Stephenson Haus

998 DECISIONS OF NATIONAL LABOR RELATIONS BOARD H.H.H. Enterprises, Inc., d/b/a Stephenson Haus and Hotel, Motel, Restaurant Employees, Cooks and Bartenders Union, Local 24, Hotel and Restaurant Employees and Bartenders International Union, AFL-CIO. Case 7-CA- 23107 19 May 1986 DECISION AND ORDER BY MEMBERS JOHANSEN, BABSON, AND STEPHENS On 13 December 1984 Administrative Law Judge Walter H. Maloney Jr. issued the attached decision. The Respondent filed exceptions and a supporting brief, and the Charging Party and the General Counsel filed briefs in opposition to Re- spondent's exceptions. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, and conclusions and to adopt the recommended Order. I ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent, H.H.H. En- terprises, Inc., d/b/a Stephenson Haus, Hazel Park, Michigan, its officers, agents, successors, and as- signs, shall take the action set forth in the Order. 1 The Respondent excepts to the remedy which the judge recommend- ed to make the Union's health insurance fund whole. We shall leave the determination of the Respondent's required contributions to the fund, if any, to the compliance stage Mark Rubin, Esq., for the General Counsel. Bernard J. Fieger, Esq., of Southfield, Michigan, for the Respondent. Richard Rosenblatt, Esq., of Detroit, Michigan, for the Charging Party. DECISION STATEMENT OF THE CASE WALTER H. MALONEY JR., Administrative Law Judge. This case came on for hearing before me at Detroit, Michigan, on an unfair labor practice complaint, t issued 1 The principal docket entries in this case are as follows- Charge filed by Hotel , Motel, Restaurant Employees, Cooks and Bar- tenders Union, Local 24, Hotel and Restaurant Employees and Bartend- ers International Union, AFL-CIO (the Union) against Respondent on February 10, 1984, complaint issued by Regional Director for Region 7 against Respondent on March 28, 1984, Respondent's answer filed April 6, 1984; and hearing held in Detroit, Michigan, on October 6, 1984; and by the Regional Director for Region 7, which alleges that Respondent H.H.H. Enterprises , Inc., d/b/a Ste- phenson Haus,2 violated Section 8(a)(1) and (3) of the Act. More particularly, the complaint alleges that Re- spondent, after taking over the ownership and control of a unionized restaurant in suburban Detroit, made a number of unilateral changes in wages and working con- ditions either without notifying and bargaining collec- tively with the Union or, in some instances, without bar- gaining to impasse concerning the changes . Respondent herein denies that it is a successor in a legal sense to the previous restaurant owner but has recognized the Union and has entered into negotiations with it. Respondent maintains that it did bargain to impasse over some issues which involved unilateral changes in working conditions and benefits. The nature of its other defenses is some- what obscure. On these contentions, the issues herein were joined.8 B. The Unfair Labor Practices Alleged Respondent is a small closely held corporation which is owned and controlled by Anna Hundich and her two sons, Steven and Theodosi (or Ted). It was formed for the purpose of operating a restaurant in Hazel Park, Michigan, a suburb of Detroit . This restaurant was pur- chased by the Hundichs on December 1, 1983, from John Vardouniotis (who is sometimes known familiarly as John V). For the past 20 or 30 years, a restaurant known as the Stephenson Club has been operated on these premises.' John V. owned and operated the Ste- phenson Club from 1975 until he sold it to the Hundichs. The restaurant serves luncheons and dinners , maintains a cocktail lounge, and handles a big banquet business. The latter function is somewhat seasonal. In January and February and throughout the summer months, banquet business is slow, but it is quite brisk at other times of the year, particularly during the month of December. The restaurant employs a staff of about 30 waitresses and a small complement of kitchen employees . Over the past 10 years these employees have been represented by the Charging Party. At the time of the 1983 takeover, they were covered by a collective-bargaining agreement be- tween Vardouniotis and the Union. This contract ex- tended from June 1981 through June 1984. briefs filed by the General Counsel, the Charging Party, and Respondent with me on or before November 9, 1984 2 Respondent admits, and I find, that it is a Michigan corporation which operates a restaurant in Hazel Park , Michigan. Based on a projec- tion of its operations, the Respondent, in the course and conduct of this operation beginning December 1, 1983, will annually derive gross reve- nues from the operation of its restaurant in excess of $500 ,000 per year and will purchase annually from the Michigan Liquor Control Commis- sion liquor valued in excess of $10 ,000, which is transported into Michi- gan directly from points and places located outside the State of Michi- gan Accordingly, the Respondent is an employer engaged in commerce within the meaning of Sec 2(2), (6), and (7) of the Act Errors in the transcript have been noted and corrected Legal title to the premises is in the names of John and Lois Breit- meyer, who are strangers to this proceeding Part of the sale of the res- taurant was the assignment of a long-term lease which the Breitmeyers had executed in favor of John V The actual sale of the business included a transfer of the fixtures, furnishings, inventory, good will, and the liquor license 279 NLRB No. 139 STEPHENSON HAUS 999 During the negotiations which preceded the sale, Anna Hundich asked for and received from John V. a copy of the collective-bargaining agreement that was then in effect. Before the sale the Hundichs apparently had no direct contact with the Union. However, John V. had informed Richard Thompson, the business agent who serviced the restaurant , that the restaurant was about to be sold . About a month before the sale was con- summated, Hundich visited the premises and spoke infor- mally with the luncheon waitresses. She told them that she planned to make certain improvements in the build- ing and also planned to clean up the premises . She invit- ed them to stay on as employees of the new manage- ment. However, they did not discuss wages, benefits, or working conditions. Just before the takeover, Hundich asked Vardouniotis to tell all of the employees to stay on and that everything would remain the same. Apparently he did so. On December 1, 1983, all restaurant employees report- ed to work and went about their duties in the normal fashion. They also continued to work banquets in ac- cordance with previous assignments . Marian Tromeak, who handled the scheduling of banquet waitresses and other chores for the former management, stayed on during the month of December to assist the new owners through this busy season. Shortly after assuming control of the restaurant, Hundich held a meeting of bargaining unit personnel in the dining room . After brief introduc- tions, she outlined the improvements she hoped to make and reminded the luncheon waitresses that they were supposed to keep their areas clean. She also informed them that banquet tips, which had previously been paid in cash, would be included in each waitress ' weekly pay- check and would not be paid until the banquet customer actually paid the restaurant. About December 6, Thompson visited the premises and spoke with some of the Hundichs . He presented them with a so-called "assuming letter," by which the signatories could agree to assume and be bound by the contract which was in effect at the time of the takeover. He asked Hundich to sign it. She declined to do so with- out first obtaining legal advice. Thompson told her he would return in a week to pick up the signed letter. There was no discussion on this occasion concerning specifics of wages or working conditions. Thompson did return a week later but for the limited purpose of speak- ing with waitresses. He did not return for the purpose of speaking with the Hundichs until December 28, when the restaurant was temporarily closed for repairs. On this occasion, Hundich expressed her displeasure with certain facets of the restaurant operation. She com- plained that employees were not doing what they were told to do and complained that the health department was requiring that a number of improvements be made in the premises. She also expressed her dissatisfaction with the way that banquets were being handled. She told Thompson that she wanted to use bartenders at banquets rather than using only waitresses because she had re- ceived complaints from banquet customers that they could not order drinks during dinner. She also wanted to redefine the duties of banquet waitresses to make sure they served drinks and picked up drink glasses . I credit testimony to the effect that Thompson voiced no objec- tion to the establishment of a banquet department or to the utilization of bartenders at banquets . I discredit testi- mony suggesting that Thompson told Hundich she could "do anything she wanted" in regard to serving banquets. After touring the building and observing the construc- tion and remodeling that was taking place , Thompson suggested to Hundich that she draw up a list of proposed procedures and regulations for employees and review the list with him after the holiday rush was completed. They scheduled a meeting on January 5, 1984 , for this pur- pose.6 On January 5, Thompson and Business Agent Peg A. Lukacs came to the restaurant shortly after 1 p.m. and ate lunch. Following their lunch, they held extended pri- vate discussion with Mrs. Hundich and her sons, during which time they discussed house rules, disciplinary pro- cedures, banquet gratuities , the status of an apprentice cook, and a complaint voiced by the Union concerning the short shifting of kitchen employees. Prior to this meeting, the Hundichs had drawn up a list of rules enti- tled "Job Duties." Some applied to all employees. Other rules applied specifically to waitresses, hostesses , kitchen employees, bartenders, or those assigned to work on ban- quets. The Union and the Employer went over these duties item by item and agreed initially on all of them except a provision requiring luncheon or dinner waitress- es to serve at least 30 guests. After hearing Lukacs' ob- jection on that point, the parties agreed that such wait- resses should be required to serve at least 24 guests. I credit Mrs. Lukacs' testimony that the parties discussed the gratuities to be paid to bartenders who are assigned to banquets. 6 The discussion lasted nearly half an hour. She objected to giving any share of the food tip to bar- tenders, because they did not participate in any way in the service of food, and told the Hundichs that this prac- tice was in fact illegal.' Lukacs had no objection to per- mitting bartenders to have a share of the tips allocable to the service of liquor and she went into some detail to ex- plain her position, using an example which called for bartenders and waitresses to share the liquor tip on a per-capita basis while waitresses alone would share the food tip on that basis. I further credit her testimony that the Hundichs agreed to this proposal. The Union also complained about short shifting in the kitchen. The contract between the Union and the former owner provided that each kitchen employee would be guaranteed 8 hours of work each day and that, if they worked less than that amount of time, they would be paid for a full day. The Union asserted that the employ- 5 I note that Hundich was present at the hearing but was not sum- moned to testify Under well -settled evidentiary rules, I conclude that, on any disputed factual points , her testimony would support the General Counsel's case This innovation was a practice introduced by the Hundichs Appar- ently only waitresses served liquor at banquets under the previous owner- ship ' Banquet customers are quoted a flat fee plus 15 percent for gratuity. At one time the gratuity was separately stated to customers as to a por- tion applicable to food and the portion applicable to liquor Apparently the bill presented to the customer is no longer broken down in this fash- ion. Separate gratuities for both items can still be calculated internally and such calculations are still being made. 1000 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ees in question were not always receiving a full 8 hours and it insisted that this provision of the old contract be observed. Hundich replied that, if they did so, they would have to lay off one of the two employees. Thompson then stated that this was agreeable so long as the layoff took place in order of seniority. The Hundichs agreed. Shortly after taking over the restaurant, the new owners hired an assistant pastry cook at $3.35 an hour. The contract rate being paid to cooks was $4 an hour. Lukacs told the Hundichs that, in a union house, there was no such thing as an apprentice cook and that a "cook is a cook." The Respondent agreed to pay the ap- prentice $4 but the parties did not agree on whether a new classification of kitchen employee should be estab- lished. Following the discussion, which took nearly 2 hours, all the participants adjourned to the dining room where the waitresses were waiting restively to hear from them. At Hundich's suggestion, Thompson did most of the talking. He told them that the work rules and regula- tions, as amended, which were found on the sheet pre- pared by Respondent, had been agreed to and proceeded to read them to the group. He explained the disciplinary procedure which would enforce these rules and stated that everyone would be starting with a clean slate from that moment forward. There was also some discussion about new locks being placed on each waitress' locker. Hundich then spoke up. She said she was glad to have all the waitresses employed by the former management working for her but observed that, if she had to comply with the contract, some employees might be just as happy being laid off. This reference was to kitchen em- ployees. Thompson went on to explain that past practice would be observed in the assignment of banquet wait- resses, namely, a rotation of assignments in order of se- niority. He also explained that waitresses would share in liquor tips at banquets with bartenders but that bartend- ers would not get a share of the food tip. On the following day, waitress Christine Williams re- ceived her paycheck and discovered what she regarded as an error in computation. The entire tip for a banquet had been divided equally among all the waitresses and the bartender. She felt that the bartender should only get that portion of the tip allocable to liquor service. When she received her paycheck the following week, the same distribution of banquet tips appeared. On this occasion she went into the office and complained to Steven Hudich about the division of tips. Others were present during the discussion as well. She asked about the tip distribution which appeared on her check, so Hundich opened the ledger to show how it was computed. In fact, the bartender at the banquet worked by Miss Williams had received the entire liquor tip while the waitresses shared the food tip. Williams complained that this divi- sion was not in accordance with the agreement which had been announced on January 5. Apparently Hundich heard the complaint as she was coming into the room and said angrily to Miss Williams, "How dare you tell me how to run my business." She asserted that bartend- ers at banquets stood behind the bar throughout the ban- quet and should receive a full cut of the liquor tip be- cause all that the waitresses did was to clean glasses and serve drinks.8 She angrily accused Williams of causing all the trouble with the Union. Williams termed the accu- sation a lie, asking, "Why can't we just work together?" Thereupon Hundich announced that she was getting her attorney and would be "getting the Union out of here." About a week later, Hundich spoke to a group of the luncheon waitresses as they were sitting at a booth at the end of the noon shift. She observed that it would be to the advantage of the waitresses to limit themselves to a share of the food tip at banquets because the food tip was always much larger than the liquor tip. The wait- resses present insisted on sharing the liquor tip, where- upon Hundich simply said "ok" and got up and left. I find as a fact that the practice of the former manage- ment was to assign banquets to luncheon waitresses rather than dinner waitresses and to do so weekly on the basis of seniority. The names of both dinner waitresses and luncheon waitresses appeared in separate columns on a sheet of paper in the order of their seniority. Such a list still exits and is in use. Each Friday, either John V. or Mrs. Tromeak would use one of those sheets for as- signing the banquets scheduled for the following week. The luncheon waitress having the most seniority re- ceived the first assignment. The supervisor would then make further assignments in order of seniority, going to the top of the list the following Friday to fill out the banquet roster for the ensuing week. When the assign- ments were made, the names of the waitresses were then entered in a red date book which was used to control all the details involved in the scheduling of banquets. The only exceptions to this procedure occurred when a cus- tomer requested a specific waitress. On those occasions the requested waitress would get the work. Beginning in late January 1984, Respondent discontin- ued the practice of assigning luncheon waitresses to ban- quets. Its rationale for this charge was that the banquet business was starting to undergo one of its periodic lulls so, in order to keep dinner waitresses busy, it gave the banquet work to them. The record does not reflect in what order, if any, they were assigned to which events. When business picked up in the spring, some luncheon waitresses were given banquet assignments and a few new waitresses were hired for this purpose. Williams tes- tified that during the first 6 months of 1984 she received only two banquet assignments, nothwithstanding the fact that she was one of the most senior luncheon waitresses. On those occasions she shared in the liquor gratuity that was paid. In June 1984, she quit and took another job be- cause her earnings at Stephenson Haus had been severely reduced. On January 10, 1984, Thompson wrote Hundich a letter summarizing certain of the agreements which had been concluded orally on January 5. He also asked for a meeting on January 15 in the office of Hundich's lawyer for the purpose of obtaining her signature on an assum- ing agreement. No such meeting ever took place. On 0 It should be noted that the bartenders who worked the disputed ban- quet and other banquets were and are , for the most part, Hundich's sons, who are also principals of the Respondent's corporation. 9 This statement is uncontradicted in the record STEPHENSON HAUS 1001 January 26, Bernard J. Fieger, Respondent's attorney, wrote the Union a letter which contained the following statement: As you are aware, H.H.H. Enterprises, Inc., a Michigan corporation, purchased the assets of the Stephenson Club on November 28, 1983, and began operations of the new enterprise, Stephenson House, on December 1, 1983. The operations of the busi- ness, both as to methods and personnel, have changed, and the current operator is a "successor employer" within the meaning of that word as used in the field of labor management relations and as defined in NLRB v. Burns International Security Services, Inc., 406 U.S. 272. Based on the foregoing, we are notifying you that H.H.H. Enterprises, Inc., elects to terminate and asserts that it is not bound by the Agreement between your Union and Stephenson Club, dated June 1, 1981, and expiring June 1, 1984 , effective as of December 1, 1983. The Corporation recognizes its current obligation to initiate and continue collective-bargaining negoti- ations with your pursuant to the law and is pre- pared to meet with you at your convenience. At the hearing on October 6, 1984 , Fieger took the stand to repudiate a part of that letter . He testified that the letter should have read that "the current operator is not a `successor employer"' and that the work "not" had been omitted from the letter because of a typographical error. However, at not time had Respondent denied its obliga- tion to bargain with the Union other than by interposing a technical denial in the pleadings in this case. Between February 24 and late September , it conducted a total of four bargaining sessions with the Union but no contract has yet emerged from these discussions. On February 10, Stuart M . Israel, the Union's attor- ney, responded to Fieger's January 26 letter and made reference also to a phone call which took place that day between the two attorneys . He objected to unilateral changes in working conditions which had been made without bargaining with the Union and he asked that these changes be rescinded . He further objected to the Company's assumption, expressed to him by Fieger, that Respondent, as a new employer, is not bound by the terms and conditions of the old contract but had a unilat- eral right to alter working conditions until a new agree- ment was consummated with the Union . Israel forward- ed to Fieger a copy of the unfair labor practice charge wich had been filed in this case on that date. The former owner made regular weekly or monthly deductions from each paycheck for employee contribu- tions to a union major medical insurance plan and peri- odically transmitted these funds to the trust fund which administered the plan . After December 1, Respondent continued to make these deductions but retained the money in its general fund and did not transmit the money to the trustees. In late January, the Hundichs dis- continued making these deductions and refunded the sums deducted to each employee. Presumably the em- ployees were without this type of insurance coverage during tis period of time, although the record is unclear on this point. On February 4, Respondent attached the following notice to employee paychecks: Until futher notice those employees who have de- ductions for union dues and medical insurance should make those payments on their own. No fur- ther deductions for those payments will be made on payroll checks. Note futher that those who in the past have had deductions for medical insurance have been refunded this money on this payroll check. It is shown as a credit (CR) under Blue Cross on your check. Shortly after taking over the restaurant, Respondent began to hire a series of cook trainees at $3.35 an hour. No such classification or wage rate for kitchen employ- ees existed in the contract signed by the predecessor em- ployer, and there is no suggestion in the record that the Union was notified that such a classification was being instituted. Apparently Respondent has had difficulty re- taining anyone to work at this wage rate , so a series of employees have been hired over the past year for this position. In February 1984, Respondent reduced the original 7:30 to 3:30 hours of kitchen employees Avon Worthy and Rosie Thomas to 8 to 2 . Worthy eventually left the employment of the Respondent. When business picked up in the spring, Thomas' hours were increased but they were later reduced in the summer when busi- ness declined. Ted Hundich testified that Respondent does not recognize any seniority accrued by waitresses before the December 1 takeover date. He stated that he had informed the Union of this policy at the first bar- gaining session on February 23 and possibly before that date, but he did not bring this change to the attention of any of the waitresses. After a prelimiary exchange of proposals, the parties met on February 23 in Fieger's office to negotiate a new contract. Among the items discussed was health insur- ance. Fieger told the union representatives ' that he wanted a health insurance plan which did not cost as much as the union plan that was previously in effect at the restaurant . He also proposed that the Company fur- nish health insurance benefits only for full-time employ- ees, meaning those who worked 32 or more hours per week. Israel replied that the Union could neither accept nor reject such a proposal without an audit of the com- pany books. Fieger agreed to an audit. Sometime in April or May, Lukacs and Claudia Holland, the Union's comptroller, visited the company premises on two occa- sions for the purpose of conducting such an audit of the Company's books. However, on February 24, Respondent notified the Union in writing that it was instituting its own health plan, referred to in the record as a plan administered by the John Alden Insurance Company. Shortly thereafter, all full-time employees were furnished with the following form on company stationery and were asked to sign it: I have been asked by my employer, Stephenson Club, whether I desire to participate in the Wash- 1002 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ington National Insurance Company Hotel Plan and I understand that if I elect to participate, $30.00 per month will be deducted from my wages and a simi- lar sum will be contributed by my employer. Check one: I desire to participate and consent to the $30.00 monthly deduction from my wages. I do not wish to participate and waive any right to do so. Signature: C. Analysis and Conclusions 1. Successorship Respondent's vacillation concerning whether it is the successor to the Stephenson Club, Inc. does not substan- tially cloud the issue on this point. Whether Respondent admits it or not, it is the successor to Stephenson Club, Inc. What consequences flow from that status is another matter. The rest of successorship was laid down long ago in John Wiley & Sons v. Livingston, 376 U.S. 543 (1964). A successorship occurs when there is substantial continuity in the identity of the business enterprise. This test has been applied by the Board many times in such cases as Miami Industrial Trucks, Inc., 221 NLRB 1223 (1975). Starco Farmers Market, 237 NRB 373 (1978), and Saks & Co., 247 NLRB 1047 (1980). When the nature of the work and the constituency of the work force remain the same and there is no hiatus in the operation, a successor- ship is usually found. In this case, the new owners took over on December 1, 1983, without a break in the operation of the Stephen- son Club. They provided the same service to the public at the same location as did the previous owner. With few if any exceptions, they employed the same employees. They did not even change the name of the operation until some months after assuming control, and did not alter the sign outside the building from Stephenson Club to Stephenson Haus until 9 months after the takeover. Indeed, a casual observer frequenting the establishment during this period of time would have scarcely noticed any changes, at least during the first weeks of the new operation. In light of these factors, I conclude that H.H.H. Enterprises, Inc., d/b/a Stephenson Haus, is the legal successor in interest to Stephenson Club, Inc. One of the least quoted portions of the oft-cited Burns decision10 is that "mere change of ownership in the em- ploying industry is not such an `unusual circumstance' as to affect the force of the Board's certification within the normal operative period if a majority of employees after the change of ownership or management were employed by the proceding employer." Burns, supra at 279. The Board has also applied the presumption of continuing majority status to successorship situations in which no formal certification is involved. Virginia Sportswear, 226 11 NLRB Y. Burns Security Services, 406 U S. 272 (1972) NLRB 1296 (1976); Western Distributing Co., 236 NLRB 1224 (1978). The presumption attaches at the point in time when the new owner comes to employ a majority of the employees who worked for the former employer. Spruce Up Corp., 209 NLRB 194 (1974). Applying these principles to the facts of the present case, it is clear that the Respondent was under an obliga- tion to bargain collectively with the Union on its first day of business, December 1, 1983, if not before that date. Hundich asked the former owner to tell his staff that she would like to have them continue to work for her without any changes. She also invited certain of the waitresses, with whom she spoke prior to the sale, to stay on. In fact, on the Respondent's first day of busi- ness, all the former employer's complement of employees showed up for work and went about their previous duties in routine fashion. Moreover, her invitation to continue working was in no way conditioned on any agreement, individual or collective, to begin working for the Respondent under terms or conditions which differed from the ones the Respodnent's employees had been en- joying while working for the Stephenson Club, Inc. In light of these factors, the Respondent was, under the doctrine of the Burns case, obligated to recognize and bargain with the Union, at least by December 1, if not before, as the exclusive collective-bargaining representa- tive of its employees. Respondent's failure to do so in a proper manner constitutes the gravemen of the complaint in this case. 2. Unilateral changes in compensation and working conditions The General Counsel does not contend that Respond- ent was formally bound by the terms and conditions of the contract which the Union had concluded with Re- spondent's predecessor in 1981. The thrust of the Gener- al Counsel's contention is that, from the time the Union achieved the status of exclusive collective-bargaining representative of Respondent's employees, Respondent was obligated to bargain collectively with the Union re- specting not only provisions which might be embodied in a future signed agreement but also respecting any changes in existing wages and terms and conditions of employment which might be made prior to the conclu- sion of such a formal contract. Since taking over the ownership and management of the Stephenson Club, the Respondent has acted on the premise that , as a new em- ployer, it was totally free to adjust wages and terms and conditions of employment to its liking without the incon- venience of collective bargaining until such time as it concluded a new agreement with the bargaining agent of its employees. This course of conduct was seriously remiss. The situation found here is similar to the ones ad- dressed by the Seventh Circuit in NLRB v. Bachrodt Chevrolet Co., 468 F.2d 963 (7th Cir. 1972), and Zim's Foodliner v. NLRB, 495 F.2d 1131 (1974). In these in- stances, a new employer purchased a continuing enter- prise and initially adopted the wages and conditions which had been observed by its predecessor. However, neither employer formally adhered to the collective-bar- STEPHENSON HAUS 1003 gaining agreement which had previously been in effect. Later on, both began to change certain features of com- pensation and of the work situation without first bargain- ing to impasse over such changes with the bargaining agent. Both the Board and the court found such prac- tices illegal . The court of appeals observed: At first blush it might seem that this determina- tion [of an 8(a)(5) violation] is tantamount to a re- quirement that [the new employer] honor the exist- ing collective bargaining agreement and that the same relief is being afforded by indirection that Burns directly forecloses. Further analysis proves otherwise. [The new employer] is free to alter unila- teally the terms and conditions of employment but only under certain conditions. Those conditions are that the company first bargain wiht the employees' representative and that the bargaining continue to an impasse; only then would [the new employer] be in a position to change the working conditions by unilateral action . A fair reading of Burns supports this conclusion. [Bachrodt Chevrolet Co., supra at 970.] The facts of this case are markedly different from the ones presented in Spruce Up, supra, in which a new em- ployer, in advance of taking over , interviewed employees of the old employer individually, invited them to come to work for him, but only upon new terms and condi- tions which he outlined . In such an instance, there was no obligation to bargain with an incumbent union repre- senting employees of a former employer because there was no duly designated bargaining agent entitled to demand recognition at that point . At the time of such in- dividual negotiations, it was as yet undetermined wheth- er or not there would be a union in the new shops enti- tled to recognition because it was still uncertain how many employees would continue on with the new owner and how many would not. In the present case, all the employees of the former owner were invited to stay on without any changes. All of them did. Of even more compelling importance is the fact that when they did report to work on December 1, 1983, the terms and conditions of employment under which they began working were in fact the same as those they had enjoyed with their previous employer, even °without the benefit of a formal contractual under- taking between the Union and the new owner to this effect. The new owner unilaterally established at the Ste- phenson Club the former owner's wage rates and work- ing conditions and continued them in effect for various periods of time. Banquet waitresses continued through- out the month of December to be assigned to banquets as they had in the past . In fact, the former owner's supervi- sor remained on board during the busy pre-Christmas season to supervise this operation. Kitchen employees continued to work a full 8-hour day. Respondent contin- ued to make payroll deductions for health insurance, albeit without forwarding the money deducted to the trustees of the health insurance fund. Banquet waitresses throughout the month of December continued to divide the total gratuity paid to the house for banquet service because, as of that time, bartenders did not work ban- quets and all service was supplied by waitresses, for both food and liquor. Accordingly, when Respondent went about changing these aspects of wages and working conditions, it was not unilaterally altering the wages and working condi- tions of its predecessor. It was altering its own wages and conditions, all of which had been in effect for various pe- riods of time subsequent to the takeover. Hence, the Re- spondent did not find itself in a conventional Burns take- over situation when it took the actions which are the subject of the unfair labor practice complaint. By then Respondent found itself in the more conventional situa- tion of a unionized company that wanted to make changes in existing wages and conditions. In order to make such changes, it was first under an obligation to notify the representative of its employees of its desires and to give it an opportunity to bargain collectively con- cerning requested changes. If requested by the Union, Respondent was under the further obligation to bargain concerning such changes and to refrain from implement- ing them unless and until it had bargained over them in good faith and to impasse. NLRB v. Katz, 369 U.S. 736 (1962). This the Respondent either failed to do, or, having done so, then reneged on its agreement. The division of banquet tips among waitresses and bar- tenders posed a new situation which Respondent was ob- ligated to address through collective bargaining. Histori- cally, waitresses alone shared the entire banquet gratuity because only waitresses served banquets . Hundich was dissatisfied with this practice and wanted to introduce the use of bartenders, two of whom were her sons. The Union had no objection to her request, but, with this in- novation, it made certain demands on how tips should be split. Respondent wanted the bartenders to get either a portion of the food gratuity or all the liquor tip. The Union strongly objected, claiming that it was illegal to give a tip to anyone who did not participate in the serv- ice for which the money was being paid. I credit cor- roborated testimony to the effect that the parties agreed to give the food tip entirely to the waitresses and to allow them to share the liquor tip with the bartender. Having made and announced this agreement, Respondent then proceeded to try to avoid implementing it by bar- gaining directly with waitresses in an effort to persuade them to forgo any division of the liquor tip. In so doing, Respondent violated Section 8(a)(1) and (5) of the Act. It is clear that the practice adopted by Respondent when it took over on December 1 was to give banquet work to luncheon waitresses and to do so in rotation and by seniority. It followed or ratified this practice in the assignments which took place throughout December. In the middle of January, it unilaterally discontinued giving banquet work to luncheon waitresses, assigning the work instead to dinner waitresses. The effect on the earnings of luncheon waitresses necessarily suffered. Moreover, Respondent unilaterally discontinued crediting for senior- ity any service by an employee to the employing indus- try rendered previous to December 1. In so doing, it cre- ated a situation in which almost every employee now has identical seniority. Respondent made no effort to bargain 1004 DECISIONS OF NATIONAL LABOR RELATIONS BOARD over either of these changes. Its action in bringing them about in this manner violated Section 8(a)(1) and (5) of the Act. At a negotiating session on February 23, Company Ne- gotiator Fieger complained that the Union's health plan was too expensive and requested the Union to agree to another plan which did not cost as much. Moreover, the company-sponsored plan being proposed would not apply to any part-time employees, whom Respondent de- fined as anyone working less than 32 hours a week. The Union's immediate response was that it could not re- spond because it had insufficient information concerning the Company's financial position. It requested an audit to see if Respondent's professed financial difficulty would be borne out by company records. The Company agreed to the audit. However, before the audit was performed and while the proposed health insurance plan was still on the table for discussion, the Company put it into effect. Unilaterally instituting terms and conditions of employ- ment before bargaining to impasse is a clear violation of Section 8(a)(1) and (5) of the Act. Having implemented its health insurance plan in this manner , the Respondent was guilty of such a violation. Shortly after the takeover, Respondent introduced a new minimum wage job classification in the kitchen. Not long thereafter it claimed that it did not have enough work to continue to employ two kitchen employees at $4 an hour for a full 8 hours each day, and decided to reduce the working hours of two kitchen employees so they would no longer enjoy the 8-hour workday they had been entitled to under the old employer's contract and the new employer's 2-month practice. By unilateral- ly creating a new job classification and assigning to it a specified wage rate, i 1 and by unilaterally reducing the regular working hours of kitchen employees, Respondent violated Section 8(a)(1) and (5) of the Act. On the foregoing findings of fact and conclusions of law, and on the entire record considered as a whole, I make the following CONCLUSIONS OF LAW 1. Respondent H.H.H. Enterprises, Inc., d/b/a Ste- phenson Haus, is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2. Hotel, Motel, Restaurant Employees, Cooks and Bartenders Union, Local 24, Hotel and Restaurant Em- ployees and Bartenders International Union, AFL-CIO is a labor organization within the meaning of Section 2(5) of the Act. 3. All full-time and regular part-time employees em- ployed by the Respondent at its facility located at 24931 North Chrysler Drive, Hazel Park, Michigan, excluding guards and supervisors as defined in the Act constitute a unit appropriate for collective bargaining within the meaning of Section 9(b) of the Act. " In the course of the January 5 meeting, Respondent agreed to pay the incumbent who was then employed in the new position the same wage that other kitchen employees received This agreement in no way detracted from the illegality of its earlier action in setting up a new job classification without negotiating with the bargaining agent 4. At all times material herein, the Union has been the exclusive collective-bargaining representative of all of the employees in the unit descnbed above in Conclusion of Law 3 with respect to wages, hours, and other terms and conditions of employment wihtin the meaning of Section 9(a) of the Act. 5. By unilaterally instituting an apprentice cook classi- fication, by unilaterally reducing the number of hours regularly worked by kitchen employees; by unilaterally changing the manner in which waitresses are assigned to work at banquets; by unilaterally changing the terms and conditions of health insurance coverage for unit employ- ees; and by unilaterally establishing a method of dividing gratuities paid for working at banquets and repudiating an agreed-upon method for dividing such gratuities, Re- spondent violated Section 8(a)(5) of the Act. 6. The aforesaid unfair labor practice violate Section 8(a)(1) of the Act and have a close, intimate, and sub- stantial effect on the free flow of commerce within the meaning of Section 2(6) of the Act. REMEDY Having found that Respondent committed certain unfair labor practices, I will recommend that it cease and desist therefrom and take certain other actions which are designed to effectuate the purposes and policies of the Act. I will recommend that Respondent be required to bargain collectively in good faith with the Union over wages, hours, and terms and conditions of employment of unit employees and that it cease and desist from making unilateral changes in those wages, hours, and terms and conditions of employment before bargaining to impasse. I will further recommend that Respondent be required to make whole all waitresses and kitchen em- ployees for any losses they may have suffered by reason of the unlawful conduct found herein, in accordance with the Woolworth formula,12 with interest thereon at the adjusted prime rate used by the Internal Revenue Service for the computation of tax payments. Olympic Medical Corp., 250 NLRB 146 (1980); Isis Plumbing Co., 138 NLRB 716 (1962). With respect to the health insur- ance plan, I shall recommend that Respondent be re- quired to make whole the employees in the unit by making all health insurance contributions, as provided in the predecessor's collective-bargaining agreement, which have not been paid since December 1, 1983, to reinstate the health insurance plan or plans, and to continue to make health insurance contributions to the fund adminis- tering the plan until such time as the parties have agreed on an alternative health insurance plan or have bargained with the Union in good faith to impasse. Turnbull Enter- prises, 259 NRLB 934 (1982). I will recommend that Re- spondent be required to make whole any employees who have incurred out-of-pocket expenses for medical and hospital costs as a result of the unlawful discontinuance of health insurance contributions by Respondent. I will recommend that Respondent be required to reinstate a regular 8-hour day for kitchen employees, that it discon- tinue the use of an apprentice cook classification, and 12 F W Woolworth Co, 90 NLRB 289 (1950) STEPHENSON HAUS 1005 that it continue to observe these conditions until it has bargained with the Union in good faith to impasse. I shall recommend that Respondent adhere to and give full force and effect to its oral agreement with the Union to compensate banquet waitresses by permitting them to share equally with bartenders in that portion of banquet gratuities attributable to liquor service and to share ex- clusively among themselves that portion of banquet gra- tuities attributable to food service. I will also require that luncheon waitresses be assigned to serve banquets on the basis of seniority accrued since their original date of hire at the Stephenson Club and in a weekly rotation, except when specific waitresses are requested by customers, and that it continue such practice until it has bargained with the Union in good faith to impasse. I will also recom- mend that Respondent be reqired to post the usual notice advising its employees of their rights and of the results in this case. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed" ORDER The Respondent, H.H.H. Enterprises, Inc., d/b/a Ste- phenson Haus, Hazel Park, Michigan, its officers, agents, successors, and assigns, shall 1. Cease and desist from (a) Refusing to bargain collectively in good faith with Hotel, Motel, Restaurant Employees, Cooks and Bar- tenders Union, Local 24, Hotel and Restaurant Employ- ees and Bartenders International Union, AFL-CIO as the exclusive collective-bargaining representative of all Re- spondent's full-time and regular part-time employees em- ployed at its facility in Hazel Park, Michigan, excluding guards and supervisors as defined in the Act. (b) Making unilateral changes in the wages, hours, and terms and conditions of employment of unit employees without notifying the Union, affording it an opportunity to bargain collectively concerning such changes, and, on request, bargaining collectively in good faith with the Union to impasse concerning such changes. (c) Repudiating and failing to give full force and effect to wages, hours, and terms and conditions of employ- ment which have been agreed upon. (d) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of the rights guaranteed them by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Recognize and, on request, bargain collectively with the Union as the exclusive collective-bargaining representative of Respondent's Hazel Park, Michigan em- ployees noted above, and adhere to and give full force and effect to any wages, hours, and terms and conditions which have been orally agreed to with the Union and embody the same in a signed written contract. (b) Make whole any employees for any loss of pay or benefits which they may have suffered by reason of the discriminations found herein, as set forth in the remedy section of this decision. (c) On written request from the Union, and in the manner set forth in the remedy section of this decision, rescind its current health insurance plan, immediately re- establish the health insurance plan that was in effect on December 1, 1983, and continue that plan in existence until such time as it has bargained with the Union in good faith to impasse. (d) Pay to the trustees of the health insurance plan that was in effect on December 1, 1983, all moneys due and owing from that date for contributions for coverage of unit employees and continue making such contributions until such time as it has bargained with the Union in good faith to impasse. (e) Rescind the job classification of assistant cook or assistant pastry cook; restore the regular 8-hour day for all kitchen employees; resume making banquet assign- ments among waitresses by assigning such work to luncheon waitresses in weekly rotation by seniority ac- crued since their original date of hire by the Stephenson Club; divide banquet tips for liquor service equally among waitresses and bartenders and banquet tips for food service equally among waitresses only, and continue to observe these terms and conditions of employment until it has bargained with the Union in good faith to im- passe. (f) Preserve and, on request, make available to the Board or its agents for examination and copying, all pay- roll records, social security payment records, timecards, personnel records and reports, and all other records nec- essary to analyze the amount of backpay due under the terms of this Order. (g) Post at Respondent's place of business in Hazel Park, Michigan, copies of the attached notice marked "Appendix." 14 Copies of the notice, on forms provided by the Regional Director for Region 7, after being signed by the Respondent's authorized representative, shall be posted by the Respondent immediately upon re- ceipt and maintained for 60 consecutive days in conspic- uous places including all places where notices to employ- ees 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. (h) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. " If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec 102 48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses 14 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 Nation- al Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board " 1006 DECISIONS OF NATIONAL LABOR RELATIONS BOARD APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government 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 make unilateral changes in the wages, hours, and terms and conditions of employment of bar- gaining unit employees without notifying the Union and affording it an opportunity to bargain collectively con- cerning such changes. On request, WE WILL bargain col- lectively in good faith with the Union concerning such changes. WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the exercise of the rights guaranteed you by Section 7 of the Act. WE WILL recognize and bargain collectively in good faith with Hotel, Motel, Restaurant Employees, Cooks and Bartenders Union, Local 24, Hotel and Restaurant Employees and Bartenders International Union, AFL- CIO as the exclusive representative of our nonsuperviso- ry employees, and WE WILL give full force and effect to any wages, hours, or terms and conditions of employ- ment which have been orally agreed to with the Union and embody the same in a signed written contract. WE WILL make whole any employees for any loss of pay or benefits which they have suffered by reason of the discriminations practiced against them and found in this case, with interest. WE WILL, on written request from the Union, rescind our current health plan and immediately reestablish the health insurance plan which was in effect on December 1, 1983, and continue that plan in existence until such time as we have bargained with the Union in good faith to impasse. WE WILL pay to the trustees of the health insurance plan which was in effect on December 1, 1983, all moneys due and owing from that date for contributions for coverage of unit employees, and WE WILL continue making such contributions until such time as we have bargained with the Union in good faith to impasse. WE WILL rescind the job classification of assistant cook or assistant pastry cook; restore the regular 8-hour day for all kitchen employees; resume making banquet assignments among waitresses by assigning such work to luncheon waitresses in weekly rotation by seniority ac- crued since their original date of hire by the Stephenson Club; divide banquet tips for liquor service equally among waitresses and bartenders and banquet tips for food service equally among waitresses only; and WE WILL continue to observe these terms and conditions of employment until we have bargained with the Union in good faith to impasse. H.H.H. ENTERPRISES, INC., D/B/A STE- PHENSON HAUS