Griffith-Hope Co.

GRIFFITH-HOPE CO' Griffith-Hope Company and Local No. 1677, United Steelworkers of America. Cases 30-CA-7313 and 30-CA-7529 23 May 1985 DECISION AND ORDER By CHAIRMAN DOTSON AND MEMBERS HUNTER AND DENNIS On 11 August 1983 Administrative Law Judge Thomas' D. 'Johnston issued the attached decision.' The Respondent filed exceptions and a supporting' brief, and the General Counsel filed a 'brief in re= sponse to the Respondent's exceptions and in sup- port of the judge's decision. 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 as modified herein. ' The facts are set forth' fully in the judge's deci- sion. The parties' most recent collective-bargaining agreement is effective 1 August 1982 through 31 July 1985. It does not mention subcontracting, and the parties did not- discuss subcontracting during their contract negotiations. In late October 1982,2. the Union suspected that the Respondent had'sub- contracted unit work and that, as a result, the Re-' spondent would lay off unit employees. Union Staff Representative Thomas Medley asked the --Re- spondent's executive ' vice president Samuel Hope III about the situation. Medley conveyed the Union's concern that subcontracting would cause layoffs, and asked that, before the Respondent would lay off employees, it would' meet with the Union to see what relief the unit could offer so as to avert the need for layoffs. In a letter the Respondent presented` to • its bank's executive vice president at the outset of its 19 Oc- tober meeting with the bank, the Respondent. in- formed the bank that it had already implemented a subcontracting program because "employee wages and past-negotiated benefits continue to be the most expensive cost 'item we have. This fact is so apparent that we have concluded we simply cannot afford the luxury of all that in-house labor' The entire 'program of subcontracting . . -. will be continued to substantially reduce these-employee- related costs'.". Around 10 November, the Respondent gave the Union a list of 11 employees it would lay off on 12 November. The layoff occurred as scheduled. The Respondent's vice president of manufacturing told The Respondent has requested oral argument The request is denied as the record, exceptions, and briefs adequately present the issues and the positions of the parties. 2 Unless noted otherwise, all dates are in 1982 487 the union president the layoffs were, in part, a result of the subcontracting. The Respondent in- creased the amount of its subcontracting and on 17 December it laid off 25 employees and, in the first week of January 1983, 4 more. The Respondent did not bargain with the Union about either the deci- sion to subcontract or its effects. After the January layoffs, the Union filed unfair labor practice charges and a grievance. In early February 1983 at one of the grievance meetings, the Respondent told the Union it would recall em- ployees if they would take a 50-percent cut in wages and benefits. In Otis Elevator Co., 269 NLRB 891 (1984), we reevaluated the scope of an employer's obligation under Section 8(d) of the Act to bargain with a certified bargaining . representative about various management decisions and their effects. The plural- ity opinion in,Otis establishes that, when a particu- lar management, decision turns upon labor costs, it falls within the scope of Section 8(d) and concerns a 'mandatory subject of bargaining. In the present case, the evidence shows that the Respondent's de- cision to subcontract was a mandatory subject of bargaining. In both its 19 October letter to its bank, and its February 1983 offer to employees to return from layoff at 50 percent of the wages and benefits set forth in the parties' contract, the Respondent indicated that its decision to subcontract unit work turned upon labor, costs within the meaning of Otis. Further, it is clear from the record that the Re- spondent viewed the subcontracting program as a temporary one that did not effect a fundamental change in the nature of its operation. Accordingly, we find that the Respondent violated Section 8(a)(5) and (1).of the Act when it made the deci- sion to subcontract without fulfilling its obligation to bargain first with the Union.3 - Notwithstanding our determination that the Re- spondent violated the Act when it subcontracted without bargaining with the Union, we reverse the judge's additional finding that- the Respondent's subcontracting also violated Section 8(a)(3) and (1) of the Act...Although the Respondent subcontract- ed its work to avoid- paying the contractual wages 8 Although not addressed in any of its exceptions, in its brief to the Board the Respondent suggests that the fudge-should have deferred the unfair laboi practice matter to the parties' grievance-arbitration system We find no merit to this argument as the Respondent never argued before the judge that he should defer the subcontracting dispute to the parties' gnevance-arbitration procedure MacDonald Engineering Co, 202 NLRB 748 (1973) - In addition to the relief the judge recommended, we will also order the Respondent to remove from its files any reference to the resultant unlaw- ful layoffs and to notify the affected individuals that this has been done, and that its unlawful conduct will not be used as a basis for future per- sonnel actions concerning them See Sterling Sugars, 261 NLRB 472 (1982) 275 NLRB No.. 73 488 DECISIONS OF NATIONAL LABOR RELATIONS BOARD and benefits, we do not. find its unlawful action was "inherently destructive" of its employees' Section 7 rights. In particular,.we rely on the judge's finding there was no evidence of union animus. ,According- ly, we shall dismiss that part of the complaint that alleged the Respondent's decision to subcontract violated Section 8(a)(3) and (1) of the Act; this par- tial dismissal does not affect the remedy.4 The judge also found that the Respondent violat- ed Section 8(a)(5) and ( 1).by changing its insurance carrier on 1 October from a superior one to an in- ferior one and then taking excessive paycheck de- ductions from certain employees, all without bar- gaining with the Union. The Union filed both an unfair labor practice charge and a grievance over the insurance change. The Respondent later supple- mented the insurance with its own coinsurance, ceased overdeducting money from employee pay- checks, and reimbursed employees for the excessive, paycheck deductions it had previously made. The Respondent urged the judge to defer resolution of this dispute to the parties' grievance procedure, but he refused on the ground that the issue did not `in- volve a matter of contract interpretation. The judge ordered the Respondent to cease and desist from making such unilateral changes. However, he recommended no further remedy because the col- lective-bargaining agreement authorized the Re-' spondent to change insurance carriers provided the benefits were equal or better, and the Respondent subsequently met that condition as well as refunded any excessive deductions. We find merit in the Respondent's exception to the judge's failure to defer- this issue to the griev- ance and arbitration' procedures of the parties' col- lective-bargaining agreement. In United Technol- ogies Corp., 268 NLRB 557 (1984), the' Board held that, where an employer and a union have volun- tarily elected to create dispute resolution machin- ery culminating in final and binding arbitration, it is contrary to the basic principles of the Act for the Board to jump into-the fray prior to an honest at- tempt by the parties to resolve their disputes through that machinery. Here, the parties met on a matter covered by the collective-bargaining agree= ment and resolved their dispute through the griev- ance mechanism. The Union's president Obreno- vich, who was responsible for handling grievances, testified that, by, meeting with the Respondent after the Union filed its grievance' over the ,insurance, Obrenovich accomplished everything the Union was seeking. The matter was appropriate for, defer- ral and we find that deferral to the resolution See Pennsylvania Energy Corp, 274 NLRB 1153 ( 1985), Stone & Thomas, 221 NLRB 573 (1975), American N eedle & Novelty Co, 206 NLRB 534 (1973) reached through the grievance procedures is also appropriate. Accordingly, we shall dismiss that part of the complaint. AMENDED CONCLUSIONS OF LAW 1. Substitute the following for Conclusion of Law 5. "5. By unilaterally subcontracting its bargaining unit work beginning about October 1982, without notifying or bargaining with the Union-over its de- cision to do so or about the effects of the decision on the unit employees , the Respondent has engaged in unfair labor practices in violation of Section 8(a)(5) and (1) of the Act."' . 2. Delete Conclusion of Law 6 and renumber the subsequent paragraph accordingly. ORDER - The National Labor Relations Board orders that the Respondent, , Griffith-Hope Company, West Allis, Wisconsin, its officers, agents, successors, and assigns, shall, -' _ 1. Cease and desist from - (a) Subcontracting bargaining , unit work without prior notice. to and bargaining with the Union. . (b) Laying off unit employees by unilaterally subcontracting bargaining unit work. (c) In any like or related manner interfering with, restraining, or coercing employees , in the ex- ercise of- the; rights guaranteed them by Section 7 of the Act. 2. Take the, following affirmative action neces- sary, to effectuate the policies.of the Act. (a) Terminate its subcontracts for bargaining unit work which -have resulted in the 40 unit employees being laid off work as a result on 12 November and 17 December 1982 and in January 1983. - - (b) Reinstate at its plant the bargaining unit work previously performed by its employees represented by the Union, and offer to those 40 employees laid off work as a result of the unilateral subcontracting of bargaining unit work found herein immediate and,full reinstatement to their former jobs or, if those jobs no longer exist, then to -substantially equivalent jobs, without prejudice to their seniority and , other rights and privileges, and. make them whole for any loss of earnings and other, compensa- tion they may have suffered by laying them off work in the manner set forth in the remedy section of the-judge's decision, as modified herein. ;(c) Bargain collectively with the Union about any decision to subcontract when the decision is based on labor costs. (d) Expunge from its files any reference to the unlawful layoff and notify the affected employees in writing that this has been done and the evidence GRIFFITH-HOPE CO. of their unlawful layoffs will not be used against them in any way. (e) Preserve and, on request , make available to the Board or its agents for examination ,and copy- ing, 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. (f) Post at its West Allis, Wisconsin plant copies of the attached notice marked "Appendix."5 Copies of the notice, on forms provided by the Re- gional Director for Region 30, after being signed by the Respondent's authorized representative, shall be posted by, the Respondent 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 Respondent to ensure that the notices are not altered, defaced, or covered by' any other material. (g) Notify the. Regional Director in writing within 20 days from the date of, this Order what steps-the Respondent has taken to comply. IT IS FURTHER ORDERED that the complaints be dismissed insofar as they allege unfair labor prac- tices not specifically found herein. MEMBER DENNIS, concurring in the result. I agree that the Respondent violated Section 8(a)(5) by subcontracting unit work without bar- gaining with the Union over. the decision or its ef- fects. Applying the two-step test set forth in my concurring opinion in Otis Elevator Co., 269 NLRB 891, 895 (1984), I find first that the Respondent's decision was "amenable to resolution through the bargaining process." The Respondent's statement to its bank, quoted in the majority opinion , reveals that labor costs were a significant consideration in the decision to subcontract. Turning to the second part of my Otis test, the Respondent's decision did not represent a significant change in business oper- ations. Further, the evidence does not establish the presence of any other burden elements- such as a need ' for speed or confidentiality . Accordingly, I conclude that the benefit for the collective-bargain- ing process outweighs any burdens placed on man- agement that are apparent from the record.' I 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 " i It is unnecessary to decide whether the subcontracting also violated Sec 8(a)(3), as the finding, of such an additional violation would not affect the remedy I also concur in the majority's decision to defer the alleged 8(a)(5) uni- lateral change in insurance coverage to the settlement the parties reached 489 pursuant , to their grievance procedure See Alpha Beta Co, 273 NLRB 1546 (1985). 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 ordered us to, post and abide by this notice. WE WILL NOT refuse to bargain collectively with Local Union No. 1677, United Steelworkers of America as the exclusive bargaining representative of our employees in the appropriate unit described below with respect to wages, hours, and other terms and conditions of employment. The appropri- ate unit is: All production and maintainence employees of the Employer; excluding office clerical em- ployees, professional employees, guards and supervisors. WE WILL NOT unilaterally subcontract bargain- ing unit work, or otherwise' change the wages, hours, and other terms and conditions of employ- ment of our unit employees, without prior notice to and bargaining with the above-named Union or any other labor organization they may 'select as their exclusive bargaining representative. WE WILL NOT lay off unit employees by unilater- ally subcontracting bargaining unit work. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of the rights guaranteed them by Sec- tion 7 of the Act except to the extent that such rights may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in Section 8(a)(3) of the Act. WE WILL terminate our subcontracts for bargain- ing unit work which have resulted in the 40 unit employees being laid off work on 12 November and 17 December 1982 and in January 1983. WE WILL reinstate at our plant the bargaining unit work previously performed by our employees represented by the above-named Union and WE WILL offer to those 40 employees who were laid off work, as a' result of the unilateral subcontract- ing of bargaining unit work herein found, immedi- ate and full reinstatement to their former jobs or, if those jobs no longer exist, then to substantially equivalent jobs, without prejudice to their seniority 490 DECISIONS OF NATIONAL' LABOR RELATIONS BOARD and other rights and privileges, and WE WILL make each of them whole for any loss of earnings and other compensation they may have suffered by our laying them off work, with interest. - WE WILL expunge from our files any references to the unlawful layoffs and WE WILL notify the af- fected employees that this has been done and that evidence of- the' unlawful layoffs "will not be used against them in any way. - - WE WILL bargain collectively- with Local Union No. 1677, United Steelworkers of America as the exclusive bargaining representative of our employ- ees in the' aforesaid appropriate unit with respect to wages,' hours, and other -terms and conditions of employment. - - 1 -1 WE 'WILL bargain, collectively with the Union about any decision to-subcontract when the ; deci- sion is based on labor costs. . -GRIFFITH-HOPE COMPANY DECISION STATEMENT OF-THE CASE THOMAS D. JOHNSTON, Administrative Law Judge. These consolidated cases were heard at Milwaukee, Wis- consin, on April.28 and 29, 1983,. pursuant to a charge filed by Local No. 1677, United Steelworkers of Amer- ica (the Union) in, Case, 30-CA-7313 on September 2, 1982,1 and a charge filed :byc,the United Steelworkers of America (the International) in Case 30-CA-7529 'on Jan- uary 5, 1983, and complaints issued in those cases on De- cember •17:and February 14, 1983, respectively. The complaints allege that Griffith-Hope Company (the Respondent) -,violated . Sections 8(a)(1) and (5) and 8(d) of the ,National:Labor,-Relations Act (the Act) -by failing and,, refusing to . bargain -in good faith with the Union. by unilaterally, without prior notice to or afford- ing the Union an opportunity, to negotiate and bargain, changing during the existing, collective-bargaining agree- ment-the -.-insurance carrier providing medical insurance coverage, to-the unit employees, and deducting from the paychecks of certain of the unit employees the difference in ,the;.premium cost between the premium paid to the new medical insurance carrier and the premium cost paid to the, Health ,Maintenance Organization (HMO). The Respondent also violated Section 8(a)(1), (3), and (5) and Section . 86) of-the, Act by failing and refusing to bargain in good faith with the,Union by subcontracting, without prior ,notice _to or bargaining with the Union concerning the decision and/or, the, effects of the decision' occurring during; te!term of,the collective-bargaining agreement, the vast majority of its bargaining unit work to outside companies and discrimmatonly laid off. approximately 11, 25 and ; 4r of its 0- unit employees as- a. consequence of said subcontracting'which'was"a midterm repudiation of its collective-bargaining agreement with the Union, and All dates referred to are in 1982 unless otherwise stated the layoffs were inherently destructive of employees' rights under Section 7 of the Act. The Respondent in its answers dated January 11 and February 24, 1983, denies having violated the Act as al- leged and asserts various affirmative defenses. With re- spect to the allegations pertaining to changing insurance carriers and making certain deductions, the Respondent's affirmative defenses are those matters should be referred to the grievance and arbitration process under Collyer In- sulated Wire, 192 NLRB 837 (1971), pursuant to a,griev- ance the Union filed on _ September 9; the Respondent had a contractual right to change insurance carriers which it had followed; the deduction of the difference between the premiums paid to the new insurance carrier and contributions paid to HMO were in accordance with the collective-bargaining agreement; the Respondent in making HMO contribution deductions acted pursuant to HMO regulations; and.the deductions were made in ac- cordance with past practice and the Union, waived its right, to challenge current deductions, which like earlier deductions were made pursuant to'a right expressly re- served in the past and present collective- bargaining agreements. Those affirmative defenses raised are: sub- contracting has been done since at least 1952 and no col- lective-bargaining agreement has limited such right; the management-rights provision encompasses the right to subcontract; the absence.of a prohibition against subcon- tracting coupled-with the retention of rights clause in the management-rights provision gives it-the right to subcon- tract; and even assuming the Respondent was required by the collective-bargaining agreement or the Act to bar- gain with the Union regarding subcontracting, the pre- cipitous and wholly unexpected change for the worse in October 1982 in the Respondent's financial situation2 gave it no time (and thus no duty) to bargain over any decision td subcontract. The issues involved are whether the Respondent vio- lated Section 8(a)(1), (3), and (5) and Section 8(d) of the Act as alleged by 'refusing to bargain with the Union in good faith by unilaterally changing its insurance carrier; deducting the difference in premium cost paid to the new insurance carrier and those paid to HMO; subcon- tracting bargaining unit work; discriminatorily laying off 40 employees as. a result of such subcontracting; and whether the affirmative defenses raised by the Respond- ent are valid. On the entire record in this case and from my observa- tions of the witnesses and after due consideration of the z This financial situation was described as follows In October, a new cost-accounting system showed Griffith-Hope to be unable to survive, much less remain competitive, given its outmoded plant and machinery and its overhead and employment costs At the same time, the Compa- ny's bank changed the status of Griffith-Hope's $850,000 debt from a demand note to a cash-collateral account This meant that the bank could close the Company 'at any time Griffith-Hope's lender made it clear' that the Company would be forced to close if immediate and drastic steps were not taken to begin showing a profit A lack of money prevent- ed the Company from making much-needed changes in its plant and ma- chinery, so the bank demanded a deduction in employment costs How- ever, any layoff due to subcontracting will be temporary, not permanent, although the duration of such layoff is presently impossible to estimate Griffith-Hope needs a total re-tooling before it can expect to remain com- petitive'in the future GRIFFITH-HOPE CO. briefs filed by the General Counsel3 and the Respondent, I make the following4 FINDINGS OF FACT 1. THE BUSINESS OF THE RESPONDENT The Respondent, a' Wisconsin corporation with its office and place of business located at West Allis, Wis- consin, is engaged in the business of the manufacture and nonretail sale and distribution of metal stampings and re- lated products During the calendar years 1981 and 1982 each, the Respondent in the course of its operations sold and shipped from its West Allis,' Wisconsin facility prod- ucts, goods, and materials, valued in excess of $50,000, directly to points located outside the State of Wisconsin. The Respondent is an employer engaged in, commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED Local No. 1677, United Steelworkers of America is a labor organization within the meaning of Section 2(5) of the Act. III. THE UNFAIR LABOR PRACTICES A. Background and the Bargaining Unit The Respondent operates a plant located at West Allis, Wisconsin, where it is engaged in the manufacture and nonretail sale and distribution of metal stampings and re- lated products. Included among its officers and supervi- sory personnel are President Samuel Hope Jr., Executive Vice President and Treasurer Samuel Hope III, Vice President of Manufacturing Raymond Brzenk, Comptrol- ler Gary Perschbacher, and Plant Superintendent Joseph Selz. Members of the board of 'directors include Presi- dent Hope Jr., who is the chairman, Executive Vice President Hope. III, Mrs. Hope Jr., Roland Sprenger, Herman Linke, and Davis. Since about 1934, the Union has had successive collec- tive-bargaining agreements with' and has been the exclu- sive representative of the Respondent's employees in the following described unit which is an appropriate unit for the purpose of collective bargaining within the meaning of Section 9(b) of the Act: All production and maintenance employees of the Employer; excluding office clerical employees, pro- fessional employees, guards and supervisors. The Union at all .times material herein has been, and is now, the exclusive representative of the employees in the aforesaid unit for the purposes of collective bargaining within the meaning of Section 9(a) of the Act. The current collective agreement between the Union and' the Respondent,- which was signed on August 23, is effective by the terms from August 1, to midnight July 3 The brief filed by the General Counsel was submitted by Sharon A Gallagher, Esq, for the General Counsel . ' Unless otherwise indicated the findings are based on the pleadings, admissions, stipulations, and undisputed evidence contained in the record which I credit ' 49i 31, 1985. It replaces the pnor.agreement which expired on July 31. B. Unilateral- Changes in Insurance Carriers and Deductions for Premium Cost Differences Article XX of, the current collective-bargaining agree- ment entitled "Life and Accident ' and Sickness Insur- ance" provides, in pertinent part, as follows: Section` 2. Hospitalization and Surgical. The Com- pany will continue the Health and Surgical Insur- ance programs described as follows: Aetna Hospital-180 day Hospital stay R. & C. charges - Aetna Surgical-Reasonable & Customary charges Aetna Major-No Maximum Medical-$25 deductible The Company reserves the right to determine the insurance carriers for all insurance programs de- scribed under Article XX and agrees that- benefits will be equal or better than had previously been ne- gotiated. The Company agrees to provide a com- parison of benefits prior to changing carriers. The Company will bear the cost for both em- ployees and dependents electing to be covered under these programs. • Effective 9/1/79 employees may enroll in Family' Health Plan, a,qualified H.M.O. for one year peri- ods. All provisions shall be as provided by Federal Laws-covering H.M.O.'s. Benefits are - to be those normally provided all users without adding addi- tional cost to the Company. The Company shall further continue this insur- ance for retired employees and dependents. for a five year period, subject to the following. qualifica- tion. • These provisions except for the future increases in ben- efits indicated are substantially identical to sections XII and -XIII of the prior collective-bargaining agreement, which covered those same benefits. During negotiations for the current collective- bargain- ing agreement changes in the insurance benefits sought by the Respondent were discussed. According to, the In- ternational's staff representative Thomas Medley, who represents the Union, as a result of such negotiations.the Union relinquished pay for certain personal holidays and holidays around the, Christmas shutdown period, as pro- vided for in the prior collective-bargaining agreement, based on the Respondent's promise this would be a basis of dealing with the insurance plan and keeping it as they had it. Union President Nicholas Obrenovich • testified that Medley offered the personal holidays to offset medi- cal costs after the Respondent had asked for copayment insurance with higher deductibles on the grounds the spi- raling cost of 'medical coverage was putting a serious cramp in their style. . E 492' DECISIONS OF NATIONAL LABOR RELATIONS BOARD ,Medley, Obrenovich, and= the Respondent's executive vice president Hope III all denied there was any mention made in negotiations about changing insurance carriers. About September -1 Obrenovich stated the Respond- ent's vice president Brzenk informed him the Respondent would be changing ; the insurance carrier.- Pursuant to Obrenovich's inquiries Brzenk said the cost's would be less and there' would be a difference of about $30 be- tween HMO participants and the new insurance. According to Obrenovich,. if the. base plan cost is less than HMO--then the,employees under HMO5 have to pay the difference. Under the Aetna,Life and Casualty Company (Aetna) plan with its present $25 deductible, there was no cost to those participants • under HMO, however before the deductible was reduced to the $25 level in 1981 they did have to pay a difference in cost. Brzenk explained if the Respondent purchased insurance with a $100 deductible since such insurance which would cost less than the insurance with the $25 deductible, this would result in employees under HMO -having to pay $32.80. - - The following day David Kloss, who is the Union's ,vice president and insurance representative, and Obreno- vich met .with. Brzenk at which time .,they discussed a sheet . of paper furnished by, the Respondent listing a comparison of the -insurance benefits.5- Kloss' version of the meeting was Brzenk informed them the Respondent was changing,its insurance carrier from' Aetna to Mid- western National Insurance Company (Midwestern) and the insurance would have a $100 deductible of which the Respondent would pay $75 and the employee would pay $25.-Upon their reminding Brzenk the-deductible provid- ed for under the collective-bargaining agreement was $25 rather than $100 Brzenk agreed. Kldss and 'Obrenovich then questioned Brzenk about how the employees under HMO. would be affected whereupon Brzenk said they would have to make up the difference to which- Kloss objected as being unfair. Brzenk insisted that was the way it had to be. - . . . -Obrenovich, who corroborated Kloss, said he also in- formed Brzenk if he went ahead with his plan about the deductible he would be violating the collective-bargain- ing agreement.' - Brzenk, who 'acknowledged -having conversations with Kloss - and Obrenovich in which • they questioned him about the proposed insurance not - being the same as Aetna,, did not dispute-their. testimony which I credit. About - September 8. Obrenovich credibly testified without denial that he mentioned to Executive Vice ,President Hope III that in his opinion if the Respondent -went ahead with the $100 deductible it would violate the collective-bargaining agreement and urged him not to do so in order to keep himself in ,A good' light in case he needed future-,concessions: - Staff Representative Medley testified that in Septem- :.-ber after learning 'from Obrenovich about the Respond- ent s plan to change its insurance carrier he contacted -Executive' Vice'President Hope III and informed him he -5 Obrenovich stated Executive Vice-President Hope, III once estimated approximately 40'percent of,the Respondent's employees were covered by HMO - ` - 6 This particular document was not proffered as evidence thought they had agreed that was going to be the insur- ance that was going to govern. When Hope denied he had violated anything Medley accused Hope of violating the collective-bargaining agreement as it related to addi- tional money on the deductible and said they had not agreed that the Respondent could alter the insurance plan. Medley mentioned that while it may not have af- fected one group of employees by the Respondent insur- ing itself it had a definite effect on another group of em- ployees and that Hope knew about the employees under HMO as they had discussed HMO during bargaining ,Medley said he would have Obrenovich follow through on the basis of the insurance and that the collective-bar- gaining agreement stipulated if they changed carriers the level of benefits would remain the same. Medley also mentioned that if the Respondent changed carriers.not only would they provide them with the same level of benefits but they also wanted the same level of service. Medley indicated that while the Respondent and the Union's committee and president could meet concerning this, any plan finalized would be through his direction. Hope III did not dispute Medley's testimony, which I credit concerning this conversation. . The Respondent, effective October 1, switched its in- surance career from Aetna to Midwestern. On February 12, 1983, the insurance agent who han- dled both the Aetna and Midwestern insurance plans for the Respondent furnished the Respondent with a summa- ry of both plans along with a comparison of their bene- fits. The Aetna plan summary was as follows. The Basic Plan provides reasonable and customary payment, for inpatient treatment of an accident or sickness. Additionally, the Basic` Plan will pay the costs of surgical, lab and x-ray charges while not confined as an inpatient The Major-medical plan provides other benefits such as drugs, office calls, medical equipment, artifi- cial limbs, etc: The Major-medical will pay 80% of all covered expenses after the $25.00 deductible has been satisfied. The 20% "out-of-pocket" cost will be paid by the member without a maximum dollar limit. The ambulance benefit is a flat $30 00 per trip to a maximum of $90.00 per year. The Midwestern plan summary was as follows: This plan does not have a basic or major-medical section. It, is, instead, a Comprehensive major-medi- cal plan with a "calendar year deductible" for "all causes," accident or sickness. Medical expenses are paid as,they are incurred in a calendar year without regard to the type of claim J inpatient, outpatient, drugs, office calls, etc.). Under,the . current Griffith Hope Company plan, in a calendar year, the first.-$100.00 of medical ex- penses is paid by the member. The next $2,000.00 of medical expenses are paid on a shared basis with the insurance company paying 80% ($1,600.00) and the GRIFFITH-HOPE CO. . 493 member paying 20% ($400.00). The remaining med- ical expenses for the balance of the calendar year will be paid in full (100%) by the insurance compa- ny. There are two additional features that will limit the amount of "out-of-pocket" costs to the member. First is a Supplemental Accident Benefit that pays the first $500 00 of all medical expenses relating to an accident. The dedutible [sic] and co-insurance will be waived in this instance. The second, previously. explained, protects the member with a maximum "out-of-pocket" expense of $400.00 plus, the .$ 100.00 deductible. If-applicable, the member is further protected by - a maximum "out-of-pocket" expense of $1,000.00 per calendar year, including-the: deductible, if under the family plan. ' - . ' - A comparison of the benefits between the two plans was as follows: BENEFIT AETNA MNI CURRENT PLAN . HOSPITALIZATION 120 days per disability , R&C 365 days per disabilty, •UR&C subject to SURGICAL CARE OR SURGERY R&C MATERNITY R&C PHYSICIAN VISITS IN HOSPITAL R&C X-RAY & LAB TESTS R&C RADIATION THERAPY R&C FIRST AID/EMERGENCY CARE R&C ded. & co-in. _UR&C subject to ded. & co-in. UR&C subject to ded & co-in. UR&C subject to ded. & co-in UR&C subject to ded & co-in. UR&C subject to ded. & co-in. if care rendered within 72 hours of UR&C within 90 days of accident, first an accident INPATIENT PSYCHIATRIC CARE AMBULANCE R&C $30 per trip covered; $90 yearly maximum DEDUCTIBLES PERCENT OF CHARGES COVERED PHYSICIAN OFFICE VISITS PHYSICAL THERAPY IMMUNIZATION & INJECTIONS - MEDICAL SUPPLIES PRESCRIPTION DRUGS ALLERGY CARE - PEDIATRIC CARE OUT-PATIENT MENTAL HEALTH SERVICES ALCOHOLISM/DRUG ABUSE ORAL SURGERY $500 in full any additional subject to ded. & co-in UR&C subject to ded . & co-in. UR&C subject to ded. & co-in $25 per person per year; 2 ded. per family $100 per person per year, 3 ded . per family per year 80% after payment of $25 ded. 80% after payment of $25 ded. 80% after payment of $25 ded per year .80% after payment of $100 ded. 80% after payment of $100-ded. 80% after payment of $100 ded. Injections covered @80% after payment of Interjections convered @80% after $25 ded.; immunization not covered nient"of $100 ded., immunizations 80%-after payment of $25 ded. 80% after payment of $25 ded. 80% after payment of $25 ded. 80% after payment of $25 ded Up to $500 covered yearly 45 inpatient days; $500 yearly maximum for outpatient care Covers gingivectomy, alveolectomy & api- coectomy No limit on out of pocket expenses.. The document also defined the abbreviations used, and the term "co-in."was defined as that part of the medical expenses that is paid by the -insurance and member to- gether. Member means the insured or employee covered under the plan. Brzenk testified Obrenovich and Kloss were furnished with a copy of this document containing the summary of both plans and a comparison of their 'benefits to look over; and about a week'later he met with them to discuss anything they felt was a problem at which time•questions were asked about the third party deductibles, X-rays; and diagnostic comparisons. Brzenk also credibly stated without denial that after receiving this document the Respondent determined there was an error in the understanding or interpretation -ered to age 6 80% after payment of $100 ded. 80% after payment of $100 ded. 80% after payment of $100 ded. 80% after payment-of $100.ded. pay- cov- $500 yearly plus the plan's regular benefits or sickness ; 70 inpatient days $500 maximum plus the plan's regular benefits for sickness Covers gingivectomy, alveolectomy & api- coectomy subject to ded & co-in. $100-ded. per person per year, $300 per family per year, maximum out of pocket expenses per family per year including deductibles is $1000. of the insurance contract, whereupon they informed the Union they would' definitely follow everything the Aetna plan offered and they were co I insuring that portion that was not specifically-covered by the Midwestern plan. Under this procedure', as explained by Brzenk, the em- ployees present claims to 1the office manager-who proc- esses them and, along-with,an- agent representing Mid- western, reviews the claims. The Respondent then makes out a check for. its part and Midwestern pays for its part. Obrenovich,7"-.Medley, and Kloss described the Mid- western plan as being different, from the, Aetna plan, which they felt provided better coverage. The differ- 7 Obrenovich denied ever seeing a copy of the insurance contract itself , - 494 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ences `as described by Obrenovich were : the Aetna plan was a normal type medical plan with" a- major medical which included a $25 deductible ; the Midwestern plan had a deductible for everything ; the Aetna plan had un- limited coverage; the Midwestern plan had a million dollar lifetime maximum; and the Aetna plan had a de-, ductible for two dependents while the Midwestern plan had a deductible for three dependents . Under cross-ex- amination Obrenovich acknowledged the Respondent did not change the $25 deductible under the basic plan and that the collective-bargaining agreement did not state the Respondent could not self-insure itself although it had never done so previously. • The differences explained by Medley were under the Midwestern plan many employees were requested to first pay money themselves which the Respondent would then reimburse them for by mailing checks out to those employees . Medley stated he complained to the Re- spondent the Union did not want checks made out to the -employees or money channeled through them which was a change in policy they would not accept. Kloss described the differences were: under the Aetna plan employees would go down and have work such as laboratory or diagnostic work performed - with the bills. being taken care of: under the Midwestern plan employ- ees- had to bring bills in to the office. The Respondent is- now self-insuring itself to make up the difference be- tween the coverages of the Midwestern plan and Aetna plan whereas under the Aetna plan as in the past the Re- spondent had never self-insured itself. Both Brzenk and Comptroller. Perschbacher acknowl- edged the Midwestern plan by itself does not provide coverage as good as that under the Aetna plan. Howev- er, they contend the coverage under the Midwestern plan plus the coinsurance by the Respondent is equal to or better in certain areas than coverage under the Aetna plan. Examples of these better benefits as pointed out by Brzenk were the Midwestern plan provided for 365 days hospitalization per disability to 120 days under the Aetna plan; the time limits on first aid or emergency care were 90 days after an accident under the Midwestern plan, but only 72 hours under the Aetna plan ; on ambulance fees, there is a $30-limit per trip with a $90 yearly maximum under the Aetna plan and no limits under the Midwest- ern plan; on out-patient mental health services the Aetna plan unlike the Midwestern plan did not include the plans's regular benefits for sickness ; the Aetna plan only - provides ' impatient days for alcoholism and drug abuse, whereas the Midwestern plan provides for '70 inpatient 'days; and under the Midwestern plan an employee only pays a maximum of $1000 per family per -year while under the Aetna plan the employees always- pay 20 per- cent. ' Brzenk-stated the only' difference between the Mid- western plan plus the - coinsurance 'and the Aetna plan' is the 'Midwestern plan' had a $1 million lifetime limitation per person. • Under cross-examination, Obrenovich, who as union president also handled grievances; stated that after the charge °in the instant case involving the insurance change was filed he later filed a grievance8 concerning the insur- ance coverage. Meetings were then held between the Re- spondent and the Union regarding the insurance cover- age issue at which Obrenovich stated he got everything he wanted and the questions he had raised with the charge and the grievance regarding this issue has been settled to his satisfaction except it has not been deter- mined whether the law had been violated. According to Obrenovich, the Respondent provided the Union with a letter stating it, was not guilty of any unfair labor prac- tice and denied it did anything wrong Further, Obreno- vich testified the Respondent is now paying the premi- ums, the employees only have a $25 deductible, and the employees who were affected under the HMO have re- ceived their backpay. Medley, however, denied the insurance problem had been resolved to his satisfaction. His reason was he has seen nothing to indicate the employees have unlimited diagnostic, laboratory, and X-rays which he says the Re- spondent admits is not specified in the agreement but states is covered. While Medley and Kloss contended some employees had not had their claims paid, those individuals were not identified. Both Brzenk, while acknowledging there could be two employees having problems receiving pay- ment from Midwestern, and Comptroller Perschbacher denied the Respondent has not paid those claims it owes. According to Brzenk and Perschbacher, after recog- nizing there had been an error, those employees under HMO, for whom deductions were taken out of their pay for at least 6 months beginning October 1, were reim- bursed for such deductions and on March 17, 1983, reim- bursement checks were also sent to the laid-off and re- tired employees under HMO who had contributed. C.' Subcontracting and the Layoffs of Employees -During negotiations for the current collective-bargain- ing agreement, which lasted from about June until August, the Union agreed to certain wage concessions. Based on the testimony of Staff Representative Medley and President Obrenovich, this occurred after the Re- spondent had represented it was having financial difficul- ties which it attempted to demonstrate through the use of charts and other information. The Union's auditor had examined the Respondent's records. Medley stated the Respondent told and more or less promised them that would be an approach to keep their people working and possibly to bring back some of the employees who were on layoff. Obrenovich stated Executive Vice President Hope III said he_ had customers waiting for cost cuts and he would not be surprised that after the concessions were given and the contract was settled to see some of the employees on layoff return. Obrenovich testified the Union's auditors had reported -that the Respondent. was r in need of approximately $115,000, to a $120,000 in relief. Obrenovich estimated the Union gave the Respondent approximately $195,000 in wage concessions during the negotiations. Medley, whose testimony was corroborated by Obren- ovich, stated that throughout negotiations he stressed the 8 This grievance was not proffered as evidence. ' 9 The auditor did not testify. GRIFFITH-HOPE CO Union was concerned about layoffs and that if the Re- spondent wanted consideration as it related to the terms of the agreement to come to him before they put a pad- lock on the door. Both Medley and Executive Vice President Hope III denied that there was any discussion about subcontract- ing during negotiations. Shortly after the employees returned to work follow- ing thestrike,10 the Respondent recalled 11 laid-off em- ployees to work. Obrenovich stated Vice President Brzenk informed him at the time of the recall that they had a lot of orders to fill. Medley also stated after the new collective-bargaining agreement was reached Plant Superintendent Selz mentioned to him that the Respond- ent's production was up, which he attributed to the Union's concessions during bargaining, and that laid-off employees were returning to -work and he had no reason to disbelieve that all of them would be back before the end of the month. Brzenk contended the laid-off employees were recalled right after. the strike because of a special need for pro- duction as a result of the strike. - Obrenovich testified that about October 10 Brzenk, in the presence of Plant Superintendent Selz, informed him that productivity was not what they had hoped for at the time of negotiations and cited absenteeism as part of the reason. Obrenovich promised to'work on it and remind- ed Brzenk that if they were in any kind of trouble and might have to make some serious changes, including modifying the contract, to let him know and that his po- sition had always been that the contract was a guideline. According to Obrenovich, at that time they were quite busy for one shift and except for a- few employees still on layoff they had practically the full work force. The current collective-bargaining agreement contains under article V the following "Management Rights" pro- vision. i i ' Section 1. The management of the Company and the direction of the work force including the right to plan, direct and control plant operations, - to schedule and assign work to employees, to deter- mine the means, methods, processes, materials' and schedules of production, to determine the products to be manufactured, to choose the location of its plants and a continuance of its operating depart- ments, to encourage the efficiency of employees, to establish and require employees to observe reasona- ble company rules and regulations, to hire, lay off and relieve employees from duties, to maintain order and to suspend, demote, disciplihe and dis- . charge employees for just cause, are the recognized reserved rights of the Company. - The foregoing enumeration of management's rights shall not be deemed to exclude other -nghts of management not specifically set forth. The Compa- ny therefore retains all rights not otherwise•specifi- cally restricted by this Agreement. The exercise by the Company of any of the foregoing • rights shall 10 The strike lasted from about August 1 until about August 8 or 9 1 i This provision is the same as that, contained in sec II of the pnor collective-bargaining agreement 495 not alter any of the specific provisions of this Agreement nor shall they be used to discriminate against any member of the Union or bargaining unit. - There is no specific provision set forth in the collec- tive-bargaining agreement pertaining to subcontracting. Section 1 of article IV entitled "Non-Bargaining Unit" provides in pertinent part: "It is unequivocally recog- nized, that bargaining unit employees will perform the work that is customarily performed by the bargaining unit. The Respondent in the past has subcontracted work. However, Union President Obrenovich credibly testified, without denial; that the Union on two prior occasions in the late 1960s and late 1975 or 1976 filed grievances against the Respondent for subcontracting work, where- upon meetings were held on one occasion with President Hope Jr. and on the other occasion with James Toby, who was then vice president of manufacturing. The Re- spondent on those occasions showed the Union it had an insufficient amount of equipment and space to get out orders when they needed them,'. Which the Union knew to be a problem in the past, and indicated. the Union should not concern itself as long as the' did, not have any layoffs. The Union agreed with the Respondent that if it could not do the work it could not do' it and as long as they did not have layoffs. Since then' other odds and ends type work has been subcontracted. However, no layoffs have resulted from subcontracting until the -in- stant case. ' Union President Obrenovich stated that in November he noticed that work was being shipped into the plant which he knew they, did not do. Upon checking, •Obren- ovich learned - that there were -dyes' which had been shipped out which the Respondent ;did not have and a conclusion was made that someone else was. doing some of the employees' work.! Union -Vice President - David Kloss, who corroborated. Obrenovich's -- testimony,' ? stated upon asking his 'foreman Stan Breeze where the work was going Breeze told him to another company... Staff Representative Medley testified upon learning at a union meeting, which he, placed as occurring -in Octo- ber, that there was, a, belief work was being contracted out and later being made aware that- l l employees might 'be affected by a layoff which had. not yet occurred, he contacted Executive: Vice President Hope III 'and ques- tioned him about what was going on Hope indicated the Respondent. was, having " str_oiig_ financial difficulties and he had to do certain things. Medley, asked Hope whether he was aware, he,was in violation of, their, contract and Hope ,replied , that he did- not. believe he was in violation of the. contract at, -the .time: Medley then,,asked Hope about mployees being .laid off, andthe .ieasons where- upon Hope mentioned one reason was dealing with the bank and the other, reason-was he, had discussed. employ- ee absenteeism and production, with .- the committee. When Hope also said their wage structure was too high, 12 Kloss believed it was late October or early November when they noticed the dyes being shipped out - 496 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Medley informed Hope that was a way of circumventing their contract, that it was totally unacceptable and would never go, and that was the worse thing they could have told him about the wages they had just sat down and bargained for. Medley then asked Hope why he had not contacted him and said he had heard nothing about the Respondent's financial difficulties to that degree. Hope only, remarked that he heard Medley and that maybe he did not get ahold of him. Medley then said before any, layoffs or anything-came to pass he wanted to. sit down and see if they could.resolve those things and also sug-• gested that Hope meet with Obrenovich and the commit- tee about the production and the absenteeism problem. Although Medley stated Hope was supposed to let him know about his meetings with Obrenovich and the com- mittee, he denied-hearing anything'from Hope: Hope III did not deny having such a conversation with Medley,' whom I credit. About November 10 Obrenovich stated Vice President Brzenk gave him a list of 11 employees to be laid off on - November 12 and told him there was going to be a layoff. Upon asking Brzenk whether the layoff was the result of subcontracting,, Brzenk replied some of it was and mentioned that Obrenovich knew what kind of times they were having then and said that had something to do with it. Brzenk suggested that Executive Vice President Hope III would be the appropriate person for Obreno- vich to talk to about subcontracting. Brzenk did not dis- pute Obrenovich's testimony which I credit. Either that afternoon or the 'next day Obrenovich stated he had a-conversation with Executive Vice Presi- dent Hope III at which he believed Brzenk was also present. During the- conversation he asked Hope why work was being shipped out and whether he needed any more money from them. Hope denied needing any money, stating that he had. all the money he needed but mentioned the problem then was they had a lot of orders which customers were waiting fof and that they had lost customers and could not afford to lose another customer Hope then said they had trouble with their bank which had put them on a cash collateral basis and the bank was very influential in what the Company had to do and indi- cated that because it. was in a precarious situation at the bank he had little control over. his destiny. Upon asking whether any more employees were going to be laid off, Hope's response was that they met on a day-to-day basis and he could not give him an honest answer Obrenovich stated he also informed Hope 11113 that in his opinion they could cut labor cost at the plant and he did not think it was necessary to subcontract all the work. Hope indicated he had a deadline to meet to show a profit before the end of the quarter. Upon asking Hope whether it was necessary to ship that quantity of work out and why he could not keep enough to have a stable work force Hope 'informed him the bank was calling the shots. Obrenovich_stated at the time of this conversation the Respondent was increasing the volume of work to be shipped to subcontractors. - 'a The record is not clear whether these remarks were made at that same meeting - Neither Brzenk nor Hope III denied having such con- versations with Obrenovich whose testimony I credit. - Obrenovich testified that about November 23 he, Union Treasurer Darlene Rouk, and Vice President Kloss, met with Executive Vice President Hope III, Vice President Brzenk, and Plant Superintendent Selz. During this meeting Hope was ask why such a volume of sub- - contracting was necessary. He reiterated the earlier con- versations between Obrenovich and himself, regarding layoffs in which Hope said they were making decisions- on a day-to-day basis and that he was in trouble with the bank When Kloss asked Hope if he could keep enough work in there to provide work for their employees, Hope said that- it was out of his hands and the bank was controlling his money. They then asked Hope if he was going to subcontract out more work whereupon Hope said he did not know because those decisions were made on a day-to-day basis. Obrenovich said he thought their employees were capable of performing the • work at a lower cost and they had a lot of fat to trim and suggest- ed a committee for dealing with cutting cost which Hope agreed sounded like a good idea and mentioned Obrenovich should get together with Brzenk on it. Kloss, who corroborated Obrenovic'h's testimony-con- cerning the meeting, stated Obrenovich also said he felt that sending their work out violated the contract and that Kloss told Hope that if Hope explained to the em- ployees the situation with the bank and the financial problems he thought the employees would be willing to help. However, Hope III replied there was not any tithe. I credit Obrenovich's and Kloss' undisputed testimony concerning this meeting. Following this meeting Obrenovich testified he and Brzenk got together, and Obrenovich appointed a com- mittee for the Union. About December 2 or 3 Obreno- vich and his committee, comprised of approximately six employees, met with Brzenk, Supervisor Stan Breeze and he believed Plant Superintendent Selz was' also present. Hope III also came into the room at one point. . They discussed the need for the committee and getting things done to cut-cost The main items discussed were absenteeism and productivity Brzenk upon being asked why there was a layoff said the bank was influencing the Respondent's decision When Arlene Tripple questioned whether the Respondent would take any of the commit- tee's suggestions, Brzenk remarked he hoped something could come out of the committee. They pointed out to the Respondent they did not think it was necessary to subcontract. if they trimmed the fat, and Obrenovich sug- gested to Brzenk at one meeting he thought they had at least 25-percent fat they could trim thereby reducing- cost Following this meeting the union committee members met and discussed ways of cutting ' cost. Afterwards Obrenovich' stated he had Joe Jeshmski ask Hope III if they could keep enough work there to let them _ prove some of the stuff out whereupon Hope said he would consider it. Shortly after this the union committee held its last meeting with the Respondent.' Obrenovich said during this meeting Brzenk again mentioned the bank situation GRIFFITH-HOPE CO and the present financial situation and also how he would like to buy certain machinery I Obrenovich testified that about mid-December after being advised by a_ truckdriver that his job had been eliminated he went to Brzenk's office where he believed Plant Superintendent Selz was also present He accused Brzenk of violating the contract and the.law and ques- tioned him about what eliminating a truckdriver's job had to do with showing a profit in the last quarter. Brzenk informed him the truck was leased for-$600 a month, which lease the Respondent's' comptroller was trying to break in order to account for every penny he could and he showed Obrenovich some papers to indi- cate he was on the level. Obrenovich testified that on December 17 Brzenk in- formed him the Respondent was laying off 25 employees and provided him with a list of their names In January 1983 Brzenk also gave Obrenovich a list-of names of four more employees who were being laid 'Off. 14 According to Obrenovich, as a result of these layoffs the Union filed charges with the Board ' and a grievance. Obrenovich stated a meeting was held on this and other grievances on January 28, 1983, attended by Hope III, Brzenk, Selz, and an attorney for the Respondent Obrenovich, Medley, and Barry Chait represented the Union. During this meeting, the, subject of subcontract- ing was raised. and Medley asked Hope III why he did not come back and talk to him before he laid the em- ployees off, Hope's response was they did not have enough time. Obrenovich said that about a week later another griev- ance meeting was held at which subcontracting was again discussed and the Respondent said it would be willing to-bring the people back if they took a 50-percent cut in wages and benefits. . , - Obrenovich testimony about-these grievance meetings which I credit was undisputed. . - Obrenovich testified at the hearing that the 40 employ- ees laid off15 had not been recalled, the'Respondent was continuing to subcontract the work, and the present work force consisted of 17 unit employees whereas he estimated the normal size of the work force prior to these layoffs was approximately 60 to 65 employees Executive Vice President Hope III acknowledged in October that the Respondent without notifying the Union began subcontracting on a large scale and laid off 11 employees in November, 25 employees in December, and 4 employees in January 1983 for a total of 40 em- ployees and that it was continuing to subcontract Ac- cording to Hope III, there are currently 17 unit employ- ees on the payroll whereas prior to_ the subcontracting there were 57 Hope III testified regarding subcontracting that since October the Respondent has undertaken a substantial effort to place work in other facilities to transfer the cost 14 The complaint alleges the four employees were laid-off on January 7, 1983, while the Respondent in its brief gives the date as January 6, 1983, and the General Counsel in its brief lists the dates as January 5 and 6, 1983 is Obrenovich acknowledged the Respondent in laying off the employ- ees followed the layoff procedures contained in the collective-bargaining agreement. 497 of production to such vendors, which it has done by uti- lizing a number of different vendors while at the same time reducing the Respondent's work force accordingly. Hope stated it was after the October 19 meeting between the Respondent and its bank, discussed infra, that it began contacting other places to place their work. Hope III acknowledged the Respondent did not con- tact or bargain with the Union over the subcontracting of this work or its impact upon the employees. His rea- sons were he felt no obligation to do so and he could not see where it would help because the Respondent had a cash crisis and what it needed was capital or some way to manage cash on a short-term basis. Vice President Brzenk also testified following the Oc- tober 19 meeting between the Respondent and its bank, discussed infra, Hope III informed him the only solution was to subcontract which Brzenk said he then, did by finding subcontractors. -The testimony of Hope III and the Respondent's records establish the Respondent continues to purchase some raw materials which it then ships to subcontractors and also on many occasions it furnished as the subcon- tractors with steel or other materials from its inventory for use on the work subcontracted to them and that it has also sent riveting machines to the subcontractors to use to perform the work. Hope III testified the decision to subcontract, which they felt was the only option available, was made to help the Respondent return to profitability by finding places where they could get their work done at less cost than in their aged and unproductive -plant and to transfer the cash burden of materials and payrolls from the Respond- ent to a group of subcontractors and using the dollars of the Respondent's customers to pay for the work, thereby solving an immediate cash crisis.16 They decided if the Respondent took precise action the bank would probably go along with it for at least a little while to see if it would work. . • ` Both board of director members Sprenger and Linke corroborated Hope III's testimony concerning the deci- sion to subcontract. While Comptroller Perschbacher did not participate in the-decision to subcontract he also cor- roborated Hope III's testimony about this being the only option available Hope III described the chief problem was the Re- spondent had run out of cash and had no funds available to run the Company. - Other alternatives, to' subcontracting as described by Hope III were considered and rejected. New capital could not be received because the Respondent's net worth had deteriorated so much that investors would not invest and the Respondent did feel it was prudent to ask the bank to increase the ' amount- of loans to them and that it would be a waste of time' to shop around for other banks. If the plant was closed all of the proceeds would go' towards paying off creditors. To file for bankruptcy would result in having a creditors' committee run -the plant and would also be fatal to their customer base. 16 Hope III estimated that the Respondent has 30 to 90 days to pay its subcontractors while Respondent's customers paid for the product in 30 days - • - 498 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Selling the business, .was rejected because they wanted a chance to continue the business- if they had a chance with long-range hopes of retooling, investing-in the plant and equipment and becoming competitive. Additionally, to sell the plant would require massive infusions of cap- ital because of the liability side of the balance sheet to satisfy the debts. - D. Respondent's Financial Condition The condition of the Respondent's plant as -described by Vice President Brzenk was it had old machinery, anti- quated methods, lacked certain equipment, was improp- erly laid out, and needed tooling changes and factory im- provement. Brzenk estimated it would cost approximate- ly $950,000 to -$1 million to make the Respondent com- petitive not including replacing 10 of the 35 • presses which needed replacing for an additional cost of about $1,700,000. Both board of director members Sprenger and Edward Van- Housen, who is the executive vice president of administration of the Marhall & Ilsley Bank (M & I Bank) also described the plant or machinery as being, antiquated or improperly laid out. However, Sprenger claimed it 'would take an engineering study to determine what capital` requirements were needed to make the Respondent competitive. Brzenk acknowledged the problems he described re- garding the plant and equipment had existed for many years and Executive Vice President Hope III also ac- knowledged the machines were still operating without investing in them 'and'stated the only'machines which re- quired investment were, for the most part, the stamping machines. • According to President Hope Jr. and-Executive Vice President Hope III, the Respondent has lost various cus- tomers since 1979. This included its biggest. customer Fort Howard Paper,: Company, which accounted for about one-third,, of its sales and provided it with, a cash flow of approximately $250,000 a- month. That account WAS, phased out ,over a, `period of several years ending about ,1981. However, ;during,.this- same period the Re- spondent.also- acquired new,customers., The Respondent's financial statements reflect in 1978 it had a net worth of approximately $1,508,543. This de- clined to $965,241 in 1979; to $811,161 in 1980, ; and to $576,534 in 1981. These statements show the Respond- ent's, pre-tax earnings for,, 1979 were-. approximately $120,428., However, for 1980 there was aJoss of $258;854 and---for 1981 'a. lost •of,,$418,634. The net. earnings Jor 1979 were approximately $74,452.=with losses, of $125,774 in 1980 and of $257,744 in 1981. , -, , --During 1980 as,result of bookkeepingiand,accounting problems; the Respondent hired.a new,.cbmptrollerLGary Perschbacher and in 1981 it hired.a new accounting, firm. Thereafter,,the Respondents books and records were-up- dated and in, 1982 a. job; costing :system, completed mid- September, and any inventory control system, completed about January 1, were put into effect.. - ; .Perschbacher testified that the results -.of,a , complete physical' inventory taken at the Respondent's in the mid- October disclosed a discrepancy' of approximately $413,000. less An. inventory than appeared on the ; Re- spondent's records. Most of this amount was attributed by Perschbacher to an increase of about 20 percent in the cost of labor and materials from the previous year, which was not taken into account in the price - of the goods already sold by the Respondent. According - to Perschbacher, inventory adjustments resulting from the absence of materials due to inventory control problems of $235,000 in 1981 and of $150,000 in 1980 had also been made previously. This latest adjustment was report- ed to the M & I Bank. The financial condition of the Respondent as of Octo- ber, as described by Perschbacher, was it owed the M & I Bank approximately $845,000, its assets had been ap- praised at about $250,000, and its net worth was between $200,000 and $300,000. It owed suppliers and vendors ap- proximately $325;000 and one or two of them would no longer ship to the Respondent without payment of cash in advance. With the latest inventory adjustment of $413,000, Perschbacher estimated- the Respondent was losing approximately $60,000 a month? for the first 8 months of 1982 out of gross sales of about $2,700,000 to $2,900,000. He also stated that salaries of officers and office workers had been reduced in 1982. Executive Vice President Hope III estimated in Octo- ber that the Respondent had about a $1 million backlog of orders and placed the value of their inventory in No- vember as being about $ 1 million.18 While Hope III stated in November the Respondent was about 3 months behind in their interest- payments to the M & I Bank, he thought they had paid some-of it. ' Although Hope III and Perschbacher contended that in October the Respondent was running out of or was out of cash, no records were produced .to establish how much, if any, cash the Respondent actually had. Persch- bacher. also stated in mid-October, based on his knowl- edge of the Respondent and its records and weekly fore- casts, he thought that by the end of 1982 the Respondent would be out of existence. • - Executive Vice President Van Housen of the M & I Bank stated in 1979 and 1980 that the Respondent ob- tained many loans from the bank and at the peak the ag- gregate totaled about $1,300,000 or $1;400,000.19 During 1982 through the efforts of both the Respondent and the bank, the • outstanding balance was reduced to about $800,000 and interest payments were brought up from 90 days to about 30-35 days. Van Housen testified that since 1979 there has been a serious deterioration in the Respondent's` earnings and net worth to which he attrib- uted in part to the loss of the Fort Howard Paper Com- pany account and to an inventory imbalance. In 1982 he stated he escalated pressure on the Respondent because the bank was increasingly concerned about the Respond- ent and its liability. Meetings were held with the Re- spondent's owners so they would know the bank had sorrel firm ideas r of their .deteriorating financial condition. 17• Perichbacher estimated without including the adjustment the losses were about $15,000 a month - - 18 Hope acknowledged that as he could remember the M & I Bank had urged a reduction in the inventory which it felt was out of line IS The Respondent's board of director member Linke, who formerly worked for the M & I Bank , testified that a $400,000 loan was made to the Respondent in 1980 for the Hope family to purchase the interests of outside stockholders GRIFFITH-HOPE CO. 499 Executive Vice President -Hope III confirmed that weekly meetings were held with the bank and stated the bank had been auditing the Respondent's records on, a regular basis for at least 2 years. He also said the bank was made aware of its negotiations with the Union and of the collective-bargaining agreement reached. The M & I Bank, by letters dated October 13, notified President Hope Jr. that it was placing the Respondent on a cash collateral account. Under this account, controlled by the bank, the Respondent would deposit all payments received on accounts receivable for the Respondent whereby the proceeds at the bank's discretion may then be applied to the Respondent's outstanding loans or to the Respondent's general account. Van Housen testified that such an account was set up so that. incoming re- ceipts would be the bank's bather than,available to credi- tors if an involuntary bankruptcy were to be pushed on the Respondent. , On October 19 a meeting was held between represent- atives of the M & I Bank, including Executive Vice President Van Housen and Assistant Vice President I. S. Purtell, and the Respondent's board of directors. Van Housen stated he had demanded such meeting as a part of the bank's pressure on the Respondent because of its deteriorating financial condition. According to Executive Vice President Hope III the meeting was in response to a request by the bank so the Respondent could inform the bank about the Respondent's intentions concerning continuing its business. Van Housen's version of the meeting was it opened with the Respondent presenting him with a letter. This letter was not discussed at the meeting and he denied learning of its contents until later. He informed them of' his concern for the desperate condition' of the Respond- ent and the welfare of the Hope family who had put over $1 million down the drain in 3 years and of the great need for some remedial action and quickly if the senior Hopes were to have-any nest egg for their retire- ment Van Housen said he made a representation about' the possibility of calling in the loan by mentioning with- out setting a date that the last month or 2 were absolute- ly critical and in that period the rest of the Hopes' money would be gone and he would have no choice but to recommend that the bank take whatever action was necessary to save its loan. He also mentioned the possi- bility of a creditor action rising day by day and that the steel companies were a tough bunch who would take whatever action they needed to and the first would be to shut off any more supplies. The options the Respondent had as defined by Van Housen were to raise more capital to replace' what was lost; sell the business; restructure the business with somebody else doing the manufacturing and with the Hopes doing the designing and manufactur- ing, and to liquidate the business. - - Executive Vice President Hope III stated that at -this meeting they informed Van Housen and Purtell they had a good history, product, and customers and felt they could make the business survive by taking drastic meas- ures to stop their cash drain and insure their return, to profitability. They mentioned they intended to subcon- tract, work down their inventory, convert it into cash, and apply the cash to pay down their bank loan over a period of a few months and that was their intention;, of continuing the business and getting the debt down to a manageable level in order to take a little bit of the heat off. Hope III, who could not recall Van Housen's exact words, indicated his response was it was their decision and he wished them good luck, adding they were not going to take any action that day and ,. they wanted imme- diate results. President Hope Jr., who corroborated Hope. III, said Van Housen also told them to write down the debt and it had to be fast because the bank was out of patience and the Respondent was in the worse situation they faced, .however, he was doing his best to have -faith in them to handle the problem. Both board of director members Sprenger and Linke also testified Van Housen expressed concern about the Respondent's financial condition and the loans., The letter presented to Van Housen at the meeting which was addressed to him and dated October 19 states in pertinent part as follows: Although our union contract was a successful three year pact, even after our short strike, employee wages and past-negotiated benefits continue to be the most expense cost item we have. This fact is so apparent that we have concluded we simply cannot afford the luxury of all that in-house labor. There- fore, we have already commenced to find subcon- tractors to undertake some of the major manufac- turing phases of making our products : steel ware- housing and storage , punch. press work, welding, painting, assembly, and perhaps even warehousing and shipping. The entire program of subcontracting has already started, and will be continued to substantially reduce these employee-related costs . Frankly, it is going to be a big job; we'll face inevitable union- problems with our present people, will need to find the proper suppliers at the best price, we'll have to exercise strong quality control over those suppliers, and to get their cooperation we will have to be pre- pared to promptly pay them. Although it's a tough job, we can, and will, get it done. The letter further mentioned prices had already been increased to a, few major customers and prices would -continue to increase to others, and unprofitable products would be dropped or phased out if they could not obtain price increases. ' ' Van •Houseii denied subcontracting" was the bank's-idea and stated the'-first he learned of it was from the letter after the October 19 meeting. While- Hope III testified - the -bank was `not `going' to supply the Respondent any' more 'cash, no evidence -was proffered to-establish any officials of -the M. &' I Bank ever specifically told Hope III or any other official of the Respondent tliat no more money would be loaned by, the bank to the Respondent. Although' Comptroller Perschbacher contends in conversations he had -with the bank auditor and Assistant Vice President Purtell he was 500 DECISIONS OF NATIONAL LABOR RELATIONS BOARD informed indirectly -by them that the bank, would not make any more loans to the Respondent, his version of such conversations in which he stated they would ask questions about the financial statements and the business and, discuss problems and' solutions' fails to show he was indirectly told this. Van Housen informed President Hope Jr. by letter dated February 8 that the last 3 months had seen a con- tinuing erosion of the Respondent's capital base and that the subcontracting program which was the Respondent's idea and not the bank's appeared to be moving somewhat slower than the proverbial snail's pace. The letter men- tioned the bank was-deeply concerned about the, viability of the Respondent and concerned it did not fully appre- ciate the, precariousness of-its financial position. After not making a.profit for any month in 1982 and losing approximately $30,000 in January. 1983 the Re- spondent had a profit of approximately $2,500 in Febru- ary 1983 and over $18,000 in March 1983. E. Analysis and Conclusions The General Counsel 'contends the Respondent violat- ed Sections 8(d) and 8(a)(1), (3), and (5) of the Act as alleged by refusing to bargain with the Union in good faith by unilaterally changing, its insurance carrier; de- ducting the difference in premium cost paid to the new insurance carrier and those paid to HMO; and subcon- tracting bargaining unit work and discnmmatonly laying off 40 employees as a result of such subcontracting. The Respondent denies having violated the Act and asserts various affirmative defenses. _ Section 8(a)(1) of the Act prohibits an employer from interfering with, restraining, or coercing its employees in the exercise of their rights guaranteed in Section 7 of the Act. Section 8(a)(3)-of the Act provides in pertinent. part: "It shall be an unfair labor practice for an employer. . . by discrimination in-regard to hire or tenure of-employ- ment or any:term or condition-of employment to encour- age •or discourage membership ,in any labor organization " Section 8(a)(5) of the Act prohibits -an -employer from refusing to bargain collectively with the representa- tive of its employees. , I The initial issues discussed are whether the Respond- ent unlawfully changed its insurance carrier and deduct- ed the difference in premium cost paid to the new insur- ance carrier and those' paid to HMO. ' The law is well- settled that unilateral changes of "wages, hours and terms and'conditions-of employment" by`an employer obligated to -bargain with the representa- tive of its employees -in -an appropriate unit violates Sec- tion '8(a)(5) of the. Act. Master Trousers Corp., 230 NLRB 1054 (1977),.enfd'. 618-F.2d 6-(6th Cir. 1980); Amsterdam Printing & Litho +Corp.,i223 NLRB 370 (1960), enfd. 559 F.-2d -188 (D.C: Cir: 1977);- and NLRB ' Katz, 369. U.S. 736 (1962). Under Section 8(d) of.the Act an employer is precluded from altering the'terms and' conditions of em- ployment embodied in a collective-bargaining agreement during the term of that agreement without the consent of the Union. Oak Cliff-'Golman Baking Co., - 207 NLRB 1063, 1064 ?(1973), enfd: 505 F.2d 1302 '(5th Cir. 1974), cert. denied 423 U.S: 826 (1975). • • The findings supra establish effective October 1 the Respondent changed its insurance carrier providing med- ical insurance' coverage to its employees from Aetna to Midwestern. Although the Respondent gave prior notice to the Union -about September 1 that it would be chang- ing its insurance carrier it did not bargain with the Union about making such change and the Union not only voiced its objections to the proposed and actual changes made but also accused the Respondent of having violated their collective-bargaining agreement by doing so. • The current collective-bargaining agreement, like its predecessor, provides for hospitalization and surgical coverage of the unit employees by Aetna. However, pro- visions contained in both of these collective-bargaining agreements, which are clear and unambiguous on their face, expressly reserve the fight of the Respondent to de- termine the insurance carriers for all of the insurance programs described, except it further agrees that the ben- efits will be equal or better than those previously negoti- ated. Thus, the Respondent possessed a contractual right to change its insurance carrier provided the benefits would be equal or better than those previously negotiat- ed and the collective-bargaining agreement placed no re- strictions on either the selection of the insurance carrier or against the Respondent from acting 'as a co-insurer with such insurance carrier selected. A comparison of the benefits, however, between those provided by the Aetna plan and the Midwestern plan standing by itself shows, and both Vice President Brzenk and Comptroller Perschbacher admit, that, the Midwest- ern plan does.not provide as good a coverage as the Aetna plan. Therefore, the Respondent although author- ized under the collective-bargaining agreement to change insurance carriers failed to•comply with the further con- dition to enable it to do so, namely,_ that benefits would be equal or better than those previously provided. Under these circumstances and having failed to comply with 'the conditions required by the collective- bargaining agreement to provide equal or better cover- age, I find that the Respondent about October 1, 1982, violated Section 8(d) and Section 8(a)(5) and (1) of the Act by unilaterally, without bargaining with the Union, changing the insurance coverage of the unit employees from the Aetna plan to the Midwestern plan. The evidence further shows after receiving a compari- son of the coverage and benefits of both the Aetna plan and the Midwestern plan from its insurance agent about mid-February 1983 and discovering there was an error in their understandmng.and interpretation of the, insurance contract the Respondent then became a coinsurer with Midwestern, for part of the coverage,provided for those employees. Taken together the Midwestern plan and the Respondent acting as a coinsurer, which Vice President Brzenk explained to the Union to mean that the Re- spondent would definitely follow everything the Aetna plan had offered and they were comsurmg that portion not .specifically. - covered by the Midwestern plan; the new- plan now provides equal or better coverage than the Aetna plan and thereby meets the condition as required by the collective-bargaining agreement to change insur- ance carriers. GRIFFITH-HOPE CO. - 501 With respect to the deductions•from the paychecks of certain unit employees for the difference in the premium cost between the premium paid to Midwestern and that paid'to HMO the evidence herein found shows such de- ductions were admittedly made over a period of approxi- mately 6 months beginning October 1 from the pay- checks of those employees covered by HMO. These de- ductions arose as a result of the Respondent paying a lower premium cost for the Midwestern plan which was less than the HMO. Under the provisions of the collec- tive-bargaining agreement the benefits provided under HMO were not to add additional cost to the Respondent and before 1981 employees under HMO also had to pay a difference. in cost. Since the change from the Aetna plan to the Midwest- ern plan effective October 1 was unlawful and these de- ductions from the paychecks of unit employees for the difference in the premium cost between the premium paid to Midwestern and that paid to HMO were the result of that unlawful change in plans and. were made by the Respondent unilaterally without bargaining with the Union, I find the Respondent by unilaterally without bargaining with the Union making such deductions be- ginning October 1 thereby violated Section 8(d) and Sec- tion 8(a)(5) and (1) of the Act. - The evidence further shows these deductions, which- were made over a period of approximately 6 months, are no longer being made and those, deductions made have since been refunded to the employees. This occurred after Vice President Brzenk -and' Comptroller Persch- bacher testified it was learned the Respondent had made an error in making such deductions. - The Respondent's additional defenses raised in its- answer or brief that the issues of changing its insurance carrier and making those deductions should be deferred under the Collyer doctrine to,the grievance and arbitra- tion procedures under the collective-bargaining agree- ment and that the case -had since been settled between the Respondent and the Union and should be dismissed as being moot are hereby rejected as being' without merit Deferral under Collyer is inappropriate whereas here contract interpretation is not involved. See Struthers Wells Corp., 245 NLRB 1170, 1171 fn. 4 (1979), enfd. 636 F.2d 1210 (3d Cir 1980). Insofar as a private settlement agreement between the Respondent and the Union is concerned the rights guaranteed under the Act are in the public interest rather than private rights. See Schuylkill Metals Corp., 218 NLRB 317 (1975) - The remaining issues to be resolved are whether that the Respondent unlawfully subcontracted unit work and discriminatorily laid off 40 employees as a result of such subcontracting. The General Counsel argues in^ its'brief that the iinilat- erally subcontracting of unit work and laying off 40 em= ployees as a result by the Respondent without notifying or bargaining with the Union over the decision to, sub- contract or its effects upon the unit employees was un- lawful. The Respondent's position asserted in its brief is the decision to subcontract was purely 'a managerial deci- sion relating to its survival over which it would have been futile and counterproductive to bargain and denies such decision, was a mandatory subject of bargaining. Those' affirmative defenses raised by the Respondent- in its answer are the -Respondent has previously subcon- tracted work; the collective-bargaining agreement: does not limit its right to subcontract ; the management rights provision emcompasses the right to subcontract , the ab- sence of a prohibition against subcontracting coupled with the retention of .rights clause -in the management rights provision gives it the right to subcontract; and even assuming it was obligated 'to bargain with the Union -regarding subcontracting the Respondent 's finan- cial situation in October gave the Respondent no time (thus no duty) to bargain over any decision to subcon- tract. • . . ' Both parties cite numerous cases in their briefs dealing with subcontracting as : well as other forms of transfer- ring or relocating unit'work to support their position. - Contracting out of work being previously performed by members of an existing bargaining unit to independent - contractors is a mandatory subject ' of bargaining under- Section 8(d) of ' the Act and an employer's refusal to bar-' gain, albeit for economic reasons, with their bargaining representative over such decision violates Section 8(a)(5) of the Act. Fibreboard Paper Products 'Corp.' v. NLRB, 379 U.S. 203 ( 1964); and Town & Country Mfg. Co., 136 NLRB 1022, 1027, enfd. 316 F.2d 846 (5th Cir. 1963). While Fibreboard is not to be applied mechanically, the' Board has found violations of Section 8(a)(5) and (1) of the Act where the subcontracting involved a departure from previously operating practices , effected a change in conditions of employment, or resulted in a significant im- pairment of job tenure, employment security , or reason- ably anticipated work opportunities for those in the bar- gaining unit. Westinghouse Electric Corp. (Mansfield Plant), 150 NLRB 1574, 1576 (-1965).. The findings, supra, establish that the Respondent in' October, but prior to October 19 , began subcontracting work being performed by its own employees in the bar- gaining unit to other contractors notwithstanding' such. work was covered by the terms of the collective -bargain- ing agreement in - effect between the Respondent and the Union. Thereafter 11 unit employees were laid off, work' on -November 12; 25 unit employees - were laid off -work: on December 17, and 4 more - unit employees were, laid off-work in January 1983 . The layoffs of these 40.em-_ ployees were the direct result of the subcontracting of unit work undertaken by the Respondent20 as-evidenced- by Executive Vice President Hope III 's admission that as the work was- subcontracted the Respondent's, -work' force was reduced accordingly, Vice .President Brzenk's! admission to President Obrenovich that a reason for-the' November 12 layoff was subcontracting the work, as well as;statements made by Hope III and 'Brzenk to•Staff' Representative' Medley, • President Obrenovich, ' Vice President Kloss, and Treasurer Rouk during their discus sions-about the layoffs and subcontracting 21,_ 20 The Respondent in its brief'acknowledged the layoffs of-the 40 em-' ployees were caused by the subcontracting of unit work 21 Various other reasons were also given by Executive Vice President Hope III and Vice President Brzenk to Union Representatives Medley, Obrenovich , Kloss, and Rouk for the layoffs including financial difficul- , 1 , ' • Continued 502 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Hope III admitted the Respondent did not consult with or bargain with the Union over the decision to sub- contract. the unit work or its effects upon the unit em- ployees. ; His reasons expressed at the hearing were he felt no obligation- to do so and and he could not see where it would help because the Respondent had a cash crisis and what it needed was capital or some way to manage cash on a short-term basis. The Respondent's October 19 letter to the M & I Bank reflects the subcontracting , which had already began, was undertaken because of the expense of the employees', wages and past negotiated benefits and its conclusion that it could not afford the luxury of "all that in-house labor." . The Union upon learning of the Respondent's actions regarding subcontracting and laying off employees as a result protested such conduct and accused the Respond- ent of violating their collective-bargaining agreement but to no avail except for an indication by Hope III at a grievance meeting over the layoffs held about February 1983 that he would be willing to bring employees back if they took a 50-percent cut in wages and benefits. This subcontracting and the resulting layoffs of em- ployees occurred notwithstanding the Union had just made substantial wage concessions during recently con- cluded negotiations. Not only had the' Union stressed to the Respondent at that time that if further concessions became necessary to let it know which the Respondent failed to do but a suggestion made by Vice President Kloss to Executive Vice President Hope III about No- vember 23 that the employees -would probably help if Hope explained the bank situation and financial problems to them was rejected on the grounds there was no time. Upon examining those defenses raised by the Respond- ent in its answer I find them to .be without merit. While work had previously been subcontracted the Union had not only objected but had filed grievances which were resolved on the basis , which is not the situation in the instant case, that work subcontracted out would be work the Respondent could not perform and as long as it did not result in layoffs. The collective-bargaining agreement itself contains no express provision - regarding subcon- tracting. However, it did specifically recognize that bar- gaining unit employees will perform the work that is cus- tomarily performed by the bargaining unit . Although the management-rights provision gives management the right to "schedule and assign work to employees," to "choose the location of its plants and a continuance of its operat- ing,departments," and to "hire, -lay off, and relieve em- ployees from duties" this does not give the Respondent the right to subcontract as- is urged by the Respondent nor does the absence of any provision in the collective- bargaining agreement prohibiting subcontracting coupled with the clause in the management-rights provision in which the Respondent retains all rights "not otherwise .ties; dealing with and trouble with the bank, the hard times they were having, discussions about absenteeism and production, the bank was very influential in what the Respondent had to do, because of the Respond- ent's precarious situation at the bank it had little control over its destiny, the bank was calling the shots, and it was out of Hope III's hands and the bank was controlling the Respondent 's money specifically restricted" give the Respondent the right to subcontract as is also urged by the Respondent. Apart from the cited provision about recognizing that bargaining unit employees will perform work customari- ly performed by the bargaining unit, which alone negates any finding that the management-rights provision author- izes subcontracting, the evidence fails to show the Union by entering into the management-rights provision waived its right to object to subcontracting. A waiver of a statu- tory right to bargain, as absent here, must be "clear and unmistakable" which is determined by examining both the collective-bargaining agreement and the circum- stances surrounding the making of such agreement. A-1 Fire Protection, 250 NLRB 217, 219 (1980). -The absence of language in a collective-bargaining agreement itself does not constitute a waiver by the Union of its statutory rights. Park-Ohio Industries, 257 NLRB 413, 414 (1981), enfd. 702 F.2d 624 (6th Cir. 1983). Insofar as the Respondent's financial situation in Octo- ber at the time its decision to subcontract was made is concerned, while the evidence shows that it was heavily indebted; was losing money and its net worth had de- clined; was under pressure by the bank which had put it on a cash collateral basis; and its plant and machinery were antiquated, other evidence indicates the state of the Respondent's business was not of such a - nature at that time to relieve it of its' obligation to bargain with the Union over its decision to subcontract unit work or about the effects of the decision on its unit employees as a result. For examples, this decision to subcontract was made prior to any showing that M & I Bank at the Octo- ber 19 meeting had threatened in the future it might call in its loans; at the time there were approximately $1 mil- lion each in inventory and in a backlog of orders; the discovery of and the adjustment of inventory which re- sulted in an increase in the loss of earnings from approxi- mately $15,000 to $60,000 per month,was attributed to undercharging its customers , for products already sold which the Respondent indicated in its October 19 letter to M & I Bank was being corrected by raising_prices and eliminating unprofitable products; only approximately 2 months before in negotiations for the new collective-bar- gaining agreement the Union had agreed to substantial, wage concessions; and both Comptroller Perschbacher and M & I Bank Executive Vice President Van Housen indicated the Respondent could have continued to oper- ate as it was for at least awhile.22 While the Respondent also claimed it was running out of or was out of cash and the bank would not lend it any more money no records were produced to establish how much if any cash the Respondent actually had in October23 or to show that any loans were requested from the bank and denied or that the bank had actually informed .the Re- spondent it would not lend the Respondent any more, money. Thus, at_ the time the decision to subcontract -unit 22 Perschbacher, based on his knowledge of the Respondent's records, estimated it would be the end of the year before the Respondent -would be out of existence and Van Housen estimated the next month or 2 was a critical penod and the rest of the Hopes' money would be gone 2s The Respondent continued to employ 17 unit employees in addition to its other personnel which presumably would have also required-cash GRIFFITH-HOPE CO work was made the Respondent was continuing to oper- ate its-business without any showing'it was faced with an immediate shutdown or inability to operate. or lack of time to permit bargaining with the Union or that such bargaining would be futile. Based on the foregoing evidence and for those reasons discussed, and having rejected the Respondent's defenses, and applying Fibreboard which I find applicable here, I find the Respondent violated Section 8(d) and Section 8(a)(5) and (1) of the Act by unilateral subcontracting its unit work beginning about October 1982 without notify- ing or bargaining with the Union over its decision to do so or about the effects of its decision on the unit employ-, ees as a result of which 11 unit employees on November 12; 25 unit employees on December 17 and 4 unit em- ployees in Janaury 1983 were laid off work. Although there is no independent evidence of union animus inasmuch as the layoffs of these 40 employees re- sulted directly from the subcontracting of unit work which was undertaken by the Respondent for a reason as indicated in its October 19 letter to the M & I Bank to evade paying the employees wages and past negotiated benefits contained in its collective-bargaining agreement covering the unit employees. I find its actions are inher- ently destructive of its employees' rights under the Act and by so doing it also violated Section 8(a)(3) and (1) of the Act. See Los Angeles Marine Hardware Co., 235 NLRB 720 (1978), enfd. 602 F.2d 1302 (9th Cir. 1979). VI. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE The activities of the Respondent set forth in section III, above, found to constitute unfair labor practices oc- curring in connection with the operations of the Re- spondent described in section I, above, have a close, inti- mate, 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 thereof. CONCLUSIONS OF LAW 1. Griffith-Hope Company is an employer engaged in commerce within the meaning of Section 2(6) and (7) of- the Act. 2. Local No. 1677, United Steelworkers of America is a labor organization within the meaning of Section 2(5) of the Act. - ' _ 3. All production and maintenance employees of the' Employer; excluding office clerical employees, profes- sional employees, guards and supervisors constitute a unit appropriate for the purposes of collective bargaining within the meaning of'Section 9(b) of the Act 4. The Union is now and at all times material herein has been the exclusive representative of all the employ- ees in the aforesaid appropriate unit for' the purposes of collective bargaining within the meaning of Section 9(a) of the Act. . ' ' 5. By unilaterally, without bargaining with the Union, changing the insurance coverage of the unit employees about October 1, 1982, from the Aetna plan to the Mid- western plan and deducting from the paychecks of unit 503 employees the difference in the premium cost between the premium paid to Midwestern and that paid the health maintenance organization; _ and by unilaterally, subcon- tracting its bargaining unit work beginning about Octo- ber 1982, without notifying or bargaining with the Union over its decision to do so or about the effects of the' deci- sion on the unit employees, as a result of which 11 unit employees on November 12,.1982, 25 unit employees 'on December 17, 1982, and 4 unit employees in January 1983 were laid off work,. Respondent has engaged in unfair labor practices in violation of Section 8(d) and Section 8(a)(5) and (1) of the Act. 6. By laying off the 11 unit employees on November 12, 1982, 25 unit employees on December 17, 1982; and 4 unit employees in January 1983 as a result of the subcon- tracting of unit work undertaken to evade paying the employees wages and past negotiated benefits contained in the collective-bargaining agreement, the Respondent has engaged in unfair labor practices in violation of Sec- tion 8(a)(3) and (1) of the Act. 7. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. THE REMEDY Having found that the Respondent 'has engaged in cer- tain unfair labor practices within the meaning of Section 8(d) and Section 8(a)(1), (3), and (5) of the Act, I -shall recommend that it 'cease and desist therefrom and take certain affirmative action to effectuate the'policies of the Act. Accordingly, having found , the Respondent unilateral- ly changed its insurance carrier and made deductions for the difference in the premium costs between the premi- um paid to Midwestern_and that'paid to the health main- tenance organization, I shall order it to' cease and desist from making such unilateral changes except where au- thorized by their collective-bargaining agreement. Inas- much as the collective-bargaining agreement- authorized the Respondent to change its insurance carrier provided the benefits were equal or `better and' whereas the Mid-' western plan coupled with the Respondent acting as •a coinsurer has now' met that condition I shall not 'order ' the Respondent to restore the Aetna plan previously in effect and since the deductions made for the difference in cost are no longer being made and these deductions' made'-have already been refunded, I'shall not order such a refund. ' . I . '• - Having found' that the Respondent beginniig about October '1982 unilaterally subcontracted its` bargaining' unit work without notifying' or'bargaining' with the Union over 'its decision'to do so :or! about, the effects of' such decision on the unit employee`s as aresult of which 11 'unit employees on November '12; `1982; '25 unit em plooyees on December` 17, '1982, and 4 unit employees in January 1983 were laid off work, I' shall order' that the Respondent cease and desist from unilaterally subcon- tracting unit ° work or - otherwise Imaking 'unilateral' changes in' its employees' terms' 'arid` conditions" of `6m" ployment without notifying or bargaining with the Union as their exclusive; bargaining representative; restore, the. status quo ante as it existed' prior to- the unlawful subcon=' 504 DECISIONS OF NATIONAL LABOR RELATIONS BOARD tracting of unit work beginning in October '1982 herein found, by terminating those subcontracts for the unit work subcontracted and bargain with the Union over any future' decision to subcontract those operations or other unit work,24 reinstate at its plant the unit work subcontracted; offer immediate and full reinstatement to its 40 employees discriminatorily laid off work as a result of its subcontracting to their former jobs or if those jobs no longer exist to substantially equivalent jobs without prejudice to their seniority and other 'rights and' privi- leges and make them whole for any loss of earnings or other compensation they may have suffered as a result of the Respondent's unlawful action in bypassing their bar- gaining representative and unilaterally subcontracting their jobs out and laying them off work on November 12, 1982; December 17, 1982, and in January 1983. Back- pay shall be computed in accordance with the manner prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), and Florida Steel Corporation, 231 NLRB 651 (1977).25. [Recommended Order omitted from publication.] 24 Where that bargaining obligation has been satisified after the re- 25 This reinstatement and make-whole remedy for the 40 employees sumption of bargaining the Respondent may,- of course, lawfully subcon- laid off applies to both the 8 (a)(3) and 8(a)(5) violations although it is an tract unit work appropriate remedy for each violation itself