Fred Meyer Stores

FRED MEYER STORES 355 NLRB No. 93 541 Fred Meyer Stores, Inc. and Lori Gaither, Petitioner and United Food and Commercial Workers, Lo- cal Union No. 555. Case 36–RD–1724 August 18, 2010 DECISION AND DIRECTION OF SECOND ELECTION BY CHAIRMAN LIEBMAN AND MEMBERS SCHAUMBER AND BECKER The National Labor Relations Board, by a three- member panel, has considered objections to an election held on August 7, 2009, and the hearing officer’s report recommending disposition of them. The election was conducted pursuant to a Stipulated Election Agreement. The tally of ballots shows 22 for and 25 against the Un- ion. There were no challenged ballots. The Board has reviewed the record in light of the ex- ceptions and briefs, has adopted the hearing officer's findings and recommendations only to the extent consis- tent with this Decision and Direction of Second Election, and finds that the election must be set aside and a new election held. After the election, the Union filed two objections. Ob- jection 1 alleged that the election must be set aside be- cause the Employer altered its payroll practices “on the eve of the election,” when it issued paychecks containing substantially larger than usual deductions for union dues and medical coverage. The hearing officer recom- mended overruling Objection 1. But the hearing officer recommended setting aside the election on the basis of Objection 2, involving alleged restrictions on the Union’s access to employees during the critical period. Although we agree with the hearing officer that, based on the facts of this case, the election should be set aside, we do not agree with the recommendation that Objection 1 should be overruled. Rather, for the reasons set forth below, we have decided to set aside the election on the basis of Ob- jection 1. In light of that conclusion, we find it unneces- sary to pass on the hearing officer’s findings and recom- mendations with respect to Objection 2. A. Facts The Employer, a subsidiary of Kroger, operates gro- cery stores. The Union represents a unit of employees at the Employer’s Coos Bay, Oregon store. The Employer and the Union were parties to a collective-bargaining agreement effective through June 13, 2009. That agree- ment provided for deductions from employees’ pay- checks for union dues and medical coverage. Union dues are deducted monthly and medical contributions are de- ducted weekly. Employees are paid weekly, on Fridays. A decertification petition was filed on July 15, 2009, and an election was scheduled for Friday, August 7, 2009. Meanwhile, on May 29, 2009, the parties agreed to in- crease unit employees’ contributions for medical cover- age effective July 1, 2009. The amount of the scheduled increase varied depending on the level of coverage se- lected by the employee. For example, the weekly contri- bution for an employee choosing level 3 employee-only coverage was to increase from $8 to $24. The weekly contribution for employees choosing level 3 family cov- erage was to increase from $11 to $34. Because of problems resulting from the relocation of the Employer’s payroll processing functions from the Kroger West Payroll Division in Portland, Oregon, to Kroger Accounting Services-Hutchinson (KASH) in Hutchinson, Kansas, the scheduled increases in medical contributions were not deducted from the employees’ paychecks on July 3, 10, 17, or 24. Similar payroll errors were made that affected employees at some of the Em- ployer’s other stores. KASH began deducting the increased amounts from employee paychecks as of July 31. To make up for the missed deductions, and without notice to the employees, KASH decided that it would withhold double the in- creased medical contributions from the employees’ next four paychecks, beginning July 31. That decision had significant consequences for the employees. For exam- ple, the July 31 and August 7 (election day) paychecks for employees choosing level 3 family coverage con- tained an increased deduction for medical coverage of $46, not the expected $23 increase. Every employee participating in the insurance plan was affected by the deductions. None of the unit employees at the Coos Bay store re- ceived advance notice of, or explanation for, the double medical deductions from the July 31 paycheck. The Un- ion received an explanation on August 5, and one unit employee received an explanation on August 6.1 By letter dated August 7, the Union’s attorney, Steven Goldberg, sent a letter to Employer Vice President Thornton stating the Union’s belief that the additional 1 Cynthia Thornton, the Employer’s labor and associate relations vice president, sent an email to Union President Clay on July 31, pro- viding an explanation for the double deductions and stating that she was sending a letter of explanation to the managers of the affected stores for distribution to the employees. But, because the email was automatically routed to Clay’s junk email inbox, Clay did not learn of it until August 5. Although Thornton explained the issue to the store managers, the Coos Bay store manager failed to post or distribute Thornton’s letter to the employees. The Union was able to obtain a copy of the letter distributed to employees at another store, and about 7 p.m. on August 6 union representatives gave copies of the letter to one Coos Bay employee to distribute to other employees. That employee, however, did not distribute the letter because he was too busy working. DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 542 deductions were “in clear and direct violation of Oregon law,” and he demanded that the Employer “immediately cease and desist from deducting” the arrearage amounts and repay any amounts that had been unlawfully de- ducted. The letter further stated that, absent notification within 7 days that such action had been taken, Goldberg would recommend that the Union initiate appropriate legal action.2 As stated above, the Employer deducts monthly union dues, in the amount of $28.05 from each unit employee’s paycheck.3 The dues deductions are usually withheld from the employees’ third paycheck each month. But, because of the Employer’s payroll processing problems, no union dues were deducted in July 2009.4 To make up for the missed deduction, the Employer deducted the July dues from the employees’ paychecks on August 7, the day of the election. Neither the Union nor unit employ- ees received any advance notice of that deduction. Em- ployer Vice President Thornton’s July 31 letter to the store managers had discussed only the deductions for medical coverage. As a result of the Employer’s actions, the election day paychecks for some unit employees in- cluded both an unexplained $23 deduction for medical coverage and an additional, unexpected deduction of $28.05 or $50 for union dues. In other words, some em- ployees’ election day paychecks were either $51.05 or $73 less than expected. For those employees whose pay records were introduced into evidence, the election day makeup deductions represented between about 16 and 39 percent of the employees’ take-home pay.5 Unit employees became aware of the extra medical deductions the week before the election, but only one received any explanation for them from the Employer prior to the election. None of the employees received any explanation for the election day dues deduction be- fore the election. In the absence of any explanation for those sizeable extra deductions from their paychecks, unit employees were angry and upset, and some blamed the Union. For example, employee Susan Leach testified 2 The hearing officer stated on p. 5 of his report that the Union filed a lawsuit alleging that the medical arrearage deductions violated State law. The Union excepted to that statement, pointing out that the Union never actually initiated legal proceedings. We correct the hearing offi- cer’s inadvertent error, which has no effect on our disposition of this case. 3 Union dues deductions are suspended when an employee’s wages are being garnished. In such a situation, the delinquent dues are de- ducted from future paychecks, up to a $50 limit. Thus, the union dues deductions for some employees are $50 per month rather than $28.05. 4 The dues problem was not limited to the employees at the Coos Bay store, but affected all of the Employer’s employees who were represented by unions. 5 Four employees testified and their payroll records, as well as the records of a fifth unit employee, were introduced into evidence. that employees were angry and blamed the Union, be- lieving “it [was] the Union’s fault that the dues weren’t taken out and that the medical deductions hadn’t been taken out, and at that time we didn’t know anything.” (Tr. 147.) Union Steward Amber Whitney similarly tes- tified that employees were angry and upset and blamed the Union for the increased deductions. (Tr. 102.) Em- ployee Catherine Johannesen testified that employees were “mad” and “complaining about how small their checks were” because they “couldn’t survive on that.” (Tr. 77–78.) Union Representative Kay Nelson testified that an employee asked her “why the Union was doing this.” (Tr. 39.) Nelson further testified that the extra deductions were “very upsetting” to these “very low paid employees, [who] live paycheck to paycheck.” (Tr. 63.) B. Hearing Officer’s Report The Union alleged that the foregoing election day pay- check problems constituted objectionable conduct under Kalin Construction, 321 NLRB 649 (1996), and required setting aside the election. In Kalin, which addressed an employer’s manipulation of payroll procedure for the purpose of influencing an election, the Board stated that it would set aside an election if the employer made any change in paycheck procedure in the 24-hour period be- fore the election, “absent a showing that the change was motivated by a legitimate business reason unrelated to the election.” 321 NLRB at 652. In the instant case, the hearing officer assumed, with- out deciding, that the increased deductions constituted a change within the meaning of Kalin, but found that the Employer demonstrated a legitimate business reason un- related to the election. Accordingly, the hearing officer recommended overruling the objection. C. Union’s Exceptions In its exceptions, the Union contends that the Em- ployer’s large and unexplained payroll deductions on the day of the election and the week before were “so ex- traordinary and mistakenly believed to be attributable to the Union that there is no way a free and fair election could have occurred.” (U. Br. 2.) First, the Union as- serts that the extra deductions resulted in dramatic reduc- tions in employees’ take-home pay and caused hardship for many of the employees. Second, the Union points out that employees were angry and upset about those deductions, and some of the employees erroneously blamed the Union. Ultimately, the Union contends, the unprecedented deductions here had a reasonable ten- dency to influence the election outcome, even absent a Kalin violation. FRED MEYER STORES 543 D. Analysis We agree with the hearing officer that the election-day deductions were not objectionable under Kalin Construc- tion, because the Employer had a legitimate business justification for the deductions and they were not in- tended to influence the election. We nevertheless find, for the reasons set forth below, that a free and fair elec- tion did not take place, and that the results must be set aside. In General Shoe Corp., 77 NLRB 124, 126 (1948), enfd. 192 F.2d 504 (6th Cir. 1951), cert. denied 343 U.S. 904 (1952), the Board stated that an “election can serve its true purpose only if the surrounding conditions enable employees to register a free and untrammeled choice for or against a bargaining representative.” In that case, the Board enunciated its “laboratory conditions” standard: In election proceedings, it is the Board’s function to provide a laboratory in which an experiment may be conducted, under conditions as nearly ideal as possible, to determine the uninhibited desires of the employees . . . . When, in the rare extreme case, the standard drops too low, . . . the requisite laboratory conditions are not present and the experiment must be conducted over again. Id. at 127. We recognize that the medical and union dues deduc- tions missed in July were caused by computer problems unrelated to the election at the Coos Bay store, and were not limited to that location or to this Union. Likewise, we accept that the extraordinary deductions from the employees’ paychecks on July 31 and August 7 were not intentional attempts to influence the August 7 election. Additionally, we acknowledge that the Employer made an effort to provide the employees with an explanation for its conduct. Despite all of that, however, the facts remain that unprecedented deductions up to $73 were taken from the pay of some of these relatively low paid employees on election day and up to $23 the week be- fore, and that the employees received no advance or con- temporaneous explanation from the Employer or the Un- ion. We find that, under these circumstances, reasonable employees would be upset by unexplained paycheck de- ductions of this size, and some would blame the Union. Although the test is an objective one, our conclusion that reasonable employees would be upset in this situation is supported by the evidence that the deductions caused widespread consternation and hardship and that some employees were angry at the Union. We find that as a result of this confluence of events, misunderstandings, and confusion, a fair election could not be held on August 7. We agree with the Union that a “free election was rendered impossible here, where em- ployees on the day of and week preceding the election unexpectedly found themselves without enough take- home pay to meet their needs and then blamed the Union for their hardship.” (U. Br. 15–16.) In arriving at this conclusion we are sensitive to the fact that the election was an extremely close one, and a change in just a few votes would have resulted in a different outcome. The unusual, substantial, and unexplained paycheck deduc- tions may well have affected employee sentiment.6 Ac- cordingly, we find that this election was one of those rare cases where the “requisite laboratory conditions” were so disturbed that the election must be set aside and a new election held.7 [Direction of Second Election omitted from publica- tion.] 6 Tinius Olsen Testing Machine Co., 329 NLRB 351 (1999), relied on by the hearing officer, in which a retroactive pay increase included in the employees’ paychecks on election day was not found objection- able, is distinguishable. In that case, the Board found that the pay increase was mandated by a collective-bargaining agreement that had been ratified the week before. Unlike the paycheck deductions in the instant case, the paycheck increase in Tinius Olsen was not unexplained and was mandated by contract and the employer’s duty to continue to bargain with the incumbent union. In fact, delay of the negotiated wage increase in that case might well have been grounds for objection. Here, the Employer was under no obligation to make the adjustments to the dues or medical deductions when it did. 7 Although the Union’s Objection 1 alleged a Kalin violation and was not framed in terms of “laboratory conditions,” we find that a “laboratory conditions” theory is properly before us. In Fiber Indus- tries, Inc., 267 NLRB 840 fn. 2 (1983), the Board stated that in setting aside an election, the Board may consider allegations of objectionable conduct that “do not exactly coincide with the precise wording of the objections” if they are “sufficiently related” to the timely filed objec- tions. We find that the “laboratory conditions” theory was reasonably encompassed by, and sufficiently related to, Objection 1, which alleged that the election-day deductions were objectionable. We also find that the “laboratory conditions” theory was fully litigated.