Paragon Systems, Inc. and National Association of Special Police and Security Officers, 05- CA-127523

CourtNational Labor Relations Board
Writing for the CourtMark Gaston Pearce, Chairman
PartiesParagon Systems, Inc. v. National Association of Special Police and Security Officers.
Docket Number05- CA-127523
Decision Date26 August 2016

Paragon Systems, Inc. and National Association of Special Police and Security Officers.

No. 05- CA-127523

United States of America, National Labor Relations Board

August 26, 2016


Chad M. Horton, Esq., for the general Counsel.

Thomas P. Dowd, Esq., of Washington, D.C., for the Respondent.

Chalfrantz Perry, of Washington, D.C., for the Charging Party.

Chairman Pearce and Members Hirozawa and McFerran

DECISION AND ORDER

Mark Gaston Pearce, Chairman

On September 30, 2015, Administrative Law Judge Eric M. Fine issued the attached decision. The Respondent and the General Counsel filed exceptions, supporting briefs, and answering briefs, and the Respondent filed a reply brief.

The National Labor Relations Board has delegated 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 only to the extent consistent with this Decision and Order.

The issue in this case is whether the Respondent was a “perfectly clear” successor under NLRB v. Burns Security Services, 406 U.S. 272, 294-295 (1972), and Spruce Up Corp., 209 NLRB 194, 195 (1974), enfd. per curiam 529 F.2d 516 (4th Cir. 1975), with an obligation to bargain with the Union prior to setting initial terms and conditions of employment that differed from those under the predecessor's collective-bargaining agreement with the Union. For the reasons discussed below, we find, contrary to the judge, that the General Counsel failed to prove that Paragon was a “perfectly clear” successor as alleged in the complaint. As a result, we find that Paragon did not violate Section 8(a)(5) and (1) by changing certain terms and conditions of employment when it began operations without giving the Union notice or the opportunity to bargain.

I. FACTS

Paragon provides armed security services to the Federal Government. In June 2013, [1] Paragon was awarded a contract to provide guard services at the Federal Emergency Management Agency (FEMA) building in Washington, D.C. Paragon was scheduled to take over operational control at the FEMA building effective September 1, replacing Knight Protective Services, which had an existing collective-bargaining agreement (CBA) with the Union covering protective security officers (PSOs). [2]

In mid-June, shortly after being awarded the contract, Paragon arranged for a memo to be posted at the FEMA building advising PSOs employed by Knight that Paragon had been awarded the contract and inviting PSOs to attend a job fair on June 29. The memo stated, “Paragon Systems is currently accepting applications from incumbent PSOs. To be considered for employment, all candidates must complete all parts of the Paragon application process.” The memo also directed applicants to Paragon's website to complete an online application and notified applicants that they should bring the original and one copy of certain documents to the job fair, including a driver's license or state ID, social security card, birth certificate, and high school diploma, transcript, or GED certificate. The memo stated that offers of employment “are contingent upon successfully passing all pre-employment requirements, attending all scheduled training and passing all contract-required performance standards.”

Paragon is subject to Executive Order 13495, “Non-Displacement of Qualified Workers” (E.O. 13495), which requires contractors with a Federal Government service contract to offer a right of first refusal to suitable employment to those nonmanagerial and nonsupervisory employees whose employment will be terminated as a result of the award of the successor contract. See 74 Fed.Reg. 6103 (2009). [3]

Paragon assumed operational control at the FEMA Building on September 1 and made the following changes to PSOs' terms and conditions of employment without notifying the Union: (1) PSOs no longer had the option of receiving health, welfare, and pension benefits as part of their wages; (2) PSOs no longer received a paid 30-minute break during each 8-hour shift; (3) the threshold for fulltime employment status was changed from 32 to 40 hours per week; and (4) the uniform allowance was discontinued.

At some point after September 1, Paragon recognized the Union as the collective-bargaining representative for PSOs. Paragon and the Union agreed to a CBA in August 2014.

II. THE JUDGE'S DECISION

The judge agreed with the General Counsel's contention that Paragon's job fair memo was tantamount to an invitation to the Knight PSOs to accept employment with Paragon, and therefore that Paragon was a “perfectly clear” successor at the time that it posted the job fair memo in mid-June. Because the memo failed to announce that Paragon intended to establish new terms and conditions of employment, the judge found that Paragon forfeited its right to set initial terms and conditions under the Board's Spruce Up analysis and that Paragon violated Section 8(a)(5) and (1) by unilaterally changing the terms and conditions of PSOs' employment when it took over operations in September.

III. POSITIONS OF THE PARTIES

Paragon excepts to the judge's findings and argues that it acted lawfully when it took over operations and set its own initial terms and conditions of employment. Paragon argues that the job fair memo simply informed PSOs that Paragon had been awarded the contract, was currently accepting applications from incumbent PSOs, and would be holding a job fair, but that the memo did not announce any intent to employ Knight PSOs and was not an invitation to Knight PSOs to accept employment. [4]

The General Counsel argues that the judge correctly found that Paragon invited Knight PSOs to accept employment with Paragon when it posted the job fair memo in mid-June and that Paragon was a “perfectly clear” successor at that time. The General Counsel does not argue in the alternative that, assuming Paragon did not become a “perfectly clear” successor until it distributed job offer letters to Knight PSOs at the June 29 job fair, the offer letters given to employees failed to clearly announce Paragon's intent to establish a new set of terms and conditions of employment and were insufficient to meet Paragon's obligations under Spruce Up, above. Nor did the General Counsel except to the judge's failure to find that, assuming Paragon was free to set initial terms and conditions, the alleged unlawful changes were not among its announced initial terms. [5]

For the reasons discussed below, we find merit to the Respondent's exceptions.

IV. DISCUSSION

Under NLRB v. Burns Security Services, supra, 406 U.S. at 281-295, a successor employer is not bound by the substantive terms of a collective-bargaining agreement negotiated by its predecessor and is ordinarily free to set initial terms and conditions of employment unilaterally. The Court explained that the duty to bargain will not normally arise before the successor sets initial terms because it is not usually evident whether the union will retain majority status in the new work force until after the successor has hired a full complement of employees. Id. at 295. The Court recognized, however, that “there will be instances in which it is perfectly clear that the new employer plans to retain all of the employees in the unit and in which it will be appropriate to have him initially consult with the employees' bargaining representative before he fixes terms.” Id. at 294-295.

In Spruce Up Corp., supra, 209 NLRB 194, the Board interpreted the “perfectly clear” caveat in Burns as “restricted to circumstances in which the new employer has either actively or, by tacit inference, misled employees into believing they would all be retained without change in their wages, hours, or conditions of employment, or at least to circumstances where the new employer . . . has failed to clearly announce its intent to establish a new set of conditions prior to inviting former employees to accept employment.” Id. at 195 (fn. omitted).

A successor's obligation to bargain about initial terms of employment can arise prior to the successor's extension of formal offers of employment to the predecessor's employees or before the hiring process begins. A successor employer has an obligation to bargain over initial terms when it “displays an intent to employ the predecessor's employees without making it clear that their employment will be on different terms from those in place with the predecessor.” Creative Vision Resources, LLC, 364 NLRB No. 91, slip op. at 3 (2016). See also Nexeo Solutions, LLC, 364 NLRB No. 44, slip op. at 2 fns. 7, 8 (2016) (bargaining obligation attached when successor informed employees that they would transfer to new business); Canteen Co., 317 NLRB 1052, 1053 (1995) (bargaining obligation attached when successor expressed to union its desire to have employees serve a probationary period), enfd. 103 F.3d 1355 (7th Cir. 1997); Fremont Ford, 289 NLRB 1290, 1296-1297 (1988) (obligation attached when successor indicated to union that it had doubts about the retention of only a few employees); Henry M. Hald High School Assn., 213 NLRB 415 (1974) (obligation attached when successor gave assurances to employees that it would employ them).

Contrary to the judge, we find that Paragon did not display an intent to retain Knight PSOs when it posted the job fair memo. On its face, the memo does not state that PSOs who complete the application or attend the job fair will be offered employment. Instead, the memo states that Paragon is “currently accepting applications” and that all candidates must complete all parts of the application process “[t]o be considered for employment.” The memo does not suggest that hiring is inevitable, and we find that the memo was simply an invitation to Knight PSOs to complete an application. The memo did not express Paragon's intent...

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