Creative Engineering, Inc.

582 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Creative Engineering, Inc. and United Steelworkers of America. Case 25-CA-7421 March 4, 1977 DECISION AND ORDER BY CHAIRMAN MURPHY AND MEMBERS FANNING AND JENKINS On September 29, 1976, Administrative Law Judge Elbert D. Gadsen issued the attached Decision in this proceeding. Thereafter, Respondent filed excep- tions and a supporting brief, and the General Counsel filed limited 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 conclusion2 of the Administrative Law Judge as modified herein. The Administrative Law Judge found, and we agree, that Respondent violated Section 8(a)(5) of the Act by refusing to bargain with the Union after the collective-bargaining contract expired on March 1, 1975, and by withdrawing recognition of the Union in the absence of objective considerations to support a reasonable doubt of the Union's majority. We further find that such conduct also violated Section 8(a)(1) of the Act.3 The General Counsel has excepted to the failure of the Administrative Law Judge to find that Respondent also violated Section 8(a)(5) of the Act as alleged in the complaint by bargaining individually with nonunion employees hired after the contract expired concerning wages and working conditions and by unilaterally and without notice to the Union refusing to follow the established conditions of work regarding supervisors' performing bargaining unit work. We find merit in the General Counsel's exceptions. The record shows that, after Respondent laid off unit employees covered by the collective-bargaining contract around February 1975 because of economic ' We do not adopt the Administrative Law Judge's finding, stated in In 2 of his Decision, that Respondent's attorney, Blankenship, credibly testified that he offered the Union an opportunity to examine its books . Attorney Blankenship did not appear as a witness and the sole discussion of the alleged offer was the following exchange between Blankenship and the Union's staff representative, Donald Tobin , during cross-examination of the latter Q. Did we also at that particular time, Mr. Tobin, offer to let you look at the Company books A That part I do not recall - I'm not saying you did and I'm not saying you didn't reasons, it thereafter hired new employees in the spring and summer of 1975 to perform unit work. The individuals hired were not members of the Union, and Respondent's president testified that the wage rates were, in effect, established by bargaining directly with the individual applicants without regard to the wage rates and fringe benefits which were paid under the recently expired collective-bargaining contract. The wage rates were below the union scale and certain fringe benefits were eliminated. In addition, the record shows that Respondent permitted supervisors to perform bargaining unit work during the same period. The use of supervisors for unit work was prohibited under the agreement with the Union except under certain specified conditions. Admittedly Respondent did not notify the Union nor bargain with the Union concerning the utilization of supervisors. Accordingly, we find on the basis of the above conduct that Respondent violated Section 8(a)(5) and (1) of the Act. Remedy In view of our findings above we revise the recommended remedy of the Administrative Law Judge to require that Respondent also cease and desist from individually bargaining with individual employees and from permitting supervisors to per- form bargaining unit work in derogation of estab- lished practices. In addition, we shall require Re- spondent to make the nonunion employees hired whole for any loss of pay or other benefits that they may have suffered by reason of Respondent's refusal to pay them wages and fringe benefits established through collective bargaining with the Union, plus 6- percent interest. Because the bargaining unit employees who are members of the Union and were laid off on and around February 1975 are no longer employed by Respondent, so far as the record shows, we shall require that, in addition to posting the attached notice at Respondent's plant as recommended by the Administrative Law Judge, Respondent shall be Also, in the same footnote the Administrative Law Judge inadvertently indicated that the Union contacted Respondent in October 1975, rather than by letter dated September 30, 1975, that it wished to resume bargaining 2 In agreeing with the Administrative Law Judge that Respondent violated Sec. 8(a)(1) and (3) of the Act by not calling the laid-off unit employees back to work, we rely on, in addition to the rationale set forth in his Decision, the admission of Respondent's president, Crandall, that the laid-off employees were not called back because they were union employees and that people could be hired off the streets for less money. 3 In adopting the Administrative Law Judge's Conclusion of Law 3, we additionally conclude that Sec. 8(a)( I) was violated. 228 NLRB No. 67 CREATIVE ENGINEERING 583 required to mail a copy of the notice to the laid-off union employees.4 Additional Conclusions of Law Insert the following as conclusions 5 and 6 and renumber conclusion 5 as 7: "5. By individually bargaining with individual applicants for employment on and after April 14, 1975, as to wages and working conditions, Respon- dent violated Section 8(a)(5) and (1) of the Act. "6. By allowing supervisors to perform bargain- ing unit work on and after April 14, 1975, without notice to and bargaining with the Union and in derogation of established practices, the Respondent violated Section 8(a)(5) and (1) of the Act." ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board hereby orders that the Respondent, Creative Engineering, Inc., Elkhart, Indiana, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Unilaterally changing terms and conditions of employment by hiring new nonunion-member em- ployees at a lower rate of pay. (b) Unilaterally changing a substantial part of its production work to engineering work. (c) Refusing to recall any of its union-member laid- off employees to perform unit production work. (d) Withdrawing recognition of the Union in the absence of reasonable and objective considerations to support a good-faith doubt that the Union continued to enjoy majority status. (e) Discriminating in regard to tenure of employ- ment of its union-member laid-off employees, there- by discouraging membership in the Union or other labor organization. (f) Bargaining with individual employees as to wages and working conditions. (g) Permitting supervisors to perform bargaining unit work. (h) In any other manner interfering with, restrain- ing, or coercing employees in the exercise of their rights guaranteed in Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act: (a) Upon request, bargain with United Steelwork- ers of America as the exclusive representative of Respondent's employees in the unit herein found appropriate, and embody any understanding reached in a signed agreement. (b) Offer to those union-member laid-off employ- ees whom Respondent would have recalled to perform the work Respondent hired new nonunion- member employees to perform reinstatement to their former positions or, if such positions no longer exist, to substantially equivalent positions, without preju- dice to their seniority or other rights previously enjoyed, and make them whole for any loss of pay suffered by reason of the discrimination against them with interest at the rate of 6 percent, in the manner described in the section entitled "The Remedy." (c) Make the nonunion employees hired as the result of individual bargaining in the spring and summer of 1975 whole for any loss of pay and benefits in accordance with the established wage scale and established fringe benefits schedule, with interest in accord with F. W. Woolworth Company, 90 NLRB 289 (1950), and Plumbing & Heating Co., 138 NLRB 716 (1962). (d) 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. (e) Post at Respondent's plant in Elkhart, Indiana, copies of the attached notice marked "Appendix." 5 Copies of said notice, on forms provided by the Regional Director for Region 25, after being duly signed by Respondent's representative, shall be posted by 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. In addition, copies of the notice, duly signed by the Respondent's representative, shall be mailed to all employees who were laid off around February 1975 who were members of the bargaining unit. Reasonable steps shall be taken by Respondent to insure that said notices are not altered, defaced, or covered by any other material. (f) Notify the Regional Director for Region 25, in writing, within 20 days from the date of this Order, what steps Respondent has taken to comply here- with. 4 Southland Manufacturing Corp, 157 NLRB 1356, 1358 (1966). 5 In the event that this Order is enforced by a Judgment of a 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." 584 DECISIONS OF NATIONAL LABOR RELATIONS BOARD APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government WE WILL NOT refuse to recognize and bargain collectively with United Steelworkers of America by unilaterally changing terms and conditions of employment in hiring new nonunion-member employees instead of recalling our union-member laid-off employees, by changing a substantial portion of our production work to engineering, or by refusing to timely meet with United Steelwork- ers of America upon its request. WE WILL NOT bargain individually with appli- cants for employment as to wages, hours, and working conditions. WE WILL NOT allow supervisors to perform bargaining unit work without notice to and bargaining with the Union. WE WILL NOT discourage membership in United Steelworkers of America, or any other labor organization, by hiring new nonunion- member employees instead of recalling our union- member laid-off employees, or otherwise discrimi- nating in any manner with respect to their tenure of employment or any term or condition of employment. WE WILL NOT in any other manner interfere with, restrain, or coerce employees in the exercise and enjoyment of rights guaranteed to them by Section 7 of the National Labor Relations Act, except to the extent that such rights may be affected by lawful agreements in accord with Section 8(a)(3) of the Act. WE WILL offer to those union-member laid-off employees, whom we would have recalled to perform the work we hired new nonunion-mem- ber employees to perform reinstatement to their former positions or, if such positions no longer exist, to substantially equivalent positions, with- out prejudice to their seniority or other rights and privileges enjoyed by them, and make them whole for any loss of pay they may have suffered by reason of our refusal to recall them, with interest at the rate of 6 percent per annum. WE WILL make the nonunion-member employ- ees hired to perform work in the bargaining unit at rates of pay and other benefits through individual bargaining whole for any loss of pay or other benefits that they may have suffered by reasons of Respondent's refusal to pay them wages and fringe benefits established through collective bargaining with the Union, plus 6- percent interest. WE WILL, upon request, bargain collectively in good faith with United Steelworkers of America as the exclusive bargaining representative of all of the employees in the bargaining unit herein found appropriate. WE WILL mail copies of this notice to all employees who were members of the bargaining unit at the time of the February 1975 layoff. The appropriate bargaining unit is composed of: All production and maintenance employees of the Respondent employed at its facility exclusive of all office clerical employees, all plant clerical employees, all engineering employees and all professional employees, guards and all supervisors as defined in the Act constitute a unit appropriate for the purpose of collective bargaining within the meaning of Section 9(b) of the Act. All our employees are free to become, remain, or refuse to become or remain members of said union or of any other labor organization, except to the extent that such rights may be affected by lawful agree- ments in Section 8(a)(3) of the Act. CREATIVE ENGINEERING, INC. DECISION STATEMENT OF THE CASE ELBERT D. GADSDEN, Administrative Law Judge: Upon a charge of unfair labor practices filed on October 10, 1975, by United Steelworkers of America, hereinafter referred to as the Union, a complaint was issued by the General Counsel of the National Labor Relations Board on January 30, 1976, against Creative Engineering , Inc., herein called Respondent. The complaint alleged that Respondent committed certain unfair labor practices by refusing to recall laid-off employees for engaging in concerted and/or union activities, thereby discriminating against them; by bargaining with representatives of its own choosing even though it knew it was bound to bargain with the duly designated Union herein; by refusing to recognize and bargain with said Union in that it unilaterally bargained individually and directly with employees on mandatory subjects of bargaining; and by abrogating the seniority and recall provisions of its collective-bargaining agreement, all in violation of Sections 8(a)(1), (3), and (5) and 2(6) and (7) of the National Labor Relations Act, as amended, herein called the Act. The hearing in the above matter was held before me in Goshen, Indiana, on March 29 and 30, 1976. Briefs have been received from counsel for the General Counsel and counsel for Respondent, respectively, which have been carefully considered. CREATIVE ENGINEERING 585 Upon the entire record in this case and from my observation of the witnesses, I hereby make the following: FINDINGS OF FACT 1. JURISDICTION Respondent Creative Engineering, Inc., is now, and has been at all times material herein, a corporation duly organized under and existing by virtue of the laws of the State of Indiana. Respondent maintains its principal place of business at Elkhart, Indiana, where it is and has been at all times material herein, engaged in the manufacture, sale, and distribution of office furniture and/or engineering technology. During the past calendar year, a representative period, Respondent, in the course and conduct of its business operations , manufactured, sold, and distributed at its plant products valued in excess of $50,000 which were shipped from said plant directly to States other than the State of Indiana. During the same period, Respondent purchased, transferred, and delivered to its plant goods and materials valued in excess of $50,000 which were transport- ed to the plant directly from States other than the State of Indiana. The complaint alleges , Respondent admits , and I find that Respondent is engaged in commerce within the meaning of Section 2(6) and (7) of the Act. U. THE LABOR ORGANIZATION INVOLVED The complaint alleges, the answer admits, and I find that the United Steelworkers of America, the Union herein, is a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES A. Background Approximately 14 years ago Respondent started business as Contour Art and later became known as Creative Engineering, Inc., for the purpose of manufacturing fiberglass bucket chairs with foam, vinyl, nylon, and wool, such as are found in airport terminals and theaters. The owners of Respondent are Eugene Crandall, president and chairman of the board of directors ; Franklin Miles, executive vice president, treasurer, and director; and Roland Oberchain, secretary and director; all with owner- ship interest of 20 percent, 60 percent, and 20 percent, respectively. Since on or about August 5 , 1967, the International Union of District 50, since merged with and now known as the United Steelworkers of America, was designated or selected the certified representative for purposes of collective bargaining with Respondent for employees in the appropriate collective-bargaining unit described as follows: All production and maintenance employees of the Respondent employed at its facility exclusive of all office clerical employees, all plant clerical employees, all engineering employees and all professional employ- ees, guards and all supervisors as defined in the Act constitute a unit appropriate for the purpose of collective bargaining within the meaning of Section 9(b) of the Act. Although Respondent and the Union were parties to several collective-bargaining agreements, their last such agreement covered the unit heretofore described from the effective date of March 1, 1973, until its expiration on March 1, 1975.1 B. The Binding Obligations of the Parties to Bargain and the Question of Contractual Obligations The credible testimony of Donald Tobin, staff represen- tative for the United Steelworkers of America, herein called the Union, established that prior to August 9, 1972, the Union was known as District 50 of the United Mineworkers until its merger with the United Steelworkers of America. Prior to the expiration of the last contract (G. C. Exh. 2) on March 1, 1975, the Union sent Respondent a letter dated December 17, 1974, in which it advised Respondent of the upcoming termination of its current contract on February 19, 1975 (G. C. Exh. 3), and expressing its desire and request to negotiate terms and conditions of a new collective-bargaining agreement. Respondent replied by letter dated December 20, 1974 (G. C. Exh. 4), pointing out an error in the Union's letter of the expiration date of its contract as February 19, 1975, instead of March 1, 1975. Respondent further advised the Union to contact its representative (Ray Blankenship) to schedule a time and place for negotiations pursuant to the Union's request. Subsequently, the parties' representatives met on Febru- ary 25, 1975, when both sides expressed their demands and limitations. The Union suggested the next meeting for February 27 and 28, but Respondent said it would not be able to meet at that time. Respondent thereafter suggested a date in March, but the Union said it could not be present at that time. However, representatives of the parties met again on April 8, 1975, when the Union appeared at the plant at 2 p.m., but Respondent's representative (Blanken- ship) did not appear until 3 p.m. An argument ensued as to whether the meeting had been set for 2 or 3 o'clock and the Union was ordered off Respondent's premises until 3 p.m. The union representative, Tobin, rejected the 3 p.m. time. The next bargaining meeting was scheduled for June 10 and when the union representative arrived he was advised by Blankenship (Respondent) that he could not meet because his father was critically W. The parties then agreed and did in fact meet on June 17, 1975, when they presented proposals and counterproposals. An impasse did not develop on any of the issues. The Union sent a letter dated September 30, 1975, to Blankenship advising that it had not as yet selected an arbitrator and suggested that the next negotiation session be scheduled for October 13, 1975. With respect to a request for negotiations, Tobin admitted on cross-examination that he had received I The facts set forth above are undisputed and are not in conflict in the record. 586 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Blankenship's letter dated January 2, 1975 (Resp. Exh. 1) in which he was advised in part as follows: I would suggest we begin negotiations as soon as possible because it would serve no useful purpose to go in negotiations with an expired contract. Would you have Mr. Tobin contact me on this matter as soon as possible. In a letter dated October 6, 1975, Blankenship (Respon- dent) acknowledged receipt of the Union's letter of September 30, 1975, and advised the Union that Respon- dent had reason to believe that the Union no longer represented the employees and, therefore, it would no longer bargain for a collective-bargaining agreement. It further advised that Respondent took the position that, due to the hiatus of time in the noted arbitration case , such case is no longer to be arbitrated. On cross-examination Tobin said he could not deny that Respondent (Blankenship) did not contact him first about scheduling negotiation meetings and he admitted that, during the June 17 meeting , Respondent insisted on its supervisors being permitted to perform production work; that the Company had financial problems; and that, if Respondent had to pay a 1-cent increase in pay, it would have to go out of business. When asked did Respondent at that time also advise the Union that it could look at its books so that it would be able to determine whether Respondent was telling the truth, Tobin said he could not deny that Blankenship said that but that he could not recall his saying so? In an effort to show that the Union no longer represent- ed the unit employees, Respondent introduced a letter dated August 9, 1974 (Resp. Exh. 3), in which Respondent was advised by an appointed arbitrator, David Dolnick that the latter had been appointed arbitrator and asked to be advised, by return mail, of the date and place the parties (Respondent and Union) agreed to meet for the arbitration hearing. Tobin admitted he did not ever contact Dolnick concerning a date for arbitration and that he could not recall whether he had received three letters for arbitration from Dolnick between June and September 30, 1975. He testified that his reasons for not seeking negotiations sooner are as follows: A. Well, due to contract negotiations at one other plant, two other plants here in Elkhart, and the fact that our people were already laid off, and not working, we did have other people who were working and tried to negotiate a contract for them. I felt that it was useless to take time that could be spent better for plants that were in operation, take time away from them, and go to something where there was no production being run and nobody being worked. Tobin said that he did not know as a fact that Respondent had employed or hired new employees to replace those employees on layoff. After checking his notes, he changed his testimony and advised that he had processed two arbitration grievances in 1975. C. The Changing Progress of Respondent's Business and Actions Taken by it in the Interim In June or July 1974 Respondent employed as many as 20-25 production and maintenance workers , but business fell off in the fall, and it laid off some employees. The laid- off employees were subsequently recalled until business declined again in February 1975, when Respondent laid off all of its employees, advising them that they would be recalled when business improved . There is no dispute that the employees were not fired. In May, June, July, and August 1975, Respondent concluded it had enough work to hire some new people to do work (2 or 4 weeks in duration) which need it characterized as temporary spasmatic help. None of the new employees were employees who had been laid off. At the time of this proceeding Respondent had working in its plant, two production workers, himself, and the engineer, plus two part-time workers doing prototype work for 1 day a week on one customer account. Respondent's business records showed that some 14 or 15 unit employees in production worked 40 hours during the week of July 26, 1974; and that one worked 30 hours. All such employees were union members. Tom Varney, engineer for Respon- dent for about a year and a half, sometimes acts as supervisor and he had participated in negotiations with the Union. Since all production and maintenance employees were laid off on or before February 1975, none of such employees have been recalled before or after April 14, 1975, but Respondent acknowledged having hired new temporary employees at a lesser rate of pay than he had previously paid his laid-off employees. Respondent did $182,000 worth of business in 1975. In some instances the new employees were paid $3 an hour while the laid-off union employees were paid as much as $4.50 an hour. The new employees did not receive some of the fringe benefits the prior laid-off employees had received. When Respon- dent hired new employees after April 14, 1975, it did not notify the Union it had such work or that it was not going to recall its laid-off employees because it concluded it had no responsibility to the Union. With respect to supervisors of Respondent performing production work, Respondent said it allowed supervisors or anyone else to perform bargaining unit work after April 14, 1975, because it had no contract with the Union; that the union employees were absent (being on layoff) and its procedure fell within the exception clause of the contract for supervisors to do such work . In responding to questions by counsel for the General Counsel, Respondent (Cran- dall) said it did not recall its laid-off employees first, because it had no responsibility to them and, secondly, because work was so "spasmatic" that such employees would have gotten only 3 days' work a week. He acknowledged that all of the employees laid off were union members. President Crandall did not remember a letter from Tobin dated September 30 (G. C. Exh. 5), asking for a bargaining session but he did remember Respondent's counsel (Blankenship) writing a reply (G. C. Exh. 6) in which he 2 1 credit Blankenship's testimony that Respondent did offer the Union contact Blankenship to set the date for the next negotiation session, but he an opportunity to exarrune its books. Tobin admitted that he agreed to in fact did not contact Blankenship from June 17 to October 1975. CREATIVE ENGINEERING 587 advised the Union that Respondent had no responsibility to bargain with the Union. Off and on since the fall of 1975, Respondent has terminated the production part of his business operation and continued the engineering part of his business, of which fact Respondent acknowledged it did not notify the Union and afford it an opportunity to bargain about the matter. Respondent also admitted that it started farming out engineering work to Cordell in 1974 when it had more business at Creative Engineering than it could handle; that it received a royalty on all work farmed out to Cordell which because profitable, while the same such work was not profitable at Creative because he could collect from the customers. In 1976 Respondent produced about 500 prototype chairs (chairs with different technology on helms and back, which were engineered differently). If the customers liked the prototype chairs, they would then buy the production machines and the entire engineering concept. The proto- tyes were so few in number that they were usually produced by Crandall and Respondent engineer, Varney. The change in operation from production to engineering was discussed by Crandall with the board of directors of Creative Engineering about 2 years before the change took effect. Prior to, and including, March 1975, Respondent produced chairs primarily for the Kruger account which it lost in 1975. The credited testimony of President Crandall, his wife and administrative staff assistant, Mary Crandall, and Supervisor Juanita Varney, as well as company records, established that beginning in November or December 1974 and continuing into January and February Respondent laid off its unit production employees; that in the early fall of 1974 Respondent was advised by the Krueger Company that the latter was doing its own side chairs and fabrics and was phasing out the need and demand for chairs from Respondent; that, although company records from May 6, 1975, through June 27, 1975, reflect orders for chairs to the Krueger Company, a close examination of said records reveals that 20 or more of such orders were what Respondent characterized as reorders (repairs, rework, or replacements rather than original orders for new chairs); that such reorders (or rework) were done under a warranty or guaranty period clause in the sales contract; that since 1973 supervisors frequently did the same work unit workers did and company records showed that from August 1, 1975, to March 30, 1976, there were no more than three people working in the plant on an hourly or salary basis, while prior to August 1, 1975, there were 15 to 16 hourly or salaried persons working; and that prior to August 1, 1975, the highest number of hours worked was 377 hours, while after August 1, 1975, to the present time, the highest amount of total hours worked was Ill hours and the least hours worked was 8 hours. The difference in the number of employees working and the number of hours worked is due to the fact, as the records further shows, that there have been on invoices to the Krueger Company since July 1975. 3 1 credit the testimony of George Pickens not only because I received the distinct impression that he was making every effort to testify truthfully, but also because his testimony with respect to changes in the amount of production employees working, and the kind of product being manufac- tured, was essentially consistent with the credible testimony of the witnesses Donald Tobin further testified about a conversation held on June 3, 1975, which he described as follows: Q. As best as you recall, would you tell us what your conversation with Mr. Pickens-what he said, what you said-in that conversation? A. George arrived at the Union hall some time after 12:00 when the meeting had adjourned, came into my office and wanted to know what was taking place at Creative Engineering. I told him that I would like to know also what was taking place. I had heard that he was working at Creative Engineering and wanted to know what his job entailed. He explained that he was doing basically the same job that he had on his previous employment- term of employment- I asked him if the rest of the people in the plant were performing the duties of the people that were during his first tenure and he said yes, they were and he went on to discuss the problems and I asked him if he had actually been informed that he was doing any engineering work or just what and he said well, he had never been informed that he was doing any engineering work as far as he knew he was doing the samejob that he had prior to his quitting the first time. He wanted to know what happened to the other people that worked there and I said that the Company had laid them off and had contended that they were engineering employees and it looked as though since they were doing the same work, that I felt the Company was playing games with us and asked him if he was interested in signing a Union card to- just in case- he wasn't an engineering employee, if they were going to bring engineering in, we would try to organize them. George Pickens had previously testified to the same effect on this subject. George Pickens, an employee and union member, testified that all of the chairs he worked on during his last employment could have been replacements and he admitted he had had several arguments with Varney during his second period of employment with Respondent. He was reemployed in his last employment at a lower salary and he said that, when he talked with Tobin at the Union, Tobin told him the Union was no longer in the plant and that his salary was as low as it was because the Union was no longer in the plant and that the contract had run out. Pickens also stated that he had noted two different machines and a new glue being used and he had also noticed that employees would leave the employment of Respondent, but he did not note any employees being hired. He admitted that production was different .3 Analysis and Conclusions As amplified by counsel for the General Counsel's brief, the crucial issues presented for determination in this proceeding are: of Respondent. In other words, while there was in fact a greater emphasis on developing and selling engineering, there was also still considerable production work being carried on for which Respondent employed new nonunion-member employees to perform at a lower salary. 588 DECISIONS OF NATIONAL LABOR RELATIONS BOARD (1) Whether Respondent violated Section 8(aXl) and (3) of the Act by refusing to recall its laid-off employees because of their union and/or concerted activities, as alleged in paragraphs 5 and 6 of the complaint. (2) Whether Respondent violated Section 8(aX5) and (1) of the Act by refusing to bargain collectively with the Union as the exclusive bargaining representative of Respondent's production and maintenance employees, as alleged in paragraph 7 of the complaint. A determination of the validity of the above-described allegations with which Respondent is charged, and the corresponding defenses asserted by it in response thereto, depends in part upon a determination of the veracity of the several witnesses whose testimony is almost free from conflict. Nevertheless, in resolving what issues of credibili- ty as are presented by the testimony of the witnesses, I considered the relationship of each witness to the party on whose behalf he testified, the readily responsive, nonselec- tive, nonexaggerating, consistent, and straightforward manner in which he testified, the reasonableness of efforts made by the parties to bring essential witnesses and appropriate documentary evidence to the hearing , as well as how such testimony or other evidence relates to the logical consistency of all of the evidence of record and the sequence of events as they transpired. With respect to the refusal-to-bargain charge , Respon- dent does not argue that prior to March 1 , 1975, the Union was not in fact the designated and exclusive representative of its unit production employees, but, on the contrary, contends that when its last contract with the Union expired on March 1, 1975, so did its obligation to bargain with the Union, thereby justifying its hiring new nonunion -member employees on and subsequent to April 14, 1975. Respon- dent further contends that on and subsequent to October 6, 1975, it was not obligated to bargain with the Union because the Union no longer represented its employees since it neglected to process more than two grievances during the past year and did not request a bargaining or negotiation session from June 14 through September 29, 1975. In support of its position, counsel for Respondent cited the Board's decision in George Braun Packing Co., 210 NLRB 1028 (1974). It is not clear from the record at what point Respondent commenced doubting that the Union continued to represent a majority of its employees, but it is inconceivable that Respondent held such a view during the months January through June 1975 , when it met and negotiated with the Union. At no time during the negotiation sessions did Respondent ever indicate that it entertained any question about the Union's representative capacity with respect to its employees. However, it is well-established law that a certified or incumbent union gives rise to a presumption of majority status in favor of the union. In view of this presumption Respondent, or an employer, in addition to showing the Union's claim for continued recognition, must demonstrate by objective considerations that it has some reasonable grounds for believing that the Union has lost its majority status. United States Gypsum Co., 157 NLRB 652 (1966); and George Braun Packing Co., supra. An examination of the latter case, cited by counsel for Respondent, reveals that the Board found that the Administrative Law Judge therein gave a factual detail of the objective considerations upon which the employer's good-faith doubt of majority status was based. The anomaly in the instant proceeding is that no probative objective considerations appear on the record that would support a reasonable basis for Respon- dent's belief that the Union herein might have lost its majority status. Under the above-described circumstances, the presumed majority status of the Union has not been rebutted and Respondent was, and remains, under a legal obligation to bargain with the Union. Consequently, Respondent's withdrawal of recognition of the Union, as well as its refusal to recall any of its laid-off union-member employ- ees instead of hiring new nonunion-member employees, all without notification to or consultation with the Union, constituted discrimination against its laid-off union-mem- ber employees in violation of Section 8(a)(5) of the Act. Respondent's union-member laid-off employees were still employees and, therefore, Respondent was still bound to bargain with the Union even though the contract had expired March 1, 1975. More specifically, since Respon- dent was under a legal duty to bargain collectively with its laid-off employees, its unilateral action in replacing them with new (part-time or full-time) employees obligated it to recall the laid-off employees instead of replacing them, even though its prior bargaining contract had expired a few months earlier. Although Respondent contends that it did not recall its laid-off employees because of a decrease in production work resulting from a loss of the Krueger contract and a shift in manufacturing emphasis from production to engineering, the evidence of record bears out its contention only in part. More specifically, while it is true that Respondent's production of its original chairs was substan- tially curtailed as a result of its loss of the Krueger contract and its efforts to sell engineering, Respondent nevertheless continued to produce a considerable number of original chairs as well as some new prototype chairs. In carrying out this operation, Respondent elected to hire new nonunion-member employees at a reduced rate in pay, instead of recalling a sufficient number of its union- member laid-off employees as the production demand required. Not only did Respondent not recall any of its union employees but it also neglected to advise them or the Union that it had any production work, that it was shifting a part of its operation emphasis from production to engineering, or that it was hiring new nonunion-member employees to perform such work at a lower pay rate. Under sworn testimony, Respondent (Crandall) testified that the reason it had hired the new nonunion-member employees, in preference to recalling its union-member laid-off employees, was because the work did not require a 40-hour week employment and that Respondent could have such work performed at a lower pay rate by new nonunion- member employees. When such an admission by Respon- dent is considered along with its changes in a substantial part of the nature and quantity of production without advising or consulting with the Union with which it admitted, in part (par. f(i) of the complaint), it was bound to bargain, the credible evidence of record is more than CREATIVE ENGINEERING sufficient to support the conclusion and finding that Respondent's failure and refusal to recall its laid-off union- member employees was discriminatory and violative of Section 8(a)(1) and (3) of the Act. Jurisdiction Although Respondent in its answer to the complaint herein denies that it is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act, it nevertheless admits in paragraphs 2(c) and (d) of the complaint the criteria upon which a determination of jurisdiction is made. Under these circumstances, as well as upon the credible testimony of record, I conclude and find that Respondent, for all practical purposes, has admitted it is an employer engaged in commerce within the meaning of the Act, and that its denial to the contrary is merely an academic formality without substance. IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of Respondent set forth in section III, above, occurring in connection with the operations of Respondent described in section I, above, have a close, intimate, and substantial relationship to trade, traffic, and commerce among the several States and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce. V. THE REMEDY Having found that Respondent engaged in unfair labor practices warranting a remedial order, I shall recommend that it cease and desist therefrom and that it take certain affirmative action to effectuate the policies of the Act. Having found that Respondent has refused to bargain collectively with the Union, it will be recommended that Respondent, upon request, bargain with the Union as the exclusive representative of its employees in the appropriate unit. It having been found that Respondent interfered with, restrained, and coerced its union-member laid-off employ- ees in the exercise of their Section 7 protected rights, in violation of Section 8(a)(1) of the Act, by refusing to recall any of its union-member laid-off employees in violation of 589 Section 8(a)(3) and (1) of the Act, the recommended Order will provide that Respondent offer to the same number of its laid-off employees that it would have recalled had it not hired new nonunion-member employees reinstatement to their jobs, and make them whole for loss of earnings within the meaning and in accord with the Board's decision in F. W. Woolworth Co., 90 NLRB 289 (1950), and Isis Plumbing & Heating Co., 138 NLRB 716 (1962), except as specifically modified by the wording of such recommended Order. Because of the character of the unfair labor practices herein found, the recommended Order will provide that Respondent cease and desist from in any other manner interfering with, restraining, and coercing employees in the exercise of their rights guaranteed by Section 7 of the Act. N.L.R.B. v. Entwistle Mfg. Co., 120 F.2d 532, 536 (C.A. 4, 1941). Upon the basis of the above findings of fact and upon the entire record in this case, I make the following: CONCLUSIONS OF LAW 1. Creative Engineering, Inc., the Respondent, is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. United Steelworkers of America, the Union, is and has been at all times material herein, a labor organization within the meaning of Section 2(5) of the Act. 3. By unilaterally changing the terms and conditions of employment in hiring new nonunion-member employees at a lower salary, changing some of its production work to engineering work, failing and refusing to recall any of its laid-off union-member employees, and withdrawing recog- nition of the Union, Respondent violated Section 8(a)(5) of the Act. 4. By discriminatorily refusing to recall any of its union-member laid-off employees, thereby discouraging membership in the Union or other labor organization, Respondent has engaged in unfair labor practices con- demned by Section 8(aX3) and (1) of the Act. 5. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. [Recommended Order omitted from publication.]