White-Evans Service Co., Inc. And Its Alter Ego Amco Elevators, Inc.

WHITE-EVANS SERVICE CO. 81 White-Evans Service Co., Inc. and its alter ego Amco Elevators, Inc. and International Union of Elevator Constructors, AFL-CIO. Case 25- CA-14922 31 July 1987 DECISION AND ORDER By CHAIRMAN DOTSON AND MEMBERS BABSON AND STEPHENS On 2 December 1983 Administrative Law Judge Richard H. Beddow issued the attached decision. The Respondents filed exceptions and a supporting brief, the Charging Party filed cross-exceptions and a brief supporting its cross • exceptions and answer- ing the Respondents' exceptions, and the General Counsel filed a brief in support of the judge's deci- sion. 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 as modified herein2 and to adopt the recommended Order as modified.3 1. We agree with the judge that the eight bar- gaining unit employees of Respondent White-Evans Service (Service) who did not report for work on the day after Service's collective-bargaining agree- In affirming the judge's finding that Respondent Amco Elevators is the alter ego of Respondent White-Evans Service, we note that the pur- pose in creating an alleged alter ego relationship is a relevant factor in the analysis See, e g, Advance Electric, 268 NLRB 1001, 1002 (1984), Fugazy Continental Corp, 265 NLRB 1301, 1302 (1982), enfd. 725 F 2d 1416 (DC Cir 1984) Here, the Respondents' purpose clearly was to evade White-Evans Service's collective-bargaining responsibilities under the Act. 2 We affirm the judge's finding that the Respondents' promises of ben- efits and interrogations of employees violated the Act. However, we do not agree that the promises and interrogations constitute independent vio- lations of Sec. 8(a)(1) Both were incident to the Respondents' pattern of unlawful direct bargaining They are therefore properly subsumed in the broader 8(a)(5) and (1) violation found by the judge See Superior Sprin- kler, 227 NLRB 204, 208 (1976), Houston Sheet Metal Contractors Assn., 147 NLRB 774, 783-784 (1964), The Union has excepted to the judge's failure .specifically to find that the Respondents' direct dealing after the collective-bargaining agreement expired violated the Act. In our view, the Respondents' postagreement direct dealing was a continuation of the unlawful direct bargaining in which they engaged before the agreement expired; the cease-and-desist order that we adopt herein adequately covers both aspects of this illegal conduct 3 The Union has moved to strike from the Respondents' brief two ref- erences to matters not properly before the Board in this proceeding One reference involved the results of the Union's negotiations with another employer and the other was the characterization of a letter admitted into evidence as "part of a public bid." Since the results of the negotiations are not contained in the record and the Respondents' characterization of the letter is not supported by the record, we grant the Union's motion In its brief the Union notes that the judge at In. 2 of his decision erro- neously identified employee James Kirkpatrick as testifying to matters concerning the rate of industrial injury for elevator constructors This testimony was in fact given by Philip Kenworthy, the Union's business manager. ment expired were constructively discharged in violation of Section 8(a)(3) and (1). The theory of the constructive discharges employed here involves an employee who ,quits after being confronted by his employer with the Hobson's choice of resigna- tion or continued employment conditioned on the relinquishment of rights guaranteed by Section 7 of the Act. See, e.g., Remodeling By Oltmanns, 263 NLRB 1152, 1162 (1982), enfd. 719T.2d 1420 (8th Cir. 1983); Superior Sprinkler, above.4 Here, in the 2-month period culminating in the expiration of the Standard /Agreement, Service's conduct in carrying out the final steps in its plan to convert to a nonunion operation clearly delineated the choice that its employees faced. Service unlaw- fully laid off mechanics Wands and Kirkpatrick, the two most active and outspoken union adherents in the unit, and subsequently failed to recall them despite its expressed interest in hiring additional mechanics. Meanwhile, at the same time that Serv- ice was assertedly seeking to negotiate in good faith with the Union, it engaged in a pattern of direct bargaining with the employees, both individ- ually and in group meetings, in obvious derogation of the Union's status as the employees' exclusive bargaining representative. At these sessions Service demonstrated its intention to institute substantial changes in terms and conditions of employment as soon as ,the contract period ended, and it attempted to convince the employees to continue working under these unilaterally imposed conditions. In ad- dition, various statements were made in the course of this direct bargaining that further indicated Service's intention to put an end to the employees' union representation when the agreement expired.5 And, on the day the contract expired, Service, as it had done previously, in, bargaining individually with employees, referred to the Company's emer- gence as a "new organization," making a "new start," now set to occur on the next day. Taking account of the circumstances above, Service clear- ly conveyed to the unit employees that they each had a choice at the time the agreement expired: either continue working on the condition that they Q Cf, e.g, Lyman Steel Co., 249 NLRB 296 (1980), and Crystal Prince- ton Refining Co, 222 NLRB 1068 (1976), applying the different construc- tive discharge theory under which an employer violates Sec 8(a)(3) and (1) of the Act by imposing intolerable working conditions on an employ- ee or otherwise harassing him because of his union activity and thereby forcing him to quit. s For example, Service told one employee that it would institute a "merit shop," i.e., a nonunion shop, when its agreement with the Union expired In another instance, Service told an employee that it had a drawerful of applicants willing to work nonunion in response to the em- ployee's statement that the unit employees would not work without union representation. At one of the group negotiation meetings, Service assured employees that if they incurred fines for working nonunion the fines could be taken care of if the Company returned to a union-shop oper- ation at a future time 285 NLRB No. 13 82 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD relinquish their right to bargain collectively through their chosen representative, and their right to terms and conditions of employment thus deter- mined, or quit. We find Service's animus readily in- ferable from the conduct above, and further sup- ported by the immediate imposition of unilateral changes and the secret transfer of bargaining unit work to Respondent Amco Elevators (Amco), the nonunion alter ego, when the contract expired. Thus, the employees who refused to report for work in the face of the dilemma created by Service were constructively discharged in violation of Sec- tion 8(a)(3) and (1).6 Superior Sprinkler, above; Co- lumbia Engineers International, 249 NLRB 1023 (1980). See also Blue Cab Co., 156 NLRB 489 (1965), enfd. 373 F.2d 661 (D.C. Cir. 1967). We do not agree with the judge, however, that employee Jack Kinz was similarly the subject of a constructive discharge. Kinz decided to leave Serv- ice's employ for another job at least 3 weeks prior to the expiration of the agreement, and he resigned in fact 8 days before it expired. Thus, while he was approached by Service in incidents of direct bar- gaining and while he resigned because of his "im- pression" that Service intended to institute unilater- al changes and to terminate the employees' union representation at the end of the contractual term, he was not confronted with the dilemma of either quitting or forgoing union representation at the time he left. Although resigning in the face of such a choice is one thing, "quitting in anticipation that such may take place later on is an entirely different matter." Marquis Elevator Co., 217 NLRB 461 (1975). Kinz left before the contract expired be- cause of the availability of other employment, an- ticipating that he would face the choice that subse- quently confronted other unit employees. As such, his resignation was premature, not a constructive discharge, and not a violation of Sec. 8(a)(3) and (1). Marquis Elevator Co., above. 2. The Union has excepted to the judge's failure to identify the appropriate unit for bargaining in conjunction with his recommended Order that the 6 One unit employee did report for work on the day after the agree- ment expired The judge included this employee among those he found had been constructively discharged We see no issue of constructive dis- charge with regard to this employee since no quit was involved The judge identified him as Franklin Cox, the record, however, makes clear that it was employee Steven Shepard Accordingly, we will delete She- pard's name from the list in the judge's recommended Order of those who were constructively discharged While we do not find a constructive discharge as to employee Shepard, we note that confronting an employee with the choice of forgoing his job or forgoing union representation is an unfair labor practice notwithstand- ing the employee's decision to keep his job and surrender his statutory right to representation by the chosen bargaining unit representative Be- cause our cease-and-desist order already bars the Respondents from re- quinng abandonment of union representation , however, there is no need to find a separate violation as to Shepard Respondents bargain with the Union. This excep- tion has merit and we will correct the judge's ap- parent oversight in this matter. In 1980 Service was created as a subsidiary of White-Evans Manufacturers to operate exclusively in the service and repair of elevators. From 1980 until 1982 White-Evans Manufacturers manufac- tured elevators; Amco, a nonunion operation, in- stalled them; and Service performed elevator serv- ice and repair. Pursuant to its purpose, Service em- ployed service and repair workers only. On 2 March 1980 Service signed a short-form adoption agreement with the Union binding it to the terms of the Standard Agreement set to expire 8 July 1982. The recognition clauses of both the Standard Agreement and the adoption agreement state in virtually identical language that the Union is the bargaining representative of the installation employees and the service and repair employees of the signing employer. There is no evidence in the record bearing directly on the parties' specific in- tentions at this time concerning the scope of the bargaining unit covered by the adoption agree- ment. The record does clearly show, however, that Service at no time employed installation workers and, as stated above, that its sole function was ele- vator service and repair. On 9 July 1982, after the agreement expired, the service and repair work of Service was transferred to Amco. Thereafter Amco employed service and repair workers on a nonunion basis in addition to the installation em- ployees it already had. We have affirmed the judge's finding that Amco is the alter ego of Service and responsible for the latter's bargaining obligations. We note specifically that Amco's alter ego status stems, inter alia, from its performance of the service and repair work for- merly done by Service, and not from the perform- ance of installation work. With regard to the ap- propriate unit for bargaining pursuant to a finding of alter ego, the Board has looked to the voluntary agreement of the parties concerning the nature and scope of the bargaining unit. See, e.g., Samuel Kosoff & Sons, 269 NLRB 424, 428-429 (1984); Ha- geman Underground Construction, 253 NLRB 60, 70 at fn. 12 (1980); see also Carpenters Local 1846 v. Pratt-Farnsworth, 690 F.2d 489, 509 (5th Cir. 1982), cert. denied 464 U.S. 932 (1983). The Union re- quests that we identify the appropriate bargaining unit in accordance with the recognition language of the Standard Agreement and the 1980 short- form adoption agreement signed by Service. In effect, the Union would include in the unit Amco's installation employees. We disagree. Although the recognition clause of a collective- bargaining contract may provide an accurate re- WHITE-EVANS SERVICE CO flection of the parties' agreement as to the unit for bargaining , the clause by itself is not necessarily conclusive, and it is not dispositive in this particu- lar case , Notwithstanding that the recognition clause in the 1980 adoption agreement included in- stallation workers as well as service and repair em- ployees, the evidence establishes that Service had no employees performing installation work in its employ when the agreement was executed or at any time thereafter. Indeed, Service was created to engage exclusively in service and repair work and to that end it employed workers for service and repair only . Then, as now , all installation work was performed by the unrepresented employees of Amco. Consequently , it is fair to infer that installa- tion workers were not considered by Service and the Union to be part of the bargaining unit. Ac- cordingly, we find that the bargaining unit covered by the parties' 1980 agreement consisted of em- ployees engaged in service and repair work. It was the transfer of this bargaining unit work to Amco that established Amco's bargaining obligation. Thus, we conclude that the employees of Respond- ents Service and Amco performing elevator service and repair work are the appropriate bargaining unit for the remedial purposes of this case, and we will amend the judge's Conclusions of Law and recom- mended Order accordingly.? AMENDED CONCLUSIONS OF LAW 1. Delete Conclusion of Law 6 and renumber the subsequent Conclusions of Law accordingly. 2. In the final Conclusion of Law, add the fol- lowing: "The appropriate bargaining unit is: All elevator constructor mechanics and help- ers employed by Respondents White-Evans Service Co., Inc. and Amco Elevators, Inc., who are engaged in the repair, maintenance, and servicing of all equipment referred to in Article IV, paragraph 2 and Article IV(A) of the Standard Agreement between the National Elevator Industry, Inc. and The International Union of Elevator Constructors, effective 9 July 1977 to 8 July 1982." AMENDED REMEDY In the first sentence of the second paragraph of the judge's recommended remedy, before the word "employees," delete the word "all" and insert the word "certain" in its place. 7 We also note that the addition of Amco's installation employees to the bargaining unit would raise an issue of accretion See, e g, Ogle Pro- tection Service, 183 NLRB 682, 688-689 (1970), enfd 444 F 2d 502 (6th Cir 1971) No such question concerning representation has been litigated in this proceeding, and thus it is not before us 83 Interest on backpay shall be computed as pre- scribed in New Horizons for the Retarded." ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge as modified below and orders that the Re- spondents, White-Evans Service Co., and its alter ego Amco Elevators, Inc., Indianapolis, Indiana, their officers, agents, successors, and assigns, shall take the action set forth in the Order as modified. 1. Delete paragraph 1(f) and reletter the subse- quent paragraphs accordingly. 2. At the end of paragraph 2(a), add the follow- ing: "The appropriate bargaining unit is: All elevator constructor mechanics and help- ers employed by Respondents White-Evans Service Co., Inc. and Amco Elevators, Inc., who are engaged in the repair, maintenance, and servicing of all equipment referred to in Article IV, paragraph 2 and Article IV(A) of the Standard Agreement between the National Elevator Industry, Inc. and The International Union of Elevator Constructors, effective 9 July 1977 to 8 July 1982." 3. Delete the name "Jack C. Kinz" from para- graph 2(b) and the name "Steven L. Shepard" from paragraph 2(c). 4. Substitute the attached notice for that of the administrative law judge. 8 In accordance with our decision in New Horizons for the Retarded, 283 NLRB 1173 (1987), interest will be computed at the "short-term Fed- eral rate" for the underpayment of taxes as set out in the 1986 amend- ment to 26 U S C § 6621 Interest on amounts accrued pnor to 1 January 1987 shall be computed in accordance with Florida Steel Corp, 231 NLRB 651 (1977) 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 bypass International Union of Ele- vator Constructors, AFL-CIO by bargaining di- rectly with individual employees in the bargaining unit or by changing your terms and conditions of employment without prior consultation with the Union. 84 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD WE WILL NOT discharge any employee for en- gaging in union activities. WE WILL NOT in any other manner interfere with, restrain, or coerce you in the exercise of the rights guaranteed you by Section 7 of the Act. WE WILL, on request, bargain with the Union and put in writing and sign any agreement reached on terms and conditions of employment for our employees in the bargaining unit. The bargaining unit is: All elevator constructor mechanics and help- ers employed by White-Evans Service Co., Inc. and Amco Elevators, Inc., who are en- gaged in the repair, maintenance, and servicing of all equipment referred to in Article IV, paragraph 2 and Article IV(A) of the Standard Agreement between the National Elevator In- dustry, Inc. and The International Union of Elevator Constructors, effective 9 July 1977 to 8 July 1982. WE WILL revoke and cease to give effect to the changes we unilaterally instituted, except in such particulars as the Union may request that a particu- lar change not be revoked, and WE WILL restore and place in effect all terms and conditions of the contract in effect on 8 July 1982. WE WILL make all payments to the pension, wel- fare, and educational funds on behalf of those em- ployees in the unit for whom we previously made contributions, and for whom such contributions would have continued had we not ceased to comply with the contract. WE WILL make whole our employees for wages and benefits they would have earned if they had not been unlawfully terminated. WE WILL offer W. Wallace Carson, Raymond Haase, James Kirkpatrick Jr., Brian Stuard, Wil- liam Wands, and Daniel C. Warren immediate and full reinstatement to their former jobs or, if those jobs no longer exist, to substantially equivalent po- sitions, without prejudice to their seniority or any other rights or privileges previously enjoyed, and WE WILL make them whole for any loss of pay and other benefits suffered by them as a result of the discrimination practiced against them, less any net interim earnings, plus interest. WE WILL remove from our files any reference to the employees' terminations and WE WILL notify them in writing that this has been done and that evidence of the unlawful terminations will not be used as a basis for future personnel actions against them. WHITE-EVANS SERVICE CO., INC. AND ITS ALTER EGO AMCO ELEVA- TORS, INC. Ann Elizabeth Rybolt, Esq., for the General Counsel. S. Doughlas Trolson, of Indianapolis, Indiana, for the Re- spondent. Brian A. Powers, Esq., of Washington, DC, for the Charg- ing Party. DECISION STATEMENT OF THE CASE RICHARD H. BEDDOW JR., Administrative Law Judge. This matter was heard in Indianapolis, Indiana, on March 7 and 8 and April 25 through 29, 1983. Subse- quently, briefs were filed by all parties The proceeding is based on a charge filed October 6, 1982, as subsequent- ly amended, by the International Union of Elevator Con- structors, AFL-CIO. The Regional Director's complaint, issued November 19, 1982, 1 alleges that Respondents White Evans Service Co, Inc. and Amco Elevators, Inc., both of Indianapolis, Indiana, are alter egos and a single employer within the meaning of the National Labor Relations Act and that Respondents violated Sec- tions 8(a)(1), (3), and (5) and Section 8(d) of the Act by interrogating employees, promising and giving benefits to encourage abandonment of union support and member- ship, discharging or otherwise terminating certain em- ployees because of their union support and membership, bypassing the Union and dealing directly with its em- ployees, transferring unit work to the alter ego, and by failing and refusing to bargain collectively and in good faith with the Union. Upon a review of the entire record in this case and from my observation of the witnesses and their demean- or, I make the following FINDINGS OF FACT I. JURISDICTION Respondent White-Evans Service has provided serv- ices in its business operations valued in excess of $50,000 for other enterprises in Indiana, each of which is directly engaged in interstate commerce, and I conclude that it is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. As shown below, Respondent Amco Elevators is an enterprise affiliated with White-Evans Service. The Union is a labor organi- zation within the meaning of Section 2(5) of the Act. II. BACKGROUND Historically, employers in the elevator industry who were signatory to a collective-bargaining agreement had been signatory to the so-called Standard Agreement. The Standard Agreement is negotiated on behalf of the entire elevator industry by the National Elevator Industry, Inc. (NEII), a multiemployer association. The agreement reached between representatives of NEII and the Union became the so-called Standard Agreement. Members of NEII were automatically signatory to the collective-bar- gaining agreement by virtue of having assigned their bar- gaining authority to NEII Independent contractors, not I All following dates are in 1982, unless otherwise indicated WHITE-EVANS SERVICE CO. 85 members of NEIL either specifically executing an adop- tion agreement or were left with no collective-bargaining agreement. To the belief of most witnesses, the Union historically was not known to have negotiated or reached agreement with any individual employer for an agreement that differed from the Standard Agreement, except for provisions in _the Standard Agreement that al- lowed a local option agreement. In the past, such local agreements were negotiated with contractors in a local area and applied to all contractors in that area. Up until 1982, the provision for a local option agreement was not known generally to have been applied to allow a con- tractor to negotiate an individual agreement that differed from the agreement applicable to the other contractors in the area. It appears, however, that on one occasion an individual agreement was initially negotiated with the Westinghouse Company for the Washington, D.C. area and that it then was applied to other employers in that area. It also appears that as part of the overall negotia- tions relative to the expiration of collective-bargaining agreement in July 1982, the Union in fact did conduct negotiations with three other independent employers. (At the time of the hearing, an agreement in one case ap- peared to be feasible of completion). White-Evans Elevator Company was a corporation in- volved in all phases of the elevator business: manufactur- ing, installation, and service and repairs. From at least 1946 until 1977, it had a collective-bargaining agreement with the Union that covered all employees engaged in the installation, repair, and maintenance of elevators. The last agreement entered into by White-Evans Elevator was a 5-year agreement, which ran from July 9, 1977, until July 8, 1982. In the fall of 1977, Donald Applegate and Burt Spaethe purchased the assets of White-Evans Elevator and changed the name to White-Evans Manufacturing. A primary reason for the change in the name was an at- tempt to limit the liability of the newly purchased com- pany for products that had been previously manufac- tured by White-Evans Elevator Company. The employ- ees, customers, method of operation, and business pur- pose remained unchanged. Amco Elevators, Inc. was established in June 1965, by Applegate who operated the Company as a sole propri- etorship until its incorporation in 1974. From then until July 1981, Applegate was the president of Amco Eleva- tor and its sole owner. Since August' 1982, Burt Spaethe has owned a 20-percent interest in Amco. Amco was sig- natory to a contract with the IUEC between 1965 and 1967, but since that time has been operated on a non- union basis. Until 1980, the Company performed both in- stallation and service work on elevators. White-Evans Manufacturers was a full service compa- ny engaged in manufacturing, installation, and repair and service until 1980, when a corporate reorganization oc- curred that resulted in the creation of a wholly owned subsidiary called White-Evans Service Co. This new company was created in order to specialize in service and repair, and both Manufacturers and Amco trans- ferred then-existing service contracts to White-Evans Service. Thereafter, from 1980 until 1982, White-Evans Manufacturers handled elevator manufacturing, Amco installed them, and White-Evans Service handled service and repair. As noted, Donald Applegate had been Amco's sole owner and he owned 80 percent of the stock of White-Evans Manufacturers, which, in turn, was sole owner of White-Evans Service. On April 1, 1982, Amco purchased White-Evans Man- ufacturers and merged it into Amco. Although Manufac- turers ceased to exist as a separate company, White- Evans Service continued as a wholly owned subsidiary of Amco. In addition to his ownership role, Donald Ap- plegate has been president of both Amco and White- Evans Service since August 1982. He also is on each one's board of directors along with his son, Marcus Ap- plegate, 'and Burt Spaethe. Steven Stuard has been vice president of White-Evans Service since he was promoted from his position as service manager with the inception of White-Evans Manufacturers in 1977. Michael Yager was president and principal managing officer in charge of the construction and service departments and manager of the financial affairs of the corporation. Spaethe was in charge of the latter's manufacturing operation. In 1980, when White-Evans Service was formed, Yager was its president and chief operating officer. As noted above, in 1979, prior to the time White- Evans Service was established through the consolidation of the service division of Amco and White-Evans Manu- facturers, the Union represented only the employees of the latter. The purpose of the consolidation was to elimi- nate duplication of overhead and other inefficiencies, and two plans of accomplishing the planned consolidation were extensively discussed. One plan, proposed by Ap- plegate, was that Amco would purchase the service divi- sion of White-Evans Manufacturers and operate the con- solidated service business from Amco's Zionsville office. The other plan, proposed by Yager, was that White- Evans Manufacturers would purchase Amco's service business, with the combined service business to be oper- ated out of White-Evans Manufacturers' Indianapolis fa- cility. Yager testified that Applegate, was adamant that the operation should be nonunion. Yager argued that the union employees of White-Evans Manufacturers would not agree to go to work for anonunion company, that several qualified service mechanics would be lost, and that some of the customers of White-Evans Manufactur- ers might have objections to having their service work performed by nonunion employees and good customers could be lost. Yager also believed that it would be more economical and profitable for White-Evans Manufactur- ers to purchase the service division of Amco because White-Evans Manufacturers; already had the clerical and administrative personnel and the physical office capacity to accommodate the combined operations, whereas Amco did not. Yager also believed that White-Evans Manufacturers' downtown Indianapolis location would make a more efficient base of operations than Amco's suburban Zionsville location. Applegate noted that the union contract had only 2 more years to run and agreed to go along with Yager's plan through the creation of a new entity, White-Evans Service. The new company was formed and Yager entered into a short-form adoption agreement with the Union dated 86 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD March 3, 1980, by whose terms White-Evans Service agreed to be bound by the Standard Agreement that ex- pired July 8, 1982. The service employees who trans- ferred from Amco became employees of White-Evans Service and became union members. Until July 1981, Amco was operated by Applegate from its Zionsville, Indiana office. Yager ran both White- Evans Manufacturers and White-Evans Service from the Indianapolis facility, which both companies shared. While Yager was on vacation during that month, Apple- gate reviewed the books and records of the two corpora- tions, and discovered financial irregularities. Yager, who had been married to Applegate's niece until their divorce the previous year, resigned on request. Applegate then resigned his post as president and director of Amco and assumed the duties of president of both White-Evans Manufacturers and White-Evans Service. Marcus Apple- gate assumed the duties of president of Amco. II. THE ALLEGED UNFAIR LABOR PRACTICES During the spring of 1982 Respondent regularly em- ployed seven service mechanics-William Wands, James Kirkpatrick Jr., Jack Kinz, W. Wallace Carson, Ray- mond Haase, Sidney Gaither and Harry Gehrich, four repair mechanics-Don Rowland, Richard Gehrich, Franklin Cox, and Dan Warren, and four repair mechan- ic helpers-Steve Shepard, James King, Frank Farris, and Brian Stuard. Two other mechanics were hired in mid-March and worked for a few weeks. Steven Stuard supervised the day-to-day operations and one nonunit employee, who served as office manager. William Wands, an elevator mechanic since 1951, start- ed working for White-Evans Elevator in 1962 and worked continuously since 1968 until he was laid off in April 1982. He had never been disciplined or given a written reprimand for any reason during his tenure with the Company. James Kirkpatrick Jr. had 25 years in the industry and had worked for the Company continuously, without layoff, since 1970. Kirkpatrick had one written reprimand dated February 5, 1982. Kirkpatrick had worked at Amco for Applegate but left in 1967 when that company failed to agree to a new union contract. Applegate also knew that Wands and Kirkpatrick were both strong union suporters and Yager testified that at the time of the merger of the two service divisions, Ap- plegate said he knew those two would never go along with anything, that they could be troublemakers, and that they were always checking with the business agent and causing problems. Between 1952 through 1964, Wands occupied various local union offices including member of the executive board, vice president, and presi- dent. Both he and Kirkpatrick had also been part of the union negotiating team that had negotiated various local- option agreements. Kirkpatrick also has held various of- fices in the Local since the early 1960s including member of executive board, treasurer, and, for the past 11 years, recording secretary. Steven Stuard started with White-Evans Elevator in 1973 as an elevator mechanic and was promoted to serv- ice manager when White-Evans Service was formed. He also was a member of the local union from 1969 until he withdrew from active status in 1979. He was a member of the union executive board during the mid-70's and was generally acquainted with the union positions of Wands, Kirkpatrick, and other members. When White-Evans Service was established and the service routes consolidated, Applegate sought to have Yager change a union work rule that required 1 hour per unit, per stop. This work rule had been negotiated by the Local Option Committee at a time that Wands and Kirk- patrick were members of that committee and the rule had been adhered to by employers bound to the union contract since the early 1960s; however, it had never been reduced to a written agreement Yager issued a di- rective to the employees reducing most unit stops to 45 minutes. Wands and Kirkpatrick strenuously objected and contacted the union business manager, Philip Ken- worthy, who supported their position. The dispute con- tinued with Respondent filing a lawsuit against the Union and with Wands and Kirkpatrick continuing to observe the old practice. A settlement was reached in September 1981, and the Union abandoned its position. Yager testified that Respondent chose the lawsuit over disciplinary action to avoid losing two good employees over the situation. During this period of time Stuard threatened Wands and Kirkpatrick with discipline but did not follow through. A number of other disputes occurred between Stuard and Wands and Kirkpatrick (as well as other mechanics on occasion) over work practices and terms of the col- lective-bargaining agreement, which involved the classi- fication of work as "repair" that generally required a two-man team, or "maintenance" that could be done by a single employee The agreement provided that repair work may be performed by a single man where "no factor of safety is involved" and some disputes involved safety consideration, especially as they related to control of older elevators that were being worked on.2 Addition- al disputes occurred involving the taking of calls for weekend work, out-of-town lunch pay, and cleanliness of elevator shafts and, in apparent response to their frequent attempts to relate work practices to terms of the collec- tive-bargaining agreement or other understandings, Stuard began to sometimes refer to Wands and Kirkpat- rick as "assistant BA's [business agents]." On February 1, Kirkpatrick left work when a snow emergency was declared. He told the office manager, who apparently thought he was joking and did not relay the information to Stuarn The next day Stuard accused Kirkpatrick of leaving without telling anyone. He then told Kirkpatrick they were never going to see eye to eye, that he should look for another job, and that he was being given 2 weeks' notice. On February 10 Stuard, Kirkpatrick, and Business Agent Kenworthy met to dis- cuss the pending discharge. Stuard retracted it but criti- cized Kirkpatrick for having told coworkers that he was being fired as it put Stuard "in a barrel" and caused him embarrassment because he retracted the discharge. Stuard then handed Kirkpatrick a letter dated February 2 Kirkpatrick testified that elevator constructors had the highest rate of Injury outside of the fire department and that within the past 20 years two elevator constructors have been killed in accidents in the Indianapo- lis area WHITE-EVANS SERVICE CO. 5, which reprimanded him for unsatisfactory cleanliness of his accounts, for his challenges of callbacks, and for his failure to work on February 1, and placed him on "probation." On another occasion during early 1982, Stuard repri- manded all the assembled employees for failing to accept an emergency repair call during the night. He told them he made the repairs himself and questioned whether anyone cared to file charges against him for performing unit work. Wands replied they probably would and Stuard responded "if you don't like it you can quit." Also during early 1982, Respondent issued a memo to all mechanics criticizing the cleanliness of elevators and began a specific campaign to improve the condition of all routes. During this campaign, helpers were made available to service mechanics, routes were cleaned up (especially car tops and pits), and a memo was issued in recognizing the success of the campaign. Subsequently, however, some service routes including those of Wands and Kirkpatrick again displayed indications of lack of cleaning that included rags, oil, and dirt on car tops and paper and dirt in elevator pits. Some mechanics testified that they normally gave preference to operational and safety maintenance on service calls and would postpone cleaning chores that could not be accomplished in the normal 45 minutes allocated for a stop, on monthly, and especially bimonthly, service contracts. In April, Stuard decided to disband two repair teams, to lay off both Wands and Kbkpatrick, to switch repair mechanics Don Rowland and Richard Gehrich to Wands' and Kirkpatrick's service routes, and to lay off the two helpers, Frank Farris and Brian Stuard (Supervi- sor Stuard's brother), who worked the repair teams. The four were laid off April 30. Stuard testified he made the decision without consultation with Applegate or Spaethe, although he admitted he possibly discussed his choice with them before the actual date of layoff. Stuard stated that the layoffs were made because of his observation of a decline in repair order over the previous 4 to 6 weeks. Wands and Kirkpatrick were selected because of poor work performance based on his evaluation of the work they did (most specifically cleanliness), their effort toward their jobs, and the retention of customer service contracts by their accounts. Farris and Brian ' Stuard were selected because the mechanics they were assigned to help were to be transferred from their repair function to the service routes previously covered by Wands and Kirkpatrick and the two repair teams were disbanded be- cause of the asserted decline in repair orders. Mechanic Dan Warren testified that on April 30, as he was leaving, Stuard asked to see Warren's helper, Brian Stuard, and said he was going to have to lay him off. Warren said, "I thought we had a bunch of work?" Stuard replied, "We do, but the old man says, Kirkpat- rick and Wands3 got to go, you'll be staying on repair." Warren asked, "If I'm staying, why can't Brian stay?" Stuard replied, "Well, it'll be better for him in this cir- cumstance, if he was to get laid off." Although Stuard 3 The transcript reads "Kirkpatrick and on the them's" and the obvious phonetic mistake for Wands in transcription is corrected. 87 recalled the conversation, he denied he said "the old man had said that Wands and Kirkpatrick had to go." Respondent's payroll records indicate that two repair mechanics were hired the week beginning March 26, 1982, during the period Stuard said he observed a de- cline in work. Respondent's financial records show a de- crease in income from repair work in the first quarter of 1982 of 24 percent as compared with the last quarter of 1981, however, there is no indication that Stuard was aware of or relied on this information and it also was noted that repair work may be covered under various types of service contracts and therefore the amount of work would not necessarily be reflected in financial records. Moreover, repair income figure comparisons for the same quarters the previous year show that repair income declined 44 percent, however, no employees were laid off. Two repair employees confirmed that the pile of repair tickets on the office clipboard got thinner in 1982, and that the people hired in March were let go a€ter'a few weeks. It also was indicated that while some emergency repairs are handled immediately, others can be elective, or completed between 2 and 6 months of their initial order. Some repairs recommended by service mechanics were not scheduled and assignment of repairs was according to Stuard's overall discretion. As noted, Stuard also would classify some work as regular service work although some service mechanics believed it to be repair-type work. A number of witnesses testified regarding the relative work abilities and habits of Wands and Kirkpatrick. Stuard and several employees noted examples of occa- sions where they felt the accounts of Wands and Kirk- patrick had problems, were poorly maintained, and were dirtier than routes of other mechanics. Several other me- chanics that had an opportunity to observe gave their opinions that the routes (which involved over a hundred units for between 50 and 60 accounts visitations a month), were no less well maintained than most others and circumstances were described that tended to indicate that many of the alleged deficiencies should not be at- tributed to Wands and Kirkpatrick. Stuard recalled a few specific instances where ac- counts served by Wands and Kirkpatrick had been can- celed, however, at the time of their layoff he did not make and review a comparison of specific records of the various mechanics. It also was shown that contract can- cellations are common and that competitive practices in the industry frequently lead to changes between compa- nies that bear no relation to the skills of the mechanic. Warren further testified that on May 17, Stuard "jumped" on him for not taking more trouble calls the previous day. Warren said he was only one man and could do only so much and suggested they needed more help. Stuard then asked several of the employees present if they knew of any available service mechanics. When mechanic Rae Haase answered "Wands and Kirkpat- rick," Stuard replied that he did not need anymore busi- ness agents around. Shortly thereafter, on May 23, Rich- ard Gehrich quit and Warren also was transferred from repair to service work. 88 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Sometime between mid-May and June 1, Stuard con- tacted Business Agent Kenworthy and asked who was on the hiring list for mechanics and helpers. Kenworthy gave him six names, including Wands and Kirkpatrick. Stuard replied he did not want any of them and he did not offer recall to either employee nor did he hire anyone else at that time. He continued his efforts to find other employees, however, by this time several events had occurred pertaining to the forthcoming termination date, July 8, of the existing collective-bargaining agree- ment. On February 12, Spaethe, as vice president of White- Evans Service, sent telegraphic notice to the Union stat- ing Respondent had learned of the forthcoming negotia- tion between NEII and the Union and that inasmuch as it was not a member of NEII, it would not be bound by any agreement reached unless it specifically agreed to be bound. On April 16, Stuard sent the Union a letter in which Respondent requested the commencement of indi- vidual negotiations for a contract with differences from the standard agreement. Suggested dates for negotiations were requested and it was noted that they did not want to wait until the last minute and be presented with a "take it or leave it" standard agreement By letter re- ceived by Respondent April 26, the International replied noting the termination date and a desire to negotiate a new contract. It acknowledged the existing negotiations with NEII and suggested that when they were complete the local union would submit it to Respondent as an in- dependent signatory. On May 25, Stuard again wrote as- serting no reply to his request for negotiations but ac- knowledging receipt of the Union's "form" letter of April 23. Asserting a need to know future labor cost for business planning as soon as possible, it requested negoti- ations in 5 days. The Union replied on June 4 that it would be in touch in the near future regarding meeting dates. Stuard then wrote on June 11 that Respondent had learned that national negotiations had been suspended since May 27, and said they had a proposal to share with the Union and expressed an intention to reach an agree- ment before the contract expiration without an unneces- sary work stoppage because of failure to negotiate. On June 18, Stuard sent his proposal to the Union with a comment that business planning required that ne- gotiations be underway prior to expiration of the current contract Stuard testified that it was his intention that this serve as notice to the Union that absent an agree- ment on July 9, the Company intended to implement the terms of the proposal. During this period Stuard made numerous local calls to Kenworthy and also called the International and was told a reply letter was in the mail. The Union's reply of June 23 stated that Kenworthy and Regional Representative Harold Smith had been appoint- ed as the negotiating committee and would be in touch shortly. Contact was made and Smith suggested July 7 or 8 as a meeting date. Stuard replied it was unaccept- able and a meeting was arranged for and held on July 2. Stuard was accompanied by Respondents' counsel and Smith indicated that, as a result, the Union was not going to match wits with a lawyer and could not negoti- ate without legal representation Accordingly, little oc- curred except an exchange of Respondents' proposals and the Union's proposal to the NEII In an attempt to avoid any work stoppage when the old contract expired on July 5, Kenworthy presented the Company with a 30-day interim agreement. Stuard, how- ever, concluded that it would have bound the Company to whatever terms and conditions were ultimately reached between NEII and the Union in the new stand- ard agreement and he therefore refused to sign because of the Respondents' desire to negotiate an individual con- tract. Clause 7 of the tendered interim agreement provid- ed: "The parties hereto agree to be bound by and adhere to the terms of the new Standard Agreement negotiated by and between the Union and NEII." On July 8, Kenworthy again tendered the interim agreement and Stuard again refused. Between 3 and 8:30 p m. that same day, Kenworthy learned that a new standard agreement had been reached between NEII and the International and he called Stuard, said there would be no strike, and asked if the Company would adopt the new standard agreement by executing the interim agree- ment form until the new standard agreement was avail- able for signature. Stuard again refused and the contract expired without agreement. No discussions were initiated by either side to attempt to modify the language in clause 7 of the interim agreement to allow clear leeway for further negotiations on an individual basis after the 30-day interim provisions. Contemporaneously with the above-noted contacts and negotiations, other events were occurring between Re- spondents and between White-Evans Service and its em- ployees. Prior to April, Amco and White-Evans Manu- facturers began making preparations for what would ulti- mately be a merger of the two corporations. On April 1, Amco moved its administrative offices, including clerical and management personnel, from the Zionsville office to the facilities of White-Evans Manufacturers in downtown Indianapolis and the administrative and management functions of the two corporations were physically merged When first questioned by the General Counsel, Applegate acknowledged that the merger had occurred April 1. Respondent's counsel then interrupted Apple- gate's testimony to remind him that the merger did not occur until August 1, the date reflected in the formal merger agreement Subsequently, however, corporate tax returns and other documents were evidenced that indi- cate that the actual transfer of ownership and operations of service did occur in April. Amco was the surviving corporation, resulting in Applegate's owning approxi- mately 80 percent of the stock and Burt Spaethe owning approximately 20 percent of the stock. Applegate became president of Amco and Burt Spaethe vice presi- dent of manufacturing of Amco. Mark Applegate, who had previously been president of Amco from July 1981 until the time of the merger, became vice president of construction and continued to manage the construction division of the business. The Union was not notified of any change until mid-October 1982, when it was told the operations of both companies would merge on Novem- ber 1. Meanwhile, however, during the period between April 1 and mid-July 1982, Stuard's salary as vice presi- WHITE-EVANS SERVICE CO. 89 dent of White-Evans Service was paid by Amco without reimbursement by White-Evans Service, as had been the prior practice and, in a similar vein, Amco paid for shared secretarial, sales, accounting and similar services without reimbursement during this period from White- Evans. By memo of February 15, Vice President Spaethe noti- fied the White-Evans Service employees of his telegram to the Union regarding negotiations and stated he ex- pressed a desire to discuss local issues that it "should not be interpreted as an intention not to sign a new agree- ment." During mid-May, shortly after Wands, Kirkpat- rick, and the two helpers had been laid off, Stuard ad- dressed most of the employees one morning, as they were all in the shop area to turn in their time records, and told them that Respondent wanted to go into negoti- ation with the Union for an individual contract. Around the June 1, mechanic W. Wallace Carson was called to Stuard's office. Carson was a 16-year union member and a highly experienced mechanic who had worked for Respondents' companies since 1954 and who previously had been engaged in aspects of elevator design and manufacture. Stuard mentioned the forthcom- ing contract expiration and told him that the Company "was going to operate with or without a contract" and said that Carson was welcome to stay, but that if he chose to do so, "there would be some changes made." When Carson asked what, Stuard declined to answer "at this time." He stated that he would like Carson's decision soon. On June 2, Stuard engaged Raymond Haase in a lengthy conversation in his office. Stuard began with a discussion of the Company's efforts to commence negoti- ations. Haase, a mechanic with 9 years' experience for- merly was a nonunion Amco employee who had joined the Union and White-Evans Service in 1981. Stuard told Haase that he wanted him to know that come July, he had a job with them if he wanted it, no matter what hap- pened. When Haase asked, "You mean, when White Evans goes nonunion?" Stuard did not reply. Haase then stated that if the Company and Union did not "get things straightened out" he would not -work for the Company because he "had waited too long to get into the union, and I'm not going to give it up now." Stuard asked Haase to take time to reconsider the matter and the con- versation ended with a lengthy debate concerning unions and economics. On June 4, mechanic Jack Kinz, Respondent's most senior employee, received a telephone call at a job and was told to meet Applegate at a nearby truckstop. During a long conversation, Applegate indicated that the purpose of his visit was to ask Kinz.to continue working after the contract's expiration. Kinz replied that he was a "union man" and would not work without a union con- tract. Applegate then explained working under a "merit shop" arrangement and stated that "we are going to have a better pension and health insurance program ... than the union program." Kinz asked to see documenta- tion of the programs but Applegate stated that an actu ary was still working on them. Applegate also stated wages would vary between 60 and 100 percent of the contractual mechanic's rate, wil.h profit sharing, and he assured him that Kinz would receive top wages. Shortly before this meeting Kinz had spoken with Jim Trefry of Trefry Elevator Co., and learned that his business was being reactivated. The possibility of employment was discussed and Kinz subsequently was asked if Trefry could list his name in response to a State of Indiana re- quest for a listing of personnel to execute their low bid on a state office contract. He agreed and was listed (along with Bill Wands), on a letter dated June 3, as being an employee as of July 1.4 Stuard's interest in finding additional employees con- tinued; however, by about June 8, his reason was to not hire anyone immediately but to have people lined up in case of a strike after July 8. Two future nonunion em- ployees, Merrill Bolnder, a so-called class A (100-per- cent) mechanic, and John Horn a class B (85-percent of rate) mechanic were contacted and Stuard also placed ads in newspapers in Cincinnati, Chicago, Louisville, and New York. During the middle of June a notice was placed on the employees' bulletin board stating that White-Evans Serv- ice would be holding individual negotiations with em- ployees. As noted, Spaethe previously had notified the employees of its intention not to be bound by the nation- al negotiations and Stuard posted Respondents' own pro- posals. Kinz testified that in view of what was occurring, during mid-June he concluded that Respondent was no longer going to be a union shop and he decided to accept Trefry's employment offer. On June 14, Kinz was called into Stuard's office and asked to stay after July 8. Stuard asked Kinz if Applegate had explained "the pro- gram" to him and Kinz answered yes but indicated that he did not intend to stay. The following Monday Stuard instructed Kinz not to leave the office until he had seen Burt Spaethe. Spaethe talked to Kinz about the new merit shop program and a better health, welfare, and pension program, including profit sharing. Kinz asked to see documentation of the plans, but Spaethe stated that they were still under de- velopment by an actuary. Applegate' then came in the room and asked Kinz to reconsider his decision, assuring Kinz that were he to work under the "new program" he would lose no pension benefits in the Union's plan be- cause his interest was vested. Spaethe then apologized for the Company's failure to recognize Kinz' 25th anni- versary the previous October and made arrangements for he and his wife to take Kinz and his wife to dinner the next Saturday. The dinner was held on June 26 at a local restaurant, Kinz was given a gift, but he informed Spaethe his decision to leave was final. 4 The low bid was subsequently rejected on the recommendation of Walter E. Knoop of the State's Public Works Division, because Trefry allegedly did not supply information saying who its expert repair person would be. The contract went to the second bidder (Dover Elevator) and several other pending contracts went to White-Evans Service who was the second low bidder on other state projects. Knoop testified that he had recognized the names of Kinz and Wands as they had been his em- ployees when he was owner of White-Evans Elevator in 1977. Shortly after he received the letter, on June 3 or 4, 1982, he spoke with Bert Spaethe, and expressed his surprise that Kmz and Wands were working for Trefry He subsequently gave Spaethe a copy of the Trefry letter Under the terms of his sale, Knoop was receiving monthly payments from White-Evans as of June 1982, as well as at the time of the hearing 90 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Warren had 23 years' experience as a mechanic, in- cluding 3 years with Amco prior to the creation of White-Evans Service. Warren had given up union mem- bership to go with Applegate at Amco and, during the course of his employment there, had a number of con- versations with Applegate concerning unions and so- called merit shops and he considered Applegate to be definitely against unions . Warren testified that in late June he was called to Stuard's office where this conver- sation took place: Stuard said: "Dan, we'd like to have you stay with the new or- ganization." And I said, "Steve, you're going non- union on me, aren't you?" And he says, "we need control of the men. We don't need to have a union running our business . I'm going to run the elevator business from this seat right here." And I said, "Steve, you'll never get anybody to go non-union with you. You won't get-the men won't go." And he said, "I've got a desk drawer full of applications of men that are wiling to go to work non-union." And I said, "Well, what are you offering?" And he said "that they were going to have a comparable plan to our insurance and welfare package and-re- tirement and everything." And I said, "how compa- rable?" And I says, "is it the Amco package, with the Blue Cross and everything?" And he said, "yeah, it's the Blue Cross." And I says, "well, the Blue Cross and the insurance is good , but the retire- ment package is a joke." Warren then recalled how he paid a fine of $2500 to rejoin the Union when he was transferred from Amco. As a result of his past experience he felt he could not trust Applegate and felt he would be "left out in the cold" if he again went nonunion with Respondent and he told Stuard he was not going nonunion with him. Stuard also spoke individually with other employees including John J . (Jim) Kinz, Jack Kinz' son. Jim Kinz was a helper and a 10-year member of the Union. About a week prior to a group meeting at the end of June, Stuard spoke with Kinz in his office about keeping the employees abreast of what was happening by posting correspondence with the Union on the bulletin board and added that he could not predict the outcome of negotia- tions, but that "the company had to continue operating with or without a union" and that Kinz had a job if he wanted to stay. In late June Stuard invited all unit members except Haase, Carson, and Warren to a group meeting in an ad- jacent office where coffee and donuts were served during worktime. A second meeting, under similar cir- cumstances, was held on , July 7 by Applegate in his office. The stated purpose of the meetings was to apprise employees of the changes in their working conditions that would occur after July 8. Stuard did not invite Haase, Carson, or Warren to either meeting because he believed from earlier conversations that they would not work nonunion. The employees were told that Respond- ent intended to implement health and retirement plans whose benefits were "equal to or better than " they pres- ently enjoyed ^ and that Respondent intended to imple- ment a profit-sharing program (a new benefit). Stuard also outlined those changes in employee job classifica- tions and wage rates as contained in the Company's pro- posal, he informed the employees that overtime premium pay would be earned only for hours worked in excess of 40 per workweek, and also told them that their maxi- mum vacation pay would be reduced to 3 weeks. Stuard testified that one of the purposes of the second meeting was to introduce the employees to Applegate, inasmuch as some White-Evans employees knew Apple- gate only as the owner of Amco . At that time the em- ployees were unaware of Service's purchase by Amco. One employee asked Applegate whether White-Evans Service would retain its name after July 8; Applegate re- plied that "They intended to change the name over grad- ual ... to Amco." Another employee asked for assur- ance that were the employees to relinquish union repre- sentation, the Company would not "go union" again at some future point, causing them to incur union fines to restore their membership to good standing. Stuard as- sured them that: in case the company were sold to someone that wished to open a union shop, it was entirely possi- ble for the sales agreement to be fashioned in such a manner that, as a part of the sale of the Company, that any problems the employees incurred along the line would be paid by the new owner or purchaser. Employees also were told that "no matter what the out- come of the union negotiations White-Evans would still be in business and that they would like to have us on their team." At the second meeting the employees also were asked to give a decision on staying after the expira- tion of the contract as soon as possible. On July 6, Stuard posted a notice reviewing the dates of communiques and contacts between the Company and the Union up to and including the meeting of July 2 and stated that the Union had ignored the Company 's request to negotiate a separate agreement. On July 6 Stuard also put a notice on the bulletin board requiring all employees to turn in all company items (including keys, vehicles, tools, prints, route sheets, and uniforms) at the close of business July 8 , "in the event a new labor agreement has not been reached, or a strike is called." The notice went on to say that in the event of a strike the Company would operate on July 9 with replacement personnel and that those who wished, might report to work at 8 a.m. when equipment would be reissued. A union meeting was held July 7, and the earlier meet- ing between Stuard and Applegate. and the employees and the equipment turn in notice were discussed, as were Respondent's proposals. Also on July 7, Stuard tele- phoned Carson in the field and explained that Carson had not been invited to the first group meeting because Stuard did not believe Carson "would be interested in what [they] had to offer." The next day Stuard again telephoned Carson and asked what he "planned on doing." Carson replied that he did not know. Stuard of- fered to meet Carson in person at a place of his choice to discuss Carson's future with the Company . Carson asked WHITE-EVANS SERVICE CO Stuard his opinion of him and Stuard stated that "you're a qualified worker, you're a good worker . . . but you're not a company man." That evening as Carson returned his vehicle and equipment to Stuard, Stuard shook hands, stating, "I hate to do this." (Stuard phoned Carson 2 weeks later and offered him employment, but Carson de- clined.) Warren returned his equipment and vehicle on July 8 and Stuard repeated that he wanted Warren to stay with "the new organization." When Warren asked what terms the Company was offering, Stuard replied that he had convinced the "old man" to pay his mechan- ic union scale. Warren rejected the offer and Stuard commented, "Well, we're going to make a new start. White Evans will continue. He said goodbye to Warren, shook his hand and wished him good luck. The afternoon of July 8' Jim 1Kinz went to the shop to see what to do about getting an elevator running in view of the contract running out. Stuard again told him that the new pension plan would be better than his present one. Kinz replied that he did not intend to stay with the Company but was confused, and would consider staying if he was guaranteed he would be promoted from helper to mechanic, assigned a service route, and issued a com- pany-owned car. Stuard said he would consider that pro- posal. (Stuard called Kinz at home on July 9 and asked if he could handle his father's former route. Kinz said he thought he could but needed a week to think about it.) As noted above, the national negotiations were suc- cessfully concluded the afternoon of July 8, however, the White-Evans Service employees (with the exception of Cox, who was out of town and had otherwise indicat- ed to Stuard that he would stay with Respondent and, apparently, Gaither, who also had an out-of-town route) turned in their equipment and Stuard declined to enter into the proferred interim agreement. On July &Stuard called Merrill Bolinder and told him to report to work on Monday, July 12. On July 9, Cox was the only employee who immedi- ately returned to work. He subsequently was joined by Gaither, Harty Gehrich, Shepard, Rowland, Farris, and, for a brief period, Jim Kinz. (All of the latter employees subsequently were fined under the union constitution for working .nonunion.) On July 9 an Amco supervisor also assigned one of their construction mechanics, Kevin Fill- more, to work for Stuard in servicing elevators. Fillmore worked without either an Arnco or White-Evans uni- form. On July 12, Gaither called in and then ran his reg- ular service route. Bolinder started working as an A me- chanic. Next, John Horn was hired as a B mechanic, 85 percent. Subsequent to July 9, Stuard continued to supervise the service and repair work for customers of White- Evans; however, the mechanics and helpers were paid by and considered to be Amco employees. A formal agreement was made for White-Evans, which now had no employees, to subcontract the work to Amco. Cus- tomers were not notified of the change and the Amco employees used White-Evans' identified cars, uniforms, and paperwork. In mid-July, Kinz first told Stuard he would not return but, near the beginning of August, Kinz informed Stuard that he would accept Stuard's earlier offer. The two met 91 privately and agreed that Kinz would return to work as a class "B" mechanic earning 80 percent of the mechan- ic's scale (10 percent more than his previous wages), re- ceive a company car, and be assigned his father's route. When he returned he filled out a new W-4 tax form and was given an Amco employees' handbook (showing, among other things, that insurance coverage was differ- ent than what he previously enjoyed), a new White- Evans Service ID card, and White-Evans timesheets (which customers would sign). His paycheck was issued by Amco. After 3 weeks Kinz voluntarily terminated his employment. About this same time, Gary Binbow was hired as a class B mechanic, 80 percent, and two helpers, Larry Burns and C. J. Edgecomb, were hired. Farris re- turned in September as a class B mechanic on repair work (previously he had been a helper). During the week of July 12, subsequent to the con- tract expiration and the subcontracting of work to Amco by White-Evans Service, Kenworthy contacted Stuard and requested a meeting. Because Respondents' counsel was out of town the following week, July 28 was select- ed. At the meeting that was held at counsel's office, Kenworthy first 'requested a complete instrument of White-Evans' proposed health and pension plans. Re- spondent did not have them available but agreed to pro- vide the documents. The parties discussed one of Re- spondents' proposal that employees be allotted two 15- minute breaks per day, but that the ending time of their shift be extended to accommodate them. The Union did not want the break and it was agreed their work hours would not be changed. They discussed other items of the Union's proposal (Kenworthy as yet had not been noti- fied of any changes in the new standard agreement)' and of Respondents' proposal, including a new employee classification that would provide for a class B mechanic that would be paid 85 percent of journeyman's scale, changes in job training, reduction in vacation to a maxi- mum of 3 weeks, and the elimination of Respondents' participation in the national industrial education fund, and a change from Respondents' position discussed on July 2 relative to control of firing. Kenworthy also told Stuard that there had been changes in the new agree- ment for speedier grievance procedures but that he' had not yet received a copy. Respondent asked Kenworthy if he was in a position to enter into any agreement other than the standard agreement and he said he would not be able to enter into any condition other than what would be equivalent to the standard agreement. Stuard also asked that the Union not retaliate against union members who had worked without a contract and Kenworthy re- plied that it would be "no problem." The meeting closed after about an hour and Kenworthy left with the impres- sion that they would get back together when Respondent had documents on pensions, etc., available for discussion. Between July 28 and August 17, Kenworthy tele- phoned Stuard on two or three occasions to schedule an- other meeting., His messages went unanswered until August 18 when Stuard returned a call from Kenworthy and informed him that he considered further negotiations a "waste of time," and refused to meet further. Thirty minutes later Stuard phoned Kenworthy and agreed to a 92 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD subsequent meeting, although repeating his opinion that further negotiations would be a waste of time because all Kenworthy had was the standard agreement. Kenworthy also 'repeated a request for Respondent's pension propos- als and they agreed on a meeting date of September 14. Meanwhile, on August 22 or 23, the Union assigned Re- gional Director Mike Mullett to take over negotiations. He called Stuard shortly thereafter and arranged a meet- ing for September 1. Mullett and Stuard, along with their respective counsels, met for approximately 30 minutes. Mullett formally withdrew the Union's original proposal and substituted therefor, terms of the new standard agreement. Mullett informed Respondent that with the exception of money figures and benefit plans and a streamlined grievance procedure, the terms of the new agreement were basically the same as the old. They dis- cussed items in Respondents' proposal that included a proposed change in the Union's so-called Atlantic City plan, that related to wage formula, and Mullett also asked for a copy of Respondents' pension and welfare proposal. Respondents indicated they would get it to the Union as soon as possible. No concessions were made by either side, however, the meeting closed on a cordial basis and the Union indicated they would get back to Respondents and try to work something out after they had seen the health, welfare, and pension material. By letter of September 10, from the Union's counsel to counsel for the Respondents, the Union acknowledged the meeting of September 1, noted the Union's position that the Atlantic City plan should be retained but that it was waiting to consider Respondents' wage proposal, and asked for a specific wage proposal, for specific clari- fications of a number of other proposals, and again asking for the detailed health, welfare, and pension plans. The Union sent a followup letter dated September 21, re- questing a response to the earlier letter along with some additional questions and it stated that failure to receive a reply by September 24 would be construed as an unwill- ingness to engage in good-faith negotiations. After an ex- change of phone calls on September 22, counsel's office wrote to the Union acknowledging a change in the re- quested reply date, due to the incapacity of Respondents' counsel at that immediate time. On September 27, the Union, after obtaining the necessary authorization from the International, began picketing and, on October 6, the Union's counsel filed a charge with the Board dated Oc- tober 1, alleging failure to bargain in good faith. In mid-October Stuard returned a call from Mullett who told Stuard that the Union would like to see Re- spondent "back in the fold." Stuard indicated that things were fine, the men were happy, and that Respondents were not interested in meeting again. On October 15, Re- spondents' counsel' wrote the union counsel to inform him that as a result of White-Evans Service employees' failure to report to work on July 9 and 12, the Compa- ny's service work was subcontracted to Amco, that six former employees were hired by Amco, and that Amco and White-Evans Service would merge their operations effective November I. The Union's counsel replied on November 1 that the Union did not recognize the merger as changing Respondents' responsibility to bargain in good faith regarding the elevator employees' terms and conditions of employment and he renewed his informa- tion request from the prior letters of September 10 and 21. The Union filed an amended charge on October 27. Since November 1, no further contract negotiations have taken place and neither party specifically has informed the other that they regard negotiations at an impasse. Discussion The series of events described above presents the bases for the charges and contentions of the General Counsel and the Charging Party. The principal issues are the alter ego/single employer status of Amco and White-Evans Service; the legitimacy of the termination of mechanics Wands, Kirkpatrick, and two helpers; the alleged direct dealings with employees and bypassing of the Union; the transfer of work to the alter ego under unilateral changes in terms of employment; the alleged refusal to bargain in good faith; and the termination of unit members at the expiration of the bargaining agreement. A. Alter Ego Status Alter ego status generally will be found where two en- terprises have substantially identical ownership, manage- ment, business purpose, operation, equipment, customers, and supervision, see Crawford Door Sales Co., 226 NLRB 1144 (1976), and Custom Mfg. Co., 259 NLRB 614 (1981). Here, Respondent White-Evans Service subcontracted'- all its bargaining unit work to Respondent Amco imme- diately after the expiration of White-Evans' bargaining agreement with the Union on July 8. Both companies have been principally owned and controlled by Donald Applegate and perform separate aspects of related func- tions, namely the installation and servicing of elevators. Since the purchase and consolidation of administrative and managerial functions on April 1, White-Evans Serv- ice has existed as a wholly owned subsidiary of Amco. As noted, White-Evans Service was originally estab- lished to consolidate the elevator service functions that previously had been performed by its parent, White- Evans Manufacturers, and Amco after they had come under Applegate's common ownership and control. In addition to Applegate, minority owner Burt Spaethe also has been active in both companies, and both individuals participated in labor relations matters of White-Evans Service during the first 6 months of 1982, as evidenced by their direct communcations with employees, despite the asserted primary responsibility for these functions being assigned to Steven Stuard. Stuard, as vice president of White-Evans, was paid by Amco after April 1, without reimbursement from White- Evans Service. Also, during June, while still operating White-Evans, Stuard recruited additional employees, at least two of which were hired by Amco immediately after a subcontracting arrangement began between the companies. Stuard supervised the service and repair me- chanics under both arrangements, including one regular Amco employee who was told by an Amco supervisor to report to Stuard on July 9. The new subcontracting operations conducted by Amco are substantially identical, to the service and repair function of White-Evans. More- WHITE-EVANS SERVICE CO. over, customers were not notified of any change, many of the mechanics were the same, and equipment, uni- forims, and paperwork were still identified as White- Evans. On brief Respondents admit that Amco and White- Evans might have constituted a single employer at the time the union contract expired, but contend that Amco is not an alter ego liable for the bargaining obligations of the other because it is not a disguised continuance at- tempting to avoid that obligation. Here, Respondent ac- curately contends that Amco was not created for a nonle- gitimate business purpose or to evade the labor obliga- tions of White-Evans, however, when it is viewed in the light of the demonstrated alleged unfair labor practices and misdirected negotiations, the immediate subcontract- ing arrangement between the two related companies ap- pears to be tainted with that very purpose. Although alter ego cases have generally involved situations where a new entity has been created, the mere fact that Apple- gate already owned and controlled a nonunion company that conveniently could be used through the device of a subcontracting arrangement for the purpose of continu- ing the activities of White-Evans after its bargaining agreement with the Union expired does not provide a le- gitimate business rationale for the transfer of operations to another entity. I find that the subcontracting arrange- ment is analogous to the lease agreement involved in the alter ego situation found to exist in Denzil S. Alkire, 259 NLRB 1323 (1982), and, accordingly, I find that under the circumstances noted above, Amco is an alter ego of White-Evans Service and is derivatively liable to provide any remedies ordered by the Board, including backpay due discriminatees, see Crawford Door and Custom Mfg., supra. In addition, the record shows that Respondents' princi- pal owner was predisposed, even at the time White- Evans Service was created in 11980, to operate as a non- union shop. White-Evans Service was allowed to operate with adoption,of the union agreement in order to retain the valued union employees that were transferred from White-Evans Manufacturers; however, it appears that this was done in anticipation of future changes when the bargaining agreement expired in 1982. Respondents' su- pervisors, especially Stuard, were well aware of the his- torical traditions in the elevator industry of the use of a basic "Standard Agreement" with local options. Howev- er, in early 1982, White-Evans indicated it would not be bound by the forthcoming, national negotiations and in April it requested separate negotiations for an individual agreement. At the same time, management, however, had arranged for the merger of White-Evans Service parent corporation into Amco. Some physical aspects of the merger took place in April, including mergers of admin- istrative and managerial functions and consolidation of fi- nancial and tax matters. The formal merger agreement reflected an effective date of August 1, approximately 3 weeks after the expiration of the existing bargaining agreement with the Union. During this same period, management also chose to lay off two of the most active and vocal union supporters and it began the other activi- ties found in this decision to constitute'unfair labor prac- tices. 93 Under these circumstances, I find that the record also supports the inference that Respondents planned to take whatever advantage they could of the opportunity pre- sented by the expiration of the White-Evans Service bar- gaining agreement with the Union, to use that opportuni- ty to attempt to avoid a contract with the Union, and to facilitate the merger of the White-Evans operations with Amco on a nonunion basis. Accordingly, I also find that alter ego status has been established here because the subcontracting of White-Evans work to Amco contem- poraneously with the merger of the separate entities in effect makes use of a disguised continuance in an attempt to avoid collective-bargaining obligations. B. Termination of Wands and Kirkpatrick Service mechanics Wands and Kirkpatrick were two of Respondents' most senior employees and were well known by the owner and supervisors alike to be such strong union supporters as to be referred to as "assistant business agents." The record also shows that their con- sistent efforts to obtain what they perceived to be adher- ence to the bargaining agreement earned them the dis- pleasure of management. Credible testimony by former Supervisor Yager and employees Warren and Jack Kinz shows that principal owner Applegate previously had ended union recognition at Amco, had favored going nonunion when White-Evans Service was formed, had expressed his opinion of Wands and Kirkpatrick as "trou- blemakers" in relation to their checking them with the Union, and, prior to the expiration of the then existing 5- year bargaining agreement, had extolled the prospect of changing to a "merit shop" nonunion operation. Supervi- sor Stuard, in addition to derisively referring to Wands and Kirkpatrick as "assistant B A's," told Warren that the Respondents did not "need to have a union running our business," told Jim Kinz the Respondents would op- erate "with or without a union," and otherwise specifi- cally excluded known union supporters Carson, Haase, and Warren from group meetings held with other em- ployees. Accordingly, I conclude that Respondents had knowl- edge of consistent union activities by Wands and Kirk- patrick and held overall feelings of antiunion animus that were directed especially at these employees. The record further shows that their activities and the Respondents' animosities continued during the early months of 1982 at the same time Respondents were pursuing a plan to avoid being bound by the industrywide standard agree- ment then under negotiation. Wands and Kirkpatrick were then laid off on April 30 and, under the circum- stances, I conclude that the General Counsel has met her initial burden in a case of this nature by presenting a prima facie showing sufficient to support an inference that the employees' union activities were the motivating factor in Respondents' decision. Accordingly, the testi- mony will be discussed and the record evaluated in keep- ing with the criteria set forth in Wright Line, 251 NLRB 1083 (1980); see NLRB v. Transportation Management Corp., 462 U.S. 393 (1983), to consider Respondents' de- fense and in the light thereof, whether the General Counsel has carried his overall burden. 94 . DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Respondents contend that Wands and Kirkpatrick were laid off because of a decline in repair work and be- cause they were mechanics with poor work performance in relation to job cleanliness, maintenance, job effort, and account retention . Stuard asserts personal responsibility for this decision, as well as the decision to transfer two repair mechanics to the vacated service routes and to lay off two repair helpers. Respondents further contend that their failure to recall Wands and Kirkpatrick while oth- erwise seeking mechanics was justified by their poor work performance and history of insubordination. Here, I find Respondents' principal reason for the layoff to be pretextual. Although Respondents presented evidence suggesting they had fewer repair orders during the previous 4 to 6 weeks and showing that financial records indicated a 24-percent decrease in repair income between the first quarter of 1982 and the last quarter 1981, there is no indication that Stuard was aware of or relied on the latter information. Moreover, comparison of the same quarters in the previous year show a 44-per- cent decline and no employee layoffs. In 1982, however, the expiration of the bargaining agreement was fast ap- proaching and Respondent was in the process of merging its Amco and White-Evans operations and in attempting to either negotiate a contract independent of the histori- cal standard agreement or to change to a nonunion shop. Wands and Kirkpatrick were the two most notorious union activists and I conclude that the disbanding of two repair teams and the selection of two service mechanics for layoff was motivated by Respondents' desire to set the stage for their desired change to a nounion operation at the expiration of the bargaining agreement. The pretextual nature of the asserted repair work excuse is amplified by the credited testimony of mechan- ic Warren (consistent with the general nature of his sev- eral conversations with Stuard and the fact that Stuard's brother was Warren's helper), that on April 30, Stuard admitted to Warren that they had a bunch of (repair) work but the "old man" said Wands and Kirkpatrick had to go. From this, and the other factors noted below, I also conclude that Respondents had no intention of re- calling Wands and Kirkpatrick regardless of the amount of available work. This conclusion also is reinforced by the showing that Stuard had actually hired two repair mechanics during the time he said he had observed a de- cline in work. Also it is shown that some repair work is elective and is scheduled or classified at Stuard's discre- tion. Moreover, within 3 weeks of the layoff Stuard asked employees if they knew of any available service mechanics and then told employees who suggested Wands and Kirkpatrick were available that he did not need any more business agents around. Gehrich, who was on Wands' old service route, then quit and Stuard asked Business Agent Kenworthy for the names of avail- able mechanics. He was given six names including Wands and Kirkpatrick, but declined to hire anyone and shortly thereafter began placing ads for elevator mechan- ics in out-of-town newspapers. I find that Respondents' other reasons, relating to poor performance and insubordination, for the layoff selection of Wand and Kirkpatrick to be in the nature of a shifting rationale and also to be without legitimate justification. Both mechanics are' shown to have been senior, experi- enced, skillful mechanics. Problems did arise, and I infer that Wands and Kirkpatrick, intentionally or unintention- ally, reacted to the cutdown in the time allowance for each service call that occurred after the settlement of the lawsuit in September 1981, by putting off some aspects of their work, most specifically cleaning. However, it does not appear that termination would be justified as a remedy for their conduct nor does it appear that they were any worse than all but the most conscious employ- ees and no others were penalized for poor performance. They were not otherwise disciplined for any • transgres- sions (except for the letter to Kirkpatrick dated February 5, 1982, precipitated by his leaving work during a snow emergency), and I conclude that the asserted insubordi- nation related most directly to their protected conduct of going by the contract rather than to any direct refusal to ultimately follow orders. Finally, Wands and Kirkpatrick themselves were not given any reason for their termina- tion other than that of being laid off because of a decline in work. In summation, I find Respondents' reasons for the layoff and failure to recall Wands and Kirkpatrick to be pretextual, shifting, and without basis or rationale and I further conclude that the preponderance of the evidence shows that the termination of Wands and Kirkpatrick (and the related layoff of Farris and Brian Stuard) was motivated by Respondents' antiunion animosity, their knowledge of Wands' and Kirkpatrick's strong union ac- tivism, and their desire to make a change in the status of White-Evans Service as a union shop. I therefore con- clude that the General Counsel has satisfied his overall burden of proof, and I find that Respondents are shown to have violated Section 8(a)(1) and (3) of the Act as al- leged. C. Direct Dealings with Employees During early June, the Respondent and the Union ex- changed correspondence and telephone contacts pertain- ing to the forthcoming expiration of the bargaining agreement on July 8. At the same time, owner Applegate met senior mechanic Jack Kinz away from the office while Vice President Stuard called employees Carson and Haase to his office. In each instance, as set forth in detail above, they were told or it was implied that changes were anticipated after July 8, Kinz was told of benefits he would receive under a "merit-shop" oper- ation, and they were asked their intentions about staying if there was no union contract. Repeated conversations of a similar nature were directed at Kinz by Stuard and Vice President Spaethe, with an official inducement of better pension and health benefits and a new profit-shar- ing plan. Later in June Kinz was given a dinner and gift by the Company some 9 months after his 25th anniversa- ry, and his son, Jim Kinz, was called to Stuard's office, told the Company would continue to operate with or without a union, and was assured of a job. Subsequently, Jim Kinz was offered his father's service route, a car, and a 10-percent salary increase. Warren also was called individually to Stuard's office, told they would like him to stay with the new organization, and WHITE-EVANS SERVICE CO. 95 offered "comparable" benefits. Then, group meetings were held (where Carson, Haase, and Warren were not invited because Stuard believed from his earlier conver- sations that they would not work nonunion), and the em- ployees were told by Stuard and Applegate that changes were intended after July 8, that would provide a new profit-sharing program and health and retirement plans equal to or better than those presently enjoyed, and new job classifications and wage rates. They also were told that it was possible to make arrangements for the pay- ment of potential union fines for going nonunion if the Company was sold at some future time. The employees also were asked to give a decision about staying as soon as possible. Also, Carson was called and asked what he planned to do. The Respondents assert that the group meetings with employees were merely to provide information regarding the Company's proposal submitted to the Union on June 18, and that there was no intent to institute the proposals prior to first negotiating them with the Union. The group meetings, however, took place after Respondent had direct dealings with individual employees and the Company specifically told the group that it intended to implement the planned changes, without mention of any disclaimer regarding union negotiations. In this context, it appears that Respondent clearly intended to make changes regardless of any negotiations with the Union. It is well established that direct dealings with employees tend to undermine a union's status as exclusive represent- ative and to inhibit parties from reaching agreement, see Tarlas Meat Co., 239 NLRB 1400 (1979), Here, it appears that Respondents' anticipation that it could successfully bypass the Union may have led to that very result. Re- spondents offered benefits to employees and tried to per- suade them to accept them regardless of the outcome of negotiations with the Union. This occurred while negoti- ations with the Union were pending and continued while the Company and Union actually had a meeting on July 2 and while on July 5 and 8 when the Union proffered an interim agreement. The offer of benefits under the circumstances shown here clearly was designed to induce the employees to abandon their support of the Union and it therefore is a violation of Section 8(a)(1) of the Act. Moreover, I find that the repeated requests, generally made in Stuard's office, that employees let the Company know if they de- cided to work after the expiration of the contract, viewed in connection with the direct dealings, is inher- ently coercive in nature and therefore constitutes unlaw-, ful interrogation in violation of Section 8(a)(1) of the Act. The individual and group meetings between Re- spondents and employees discussed herein show that Re- spondents bargained directly with the employees con- cerning terms and conditions of employment at a time when they were engaged in bargaining with the Union concerning a new contract and, accordingly, I conclude that Respondents are shown Lo have violated Section 8(a)(1) and (5) of the Act as alleged. See Tarlas Meat, supra, and Marquis Elevator Co., 217 NLRB 461 (1975), and C. K. Smith & Co., 227 NLRB 1061 (1977). D. Termination of Unit Members After Wands and Kirkpatrick were terminated on April 30, mechanic Gehrich voluntarily quit on May 23, and senior mechanic Kinz learned of a job opportunity at Trefry Elevator Co., shortly thereafter. Kinz credibly testified that he became interested in the job because of his concern over the termination of Wands and Kirkpat- rick, his impression that White-Evans intended to go nonunion, and his personal convictions as a "union man." With his consent, he was listed as a future employee on a Trefry listing of personnel sent to the State of Indiana on June 3. The state official who received the letter on June 3 or 4 was a former owner of White-Evans with continu- ing financial ties with the Company and I fmd that he promptly told Respondents' official Spaethe about the letter. This was relayed to Applegate who immediately contacted Kinz near a jobsite and attempted to persuade Kinz to stay after the expiration of the bargaining agree- ment. At the same time, the state official recommended to his superior that Kinz' potential employer be disquali- fied. The recommendation was followed; however, there is no indication that Kinz learned that his potential em- ployer would not be receiving state contracts and he went forward with his plan and resigned from Respond- ents effective June 30. The General Counsel urges that Kinz was construc- tively discharged because he quit in response to Re- spondents' planned "intolerable" changes in working conditions and the attendant relinquishment of union rep- resentation. Respondents contend that Kinz quit volun- tarily and had decided to do so prior to June 3, as evi- denced by the list of his name in a letter of that date by his prospective new employer. Here, I infer that Kinz would have stayed with White- Evans through July 8 were it not for his unawareness that it had been recommended that his potential employ- er be disqualified from its low bids on several state jobs. I also find a strong appearance of impropriety in the dis- closure of seemingly confidential information by a state official to Respondents, in the official's financial relation- ship with Respondents, and in his recommendation to the State which could benefit Respondents. I find that Re- spondents' participation, directly or indirectly, in the use of this information regarding Kinz' future employment status, contributed to his decision to resign effective June 30, and that were it not for Respondents' actions, he would have been in the same position as the other em- ployees who were still working when the contract ex- pired. Respondents should not be permitted to benefit from their improper actions (in effect using confidential information as a prelude to their illegal direct dealings and offering of benefits to Kinz) to avoid their responsi- bilities under the Act and, accordingly, I find that Kinz falls into the same category as the other employees working on July 8 for purposes of evaluating his con- structive discharge status. As already discussed, in the month prior to the expira- tion of the existing contract, the Respondents "laid off the two most active union supporters and failed to recall them, despite an apparent shortage of personnel and Vice President Stuard's expressed interest in hiring additional 96 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD mechanics. Respondents then engaged in direct negotia- tions with employees during which they offered benefits to employees who would continue to work under chang- ing conditions and without a union contract, including the implied promises that possible union fines for work- mg nonunion could be paid for by any successor union employer. At the same time, employees with known, strong union sympathies were excluded from Respond- ents' meetings with other employees and while the work- ers were interrogated as to their decisions regarding con- tinued employment. Finally, Respondents put up a notice requiring all employees to turn in their keys, vehicles, tools, uniforms, and paperwork concurrently with the ex- piration of the contract. Under these circumstances, I conclude that the unit members were given the choice of not reporting to work or continued employment conditioned on acceptance of changed terms and conditions of employment and aban- donment of union representation, a right guaranteed them under Section 7 of the Act. The Union did not call a strike at that time and, accordingly, the record clearly supports the finding that the Respondents were responsi- ble for the employees' termination and that the unit em- ployees were constructively discharged on July 8 be- cause they declined to relinquish rights guaranteed them under the Act. See Columbia Engineers International, 249 NLRB 1023 (1980), and Marquis Elevator and Crawford Door, supra. I therefore conclude that the Respondents are shown to have terminated all employees on July 8, in violation of Section 8(a)(1) and (3) of the Act, as alleged. E. Unilateral Changes and Good-Faith Bargaining An employer is not free to unilaterally change terms and conditions of employment after the expiration of a contract unless impasse in negotiations has been reached. Here, the record shows that after the contract expiration date, the Respondents ceased contributions to the union- negotiated fringe benefit plans and instituted its' own health and welfare plan and pension plan while also uni- laterally changing numerous terms and conditions of em- ployment such as overtime, wage scales, vacations, and job classifications, all changes that were contained in the bargaining proposals given to the Union. And, as noted by the Charging Party, other than by the contract pro- posals themselves, Respondent did not notify the Union that it intended to change any term or condition, that it was discontinuing contributions to the union fringe bene- fit funds, or that it considered negotiations at an impasse. The Respondents, citing R. A. Hatch Co., 263 NLRB 1221 (1982), contend that they gave the Union every op- portunity to negotiate an individual contract, while the Union delayed any negotiations and then insisted on the terms of the standard agreement, forcing an impasse, and that it therefore had the right to institute the terms of its proposal upon expiration of the contract on July 8. In Hatch the union had insisted on the employer's execution of a standard, areawide agreement. In the instant case, the Local Union offered a 30-day interim agreement on July 5 and 8 while the national negotiations were still un- derway and a second time qn July 8, after it was learned that a new standard agreement had been reached. Al- though the interim agreement contained a clause offen- sive to Respondents in that it tied it into the standard agreement, it was possible for the parties to have negoti- ated a modification of that language, however, no party raised that alternative. No strike was called by the Union and Business Agent Kenworthy credibly testified that his purpose in offering the interim agreement was to avoid a work stoppage. It also appears that he anticipated contin- ued negotiations with the Company. And, although it is shown that the immediate parties to the negotiations were unaware of historical variation from the standard agreement by the Union, it is oberved that the old con- tract expired at a time when new aspects of concession- type bargaining were becoming practical and the Com- pany was aware that, at a minimum, it was possible to negotiate local options with the Union. In its decision in Taft Broadcasting Co., 163 NLRB 475, 478 (1967), the Board has described a bargaining im- passe as follows; Whether a bargaining impasse exists is a matter of judgment. The bargaining history, the good faith of the parties in negotiations, the length of the negotia- tions, the importance of the issue or issues as to which there is disagreement, the contemporaneous understanding of the parties as to the state of nego- tiations are all relevant factors to be considered in deciding whether an impasse in bargaining existed. The court of appeals in the same case went on to com- ment that a finding of impasse reflects that there is no realistic possibility that continuation of discussion at that time would be fruitful, that the prospects of reaching an agreement had been exhausted, and that the Company had discharged its statutory obligation to conduct full and fair discussion with the Union. Here, I conclude that the facts are distinguishable from those in Hatch, supra, and that the timing and circum- stances surrounding the Union's presentation of the inter- im agreement falls short of conclusive insistence on Re- spondents' capitulation to the terms of the standard agreement. At the time the interim agreement was of- fered by the Union, no substantial local negotiations had yet taken place, there was no history of difficult negotia- tions between the parties, the Union had responded to the Company's request for independent negotiations and had never indicated that the Union would be unwilling to enter into negotiations and agreement with a separate employer, and no strike had been called. And, although it is likely that Respondents could have been frustrated by the Union's apparent reluctance to negotiate locally while the national negotiations were taking place, no per- suasive justification is shown to warrant the conclusion that the Company could reasonably believe that it had thoroughly exhausted the prospects of reaching an agree- ment. I therefore conclude that, as of July 8, no impasse had occurred. Accordingly, I conclude that Respondents breached their obligation to bargain in good faith by making unilateral changes in existing terms and condi- tions of employment subject to mandatory bargaining, in violation of Section 8(a)(1) and (5) of the Act as alleged. It also is concluded that Respondents otherwise cannot claim that impasse justifies unilateral changes inasmuch .«^...{yr5 bum' _^°{""*s Tkv.E 4cx WHITE-EVANS SERVICE CO. as they are shown to have contemporaneously engaged in unfair labor practices, including direct dealings with employees, which precluded the possibility of a genuine impasse, see Akron Novelty Mfg. Co., 224 NLRB 998, 1002 (1976). Moreover, after the weekend following the contract's expiration, the Union sought to continue nego- tiations and,' although talks were delayed, this time by the Company, they did resume and I find that negotia- tions did continue on July 28 and September 1, thereby further negating Respondents' claim of impasse on July 8. Also, during the July 28 meeting, agreement was reached that one of Respondents' proposals, regarding a change in hours to include two break periods, would not be made and the regular schedule of work hours would not be altered. At Respondents' request the Union also agreed at that point in time that it would not retaliate against union members that had worked without a con- tract. During the September 1 meeting the Union was represented by a new national negotiator and counsel and it substituted the terms of the new standard agree- ment as its proposal. No concessions were made but the Respondents indicated they would respond to the Union's continued request for pension and welfare infor- mation as soon as possible. The Union again requested the pension ,and welfare information in late September and when no compliance was made, the Union obtained authorization for picketing and filed charges with the Board on October 1. After a contact from the Union in mid-October, Respondents replied they were not interest- ed in further meetings. However, the Union made one last request for information on November 1, which con- cluded contacts between the parties. The total sequence of events shown on this record in- dicates a pattern of conduct designed first to undermine the Union's status, and then to impede the possibility of a bargaining agreement. Thus, following the undisclosed merger of the involved alter egos, the termination of the two most active union supporters, and direct dealings with employees during which they were solicited to work nonunion, the , Respondents ceased making contri- butions to the contractual benefits funds, terminated all unit members, and thereafter conditioned reemployment of unit members on their acceptance of unilaterally changed terms. Moreover, the credited testimony of former President Yeager clearly indicates that owner Applegate harbored a desire to make Respondents' eleva- tor service operations nonunion at the expiration of the existing contract and, thereafter, Vice President Stuard expressed his view that continued negotiations were a waste of time. Even when an attempt to continue negotiations was being pursued, White-Evans Service subcontracted its entire operation to Amco. As otherwise discussed, this was done between two companies who were alter egos of one another at a time when their true relationship had not been fully disclosed to the Union or public. Thus, the subcontracting constitutes a fictional transfer of work to a disguised continuance in an attempt to avoid collective bargaining obligations and violates Section 8(a)(5) of the Act as alleged. This, combined with Respondents repeat- ed lack of response to the Union's request that it be pro- vided relevant information regarding terms and condi- 97 tions of their contract proposals, is indicative of a lack of good-faith bargaining and I conclude that under all these circumstances Respondents are shown to have violated Section 8(a)(1) and (5) of the Act, as alleged. CONCLUSIONS OF LAW 1. Respondents are an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. White-Evans Service Co., Inc. and Amco Elevators, Inc. are alter egos of one another and are affiliated busi- nesses that constitute a single-integrated business and the latter is obligated to remedy the unfair labor practices of the former. 3. The Union is a labor organization within the mean- ing of Section 2(5) of the Act. 4. By laying off employees William Wands and James Kirkpatrick Jr. on April 30, 1982, Respondents engaged in unfair labor practices in violation of Section 8(a)(1) and (3) of the Act. 5. By bargaining directly and unilaterally with employ- ees in regard to wages, benefits, and working conditions, Respondents violated Section 8(a)(1) and (5) of the Act. 6. By interrogating employees regarding their union support, asking for their decision as to whether they would work after the union contract expired, and offer- ing benefits if the employees abandoned union support and membership and worked without a union contract Respondents violated Section 8(a)(1) of the Act. 7. By unilaterally imposing illegal conditions of contin- ued employment or reemployment on and after the expi- ration of the bargaining agreement on July 9, 1982, an abandonment of union representation and acceptance of unilateral changes in terms and conditions of employ- ment, Respondents constructively terminated employees in violation of Section 8(a)(1) and (3) of the Act. 8. By ceasing to make contractual contributions to the Union's pension, health and educational trust funds after July 8 and thereafter unilaterally implementing the terms of Respondents contract proposal to the Union without impasse or agreement, Respondents violated Section 8(a)(1) and (5) of the Act. 9. By subcontracting the entire White-Evans Service operation to Amco, by failing to furnish the Union with requested documentation of their contract proposals dealing with pension and health programs, wage rates, and travel expense reimbursement and negotiating with the Union with no intention of reaching an agreement Respondents violated Section 8(a)(1) and (5) of the Act. 10. A bargaining order is necessary to remedy Re- spondents' unfair labor practices. REMEDY Having found that the Respondents have engaged in certain unfair labor practices, I find it necessary to order it to cease and desist and to take certain affirmative action designed to effectuate the policies of the Act. Respondents having discriminatorily discharged all employees, it must offer them reinstatement and make them whole for any loss of earnings and other benefits, computed on a quarterly basis from date of discharge to date of proper offer of reinstatement less any net interim 98 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD earnings, as prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), plus interest as computed in Florida Steel Corp., 231 NLRB 651 (1977). Those employees sub- sequently rehired by Respondent Amco shall be compen- sated for any intervening loss of pay or other benefits. Additionally, Respondents must make appropriate pay- ments to the Union's benefit funds in accordance with Merryweather Optical Co., 240 NLRB 1213, 1216 fn. 7 (1979), and because the serious nature of the violations demonstrate a general disregard for the Union's status as exclusive bargaining representative and for the employ- ees' fundamental rights, I find it necessary to issue a broad order requiring the Respondents to bargain with the Union and to cease and desist from infringing in any other manner on rights guaranteed employees by Section 7 of the Act. Hickmott Foods, 242 NLRB 1357 (1979). On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- s ORDER The Respondents, White-Evans Service Co., Inc. and Amco Elevators, Inc., Indianapolis, Indiana, their offi- cers, agents, successors, and assigns, shall 1. Cease and desist from (a) Discharging or otherwise discriminating against any employee for supporting International Union of Ele- vator Constructors, AFL-CIO or any other union. (b) Failing or refusing, on request, to furnish the Union with documentation of their contract proposals or to bargain collectively with the labor organization as the exclusive collective-bargaining representative of the em- ployees in the bargaining unit. (c) Unilaterally changing the wages and other terms and conditions of employment of the employees in the unit without prior consultation with the labor organiza- tion as the exclusive collective-bargaining representative of the employees. (d) Bargaining directly and individually with any em- ployee in the bargaining unit. (e) Requiring as conditions of continued employment or reemployment that employees abandon union repre- sentation and accept unilateral changes in terms and con- ditions of employment. (f) Interrogating employees concerning whether they would work without the Union and offering benefits to induce employees to abandon union support and mem- bership and work without a union contract. (g) Failing and refusing to make required contributions to the union pension, health, and educational trust fund as required by the collective-bargaining agreement be- tween the Company and the Union. (h) In any other manner interfering with, restraining; or coercing employees in the exercise of the rights guar- anteed them by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) On request, bargain with the Union as the exclusive representative of the employees in the appropriate unit concerning terms and conditions of employment and, if an understanding is reached, embody the understanding in a signed agreement. (b) Offer W. Wallace Carson, Raymond Haase, Jack C. Kinz, James Kirkpatrick, Jr., Brian Stuard, William Wands, and Daniel C. Warren immediate and full rein- statement to their former jobs or, if those jobs no longer exist, to substantially equivalent positions, without preju- dice to their seniority or any other rights or privileges previously enjoyed, and make them whole for any loss of earnings and other benefits suffered as a result of the dis- crimination against them, in the manner set forth in the remedy section of the decision. (c) Make whole employees Steven L. Shepherd, Sidney Gaither, Harry L. Gehrich, Franklin Carl Cox, Donald H. Rowland, and John J. Kinz for any loss of earnings they have incurred as a result of their termina- tions on July 9, and Frank Ferris for his termination on April 30, to the date of their subsequent employment by Amco, for any loss of earnings and other benefits suf- fered as a result of the discrimination against them, as set forth in the remedy section. (d) Remove from its files any reference to the unlaw- ful discharges and notify the employees in writing that this has been done and that the discharges will not be used against them in any way. (e) Restore and place in effect all terms and conditions of employment provided by the contract of July 8, 1982, which were unilaterally changed by the Respondents, except in such particulars as the Union may request that a particular change not be revoked. (f) Make such pension, welfare, and educational pay- ments on behalf of those employees in the unit for whom contributions were previously made and would have continued to be made had the Respondents not ceased to comply with the contract. (g) 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. (h) Post at its Indianapolis, Indiana facility, copies of the attached notice marked "Appendix."6 Copies of the notice, on forms provided by the Regional Director for Region 25, after being signed by the Respondent's au- thorized representative, shall be posted by the Respond- ents immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respond- 5 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. 6 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." WHITE-EVANS SERVICE CO. 99 ent to ensure that the -notices are riot altered, defaced, or (i) Notify the Regional Director in writing within-20 covered by any other material. days from the date of this Order what steps the Re- spondent has taken to comply.