Design Drywall Ltd.

National Labor Relations Board - Board Decisions

Jan 30, 1991

301 N.L.R.B. 437 (N.L.R.B. 1991)

437
301 NLRB No. 63
DESIGN DRYWALL LTD.
1 The Respondents have excepted to some of 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 evi-
dence 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 ex-
amined the record and find no basis for reversing the findings.
The Respondents except to the judge’s finding that they admitted to being
a single employer. The Respondents admit ‘‘that [Allen] Novick’s three sepa-
rately incorporated companies . . . are a ‘single integrated enterprise’ that is
commonly owned and operated by Novick [and his wife].’’ R. Br. at 7. On
the basis of this admission, we agree with the judge that the Respondents con-
stitute a single employer. See NLRB v. Browning-Ferris Industries, 691 F.2d
1117, 1120 (3d Cir. 1982) (the question in all single employer cases is wheth-
er two or more nominally independent enterprises in reality constitute only
‘‘one integrated enterprise’’). In light of this single employer finding, Mem-
bers Devaney and Oviatt find it unnecessary to pass on whether the Respond-
ents also constitute alter egos. For the reasons stated by the judge, Member
Cracraft would find the Respondents were alter egos.
The Respondents also except to the judge’s finding that G.C. Exh. 30 shows
that some carpenter crew leaders received extra pay to be divided with labor
helpers. We find merit in this exception. G.C. Exh. 30 is a payroll summary,
prepared by the union auditor, reflecting the earnings received by carpenters
and other drywall workers from either Ideal Drywall, Design Drywall, or I.D.
Drywall. It does not indicate, and the record does not otherwise show, that
some crew leaders received extra pay to distribute to their helpers. This error,
however, does not affect our decision.
Design Drywall Ltd., Inc., I.D. Drywall Ltd., Inc.,
and Ideal Drywall Company, a Single Em-
ployer and Alter Egos and The Carpenters Dis-
trict Council of Detroit and Southeastern
Michigan, United Brotherhood of Carpenters
and Joiners of America, AFL–CIO. Case 7–
CA–27822
January 30, 1991
DECISION AND ORDER
BY MEMBERS CRACRAFT, DEVANEY, AND OVIATT
On February 8, 1990, Administrative Law Judge
Marion C. Ladwig issued the attached decision. The
Respondent filed exceptions and a supporting 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 brief and has de-
cided to affirm the judge’s rulings, findings,1 and con-
clusions and to adopt the recommended Order as modi-
fied below.
The Respondents contend in their exceptions that the
carpenters on both residential and commercial projects
were independent contractors rather than employees.
For the reasons set forth by the judge, we agree that
on commercial projects the carpenters were employees.
Based on our review of the record, however, we are
unable to determine the nature of the working relation-
ship that the Respondents established with the car-
penters who performed residential work during the rel-
evant time period after the creation of Design Drywall
in 1986, and we do not find that the evidence estab-
lishing the employee status of the commercial car-
penters supports a similar finding with respect to resi-
dential carpenters. In this regard, we note that the only
witness who testified about the working relationship
between the carpenters and the Respondents was
Novick. He claimed that when he started out in busi-
ness doing residential work as Ideal Drywall in 1985,
the carpenters with whom he dealt were independent
contractors whose status never changed after the for-
mation of Design Drywall. During his examination of
Novick in an attempt to refute this claim, the General
Counsel focused on examples of Novick’s control over
carpenters hired for commercial jobs after Design
Drywall was created. The record contains few details
of the nature of the carpenters’ working relationship
with Novick on residential projects after the creation of
Design Drywall. In this regard, it cannot be ascertained
from the record whether, after Design Drywall was es-
tablished, Novick ran the residential projects in the
same manner as the commercial projects or whether
the residential projects continued to be run as they had
been under Ideal Drywall. Under these circumstances,
the record is insufficient to establish that the carpenters
on residential projects were employees rather than
independent contractors as alleged by the Respondents.
Accordingly, we shall modify the judge’s conclusions
of law and recommended remedy and Order to limit
the violation found to commercial projects.
AMENDED CONCLUSIONS OF LAW
The following shall be substituted for Conclusion of
Law 4.
‘‘4. By unilaterally modifying the terms of the col-
lective-bargaining agreement with the Union and repu-
diating their obligation to pay the contractual wage rate
and fringe benefits on commercial projects, the Re-
spondents have engaged in unfair labor practices af-
fecting commerce within the meaning of Section
8(a)(5) and (1) and Section 2(6) and (7) of the Act.’’
REMEDY
Having found that the Respondents have engaged in
certain unfair labor practices, we shall order them to
cease and desist and to take certain affirmative action
designed to effectuate the policies of the Act.
We shall order the Respondents, for the period from
September 3, 1987 (the beginning of the 10(b) limita-
tion period), through August 1, 1988 (the expiration
date of the 8(f) agreement), to make the employees
whole for unpaid wages and reimburse them for any
expenses ensuing from the failure to make the fringe
benefit contributions, Kraft Plumbing & Heating, 252
NLRB 891 fn. 2 (1980), enfd. mem. 661 F.2d 940 (9th
Cir. 1981), plus interest as computed in New Horizons
for the Retarded, 283 NLRB 1173 (1987). This shall
include reimbursing employees for any contributions
they themselves may have made for the maintenance
of any fund after the Respondents made the unilateral
changes. Concord Metal, 295 NLRB 912 (1989).
438 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
The Respondents, for the same period, must also
make the withheld contributions to the fringe benefit
funds, plus the contractually mandated liquidated dam-
ages for delinquent contributions, American Thoro-
Clean, 283 NLRB 1107, 1109 (1987). Because the
provisions of employee benefit fund agreements are
variable and complex, the Board does not provide at
the adjudicatory stage of the proceeding for the addi-
tion of interest at a fixed rate on unlawfully withheld
fund payments. Any additional amount owed the fringe
benefit funds shall be determined in accordance with
Merryweather Optical Co., 240 NLRB 1213, 1216 fn.
7 (1979).
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge as
modified below and orders that the Respondents, De-
sign Drywall Ltd., Inc., I.D. Drywall Ltd., Inc., and
Ideal Drywall Company, Dearborn Heights, Michigan,
their officers, agents, successors, and assigns, shall
take the action set forth in the Order as modified.
1. Substitute the following for paragraph 1(a).
‘‘(a) Refusing to pay the contractual wage rate and
fringe benefits on commercial projects as required by
the 1987–1988 collective-bargaining agreement be-
tween M.C.C.A. and the Carpenters District Council of
Detroit, AFL–CIO, during the period from September
3, 1987, until the expiration of the agreement on Au-
gust 1, 1988.’’
2. Substitute the attached notice for that of the ad-
ministrative law judge.
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
violated the National Labor Relations Act and has or-
dered us to post and abide by this notice.
WE WILL NOT refuse to pay union wages and fringe
benefits on commercial projects from September 3,
1987, to August 1, 1988, as required by our agreement
with the Carpenters District Council of Detroit, AFL–
CIO.
WE WILL NOT refuse to furnish relevant and nec-
essary records requested by the Union for an audit to
determine compliance with the agreement.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the
rights guaranteed you by Section 7 of the Act.
WE WILL transmit the unpaid fringe benefits to the
Union’s benefit funds, plus the contractual liquidated
damages, and make whole the employees in the fol-
lowing appropriate unit by paying their unpaid wages
and reimbursing them for any expenses ensuing from
our failure to pay the fringe benefits, plus interest, in
the manner set forth in the remedy section of the deci-
sion:
All drywall carpenters employed by Design
Drywall, Ideal Drywall, and I.D. Drywall, exclud-
ing all other employees and supervisors as defined
in the Act.
DESIGN DRYWALL LTD., INC., I.D.
DRYWALL LTD., INC., AND IDEAL
DRYWALL COMPANY
Dennis R. Boren, Esq., for the General Counsel.
Theodore R. Opperwall and Carl Bloetscher III, Esqs., of
Detroit, Michigan, for the Respondents.
Frederick B. Gold, Esq., of Birmingham, Michigan, for the
Union.
DECISION
STATEMENT OF THE CASE
MARION C. LADWIG, Administrative Law Judge. This case
was tried in Detroit, Michigan, on February 16–17, 1989.
The charge was filed March 8, 1988 (amended March 28 and
September 21, 1988) and the complaint was issued April 27
and amended November 21, 1988, and at the trial.
After operating nonunion over a year as Ideal Drywall,
President Allen Novick formed a union company, Design
Drywall, to bid on both union and nonunion drywall installa-
tion jobs. To avoid paying the contractual fringe benefits, he
placed most of the employees on Ideal’s payroll, transferring
funds from Design to Ideal for piece-rate pay without any
fringe benefits.
When the employer association terminated Design from
membership, Novick activated a second nonunion company,
I.D. Drywall, which he also operated from the same office.
He used the same Design and Ideal employees, transferring
funds from I.D. to Design and Ideal for their pay, without
any fringe benefits.
Respondents Design, Ideal, and I.D. admit that they are a
‘‘single integrated enterprise.’’
The primary issues are whether the Respondents (a) un-
lawfully, without notice to the Union, modified terms of the
union agreement by repudiating their obligation to make
fringe benefit contributions for their employees and to pay
the contractual wage rate for commercial work and (b) un-
lawfully refused to provide records for an audit, violating
Section 8(a)(1) and (5) of the National Labor Relations Act.
On the entire record, including my observation of the de-
meanor of the witnesses, and after considering the briefs
filed by the General Counsel, Respondents, and Union, I
make the following
FINDINGS OF FACT
I. JURISDICTION
The Respondent corporations, Design Drywall Ltd., Inc.,
I.D. Drywall Ltd., Inc., and Ideal Drywall Company, are con-
439DESIGN DRYWALL LTD.
tractors in the construction industry, installing drywall at res-
idential and commercial structures from their office in Dear-
born Heights, Michigan. Respondent Design has been a
member of the Michigan Carpentry Contractors Association
(M.C.C.A.), whose members annually receive goods valued
over $50,000 directly from outside the State. The Respond-
ents admit, and I find, that they are an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7)
of the Act and that the Union, the Carpenters District Coun-
cil of Detroit and Southeastern Michigan, United Brother-
hood of Carpenters and Joiners of America, AFL–CIO is a
labor organization within the meaning of Section 2(5) of the
Act.
II. ALLEGED UNFAIR LABOR PRACTICES
A. Modified Terms of Union Agreement
1. Operating business under three names
a. As Ideal Drywall, beginning February 1985
On February 5, 1985 (Tr. 8) President Allen Novick incor-
porated Ideal Drywall and began operating a small nonunion
drywall installation business. He hired drywall carpenters at
a straight piecework rate, paying no fringe benefits (Tr. 92).
He was the sole supervisor and he sometimes worked along-
side the crews (Tr. 25–26).
Novick permitted many of the drywall carpenters to select
their own labor helpers, who were paid as low as $5 an hour
and who were not shown on Ideal’s payroll (Tr. 94–95).
There was no foreman on the job for quality control.
b. As Design Drywall, beginning June 1986
(1) Adoption of union agreement
On May 9, 1986 (Tr. 7) Novick formed a new corporation,
Design Drywall. On June 10, 1986, on behalf of Design
(G.C. Exh. 2A), he joined the Michigan Carpentry Contrac-
tors Association (M.C.C.A.) and signed a power of attorney
in labor relations matters (G.C. Exh. 2B). The document ap-
pointed M.C.C.A. as Design’s ‘‘exclusive agent’’ to ‘‘nego-
tiate and sign collective labor agreements with the Union,
which agreements shall be binding on the undersigned for
their duration.’’ It concluded: ‘‘This Power of Attorney shall
continue until expressly revoked in writing.’’
At the time, M.C.C.A. was a party to the Union’s 1984–
1987 residential construction agreement (G.C. Exh. 15), to
which Design Drywall became bound as an 8(f) prehire
agreement. City Electric, 288 NLRB 443 (1988) (employer
signed letter of assent). The agreement provided for fringe
benefits (consisting of health and welfare insurance, vaca-
tions and holidays, pension, and apprenticeship and training)
and liquidated damages (collection charges) for delinquent
payments. It also provided that any party performing work
not covered by the residential agreement (such as ‘‘funeral
homes, clinics, restaurants, rest homes, nursing homes, stores
or similar work traditionally done under the Commercial
Agreement’’) shall abide by the commercial agreement (see
the 1987–1989 commercial agreement, G.C. Exh. 20, Tr.
248).
In 1987 the M.C.C.A.-union residential agreement was ex-
tended from August 1, 1987, to August 1, 1988 (G.C. Exh.
16), raising the journeyman base rate from $14.51 to $15.46
and the fringe benefits from $3.98 to $4.08 an hour (G.C.
Exh. 22).
(2) Repudiation of contractual terms
(a) Nonpayment of fringe benefits
After adopting the union agreement on June 10, 1986
(through Design’s power of attorney to M.C.C.A.), Design
President Novick began operating the business under the
name Design Drywall, submitting Design bids for drywall in-
stallation on both union and nonunion project (Tr. 132, 147,
156—contrary to his claim at Tr. 31). He expanded the busi-
ness and hired a foreman, Glenn Pillow (Tr. 70). The audi-
tor’s summary (G.C. Exh. 30) shows that Pillow (a taper, Tr.
192) worked full time, being paid $26,420 during the remain-
der of 1986, $36,488 in 1987, and $37,632 in 1988 through
August, the last month covered by the summary.
Under the union agreement, Novick initially paid the
fringe benefits, but only to a few employees. When the audi-
tor examined the records in July 1987 he found that Novick
placed carpenter Jerry Dominic on the Design payroll (with
fringe benefits) in June, Robert Atchley in July, Jimmy
Sullins in August 1986, and Ted Carpenter in February 1987.
Atchley remained on the Design payroll from July to No-
vember, but did not work after December 1986, when he was
placed on the Ideal payroll, without benefits. (G.C. Exh. 30,
Tr. 309.) By May 1987 Novick was paying fringe benefits
only for Dominic (G.C. Exh. 22).
(Novick testified, Tr. 102, that he formed Design in May
1986 because Dominic—who was a ‘‘flier,’’ doing the work
of ‘‘two or three crews’’—called him and said, ‘‘Al, if you’ll
pay union I will go to work for you.’’ The auditor’s sum-
mary (G.C. Exh. 30) shows that Dominic had been working
for Novick on Ideal’s payroll for months before that. Con-
cerning the three other employees on Design’s payroll
(Atchley, Carpenter, and Sullins), Novick testified (Tr. 105)
that ‘‘when I joined the union and we got a union job, I
asked them if they’d go join the union and . . . . I asked
them [if they wanted the benefits]. . . . I made the mistake
of asking them.’’)
President Novick continued to pay fringe benefits only for
Dominic from June through October 1987, even though em-
ployees Carpenter and Sullins were on the Design payroll in
June and July and also in October, along with employees
Keith Hedger and Lloyd Scherdt (G.C. Exh. 30), working on
an office building, a union commercial job (as discussed
later).
Meanwhile, employees Carpenter and Sullins, as well as
the other employees working on Design’s jobs that did not
require union employees, were placed on Ideal’s payroll,
with no fringe benefits.
Thus, to avoid paying fringe benefits to employees work-
ing on Design’s nonunion jobs, President Novick placed the
employees on nonunion Ideal’s payroll. Without notice to the
Union, he repudiated his contractual obligation to pay all em-
ployees the union scale and fringe benefits (G.C. Exhs. 15,
16) and paid them at a piece rate of 10 cents a square foot,
without any fringe benefits and without any tax or other pay-
roll deductions (Tr. 73–74, 91–92, 205). This required a
transfer of funds from Design to Ideal.
440 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
In evidence are copies of 132 checks from Design to Ideal,
dated from June 5, 1986, to November 23, 1988, each bear-
ing the notation ‘‘Consultant Fee’’ or ‘‘Consultant Fees’’
(G.C. Exh. 4A). Novick admitted writing the Design checks
to cover Ideal’s payroll (Tr. 73, 147). He claimed, however,
that he placed the consultant fee notations on the checks be-
cause his bookkeeper told him to do so ‘‘to keep the checks
separate from going into my personal income’’ and having
‘‘to pay personal taxes on it’’ (Tr. 130, 150, 182). I discredit
this implausible explanation, finding it to be a fabrication.
I find it obvious that the consultant fee notations were de-
signed to conceal Novick’s maneuver of avoiding the pay-
ment of fringe benefits to employees on Design’s nonunion
jobs by placing the employees on the nonunion company’s
payroll (that is, paying Design employees with Ideal checks
or employing Ideal employees on Design’s nonunion jobs).
(b) Residential rates on commercial job
President Novick testified that when he incorporated De-
sign Drywall, ‘‘I was going to try to get into commercial
work’’ (Tr. 103).
When called as an adverse witness, Novick admitted (Tr.
34) that his drywall work at the Concord Office Center
project in Auburn Hills was a commercial job, his first non-
residential job (Tr. 184–185). Yet in October 1987, when the
job began, he not ony failed to pay fringe benefits for four
Design employees (Carpenter, Hedger, Scherdt, and Sullins
as discussed above), but he paid them and employee
Dominic (who was acting as foreman, Tr. 263) the lower res-
idential wage rate and benefits instead of the commercial
wage rate and benefits ($15.46 instead of $17.87 in wages
and $4.08 instead of $5.80 an hour for fringe benefits).
Throughout November he continued to pay the residential
rate and fringe benefits (G.C. Exh. 22).
Finally, after Union Representative Charles Jackson visited
the job on November 25, 1987, and discovered the violations
of the union agreement (Tr. 263–267), Novick began in De-
cember 1987 paying the commercial wage rate and benefits.
For November, he submitted the residential form 3020
(showing the $15.46 rate) to the Union’s fringe benefit funds
and paid the fringe benefits for that month. For December
through February 1988 he submitted the commercial form
3010. Since then he has paid no fringe benefits except for
employee Dominic’s residential work in August and Sep-
tember 1988 (G.C. Exh. 22).
I discredit Novick’s claim (when questioned later at the
trial by the Respondents’ counsel) that he was under the im-
pression that the ‘‘two-story’’ office buildings (actually three
stories, or two stories and a garage basement, Tr. 263, 334)
were residential work (Tr. 75). These buildings had metal
studs (Tr. 203, 271), whereas all his residential work had
wood studs (Tr. 23), and there is nothing in the union agree-
ments suggesting that construction of an office building
could be considered residential work.
c. As I.D. Drywall, beginning April 1988
President Novick continued to operate as Design Drywall
until March 1988 when M.C.C.A. (consisting of union con-
tractors) terminated Design Drywall from membership.
Meanwhile on August 26, 1987, anticipating ‘‘union trou-
ble,’’ Novick incorporated a second nonunion company, I.D.
Drywall, which he left dormant for the time being, except for
bidding on two nonunion jobs (Tr. 9, 160, 163). As he ex-
plained at the trial, ‘‘I just wanted to . . . avoid the Union
from coming in and start picketing and raising hell with me’’
(Tr. 155).
On March 25, 1988, the Union notified Novick, in part
(G.C. Exh. 2C):
This will acknowledge receipt of a letter informing
us of the termination of your membership in the Michi-
gan Carpentry Contractors Association and withdrawing
its authority to act as your collective bargaining rep-
resentative.
Your company will, of course, continue to be bound
by the current Collective Bargaining Agreement until it
is terminated.
In April Novick, as president of the new nonunion com-
pany, activated I.D. Drywall and began doing business under
that name, without notifying the Union. He hired no new em-
ployees, but used the same Ideal and Design employees,
making no fringe benefits contributions except later for
Dominic’s work in August and September 1988.
In evidence are copies of 23 checks from I.D. Drywall to
Ideal Drywall, dated from April 8, 1988, to January 27,
1989, all bearing the notation ‘‘Consultant Fees,’’ except one
with no notation and one for ‘‘Consultants’’ (G.C. Exh. 4D,
Tr. 154). Also in evidence are copies of 14 checks from I.D.
to Design, dated from May 10, 1988, to January 27, 1989,
all showing ‘‘Consultant Fees’’ (G.C. Exh. 4C, Tr. 151). Al-
though notified that ‘‘Your company will, of course, con-
tinue to be bound by the [union agreement] until it is termi-
nated,’’ Novick was obviously determined to continue avoid-
ing the payment of fringe benefits.
2. Single employer and alter egos
It is well established that an employer’s union agreement
is binding on a nonunion employer in a double-breasted op-
eration either if the two employers constitute a single em-
ployer and their aggregate employees constitute an appro-
priate bargaining unit, or if the employers are alter egos.
NLRB v. Al Bryant, Inc., 711 F.2d 543, 550–554 (3d Cir.
1983).
Here, as indicated above, the union company (Design
Drywall) and the two nonunion companies (Ideal Drywall
and I.D. Drywall) all admit in their brief that they are a sin-
gle integrated enterprise. And the evidence is clear that their
employees constitute a single bargaining unit.
The same group of employees, working on Design’s and
later on I.D.’s jobs, were usually placed on Ideal’s payroll
to evade the payment of the contractual fringe benefits. On
Design’s union jobs, and sometimes on nonunion jobs, some
of these employees were placed on the Design payroll and
paid fringe benefits. Others, working alongside Design em-
ployees but placed on Ideal’s payroll without fringe benefits,
were doing the same type of work. (Tr. 36, 153, 159, 168,
183, 185, 191, 204–205, 211–213.) After Design was
formed, neither Ideal nor I.D. had a separate group of em-
ployees working on its jobs. I.D. did not place the employees
on its own payroll (Tr. 21, 74), and all the employees on
Ideal’s payroll were working on Design’s or I.D.’s jobs (Tr.
132, 156). See Naccarato Construction Co., 233 NLRB 1394
441DESIGN DRYWALL LTD.
fn. 2 (1977) (work of three companies’ employees ‘‘so inter-
twined’’ that employerwide unit was appropriate).
The evidence is aso clear that the three companies were
alter egos. Allen Novick, who managed the three companies
from the same office, was president (the only officer) and
owner of all the stock of both Design Drywall and I.D.
Drywall. He was vice president and owner of 49 percent of
the stock in Ideal Drywall, and his wife owned the remaining
51 percent and replaced him as president after Design was
incorporated. (Tr. 6–9, 62.) All three companies, which were
formed with the same business purpose of installing drywall
in the construction industry, continued in that business except
that after Design became a union company, Novick discon-
tinued placing bids in Ideal’s name and merely used its pay-
roll for employees on Design’s and I.D.’s jobs. Both Design
and I.D. contracted for nonunion jobs in the same geographic
area (Tr. 36). Both had the same supervision (President
Novick and Foreman Pillow) and both used the same equip-
ment (Design’s truck and scaffold, Tr. 13, 222). I find that
Design, Ideal, and I.D. have ‘‘substantially identical manage-
ment, business purpose, operation, equipment, customers, su-
pervision and ownership.’’ NLRB v. Allcoast Transfer, 780
F.2d 576, 579 (6th Cir. 1986).
3. Respondents’ defenses
a. Purported ‘‘independent contractors’’
(1) Before June 1986
Despite the clear evidence to the contrary, the Respondents
contend in their brief that their drywall hangers are inde-
pendent contractors and not employees.
In support of this contention at the trial, President Novick
was questioned at length (Tr. 83–102) by the Respondents’
counsel about Ideal’s drywall hangers in 1985 and early
1986, before he formed Design Drywall and hired a full-time
foreman. This was long before the 10(b) limitation period,
which began September 3, 1987 (6 months before the filing
of the charge on March 3, 1988).
According to Novick, he then had practically no control
over the Ideal workers. He claimed that he would select the
crew leader, who would determine the size of the crew and
pick the crew members, usually the leader’s own helpers,
half of whom the leader would pay $5 an hour. He claimed
that ‘‘Not generally’’ did he have any say over who was in
the crew. (Tr. 94–95.) ‘‘I would write [the crew leader] a
check [for 10 cents a square foot] and . . . he handled the
rest.’’ (Tr. 86, 91–92.)
Novick first claimed that he gave no instructions to the
journeyman drywall carpenters, except to install the ‘‘white
side out,’’ but then claimed: ‘‘I just tell them they had to
nail and glue it. Keep it as neat as possible.’’ (Tr. 98.) He
had no on-the-scene supervisor (Tr. 94). Upon completion of
the job, ‘‘I’d go by and inspect it . . . . Some of them you
have to . . . check every single job’’ because ‘‘carpenters
would hang everything you see and never mind the backs of
the closets. They wouldn’t hang it unless you inspected it.’’
(Tr. 92–93.)
Novick testified that although ‘‘A thousand times you tell
them ‘we need you here at 8,’’’ the ‘‘builders start calling
me at 8:30, ‘you’re not here’’’ (Tr. 95). He claimed that he
had ‘‘no control over it’’ (Tr. 96) and testified (Tr. 96–97):
Q. Would the crew have the power to decide when
to stop work on a given day?
A. Yeah.
Q. Did they decide that through themselves?
A. Half the time, anytime they mentioned a bar they
did.
(Earlier he claimed, Tr. 22, 24, that ‘‘they get there when
they want,’’ even ‘‘in the middle of the night,’’ and ‘‘they
leave when they want. . . . [Y]ou can’t keep track of these
people. They come and go as they please.’’)
Novick claimed that most of the crews worked for him
and somebody else at the same time and ‘‘They’d work for
another contractor in a minute’’ if ‘‘somebody offered them
a half a cent more’’ (Tr. 27). He claimed (Tr. 88):
I would ask them to hang this room [for 10 cents a
square foot]. They would say ‘‘yes, we’ll do it’’ [or]
‘‘no, we won’t do it,’’ they’d go out and look at the
job and say ‘‘Geez, it’s over eight foot. I don’t want
to do it.’’ Then they’d walk.
He positively testified, ‘‘I never terminated anybody’’ (Tr.
90).
He next testified (Tr. 102):
Q. After Design was established, in about May of
1986, did those arrangements that you’ve described as
applying to the Ideal workers change?
A. No. [Emphasis added.]
Even assuming that Novick did operate Ideal Drywall in
this manner, I find it obvious that his ‘‘No’’ answer was not
truthful. The evidence clearly shows that such an operation
did not exist after Novick incorporated Design Drywall, em-
ployed a full-time foreman on nonunion jobs, assigned a
working foreman and paid union wages and benefits on
union commercial jobs, employed regular crews of employ-
ees working months at a time, determined crew sizes, and
transferred employees back and forth between Ideal and De-
sign as discussed below.
(2) After September 3, 1987
By September 3, 1987 (when the 10(b) limitation period
began and about 15 months after Novick adopted the union
agreement for Design Drywall), most of Design’s drywall in-
stallation was being performed by employees who worked
regularly on the Design and Ideal payrolls for months (G.C.
Exh. 30). The evidence also shows that these payrolls consist
of both crew leaders and crew members (e.g., Carpenter and
Sullins, Eric Livingston and Douglas Howell, and Robert
Mills and Richard Eby, Tr. 198–200, G.C. Exh. 30) and that
only a few crew leaders were then receiving extra pay to be
divided with labor helpers (G.C. Exh. 30). (I agree with the
General Counsel that the labor helpers were nonbargaining
unit workers, lacking a community of interest with journey-
man drywall carpenters.)
One crew leader who often worked with a labor helper
was Dominic, the fast-working ‘‘flier’’ who acted as the
foreman on at least one of Design’s commercial jobs (Tr.
263). He and other Design employees were paid the contrac-
tual hourly rate on union jobs (Tr. 29, 106), and he worked
a straight 40-hour week as a Design employee from March
442 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
through May 1987 (G.C. Exh. 30). Usually, however, he was
paid at the piece rate of 10 cents a square foot for his crew,
with his hours computed at 190 square feet an hour for his
fringe benefits (Tr. 205). He and other employees working
at the piece rate were not paid the contractual rate for over-
time. Novick admitted (Tr. 96) that if the workers ‘‘need a
lot of money, they work a lot of hours.’’
I find the evidence clear that during the limitation period,
as well as at all the times after Design Drywall was estab-
lished, President Novick retained the right to control the ac-
tual manner and means by which the work was done. Novick
admitted that on the union commercial work, ‘‘I demand
them to be there at 8:00 o’clock’’(Tr. 24); ‘‘when I was
working on commercial work for Design, I basically told
them what we had to do’’ (Tr. 26); ‘‘they were working on
a commercial job that I was controlling with a foreman’’ (Tr.
28); they normally had ‘‘a 40-hour workweek’’; and ‘‘they’re
working by the hour. You can’t let them smoke dope in the
basement like some of them did. . . . They don’t punch a
time clock, but they have a foreman there’’ (Tr. 133–134).
He further testified that he tried to check the commercial
jobs everyday. ‘‘Whatever problems you run into, you would
have to stay and see and make sure that you got your guys
lined up to do it, and told the foreman what was next. It
would vary. You might be out there a half hour, and then
you might be there for three hours. . . . I decided what men
to put on them.’’ (Tr. 186–187.)
When not answering questions by the Respondents’ coun-
sel regarding the business before Design was established,
Novick made further admissions about his control over the
drywall carpenters on both the Design and Ideal payrolls. He
admitted he would make the determinations on hiring, dis-
cipline, crew sizes, transfers between companies, layoffs, and
grievances (Tr. 17–19). Although he repeatedly denied ever
terminating anybody (Tr. 19, 90), he later admitted (Tr. 191–
192) that on the nonunion Green Pointe job (on which both
Foreman Pillow and Dominic were working),
I fired somebody off the job. The only guy I ever let
go, but he punched one of my other men, and I
couldn’t tolerate it.
Then, recalling that he had denied ever discharging anybody,
he changed his testimony (Tr. 192–193):
That’s the only guy that I ever—I really didn’t fire him,
I just told him I couldn’t use him, that I didn’t have
any more work for him. He punched a guy and the su-
perintendent didn’t want him on the job.
The Respondents in their brief contend (R. Br. 6) that the
work of these journeymen is routine and ‘‘There is no in-
struction involved, other than identifying the locations of the
building and the obvious fact that drywall must be hung with
the ‘white side out.’’’ They also contend (R. Br. 11) that
there was no supervision on the residential work. They ig-
nore the fact that Novick hired Foreman Pillow to supervise
Design’s jobs (most of which were residential) and that
Novick admitted (Tr. 70): ‘‘Glenn is my foreman . . . I did
give him some bonuses out of I.D.,’’ admitting that Pillow
was supervising I.D.’s residential work as well. I discredit,
as a fabrication, Novick’s claim (Tr. 210) that ‘‘Residential
jobs can take care of themselves.’’
The Respondents contend (R. Br. 6) that their ‘‘drywall
hangers, with the rarest exception, were truly sporatic work-
ers’’—relying on Novick’s dubious testimony and ignoring
the auditor’s summary of their payroll records (G.C. Exh. 30)
to the contrary. They also contend (R. Br. 8) that ‘‘Each
crew leader always worked with a crew of one or more help-
ers,’’ ignoring the testimony that the names of crewmembers
as well as crew leaders appear on the Design and Ideal pay-
rolls and also ignoring the auditor’s summary, showing that
only a few of the drywall carpenters on the payrolls were re-
ceiving extra pay to be divided.
The Respondents also contend (R. Br. 9–11) that the pay
arrangements point to an independent contractor finding. I
note, however, that the pay arrangements on the commercial
jobs (consisting of the contractual hourly wage rate and ben-
efits) point to an employee finding. I find that the pay ar-
rangements are not determinative.
As the General Counsel points out, ‘‘The Board uses the
common law right-of-control test to determine whether indi-
viduals are employees or independent contractors.’’ Precision
Bulk Transport, 279 NLRB 437 (1986). Having found that
President Novick retained the right to control the actual man-
ner and means by which the drywall carpenters perform the
work, I find that they are employees.
I therefore reject the Respondents’ defense that the drywall
carpenters are independent contractors.
b. Unsigned union agreements
The Respondents contend (R. Br. 19–26) that none of
them signed the union agreements and therefore payment of
the fringe benefits to the Union is prohibited by Section 302
of the Act.
I reject this contention as frivolous. President Novick, for
Design Drywall, joined M.C.C.A. and signed a power of at-
torney, appointing the employer association as Design’s
agent to sign collective-bargaining agreements with the
Union. M.C.C.A. did sign the union agreements (G.C. Exhs.
15, 16), which in article 5H incorporate by reference the de-
tailed basis for fringe benefits to be paid. Compare Merrimen
v. Paul F. Rost Electric, 861 F.2d 135, 136 (6th Cir. 1988),
in which an employer member of an association failed to
sign the required letter of assent.
c. Lack of majority status
The Respondents argue in their brief (R. Br. 26–29) that
‘‘the imposition of contract obligations is contingent upon
the union’s possession of majority support.’’
The Board rejected such a contention in Consumers As-
phalt Co., 295 NLRB 749 (1989), in which an employer
similarly ‘‘transferred employees from its payroll to that of
its alter ego . . . to evade obligations under the 8(f) prehire
agreement’’ with the union, and the employers ‘‘repudiated
the collective-bargaining agreement then in effect by virtue
of the 8(f) relationship.’’ The Board specifically held:
We disagree with the [employers’] contention that
their agreement with the [union] could be repudiated at
will because of an inadequate showing of majority sup-
port. That argument is premised on the continued appli-
cation of the conversion doctrine, which [John Deklewa
& Sons, 282 NLRB 1375 (1987), enfd. 843 F.2d 770
(3d Cir. 1988)] abolished.
443DESIGN DRYWALL LTD.
Here, as in Deklewa, Design Drywall ‘‘voluntarily entered
into a Section 8(f) relationship with the Union [through its
power of attorney to M.C.C.A., adopting the union contract].
This contract was binding, enforceable, and not subject to
unilateral repudiation by [the employer].’’
4. Respondents bound by union agreement
After weighing all the evidence, I find that both Ideal
Drywall and I.D. Drywall are bound by the terms of Design
Drywall’s union agreement, first as a single employer and
second as alter egos.
Single employer. In view of the admission that all three
companies are a single employer and the finding that their
employees constitute a single bargaining unit, I find that
when President Novick paid employees on Design jobs with
Ideal checks and when he contracted jobs under the name
I.D. Drywall instead of Design Drywall, he was acting on
behalf of a single employer that was bound by the obliga-
tions under the union agreement.
The Board held in Deklewa, 282 NLRB at 1377, that in
such 8(f) cases, ‘‘the appropriate unit normally will be the
single employer’s employees covered by the agreement.’’ I
therefore find that the appropriate unit is
All drywall carpenters employed by Design Drywall,
Ideal Drywall, and I.D. Drywall, excluding all other
employees and supervisors as defined in the Act.
Alter egos. It is well established, as the court held in Car-
penters Local 1846 v. Pratt-Farnsworth, 690 F.2d 489, 508
(5th Cir. 1982):
[T]he focus of the alter ego doctrine, unlike that of the
single employer doctrine, is on the existence of a dis-
guised continuance or an attempt to avoid the obliga-
tions of a collective bargaining agreement through a
sham transaction or technical change in operations.
[Emphasis added.]
I find that Novick’s paying employees on Design Drywall
jobs with Ideal Drywall checks was ‘‘an attempt to avoid the
obligations’’ of the union agreement ‘‘through a sham trans-
action’’ and that I.D. Drywall was merely a ‘‘disguised con-
tinuance’’ of Design Drywall. I therefore find that, as alter
egos of Design Drywall, both Ideal Drywall and I.D. Drywall
are bound by the obligations under Design Drywall’s union
agreement.
5. Concluding findings
While enjoying the benefits of an 8(f) prehire agreement,
enabling President Novick to submit Design Drywall bids on
both union and nonunion jobs, Novick unilaterally modified
the terms of the union agreement. Without notice to the
Union, he placed Design Drywall employees on the nonunion
Ideal Drywall payroll, and later contracted under the name
I.D. Drywall to evade the contractual obligation to pay all
employees fringe benefits. He further repudiated the terms of
the union agreement by paying the residential wage rate and
fringe benefits instead of the higher commercial wage rate
and fringe benefits on commercial construction.
I find that the Respondents, by repudiating the terms of
the union agreement in this manner, engaged in a funda-
mental abrogation of their bargaining obligation. As the court
observed in NLRB v. Al Bryant, Inc., above, 711 F.2d at 552,
in a somewhat similar situation:
Where the same employees can be and are, as in this
case, switched back and forth between a union and non-
union payroll, the benefits which the employees reap
from the union’s collective bargaining can be diluted or
dissipated.
Under these circumstances I find that Design Drywall,
Ideal Drywall, and I.D. Drywall, which are found to be a sin-
gle employer with employees in a single unit and to be alter
egos, ‘‘repudiated the collective-bargaining agreement then in
effect by virtue of the 8(f) relationship, violating Section
8(a)(5) and (1) of the Act.’’ Consumers Asphalt Co., above.
The agreement in effect on September 3, 1987 (the begin-
ning of the 10(b) limitation period) was the 1987–1988
M.C.C.A.-union agreement (G.C. Exh. 16). Under the
Deklewa principles, it was ‘‘binding, enforceable, and not
subject to unilateral repudiation’’ until its ‘‘expiration,’’
when the Union would ‘‘enjoy no presumption of majority
status, and either party may repudiate the 8(f) bargaining re-
lationship.’’ Deklewa, 282 NLRB at 1377–1378, 1389.
Because of the Union’s March 25, 1988 notice to Design
Drywall (G.C. Exh. 2C) that M.C.C.A. was ‘‘withdrawing its
authority to act as your collective bargaining representative,’’
I find that M.C.C.A. was not representing the Respondents
in the 1988 negotiations and that their obligations under the
1897–1988 agreement terminated on its August 1, 1988 expi-
ration date.
B. Refusal to Submit Records
Until December 1, 1987, Novick succeeded in concealing
from the Union the fact that he was paying employees on
various Design Drywall jobs with Ideal Drywall checks. That
was when Union Representative Thomas Cameron visited the
Design job at the Meadowbrook Apartments project in Roch-
ester. Drywall employee Keith Hedger informed Cameron
that he sometimes worked for Design and sometimes for
Ideal. Hedger also complained that he was not getting any
fringe benefits, which he needed because his wife was preg-
nant. (Tr. 281–284.)
On December 15, 1987, the union auditors requested De-
sign Drywall to furnish records necessary to perform an
audit, to determine if there were delinquent fringe benefits
and if employees were being shifted from one company to
another (G.C. Exh. 24, Tr. 307). At the scheduled audit on
January 20, 1988, the union auditor was furnished only De-
sign’s check registers (Tr. 307, 309).
Upon auditing the check registers and finding the large
number of checks from Design Drywall to Ideal Drywall, the
auditor was told that Ideal’s records were not available, ‘‘I’d
have to talk to Al [Novick]’’ (Tr. 317). The next day the
auditor informed Novick of shortages in Design’s fringe ben-
efit payments and then asked him for Ideal’s records. Novick
refused to produce them, falsely stating ‘‘that he didn’t have
any part to do with Ideal.’’ (Tr. 317–318.) To the contrary,
Novick was making the decisions when to place employees
on the Ideal payroll (Tr. 17–18), was transferring funds from
Design to Ideal to cover the payroll, and was then the vice
444 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules
and Regulations, the findings, conclusions, and recommended Order shall, as
provided in Sec. 102.48 of the Rules, be adopted by the Board and all objec-
tions to them shall be deemed waived for all purposes.
2 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 National Labor Rela-
tions Board’’ shall read ‘‘Posted Pursuant to a Judgment of the United States
Court of Appeals Enforcing an Order of the National Labor Relations Board.’’
president of Ideal (Tr. 8), having been replaced by his wife
as president (Tr. 62).
Although Novick permitted an audit of Ideal’s records
nearly 6 months later on July 12, 1988 (as his lawyer ad-
vised, after the charge was filed, Tr. 334), I find that the Re-
spondents’ refusal on January 21, 1988, to provide the Union
with the relevant and necessary Ideal records for an audit
was unlawful. As the Board held in Consumers Asphalt Co.,
above at 750, ‘‘the [unions] were unlawfully denied their re-
quest for an audit of the [employers’] payroll records to
verify the [employers’] compliance with the . . . contract to
which they were bound under [John Deklewa & Sons, 282
NLRB 1375 (1987).]’’
I therefore find that the refusal violated Section 8(a)(5)
and (1) of the Act.
CONCLUSIONS OF LAW
1. The Respondents are a single employer, whose employ-
ees constitute a single bargaining unit, and are alter egos.
2. The Respondents were bound by the 1987–1988
M.C.C.A.-union agreement as an 8(f) prehire agreement.
3. All drywall carpenters employed by Design Drywall,
Ideal Drywall, and I.D. Drywall, excluding all other employ-
ees and supervisors as defined in the Act, constitute an ap-
propriate bargaining unit.
4. By unilaterally modifying the terms of the collective-
bargaining agreement with the Union and repudiating their
obligation to pay fringe benefits on residential projects and
the contractual wage rate and fringe benefits on commercial
projects, the Respondents have engaged in unfair labor prac-
tices affecting commerce within the meaning of Section
8(a)(5) and (1) and Section 2(6) and (7) of the Act.
5. By refusing to provide the Union with relevant and nec-
essary records for an audit to determine compliance with ob-
ligations to make fringe benefit contributions, the Respond-
ents further violated Section 8(a)(5) and (1).
REMEDY
Having found that the Respondents have engaged in cer-
tain unfair labor practices, I find that they must be ordered
to cease and desist and to take certain affirmative action de-
signed to effectuate the policies of the Act.
The Respondents, as found, have unilaterally modified the
terms of the 1987–1988 M.C.C.A. agreement with the Union,
having repudiated their obligation under that 8(f) prehire
agreement to make contributions on residential projects for
fringe benefits (consisting of health and welfare insurance,
vacations and holidays, pension, and apprenticeship and
training) and to pay employees on commercial construction
the contractual wage rate and fringe benefits.
I therefore find that the Respondents, for the period from
September 3, 1987 (the beginning of the 10(b) limitation pe-
riod), through August 1, 1988 (the expiration date of the
agreement), must make the employees whole for unpaid
wages and reimburse them for any expenses ensuing from
the failure to make the fringe benefit contributions, Kraft
Plumbing & Heating, 252 NLRB 891 fn. 2 (1986), enfd.
mem. 661 F.2d 940 (9th Cir. 1981), plus interest as com-
puted in New Horizons for the Retarded, 283 NLRB 1173
(1987).
The Respondents, for the same period, must also make the
withheld fringe benefit contributions to the benefit funds,
plus the contractual mandatory liquidated damages for delin-
quent contributions, American Thoro-Clean, 283 NLRB
1107, 1109 (1987). Because the provisions of employee ben-
efit fund agreements are variable and complex, the Board
does not provide at the adjudicatory stage of the proceeding
for the addition of interest at a fixed rate on unlawfully with-
held fund payments. Any additional amount owed the fringe
benefit funds shall be determined in accordance with
Merryweather Optical Co., 240 NLRB 1213, 1216 fn. 7
(1979).
On these findings of fact and conclusions of law and on
the entire record, I issue the following recommended1
ORDER
The Respondents, Design Drywall Ltd., Inc., I.D. Drywall
Ltd., Inc., and Ideal Drywall Company, Dearborn Heights,
Michigan, their officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Refusing to pay the fringe benefits on residential
projects and the contractual wage rate and fringe benefits on
commercial projects as required by the 1987–1988 collective-
bargaining agreement between M.C.C.A. and the Carpenters
District Council of Detroit, AFL–CIO during the period from
September 3, 1987, until the expiration of the agreement on
August 1, 1988.
(b) Refusing to furnish relevant and necessary records re-
quested by the Union for an audit to determine compliance
with the agreement.
(c) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of the rights guar-
anteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to ef-
fectuate the policies of the Act.
(a) Transmit the unpaid fringe benefits to the Union’s ben-
efit funds, plus the contractual liquidated damages, and make
whole the employees in the following appropriate unit by
paying their unpaid wages and reimbursing them for any ex-
penses ensuing from the failure to pay the fringe benefits,
plus interest, in the manner set forth in the remedy section
of the decision:
All drywall carpenters employed by Design Drywall,
Ideal Drywall, and I.D. Drywall, excluding all other
employees and supervisors as defined in the Act.
(b) Preserve and, on request, make available to the Board
or its agents for examination and copying, all payroll records,
social security payment records, timecards, personnel records
and reports, and all other records necessary to analyze the
amount of payments due under the terms of this Order.
(c) Post at their Taylor, Michigan office and at all their
construction sites during the posting period copies of the at-
tached notice marked ‘‘Appendix.’’2 Copies of the notice, on
forms provided by the Regional Director for Region 7, after
being signed by the Respondents’ authorized representative,
445DESIGN DRYWALL LTD.
shall be posted by the Respondents immediately upon receipt
and maintained for 60 consecutive days in conspicuous
places including all places where notices to employees are
customarily posted. Reasonable steps shall be taken by the
Respondents to ensure that the notices are not altered, de-
faced, or covered by any other material.
(d) Notify the Regional Director in writing within 20 days
from the date of this Order what steps the Respondents have
taken to comply.
IT IS FURTHER ORDERED that the complaint is dismissed
insofar as it alleges violations of the Act not specifically
found.