United Technologies Corp.

306 DECISIONS OF NATIONAL LABOR RELATIONS BOARD United Technologies Corporation and- Local Lodge 700, International Association of Machinists and Aerospace Workers, AFL-CIO. Case 39- CA-2269 30 January 1986 DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND JOHANSEN Upon a charge filed 25 July 1984 by Local Lodge 700, International Association of Machinists and Aerospace Workers, AFL-CIO (the Union), the General Counsel of the National Labor Rela- tions Board issued a complaint on 4 February 1985. The complaint alleges that the Respondent violated Section 8(a)(l) and (5) of the Act by implementing, without first notifying the Union or affording it an opportunity to bargain, a program called "Correct- A-Bill" which provided additional benefits for em- ployees in the bargaining unit represented by the Union. The Respondent filed a timely answer ad- mitting in part and denying in part the allegations of the complaint. On 29 April 1985 the General Counsel, the Union, and the Respondent filed a motion to trans- fer the proceeding to the Board and a stipulation of facts. The parties waived a hearing and the issu- ance of a decision by an administrative law judge and indicated their desire to submit the case direct- ly to the Board for findings of fact, conclusions of law, and a decision. The parties also agreed that the charge, the complaint, the Respondent's answer, and the stipulation of facts would consti- tute the entire record before the Board. On 5 August 1985 the Board issued an Order granting the parties' motion, approving the stipula- tion, and transferring the proceeding to the Board. Thereafter, the General Counsel and the Respond- ent filed briefs. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. On the entire record and the briefs, the Board makes the following FINDINGS OF FACT 1. JURISDICTION The Respondent, a Delaware corporation with its main office in Hartford, Connecticut, and with an office and place of business in Middletown, Connecticut, is engaged in the manufacture and nonretail sale and distribution of aircraft engines and related products. During 1984, in the course and conduct of its business operations, the Re- spondent sold and shipped from its Middletown fa- cility products, goods, and materials valued in excess of $50,000 directly to points outside the State of Connecticut. We find that the Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act and that the Union is a labor organization within the mean- ing of Section 2(5) of the Act. II. ALLEGED UNFAIR LABOR PRACTICES A. The Stipulated Facts The following employees of the Respondent con- stitute a unit appropriate for the purpose of collec- tive bargaining within the meaning of Section 9(b) of the Act: All production and maintenance employees of the United Technologies Corporation, Pratt & Whitney Aircraft Group (Commercial Engi- neering and Manufacturing Division) at its Middletown, Connecticut plant, including in- spectors, crib attendants, material handlers, working leaders, and plant clerical employees but excluding all timekeepers, engineering and technical employees, professional employees, laboratory technicians, foremen's clerks, sala- ried office and salaried clerical employees, medical employees, first aid employees, plant production employees, executives, plant super- intendents, division superintendents, general foremen, foremen, assistant foremen, group su- pervisors, watch engineers, and all other su- pervisory employees with authority to hire, promote, discharge, discipline, or otherwise effect changes in the status of employees, or effectively recommended such action. Since about November 1958, and at all times mate- rial, the Union has been the designated exclusive collective-bargaining representative of the employ- ees in the above unit and has been recognized as such by the Respondent. Such recognition has been embodied in successive collective-bargaining agree- ments, the most recent of which was effective by its terms from 29 November 1982 until 1 December 1985. At all times since November 1958, the Union has been, and is, the exclusive representative of the em- ployees in the bargaining unit for the purposes of collective bargaining with respect to rates of pay, wages, hours, and other terms and conditions of employment within the meaning of Section 9(a) of the Act. The current collective-bargaining agreement pro- vides that bargaining unit employees are covered by the Respondent's group health and life insur- ance plan, which covers, among other things, hos- 278 NLRB No. 41 UNITED TECHNOLOGIES CORP. 307 pital and outpatient surgical services for employees and their dependents. In July 1984, the Respondent implemented a corporatewide Correct-A-Bill pro- gram as part of an effort to contain spiraling em- ployee health care costs, which had reached a level of approximately $250 million per year. The Cor- rect-A-Bill - program invited employees to audit their hospital and surgical center bills and to report any_ overcharges by hospitals or surgical centers to the Respondent's insurance carrier on forms pro- vided by the Respondent. Any employee who re- ported an overcharge was to receive from the Re- spondent a payment equal to 80 percent of any amount refunded to the insurance carrier by the health care provider pursuant to the employee's report. The program resulted from the Respond- ent's belief that incorrect charges by hospitals and surgical centers substantially increased its yearly health care costs and that many such errors were of the type that the recipients of the services are best able to detect. The Respondent implemented the Correct-A-Bill program for a 1-year trial beginning July 1984. The program applied to approximately 130,700 employ- ees at the Respondent's various facilities through- out the United States, including the approximately 3600 employees in the bargaining' unit described above. Of the remaining employees covered by the program, about 63,200 belong to 168' other bargain- ing units represented by 40 different unions, and about 63,900 employees are unrepresented. The implementation of the Correct-A-Bill pro- gram was not in any manner the product of, or preceded by, negotiations between the Respondent and any of the unions representing, any of,its em- ployees. The Respondent met with a representative of the Union to inform him about the Correct-A- Bill program on 17 July 1985, 2 days before letters and brochures describing the program and solicit- ing employee participation were sent to employees. At the 17 July meeting, the Respondent gave the Union's representative a copy of the letter and the brochure, as well as a 17 July memorandum to su- pervisors describing the program and advising the supervisors how to assist in its implementation. On 18 July 1985 the Union filed a grievance alleging that the Respondent's implementation of the pro- gram without first negotiating with the Union vio- lated the collective-bargaining agreement and the Act. The parties met to discuss the grievance on 23 July and 24 August 1985. The Respondent has since refused the Union's request to arbitrate the grievance. Between the time the Respondent implemented the Correct-A-Bill program in July 1984 and the time the parties entered into the stipulation of facts ir%tlie-present case (23 and 24 April 1985), an un- specified number of the. Respondent's employees nationwide had processed claims and 29 employees received a total of $12,105.40 in payments from the Respondent as a result of the employees' detection of overcharges by hospitals ' and surgical centers. One of the -employees who received such a pay- ment was a member of the bargaining unit de- scribed above. He received a check for $219.60 on 20 March 1985. B. Contentions of the Parties The General Counsel, noting that employee medical insurance is a mandatory subject of bar- gaining, contends that the awards .made available to employees under the Correct-A-Bill program constitute an, "emolument of value" arising out of the employment relationship and, therefore, fall within the scope of terms and conditions of em- ployment over which an employer is required to bargain. The General Counsel further argues, that the indeterminate level of the benefits available to employees and the voluntariness of employee par- ticipation do not remove the program from the Re- spondent's bargaining obligation. She therefore argues that the Respondent failed and refused to bargain in violation, of Section 8(a)(5) of the Act by unilaterally implementing the program. The Respondent contends that the Correct-A- Bill program had such an indirect, attenuated, and minimal effect on the terms and conditions of em- ployment of bargaining unit employees that it was not a mandatory subject of bargaining. In this regard the, Respondent notes particularly the limit- ed duration of the program and the fact that, it would affect, only those employees who underwent hospitalization or, surgery during the time the pro- gram -was in effect. The Respondent further argues that requiring it to bargain with the unions repre- senting the various units of its employees -before applying such a program to employees in those units would result in the Respondent's applying the program only to its unrepresented employees or would result in cumbersome negotiations with some 40 unions. The Respondent argues that the former course would involve "pointless discrimina- tion" while the latter course would impose a burden on the Respondent that would outweigh any benefit to, labor-management relations and the collective-bargaining process. Accordingly, the Re- spondent argues that it did-not violate the Act "by implementing the Correct-A-Bill program without first affording the Union an opportunity to bargain. 308 DECISIONS OF NATIONAL LABOR RELATIONS BOARD C. Discussion We_fmd that the Respondent did not violate Sec- tion 8(a)(1) and (5) of the Act by unilaterally im- plementing the Correct-A-Bill program. An em- ployer violates its duty to bargain with the exclu- sive representative' of its employees by unilaterally implementing changes in ` terms and conditions of their employment.' It is well settled that health in- surance benefits constitute a term or condition of employment over which an employer is required to bargain before implementing any change in such benefits.2 However, in order for a statutory bar- gaining obligation to arise with respect to a par- ticular- change implemented by an employer, such change must be a "material, substantial, and a sig- nificant" one affecting the terms and conditions of employment of bargaining unit employees.3 Here, the Correct-A-Bill program implemented by the' Respondent was of limited duration. It did, not -constitute a,change in any health care service covered by the Respondent's health insurance plan nor did it otherwise affect the terms of the plan itself. Instead, it merely provided employees with an incentive to review their hospital or surgical center bills to detect overbilling for services re- ceived during the program year. It therefore was likely to affect only a small number of employees in the unit. Here, the fact that only one of the ap- proximately 3600 employees in the bargaining unit received any payment during the first 9 months of the program demonstrates the very limited impact that the program had on' bargaining unit employ- ees.4 In these circumstances, we find that the Re- spondent's implementation of the Correct-A-Bill program did not amount to a material, substantial, and significant change (if a change at all) in the terms and conditions of employment of bargaining unit employees and therefore did not give rise to any bargaining obligation. We therefore find that the Respondent did not fail or refuse to bargain in violation of Section 8(a)(5) and (l): Accordingly, we shall dismiss the complaint. i NLRB v. Katz, 369 U S. 736 (1962) 2 See, e g., Dial Tuxedos, 250 NLRB 476 (1980); East Belden Corp, 239 NLRB 776, 793 (1978). a See, e.g., Peerless Food Products, 236 NLRB 161 (1978); Weather Tec Corp., 238 NLRB 1535, 1536 (1978); Rust Craft Broadcasting, 225 NLRB 327 (1976). 4 Contrary to our dissenting colleague, our analysis is not based on hindsight, but rather on the clearly limited scope of the progam which could affect only those employees who underwent surgery or who were otherwise hospitalized during the 12-month period in question CONCLUSIONS OF LAW 1. The Respondent, United Technologies Corpo- ration, is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Union, Local Lodge 700, International Association of Machinists and Aerospace Workers, AFL-CIO, is a labor organization within the mean- ing of Section 2(5) of the Act. 3. The Respondent has not violated the Act as alleged in the complaint. ORDER The complaint is dismissed. MEMBER DENNIS, dissenting. Contrary to my colleagues, I would find that the Respondent's unilateral implementation of a 1-year program to award employees for detecting health care overcharges constitutes an unlawful change in employment terms and conditions. I therefore dis- sent. In July 1984 the Respondent, without bargaining with the Union, implemented the "Correct-A-Bill" program, under which the Respondent rewarded an employee for reporting hospital or surgical center, overcharges to the Respondent's insurance carrier.' Apparently because the program was of limited duration and benefited only one unit member during the program's 9-month existence, my colleagues find that the Respondent's imple- mentation of the program did not amount to a ma- terial, substantial, and significant change in employ- ment terms and conditions. Thus, my colleagues, although not denying that the program provided' an employee benefit, have decided (with the advantage of hindsight) that the Correct-A-Bill program is not an unlawful change because only one unit member benefited in 9 months. I decline to engage in post hoc justifica- tion, but rather focus on the relevant timeframe, i.e., when the Respondent unilaterally changed the employees' employment terms and conditions. The Respondent's program was a monetary benefit for employees that accrued to them based on their re- lationship with their employer.2 Carpenters Local 2265 (Mill Floor Covering), 136 NLRB 769, 771 (1962). Consequently, unilaterally implementing the program violated the Respondent's obligation to bargain with the Union before making changes in employment terms and conditions. ' An employee receives a payment equal to 80 percent of the amount the health care provider refunds to the insurance carrier 2 The number of unit members who actually received payments is ir- relevant Certainly, however, the Respondent anticipated the number of employees affected would be sizeable