Hill-Rom Co., Inc. v. N.L.R.B.

• Decision Date: 06 March 1992
• Docket Number: 90-1236,HILL-ROM,Nos. 89-3721,s. 89-3721
• Citation: 957 F.2d 454
• Parties: 139 L.R.R.M. (BNA) 2673, 121 Lab.Cas. P 10,036 COMPANY, INC., Petitioner/Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 454

957 F.2d 454

139 L.R.R.M. (BNA) 2673, 121 Lab.Cas. P 10,036

HILL-ROM COMPANY, INC., Petitioner/Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.

Nos. 89-3721, 90-1236.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 2, 1990.

Decided March 6, 1992.

William R. Stewart, N.L.R.B., Contempt Litigation Branch, Aileen A. Armstrong, Robert I. Tendrich (argued), N.L.R.B., Appellate Court, Enforcement Litigation, Washington, D.C.

William T. Little, James S. Robles, N.L.R.B., Region 25, Indianapolis, Ind., for N.L.R.B.

Kenneth J. Yerkes, Robert K. Bellamy (argued), Barnes & Thornburg, Indianapolis, Ind., for Hill-Rom Co., Inc.

Before EASTERBROOK, MANION and KANNE, Circuit Judges.

KANNE, Circuit Judge.

To improve its quality control program, Hill-Rom Company, Inc. proposed that certain work from one of its recognized bargaining units be transferred into a new, non-unit position entitled Quality Assurance Technician ("QAT"). However, after several meetings with Hill-Rom, the union representing Hill-Rom's employees the Furniture & Casket Workers Local Union No. 525, Upholsterers International Union of North America, AFL-CIO ("Union") rejected the proposed work transfer. Notwithstanding the Union's disapproval, Hill-Rom decided to unilaterally transfer the work to the new position, and the Union subsequently responded by filing an unfair labor practices charge with the National Labor Relations Board. Concluding that Hill-Rom's unilateral action constituted an illegal alteration of the scope of the bargaining unit, the Board found that Hill-Rom violated §§ 8(a)(5) and (1) of the National Labor Relations Act by excluding employees in the job classification of QAT from the bargaining unit without the agreement of the Union and by refusing to apply the collective bargaining agreement to those employees. The Board then entered an order requiring Hill-Rom to cease and desist this unfair labor practice. Hill-Rom petitions for review of the Board's order; the NLRB has cross-applied for enforcement of its order.

I.

Hill-Rom, a subsidiary of Hillenbrand Industries, Inc., manufactures hospital beds as well as other architectural and furniture products for the health care industry. The hospital furniture market is a competitive one; there are only 8300 hospitals in the United States and 3000 of these hospitals control 80% of the beds. Acknowledging that it needed to improve the quality of its hospital beds in order to compete effectively with other suppliers, Hill-Rom decided to revamp its quality control system in 1983. To implement this change, Hill-Rom planned to consolidate the inspection duties of its Inspector 3 and Inspector 4 positions with additional duties under the new, non-unit classification of Quality Assurance Technician.

Hill-Rom informed the Union of its intent to change its quality assurance program by creating the new position. The parties met three times to discuss the proposed changes and their implications for bargaining unit employees. However, the Union insisted that Hill-Rom could not transfer the work to a non-unit position and no agreement was ever reached concerning these changes.

Having bargained to an impasse, Hill-Rom advised the Union that it intended to unilaterally implement the proposed change in its quality assurance program. On April 2, 1984, Hill-Rom transferred the work performed by the two inspector classifications to fourteen new QAT positions. These new positions were filled by application, and of these fourteen, twelve were filled by former inspectors. The remaining two inspectors declined to apply and were subsequently reassigned to different positions. The Inspector 3s and 4s were offered higher salaries and benefits if they applied for and were accepted as QATs. No unit employee was unilaterally removed from the bargaining unit or forced to leave it.

On April 6, 1984, the Union filed an unfair labor practices charge against Hill-Rom, alleging that the company had violated their collective bargaining agreement when it removed twelve bargaining unit positions from the Quality Assurance Department. ¹ The Regional Director of the Board referred the case to arbitration, as specified by the parties' bargaining agreement, and indicated that it would defer to the arbitrator's findings. At the arbitration hearing, the arbitrator found in favor of Hill-Rom, reasoning that "the transfer of the final inspection duties to the new non-unit classification did not violate the recognition language of [their bargaining agreement]." Accordingly, because the company had bargained to impasse and harbored no anti-union animus, the arbitrator concluded that Hill-Rom's actions were reasonable and did not violate the parties' agreement.

Following this arbitration, however, the Board concluded that it would not defer to the arbitrator's decision. It then issued a complaint and notice of hearing. At the conclusion of its own hearing, the administrative law judge determined that Hill-Rom had unlawfully altered the scope of the bargaining unit. The ALJ pointed out that the new QATs spent 75% of their time doing work previously performed by unit employees, while the other 25% of the time involved new tasks including product review and laboratory work, electronic component testing, and field work. Both parties concede that these new tasks were traditionally performed by non-unit employees. The judge also specifically noted that Hill-Rom had displayed no sign of anti-union animus. Nonetheless, citing the overlap of the duties performed by the old and new positions, the Board determined that these Inspectors cum QATs should be considered members of the bargaining unit.

The Board affirmed the administrative judge's decision on November 21, 1989. Hill-Rom Co., Inc., 297 NLRB No. 53. Following the Board's affirmance of the administrative law judge's decision, Hill-Rom filed its petition for review. The Board later cross-petitioned for enforcement of its order.

II.

The parties in this case do not dispute what the law is, but rather contest which law should apply to this factual situation. Hill-Rom contends that its actions constituted a lawful transfer of work out of the bargaining unit, within the requirements set forth in University of Chicago v. NLRB, 514 F.2d 942 (7th Cir.1985). The Board, on the other hand, insists that this case constitutes an unlawful alteration of the scope of the bargaining unit as defined by NLRB v. Bay Shipbuilding Corp., 721 F.2d 187 (7th Cir.1983). Therefore, we begin our analysis by reviewing the principles underlying the subtle distinction between transferring work from a bargaining unit, and changing the scope of a bargaining unit.

The potential topics of collective bargaining ² generally fall within three broad classifications: mandatory subjects, permissive subjects and illegal subjects. See generally NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 78 S.Ct. 718, 2 L.Ed.2d 823 (1958); The Idaho Statesman v. NLRB, 836 F.2d 1396, 1400 (D.C.Cir.1988). See also Facet Enterprises, Inc. v. NLRB, 907 F.2d 963, 975 (10th Cir.1990). Mandatory subjects, over which both the employer and the union are obligated to bargain in good faith, are specified in § 8(d) of the NLRA as "wages, hours, and other terms and conditions of employment." 29 U.S.C. § 158(d). See also Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 210, 85 S.Ct. 398, 402, 13 L.Ed.2d 233 (1964); Facet Enterprises, 907 F.2d at 975. If an employer and a union bargain in good faith over a mandatory subject but reach an impasse during their negotiations, the employer may then implement its proposal unilaterally without the union's consent. Trustees of Col. Pipe Indus. Pension Trust v. Howard Elec. & Mechanical, Inc., 909 F.2d 1379, 1384 (10th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 958, 112 L.Ed.2d 1046 (1991); Facet Enterprises, 907 F.2d at 975 n. 2. Permissive subjects, by contrast, are those which fall outside the scope of § 8(d) and cannot be implemented by the employer without union or Board approval. Boise Cascade Corp. v. NLRB, 860 F.2d 471, 475-76 (D.C.Cir.1988). Illegal subjects are simply those proscribed by federal, or where appropriately applied, state law. The Idaho Statesman, 836 F.2d at 1400.

There is no doubt that the scope of the employees' bargaining unit is a permissive subject of bargaining, regardless of whether the unit has previously been certified by the Board or voluntarily agreed upon by the parties. Newspaper Printing Corp. v. NLRB, 625 F.2d 956, 963 (10th Cir.1980), cert. denied, 450 U.S. 911, 101 S.Ct. 1349, 67 L.Ed.2d 335 (1981); The Idaho Statesman, 836 F.2d at 1400. See also Boise Cascade Corp., 860 F.2d at 474-77; Newport News Shipbuilding & Dry Dock Co., 602 F.2d 73, 76 (4th Cir.1979); Shell Oil Co., 194 N.L.R.B. 988, 995 (1972), enf'd sub nom., OCAW v. NLRB, 486 F.2d 1266, 1268 (D.C.Cir.1973). Accordingly, once a specific job has been included within the scope of the bargaining unit by either Board action or consent of the parties, the employer cannot unilaterally remove or modify that position without first securing the consent of the union or the Board. Bay Shipbuilding Corp., 721 F.2d at 191. See also The Idaho Statesman, 836 F.2d at 1400; Hess Oil & Chemical Corp. v. NLRB, 415 F.2d 440, 445 (5th Cir.1969), cert. denied, 397 U.S. 916, 90 S.Ct. 920, 25 L.Ed.2d 97 (1970). The reason why the law disfavors unilateral changes in the unit description is as simple as it is fundamental: if an employer could vary unit descriptions at will, it would have the power to sever the link between a recognizable group of employees and its union as the collective bargaining representative of these employees. "This, in turn, would have the effect both of undermining a basic tenet of union recognition in the collective bargaining context and of greatly complicating coherence in the negotiation process." Boise Cascade Corp., 860...