminary investigation, the Regional Director issued and duly served upon the parties a notice of hearing on objections to resolve the issues raised with respect to the Petitioner's objections. Pursuant to said notice of hearing on objections, a hearing was held on August 8 and 9, 1974, in Traverse City, Michigan, before Hearing Officer Robert E. Day. On October 29, 1974, the Hearing Officer issued and duly served upon the parties his Report and Recommendations Upon Objections to Election in which he recommended that all objections except Objection 1 be overruled and that, in finding merit to Objection 1, the election of July '13, 1974, be set aside and a new election directed. Thereafter, the Employer filed timely exceptions to the Hearing Officer's report and a supporting brief and the Petitioner filed a reply brief answering the Employer's exceptions to Hearing Officer's report and recommendations.' 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. Upon the entire record in this case, the Board finds: 1. The Employer is engaged in commerce within the meaning of the Act, and it will effectuate the purposes of the Act to assert jurisdiction herein. 2. The Petitioner is a labor organization claiming to represent certain employees of the Employer. 3. A question affecting commerce exists concern- ing the representation of certain employees of the Employer within the meaning of Section 9(cXl) and Section 2(6) and (7) of the Act. 4. The parties stipulated, and we find, that the following employees constitute an appropriate unit for the purpose of collective bargaining within the meaning of Section 9(b) of the Act: All production and maintenance employees, employed by the Employer at its plants located in Traverse City, Michigan; but excluding truck drivers, office clerical employees, plant clerical employees, technical employees, engineering em- ployees, and confidential employees, professional employees, guards, watchmen-custodians, assist- ant foremen, foremen, and all other supervisors as defined in the Act. 5. The Board has duly considered the entire record in this case, including the Hearing Officer's report,2 the Employer's exceptions thereto, and the Petitioner's reply brief to the Employer's exceptions, and hereby adopts the findings and recommenda- tions 3 of the Hearing Officer only to the extent consistent herewith. The Hearing Officer, in recommending that Objec- tion 1 be sustained, found that the Employer interfered with the free exercise of employee voting rights under the Act when it announced changes in wages and other terms and conditions of employ- ment to its employees 13 days before the election. We disagree. On May 31, 1974, Plant Manager Ted Edginton held a meeting for each shift where he announced that everyone was going to receive a 20-cent-per- hour pay raise; that the Company was cutting the wage progression period so that assemblers would reach the top pay rate in 1 year instead of 2 and other ' On January 21, 1975, the Employer filed a letter with the Board contending that the unit previously agreed to by the Employer in a Stipulation for Certification Upon Consent Election is no longer appropri- ate because of changed circumstances and that the case is thereby rendered moot. On January 24, 1975, the Union filed a letter to the Board in reply to the Employer's contentions. In view of our decision, as hereinafter set forth, we need not rule on the Employer's contentions or the Union's opposition 216 NLRB No. 101 thereto. 2 The Hearing Officer's report and recommendations, in pertinent part, is attached as an appendix hereto. 3 In the absence of exceptions thereto , the Board adopts,proforma, the Hearing Officer's recommendation that the Petitioner be allowed to withdraw Objection 3 and that Objections 2 and 4 through 15 be overruled. 576 DECISIONS OF NATIONAL LABOR RELATIONS BOARD classifications would reach the top pay rate in 1-1/2 years instead of 2-1/2; and that the employees would be given an opportunity to vote on whether or not they wanted the Company to institute a pension plan in which 5 cents of the 20-cent-per-hour wage increase would be placed into a pension fund .4 The record indicates that every year since the Traverse City plant opened in 1966, the Employer has made its only wage and benefit presentation to the assembled employees in the last week of May or the first week in June and has effectuated the changes on the first Monday of the following July. The timing of the May 31, 1974, presentation did not deviate from this past practice. The substance of the May 31, 1974, presentation had been jointly determined 1 or 2 months prior to that date by Traverse City Plant Manager Edginton, the managers of two other Essex International plants in Michigan, and the division manufacturing manager. Identical presentations were made simultaneously at the other two Michigan facilities. Although the 20-cent-per-hour increase was higher than that which had been given in some of the preceding years, on at least one other occasion a 20- cent-per-hour increase had been granted, and, in 1973, a 19-cent increase included 13 cents for wages and 6 cents for insurance benefits. Also, the wage progression period had been reduced previously. Edginton testified without contradiction that the wage progression period was reduced in 1974 in order to attract more employees to the plant and to reduce the turnover rate of employees. Although granting employee benefits during the period immediately preceding an election is not per se ground for setting aside an election, in the absence of a showing that the timing of the announcement was governed by factors other than the pendency of the election, the Board will regard such timing as calculated to influence the employees in their choice of a bargaining representative.5 The burden of showing other factors is upon the employers We find that the Employer has met this burden here. As a general rule, an employer, in deciding whether to grant benefits while a representation election is pending, should decide that question as it would if a union were not in the picture.7 The Employer made its announcement at the same time and in the same manner as it had in the previous 8 years irrespective of the existence of a union campaign . Moreover, the announcement itself made no mention of the Union or of the pending elections A group of employees at * The employees voted against the creation of a pension plan. a Cf. Performance Measurements Co., Inc., 148 NLRB 1657, 1658 (1964); also see Performance Measurements Co, Inc., 149 NLRB 1451 (1964). e Id I Oxco Brush Division of Vistron Corporation, 171 NLRB 512, 513 ( 1968); The Great Atlantic B Pacific Tea Company, Inc., 166 NLRB 27, in. 1 (1967); the plant who opposed the Union's organizational efforts had formed a "Fact Committee" which distributed literature throughout the campaign. The Hearing Officer found, and we agree, that the Employer neither sponsored nor dominated the "Fact Committee" and that no agency existed between the Employer and the "Fact Committee." Following the May 31, 1974, presentation by the Employer, the "Fact Committee" distributed a letter in which it stated, "We feel we got a very good package this year! . . . We think this is a big improvement! Could the UAW do better?"; however in view of the complete independence of the "Fact Committee," there is no basis for finding that this letter supports the contention that the Employer's presentation was an effort to influence the employees in their choice of a bargaining representative. Nor do we find that the June 12, 1974, speech by Frank Gallucci, the Employer's corporate labor relations director, in which he made several references to the new rate of $2.70 per hour, suggests that the increase was motivated by the union campaign. A wage increase granted during the pendency of an election, which is somewhat in excess of that granted in prior years, is not necessarily objectionable conduct if it can be shown that the employer was motivated by valid business considerations.9 Here, the wage increases and progression time reduction were granted in order to reduce employee turnover and to attract new employees to the plant. The increases were granted during, a time of high inflation, and, in any event, when compared to the Employer's past practice, the amount of the 1974 package in both wage increases and progression time reduction was not excessive. Under all the circum- stances, any inference from the size of the increase of improper motivation is unfounded. It is also significant that the identical presentation made to the Employer's Traverse City employees was simultaneously made to the employees of two other Michigan plants owned by the Employer. In neither of those plants was there a pending election or an organizational campaign. It is somewhat inconceiva- ble that the Employer would have offered increased wages, a reduced progression period, and a pension plan, which it otherwise would not have offered, to all three plants in order to thwart the union campaign at only the Traverse City facility.10 Had the Employer granted the new benefits at the other facilities but withheld them at the Traverse City plant because of the pendency of the election, it might McCormick Longmeadow Stone Co., Inc., 158 NLRB 1237, 1242 (1966); also we Grede Foundries, Inc. (Milwaukee). 205 NLRB 39, ALJD part II (1973). 8 Oxco Brush Division of Vistron Corporation, supra. 9 Meter's Wine Cellars, Inc., 188 NLRB 153, 154 (1971). 10 See Freightmaster, a Division of Halliburton Services, 186 NLRB 3, 11- 12(1970). ESSEX INTERNATIONAL, INC 577 thereby have committed an unfair labor practice.ii Under the circumstances, namely, the past practice of announcing changes in wages and terms and conditions of employment at the same time every year, the absence of unjustified or excessive changes compared to past practice, and the fact that the same changes were announced at two other area facilities not involved in the union campaign, we conclude that the Employer did not attempt to influence the employees in their choice of a bargaining representa- tive, but rather it proceeded as it would have done had the Union not been on the scene.12 Accordingly, we find that the Employer did not engage in objectionable conduct by making its annual an- nouncement of changes in wages and other terms and conditions of employment on May 31, 1974, and we therefore overrule objection 1. As the Union has not received a majority of the valid ballots cast, we shall certify the results of the election. CERTIFICATION OF RESULTS OF ELECTION It is hereby certified that a majority of the valid ballots have not been cast for International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW, and that said labor organization is not the exclusive representative of all the employees in the unit herein involved, within the meaning of Section 9(a) of the National Labor Relations Act, as amended. 11 Gold Circle Department Stores, a Division of Federated Department Stores, Inc, 207 NLRB 1005 (1973), Grede Foundries, inc, supra, The Gates Rubber Company, 182 NLRB 95 (1970) 12 Although we note that the Petitioner, throughout its campaign, raised, inter alga, the issues of wages, progression periods, and pension plans, we find on the facts here that the Employer' s action in these areas was economically motivated and was not in response to this union literature APPENDIX VII. Objection 1: 1. Promised and/or put into effect changes in wages, hours, or other terms and conditions of employment to influence the election outcome. Petitioner contends that on May 31, 1974, Plant Manager Edginton held a meeting for each shift. Employees were told that the Employer would not hold up its annual wage increment as some source had alleged. (Presumably the UAW, but the record does not so indicate.) Employees were informed that plans for a new hospitalization plan were being worked up and the results would soon be passed on to them. Edginton then stated, This year everyone is going to receive 20 cents an hour increase across the board. We are also cutting one year off the bottom of the progression raises so that assemblers will reach top pay in one year instead of two. Other classifications will only take one and a half years instead of two and a half to reach the top. This means assemblers with less than one year of seniority will get 36 cents an hour. To offset this for people who have been with us longer, they are the top 99 people who not [sic] get 7 years, with 7 years seniority will get 3 Weeks paid vacation, plus we are, farther down in my talk, we're going to offer you a pension plan and Jerry Hope will make that presentation to you. On Monday, June 3, 1974, the employees voted not to have 5 cents of the 20-cent increase per hour go toward a pension fund. On June 7, 1974, a UAW letter dealt solely with the Employer's presentation of May 31, 1974. On or about the same date, the FC circulated its next to last leaflet . Contained therein is the following paragraph, We feel we got a very good package this year! Twenty cents across the board plus-for example, all the new people will be at $2.70 in one years time. After July 1, [1974] new employees start at $2.56 per hour and reach $2.70 in one year. We think this is a big improvement! Could the UAW do better? Plus still the possibility of improvement on our insurance. The record reflects that the elimination of the progression rate effectively brought all assemblers (newer employees) up to the highest comparable area standards for that job classification (Gallucci speech). Moreover, the 20-cent-an-hour increase meant much more than that figure for persons who were effected by the elimination of the progression rate. The record, supported both by the Fact Committee and Edginton's testimony, warrants a conclusion that the increase for newer employees could mean about 36 cents an hour increase. Each year since 1966 the Employer has made annual wage presentations. Without exception the presentations were made during the last week in May or the first week in June. Wage increases were uniformly effective the first week of July, the month following the announcement. Only in 1967 had the Employer initiated as much as a 20-cent-per-hour raise. The record reflects the fact that in prior years fringe benefits had 'been announced, increased, or made a cohditional part of a wage package. There is no indication of the extent of such fringe benefits, nor does the record indicate the fringes in existence as of May 31, 1974. At the time of Edginton's May 31, 1974, presentation similar announcements were simultaneously made at two other area Essex 578 DECISIONS OF NATIONAL LABOR RELATIONS BOARD facilities. Edginton testified that this year's presenta- tion had been delayed until the end of May. The decision as to what the wage increase would be was made a month or two prior to May 31, 1974. The delay was caused by some Essex official who was investigating a change in the hospitalization insur- ance which was alluded to in the May 31, 1974, speech. Petitioner contends that the wage increase, reduc- tion of time for progression raises and the hint of a better insurance and pension plan within 2 weeks of the election warrants setting aside the election. In support of this contention Petitioner asserts that this increase is the highest ever given and is directly related to campaign issues . The Employer contends that it had business justification for its increase, and that not only was this year's increase annual in nature, but it was also the same program presented at two other facilities. All prior presentations were made on an annual basis. Moreover, it is alleged that Petitioner anticipated this increase in its literature. The Board's long-established rule concerning the granting of benefits to employees during the preelec- tion period is that the granting of such benefits is not per se grounds for setting aside an election, but that such timing will be regarded as calculated to influence the employees in their choice of a bargain- ing representative, absent a showing that the timing of the benefits or the announcement thereof was governed by factors other than the pendency of the election. The burden of showing other factors is upon the Employer. i i I find that pay and benefit increases were in fact announced and implemented within the objectiona- ble period. I further find that the Employer has not sustained its burden of proof that the timing and announcement of such increases was unrelated to the pendency of the Petitioner's organizational campaign and the election. This report will assume that no adverse inference should be drawn from the delayed timing of the announcement. Clearly a past practice had devel- oped. The organizing drive began in December 1973, the petition was filed in April of 1974, the election agreement was taken on or about May 14, 1974, and the election was June 13, 1974. Sometimes it is of import that during or as part of a wage increase no reference or allusion is made to the Union or its organizing drive. N. L. R. B. v. Allegheny Mining Corp., 167 NLRB 81 (1967). Herein not much can be made of this factor because of the Fact Committee's subsequent reinforcement to employees shortly after June 3, 1974, of the import of this increase. No loose end exists after the Fact Committee states "Could the UAW do better?" Thereafter on June 12, 1974, Gallucci in detail sets forth area standards for assemblers. The denouement of his presentation of June 12, 1974, is that Essex employees are within 2 cents of the top hourly rate in the area. Then Gallucci tempers the import of this increase with the negative pregnant that anything at present in excess of $2.70 an hour is economically prohibitive. This message is suggested throughout his entire speech. The Employer could have done whatever he normally did in the past with wage increments. The record is silent on the nature of prior increments. Herein the Employer stops at a showing of regular annual wage announcements. The touchstone to this analysis is whether or not the nature of the increments was intended to undermine the Union. It has been noted how much the 1974 raises were, their impact on area standards, the constant subtle (Gallucci's speech) and not so subtle (Fact Commit- tee leaflet, P-6) references to the effect that the UAW is not necessary to achieve a better and more substantial wage increment. Increases a little out of the ordinary may not be objectionable, N.L.R.B. v. Meier's Wine Cellars, Inc., 188 NLRB 153 (1971). However, a wage increase which is out of line with all prior timely wage increases is sufficient to set aside an election. N.L.R.B. v. The Savings Bank Co., 207 NLRB 269. A new change in working conditions or wage rate which substantially undercuts the union organiza- tional drive and which is attuned to a major campaign issue should afford a basis to set aside an election, N.L.R.B. v. Sanford Finishing Corp., 175 NLRB 371 (1969). In Sanford like in this matter, the employer drastically cut the time it would take a new hire to reach top pay within their classification. Also in Sanford, the employer, as here, sought to justify the elimination of its progression system on the basis that it sought to reduce turnover and attract a better work force. The Board adopted an Administrative Law Judge finding on this issue. The Administrative Law Judge rejected the employer's defense and set aside the election. In Sanford, as in this case, there had also been an across the board wage increase granted along with elimination of progression steps. The wage increase was found by the Board not violative of the Act or tainted sufficiently to set aside the election. The basis for that finding was that the employer, like here, had established a pattern for such increases. However, the fact of a historical pattern for announcing and granting wage increases did not shelter the parallel elimination of job progression steps within a classification. The Admin- istrative Law Judge reasoned that the employer's t I Performance Measurements, Inc, 148 NLRB 1657 ( 1964), International Shoe Company, 123 NLRB 682 (1959). ESSEX INTERNATIONAL, INC. conduct, viewed against what had been done in the past as well as the advent of the organizational drive, was designed to undercut the, momentum of the union campaign. Herein, unlike Sanford, the Em- ployer announced its elimination of progression steps. However, in this case the elimination could not have been clandestinely implemented as the UAW had criticized the Employer's progression system since early in 1974. I conclude the extraordinary nature of the increase was dictated by the union campaign. True, this is an inference, but an inference warranted by a close examination of surrounding circumstances and the form in which the extraordinary increase was presented.12 After May 31, 1974, many UAW campaign issues are rendered moot: (1) progression rates for assemblers; 13 (2) area standard wages; 14 and (3) a pension plan.15 A cursory examination of the sources in the record, cited in footnotes 12, 13, and 14, will reveal how early in the campaign and with what force the UAW 12 The Board has held that specifically remedying certain working conditions or employee complaints after knowledge of an organizing drive and the filing of a petition "warrants an inference" that the action is taken to "defuse the employees' union activity." NLR.B. v. American National Stores, Inc, 195 NLRB 127 (1972) In American National Stores, the Employer agreed to adjust its system of handling employee commissions. Prior to the union dnve, the situation existed and nothing happened to remedy the complaint. Enter the union, and the exact adjustment sought is achieved presumably with a uniformly advantageous effect on each 579 criticized the Employer's job classification progres- sion rate. Moreover, the impact and effect of the wage increase becomes exacerbated after May 31, 1974. The magnitude of the pay increase and its relationship to area standards are reinforced by constant subtle (Gallucci's speech of June 12, 1974) and not so subtle (Fact Committee leaflet, P-6, quoted above) campaigning. I conclude that the invariable tendency of the wage announcement was to suggest how needless a union would be. The vote spread in this election was only four votes. The wage presentation in the form chosen had interfered with the free exercise of employee voting rights under the Act. Accordingly, I recommend that Objection I be sustained. VIII. Recommendation: I recommend that all objections, save Objection 1, be overruled. Objection 1 is found to have merit, and it is recommended that the election of July 13, 1974, be set aside and a new election directed. employees' disposable income. 13 See Petitioner's Exh P-10 dated Jan 22, 1974, P-13 dated Feb 28, 1974, P-15 dated Mar 14, 1974, P-16 dated Apr 4, 1974, and especially P- 20 dated May 16, 1974. 14 Petitioner's Exh . P-13 dated Feb. 28, 1974; P-20 dated May 16, 1974. 15 Petitioner's Exh P- 10 dated Jan. 22, 1974, P-14 dated Mar 7, 1974, P-16 dated Apr 4, 1974, P-I8 dated Apr 18, 1974, P-19 dated May 9, 1974, P-20 dated May 16, 1974, P-21 dated May 23, 1974 and P-22 dated May 30, 1974.