Capitol Ford

National Labor Relations Board - Board Decisions

Dec 16, 2004

343 N.L.R.B. 1058 (N.L.R.B. 2004)

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
343 NLRB No. 116
1058
Sonic Automotive, formerly d/b/a Capitol Ford, cur-
rently d/b/a Friendly Ford and International As-
sociation of Machinists & Aerospace Workers,
District Lodge 190, Local Lodge No. 1101, AFL–
CIO. Case 32–CA–19327–1
December 16, 2004
DECISION AND ORDER
BY CHAIRMAN BATTISTA AND MEMBERS SCHAUMBER
AND WALSH
On February 28, 2003, Administrative Law Judge
James M. Kennedy issued the attached decision. Interna-
tional Association of Machinists & Aerospace Workers,
District Lodge 190, Local Lodge No. 1101, AFL–CIO
(the Union) filed exceptions and a supporting brief, and
the General Counsel filed a limited exception. The Re-
spondent filed an answering 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 as
modified below and to adopt the recommended Order as
modified and set forth in full below.
1. We adopt the judge’s dismissal of the complaint al-
legation that the Respondent made statements threatening
employees in violation of Section 8(a)(1) of the Act. The
judge made a credibility resolution that the alleged
statements were not in fact made, and we adopt the
judge’s credibility resolution.1 We accordingly find it
unnecessary to pass on the judge’s alternative finding
that, even if the statements were in fact made, they did
not constitute unlawful threats violative of Section
8(a)(1) of the Act.
2. The judge found, and we agree for the reasons set
forth in his decision, that the Respondent, an undisputed
Burns2 successor employer, did not violate Section
8(a)(5) of the Act by unilaterally implementing the Octo-
ber 2001 productivity bonus program, and thereafter uni-
laterally modifying the bonus program. As the judge
fully explained, neither the introduction of the October
2001 bonus program without bargaining with the Union,
nor the subsequent modification of the bonus program,
constituted changes in unit employees’ terms and condi-
tions of employment. Thus, the record shows that simi-

1 The Union has excepted to the judge’s credibility findings. The
Board’s established policy is not to overrule an administrative law
judge’s credibility resolutions unless the clear preponderance of all the
relevant evidence convinces us that they are incorrect. Standard Dry
Wall Products, 91 NLRB 544 (1950), enfd. 188 F.2d 362 (3d Cir.
1951). We have carefully examined the record and find no basis for
reversing the findings.
2 NLRB v. Burns Security Services, 406 U.S. 272 (1972).
lar bonus programs were utilized by Respondent’s prede-
cessor, and this discretion was authorized under the un-
ion-predecessor collective-bargaining agreement. Ac-
cordingly, the discretionary use of such programs at the
employer’s initiative was one of the existing terms and
conditions of employment that governed the Respon-
dent’s relationship with its employees after it took over
the business from the predecessor employer. The fact
that the contract was not in effect vis-à-vis the Respon-
dent does not mean that the practice was no longer in
effect. The practice was that the predecessor could act
on bonuses at its discretion. The Respondent continued
that practice and, under that practice, acted on bonuses.3
In addition, the Union did not object and indeed encour-
aged such bonus programs by both the Respondent and
its predecessor. In sum, the judge correctly concluded
that “the [bonus] system had been in place before Re-
spondent acquired the facility and it simply utilized it in
the same fashion the Predecessor had.”4 We also agree
with the judge’s further finding, for the reasons set forth
in his decision, that the Respondent did not engage in
unlawful direct dealing with employees with respect to
the October 2001 bonus program.
3. We further agree with the judge, as set forth in his
decision, that the Respondent did not violate Section
8(a)(5) of the Act by unilaterally implementing two paid
holidays: the day after Thanksgiving and the day of
Christmas Eve. The judge correctly found that the initial
terms and conditions of employment established by the
Respondent encompassed the latter holiday. With re-
spect to the former, we recognize that the Respondent,
upon taking over, announced that there would be no
holiday on the day after Thanksgiving. However, this
announcement was never implemented because, prior to

3 Our colleague is correct in saying that a successor employer who
does not adopt the predecessor’s contract cannot rely upon the man-
agement rights clause of that contract to justify unilateral action. How-
ever, the instant case involves the predecessor’s practice of acting
unilaterally with respect to bonuses. The Respondent was privileged to
continue that practice, and did so in this case. Contrary to our col-
league, the mere fact that the past practice was developed under a now-
expired contract does not gainsay the existence of the past practice.
The Respondent’s reliance on its predecessor’s past practice is not
dependent on the continued existence of the predecessor’s collective-
bargaining agreement.
Further, while our colleague relies on Ironton Publications, 321
NLRB 1048 (1996), in support of his assertion that the Union’s con-
tractual waiver of its right to bargain over bonus programs did not
outlive the contract, his reliance is misplaced. As discussed above, the
instant case involves a successor employer who continued the practice
of its predecessor in regard to the granting of bonuses.
4 Accordingly, we disagree with our dissenting colleague’s conten-
tion that the evidence is insufficient to establish the past practice of
unilaterally implementing and modifying bonus programs on which the
Respondent relied.
CAPITOL FORD 1059
Thanksgiving, the Respondent announced that there
would be a holiday on the day after Thanksgiving. And,
that holiday was given. Thus, there was no change from
the predecessor’s established practice of granting the day
after Thanksgiving as a paid holiday. We additionally
agree with the judge’s further finding, as set forth in his
decision, that the Respondent did not engage in unlawful
direct dealing with employees with respect to these holi-
days.
4. The General Counsel and the Union have excepted
to the remedy recommended by the judge for his finding
that the Respondent violated Section 8(a)(5) and (1) of
the Act by unilaterally changing the unit employees’ pay-
roll period, and dealing directly with unit employees on
this matter.5 The General Counsel and the Union con-
tend that the appropriate remedy should direct that the
Respondent, on request of the Union, to rescind its uni-
lateral change in the payroll period. We find merit in the
exceptions of the General Counsel and the Union under
Board precedent. See S & I Transportation, Inc., 311
NLRB 1388, 1391 (1993); South Carolina Baptist Minis-
tries, 310 NLRB 156, 192, 193 (1993). We shall modify
the judge’s remedy accordingly.6
ORDER
The National Labor Relations Board adopts the rec-
ommended Order7 of the administrative law judge as
modified and set forth in full below and orders that the
Respondent, Sonic Automotive, formerly d/b/a Capitol
Ford, currently d/b/a Friendly Ford, San Jose, California,
its officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Refusing to bargain with the Union as the exclusive
bargaining representative of its employees, in the bar-
gaining unit set forth below, by unilaterally changing the
payroll period.

5 No party filed exceptions to these unfair labor practice findings.
The Respondent improperly attempted to address these findings in its
brief in answer to the exceptions of the Union and the General Counsel.
It is well established, however, that the “answering brief to the excep-
tions shall be limited to the questions raised in the exceptions and in the
brief in support thereof.” NLRB Rules and Regulations Sec. 102.46
(d)(2).
6 “Pursuant to the Board’s established policy, in cases such as this
involving a violation of Sec. 8(a)(5) based on an employer’s unilateral
alteration of terms and conditions of employment, it is customary to
order restoration of the status quo ante to the extent feasible.” Detroit
News, 319 NLRB 262 fn. 1 (1995). The Respondent will have the
opportunity in the compliance phase of this proceeding to demonstrate
that the rescission remedy is unduly burdensome.
7 We have modified the judge’s recommended Order to reflect the
appropriate remedy discussed above, to conform to the violations
found, and to correct certain inadvertent errors. We have substituted a
new notice to comport with these modifications.
(b) Dealing directly with bargaining unit employees
with respect to their rates of pay, wages, hours, or other
terms and conditions of employment.
(c) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) On request of the Union, rescind the unilateral
change in the payroll period.
(b) Before implementing any changes in wages, hours,
or other terms and conditions of employment of unit em-
ployees, notify and, on request, bargain with the Union
as the exclusive collective-bargaining representative of
employees in the following bargaining unit:
All full-time and regular part time automotive machin-
ists; automotive mechanics; automotive diesel engine
mechanics; automotive electrical machinists; automo-
tive welders; automotive fender, body, and radiator
mechanics; automotive trimmers; automotive sprayers,
color matchers, and stripers, sanders and rubbers; ap-
prentices or trainees; service writers; and dispatchers
employed by Respondent at its San Jose, California fa-
cility; excluding all other employees, office clerical
employees, guards, and supervisors as defined in the
Act.
(c) Pay to the bargaining unit employees the 2 days’
wages placed in the holdback account in January 2002,
with interest, in the manner set forth in the remedy sec-
tion of the judge’s decision.
(d) Preserve and, within 14 days of a request, or such
additional time as the Regional Director may allow for
good cause shown, provide at a reasonable place desig-
nated by the Board or its agents, all payroll records, so-
cial security payment records, timecards, personnel re-
cords and reports, and all other records, including an
electronic copy of such records if stored in electronic
form, necessary to analyze the amount of backpay due
under the terms of this Order.
(e) Within 14 days after service by the Region, post at
its facility in San Jose, California, copies of the attached
notice marked “Appendix.”8 Copies of the notice, on
forms provided by the Regional Director for Region 32,
after being signed by the Respondent’s authorized repre-
sentative, shall be posted by the Respondent and main-
tained for 60 consecutive days in conspicuous places

8 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 Na-
tional Labor Relations Board” shall read “Posted Pursuant to a Judg-
ment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1060
including all places where notices to employees are cus-
tomarily posted. Reasonable steps shall be taken by the
Respondent to insure that the notices are not altered, de-
faced, or covered by any other material. In the event
that, during the pendency of these proceedings, the Re-
spondent has gone out of business or closed the facilities
involved in these proceedings, it shall duplicate and mail,
at its own expense, a copy of the notice to all current
employees and former employees employed by the Re-
spondent at any time since January 9, 2002.
(f) Within 21 days after service by the Region, file
with the Regional Director a sworn certification of a re-
sponsible official on a form provided by the Region at-
testing to the steps that the Respondent has taken to
comply.
MEMBER WALSH, concurring in part and dissenting in
part.
I agree with my colleagues’ decision except with re-
spect to the following two issues:
I. The Respondent Violated Section 8(a)(5) By Unilat-
erally Modifying the Productivity Bonus Program It Im-
plemented in October 2001
The Union had no objection to the productivity bonus
program that the Respondent initially implemented in
October 2001. But then the Respondent modified the
program without bargaining with the Union.
The Respondent was not privileged to unilaterally
modify the bonus program it put into effect. Although
the collective-bargaining agreement between the Union
and the predecessor allowed the predecessor to institute
similar bonus programs, that agreement is no longer in
effect. Therefore, even assuming the predecessor’s con-
tract embodied a valid waiver of the Union’s statutory
right to bargain, the waiver did not outlive the contract
that contained it. See Ironton Publications, 321 NLRB
1048 (1996).1 Further, the evidence is insufficient to

1 The judge’s reliance on Holiday Inn of Victorville, 284 NLRB 916
(1987), is misplaced. That case sets forth the general rule in successor-
ship situations that “the terms and conditions of employment of union-
represented employees will normally be those established by the prede-
cessor’s collective-bargaining agreement.” (Emphasis added.) How-
ever, as the Board went on to explain in the following paragraph, a
contract clause in a predecessor’s contract authorizing unilateral action
with respect to a mandatory bargaining subject is “not a term and con-
dition of employment in the same sense.” A successor employer who
does not adopt the predecessor’s contract “cannot as a general proposi-
tion rely” on such a clause to act unilaterally. Id. In Holiday Inn of
Victorville, the Board was referring specifically to a management-rights
clause, but the Board’s reasoning is equally applicable here where the
contractual reservation of management discretion in the predecessor’s
contract concerned bonus programs.
The majority errs in relying on the predecessor’s past practice. As
stated above, the contractual provision under which the predecessor
acted unilaterally with respect to bonuses is no longer in effect, and any
establish a past practice of unilaterally implementing and
modifying bonus programs subsequent to the effective
date of the predecessor’s contract. Therefore, although
the Union did not object to the initial implementation of
the October 2001 bonus program, the Union’s acquies-
cence in that unilateral change does not constitute a
waiver of its right to bargain over subsequent modifica-
tions to the program. See Owens-Corning Fiberglas, 282
NLRB 609 (1987) (“A union’s acquiescence in previous
unilateral changes does not operate as a waiver of its
right to bargain over such changes for all time.”) For
these reasons, the Respondent violated Section 8(a)(5)
and (1) of the Act by unilaterally modifying the produc-
tivity bonus program it implemented in October 2001.
II. The Respondent Violated Section 8(a)(5) By Unilat-
erally Implementing the Day After Thanksgiving Holiday
and By Dealing Directly With Employees.
The Respondent’s implementation of the day after
Thanksgiving holiday was a change from the Respon-
dent’s initial terms and conditions of employment. The
Respondent never bargained with the Union about the
change. It makes no difference that the unilateral change
was a benefit to employees. See Register-Guard, 339
NLRB 353, 359 (2003). Further, the Respondent met
directly with employees regarding the change and en-
tirely excluded the Union from the process. Unlawful
direct dealing is accordingly established. See Georgia
Power Co., 342 NLRB 192, 195–196 (2004) (Member
Walsh dissenting).
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 vio-
lated Federal labor law and has ordered us to post and obey
this notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist any union
Choose representatives to bargain with us on
your behalf
Act together with other employees for your bene-
fit and protection

union waiver of the statutory right to bargain did not outlive the con-
tract that contained it. Under these circumstances, the predecessor’s
past bonus programs, implemented under a contractual provision that is
no longer in effect, do not establish a past practice allowing the Re-
spondent to modify the productivity bonus program in issue here with-
out bargaining with the Union.
CAPITOL FORD 1061
Choose not to engage in any of these protected
activities.
WE WILL NOT refuse to bargain with the Union as the
exclusive bargaining representative of our employees, in
the bargaining unit set forth below, by unilaterally
changing the payroll period.
WE WILL NOT deal directly with our employees with
respect to their rates of pay, wages, hours, or other terms
and conditions of employment.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the rights
set forth above.
WE WILL, on request of the Union, rescind our unilat-
eral change in the payroll period.
WE WILL, before implementing any changes in your
wages, hours, or other terms and conditions of employ-
ment of unit employees, notify and, on request, bargain
with the Union as the exclusive collective-bargaining
representative of our employees in the following bargain-
ing unit:
All full-time and regular part-time automotive machin-
ists; automotive mechanics; automotive diesel engine
mechanics; automotive electrical machinists; automo-
tive welders; automotive fender, body, and radiator
mechanics; automotive trimmers; automotive sprayers,
color matchers, and stripers, sanders and rubbers; ap-
prentices or trainees; service writers; and dispatchers
employed by us at our San Jose, California facility; ex-
cluding all other employees, office clerical employees,
guards, and supervisors as defined in the Act.
WE WILL pay to our bargaining unit employees the two
days’ wages we placed in the holdback account in Janu-
ary 2002, with interest.
SONIC AUTOMOTIVE, FORMERLY D/B/A CAPITOL
FORD, CURRENTLY D/B/A FRIENDLY FORD
Valery Hardy-Mahoney, for the General Counsel.
Robert G. Hulteng and Philip R. Paturzo (Littler Mendelson),
of San Francisco, California, for the Respondent.
David A. Rosenfeld (Van Bourg, Weinberg, Roger &
Rosenfeld), of Oakland, California, for the Charging Party.
DECISION
STATEMENT OF THE CASE
JAMES M. KENNEDY, Administrative Law Judge. This case
was tried in San Jose, California, on September 18, 2002,1
based upon a complaint issued March 22 by the Acting Re-
gional Director for Region 32. The underlying unfair labor
practice charge was originally filed by the International Asso-
ciation of Machinists & Aerospace Workers, District Lodge

1 All dates are 2002 unless stated otherwise.
190, Local Lodge No. 1101, AFL–CIO, on January 7, subse-
quently amended on March 22. The complaint alleges that
Sonic Automotive formerly d/b/a Capitol Ford, currently d/b/a
Friendly Ford (Respondent) violated Section 8(a)(1) and (5) by
making various unilateral changes in working conditions and
simultaneously engaging in direct dealing with the employees
rather than going through the Union. It also asserts that Re-
spondent committed two independent violations of Section
8(a)(1) by threatening an employee because of his union activi-
ties. Respondent denies the allegations.
Issues
The independent 8(a)(1) allegations assert that Respondent,
on two occasions, acting through two different supervisors,
threatened Union Steward Keith Scarboro with discharge as a
reprisal for his union activities. Respondent denies the inci-
dents and argues that, in any event, one of the individuals is not
the supervisor as defined in Section 2(5) of the Act. With re-
spect to the 8(a)(5) allegations, the complaint asserts that Re-
spondent breached the bargaining obligation in four different
respects: (1) modifying a productivity bonus program in Octo-
ber or November 2001; (2) changing its policies regarding paid
holidays for the Friday after Thanksgiving 2001; (3) Christmas
Eve 2001; and, (4) on January 9 changing the pay periods.
Respondent defends on several grounds, including de minimis,
waiver, no change occurred, and, in the case of the pay period
change, that it was only an administrative change not affecting
employee working conditions.
The parties were given full opportunity to participate, to in-
troduce relevant evidence, to examine and cross-examine wit-
nesses, to orally argue, and to file briefs. The General Counsel,
the Charging Party, and Respondent have all filed briefs, which
have been carefully considered. Based on the entire record of
the case, as well as my observation of the witnesses and their
demeanor, I make the following
FINDINGS OF FACT
I. JURISDICTION
According to the pleadings, Respondent is a California cor-
poration2 with an office and place of business in San Jose,
where it operates an automobile dealership and where it sells
and services new and used motor vehicles. It admits that dur-
ing the calendar year beginning May 8, 2001, in the course and
conduct of its business it has derived gross revenues exceeding
$500,000 and during the same period it has purchased and re-
ceived goods originating outside California valued in excess of
$5000. Accordingly, it admits that it is an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7) of
the Act. It further admits that the Union is a labor organization
within the meaning of Section 2(5) of the Act.

2 The dealership in question is part of a national chain of dealerships.
Testimony shows it to be one of approximately 180 dealerships owned
by Sonic Automotive whose headquarters are in Charlotte, North Caro-
lina.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1062
II. THE ALLEGED UNFAIR LABOR PRACTICES
a. The setting
On May 8, 2001, Respondent took over the Ford dealership
located on West Capitol Expressway in San Jose known as
Capitol Ford.3 At the time of the takeover, Capitol Ford had
been a member of a multiemployer association and bound to a
master collective-bargaining agreement with the Union, which
was not scheduled to expire until October 31. The General
Counsel and Respondent both agree that Respondent is a suc-
cessor employer within the meaning of the Supreme Court’s
decision in NLRB v. Burns Security Services, 406 U.S. 272
(1972). As such, it was obligated to recognize the Union, and it
did so. At the same time, it was not required to accept the
predecessor’s collective-bargaining contract; instead, it was
free to set its own initial terms and conditions of employment
for those employees in the bargaining unit. It did that as well.
The bargaining unit, not in issue here, covers the automotive
machinists, mechanics bodyshop workers, painters, service
writers, and dispatchers but excludes auto sales personnel and
other appropriate exclusions. Respondent, upon its takeover,
issued its own employee handbook and immediately signed a
recognition/interim agreement.4 The parties, pursuant to that
recognition agreement, as of the date of the hearing, had not yet
reached an agreement. They had nevertheless engaged in ex-
tensive bargaining, including eight meetings during 2002 and
five meetings in 2001. The complaint does not allege that Re-
spondent has engaged in bad-faith bargaining during any of
those negotiations.
As part of its initial terms and conditions, Respondent estab-
lished a pay scale known as the “Sonic package” (not in evi-
dence). This system of recompense set levels under both
hourly and flat-rate calculations. Both Respondent and the
Union considered those levels as minimums, and overscale
wages were allowed. In fact, Business Agent Glenn Gandolfo
testified that the predecessor’s collective-bargaining contract
expressly permitted overscale wages. He also testified that
during a bargaining session in October 2001 the Union had
become aware that Respondent was paying wages over the
initially established scales and the Union did not object to the
practice. It is reasonable, I think, to conclude that the Union’s
policy is to encourage employers to pay workers beyond the
minimums established, whether based on a collective-
bargaining contract, initial flat, experience, or to reward dem-
onstrated excellence.5
Consistent with that policy, the Union does not appear to op-
pose bonuses or other types of remuneration. Although occur-

3 Respondent continued to do business under the Capitol Ford trade
name for almost 6 months before converting to its current trade name,
Friendly Ford.
4 The recognition agreement not only included an affirmative agree-
ment to meet and bargain in good faith, it committed Respondent to
make contributions to the pension fund and health plan.
5 Gandolfo’s testimony:
Q. BY MR. HULTENG: And in dealings with this employer,
have you in fact informed the employer that the union does not
oppose the granting of any above scale paid to employees?
A. [WITNESS GANDOLFO] Yes.
ring some 10 months after the incentive plan under scrutiny
here, Gandolfo wrote Respondent a letter on August 30 encour-
aging pay raises for the bargaining unit based on “length of
service, change of class, or proven ability.” He went on to say
that the Union would not take action against the Company dur-
ing negotiations because of such a grant. He added that like-
wise, the Union did not oppose the grant of “bonuses, spiffs, or
other remuneration given by the manufacturer or the company.”
Among other things, the handbook established eight paid
holidays, one of which was a day, which could be scheduled by
the department manager between December 24 and January 2.
The named holidays included Thanksgiving Day and Christmas
Day. Neither the day after Thanksgiving nor Christmas Eve
was listed. Those omissions were a departure from the prede-
cessor’s collective-bargaining contract, which had specifically
granted the day after Thanksgiving and Christmas Eve as paid
days off.
During the period in question here, Respondent’s general
manager was Gary Potter,6 its service manager was Andrew
McDonald, the maintenance and detail manager was Omar
Infante, and the used car reconditioning person was John
Swarthout. Respondent acknowledges the supervisory status of
Potter, McDonald, and Infante. It asserts that Swarthout is not
a supervisor within the meaning of Section 2(11) of the Act.
Both Infante and Swarthout are alleged to have said things
which allegedly violated Section 8(a)(1) of the Act. The indi-
vidual to whom the remarks were supposedly directed was
Keith Scarboro. Scarboro had been a longtime employee with
Capitol Ford, originally hired in 1989 and, except for a short
hiatus in the early 1990s, had worked continuously at the facil-
ity until he quit in November 2001. For some period of time
prior to his departure he had been the union steward. He was
succeeded as steward by Rod Stamps. Both of those individu-
als testified in support of the General Counsel’s case.
b. Scarboro’s testimony
As noted, Keith Scarboro was the Union’s longtime steward.
He was also a member of the Union’s negotiating committee.
Respondent had retained him when it took over the dealership.
He was a technician assigned to the used car reconditioning
operation, which was run by John Swarthout. Scarboro said
that sometime during October, he was in Swarthout’s office
picking up a work order. He testified Swarthout arose from his
desk, checked to make certain no one was listening and closed
the office door. Swarthout then told Scarboro “Hey, by the
way, watch your ass man, because they want to get you.”
Similarly, at about the same time, Scarboro says he was near
his work area walking toward the parts department when he
encountered Detail Manager Omar Infante. He says Infante
told him “You know, watch your ass man, they’re out to get
you, watch your ass.” When Scarboro asked Infante what he
meant, Infante replied, “You know what they say: Cut off the
head and the body will fall.” Scarboro says he asked Infante
where he had heard that from. Infante replied, “Potter.”

6 At some point after the events recounted here, Potter became the
regional director of used cars for the nine Sonic dealerships in the
North Bay. He is no longer resides in northern California, living now
in Payson, Arizona, and commuting to California three times a week.
CAPITOL FORD 1063
Neither of these statements has any particular context, al-
though when pushed for more information, Scarboro said
Swarthout’s comment came after they had been talking about
contract negotiations. Even with that addition, specific context
is wanting. Infante is Scarboro’s longtime personal friend and
coworker. Swarthout had been put in charge of used car recon-
ditioning upon the May takeover, but he had previously worked
at the dealership as a parts man. Both were on very good terms
with Scarboro.
Swarthout denied that such a conversation had occurred.
According to him, he has never heard Potter or any manager
say they were looking to get rid of Scarboro. Infante denied
ever having such a conversation with Scarboro, specifically
saying that he never told Scarboro to “watch his ass” or making
a remark to the effect that if you cut off the head, the body will
fall.
In assessing the relative credibility of these witnesses, one
cannot ignore Scarboro’s intense dislike of Respondent. Re-
spondent’s counsel asked why he had voluntarily terminated his
employment and Scarboro replied, without much explanation,
that he “wasn’t going to work for these people after what had
been going on for seven, eight months.” He explained that
“these people” referred to the Sonic management, apparently
particularly those who were negotiating the new collective-
bargaining contract. He agreed that he “absolutely” disliked
Sonic and the people associated with it. His rancor, like his
testimony, has little context. Whatever the source of his nega-
tive attitude toward Respondent, it has not been articulated in
the record. Even so, his bitterness is striking.7
Scarboro’s approach to describing what occurred is in sharp
contrast to the matter-of-fact approach taken by both Swarthout
and Infante. Furthermore, Potter credibly testified that the
phrase “cut off the head and the body will fall” is not an ex-
pression that he uses. He denied telling Infante any such thing
and Infante agrees. Based on demeanor alone, it is difficult to
credit Scarboro. Given the lack of context and his testimony
that these remarks came out of the blue, the probability of such
an occurrence is low. Furthermore, the General Counsel
needed to lead Scarboro to the specific conversations.
It seems to me that Scarboro’s clear bias renders his testi-
mony suspect. Coupled with its other shortcomings, I am un-
able to credit him. Accordingly, I find the evidence to be insuf-
ficient to support an 8(a)(1) violation. Moreover, even if one
credits Scarboro’s testimony, it is difficult to assign a discrimi-
natory meaning to the words. I find the phrases used, “watch
your ass” and “if you cut off the head, the body will die,” are
very ambiguous in the circumstances. Certainly they are not
connected to union activity, except by innuendo. Other innu-
endos might well be fashioned, too. To draw the conclusion
which the General Counsel wishes is too much of a reach,
given Scarboro’s inability to put the phrases in any sort of con-

7 Neither Potter nor McDonald were members of Respondent’s ne-
gotiating team. According to Mike Cervantes, regional fixed opera-
tions director for Sonic, their exclusion from collective bargaining was
by corporate design. It seems, therefore, that Scarboro’s resentment
was aimed at the negotiators, perhaps because of what he perceived as
lack of progress.
text. There is no evidence that Scarboro had done anything to
warrant Potter’s attention and certainly no evidence that either
Infante or Swarthout harbored any union animus of their own.
Therefore, no context, and certainly no antiunion context, may
be reasonably inferred. These statements simply do not amount
to interference, restraint, or coercion as required by Section
8(a)(1). The allegation should be dismissed. Accordingly,
there is no reason to determine whether Swarthout was a statu-
tory supervisor through whom Respondent may be charged
with an unfair labor practice.
c. The October 2001 productivity bonus
The complaint alleges that in late October or early November
2001, Respondent ‘modified’ the productivity bonus program
which had been established for October. In her brief, counsel
for the General Counsel seems to be modifying the complaint’s
theory. She argues, without moving to amend, that Respondent
unilaterally implemented the program in violation of Section
8(a)(5), not just that it modified the program as alleged. Nei-
ther does she acknowledge any theory change. The testimony,
as taken, focused solely on the modification.8
The record demonstrates that both before and after the bonus
program under scrutiny here, both the predecessor9 and Re-
spondent had run similar incentive events. The employees
were familiar with the terminology and the practice from their
experience with the predecessor, and Respondent had main-
tained a service advisor bonus program already in effect, albeit
with some slight modification. Technicians were also eligible
for a $500 recruiting bonus in the event they were able to re-
cruit a new mechanic who lasted 90 days with the dealership.
And, although, not of significant value, in August 2001 it had
taken the staff out for pizza and beverages consistent with a
promise to do so in the event the dealership reached a gross
profit level of $325,000 for that month. None of these bonuses
or programs was negotiated with the Union.
In October 2001, Potter announced the so-called, “Big Dog
Contest,” an incentive program aimed at the service techni-
cians. He said that a $5000 “kitty” was being created which
could be divided among all the qualifying employees. Origi-
nally, to qualify, the technicians had to be 90-percent produc-
tive during October and the service department gross profit had
to reach 70 percent. The modification occurred when Service
Director Andrew McDonald and Potter realized that even
though a number of employees were close to reaching the pro-
gram’s targets, the 70-percent gross profit level would not be
met, and that few, if any, of the employees would reach the 90-
percent productivity rate. Furthermore, McDonald had heard
that some of the employees were supposedly thinking of sabo-
taging the program by unclear means. He reported what he had
heard to Potter. As a result of all that information, Potter de-

8 An example is the question she propounded to the Union’s business
representative:
BY MS. HARDY-MAHONEY: Did the union ever agree that a
bonus program that was implemented in October 2001 could be
modified in any way?
A [WITNESS GANDOLFO]: No. I never even knew.
9 The predecessor’s collective-bargaining contract, art. XII, specifi-
cally authorized it to institute an incentive pay program.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1064
cided to try to save the program. He knew the staff was close
to the 70-percent level and he knew that a number of the em-
ployees were working very hard. He could see that he had nine
employees who were over the 90-percent level and that the
productivity of four others had shown a marked increase al-
though they were not yet at the 90-percent rate. Even though
he knew he was diluting the number of “winners,” he wanted to
find a way to reward those who had made significant progress.
He also knew, because the 70-percent gross profit target had
not been reached, if he followed the program’s announcement
to the letter, there would be no “winners” at all. He decided to
include every technician who had either reached the 90-percent
mark or who had shown marked improvement. After all, he
reasoned, he was trying to induce and reward better perform-
ance. As result, he selected 13 employees who met the modifi-
cation to divide the $5000 pot equally. Each of those thirteen
received a bonus of $384.62. He did not tell the mechanics that
the program had been modified to improve everyone’s eligibil-
ity; he just announced the recipients.
d. The two paid holidays
Article VII of the predecessor’s collective-bargaining contract
listed a number of contractual paid holidays for the service de-
partment employees. These included the Friday following
Thanksgiving and the day before Christmas Day (Christmas
Eve). These holidays had been in the collective-bargaining con-
tract for many years. Indeed, since it was a multiemployer asso-
ciation contract covering a number of South Bay dealerships,
those holidays had become part of the auto mechanics’ culture.
When Respondent acquired this dealership, its employee hand-
book established for the service department employees eight paid
holidays. Neither the Friday after Thanksgiving nor Christmas
Eve was included. It did allow for an additional holiday to be
scheduled by management between December 24 and January 2.
It also allowed for a floating holiday.
Although the dates are not specific, sometime in mid-
November 2001, Respondent posted the work schedule for the
day after Thanksgiving. Consistent with its employee hand-
book it had begun taking service appointments for that day.
That posting caused an immediate uproar within the techni-
cians’ ranks. Their dismay resulted in a meeting conducted by
Service Director McDonald. Both he and Shop Steward Rod
Stamps agree that the entire staff voiced intense opposition to
working that day. The employees observed that the day after
Thanksgiving had been holiday for about 25 years. McDonald
remembers hearing a strong undercurrent from employees to
the effect that they would not work that day. His recollection is
confirmed by Stamps’ testimony. Stamps agreed that he told
McDonald that the employees would not work on the Friday
after Thanksgiving. McDonald informed Potter and after learn-
ing that the only service departments on the Capitol Express-
way to be open that Friday were at a Nissan dealership owned
by Sonic and a Toyota dealership. While the record does not
reflect the number of auto dealerships on that road, it is clear
that it is an auto row with a large number of similar businesses.
Upon learning that, Potter decided that it was in the best inter-
est of the dealership to close the service department that day
and, to keep a happy work force, he would pay the service staff
for 8 hours’ work that day. The Company did so.
A similar incident occurred for Christmas Eve. On December
7, 2001, Respondent issued a memo to its employees setting forth
the service department work schedule for Christmas and New
Years. Stamps described a near identical uprising. Again, the
employees threatened not to work. This time Respondent exer-
cised its right under the employee handbook and announced that
Christmas Eve was the additional holiday, which it had reserved
under its rule. Respondent also paid the service department em-
ployees 8 hours’ pay for the Christmas Eve holiday.
e. The pay period/payday change
When Respondent took over the operation from the Prede-
cessor in May 2001 it established a local payroll system. All of
the data was collected locally and paychecks were written at the
dealership. At that time its pay period ran from Wednesday to
Tuesday. Paychecks were distributed that Friday. As noted
above, Respondent is just 1 of over 180 dealerships nationally
operated by Sonic Automotive, which is headquartered in Char-
lotte, North Carolina. For administrative reasons, the national
headquarters had determined to centralize its payroll from
Charlotte. It established a web-based payroll system and in the
first part of 2002, imposed it upon Respondent.10
On January 9, Potter conducted an employee meeting and
announced that the dealership was changing the pay period.
The new pay period was to begin on Sunday and end on Satur-
day; paychecks were to be distributed the following Thursday.
He explained that this change would mean that on the first pay-
day under the new system, Thursday, January 10, the employ-
ees would receive a 3-day paycheck. It was to cover work per-
formed on January 2, 3, and 4, the Wednesday, Thursday, and
Friday of the previous week, but not January 7 and 8, the Mon-
day and Tuesday of the old cycle, days which had now been
moved to the new pay cycle beginning Sunday, January 6.
Steward Rod Stamps and most of the technicians protested
and said they did not want to change the pay period because it
would result in their losing 2 days’ pay (from that paycheck).
They became very upset and Potter decided that he needed to
discuss the matter at a higher level within the Company. Later
that afternoon Potter and McDonald resumed the meeting.
Recognizing that short paychecks might result in some hard-
ships, Potter said that for those employees who were interested,
the Company would allow them to “draw” against future wages
to make up for the shortage. They were to pay back the draw
over the next four checks, by having 4 hours’ wages deducted
each of those weeks.
Over half of the employees accepted Potter’s offer; the re-
mainder did not. The others, including Stamps, refused to ac-

10 That change required all dealerships, including Respondent, to
collect the payroll data and transmit the information electronically to an
Atlanta payroll processor. Respondent now sends that information to
Atlanta every Monday. The Atlanta processor then creates the pay-
checks and sends them out each Tuesday by an overnight express com-
pany, arriving in San Jose on Wednesday. Since payday is Thursday,
that system allows for a 1-day cushion in the event the express com-
pany’s delivery is delayed.
CAPITOL FORD 1065
cept the 3-day check. Those who accepted the offer received
two checks roughly equaling a full week’s pay.
The 2 days’ pay, representing January 7 and 8, is now carried
as part of the holdback. Holdback is the amount of money held
by an employer between the end of the pay period and the day
the paycheck is issued. Previously, this dealership’s holdback
was from Tuesday to Friday, a holdback of 3 days. Under the
new system the holdback is from Saturday to Thursday, a hold-
back of 5 days. Nonetheless, the two unpaid days continue to
roll forward. According to Respondent, those days will be paid
whenever an affected employee separates from the Company.
III. ANALYSIS AND CONCLUSIONS
The independent 8(a)(1) threat allegations have been dis-
missed on their facts above. I now proceed to the 8(a)(5) con-
tentions. The first is the unilateral change allegations.
As noted in the introductory portion of the decision, Respon-
dent has acknowledged its successor status within the meaning
of NLRB v. Burns Security Services, 406 U.S. 272 (1972). To
that end, it took advantage of the opportunity and set its initial
terms and conditions of employment; it also signed an interim
agreement with the Union, recognizing the Union as the 9(a)
exclusive collective-bargaining representative of the service
department employees.
Since NLRB v. Katz, 369 U.S. 736 (1962), it has been unlaw-
ful under Section 8(a)(5) for an employer to circumvent its
bargaining obligation with the 9(a) representative of its em-
ployees by making unilateral changes in their wages, hours, and
terms and conditions of employment. The Supreme Court rela-
tively recently reiterated that rule of law. In Litton Financial
Printing Div. v. NLRB, 501 U.S. 190, 198 (1991), the Court
quoted itself to say, “[A]n employer commits an unfair labor
practice if, without bargaining to impasse, it effects a unilateral
change of an existing term or condition of employment.”
Initially, there is always the question of whether a change
has actually occurred. Therefore, one must first find a bench-
mark, the place from which the new status must be measured.
Second, the rule is not without its exceptions. For example, the
rule does not apply in cases of waiver (Metropolitan Edison Co.
v. NLRB, 460 U.S. 693, 708 (1983)) or insignificance (Rust
Craft Broadcasting of New York, 225 NLRB 327 (1976)).
In successor situations such as this, the Board has held that
the predecessor’s terms and conditions of employment, particu-
larly those established by collective bargaining, are to be rec-
ognized as the starting point, i.e., the benchmark. In Holiday
Inn of Victorville, 284 NLRB 916 (1987), the Board said:
Except for matters on which a successor employer sets its
own initial terms, the terms and conditions of employment of
union-represented employees will normally be those estab-
lished by the predecessor’s collective-bargaining agreement
or by the predecessor acting unilaterally to the extent that the
union had waived bargaining. Practices thus established are
the existing practices. They are kept in place simply by virtue
of Section 8(a)(5) of the Act rather than by force of contract,
however, because a successor employer is not bound to adopt
a predecessor’s collective-bargaining agreement. [Citing
Burns.]
Therefore, following Holiday Inn of Victorville, the bench-
mark from which we begin our analysis is the terms and condi-
tions established by the collective-bargaining contract to which
the predecessor was bound, albeit as modified by the initial
terms and conditions announced by Respondent when it took
over the dealership. Therefore, the benchmark here is two-fold:
(1) the initial terms and conditions set by Respondent to the
extent that they are actually new or that they modified the
predecessor’s terms; and (2) the predecessor’s terms and condi-
tions which Respondent did not seek to modify. Therefore,
there is a mix of both old and new.
Insofar as the productivity bonus is concerned, there is no
doubt that the predecessor utilized productivity bonus programs
in much the same fashion as Respondent did here. This was not
a departure of any kind. The employees were familiar with
such programs from their experience with the predecessor. It
was an established term and condition which preceded Respon-
dent’s takeover and was unaffected by the new employee hand-
book or the recognition agreement; it was left over from the
predecessor.
Therefore, when Respondent announced the “Big Dog” in-
centive, it was not making any sort of change; it was following
a procedure established many years before by the predecessor.
To the extent that the General Counsel is claiming (via a sub
silentio complaint modification) that the establishment of the
program was a change, the contention is without merit. Simi-
larly, since Respondent had the right to set the incentive pro-
gram’s rules, it was likewise free to modify those rules so long
as it maintained its fundamental goal. When Potter realized
that none of the employees would qualify under the original
announcement, he knew his goal of better productivity would
be defeated, for he would be perceived to have set the bar too
high. From an employee perception, if no technician could
prevail and win the bonus, the goal would be regarded as un-
achievable. Moreover, Respondent, their new employer, would
make itself out as parsimonious, if not dishonorable. Potter
could not allow that to happen, for he understood that employee
morale is critical to a successful business enterprise. He knew
that if he denied the prize in its entirety, the employees would
not only be disappointed, they might well become disgruntled.
As far as he was concerned, the $5000 kitty had already been
committed toward improved productivity/morale and it would
only have a negative effect if it were not spent as intended.
Knowing that he had the right to set the rules for winning,
Potter believed, correctly in my view, that he also had the right
to make certain that the program succeeded. Therefore, he had
the power to cure any defect so long as the program maintained
its primary purpose, improving productivity. In the final analy-
sis, this incentive program was nothing more than a manage-
ment tool to improve efficiency. It is accurate to say that the
wage component, the winnings, was not the driving purpose of
the program. Improving productivity was the principal goal
and that the award money was simply an inducement to reach
that end. Such a tool has long been recognized by the Union as
a legitimate instrument available to management to induce
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1066
better performance.11 Accordingly, I find that Respondent did
not make any unlawful unilateral change. The system had been
in place before Respondent acquired the facility and it simply
utilized it in the same fashion that the predecessor had. This
allegation will be dismissed.
With respect to the two holidays, the analysis is a little dif-
ferent. Here, Respondent did set the initial terms and condi-
tions as they related to paid holidays. The handbook issued
simultaneously with the acquisition specifically omitted the day
after Thanksgiving and Christmas Eve as paid holidays. Those
days had been holidays under the predecessor’s collective-
bargaining contract with the Union. Respondent’s plan was to
reduce the number of paid holidays and the handbook reflected
that policy. However, in the handbook Respondent had specifi-
cally reserved to itself the right to declare a paid holiday during
the end-of-the-year holiday season.
At first blush there appears to be no doubt that Respondent
changed its initial terms and conditions insofar as the day after
Thanksgiving is concerned. In response to both employee
complaints and employee threats to refuse to work that day,
Potter decided to grant a paid holiday for the day after Thanks-
giving. The employees had come to expect that day as a paid
holiday and were not willing to accept Respondent’s policy.
There is no question that Potter considered the employees’
vehemence as a genuine threat to the viability of the workweek.
Most of the employees said that they would not work that day,
and those that did not told McDonald that they wanted to take a
vacation day. Both McDonald and Potter realized that the Fri-
day service department appointments could not be met. This
meant there was a dual problem. First, they knew there would
be customer repercussions that Friday in the event customers
brought their automobiles in for service pursuant to an ap-
pointment which would then be dishonored. Second, in the
event the employees carried out their threat, there was very
little Respondent could do about it. It risked losing the entire
staff if it disciplined them for not coming to work that day.
Indeed, discipline would have been counterproductive (and
possibly unlawful under Section 8(a)(1)). Again, seeking to
make the best of a bad situation, Potter decided that it was pre-
mature to impose Sonic’s policy. The employees were simply
not ready to accept it. Therefore, he made the decision to honor
the culture which had been established under the predecessor’s
collective-bargaining contract.
Yet, despite the change’s apparent clarity, in a very real way,
the decision can be viewed as no change at all. After all, the
established practice (as opposed to nascent policy) was to grant
the Friday after Thanksgiving as a paid holiday. Although the
change had been announced, Respondent had never actually
implemented its desired plan of requiring work that day. In-
deed, insofar as the unionized portion of the auto repair service
trade is concerned, the paid day off was the industry norm.
Meeting that standard was an acceptance of the status quo.

11 The only caveat might be that management could not use it in a
discriminatory fashion. Such a contention has not been made here, nor
does the evidence suggest that the program was abused in such a way.
Indeed, such a claim would require the invocation of a different section
of the Act.
In another way, Respondent may well be viewed as having
accepted a fait accompli levied on it by the employees. It had
no real other choice. It certainly did not seek to grant the paid
holiday out of a sense of altruism or duty. It only responded to
an employee-generated threat to refuse to work that Friday.
Given the fact that the employees, apparently led by their shop
steward, were seeking to maintain what they viewed as a long-
established benefit, it can hardly be said that this employer’s
response was either intended to or actually had the effect of
undermining the Union. Instead, the employees, led in a collec-
tive effort by their steward, were able to maintain a standard
established by the Union.
In fact, one may properly ask whether any different response
would have been given by the Union had Potter asked. Potter’s
question would have been, ‘Is it okay to give the employees to
a paid holiday on the day after Thanksgiving?’ The Union
would either have said that it was or it wasn’t. If the Union had
given its approval, the employees would have received exactly
what they did receive, a day off with pay. If the Union had said
no and asked to bargain about it, the employees would have
remained disgruntled, and the Union would have risked their
disfavor. The likelihood that the Union would have said no is
virtually nil. Therefore, as a practical matter the employees
achieved exactly what the Union would have asked for, and
they did it with the leadership of their union steward. How
such a result is contrary to the Union’s institutional interest
escapes me.
For practical reasons I conclude that this matter simply does
not rise to the level of an unfair labor practice. A cease-and-
desist order would not accomplish anything and an affirmative
remedial order would not accomplish much, either. I shall
recommend that the complaint be dismissed insofar as the day
after Thanksgiving is concerned.
With respect to Christmas Eve, the result must be the same,
albeit for a different reason. Here, when Respondent estab-
lished its initial terms and conditions through its handbook, it
reserved the right to grant a paid holiday between Christmas
Eve and the end of the holiday season. When faced with the
same sort of employee dissatisfaction as a result of its posted
schedule, Respondent simply exercised the right it had reserved
to itself to grant a paid holiday during that period. No change
of any kind ever occurred, for its conduct was an integral part
of its initially established terms and conditions. No complaint
can be made concerning the addition of this paid holiday. This
matter, too, will be dismissed.
Insofar as the change in the pay periods is concerned, I am
less impressed with Respondent’s explanation. There is no
question that the frequency of wage payments is a mandatory
subject of bargaining. S & I Transportation, Inc., 311 NLRB
1388 (1993) (presenting employees and union with change
from 1-week pay period to a 2-week pay period an unlawful fait
accompli and is a breach of the bargaining obligation under
Section 8(a)(5).) Cf. South Carolina Baptist Ministries, 310
NLRB 156, 188 (1993) (employer changed from 1-to 2-week
pay periods during negotiations without bargaining to impasse.)
Here, as a result of an administrative convenience to itself,
Respondent inflicted an inconvenience upon its employees.
Prior to the change, the employees had relied on Friday pay-
CAPITOL FORD 1067
checks covering a full week’s work. The employees had come
to plan their personal finances around receipt of that full check.
On that Thursday, January 10, Respondent provided them with
only a 3-day check, causing consternation and complaint. The
complaint was legitimate and led Respondent to provide short-
term loans to over half the staff to cover their shortfall.
The pay period alteration was a significant event and consti-
tuted a material and substantial change in the employees’ terms
and conditions of employment. Moreover, it occurred in the
normal course of things, not compelled by any unusual business
circumstance. Despite that, Respondent failed to notify the
Union of its intent. It acted as if the Union was not on the
scene or did not represent the employees who would be af-
fected by the change. Rather obviously, had the Union been
notified, the switch could have been accomplished more
smoothly. Indeed, the 2 days’ pay now hidden in the holdback
may well have been paid out without the necessity for the ad-
vances or the employees’ having been shorted at all. The crude
matter in which Respondent carried out its changeover could
have been avoided entirely. Certainly the Union was not obli-
gated to accept such a fait accompli. Furthermore, ignoring the
Union as it has, clearly has the tendency to undermine the Un-
ion’s status in the eyes of the employees. This is a classic uni-
lateral change requiring a remedy under Section 8(a)(5).12
In addition, the complaint asserts that each of the incidents
set forth as unlawful unilateral changes also constituted unlaw-
ful direct dealing. With respect to the allegations concerning
the productivity bonus programs and the paid holiday issues, I
am unable to concur with the General Counsel’s complaint.
Simply notifying the employees that a unilateral change will
affect them does not constitute unlawful direct dealing. John-
son’s Industrial Caterers, 197 NLRB 352 (1972). There, the
Board adopted Trial Examiner Henry Jalette’s decision where
he said (id. at 356):
The unilateral changes announced on July 9, which I have
found violative of Section 8(a)(5) because they were instituted
without notice to or consultation with the majority representa-
tive, are also alleged . . . to be violative of Section 8(a)(5) on
the ground that when Respondent met with the employees on
July 9 and announced the changes in method of operations,
and when thereafter it discussed with employees problems
that arose under the new system, it was engaged in direct
dealing with the employees in derogation of the status of the
Union as majority representative. Of course, the unilateral

12 “An employer must inform the union of its proposed actions under
circumstances which at least afford a reasonable opportunity for
counter arguments or proposals.” NLRB v. Centra, 954 F. 2d 366, 372
(6th Cir. 1992). “If a policy is implemented too quickly after notice is
given, or an employer has no intention of changing its mind, the notice
constitutes nothing more than informing the union of a fait accompli.”
Id. Also Roll & Hold Warehouse & Distribution Corp., 325 NLRB 41,
42 fn. 4 (1997), enfd. 162 F. 3d 513 (7th Cir, 1998): “By announcing
the [wage increase] to the [Union] at the same time as all other employ-
ees, the respondent essentially ignored the representative status of the
employees’ bargaining agent. Such failure to acknowledge the [Un-
ion’s] proper role in negotiating terms and conditions of employment
severely diminished, if not effectively foreclosed, any meaningful
opportunity for the [Unions] to exercise [their] authority in this matter.”
conduct derogated from the Union’s status as majority repre-
sentative and little is added either to the remedy in this case or
the body of law on the subject to find a violation on the theory
of direct dealing. In my judgment, the conduct of Respondent
did not constitute direct dealing with employees in the sense
in which the term is normally used. Respondent was not mak-
ing offers to employees seeking acceptances, nor was it seek-
ing to induce employees to repudiate the Union. While the ef-
fect of its unilateral change in working conditions was to un-
dermine the Union, I cannot see how the implementation and
announcement of what was clearly a predetermined course of
action constituted direct dealing. Huttig Sash & Door Co.,
154 NLRB 811, 817 (1965). Compare Dan Dee West Vir-
ginia Corp., 180 NLRB 534, 539 (1970).
Assuming that the employees were actually victims of a uni-
lateral change with respect to the productivity bonus and holi-
day pay matters, Respondent simply announced the changes
and did not bargain with the employees of all. Making the
same observation as Trial Examiner Jalette did in Johnson’s, I
observe that Respondent simply followed a predetermined
course in implementing them. There can be no direct dealing
violation in such a circumstance.
The same cannot be said for the change in pay period. Not
only did it constitute an unlawful unilateral change, Respondent
dealt directly with those individuals who faced a hardship, of-
fering them a loan to cover the change in payday and lost 2
days’ wages. In directly dealing with its employees in this
fashion and without involving the Union in its transactions
concerning their pay matters, Respondent violated Section
8(a)(5) of the Act. The Union was the 9(a) exclusive collec-
tive-bargaining representative of the employees. Respondent
had the obligation to deal with it, not skip it or act as if it had
no role in such matters. See Blue Circle Cement Co., 319
NLRB 954 (1995). There, the Board not only found unlawful a
unilateral change in the starting time for a shift, in addition it
found that the respondent had committed a direct dealing viola-
tion under Section 8(a)(5) when discussing with union-repre-
sented employees their preference concerning earlier start times
on other shifts. Accordingly, Respondent’s offer of loans to
cover the pay shortfall was unlawful direct dealing.
REMEDY
Having found that Respondent has engaged in certain unfair
labor practices, I find that it must be ordered to cease and desist
and to take certain affirmative action designed to effectuate the
policies of the Act. The affirmative action will include an order
to post a notice to employees advising them of the remedial
steps it will take. It shall also require Respondent to pay the
employees the 2 days’ wages it improperly placed into the
holdback account when it changed payroll periods in January
2002, together with interest on the amount improperly with-
held. Interest will be calculated under New Horizons for the
Retarded, 283 NLRB 1173 (1987).
Based on the foregoing findings of fact and the entire record
in this case, I hereby issue the following
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1068
CONCLUSIONS OF LAW
1. Respondent is an employer engaged in commerce within
the meaning of Section 2(2), (6), and (7) of the Act.
2. The Union is a labor organization within the meaning of
Section 2(5) of the Act.
3. The General Counsel has failed to prove by credible evi-
dence that Respondent threatened to discharge employee Keith
Scarboro in violation of Section 8(a)(1) of the Act.
4. Respondent did not violate Section 8(a)(5) when it modi-
fied its productivity bonus program, when it granted its em-
ployees a paid holiday on the day after Thanksgiving 2001 or
when it granted its employees a paid holiday for Christmas Eve
2001.
5. Respondent violated Section 8(a)(5) and (1) of the Act
when, on January 9, 2002, it unilaterally changed the payroll
period, causing employees to receive short paychecks and roll-
ing the amount owed them into the pay holdback.
6. Respondent, on January 9, 2002, violated Section 8(a)(5)
and (1) by dealing directly with employees in the collective-
bargaining unit with respect to pay matters.
[Recommended Order omitted from publication.]