Lynn-Edwards Corp.

National Labor Relations Board - Board Decisions

Oct 29, 1986

282 N.L.R.B. 52 (N.L.R.B. 1986)

52 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Lynn-Edwards Corp . and Chauffeurs , Teamsters and
Helpers Local 150, International Brotherhood
of Teamsters , Chauffeurs, Warehousemen and
Helpers of America . Cases 20-CA-18133 and
20-RC-15616
29 October 1986
DECISION, ORDER, AND DIRECTION
OF SECOND ELECTION
BY MEMBERS JOHANSEN, BABSON, AND
STEPHENS
On 6 March 1984 Administrative Law Judge
Gerald A. Wacknov issued the attached decision.
The Respondent filed exceptions and a supporting
brief, and the General Counsel filed an answering
brief.
The National Labor Relations Board has delegat-
ed 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 and to adopt the recommended Order.
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge and orders that the Respondent, Lynn-Ed-
wards Corp., North Highlands, California, its offi-
cers, agents, successors, and assigns, shall take the
action set forth in the Order.
[Direction of Second Election omitted from pub-
lication.]
MEMBER STEPHENS, concurring and dissenting.
I concur in the majority's disposition of this case
save for that aspect of the affirmative relief direct-
ed at the eligibility provision of the Respondent's
Employee Stock Ownership Plan (ESOP).
The judge's recommended Order, which the ma-
jority adopts, requires the Respondent to amend
the eligiblity article by deleting portions that "re-
quire that Respondent exclude from participation
employees covered by a retirement plan resulting
from collective bargaining through a labor organi-
zation." The Respondent excepts to this provision
of the Order insofar as it might preclude an amend-
ment permitting exclusion of "any person covered
1 In the absence of exceptions thereto, we adopt pro forma the judge's
8(a)(1) findings and, accordingly, we need not pass on the judge's com-
ments at sec III,C,1 , pars. 3-6, regarding the nature of the Respondent's
ESOP Plan. Our dissenting colleague agrees that the Respondent has "es-
sentially consented to judgment on the allegation that it violated Section
8(a)(1) of the Act by maintaining the eligibility provision" at issue in the
ESOP plan Given that no exceptions were filed to that finding of the
judge, the remedy the judge provided is appropriate for the violation
found.
by a collective bargaining agreement entered into
with the employer, which agreement does not pro-
vide for coverage of such person" by that plan. As
the Respondent points out, such language was ex-
pressly approved by the Board in Rangaire Corp.,
157 NLRB 682 (1966), a case concerning a pension
plan that, as here, preexisted the advent of union
organization of part of the work force. It would
appear from certain portions of the judge's opinion
that this section of his recommended Order reflects
his conclusion that the ESOP at issue here is a to-
tally "different entity" from a retirement or pen-
sion plan and that, therefore, the principles of Ran-
gaire and its progeny do not apply. For the reasons
set forth below, I believe that the judge erred in
his characterization of the ESOP and that he has
given an overbroad reading to the Board's relevant
precedents. I would accordingly revise the remedi-
al order to permit an amendment that makes the
participation of bargaining unit employees in the
ESOP a matter to be negotiated in the context of a
collective-bargaining agreement.
Preliminarily I note that, as I understand my col-
leagues' position, they neither accept nor reject my
conclusions on the nature of the ESOP at issue
here but conclude that we are powerless to reach
the matter, because the Respondent did not except
to the judge's 8(a)(1) findings and because it dis-
claimed any intent to take issue with any "eviden-
tiary conclusion" of the judge "with respect to the
unfair labor practice case." Contending that any
unlawful, conduct that might have occurred took
place prior to the critical period, the Respondent
simply sought the overruling of the judge's recom-
mendation that the election be set aside; and, as
noted above, it challenged the Order regarding the
ESOP's eligibility provisions as "overbroad and
contrary to the Board law" insofar as the Order
precluded the Respondent from incorporating the
Rangaire language in the ESOP. In my view, al-
though the Respondent has thus essentially con-
sented to judgment on the allegation that it violat-
ed Section 8(a)(1) of the Act by maintaining the
eligibility provision and related explanatory materi-
al, the substance of the Respondent's challenge to
the remedial order sufficiently calls into question
the judge's characterization of the ESOP, since
that was the basis for the judge's refusal to apply
Rangaire.
The Respondent's ESOP was adopted as a retire-
ment plan for the employees in 1977, long before
Local 150 entered the scene demanding recogni-
tion. The pertinent portion of its eligibility provi-
sion (art. 3.1) provides as follows:
282 NLRB No. 7
LYNN-EDWARDS CORP.
[N]otwithstanding any provision to the con-
trary, no employee covered by a collective
bargaining agreement between an Employee
representative and the Employer shall become
a Participant in the Plan, provided that retire-
ment benefits of said class of Employees was
the subject of good faith bargaining between
the Employee representative and the Employ-
er, and said Employee's retirement benefits are
being funded pursuant to said collective bar-
gaining agreements.
A plausible explanation for the inclusion of this
provision is that the Respondent was endeavoring
to comply with the Employee Retirement Income
Security Act of 1974 (ERISA).1 Indeed, article 1.3
of the plan expresses an intent to obtain qualified
status under, ERISA and the Internal Revenue
Code. Under Title II of ERISA, as one of the con-
ditions for obtaining qualified status, a retirement
plan, whether funded by profit sharing, stock own-
ership, or otherwise, must,satisfy certain participa-
tion standards, including a breadth-of-coverage re-
quirement.2 This requirement-expressed as a per-
centage-of-the-work-force standard-is designed to
ensure that a pension plan broadly encompasses an
employer's work force and does not discriminate in
favor of just those employees who are officers,
shareholders, or highly compensated. In calculating
whether a sufficient percentage of employees are
eligible to participate, an employer may exclude
from the work force on which the percentage is
based those employees not included in the plan
who are subject to a collective-bargaining agree-
ment; but as a qualification of this exclusion there
must be evidence that the agreement covering the
excluded employees is the product of good-faith
bargaining over retirement benefits.3
The Respondent's ESOP tracks this statutory
formula. Excluded from the plan are otherwise eli-
gible employees who become covered as a result of
good-faith negotiations under a collectively bar-
gained retirement plan.4 It is also in keeping with
1 Pub. L. 93-406, 88 Stat. 829 (codified as amended 29 U.S C. §§ 1001-
1462, and in scattered sections of 26 U.S.C.)
2 Pub L. 93-406, § 1011, adding sec. 410 to the Internal Revenue
Code of 1954, 26 U,S.C § 410. See especially sec. 410 (b)(1)-(2).
' 26 U.S.C. § 410(b)(3)(A).
4 In fact, the Respondent's provision appears more favorable to em-
ployee choice than the minimum standards established by ERISA As in-
terpreted by the current regulations , 26 U S C § 410(b)(2)(A) does not
mandate that the bargaining unit employees be covered by another plan
in order to be excluded from the plan in question; nor is it necessary that
the plan in question be actually considered during the course of bargain-
ing 29 CFR §^ 1.410(6)-I(c)(I)(1986). See also Pens Plan Guide (CCH),
"Plans and Clauses," ¶ 34, 151 (specimen employee stock ownership plan
not yet approved by IRS at time of its publication in 1975, but prepared
to encompass changes effected by ERISA).
53
the common practice of an employer's maintaining
separate pension plans for different groups of em-
ployees, such as one for bargaining unit workers
and another for nonunion employees. 5 Thus, I see
no basis for concluding either that the Respond-
ent's ESOP is not a form of retirement plan or that
the eligibility provision was deliberately included
as a device to discourage union organizing rather
than just a provision that anticipates the possibility
that part of the work force might choose to orga-
nize and bargain for a different pension plan (al-
though possibly one incorporating stock ownership
funding features).6
This, however, does not dispose of the question
of what exclusionary language, if any, the Re-
spondent is free to employ without being, deemed
to coerce or restrain employees respecting a deci-
sion whether to seek a collective-bargaining repre-
sentative. The Board's precedents during the last
two decades establish the following principles. Em-
ployers may not effectively announce to employ-
ees-whether in the eligibility provisions of pen-
sion plans or otherwise-that only those who are
unrepresented by unions can qualify for coverage.
Thus, an employer violates Section 8(a)(1) of the
Act through any provision or statement about a
plan that suggests either that coverage of employ-
ees will automatically be withdrawn as soon as
they vote to be represented by a union or that con
tinued coverage under the plan will not be on the
bargaining table.7 Such 'a statement or provision
tells employees that they must automatically lose a
current benefit as the price of union representation
and it also manifests an intent to withhold certain
benefits from the bargaining table-a state of mind
inconsistent with good-faith negotiations. On the
other hand, as the Board observed in Solo Cup Co.:
"This does not mean, of course, that an employer
may not advise ' his employees, in a noncoercive
fashion, that pensions for those in the unit are sub-
ject to bargaining and that if a separate pension
plan for'those in the unit is agreed upon, coverage
,in the existing plan will not be maintained., i.e., the
employer is not obligated to provide `double cover-
age."'S Pursuant to those principles, the Respond-
5 See D . McGill, Fundamentals of Private Pensions, 80 (5th ed 1984)
6 It is noteworthy that the provision does not speak in terms of forfeit-
ure, i e., of employees losing eligibility for the plan, but rather of not "be-
coming" participants in the particular plan if they are covered by a re-
tirement plan tinder the collective-bargaining agreement.
'i Rangaire Corp., 157 NLRB 682, 683 (1966); Solo Cup Co, 176 NLRB
823, 824 (1969), Tappan Co., 228 NLRB 1389, 1390 (1977), enfd 607 F 2d
764 (6th Eric 1979), Niagara Wires, 240 NLRB 1326, 1328 (1979), Sarah
Neuman Nursing Home, 270 NLRB 663, 680 (1984).
s 176 NLRB at 824 fn. 3 Accord- Tappan Co., 228 NLRB at 1390,
Sarah Neuman Nursing Home, 270 NLRB at 680-681 Our decisions in
Kroger Co, 164 NLRB 362 (1967), enfd 401 F.2d 682 (6th Cir 1968),
Continued
54 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ent in the present case should be free to clarify its
eligibility provision so that (1) it does not automati-
cally terminate the employees' benefits upon selec-
tion of the Union; (2) employee participation may
continue during the pendency of collective bargain-
ing; and (3) the Respondent and the Union may,
through good-faith negotiations, agree either to
continuation of the ESOP for employees under the
collective-bargaining agreement or to substitution
of a different plan, possibly one that incorporates
stock ownership features. A provision modeled on
that held lawful in Sarah Neuman Nursing Home,
supra, obviously should be permissible.9
In sum , I do not suggest that an employer's ef-
forts to comply with the arcane requirements of
ERISA should insulate it from the precepts of our
statute. An employer is at peril if it operates with
an eye only on one statutory scheme, without
regard to other, equally significant objectives estab-
lished by Congress. But the Board itself should ap-
preciate that the establishment and maintenance of
separate pension plans for union and nonunion
workers, however those plans are funded, is a
common practice and that even an unorganized
employer may be advised to structure a plan to
take account of the possibility of a separate plan
for bargaining unit workers should the occasion
cert denied 395 U.S 904 (1969), and Winn-Dixie Stores, 224 NLRB 1418
(1976), enfd in part 567 F.2d 1343 (5th Cir. 1978), are not to the con-
trary Those cases stand for the proposition that an employer may not
declare in advance of bargaining that some benefit entirely separate or
separable from the existing retirement plan will be withheld from the em-
ployees if they choose any alternative other than continued coverage
under the existing plan Thus, in Kroger, there existed two separate pro-
grams, one a retirement plan and the other a profit-shanng plan, the
terms of the latter were such that any employees covered by a collective-
ly bargained retirement plan were automatically exluded from the profit-
sharing plan, i e , nonunion employees could have both a retirement plan
and a profit-sharing plan, while union-represented employees could have
only the former. Winn-Dixie concerned a profit-sharing plan that provid-
ed both income deferred until retirement and annual bonuses of up to
$300 for unit employees earning less than $8500 a year 224 NLRB at
1419, 1447 I would reconcile Winn-Dixie with the no-requirement-to-pro-
vide-double-coverage principle by reading Winn-Dixie as holding only
that an employer may not precondition agreement to a union retirement
plan on relinquishment of participation in profit sharing Thus, the Board
faulted Winn-Dixie for "refus[ing] to bargain over any aspect of the
[profit-shanng] plan" 224 NLRB at 1419-1420. (The Board's comments
on whether the Winn-Dixie plan was a retirement plan, as the administra-
tive law judge had found, were unnecessary to its holding in the case )
9 The eligibility provision of the existing pension and profit-sharing
plan provided as follows (270 NLRB at 680)
The term employees shall not include any person who is covered
under a collective bargaining agreement if there is evidence that re-
tirement benefits were the subject of good faith bargaining between
the representative of such person and the employer, unless the col-
lective bargaining agreement provides for the inclusion of such
person under the plan
But see Belcher Towing Co, 265 NLRB 1258, 1260-1261, 1267-1268
(1982), holding unlawful the maintenance of a somewhat similar provi-
sion In the Belcher provision , however, there was no reference to "good
faith bargaining " In addition , the employer in that case had suggested in
both a handbook and through its spokesmen that anyone covered by a
collective-bargaining agreement would be automatically ineligible to par-
ticipate in the existing plan
arise . In my view, the principles set forth above
take account of both, and I would clarify the reme-
dial order accordingly in response to the Respond-
ent's exception. 10
10 Whether the Respondent 's existing eligibility provision might be re-
garded as a per se violation of Sec 8(a)(1), I concur in the panel's deci-
sion to set aside the election because the provision had originally been
explained , in literature distributed to the employees , in a way that would
lead them to believe that umon-represented employees were automatical-
ly ineligible for the ESOP . The maintenance during the critical period of
a provision thus explained, without any subsequent clarification , is in my
view grounds for setting aside the election.
Carmen Plaza De Jennings and Boren Chertkov, Esqs., for
the General Counsel.
Dennis R. Murphy, Esq. (Diepenbrock, Wulff Plant &
Hannegan), of Sacramento, California , for Respondent.
Carol Livingston, Esq., of Sacramento , California, for the
Union.
DECISION
STATEMENT OF THE CASE
GERALD A. WACKNOV, Administrative Law Judge.
Pursuant to notice, a hearing with respect to this matter
was held before me in Sacramento, California, on No-
vember 29, 1983.1 The initial charge was filed on June
16, by Chauffeurs, 'Teamsters & Helpers of America,
Local 150, affiliated with International Brotherhood of
Teamsters, Chauffeurs, Warehousemen & Helpers of
America (the Union), and an amended charge was filed
by the Union on July 27.
Thereafter, on July 29, the Regional Director for
Region 20 of the National Labor Relations Board (the
Board) issued a complaint and notice of hearing alleging
a violation by Lynn-Edwards Corp. (Respondent) of
Section 8(a)(1) of the National Labor Relations Act (the
Act).
Pursuant to a representation petition filed by the
Union on April 7 in Case 20-RC-15616, an election by
secret ballot was conducted on June 2. The tally of bal-
lots reflects that of the approximately 79 eligible employ-
ees 16 cast ballots for the Union and 53 cast ballots
against the Union. There were three challenged ballots,
which were insufficient in number to affect the results of
the election. Thereafter, the Union filed timely objec-
tions to the election. Pursuant to a Report on Objections,
notice of hearing, and order consolidating cases issued by
the Regional Director on August 31, certain objections
were consolidated with the instant unfair labor practice
proceeding for the purpose of hearing, ruling, and deci-
sion by an administrative law judge.
The parties were afforded a full opportunity to be
heard , to call, to examine and cross -examine witnesses,
and to introduce relevant evidence. Since the close of
the hearing, briefs have been received from the General
Counsel2 and counsel for Respondent.
1 All dates or time periods herein are within 1983, unless otherwise
specified.
2 The General Counsel's request to correct the transcript is granted.
LYNN-EDWARDS CORP. 55
On the entire record, and based on my observation of
the witnesses and consideration of the briefs submitted, I
make the following
FINDINGS OF FACT
I. JURISDICTION
The Respondent is a California corporation, with an
office and place of business in North Highlands, Califor-
nia, and is engaged in the wholesale sale and distribution
of office products and supplies. Respondent, in the
course and conduct of its business operations, annually
purchases and receives products, goods, and materials
valued in excess of $50,000 directly from points outside
the State of California.
It is admitted, and I find, that Respondent is now, and
has been at all times material herein,- an employer en-
gaged in commerce within the meaning of Section 2(2),
(6), and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
It is admitted that the Union is, and has been at all
times material herein, a labor organization within the
meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. The Issues
The principal issues raised by the pleadings are wheth-
er Respondent, pursuant to the provisions of its Employ-
ee Stock Ownership Plan, unlawfully excluded employ-
ees represented by a union from participation in the plan,
and threatened its employees with loss of plan benefits if
the employees were to unionize; and whether such con-
duct warrants the direction of a second election.
B. The Facts
On April 4 the Union requested recognition from Re-
spondent in an appropriate unit.a
On April 5 , the day following the Union 's request for
recognition, but prior to the filing of the representation
petition, Respondent held separate meetings for unit em-
ployees on each of three shifts. Respondent was repre-
sented by Jack Scarzella, president and chief executive
officer; Walter Riley , vice president in charge of market-
ing and a trustee of Respondent 's Employee Stock Own-
ership Plan (ESOP);4 and Ken ' Saunders, Respondent's
chief financial officer.
President Scarzella's outline of the meetings reflect
that he began by telling the employees that the Company
had received a claim for recognition by the Union and
'that it doubted whether the Union represented a majori-
ty of its employees . He then went on to enumerate six
a The unit as described herein is as follows-
All shipping and receiving employees , including stock pullers,
stockers, returns, -packers, shipping/strappers , maintenance employee
drivers and forklift operators employed by Lynn-Edwards Corpora-
tion at its North Highlands, California facility; excluding office cleri-
cal employees, salespersons, managerial employees, guards, and su-
pervisors as defined in the Act.
4 The record clearly shows, and I find, that Riley is a supervisor and
agent of Respondent , as alleged.
points under the general topic "Unions tell you what
they can do for you-nd guarantee of wage increase or
security." He, apparently spoke negatively about the
"large unfunded vested liability" of theTeamsters pen-
sion plan, and then mentioned Respondent's ESOP plan,
telling the employees that the "union cannot participate
in ESOP." Scarzella testified that although he did not
read from the outline he "essentially" followed it in con-
veying its meaning. After further statements regarding
the costs of belonging to a union and other matters,
Scarzella introduced Riley and Saunders for the express
purpose of discussing Respondent's ESOP plan. Riley
commenced this portion of the meeting by reading the
following description of the plan:
Lynn-Edwards Corporation Employee Stock
Ownership Plan (ESOP) was adopted on June 1,
1977. ESOP is a voluntary program on the part of
corporation's management and its continuance and
growth is dependent on contributions from profits
which are not needed for growth, debt reduction,
etc. ESOP is a form of retirement program designed
to benefit the long term employee.
The purpose of this plan is to recognize the con-
tribution of the employees to the successful oper-
ation of Lynn-Edwards and to reward their contri-
bution by enabling the employees to acquire equity
ownership in the Corporation without diminishing
take home pay. A major portion of the Corporate
contribution to the Employee Stock Ownership
Trust will be invested in Lynn-Edwards Corpora-
tion Stock. The value of the stock fluctuates with
the' performance of the business. Any employee who
is a member of collective bargaining cannot be eligible
for this plan. [Emphasis added.]
After providing the details of the plan's operation, in-
cluding the vesting provisions, Riley told the employees
that:
All participating employees as of May 31, 1982 will
be receiving their individual statements in the mail
this week. This is being done to respect individual
employee privacy.
Scarzella testified that during additional group meet-
ings subsequent to the April 5 meetings and following
the filing of the representation petition, he did recall that
be compared the ESOP plan to the "contributory nature
and 'the solidity" of the Teamsters pension plan. Howev-
er, according to Scarzella, the matter was not considered
to be a major point during the preelection campaign.
The parties stipulated that all employees are furnished
with Respondent's Employee Handbook, which contains a
detailed summary of the ESOP plan. Significant portions
of the handbook summary are as follows:
EMPLOYEE STOCK OWNERSHIP PLAN
(ESOP)
The purpose of this plan is -to enable full time
permanent employees of the Company to share in
the growth and prosperity of the Company and to
56 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
provide participants with an opportunity to accu-
mulate capital for their future economic security.
The Plan is designed to do this without any deduc-
tions from participant's paychecks and without call-
ing upon them to invest their personal savings. A
primary purpose of the Plan is to enable participants
to acquire a proprietary interest in the Company-
consequently a major portion of the Employer Con-
tributions made to the Trust will be invested in
Company stock.
This Plan is administered by a Committee con-
sisting of not less than three (3) nor more than five
(5) members.
All full-time employees, except those covered by
collective bargaining agreements, who have attained
the age of 20 and have completed two (2) months
of continuous service prior to the Plan Entry Date
of May 31st, are eligible to participate. [Emphasis
added.]
Vesting Schedule:
Vesting measures a Participant's right to receive
the value of the Employer's contributions which
have been allocated to his account in the event he
terminates employment for reasons other than
death, disability or retirement.
ESOP contributions are made from corporation
funds and are divided to all participants in same
proportions as their salary is to total salaries. It is
important to note that no money is withheld from
the employee's salary. The Plan is totally funded by
the Corporation and should be thought of as extra
salary being invested for each participant. [Emphasis
added.]
In 1978 a "Summary Plan Document" was distributed
to employees. This summary, inter alia, contains the fol-
lowing:
The purpose of this Plan is to enable participating
employees of the Company to share in the growth
and prosperity of the Company and to provide Par-
ticipants with an opportunity to accumulate capital
for their future economic security. The Plan is de-
signed to do this without any deductions from Par-
ticipants' paychecks and without calling upon them
to invest their personal savings. A primary purpose of
the Plan is to enable Participants to acquire a proprie-
tary interest in the Company-consequently, a major
portion of the Employer Contributions made to the
Trust will be invested in Company stock. This Plan
is adopted as an amendment of the Company's
Profit Sharing Plan, and the assets of the Profit
Sharing Plan will be transferred to the Trustee
under this Plan. The Plan is administered by a Com-
mittee consisting of'not less than three, nor more
than five members. [Emphasis added.]
2. When do I become eligible to participate?
All full-time employees, except those covered by
collective bargaining agreements, who have attained
age 20 and have completed at least 2 months of
continuous service are eligible to participate as of
the effective date of the Plan. [Emphasis added.]
The documentary evidence indicates that the ESOP
plan, which has been in effect since 1977, was amended
in 1983 retroactive to June 1, 1981.5 The amendment, a
document of some 37 pages, contains the following:
ARTICLE 1
Name and Purpose of Plan
1.1 Name
The Employee Stock Ownership Plan established
by the LYNN-EDWARDS CORPORATION, a
California corporation (Employer' herein) shall be
known as the Stock Bonus Employee Stock Owner-
ship Plan (Plan herein) and the Employee Stock
Ownership Trust executed by Employer and
EDWARD F. SCONBERG, JR. and WALTER E.
RILEY, (Trustees herein) shall be known as the
Employee Stock Ownership Trust (Trust herein).
1.2 Purpose
It is the' purpose of this plan to recognize the
contribution of the Employees to the successful op-
eration of the Employer and to reward such contri-
bution by establishing the system that would enable
the employees to acquire through a Stock Owner-
ship Plan equity ownership in the Employer with-
out diminishing take-home pay. A major portion of
the Employer contributions to the trust will be in-
vested in stock of Employer.
ARTICLE 3
Eligibility and Participation
3.1 Eligibility.
However, notwithstanding any provision to the
contrary, no employee covered by a collective bar-
gaining agreement between an Employee represent-
ative and the Employer shall become a Participant
in the Plan, provided that retirement benefits of said
class of Employees was the subject of good faith
bargaining between the Employee representative
and the Employer , and said Employee's retirement
benefits are being funded pursuant to said collective
bargaining agreements.
C. Analysis and Conclusions
1. The unfair labor practice case
Both Respondent's employee handbook an d its summa-
ry plan document, copies of which have been furnished
to the employees since 1977 or 1978, specify that all em-
ployees are able to participate in the plan "except those
covered by collective bargaining agreements." Similarly,
on April 5, Respondent's president, Scarzella, told the
5 The amendment does not denote the month and day in 1983 when
the plan was amended This case was litigated on the premise that the
amendment has been in effect at all times material herein.
LYNN-EDWARDS CORP. 57
employees at a series of meetings that 'the "union cannot
participate in ESOP," and Vice President Riley stated
that "Any employee who is a member of collective bar-
gaining cannot be eligible for this plan." Such statements
by Scarzella and Riley are clearly violative of the Act,
as alleged.
In Niagara Wires, 240 NLRB 1326, 1328 (1979), the
Board found that virtually identical language appearing
in a pension plan and summaries of the plan constituted a
violation of Section 8(a)(1) of the Act. The Board stated:
While, as Respondent notes, the Board has
indeed found violations under the Act based on an
employer's unlawful conduct in, implementing a re-
strictive eligibility provision to deprive otherwise
eligible employees of benefits, or by explicitly using
the eligibility restriction as a coercive device during
an election campaign,3 it is clear that such conduct
is not a sine qua non for finding a violation in this
area . Rather, we have consistently, stated that the
mere maintenance and continuance of a provision in
a pension plan, making lack of union representation
one of the qualifications for eligibility to participate
therein, itself tends to interfere with, restrain, and
coerce employees who are otherwise eligible in the
exercise of their self-organizational rights.4 Here,
Respondent's plan, in limiting eligibility to employ-
ees who are not covered by a collective-bargaining
agreement, in effect, conditions eligibility on the un-
represented status of the employees. It is clear that
Respondent publicized this restriction by distribut-
ing summaries of the plan to its employees a few
weeks before they were scheduled to vote in the
union election. While there is no reason to assume
that the distribution of the plan was unlawfully mo-
tivated, the communication and the continued exist-
ence of such an exclusionary eligibility requirement
necessarily exert a coercive impact on the employ-
ees. It is for this reason that an employee benefit
plan which restricts coverage to unrepresented em-
ployees is per se violative of Section 8(a)(1) of the
Act, regardless of whether, the employer adds to the
misconduct by implementing the restriction or ex-
ploiting it during an organizing campaign. s
' See, e g., Firestone Synthetic Fibers Company, 157 NLRB 1014,
1018, 1019 (1966), enforcement denied 374 F.2d 211 (1967); Sun-
shine Food Markets, Inc., 174 NLRB 497, 504 (1969).
a See, e.g., Jim O'Donnell, Inc., 123 NLRB 1639, 1643 (1959);
Melville Confections, Inc., 142 NLRB 1334, 1338 (1963), enfd 327
F.2d 689 (7th Cir 1964), cert. denied 377 U.S. 933. See also A. M.
Steigerwald Co., 236 NI;R13 1512 (1978).
5 See, e.g., White Sulphur Springs Company, d/b/a Greenbrier
Hotel, 216 NLRB 721, 727 (1975); Sunshine Food Markets, Inc., 174
NLRB 497, 504 ( 1969); Goodyear Tire & Rubber Company, 170
NLRB 539, 550 (1968), modified in part 413 F2d 158 (6th Cir
1969); Aura Corporation, 156 NLRB 285, 288, 289 (1965), enfd. 380
F,2d 970 (6th Cir 1967).
Further, even assuming the exclusionary language of the
amendment to the plan, supra, is not unlawful and that
Scarzella and Riley simply misrepresented the provision
to the assembled employees, as Respondent maintains,
their statements are nevertheless unlawful. Thus, in Ran-
gaire, `Corp., 157 NLRB 682 (1966), the Board found
under similar circumstances that although the exclusion-
ary language of the plan was not unlawful, nevertheless a
"plainly misleading statement of fact which purports to
exclude the possibility of bargaining over continuation of
an existing condition of employment interferes with the
protected right of employees to engage in,collective bar-
gaining." See also Tappan Co., 228 NLRB 1389 (1977). It
is therefore clear that the similar misleading statements
by Scarzella and Riley during the course of the April 5
group meetings were per se unlawful and violative of
Section 8(a)(1) of the Act. I so find.
In Rangaire Corp., supra, the Board found that lan-
guage in a pension plan excluding "any person covered
by a collective-bargaining agreement entered into with
the employer,, which agreement does not provide for
coverage of such person by this plan," was permissible.
Similarly, in Tappan Co., supra, the language in the "re-
tirement savings benefit plan," which was further de-
scribed as "Tappan Company Retirement Savings Plan
for Non-Bargaining Unit Employees" was not found to
be unlawful, in that it did not automatically exclude
union employees, but rather provided that they would be
excluded only if they become members "of a bargaining
unit recognized for the purpose of collective bargaining,
and for whom the Company maintains or contributes to
an employee benefit plan pursuant to agreement with the
collective bargaining representative for the unit."
Respondent contends that the exclusionary language in
its amendment to the plan falls within the parameters of
the cited cases, and is therefore lawful because, as stated
by the Board in Solo Cup Co„ 176 NLRB 823 fn. 3
(1969):
This does not mean of course, that an employer
may not advise his employees, in a noncoercive
fashion, that pensions for those in the unit are sub-
ject to bargaining and that if a separate pension plan
for those in the unit is agreed upon, coverage in the
existing plan will not be maintained, i-e.,, the em-
ployer is not obligated to provide "double cover-
age."
The General Counsel, however, citing Solo Cup Co.,
supra, Kroger Co.,, 164 NLRB 362 (1967), enfd. 401 F.2d
682 (1968), cert. denied 395 U.S. 904 (1969), and Winn-
Dixie Stores, 224 NLRB 1418 (1976), enfd. in pertinent
part 567 F.2d 1343 (5th Cir. 1978), maintains that the lan-
guage is unlawful because of the nature of Respondent's
plan. As argued by the General `Counsel, the gravamen
of the violations in the foregoing cases as well as the in-
stant case involves the language in the employers' "profit
sharing plans," which automatically precludes employees
from enjoying the benefits of such plans if they become
covered by a "retirement" plan negotiated by the union.
Thus, profit-sharing, plans and retirement plans, as char-
acterized by the Board, are different entities.
Profit-sharing 'plans are essentially dependent on an
employer's current and future profits and, as in the in-
stant case, constitute a bonus for employees whose ef-
forts have enabled the company to make a profit, As
stated in Respondent's employee handbook, the contribu-
58 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tions are to be viewed as "extra salary." Indeed, the
amendment to the plan renames it to reflect that it is a
"Stock Bonus" plan designed to reward the employees
for their contributions to the Respondent's success. Al-
though certainly more elaborate, the plan, in essence,
may be viewed as similar to an annual Christmas bonus
rewarding employees for a job well done; and indeed,
the value of the ,bonus to the employees may diminish
with time as the benefits are dependent on the value of
Respondent's stock on the employees' retirement. In con-
trast, retirement plans or pension plans, as contemplated
or discussed by the Board in the foregoing cases, are not
subject to the vicissitudes of an employer's business oper-
ations, but rather are customarily funded on a different
basis , ensuring regular contributions and stability. The
fact that Respondent's plan is sometimes denominated as
a retirement plan by Respondent in the various docu-
ments or speeches referred to above does not alter the
plan's essential purpose. As the Board has stated - in
Winn-Dixie, supra, the fact that "enjoyment of,the bene-
fits derived from Respondent's contributions is deferred
until a , point of time normally associated with retire-
ment," is not a determinative factor.
On the basis of the foregoing, I find that Respondent's
ESOP plan is a profit-sharing plan within the purview of
the aforementioned cases . It is clear that an employer
may not, through, provisions of a profit-sharing plan,
automatically deprive employees of benefits therefrom if
they elect to be covered by a retirement or pension plan
negotiated by the union. As this is precisely the express
intent of the language in Respondent's profit-sharing
plan, such provisions are unlawful. I therefore conclude
that by maintaining such an unlawful exclusionary clause
in its profit-sharing plan, Respondent has violated Sec-
tion 8(a)(1) of the Act, as alleged. Winn-Dixie Stores,
supra; Solo Cup Co., supra; and Kroger Co., supra.
2. The representation case
Insofar as the record shows, and as found above, Re-
spondent has maintained an unlawful exclusionary provi-
sion in its profit-sharing plan during all times material
herein. The amended plan was in existence during the
election campaign, as were the employee handbook and
the summary plan document. Immediately prior to the
filing of the petition herein, and as a direct consequence
of the Union's request for recognition, the Respondent
emphasized language contained in the employee hand-
book and summmary plan document, by telling the em-
ployees that the benefits of the ESOP plan were not
available , to union-represented employees.6 Further,
during the course of the postpetition campaign, Respond-
ent admittedly mentioned its ESOP plan to the employ-
ees, for purposes of comparison with the Union's retire-
ment plan.
It is clear that conduct violative of Section 8(a)(1) as
found herein is, a fortiori, conduct that interferes with a
6 It, is well established that prepetition conduct may be considered for
purposes of evaluating objections insofar as it lends meaning and dimen-
sion to postpetition conduct or assists in its evaluation Arthur Briggs, Inc.,
265 NLRB 299 (1982); Maywood, Inc., 251 NLRB 979 fn . 4 (1980);
Dressier Industries, 231 NLRB 591 (1977); Parke Coal Co, 219 NLRB 546
(1975).
free and untrammeled choice in the election. Federated
Department Stores, 241 NLRB 240, 253 fn. 38 (1979);
Dal-Tex Optical Co., 137 NLRB 1782, 1786 (1962). Re-
spondent contends that the ESOP plan was not consid-
ered by Respondent to be a significant issue during the
preelection campaign and therefore should not constitute
grounds for setting the election aside. The Board stated
in Enola Super Thrift, 233 NLRB 409 (1977), "the only
recognized exception to this policy [of finding that con-
duct violative of Section 8(a)(1) constitutes a fortiori in-
terference with a free election] is when the violations are
such that it is virtually impossible to conclude that they
could have affected the results of the election," Applying
this test to the instant factual situation, it is clear that Re-
spondent's contention is without merit.
Moreover, I find no merit to Respondent' s similar ar-
gument that because the vote was overwhelmingly
against union representation it would serve no useful
purpose to conduct a second election. It is clear that
"whether certain conduct warrants setting aside an elec-
tion does not turn on the election results, but rather on
its likelihood to coerce prospective voters to cast their
ballots in a particular manner ." United Broadcasting Co.
of New York, 248 NLRB 403 (1980).
The Respondent's profit-sharing plan is a financial ben-
efit that, it may reasonably be presumed, significantly af-
fects each unit employee. Indeed, Respondent, when
confronted with the Union's request for, recognition,
deemed it expedient to present the employees with the
details ' and benefits of the plan in an effort to persuade
them that not only was a union unnecessary but that se-
lecting a , union would result in their exclusion from the
plan. I therefore conclude that, under the circumstances,
it is necessary to recommend that a second election be
conducted.?
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 mean-
ing of Section 2(5) of the Act.
3. Respondent has violated Section 8(a)(1) of the Act
by threatening employees with loss of a profit -sharing
plan in the event they become covered by a retirement
plan negotiated by the Union.
4. Respondent has violated Section 8(a)(1) of 'the Act
by maintaining article 3.1, eligibility, of, its amended
profit-sharing plan, which unlawfully excludes employees
from participation in the plan, and by maintaining those
portions of existing booklets and documents that contain
related explanatory material.
5. The aforesaid unfair labor practices are unfair labor
practices affecting commerce within the meaning of Sec-
tion 2(6) and (7) of the Act. ' ,
6. By the unfair labor practice found above, Respond-
ent has interfered with the freedom of choice of its em-
ployees in the representation proceeding, and it is recom-
7 A separate, unrelated election objection was withdrawn by the Union
at the hearing.
LYNN-EDWARDS CORP. 59
mended that the election in Case 20-RC-15616 held on
June 2, 1983, be set aside and that a second election be
conducted.
THE REMEDY
Having found that Respondent violated and is violat-
ing Section 8(a)(1) of the Act, I recommend that it be
required to cease and desist therefrom and from in any
like or related manner interfering with, restraining, or
coercing its employees in the exercise of their rights
under Section 7 of the Act, and take certain affirmative
action described herein, including the posting of an ap-
propriate notice attached hereto as "Appendix."
Having found that Respondent violated Section 8(a)(1)
of the Act by maintaining article 3.1, eligibility, of its
amended profit-sharing plan, it is recommended that Re-
spondent cease and desist from further maintaining the
paragraph. Further, Respondent shall be ordered to
amend the plan and any existing employee booklets
and/or publications so as to eliminate therefrom any lan-
guage that suggests that employees covered by a retire-
ment plan resulting from collective bargaining through a
union will be disqualified from participating in Respond-
ent's profit-sharing plan.
On these findings of fact and conclusions of law and
on the entire record, I issue the following recommend-
ed"
nization will 'be disqualified from participation in its
profit-sharing plan.
(c) Post at its North Highlands, California facility
copies of the attached notice marked "Appendix."9
Copies of the notice, on forms provided by the Regional
Director for Region 20, after being signed by the Re-
spondent's authorized representative, shall be posted by
the Respondent immediately upon receipt and maintained
for 60 consecutive days in conspicuous places including
all places where notices are customarily posted. Reasona-
ble steps shall be taken by the Respondent to ensure that
the notices are not altered, defaced, or coveted by any
other material.
(d) Notify the Regional Director in writing within 20
days from the date of this Order what steps the Re-
spondent has taken to comply.
IT IS FURTHER ORDERED that the Union's objections to
the election held by the Board in Case 20-RC-15616 be
sustained, that the results of the election be set aside, and
that the case be remanded to the Regional Director for
Region 20 for the purpose of conducting a second elec-
tion at such time as he deems the circumstances permit
the free choice of a bargaining representative.
9 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 Nation-
al Labor Relations Board " shall read "Posted Pursuant to a Judgment of
the United States Court of Appeals Enforcing an Order of the National
Labor Relations Board."
ORDER
The Respondent, Lynn-Edwards Corp., North High-
lands, California, its officers, agents, successors, and as-
signs, shall
1. Cease and desist from
(a) Threatening employees with loss of a profit-sharing
plan in the event they become covered by a retirement
plan negotiated by the Union.
(b) Maintaining article 3.1, eligibility, of its amended
profit-sharing plan, which unlawfully excludes employees
from participation in the plan, and maintaining those por-
tions of existing booklets and documents that contain re-
lated explanatory material.
(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) Amend article 3.1, eligibility, of its amended profit-
sharing plan by' deleting therefrom those portions that re-
quire that Respondent exclude from participation em-
ployees covered by a retirement plan resulting from col-
lective bargaining through a labor organization.
(b) Amend its' existing employee booklets and/or docu-
ments so as to eliminate therefrom any language that in-
dicates that employees covered under a pension plan re-
sulting from collective bargaining through a labor orga-
8 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 objections to them shall be deemed waived for all pur-
poses
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.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives
of their own choice
To act together for other mutual aid or protec-
tion
To choose not to engage in any of these protect-
ed concerted activities.
WE WILL NOT threaten you with loss of a profit-,shar-
ing plan in the event you become covered by a retire-
ment plan negotiated by the Chauffeurs, Teamsters &
Helpers of America, Local 150, affiliated with Interna-
tional Brotherhood of Teamsters, Chauffeurs, Warehou-
semen & Helpers of America or any other union.
WE WILL NOT maintain those provisions of a profit-
sharing plan that disqualify you from participation in the
event that you become covered by a retirement plan
neogtiated by the Union.
60 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
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 amend those provisios of our profit -sharing
plan and those portions of employee booklets and other
documents that suggest that employees covered by a re-
tirement plan resulting from collective bargaining
through a union will be disqualified from participating in
Respondent's profit-sharing plan.
The election held on June 2, 1983 , by the National
Labor Relations Board has been set aside and its results
voided because of our conduct, described above , affect-
ing the outcome of that election . In due time , another
election will be conducted.
LYNN-EDWARDS CORP.