Watt Electric Co.

fly 7 , ,■.,.., , 7 ■ WATT ELECTRIC CO 655 •Watt Electric Company and its alter ego, Watt Plumbing, Airconditioning & Electric, Inc. and John 0. Watt and International Brotherhood of Electrical Workers, Local No. 584, AFL-CIO- CLC. Case 16-CA-11434 14 December 1984 DECISION AND ORDER BY MEMBERS ZIMMERMAN, HUNTER, AND DENNIS On 31 July 1984 Administrative Law Judge Richard J. Linton issued the attached decision. The Respondent filed exceptions and a supporting brief, and the General. Counsel filed a brief in support of the judge's decision. The National Labor Relations Board has delegat- ed its 'authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, and conclusions' and to adopt the recommended Order. ORDER , The National Labor Relations Board adopts the recommended , Order of the administrative law judge and orders that the Respondent, Watt Elec- tric Company and its alter ego, Watt Plumbing, Airconditioning & Electric, Inc. and John 0. Watt, Tulsa, Oklahoma, its officers, agents, successors, and assigns, shall take the action set forth in the Order. 1 In the absence of exceptions Member Hunter adopts the judge's con- clusion that the Union is the Sec 9(a) collective-bargaining representative of the Respondent's employees DECISION STATEMENT OF THE CASE RICHARD J. LniToN, Administrative Law Judge. In this alter ego case I find that Respondent, establishing an alter ego in order to operate nonunion with the hope that it could then make a profit, violated Section 8(a)(5) of the Act by refusing to apply the union contract to its alter ego, and transgressed Section 8(a)(3) by construc- tively discharging its employees, members of the Union, when they quit rather than applying to work for the alter ego The ease was tried before me in Tulsa, Oklahbma, on March 7-8 and April 16, 1984, pursuant to the January 27, 1984 complaint issued, and thereafter amended, by the General Counsel of the National Labor Relations Board through the Regional Director for Region 16 of the Board. The complaint is based on a charge filed De- cember 22, 1983, by International Brotherhood of Elec- trical Workers, Local No. 584, , AFL-CIO-CLC (the Union, IBEW, or Local 584), against Watt Electric Company, inc..1 In the complaint, as 'amended, the General Counsel al- leges that the Respondent violated Section 8(a)(5) of the Act on August 23, 1983, when WPA repudiated its col- lective-bargaining contract with Local 584, unilaterally terminated its employees, and began operating nonunion under the name of Watt Electric Company (WECO). The General Counsel also- alleges that Respondent violat- ed Section 8(a)(3) of the Act on August 23 by terminat- ing the employees of WPA because they were members of or represented by the IBEW: By its answer Respondent admits receiving the charge but essentially denies all other allegations: At the hear- ing, Respondent amended its answer to admit commerce and certain other facts. On the entire record, including my observation of the demeanor of the witnesses, and after due consideration of the brief filed by the General Counsel, I make the fol- lowing 2 . FINDINGS' OF FACT I. JURISDICTION WPA, until August 23, 1983, and WECO, on and after that date, have been engaged in the business of providing electrical contracting services in the building and con- ,struction industry: During calendar year 1983, Respond- ent performed such services valued in excess of $50,000 for other business enterprises, including Oklahoma Elec- tric Supply Company (OES), located within the State of Oklahoma. During the past 12 months OES, an Oklaho- ma corporation with a place Of business in Tulsa, Okla- homa, purchased and received goods and materials Valued in excess of $50,000 at its Tulsa facility direct from points outside Oklahoma. WPA and WECO are members of the Eastern Oklaho- ma Chapter; National Electrical Contractors Association, Incorporated (NECA) NECA is an organization of em- ployers engaged in providing electrical contracting serv- ices. NECA exists for the purpose, inter alia, of repre- senting certain employer-members in negotiating and ad- ministering collective-bargaining agreements with vari- ous labor , organizations, . including the Union. Various employer-members of NECA annually purchase goods and materials valued in excess of $50,000 directly from suppliers located outside Oklahoma I find that at all material times Respondent has been an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. . . I All dates are 1983 unless otherwise indicated In this decision, Watt Plumbing, Airconditioning ,84 Electric, Inc is designated as WPA and John 0 Watt as Watt * Because its articles of incorporation reflect the correct name to be "Watt Electnc Company" (G C Exh II), I exclude the "Inc " „ 2 Although Respondent asserted at the close of the hearing that it de- sired to file a bnef, it failed to do so 273 NLRB No. 94 656 DECISIONS OF NATIONAL LABOR RELATIONS BOARD II. LABOR ORGANIZATION INVOLVED Respondent admits, and I find, that Local 584 is a labor organization within the meaning of Section 20) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES A. Background John 0. Watt has been president of WPA since 1979 (Tr. 1:37; 3:16). 3 Watt testified that the Company, al- though under a different name, was established in 1910 (Tr. 3:15). For approximately 50 years . it enjoyed a bar- gaining relationship with the Union '(Tr. 3:15). In 1979 Watt's father, Dale Watt, sold WPA to his sons., John Watt purchased 87 percent and his brother Jim pur- chased 13 percent (Tr. 1:64-65, 119)., On January 2, 1974, Watt's father, still active in the business then, signed a "Letter of Assent-A" with the Eastern Oklahoma Chapter of the National Contractors Association (NECA). 4 In signing the form. (G.C. Exh. 2), WPA designated NECA as its collective-bargaining rep- resentative for all matters "contained in or pertaining to the current approved inside labor agreement" between NECA and Local 584. The authorization, by its express terms, shall remain in effect until ,terminated by the un- dersigned employer giving written notice to the Eastern Oklahoma Chapter, NECA, and to the Local Union at least one hundred fifty (150) days prior to the then cur- rent anniversary date of the aforementioned approved labor agreement." By its amended answer, 'Respondent admits that the Assent designation, described above, re- mained in effect until June 1983 as to WPA (Tr., 1.15). The most recent collective-bargaining • agreement (CBA) executed by NECA and Local 584 expressed an effective term of June 2, 1982, through May 31, 1984, continuing thereafter from year to year unless modified or terminated on written notice of 90 days prior to the anniversary date (G.C. Exh. 3). By letter dated June 9, 1983, Watt, on behalf of WPA, purported to cancel the Assent and to revoke the designation of NECA as WPA's bargaining representative (G.C. Exh. 7). 5 In a letter bearing the same date, Watt notified Local 584 of its desire to terminate the CBA set to expire May' 31, 1984 (G.C. Exh 6). Watt stated in the letter that WPA representatives would be available to meet with the Union to discuss a successor contract. The General Counsel contends that Respondent's at- tempt to withdraw the bargaining authorization was un- timely because Watt's letter failed to give .the required Transcript references are by volume and page The third day of this heanng followed a 6-week recess, and the reporting service prepared the volume of testimony for the third day as if It were a new hearing begin- ning with page one To avoid confusion, I designate the transcnpt for the third day as volume 3, and I list the page numbers as they appear in that volume 4 The company name shown on the form is "Watt Electnc Company" Watt explained that the company performed electncal work for 20 years, and that the clerks at NECA frequently used the name shown as the company's name as a shorthand rendition of the longer name (Tr 1 214- 216) 5 Watt testified that WPA has not dropped its membership in NECA, and that WECO is a member of NECA although WECO has never as- signed its bargaining rights to NECA (Tr 3 92) 150 days' notice. The argument appears to be that Re- spondent desired the notice to be effective immediately (Br. at 26) Of course, it is clear that Watt's revocation letters, dated June 9, 1983, gave well over the required 150 days' notice prior to the contract's anniversary date. However, on June 29, 1983, NECA and Local 584 exe- cuted an amendment to the 1982-1984 CBA whereby the CBA was extended 1 year, to May 31, 1985. The exten- sion was in exchange for the Union's deferring 75 cents of a $1-an-hour pay raise, scheduled for June .1, 1983, to June 1, 1984, with the remaining 25 cents of the sched- uled dollar to be paid to the pension plan effective June 1, 1983. WPA took advantage of the deferred wage rate by continuing to pay the existing rate, plus the additional 25 cents for the pension fund, until WPA became dor- mant in August 1983. Watt testified that he considered WPA bound to the 1982-1984 CBA for its original term, but not to the 1-year extension, and that the reason WPA ceased making the fringe benefit payments after August 1983 is because after August 23, 1983, WPA no longer employed any bargaining unit employees (Tr. 1182, 192- 196, 212). I find that WPA's revocation notice was timely and effective. The notice exceeded the 150 days required. As established by the amended pleadings, the bargain- ing unit is described as: All full-time and part-time journeymen electricians, apprentices,- and helpers employed by Respondent, exclusive of office employees, guards, watchmen, and supervisors as defined in the Act .WPA employed about four employees in the unit.° B Alter Ego WECO Created to Evade Union Contract I. Facts There is no dispute that by 1982 WPA was suffering from economic difficulty. Watt testified that WPA was losing jobs by _being underbid by nonunion contractors during a time wlien the economy was generally poor (Tr. 1 231). The average nonunion pay rate, Watt testi- fied, is about one-half that of union scale (Tr. 3:22, 48, 85). In January 1983 the Watt brothers, particularly John Watt, began a series of 'steps designed to help keep WPA afloat. Thus; in -January, Watt eliminated his own salary (Tr 1 .68; 3:27). 'In April he mortgaged his home for "$40,000, and Jim Watt did likewise for $10,000, and they put the funds into WPA (Tr. 1:70-71, 3.29, 91). Watt also sold an interest in an oil well, and in March he sold his automobile to provide his living expenses (1:71-72). WPA 'also auctioned some inventory for $40,000. 7 WPA 6 Even if WPA initially entered into a prehire agreement with the Union under Sec 8(f) of the Act, that agreement ripened into a Sec 9 contract by virtue of the fact that WPA's employees constituted a perma- nent and stable work force with a majority, and perhaps all, being mem- bers of Local 584 In short, at all times material herein, Local 584 en- joyed majority status 7 Because the inventory sold at far below value, the sale hurt WPA's credit standing at the firin's bank, for the bank had listed the inventory at a much higher value (Tr . 3 31, 33) WATT ELECTRIC CO 657 also terminated an office employee who had worked for the firm 21 years (Tr. 1:137; 3:28) Although Watt never told the Union how bad WPA's financial plight was, the NECA contractors did seek a number of contract changes in an attempt to remain competitive The Union granted none of those requested, but did agree that a contractor could pay a reduced rate, 75 percent of scale, for certain small jobs. This conces- sion was called the Jobs Target Program (G.C. Exh. 15). , Watt testified that, because the Jobs Target Program did not apply to much of his work, he went to each of his employees in July 1983 and asked if they would agree that WPA could apply the reduced scale to all jobs of WPA (Tr. 1:85, 92). 8 Each agreed. The Union did not learn of this conduct until late August (Tr. 2.374).9 Although the reduced rate helped, Watt testified, it was not enough (Tr. 1:93; 3:55). Earlier WPA's bank had given the Company an ultimatum—get profitable, or else! (Tr. 1:67, 160-161, 168) In August the Watt brothers de- cided they would have to take the ultimate step—begin operating a firm which had no union contract (Tr 3.56). About August 1 the idea of incorporating another -firm began to form (Tr. 1.40), and the decision made by the Watt brothers became firm on August 19 (Tr. 1:66, 217, 230). WECO was incorporated on August 22, the date the articles of incorporation were filed with the office of the Secretary of State of Oklahoma (1-41, 55; G.C. Exh. 11). . Watt testified that WECO was created in response to the hank's pressure to become profitable, and the only way left in which a profit could be made was by deacti- vating WPA and operating through a new company, WECO, which would not have to pay the high wages and benefits mandated by a union contract (Tr. 1:67, 161, 166). 1° This is reflected in a letter, , dated January 9, 1984, from Respondent's counsel, Jeff Nix, to Board agent Leslie D Imboden, responding to the Union's charge in this case. The first paragraph of the two-para- graph letter reads (G.C. Exh. 8). In response to the charges filed the Company, re- plies_as follows: Late in the summer of 1983 the em- ployer ascertained that it could no longer operate paying union scale and further that the union would not consider a lesser rate, so the employer ceased doing business. This is not a case involving a "double breasted" oper- ation.' At the hearing Respondent's counsel described 8 The complaint was amended at trial to allege such direct dealing as being violative of Sec 8(a)(5) of the Act (Tr 2 328, 379, G C Exh 20) 9 Watt bypassed the Union because he felt Local 584 would be nega- tive (1-191, 225, 3 72) He never sought individual relief from the Union from the contractual wage scale and benefit contributions (Tr 1 73-76) However, It should be noted that under art II, sec 24, of the 1982-1984 CBA, any better term granted to one contractor must be extended to all (GC Exh 3) is Watt testified that WECO has never recognized the Union or hon- ored the 1982-1984 CBA (Tr 1174, 220) 11 The Board has defined "double breasted" as being one "in which a contractor operates two companies, one unionized and the other nonun- ionized " Walter N Yoder & Sons, 270 NLRB 652 fn 2 (1984), Comment, Double-Breasted Operations In the Construction Industry A Search For Concrete Guidelines, 6 U Dayton L Rev 45 fn 3 (1981) the situation as being one in which one company (WPA) simply "went broke," and, in an effort to salvage what was left, "They offered a reduced wage rate to employ- ees who are performing essentially the same work [for WECO] " (Tr. 1:143) Watt testified that he did not awake one morning hating the Union, and that if somehow he were given complete discretion regarding wages and benefits, he still would be operating under the CBA and WECO would not have been formed (Tr. 1-167-168). The parties stipulated that Respondent converted WPA to a dormant status; that WPA exists merely to service its mortgage obligation; that the various business transfers, purchases, and lease payments between WPA and WECO have not been as an arm's-length transaction; and that WPA and WECO constitute a single integrated business enterprise, with the qualification that WPA exists only in its dormant condition (Tr. 1:149-151). The parties further stipulated that at all times material, John 0. Watt has controlled the operation and manage- ment of both WPA and WECO, and that the matters so controlled include labor relations (Tr. 1:60, 129).12 Watt testified that he was responsible for the hiring at both WPA and WECO, although Jim Watt, his brother, served as the only supervisor at WPA other than Watt (Tr. 1:132-133). Jim 'Watt is vice president of WPA and secretary-treasurer of WECO (Tr. 1-53, 55). The boards of directors of both corporations are composed principal- ly of members of the Watt family (1:60). Watt testified that WECO assumed what business WPA had and has tried to expand on it (Tr. 3:64-65) while using the same job classifications for its electricians of journeyman and apprentice (Tr. 1.135). Following its August 23 deactiva- tion, WPA has leased its office space, equipment, and land to WECO for $3600 per month from which WECO operates (1:141, 169). When WECO needs a supply item, it purchases it at market value from the inventory still owned by WPA (Tr. 3:89-90). 2. Analysis and conclusions As noted by the Third Circuit in its lucid opinion in NLRB v. Browning-Ferris Industries, 691 F 2d 1117, (1982), the Board reviews the following four factors in determining whether two nominally separate entities in reality constitute a single employer (1) functional inte- gration of operations; (2) centralized control of labor re- lations; 13 (3) common management; and (4) common ownership or financial control." However, a finding of single-employer status does not necessarily establish that an employerwide unit is the appropriate bargaining unit. South Prairie Construction Co. v. Operating Engineers " Dale Watt, the father of John 0 Watt, has owned 100 percent of WECO's stock at all times (Tr 1 66) John 0 Watt is vice president of WECO and his wife, Malissa Watt, is president of WECO (Tr 1 55) Notwithstanding Malissa Watt's position of president, Watt credibly testi- fied, consistent with the stipulations, that his wife is not engaged in the operation of WECO (Tr 1 121-122) " Control of labor relations is deemed a cntical factor Gerace Con- struction, 193 NLRB 645 (1971), Comment, Bargaining Obligations After Corporate Transformations, 54 NYUL Rev 624, 634, and fn 68 (1979) 14 With equal clarity, the Court distinguished the different concept of Joint employer 658 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Local 627, 425 U.S. 800 (1976). This is so because the cn- teria for finding a single employer are not the same as those used in determining the scope of the unit. Acoustics, Inc., 270 NLRB 1046 (1984). Thus, the collective-bar- gaining agreement (CBA) of one entity does not attach and bind the single employer simply because there is a single-employer finding. NLRB v. DMR Corp., 699 F.2d 788 (5th Cir. 1983); Samuel Kosoff & Sons, Inc.,' 269 NLRB 424 (1984); Naccarato Construction Co., 233 NLRB 1394 fn. 2 (1977). On the other hand, where two firms do comprise a single employer employing employ- ees in an employerwide unit found appropriate, the CBA of one will bind the single employer. Walter N Yoder & Sons, 270 NLRB 652 fn. 2 (1984); Ray C. Lapp Air Con- ditioning, 270 NLRB 641 fn. 2 (1984), DMR Corp., 258 NLRB 1063 (1981), remanded on other grounds 699 F.2d 788 (5th Cir. 1983). In contrast to the single-employer situation, where two facially different firms are found to be alter egosof each other, the CBA of one automatically binds the other." This result follows from the very definition of an alter ego. As a practical matter the second company, found to be the alter ego of the first, does not have a CBA of its own because typically the alter ego is established for the purpose of evading the original employer's responsibil- ities under its CBA. As we shall see, the purpose of the corporate transformation is a factor the Board considers. In resolving questions of alter ego status the Board considers a number of factors, no one of which is con- trolling, with several being similar to those reviewed when determining .single employer status. The Board re- cently. listed these factors as including . " (1) common management and ownership; (2) common business pur- pose, nature of operations, and supervision; (3) common premises - and equipment; (4) common customers, i.e., whether the employers constitute the same business in the same market; (5) the nature and extent of the negotia- tions and formalities surrounding the transaction; and (6) whether the purpose behind the creation of the alleged alter ego was legitimate or whether, instead, its purpose was to evade responsibilities under the Act. Because I find WECO to be the alter ego of WPA, is not necessary that I resolve the single-employer or ap- propriate unit questions. Turning now to a review of the evidence regarding the alter ego factors, I note that consideration of the first factor calls for an affirmative finding. Admittedly, there was common management Even though Watt's father is the sole shareholder of WECO, there is substantially identical ownership of WPA and WECO because the Board, at least in these circumstances, treats ownership by family members as personal ownership.' 7 16 Walter N Yoder - & Sons, supra, E G Sprinkler Corp, 268 NLRB 1241 fn 1, 1244 (1984), J M Tanaka Construction, 249 NLRB 238, -241 (1980), enfd 675 F 2d 1029, (9th Or 1982) 16 Fugazy Continental Corp, 265 NLRB 1301 (1982), enfd 725 F 2d 1416 (DC Cir 1984) See also Advance Electric, 268 NLRB 1001 (1984) E G 'Sprinkler Corp, 268 NLRB 1241 (1984), Advance Electric, supra, J M Tanaka Construction, 249 NLRB 238, 241- fn 29 (1980), enfd 675 F 2d 1029 (9th Cir 1982) In fact, most of the factors are covered by the parties' stipulation that following WECO's creation it had sub- stantially identical management, ownership, business pur- pose, operation, supervision, equipment, and customers that WPA had before August 23, 1983 (Tr. 1:147). As discussed earlier, the parties also stipulated that Watt controls the labor relations policies of WECO as he also did at WPA before it became dormant on August 23 (1.60-61). The fact that WECO operates from the same premises occupied by WPA has been noted. Moreover, the parties stipulated that the $3600 monthly lease payment made by WECO to WPA is not based on fair market value con- siderations but only on WECO's remaining mortgage ob- ligations, that the arrangement is not an arm's-length transaction, and that the two firms are a single integrated business enterprise, with the qualification that WPA is dormant and exists only to service its mortgage obliga- tions (Tr. 1:149-151). Finally, and as previously discussed, Watt was quite candid at the hearing in testifying that the principal moti- vation, indeed, the only reason, in creating WECO was for the purpose of establishing a profitable company based on operating at wage and rates substan- tially less than those mandated by WPA's CBA. Watt testified that WPA was deactivated because it .could not make the desired profit under a union contract (Tr. 1:164, 165). WECO was created to avoid WPA's finan- cial obligations under the 1982-1984 CBA." Although Watt did not, I find, harbor any personal dislike, animus, or hate for the Union, the absence of such a motivation is not determinative. What does re- solve the issue is the undisputed fact that the Watt family created WECO in an attempt to evade the CBA WPA was obligated to honor with Local 584. Certain testimony by Gerald H. Edwards, Local 584's business manager, is illuminating here. Edwards credibly testified that on August 23, 1983, Watt informed Ed- wards that WPA was closing and WECO would open nonunion. Edwards inquired how Watt expected to bene- fit from this when his brother had been unsuccessful in an earlier attempt to operate a nonunion shop. Watt re- plied that when Jim Watt had tried to operate nonunion earlier, it was under the name "Diversified Electric," a name not known in the electrical business in Tulsa. By utilizing the name of Watt Electric Company, Watt ex- plained to Edwards, Watt felt WECO could survive and make a profit (Tr. 2:343-344). In his subsequent testimo- ny, Watt did not address the subject of "Diversified Electric" or the remarks (aside from the nonunion part) attributed to him by Edwards. I credit Edwards who tes- tified with a persuasive demeanor. A majority of the court in Denzil S. Alkire v. NLRB, 716 F.2d 1014 (4th Cir. 1983), held that an alter ego con- clusion cannot be made unless it is supported by a find- ing that the employer "obtained, or reasonably expected" . 18 Watt testified that WECO does not provide any fringe benefits such as Insurance (Tr 3 94) 18 Certain work rules, deemed restrictive, pertaining to such matters as the Journeyman-apprentice ratio also figured in Respondent's motivation (Tr 1 115-116, 3 93-94) svArr ELECTRIC CO 659 an economic benefit as a result of the transfer of its oper- ations to the alleged alter ego. As with the Shoots family in Advance Electric, 268 NLRB 1001 (1984), and the Cordes family in Crawford Door Sales Co., 226 NLRB 1144 (1976), here the Watt family anticipated the "rea- sonably expected" economic benefit that the alter ego (WECO) could be operated at a profit (because of no CBA) instead of the loss being sustained by WPA which was bound to a CBA. Even with the added factor of a reasonably expected economic benefit, it is clear, and I find, that from its in- ception WECO has been the alter ego of WPA.2° Accordingly, I find that Respondent, by allowing WECO to fail to honor the 1982-1984 CBA with Local 584, has violated Section 8(a)(5) of the Act. Samuel Kosoff & Sons, 269 NLRB 424 (1984); Advance Electric, supra. WPA's Employees Constructively Discharged There is a sharp dispute over what Watt told Gerald H. Edwards, Local 584:s business manager, either the 'early morning or early afternoon of August 23, 1983,21 and the unit employees later that afternoon. The crux of the dispute is whether Watt, on informing them he was closing WPA on August 23 and would begin operating the next day as ,a different firm, also asserted that the new company would be nonunion. Watt contends that he said nothing about nonunion, whereas Edwards and four 'employee witnesses testified that he did. I credit Ed- wards and the employees, who testified persuasively, and I find that on August 23, Watt did tell them WECO would 'ripen as a nonunion shop. The employees, faced with the choice of having to forgo the benefits of their union contract, all declined Watt's offer that they could apply for work at WECO. , To the extent that it matters, I credit Watt's testimony that he did not awake one morning hating the Union (Tr: 1:167). I also credit his testimony that he had no objec- tion to the men retaining their union membership while working for WECO Admitting that he did not tell the men this latter fact, Watt asserts that he did not do so because they did not ask- (Tr 1:186). Such admission les- sens the weight to be given his further testimony that he would welcome the men to WECO's payroll (Tr. 1 83). It is clear that, although Watt would like to have had the experience and reliability of .tfiese electricians at WECO, he made little affirmative effort to encourage them to apply. Whether Watt followed his course of lukewarm effort because of the men's negative reaction at working for a nonunion firm, or because Watt perhaps felt that there was no way he could convince union electricians to work for a nonunion'shop, is not entirely clear. 22 Res- 2'0 The pleadings designate WPA as the alter ego of WECO The ' dif- ference is immaterial, for the alter and the ego are one and the same under the law 21 _ The hour is disputed, but I need not resolve the conflict 22 one of the electncians, Jerry W Wallace, returned about January 1984 and discussed with Jim Watt the possibility of being lured by WECO (Tr 1187, 247,, 2 259) Nothing developed from this interview and, although the cause is not fully explained in the record, it appears to be unrelated to Wallace's known union membership olution of the question is not really important, for the de- termination of whether a constructive discharge oc- curred does not depend on a finding that Watt acted from union animus and discriminatory intent. A constructive discharge is shown simply by the fact that Watt presented the electricians with a Hobson's choice: work for WECO without benefit of a union con- tract, or work elsewhere. By presenting its employees that choice on August 23, 1983, Respondent violated Section 8(a)(3) of the Act. Advance Electric, supra; Re- modeling By Oltmanns, 263 NLRB 1152, 1162 (1982). CONCLUSIONS OF LAW 1. Respondents WPA and WECO are employers within the meaning of Section 2(2), (6), and (7) of the Act. 2. WECO is the alter ego of WPA. 3. IBEW Local 584 is a labor organization within the meaning of Section 2(5) of the Act. 4. The following employees constitute a unit appropri- ate for collective bargaining within the meaning of Sec- tion 9(b) of the Act. All full-time and part-time journeymen electricians, apprentices, and helpers employed by Watt Plumb- ; ing, Airconditioning & Electric, Inc., and by its alter ego Watt Electric Company, excluding office , employees,, guards, watchmen, and supervisors as defined in the Act. - - 5.,At all. times material herein, IBEW Local 584 has been the exclusive collective-bargaining representative of the employees in the appropriate unit .within the meaning of Section 9(a) of the Act; 6. WPA effectively revoked the "Letter of Assent-A" on June 9, 1983, and therefore did not become bound to the 1-year extension of the expiration date provided for in the June 29, 1983, amendment to the 1982-1984 collec- tive-bargaining agreement. 7. By negotiating a reduction in the pay scale at mid- term.directly with its unit employees in July 1983, WPA violated Section 8(a)(5) and (1) of the Act. 8. By failing and refusing to recognize and bargain with the Union as the exclusive representative of its em- ployees in the appropriate unit, by failing to honor the 1982-1984 'CBA with respect to such employees and by failing to apply to such employees the terms and condi- tions of the 1982-1984 CBA, Respondent has violated Section 8(a)(5) and (1) of the Act. 9. By constructively discharging Donald J. Andrews, Robert L. Silver, Johnny F. Taylor, and ferry W. Wal- lace on August 23, 1983, by conditioning their employ: ment on working for WECO without the benefit of the 1982-1984 CBA applicable between WPA and the Union, and below the wage rates and benefits called for in the CBA, Respondent has violated Section 8(a)(3) and (1) of the Act. 10. These are unfair labor practices affecting com- merce within the meaning of Section 2(6) and (7) of the Act. 660 DECISIONS OF NATIONAL LABOR RELATIONS BOARD THE-REMEDY . . Having found that Respondent has violated Section 8(a)(3) and (5) the Act, I shall order that it cease and desist therefrom and take certain affirmative action de- signed to effectuate the policies of the Act. The General Counsel makes no contention that John 0. Watt is named in his capacity as an individual. It therefore appears that Watt is named only as an owner, representative, or officer of WPA and WECO. Accord- no monetary liability shall attach to Watt in his in- dividual capacity. See generally Contns Packing Co., 268 NLRB 113 (1983), In making the discnminatees whole in the manner es- tablished by the Board in' F. W. Woolworth Co., 90 NLRB 289 (1950), Respondent shall pay interest on any backpay which is determined in the compliance stage to be due 23 Interest shall be calculated in the manner pre- scribed in Florida Steel Corp., 231 NLRB 651 (1977) See generally Isis Plumbing Co., 138 NLRB 716 (1962). Re- spondent shall expunge any reference to the constructive discharges from the personnel records' of the discrimina-, tees. Sterling Sugars, 261 NLRB 472 (1982). As earlier discussed, the 1982-1984 CBA expired as to Respondent on May 31,-1984: and the 1-year extension of the CBA does not bind Respondent. However; ReSpond- ent cannot eat the 'cake without paying the baker. This means that Respondent, 'having revoked NECA's right to bargain on Respondent's behalf, could not avail itself of the deferred wage rate called for by the June 29, 1983 amendment negotiated by NECA, while at the same time decline to honor the 1-year extension. Respondent must therefore make contributions and backpay at the scale set forth in the' 1982-1984 CBA without regard to the de- ferred rate negotiated by NECA in the June 1983 amendment. Respondent was experiencing serious financial difficul- ty. In Watt's words, the (nonunion) competition was "fierce" and "cutthroat" (Tr. , 3:18.) The course of action Respondent chose in creating WECO, however, was worse than futile. Respondent now not only must make whole the constructively discharged employees and' re- imburse them and the contractual benefit funds, but it also must make whole all those employees hired by WECO between August 23, 1983, and May 31, 1984, pursuant to the terms and pay scale set forth in the 1982- 1984 CBA. 24 And it does not end there. Although the 1982-1984 CBA expired May 31, 1984 as to Respondent, it is well settled that terms and conditions of employ- ment cannot be unilaterally changed following the expi- ration of a CBA, Stone Boat Yard, 264 NLRB 981 (1983), enfd. 715 F.2d 441 (9th Cir. 1983), although the rule does not hold for continuation of any dues-checkoff provi- sion, 26 or for arbitration of a grievance arising after expi- 23 Backpay shall be due not only for any loss of earnings resulting from their constructive discharge on August 23, 1983, but also resulting from the reduced wages Respondent unlawfully paid them from July to August 23, 1983 As to the latter, backpay shall be computed in accord- ance with Ogle Protection Service, 183 NLRB_682 (1970) 24 The names of the affected employees and all amounts, due are mat: ters to be determined at the compliance stage 25 Hassett Maintenance Corp. 260 NLRB 1211 (1982) ration of the CBA which is not over an obligation argu- ably created by the CBA. 26 Thus, Respondent's backPay liability continues until Respondent complies with the order set forth below. On these findings of fact and conclusion's of law and the on entire record, I issue the following recommend- ed27 ORDER The Respondent, Watt Electric Company, and its alter ego, Watt Plumbing, Airconditionmg & Electric, Inc. and John 0. Watt, its officers, agents, successors, and as- signs, shall l. Cease and desist from. ' (a) Refusing to recognize and bargain with the Union, IBEW Local 584, as the exclusive representative of its employees in the appropriate unit with respect to wages, hours, working conditions, or other terms and conditions of employment of the employees. (b.) Bypassing IBEW Local 584 and dealing directly with its employees on wages, hours of work, or other conditions of employment. -(c) Discouraging membership in the Union, or any other labor organization, by constructively discharging its' employees through the imposition of illegal conditions of employment, or by otherwise discriminating against any of its emOloyees in regard to hire, tenure of employ- ment, or other terms and conditions , of their employ- ment. (d) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Offer Donald J. Andrews, Robert L. Silver, Johnny F. Taylor, and Jerry W. Wallace immediate and full reinstatement to their former jobs or, if those jobs no longer exist, to substantially equivalent positions of em- ployment, without prejudice to their seniority and other rights and privileges, dismissing, if necessary, any em- ployees hired on or after August 24, 1983, to fill any of said positions, and make such employees whole for any loss of earnings and other benefits , suffered as a result of the- discrimination against them in the manner set forth in the remedy section of the decision. (b)' Remove from its files any reference to the'unlawful discharges and notify the employees in writing that this has been done and that the discharges will ,not be used against them in any way. (c) Comply .retroactively with the terms ,and condi- tions of the 1982,1984 CBA, without regard to the modi- fications prescribed in the June 29, 1983 amendment, as those original terms would have applied through May 31, 1984, by making whole the Union for any and all 26 Digmor Equipment & Engineering Co, 261 NLRB 1175 (1982) 23 If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec 102 48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for -all pur- poses - WATT ELECTRIC CO 661 benefit funds and other- payments due and owing pursu- ant to the 1982-1984 CBA 2 8 (d) Make whole all unit employees for any losses they may have- suffered by reason• of Respondent's failure to honor the 1982-1984 CBA beginning in July 1983 and extending through May 31, 1984.2 9 (e) On request, recognize and bargain with the Union as the exclusive representative of the employees in the following appropriate unit concerning terms and condi- tions of employment: All full-time and part-time journeymen electricians, . apprentices, and helpers employed by Watt Plumb- ing, Aircondinoning & Electric, Inc., and by its alter ego Watt Electric Company, excluding office employees, guards, watchmen, and supervisors as defined in the Act. (f) Preserve and, on request, make available to the Board or its agents for examination and copying, all pay- roll records, social security payment records, timecards, personnel records and reports, and all other records nec- essary to analyze the amount of backpay due under the terms of this Order. (g) Post at its Tulsa, Oklahoma facility copies of the attached notice marked "Appendix." 3° Copies of the notice, on forms provided by the Regional Director for Region 16, after being duly signed by the Respondent's authorized representative, shall be posted by the Re- spondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respond- ent to ensure that the notices are not altered, defaced, or covered by any other material. (h) Notify the Regional Director in writing within 20 days - from the date of this Order what steps the Re- spondent has taken to comply. 28 The Board leaves to the compliance stage the full implementation of this provision E.G Sprinkler Corp, 268 NLRB 1241 (1984), Advance Electric, supra 29 In addition to any backpay Respondent must pay the employees with interest, as noted in the remedy section of this decision, Respondent must reimburse its employees for any expenses ensuing from its unlawful failure to make the required payments referred to in paragraph 2(c) as set forth in Kraft Plumbing, 252 NLRB 891 fn 2 (1980) 3 ° If 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 Na- tional Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the Nation- al Labor Relations Board" APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has or- dered us to post and abide by this notice. Section 7 of the Act gives employees these rights. To organize' To form, join, or assist any union To bargain collectively through iepresentatives of their own choice To act together for other mutual aid or protec- tion To choose not to engage in any of these protect- ed concerted activities. WE WILL NOT refuse to recognize and bargain with International Brotherhood of Electrical Workers, Local No. 584 as the exclusive representative of our employees in the following appropriate unit: All full-time and part-time journeymen electricians, apprentices, and helpers employed by Watt Plumb- ing, Airconditioning & Electric, Inc., and by its alter ego Watt Electric Company, excluding office employees, guards, watchmen, and supervisors as defined in the Act. WE WILL NOT refuse to honor and abide by the terms and conditions of any collective-bargaining agreement (CBA) which we may have now or in the future with IBEW Local 584, or with any other labor organization WE WILL NOT constructively discharge you by forcing you to quit rather than to work without the wage scale, benefits, and conditions of any CBA which we have with IBEW Local 584, or any other labor organization, and without representation by such labor organization where we have a legal obligation to recognize such union and honor the agreement. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you with respect to your rights guaranteed by Section 7 of the National Labor Relations Act. WE WILL NOT bypass IBEW Local 584, or any labor organization which is your exclusive representative, and negotiate directly with you concerning wages, hours, or terms and conditions of employment WE WILL, on request, recognize and bargain with IBEW Local 584 as the exclusive representative of all the employees in the appropriate unit concerning rates of pay, wages, hours of work, and other terms and condi- tions of employment. WE WILL make whole all employees employed in the unit at any time between July 1, 1983, and May 31, 1984, by transmitting, with interest, the contributions owed to various funds provided for in the 1982-1984 CBA; by re- imbursing, with interest, such unit employees for any ex- penses they may have incurred by our failure to make the required contributions; and by paying to all employ- ees employed at any time in the unit between July 1, 1983, and May 31, 1984, the difference, with interest, in wages actually paid and the wage scale specified in the 1982-1984 CBA. WE WILL offer Donald J. Andrews, Robert L Silver, Johnny F. Taylor, and Jerry W. Wallace immediate and full reinstatement to their former jobs or, if those jobs no longer exist, to substantially equivalent positions, without prejudice to their seniority or any other rights or pnvi- 662 DECISIONS OF NATIONAL LABOR RELATIONS BOARD leges previously enjoyed and WE WILL make them whole that the discharge will not be used against him in any for any loss of earnings and other benefits resulting from way. their discharge, less any net interim earnings, plus inter- est and WE WILL notify each of them that we have re- WATT ELECTRIC COMPANY AND ITS ALTER moved from Our files any reference to his discharge and EGO, WATT PLUMBING, AIRCONDITIONING & ELECTRIC, INC. AND JOHN 0. WATT