NLRB v. Wonder State Manufacturing Company

• Decision Date: 20 April 1965
• Docket Number: No. 17828.,17828.
• Citation: 344 F.2d 210
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. WONDER STATE MANUFACTURING COMPANY, Respondent.
• Court: U.S. Court of Appeals — Eighth Circuit

344 F.2d 210 (1965)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. WONDER STATE MANUFACTURING COMPANY, Respondent.

No. 17828.

United States Court of Appeals Eighth Circuit.

April 20, 1965.

William Wachter, Atty., N. L. R. B., for petitioner. Arnold Ordman, Gen. Counsel, N. L. R. B., Dominick L. Manoli, Associate Gen. Counsel, N. L. R. B., Marcel Mallet-Prevost, Asst. Gen. Counsel, N. L. R. B. and Warren M. Davison, Atty., N. L. R. B., Washington, D. C., on the brief.

Alan I. Berger, St. Louis, Mo., for respondent. V. Lee McMahon of McMahon & Zempel, St. Louis, Mo., on the brief.

Before VAN OOSTERHOUT and MATTHES, Circuit Judges, and YOUNG, District Judge.

MATTHES, Circuit Judge.

This case is here on the petition of the National Labor Relations Board pursuant to § 10(e) (29 U.S.C.A. § 160(e)) of the National Labor Relations Act, as amended, for enforcement of its order against Wonder State Manufacturing Company, respondent. The Board's Decision and Order are reported at 147 N. L.R.B. No. 23 (1964).

The Board found that respondent had violated § 8(a) (5) and (1) of the Act (29 U.S.C.A. § 158(a) (5) and (1), by unilaterally discontinuing payment of the customary Christmas bonus in 1962; and by unilaterally adjusting labor grades and job classifications to grant wage increases to a substantial number of employees on May 17, 1963. The Board also found respondent had violated § 8(a) (5) and (1) of the Act by refusing to bargain in good faith with respect to a contract covering the employees.¹

The Board entered a cease and desist order in accordance with the recommendations of the trial examiner's recommended order with one modification. The examiner had recommended that respondent be ordered and required to make whole eligible employees for any loss they may have suffered because of the termination of the 1962 Christmas bonus. The Board found that because respondent was facing serious financial losses in December, 1962, the examiner's recommendation in this regard should be deleted.

No serious factual dispute is indicated by the briefs of the parties and a brief résumé of the uncontradicted facts will suffice as an introduction to the contentions of the parties and the legal issues involved.

Respondent, an Arkansas corporation, having its office and plant in Paragould, Arkansas, is engaged in the fabrication and sale of cotton gin equipment and supplies.

Pursuant to an election on August 30, 1962, the International Association of Machinists, AFL-CIO, was certified as the exclusive collective bargaining agent of respondent's production and maintenance employees. On January 28, 1963, pursuant to motion of the International, certification issued to it was amended by substituting the name of Lodge 1568, International Association of Machinists, AFL-CIO.²

Pursuant to a request from a representative of the International, respondent, on September 12, 1962, furnished International with information concerning its employee merit grading system, rates of pay, vacations, and other pertinent information relating to fringe benefits, but no reference was made in this letter in regard to respondent's Christmas bonus policy. In 1959, 1960 and 1961 respondent paid its employees a bonus but failed to do so in December, 1962.

Collective bargaining between International and respondent began on September 26, 1962. Numerous bargaining meetings were held between that date and March 1, 1963, but the parties were unsuccessful in negotiating and agreeing upon a satisfactory contract. Shortly after the bargaining negotiations broke off on March 1, respondent unilaterally put into effect wage increases, based on a merit evaluation, for a number of its employees.

Union filed charges on May 21, 1963, and an amendment thereto on June 13 on the basis of which the general counsel filed its complaint.

The questions for decision are: (1) did respondent violate § 8(a) (5) and (1) by unilaterally discontinuing the Christmas bonus in 1962; (2) did respondent violate § 8(a) (5) and (1) by unilaterally granting wage increases after negotiations for a contract had reached a stalemate; (3) does the totality of respondent's conduct support the Board's finding that it failed to bargain in good faith toward a collective bargaining agreement? We enforce the 8(a) (5) and (1) violation relating to issue (2), but deny enforcement as to issues (1) and (3).

Christmas bonus issue. The initial question in regard to this issue is whether the Christmas bonuses previously paid by respondent were within the meaning of wages as that term is used in § 9(a) of the Act (29 U.S.C.A. § 159(a)), so that this was a matter upon which respondent was bound by law to bargain if requested.³ The rule is that gifts per se — payments which do not constitute compensation for services — are not terms and conditions of employment, and an employer can make or decline to make such payments as he pleases, but if the gifts or bonuses are so tied to the remuneration which employees received for their work that they were in fact a part of it, they are in reality wages and within the statute. This is a question of fact and, if the Board's finding to that effect is supported by substantial evidence, the finding must be accepted on review. National Labor Relations Bd. v. Niles-Bement-Pond Company, 199 F.2d 713 (2 Cir. 1952); N. L. R. B. v. Electric Steam Radiator Corporation, 321 F.2d 733 (6 Cir. 1963); N. L. R. B. v. Citizens Hotel Company, 326 F.2d 501 (5 Cir. 1964); N. L. R. B. v. United States Air Conditioning Corporation, 336 F.2d 275 (6 Cir. 1964); N. L. R. B. v. Toffenetti Restaurant Company, 311 F.2d 219 (2 Cir. 1962); National Labor Relations Board v. Wheeling Pipe Line, 229 F.2d 391 (8 Cir. 1956). The Board adopted the examiner's finding that "a monetary Christmas bonus has been a part of respondent's wage plan or fringe benefits to employees dating back to the year of 1955." We do not regard the evidence as supporting this finding. The record reveals that respondent embarked upon its operations in 1950. Apparently bonuses were not paid until 1955. In that year and in 1956 respondent gave to its employees cash amounts as follows: 15 employees received $10 each, one received $15, 5 received $20 each, and 3 received $25 each; in 1956, 25 employees received $10 each, 5 received $20 each, and 3 received $25 each. Because of a crop failure in 1957 which was reflected in respondent's business no bonuses were made in that year. Likewise, in 1958 there were no bonuses, but the reason does not appear. In 1959, the employees received a cash bonus equal to one week's wages, in 1960 one-half week's wages, in 1961 one week's wages and, as stated, none in 1962.⁴

The record establishes conclusively that on November 16, 1962, with one exception, the entire executive staff of respondent, the foreman of the machine shop, and some salesmen resigned and organized a new competing corporation. This precipitated a "terrific price competition" and seriously affected respondent's financial situation. The record shows that because of this economic development respondent decided against giving a bonus in 1962.⁵ In our view, this circumstance was consistent with the testimony of the vice-president of respondent that the Christmas bonus was based upon the previous 3 months' business, the economic outlook and the general Christmas spirit that prevails at the time, and that the bonus was not earned, rather it was a gift or gratuity. There was also testimony from at least one of the former employees of respondent to the effect that he considered the amount received at Christmas as a gift.

Thus, from the uncontroverted evidence, the following facts plainly appear: (1) there was no consistency or regularity in awarding the bonuses — rather they were made intermittently, i. e., in three of the five years immediately prior to 1962; (2) there was no uniformity in or basis for the amount of the bonus; (3) the bonuses were not tied to the remuneration received by the employees; (4) whether a bonus was paid and the amount thereof depended on the financial condition and ability of respondent.

In the cases cited, supra, the bonuses were of regular and long duration (10 to 19 years) and in most instances the bonus was tied into seniority. Because of these and other circumstances not present here, the Board and courts had little difficulty in deciding that the bonuses were in fact wages or remuneration within the statute.

We conclude that the Board's finding in regard to the Christmas bonus issue is not supported by substantial evidence on the record considered as a whole. The evidence compels the holding that the bonuses were gifts and, being so, respondent was under no obligation to bargain with International prior to discontinuance of the bonus in 1962.

Unilateral wage increases issue. Shortly after the March 1, 1963 meeting, respondent, acting upon advice of its attorney, caused its plant manager to reevaluate all the employees and recommend reclassification and wage increases. Of the 42 employees in the bargaining unit 9 were reclassified and given wage increases ranging from a minimum of 10 cents per hour to a maximum of 30 cents per hour.

The Board adopted the examiner's finding "that by unilaterally adjusting the job classifications of certain employees on May 17, 1963, in order to grant them wage increases without formally negotiating with their certified bargaining representative, the Respondent refused to bargain collectively with the representative of its employees, subject to the provisions of Section 9(a), within the meaning of Section 8(a) (5) of the Act."

The law applicable to this issue is clearly enunciated in National Labor Relations Board v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). In Katz unilateral merit increases were granted in October, 1956 and January, 1957, both prior to the final bargaining meeting on May 13, 1957. The Board found this constituted a violation of...