Paragon Systems, Inc.

National Labor Relations Board - Administrative Judge Opinions

Sep 30, 2015

05-CA-127523 (N.L.R.B. Sep. 30, 2015)

JD–59–15
Washington DC
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
PARAGON SYSTEMS, INC.,
and Case 5-CA-127523
NATIONAL ASSOCIATION OF SPECIAL POLICE AND
SECURITY OFFICERS
Chad M. Horton, ESQ.,
for the General Counsel.
Thomas P. Dowd, ESQ., of Washington, D.C.
for the Respondent.
Chalfrantz Perry, of Washington, D.C.
for the Charging Party.
DECISION
STATEMENT OF THE CASE
Eric M. Fine, Administrative Law Judge. This case was tried in Washington, D.C. on
February 19, 2015. The National Association of Special Police and Security Officers (the Union)
filed the charge on April 24, 2014, and the first amended charge on May 20, 2014 against
Paragon Systems, Inc., (Paragon or Respondent).1 The General Counsel issued the complaint
on November 26, 2014 alleging Paragon violated Section 8(a)(5) and (1) of the Act by, without
notice to and affording the Union the opportunity to bargain, making changes in the following
terms of employment of employees represented by the Union: (a) Reduced and/or cancelled
employee breaks; (b) Redefined the threshold for full-time employment status from 32 to 40
hours per week; (c) Discontinued a uniform allowance; (d) Discontinued the option of paying
health and welfare benefits directly to employees’ paychecks; and (e) Discontinued the option of
paying pension benefits directly to employees’ paychecks.
On the entire record, including my observation of the witnesses' demeanor, and after
considering the briefs filed by the General Counsel and Paragon, I make the following:2

1 All dates are 2013 unless otherwise indicated. Respondent’s unopposed motion to correct
the transcript; and the parties “Joint Motion to Withdraw The General Counsel’s Argument That
Respondent Unilaterally Changed Employee Breaks After September 1, 2013” are granted.
2 In making the findings, I have considered the witnesses’ demeanor, the content of their
testimony, and the inherent probabilities of the record as a whole. In certain instances, I have
credited some but not all of what a witness said. See NLRB v. Universal Camera Corporation,
179 F. 2d 749, 754 (C.A. 2), reversed on other grounds 340 U.S. 474 (1951). All testimony and
evidence has been considered. If certain testimony or evidence is not mentioned it is because it
is cumulative of the credited evidence, not credited, or not essential to the findings herein.
JD–59–15
2
FINDINGS OF FACT
I. JURISDICTION5
Paragon, a corporation, with an office and place of business in Herndon, Virginia
(Respondent’s facility) has been engaged in the business of providing security services to
commercial and governmental entities, including the Federal Emergency Management Agency
(FEMA), at 500 C Street, SW and 1201 Maryland Avenue, SW, in Washington D.C. Annually, 10
Paragon performed services in excess of $50,000 in states other than the District of Columbia.
Paragon admits and I find it is an employer engaged in commerce under Section 2(2), (6), and
(7) of the Act and the Union is a labor organization under Section 2(5) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES15
A. Background
The Federal Protective Service (FPS) is a division of the Department of Homeland
Security, and is responsible for overseeing and providing security of various federal buildings 20
and facilities.3 In June 2013, the FPS awarded Paragon a federal contract to provide guard
services at various federal buildings in the District of Columbia, including the FEMA building in
Washington, D.C. Under the contract, Paragon was scheduled to take over operational control
of guard services at FEMA building effective September 1 replacing Knight Protective Services,
Inc. (Knight). The Union was the certified bargaining representative for the protective service 25
officers (PSOs) who worked for Knight at the FEMA Building and the Union had a collective
bargaining agreement with Knight effective for October 1, 2012 through September 30, 2015
(the Knight CBA). As a federal contractor with a government service contract, Paragon was
subject to the requirements of Executive Order 13495, Non-Displacement of Qualified Workers
as well as the McNamara-O'Hara Service Contract Act, 41 U.S.C. §§ 351–358.430
Shortly after the FEMA federal contract was awarded to Paragon, Paragon arranged for
a memorandum to be posted at the FEMA Building for incumbent Knight PSOs advising them
Paragon was awarded the contract to begin providing guard services effective September 1,
and inviting the incumbent PSOs to attend a job fair on June 29 at the Marriott hotel in 35
Greenbelt, Maryland. The memorandum included the following:

3 The findings here are made relying on a written stipulation of facts entered by the parties,
credited testimony and documentary evidence submitted at the hearing.
4 Executive Order 13495, states “The Federal Government's procurement interests in
economy and efficiency are served when the successor contractor hires the predecessor's
employees. A carryover workforce minimizes disruption in the delivery of services during a
period of transition between contractors and provides the Federal Government the benefit of an
experienced and trained workforce that is familiar with the Federal Government's personnel,
facilities, and requirements.” Executive Order 13495, therefore, generally requires that
successor service contractors performing on Federal contracts offer a right of first refusal to
suitable employment under the contract to those employees (other than managerial and
supervisory employees) under the predecessor contract whose employment will be terminated
as a result of the award of the successor contract.
JD–59–15
3
Paragon Systems is currently accepting applications from incumbent security officers.
To be considered for employment, all candidates must complete all parts of the Paragon
applications process.
Applicants shall go to (listed website) or the company website (listed website) under
careers and complete an online application.5
The memorandum stated applicants must bring the following documents (the original and a
copy) to the job fair. The documents listed included a driver’s license or state ID, social security
card, birth certificate, and high school diploma, transcript or GED certificate. The memo stated:
10
Offers of employment are contingent upon successfully passing all pre-employment
requirements, attending all scheduled training and passing all contract-required
performance standards. A Medical exam, including a Fit Test and a drug screen is also
required.
Applicants will also be asked to provide availability times in order for the medical exam 15
and the fit test to be scheduled.
Paragon held the job fair on June 29 and applicants who had not yet completed
applications were given the opportunity to do so on-line at the job fair. Incumbent applicants
who had completed applications were given job offer letters that were identical in content for all 20
incumbents, other than being personalized with the incumbent’s name and address in the title of
the letter and at the acknowledging signature block for each incumbent. Paragon also took
down at the job fair contact and certification-related information that would be needed in order
for the PSOs to complete the necessary pre-employment drug-testing, physical examination and
other certifications required in order to start work for Paragon. 25
The offer letter distributed to Knight employees on June 29 was dated June 29, and had
each individual employee’s name on it. It stated it was regarding “potential” employment with
Paragon as a security officer. The letter stated, “On behalf of Paragon Systems, I would like to
extend to you a contingent offer of employment to serve as a Security Officer …”. “Effective 30
date of this offer is September 1, 2013.” The offer contained an appendix which included a
wage rate and chart listing certain benefits. The offer letter discussed health/medical coverage
and stated that if the employee elected not to receive health/medical coverage, then the health
and welfare hourly rate indicated in the appendix assigned to their geographic area will
automatically be contributed into a Company-sponsored 401(k) retirement plan, pretax, for the 35
employee’s benefit. The offer letter stated “You will not have the option of receiving a cash
payment in lieu of health and retirement benefits.” The offer letter stated:
Shift schedules will be determined in accordance with the operational needs of the
contract, with consideration given to employee seniority. Breaks will be provided in 40
accordance with Company policy and in compliance with any applicable State and
Federal law requirements and subject to the operational needs of the contract.
All full-time employees who have continuously been employed by the Company, or its
predecessors to the contract between the Company and the Department of Homeland
(EG.29 CFR 4.173), shall be entitled to vacation pay in accordance with Appendix A. 45
* * *
Paid holidays and sick leave are also available in accordance with Appendix A, and in
accordance with certain eligibility requirements.
Additionally, to the extent indicated in Appendix A, individuals working in specific
localities will receive an hourly pension earning for each regular hour worked that will be 50
contributed on your behalf to the Company-sponsored retirement plan, pretax. You will
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have your own account within the 401(k) plan, and the money that you are entitled to
receive will be placed in that account.
Employment is contingent upon successfully passing all pre-employment
requirements (including pre-employment interviews), attending all scheduled training,
weapons qualification, and passing all contract-required performance standards 5
including the physical exam with a physical abilities test. A pre-employment drug screen
is also required.
Your employment will be at will, meaning that there is no restriction on your ability to
leave your employment at any time or for any reason, and there is similarly no restriction
on the Company’s ability to terminate employment at any time and for any reason not 10
prohibited by law.
* * *
In compliance with Executive Order 13495 (Non-Displacement of Qualified Workers
under Service Contracts), you are hereby given a first right of refusal for this job opening.
If you intend to accept employment you will need to hand deliver, or fax a copy of your 15
acceptance form to (number provided) or mailed to the above address by July 6, 2013.
Additionally, a copy of Paragon Systems’ Health, Dental, and 401(k) Plan Summary
Descriptions can be requested by calling Human Resources…..
The June 29 contingent offer letter contained a base pay rate of $24.29, a health and 20
welfare rate of $5.00; and a pension rate of $1.11 for the 500 C Street location; 1201 Maryland
Avenue Locations. However, the Knight CBA provided in its appendix that for a guard, the rate
was $24.29, but effective October 31, 2012, the guard rate was increased to $26.80. The
Knight CBA provided for four classifications with the lowest pay as of October 31, 2012 being
$24.30, and the highest rate being $28.60. The Knight CBA provided for wage increases for all 25
four classifications effective October 31, 2013. The Knight CBA provided effective October 31,
2012, the Employer health and welfare contribution was to be $6.00 per hour and pension
contribution was to be $1.19 per hour, with the rate prior to that time being $5.00 and $1.11 per
hour respectively. Thus, the June 29 offer letter understated wages, health and welfare, and
pension benefits concerning the amounts the bargaining unit employees were receiving from 30
Knight at the time the offer letter was distributed. The Knight CBA granted sick leave and
vacation based on a formula accruing minutes per hours worked. It did not distinguish sick
leave based on full or part time status. The Paragon offer letter offered vacation based a
formula for hours for years of service, and just stated 6 sick days. It stated full-time employees
will be entitled to vacation as listed in the appendix to the letter, but it did not define who was a35
full time employee. The offer letter stated paid holidays and sick leave are also available in
accord with the appendix based on certain unspecified eligibility requirements.
Paragon subsequently held a mandatory new hire orientation meeting on August 24, for
employees who had been hired to fill PSO positions at the FEMA Building. At this meeting, 40
PSOs were given copies of Paragon’s Security Officer Handbook as well as follow-up
information about PSO work schedules and break schedules based on the operational needs of
the federal contract. The Paragon Security Officer Handbook is over 50 pages in length singled
spaced. It contains a table of contents, which does not specifically mention full time status,
breaks, vacation, or uniforms. At page 24 of the handbook it discusses uniforms and 45
appearance. Within that provision, it discusses “wash and wear” uniforms and their
maintenance. It states “If you are issued a uniform that requires dry cleaning, the local contract
office will make arrangements to either provide clean uniforms to you, or reimburse you for dry
cleaning expenses.” At page 39, of the handbook under the heading “Definitions”, it states, “A
full-time employee regularly works a minimum of 40 or more hours per week on a continuing 50
basis and has completed the introductory period.” At page 41, there is a heading “On-Duty
JD–59–15
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Meal Period”. It states therein after defining on duty meals as involving posts that do not allow
officers to leave the job site for meal periods, that “you will be paid on-duty meal periods you
take.” It states, “as some assignments, officers take off-duty, unpaid meal periods. If you take
an unpaid meal period, you will be relieved of duties during that period.” At page 47, the
handbook states, “Eligible employees will be paid vacation pay in accordance with the terms of 5
the Paragon vacation pay policy, applicable CBA or Wage Determination and applicable state
and federal law.” It states, “Paragon does not pay for sick days unless stipulated in the CBA.”
The employees attending the August 24 orientation signed for receipt of the handbook.
The parties stipulated to the following: 10
Article VII of the Knight CBA set forth employee break structure, and provides, in
relevant part: (a) employees working more than four (4) hours but less than eight (8)
hours shall receive one (1) paid 15-minute break; (b) employees working eight (8) hours
but less than 12 hours shall receive one (1) paid 30-minute break and two (2) paid 15-15
minute breaks; and (c) employees working 12 or more hours shall receive one (1) paid
30-minute break and three (3) paid 15-minute breaks. Effective September 1, 2013,
Paragon has altered the length and number of employee breaks, as well as the paid or
unpaid status of said breaks. When Paragon assumed operational control on
September 1, 2013, it put in place a break structure different from the break structure set 20
forth in the Knight CBA.
Article VI of the Knight CBA states that employees who are regularly scheduled
to work at least 32 hours per workweek shall be considered “full-time.” Effective
September 1, 2013, Paragon considered a “full-time employee” to be an individual who
regularly works a minimum of 40 or more hours per week on a continuing basis.25
Article XXIII of the Knight CBA states that, effective October 1, 2012, employees
shall receive a uniform allowance of sixty-five cents ($0.65) per hour worked. These
monies were paid to employees as wages in their paychecks. Effective September 1,
2013, Paragon did not provide an hourly uniform allowance.
Article XXIV of the Knight CBA provides, in part, that employees may receive the 30
cash equivalent of the Health and Welfare fringe benefit amount if the employee can
produce evidence of comparable medical group coverage in an employer-sponsored
medical plan, either through a spouse or another employer. If an employee could
present such evidence, he or she could receive the cash equivalent of the Health and
Welfare fringe benefit as wages in his or her paycheck. The benefit was paid based on 35
hours worked, up to 80 hours of bi-weekly pay. Effective September 1, 2013, Paragon
did not provide employees with the option of receiving the cash equivalent of the Health
and Welfare fringe benefit as wages in an employee paycheck.
Article XXVI and the Appendix of the Knight CBA set forth the employer’s
pension contribution. Effective October 31, 2012, the employer’s pension contribution 40
was $1.19/hour worked, up to a maximum of 80 hours of bi-weekly pay. Knight and the
Union had an established past practice wherein unit employees could receive the
employer’s pension contribution as wages in their paycheck. Effective September 1,
2013, Paragon did not provide unit employees with the option to receive the employer
pension contribution as wages in their paycheck. Rather, Paragon directed its pension 45
contribution to a company-sponsored 401(k) plan maintained for each unit employee.
The parties stipulated the differing terms and conditions of employment described above
were announced and implemented by Paragon without bargaining with the Union. Paragon
assumed operational control of security for the FEMA Building on September 1 with a workforce 50
consisting of a majority of PSOs who formerly worked for Knight at the FEMA Building.
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Thereafter, Paragon recognized the Union as the collective bargaining representative of the
PSOs at the FEMA Building, and bargained with the Union for a new collective bargaining
agreement. Paragon and the Union reached a collective-bargaining agreement on or about
August 15, 2014 covering the time period of August 15, 2014 through November 30, 2017.
5
Myron Birdsong, a security officer working for Paragon, was called by the General
Counsel as a witness. He began his employment with Paragon in September 2013 working at
FEMA at the headquarters building located at 500 C Street, Southwest. Prior to working for
Paragon, Birdsong was employed by Knight where he began working at the FEMA
headquarters in 2011. Birdsong estimated there were about 50 to 60 bargaining unit 10
employees who worked at the FEMA headquarters. In addition to the 500 C Street address,
there is a FEMA annex building in Southwest which houses bargaining unit employees.
Birdsong has been a member of the Union since 2011, but has never has held a union office.
Birdsong learned Paragon was taking over the contract from Knight in the spring of 15
2013, through word of mouth, and he saw the memo from Paragon posted in the control room
which announced Paragon’s June 29 job fair. Birdsong testified the control room is where the
security officers have their guard mount, which is their daily briefing from their supervisors.
Birdsong estimated he saw the memo posted about a month before the job fair. Birdsong
applied for employment with Paragon online as instructed by Paragon’s job fair memo. Birdsong 20
completed the online application in advance of the job fair. Birdsong received an email
confirming he had submitted the application. Birdsong credibly testified the online job
application did not indicate anything was going to change concerning his working conditions.
He testified the application said nothing about: the uniform allowance, paid or unpaid breaks, the
length of breaks, how he would receive his health and welfare or pension contribution. It did not 25
say how many hours were needed to be a full-time employee. Birdsong testified the email
confirmation for the application did not contain any information regarding these matters.
However, the application stated:
30
If hired, I agree and understand that I will conform with the policies practices and
procedures of Paragon. I further agree that my employment is “at-will” This means that
either Paragon or I may terminate the employment relationship at any time, with or
without notice, and with or without cause. I understand that Paragon retains the right to
establish compensation benefits and working conditions for all of its employees. 35
Accordingly, I understand and agree that Paragon retains the sole right to modify my
compensation and benefits, position, duties, and other terms and conditions of
employment, including the right to impose disciplinary action that Paragon, at its sole
discretion, determines to be appropriate. No employee or representative of Paragon,
other than the President of Paragon, Inc., has the authority to alter the at will nature of 40
my employment relationship, or make any agreement inconsistent to the foregoing.
Birdsong attended the June 29 job fair at the Greenbelt, Marriott. Birdsong testified that,
upon arriving at the job fair, he went to a desk, signed in and then received a packet to be filled
out. Birdsong testified the person he encountered first was Paragon Representative Rick 45
Waddell. Lori Raines, who worked in HR for Paragon, also attended the job fair. Raines had
some assistants with her. Birdsong testified he was directed to go inside the room where he
completed his paperwork. It took Birdsong about 20 minutes to complete the packet which
contained tax forms, a direct deposit form, an offer letter, some EEO policy papers, and things of
that nature. Birdsong testified there was a uniform sizing document in the packet. 50
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The offer letter in Birdsong’s packet was dated June 29, and has his name on it. It
contained the information described above with respect to the June 29 offer letters to all Knight
employees who received one. Birdsong testified he read and signed the offer letter and turned it
in to Paragon officials on June 29. Birdsong testified the offer letter contained different working
conditions than were in place with Knight. He testified first was the rate of pay located on the 5
third page, the $24.29 for 500 C Street. Birdsong testified that Paragon remedied that before
they took over the contract. Birdsong testified that another change was that health and welfare
was no longer going to be given to the officers as a wage that it was going to be put in their
401(k) plan. Birdsong testified that other than those two items there were no announced
changes in working conditions in the offer letter.10
Birdsong testified that when they completed filling out their hiring packets received on
June 29 at the Marriott, the officers waited to be called up front. There was a panel there that
reviewed the hiring packet with the officers. Waddell and Raines were sitting at the table
along with about five assistants. Birdsong met with a man at the table and 15
Birdsong provided him with his hiring packet, social security card, birth certif icate,
driver’s license, and a blank voided check for them to make direct deposits of his
pay. Birdsong testified he submitted qualifications including certificates of training
that he had. Birdsong testified he met with the person at the table for about 20 to 25 minutes,
and then he left. Birdsong testified that he was told at the table there would be an orientation 20
soon, and it would be announced. Birdsong testified the man at the table did not ask him any
questions about his professional or educational background. He did not inquire why Birdsong
was interested in working at Paragon. Birdsong testified when he left the Greenbelt Marriott on
June 29, he was under the impression he had been hired.
25
Birdsong testified, on cross-examination, that at the job fair Paragon responded to a lot
of questions the officers asked. Birdsong, himself, asked questions including whether Paragon
was going to go by the CBA. Birdsong testified they had CBA in their building and there were
officers at the job fair from different sites that had different CBA’s than the one where Birdsong
worked. Birdsong testified the officers at his building wanted to know whether Paragon was 30
going to honor their collective-bargaining agreement because their pay was higher than that in
the surrounding areas. Birdsong testified that he as well as others asked this question stating
this was the main concern. He testified he asked this when the floor was open for questions.
Birdsong testified he read the bullets points in Paragon’s offer letter including the statement that
“You will not have the option of receiving a cash payment in lieu of health and retirement 35
benefits.” He testified he understood from it that he would not have the option of receiving a
cash payment in lieu of health and retirement benefits. Birdsong testified that he understood
that was different from what happened under the Knight CBA. He testified as to pension
benefits at Knight he had the ability to get that paid directly to him. He testified he understood
from Paragon’s letter that under Paragon he would have his own 401(k) account and the money 40
he was entitled to receive would be placed in that account. However, Birdsong testified that
aside from the change in the placement of health and welfare funds the Paragon offer letter was
not specific that other employment conditions were going to change.
At one point on cross-examination, Birdsong testified the employees kept asking Waddell 45
if their rate of pay would change, and if Paragon would be honoring the CBA, and he testified
Waddell responded, “everything will remain the same”. Birdsong testified they asked Waddell if
Paragon would honor their CBA, to which he replied “everything would remain the same.”
Birdsong testified the number one question at the June 29 job fair was whether they were going
to be paid the collective-bargaining wage rate. Birdsong testified the wage rate in the offer letter 50
was low and everyone wanted to know if this was what Paragon was offering because they had
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a CBA, and they were getting paid a certain rate, and if they signed the offer letter are they
bound to it. He testified the answer given was no this was just an offer letter. He testified they
were told the wage rate in the offer letter was wrong, and they would be paid the wage rate in
the collective-bargaining agreement which was what Waddell was telling them. Then the
following exchange took place:5
Q. And was Rick Waddell being broader than that? Was he saying, and not only will we
pay you what's in the wage rate, we're going to do everything exactly the way it was
done in the Knight contract even though you're signing this and saying that changes
are going to be made? Did he say --10
A. He wouldn't give up that information like that, no. We bombarded him with
questions, and with the bombardment of questions, he had, you know, to give some
answer to the questions that were being asked.
Following the job fair, Birdsong saw a memo posted by Paragon at work stating, “On 15
August 24, 2013, we will be holding a Mandatory New Hire Orientation at the following
location.” The memorandum gave the time as 10 a.m., and listed the Greenbelt Marriott as the
place. It stated, “During the Orientation you will receive a presentation with information on the
company and your benefits. In addition, the following items will be handed out: Employee
Handbook; Benefits Packet.”20
Birdsong attended the August 24 orientation, which was attended by Paragon officials
Waddell and Raines, along with others. Birdsong testified that, at orientation, they were given
an employee handbook and a benefit packet. He testified this was the first he had seen the
Paragon employee handbook. Birdsong estimated the orientation lasted no more than 2 25
hours. He testified the orientation began by Raines discussing the benefit package. Raines
used a Power Point. Birdsong testified Raines stated if they had insurance they could opt out
of the insurance and put their monies in the 401(k) plan. Birdsong testified Raines did not
speak about a uniform allowance, or the pension. He testified she did not talk about how
many hours they needed to work to be a full-time employee, or about breaks.30
Birdsong testified that Waddell spoke at the orientation for about 45 minutes. He
testified Waddell talked about the company and went over the handbook, but Waddell did not go
over every page of the handbook. Birdsong did not recall in particular any policies Waddell
discussed from the handbook. Waddell opened the floor to questions. Birdsong testified the 35
main question was whether Paragon was going to pay them the same pay they had been
receiving with the prior company because they had a CBA in place. They wanted to know if
Paragon would honor the CBA and pay them their rate of pay. In this regard, Paragon’s offer
letter pay rate was lower, and the employees were concerned Paragon was going to drop their
pay. Birdsong testified Paragon fixed the pay rate before he started working for Paragon. 40
Birdsong testified Waddell also talked about vacation pay, and he was asked questions about
health and welfare. Waddell was asked if they were going to be receiving their health and
welfare as a wage and he said no. Waddell said it would be going to the benefit plan. Birdsong
testified that when he worked for Knight they received an hourly pension contribution of $1.19
an hour as a wage in their paycheck. Birdsong testified it did not go into their 401(k). Waddell 45
said they would no longer receive the pension contribution as a wage that it would go into the
401(k) plan. Birdsong testified he asked if the collective bargaining agreement would change.
He testified Waddell said in response that everything would remain the same. Birdsong testified
Waddell did not discuss break structures or tell them they would be receiving an unpaid lunch
break. He testified they were not told the hourly uniform allowance they received at Knight 50
would be discontinued. He testified neither Waddell nor Raines discussed how many hours an
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employee needed to work to be full-time. Birdsong testified he never interviewed with Paragon
before they assumed operations. Birdsong testified he received and reviewed the Paragon
employee handbook at the orientation meeting. The handbook is over 50 pages in length and at
page 39, it states, “A Full-time employee regularly works a minimum of 40 or more hours per
week on a continuing basis and has completed the introductory period.”5
Birdsong testified Waddell spoke about the offer letter at the orientation. Birdsong
testified “the only thing I remember is the questions that were asked of him about the offer
letter, you see, and about the CBA. Because we were under the impression that nothing would
change, regardless of what the full-time in your – in this handbook, that says 40 hours, on our10
site, per our CBA, 32 hours is full-time. So when you tell us that nothing is going to change,
then this, what I just read to you, means nothing because you're telling me nothing's going to
change. So we're not worried that -- we're not concerned. That's not concern. It doesn't raise
a red flag.” Then the following exchange took place:
15
Q. When he said nothing's going to change, was he talking about the wage rate?
A. Like I said, we asked -- we bombarded him with questions in accordance to the
CBA, you know, it was this question, that question, this question, that question, you
see. It wasn't just a broad statement or, yes, we will honor your --the whole CBA. Of
course, he wouldn't say anything like that. We had to -- we tried to ascertain was he --20
were they going to honor our CBA. So we kept saying, you know, we have a CBA. Our
CBA says this. Our CBA says that.Will that change? Will this change? No.
As can be seen from the above discourse concerning Birdsong’s testimony, he vacillated
between stating that at the job fair and orientation that Waddell in response to questions stated 25
Paragon would honor Knight’s CBA and nothing would change, to stating “Of course, he
wouldn’t say anything like that.” Noting this was only brought out on cross-examination, I do not
find based on Birdsong’s testimony that Waddell made statements at either the job fair, or the
orientation that Paragon would honor Knight’s CBA. Rather, I find as Birdsong testified that
errors in Paragon’s June 29 offer letter generated a lot of questions from the officers, and that 30
Waddell’s response to these questions while assuring them that Paragon would honor the
wages set forth in the Knight CBA, created confusion as to what other Knight CBA benefits
Paragon might honor. I do not find Birdsong’s occasional testimony that Waddell stated
Paragon would honor the Knight CBA to be an intentional misrepresentation. Rather, I find
Birdsong’s memory on Waddell’s specific statements was clouded by the passage of time, and 35
as well as the barrage of questions from security officers that Respondent’s offer letter
engendered. I find misstatements by Respondent in its June 29 offer letter about wages, and
pension and health and welfare rates concerning those in the Knight CBA and assurances by
Waddell at those meetings that Paragon would honor the CBA in certain respects created
confusion amongst the employees as to what Paragon was actually offering. 40
Birdsong testified their hourly rate of pay with Knight did not change after they were hired
by Paragon. Birdsong testified the health and welfare contribution being received as wages
changed, but they employees already knew that. Birdsong testified the employees had no clue
that breaks were going to change. Birdsong testified where it states in the offer letter that, 45
"Breaks will be provided in accordance with company policy," did not signify to him there was
going to be a change because Paragon’s break policy could have been the same as Knight’s.
Birdsong testified he learned he was no longer receiving a uniform allowance when the
employees looked at their first pay checks from Paragon. For Knight, there was a line item on 50
the check for uniform allowance, which was absent from the checks from Paragon. Birdsong
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testified that prior to September 1, no one from Paragon had told him that the hourly uniform
allowance was going to be discontinued. Birdsong later testified that by the first two checks they
received they figured out they were not receiving a uniform allowance, and he testified that was
about a month or so.
5
Birdsong testified when he was employed by Knight the employees received an hour
paid breaks. There was one 30 minute and two 15 minute breaks per 8 hours worked, or the
employee could just take the whole hour at a time. Birdsong testified they worked 7 hours at
Knight and got paid for 8. Birdsong testified when Paragon took over operations on
September 1, his breaks did not change initially. He testified the break structure changed 10
around a month after Paragon took over. Birdsong testified that around a month after
Paragon took over he no longer received a paid lunch break. Birdsong testified after Paragon
took over and made the changes to breaks, when Birdsong worked an 8 hour shift he was
only paid for 7 hours and 30 minutes. Birdsong testified the first paycheck he received from
Paragon the hours he was paid included the time he spent on his lunch break. He testified that 15
in subsequent checks the hours did not match up. Birdsong testified it was a couple of months
after he got there that he realized he was not being paid for his lunch breaks by Paragon.
Birdsong testified he could tell by calculating the hours in his check and the amount of pay that
for around the first two months he was being paid 40 hours and therefore he was being paid for
his lunch break. He testified this changed around two months after Paragon came in and the 20
supervisors announced the employees would no longer be paid for their lunch break. He
testified at that time he made calculations and determined he was not being paid a full 40 hours.
He testified when the supervisors announced the change the employees had to start signing in
for their breaks.
25
Birdsong testified he learned Paragon had increased the hourly threshold for full time
status from 32 to 40 hours much later on. He testified it was over a year. Birdsong testified this
had a tremendous effect because it impacted their personal leave and vacation pay. It also
affected the rate of pay they were receiving to go into their 401(k). He testified a full time
employee gets the full vacation benefit, a part time receives a pro-rated benefit.30
Grady Baker works for Paragon as vice president of operations. Baker testified Paragon
provides armed force protection to the federal government in various aspects, including security
officers working as guards in federal buildings. Baker testified Paragon’s operations are in 42
states in the United States and many of the territories including Saipan, American Samoa and 35
Guam. Baker testified there have been over 30 contract transitions to Paragon since the
president’s executive order pertaining to the right of first refusal of a job offer to the predecessor
contractor’s employees, with at least 15 in 2014. Baker testified there were two occasions in
2014 where less than 50 percent of the predecessor’s employees came to Paragon on federal
contracts. He testified he did not recall it happening in 2013. Baker testified with the vast 40
majority of contracts in the last 2 years more than 50 percent of the predecessor’s employees
have been hired by Paragon making it through the vetting process and beginning work. Baker testified
over 90 percent of the employees Paragon employs are union represented.
Baker testified the items specified in a wage determination that have to be met by the 45
contractor are: hourly wages, health and welfare minimums, minimum requirements for vacation,
and some locales prescribe how breaks are to be conducted. Baker testified there are
provisions and guidelines for amounts to pay for uniform maintenance allowance (UMA). Baker
testified when Paragon is going to bid on a location and there is no CBA in place he looks at the
wage determination to determine what Paragon has to pay as a minimum amount. Baker 50
testified, if the predecessor contractor has a CBA, Paragon is bound by the wages and fringe
JD–59–15
11
benefits of that contract. He testified whatever the employees are making per hour, the health
and welfare, vacation, vesting is all predetermined and is owed to the employees. Baker
testified Paragon has to ensure when they go into a new contract they are paying at least those
collectively bargained minimums because those wages become the wage determination for the
applicable contract and this is made clear by the contracting officers when they put out the 5
solicitations on behalf of the federal agencies. Baker testified when they are interested in
bidding for a contract most times Paragon receives a copy of the predecessor’s CBA. Baker
testified he reviews the predecessor’s CBA wage appendices because that is what Paragon is
required to meet, and how they determine what to put in the offer letter for wages. He testified
Paragon does not look at the predecessor’s other provisions or economic or noneconomic terms 10
of employment because Paragon has their own company policies and practices which they
propose and were awarded the contract based on. Baker testified they are not interested how
other companies do their business unless they are beating Paragon in the competitive market.5
Baker testified that, prior to the FEMA contract; he has been involved with Paragon15
taking over a federal contract from a competitor over 50 times since 2008, when Baker started
with Paragon. Baker testified he is the liaison between whoever they contracted with and
Paragon, and he is also responsible for making sure that Paragon sets up the logistics such
as job fairs to make sure they have enough personnel to be able to staff the contract on day
one. Baker testified when Paragon has taken over contracts from a competitor in about 45 to 20
46 of the 50 plus contracts the competitor’s employees were represented by a union. Baker
testified he is aware of no instances where Paragon adopted the predecessor’s union contract.
Baker testified, concerning the FEMA contract, Baker was responsible for ensuring they had
enough people recruited, hired, trained, qualified, and ready to work on day one. Baker testified
Paragon used Knight’s union contract at the FEMA building to price out what Paragon was 25
legally obligated to pay in terms of wages and fringe benefits. Baker testified Paragon does not
assume that the union will be representing the employees because, “it's not in every instance
that we get a majority membership to come aboard especially in this region.”
Baker testified Paragon has developed a procedure on how to communicate to incumbent30
employees the terms Paragon is offering. Paragon’s first communication to incumbent
employees is the job fair announcement. He testified Paragon posts it at the location for the
incumbent workforce with permission of the client. Copies are also left with the incumbent
management if they are willing to speak with Paragon, and Paragon asks them to pass it out
without disrupting operations. Baker testified the posting announces Paragon won the contract 35
they are working on and Paragon is hosting a job fair, and to be at this place at the specified
time and to make sure to bring things to prove who you are, including your social security card,
driver’s license, et cetera and to apply on line.
Baker testified Paragon trains its personnel who conduct the job fairs for questions at the 40
job fair. He testified Paragon representatives are taught to direct the officers to the offer letter

5 I did not find this particular aspect of Baker’s testimony to be convincing in that it appeared
to be formulated in support of Paragon’s legal position. For example, the Knight CBA was not
terribly complex, and I do not credit Baker’s claim that when they had access to it that he and
Respondent’s other officials did not review its contents, whether or not they felt obliged to follow
its terms. I would also note that Paragon’s offer letter specifically stated employees would not
have the option of receiving health and welfare payments as part of their pay check, rather it
would be placed in their 401(k) plan. Thus, the offer letter changed a benefit provided by Knight
listed in its CBA which was not contained in the CBA appendices, but in the heart of the
agreement at article XXIV.
JD–59–15
12
concerning questions about pay, and if they have further questions they can direct them to
Baker, the HR representative, one of Paragon’s attorneys, or someone senior in the company.
He testified Paragon job fair representatives are trained for the frequently asked questions one
of which is if Paragon is going to honor the CBA of the predecessor. Baker testified people are
trained to say no to that question. 5
Baker testified Rick Waddell’s title at Paragon was the project manager for the D.C.
region. He testified Waddell was no longer working for Paragon at the time of the trial and he
was living in West Virginia.6 Baker testified Waddell went through training in terms of what to
say in response to questions about the CBA a n d questions about the job offer. Baker testified 10
he attended seven of the job fairs Waddell conducted while working for Paragon, including the
FEMA job fair. Baker testified at those job fairs he heard Waddell receive questions about
whether Paragon was going to adhere to the predecessor's CBA. Baker testified when they
specifically asked are you going to be adopting the CBA, Baker and Waddell gave them
the same answer “which is we currently do not have a CBA with Knight Protective15
Security or your union. If at the end of the process, a union presents itself, we'll enter into
negotiations in good faith.”
Baker testified Paragon wants the officers to complete the applications before coming to
the job fair because, “We can't issue contingent offers of employment until you've applied,20
officially applied with the company unless you express interest, and everybody who works
for Paragon from top to bottom has to apply online through our HMS system before being
considered for positions.” He testified Paragon wants people to apply in advance of the job fair
to know who is coming to the fair, and how much support personnel Paragon will need at the
meeting. Baker testified Paragon’s job fair memo asks people to bring certain documents so 25
they can prove who they are because that is part of the interview process. Baker testified they
present themselves with their social security card, they fill out I-9s, and they provide their
driver's license data. Baker testified the job fair announcement memo states offers of
employment are contingent upon successful passing of all the pre-employment requirements.
Baker testified contingent means, “we're giving you an offer, but it's not a guarantee of 30
employment on September 1st. That's just the first part of the process. We're giving you a
contingent offer of employment meaning if you meet all the terms and conditions, if you accept
our employment, and if you qualify with all the bona fides that I explained earlier for your
training, your medical certifications, et cetera, then essentially you'll have a place to work on 1
September.” Baker testified the job fair memo is not an offer of employment. He testified “an 35
offer of employment is an offer letter. This is just how to go and apply for a job with us.”
Baker testified when someone comes to a job fair if they are an incumbent they check in
and if they have applied in Paragon’s system it is likely Paragon has an application and a packet
for them which includes a contingent offer letter. He testified Paragon will ask them for their 40
paper work. Baker testified for the incumbent workforce Paragon has their credentials and
knows to that point they are an officer in good standing on the current contract. For the
incumbent officer, they come in and receive their packet with the offer letter and behind that
there is benefit paperwork, the I-9, direct deposit forms, benefits explanation forms, and all of
the information someone would need to be put into Paragon’s system. Baker testified the offer 45
letter is on top in the file and the first thing the incumbent sees.
Baker attended the June 29 job fair. He testified it started at 10 a.m. and Baker left
around 4 p.m. Paragon was billed for the use of the facility until 5: 30 p.m. Baker testified there

6 Baker testified Lori Raines also no longer works for Paragon and had moved to Florida.
JD–59–15
13
was minimal activity at the time he left. Baker testified when people arrived they signed in.
They were directed inside where there were folders c o n t a i n i n g their information including
contingent offer letters. They went back to the tables, took a seat, read through the information,
and filled out the paperwork. He testified once they were done filling o u t t h e i n f o r m a t i o n ,
they came back and signed in again, at which time they were called up to have the paperwork5
reviewed and went through the interview process with attending Paragon representatives. Baker
testified when they turned in the paper work they had to complete their uniform size survey
and give Paragon their measurements. Baker testified Paragon had people with a tape
there who would d id a f i t t ing for the of f icers ’ body armor. Baker testified they were
told they would be instructed a s t o when the next range dates would be, when the training10
dates would be, and this would be communicated through their site manager.
Baker testified there was no specific question and answer session at the June 29 job fair.
Baker testified there were questions and answers when they would come up with their packets,
and if they had questions, then we would answer them. However, he also testified people raised 15
their hands and asked questions. Baker testified Waddell was asked questions at the job fair,
and that Baker was present for all of the questions that Waddell was asked that Baker knew of.7
Baker testified someone asked about the pay rate, that the rate listed on the back of the
contingent offer letter for FEMA was incorrect and wanted to know if this was what they were
getting paid. Baker testified the answer was no that they would be getting paid what you are 20
getting today. Baker testified Waddell said, “I'm not sure what's in your CBA, but if there's, if
there's a CBA out there or wage determination we don't know about, we'll research that.“ “If
there's money that we owe you, we're –“ “we're going to pay you what's legally owed.”
Baker testified he did not hear Waddell address that point more than once.
25
Baker testified that other questions asked of Waddell in the meeting, where about the
types of uniforms they would be receiving, could they wear their own boots. Baker testified, “I
mean it was all kinds of various questions. Are we going to be on 12-hour shifts? Currently,
you know, we work 12s.” Baker testified, “The majority of the answers were we don't know at
this time. The offer, you know, you have your offer letter. We still don't know who's going to30
be there yet because there were -- we were recruiting for more than one location at this job
fair.“ Baker testified there were five sites they were recruiting under this contract. He testified
there were a ton of questions going back and forth. Baker testified there were no questions
about whether people would get a uniform allowance or a shoe allowance. Baker testified they
did not promise anyone that they would get a uniform or shoe allowance. Baker testified the job 35
fair was conducted in a large room with the capacity to hold 300 people. He testified at the initial
rush there were about 60 people in the room. Baker testified he was not standing next to
Waddell the whole time Baker was there. Baker testified he did not hear every question Waddell
was asked. Baker testified he did not hear anyone at the job fair raise a question to himself or
Waddell about whether Paragon was going to keep everything the same as under the Knight 40
contract. He testified he also did not hear anyone ask a generalized question as to whether
everything was going to be the same as under Knight. Baker did not hear Waddell state that
everything was going to be the same as under Knight.
Concerning the June 29 contingent offer letter of employment, it states shift schedules to 45
be determined in accordance with the operational needs of the contract. Baker testified this
meant depending on the number of personnel they had, they will devise the shift schedule,

7 Despite this testimony, Baker later testified that the job fair was in a very large room, that
there were as many as 60 officers there in the morning rush, and he was not at Waddell’s side
for the whole time Baker was there.
JD–59–15
14
such as whether they would be 12 or 8 hour shifts. Baker testified, at the time of the job fair,
he did not know how the shift schedules would be set up on September 1. It is stated in the
letter breaks will be provided in accordance with the company policy and in compliance with any
applicable state, federal law requirements subject to the operational needs of the contract.
Baker testified their company policy is, unless otherwise s t i p u l a t e d b y the statement of5
work provided by the government, t h e y follow the wage determination laws for the
minimum break requirements. Baker testified there was nothing in the FEMA statement of
work that required P a r a g o n to set up breaks in any particular fashion. Baker denied
hearing Waddell tell anyone at the job fair that breaks would be done in the same manner as
they were done by Knight.10
Baker testified that, after the job fair is completed, then the predecessor’s incumbents
have to qualify for the new contract. To qualify, they have to go through use of force
training with Paragon, which pertains to the use of their firearm. He testified, if they had OC
training or if they had baton certification which is expired, they have to go through that use of15
force training with Paragon. Baker testified Paragon does its own use of force training.
He testified they have to go for new medical testing. He testified the medical requirements from
the old contract to the new one had changed at FEMA. The new one required a seven-panel
urinalysis as opposed to a five panel. They also had to be sized for uniforms and for their
body armor, which was a new requirement. Then they are sent for the fit testing which is not 20
only the medical testing, but also a cardiovascular test.
Baker testified the next meeting with the incumbent employees was the orientation
meeting. Baker testified there were eight orientations in Waddell’s region while Waddell worked
for Paragon. Baker testified he spoke at seven of them, and only missed one, which was the 25
one pertaining to the FEMA building. Baker testified he spoke to Waddell and others about how
to respond to employee questions at orientations. Baker testified they know the typical
questions people are going to ask because t h e y h a v e heard them before. Baker testified,
at the sessions he attended with Waddell, there were questions about whether Paragon was
going to honor the CBA in place with the predecessor. Baker testified that, during the seven 30
orientations he attended with Waddell, Waddell gave two answers, one was no union has
presented itself to the company and we are not currently in negotiations or, two, no, we are
not adopting it and we will enter into negotiations once we figure out who shows up on day
one because we are not there yet. Baker testified Waddell never said anything suggesting
Paragon would continue to employ the officers under the same terms and conditions as the35
predecessor's CBA. Baker testified Waddell never made the generalized statement that
everything was going to remain the same while Baker was present.
Baker testified employees were given a copy of the hand book at the orientation meeting
as part of Respondent’s practice. The employee handbook contains a section on uniforms and 40
appearance. It states that the officer will be issued either “wash and wear” or “dry clean-only”
uniforms. It gives maintenance instructions for each and states if they were provided dry clean
only uniforms they will be provided clean uniforms or reimbursed for dry cleaning expenses.
Baker testified it is Paragon’s policy that if they are able to provide wash and wear uniforms and
uniform replacements at no cost to the employee, then they were not going to pay the uniform 45
allowance for dry cleaning. Baker testified Paragon provides wash and wear uniforms at the FEMA
location and does not provide a uniform allowance there.
Baker testified that on the first day of the contract, September 1, the direction from
Paragon was that officers were to receive one 15-minute break per 4 hours of work and one 50
unpaid meal break for 30 minutes. If they worked 8 hours, they would get two paid 15-minute
JD–59–15
15
breaks and one unpaid 30 minute break. However, Baker testified that was not what actually
started the first pay period. He testified they found in the first pay period the supervisors were
not deducting the 30 minute break in the payroll system on a consistent basis. Some of them
were, and some were not. Baker testified for the first pay period some of the officers may have
been paid a full hour in break time for an 8-hour period, which would include a 30-minute lunch 5
and two 15-minute breaks. Baker testified he found out about this problem the first pay period
when they were doing payroll review. Baker testified, “We immediately corrected it going
forward.” He testified, “I called Rick Waddell and said, hey, your supervisors at the site are
paying for breaks, are paying for some of these breaks, not all, but you need to get on your
folks and make sure that they're following company policy.” Baker testified Waddell would have 10
received the same reports Baker received concerning the officers being paid for their lunch
breaks. However, Waddell did not pick up the error in payment on his own at the time Baker
called him about it. Baker testified the problem about paying some of the officers for the 30
minute lunch break was corrected in October at the time of the second pay period on October 3.
The prior and first pay check had issued on September 19. 15
B. Analysis
1. Respondent’s Section 10(b) defense
20
Section 10(b) states in pertinent part that “[N]o complaint shall issue based on any unfair
labor practice occurring more than six months prior to the filing of the charge with the Board.”
Section 10(b) is an affirmative defense which must be pleaded and if not timely raised, is
waived. E.g., Federal Management Co., 264 NLRB 107 (1982). The burden of proving an
affirmative defense is on the party asserting the defense. See, Chinese American Planning 25
Council, 307 NLRB 410 (1992), review denied 990 F.2d 624 (2d Cir. 1993); and Kelly's Private
Care Service, 289 NLRB 30 (1988). The burden is met by showing the filing party had actual
knowledge or constructive knowledge of the alleged unfair labor practice more than 6 months
prior to the filing of the charge. Duke University, 315 NLRB 1291 fn. 1 (1995); Mine Workers
Local 17, 315 NLRB 1052 (1994). Notice, may be found even in the absence of actual 30
knowledge if a charging party has failed to exercise reasonable diligence, i.e., the 10(b) period
commences running when the charging party either knows of the unfair labor practice or would
have “discovered” it in the exercise of “reasonable diligence.” Oregon Steel Mills, 291 NLRB
185, 192 (1988), enfd. mem. sub nom. Gilmore Steel Corp. v. NLRB, 134 LRRM 2432 (9th Cir.
1989), cert. denied 496 U.S. 925 (1990). M & M Automotive Group, Inc., 342 NLRB 1244, 1246 35
(2004). See also NLRB v. Dynatron/Bondo Corp., 176 F.3d 1310, 1317 (11th Cir.1999).
Whether and when a charging party should reasonably have known of an unfair labor practice
requires a case-specific factual determination. See, e.g., East Bay Automotive Council v. NLRB,
483 F.3d 628, 634 (9th Cir. 2007) (concluding that substantial evidence supported the NLRB's
finding that labor organization “did not have actual or constructive knowledge” of unfair labor 40
practices); Michael Konig, 318 NLRB 337 (1995) (concluding that evidence was insufficient to
establish that exercise of reasonable diligence by labor organization would have led to earlier
discovery by the organization of unfair labor practice); Moeller Bros. Body Shop, Inc., 306 NLRB
191 (1992), (concluding complaint to be untimely because facts demonstrated that labor
organization, exercising reasonable diligence, should have discovered unfair labor practices 45
more than six months before it filed its complaint).
In Duke University, 315 NLRB 1291, 1292 fn. 1 (1995), it was stated:
Having adopted the judge's credibility findings with respect to the testimony of full-time 50
drivers Louise Davis and Melton Thompson and International Vice President of
JD–59–15
16
Amalgamated Transit Union Tommy Mullins, we agree that the Union did not have actual
notice of the Respondent's unfair labor practices prior to 1993. We further find that there
is no basis for concluding that the Union should have known of the conduct before July
1993. As the judge found, the Respondent was refusing to recognize the Union at the
relevant times, and thus the Union was not able to perform its function as collective-5
bargaining representative. Clark Equipment Co., 278 NLRB 498 (1986). The
Respondent also relies on Southeastern Michigan Gas, 198 NLRB 1221 fn. 2 (1972). In
that case, the Board left open the issue of whether the 10(b) period would begin to run
only on notice to the union when the changes are not open and obvious. The
Respondent apparently infers from this that the 10(b) period would begin to run prior to 10
notice to the union, i.e., on notice to employees, where the changes are open and
obvious to the employees. Whatever the merit of this interpretation, it has no relevance
here. The changes here were not open and obvious to employees until within the 10(b)
period. The nature of the Respondent's policy changes at issue here were subtle and
evolving, the full impact of which could not readily be appreciated by the employees 15
outside the 10(b) period.
Similarly, In Concourse Nursing Home, 328 NLRB 692, 693-694 (1999), the Board
reversed the judge in concluding that Section 10(b) did not bar a union from seeking pension
contributions for the respondent employer’s licensed practical nurses (LPNs) for periods before 20
June 1, 1995. As part of a CBA that expired on September 30, 1994, the parties agreed to a
35-month moratorium on future contributions to the Union's pension fund because of a surplus
in the fund. The moratorium ended on May 30, 1994, and the respondent was obligated to
resume making payments to the fund beginning in June. The union’s pension fund did not
receive any contributions from the respondent for the unit employees covering the month of 25
June until the following October. The fund determined, after receiving the respondent's October
pension check, that the payment total was less than the fund should have received. All the
pension fund contributions the respondent made during the ensuing months were also “short” by
the calculations of the fund's accountants. There, the pension fund office administered 9 or 10
separate funds and received monthly contributions from a total of 170-200 employers 30
contributing to the various funds. The frequency of inadequate or otherwise incorrect payments
to the funds was so great that the fund office prepared a form letter that it sent monthly to those
employers whose contributions were less than the proper amount. In October, the Union's fund
office sent a “short notice” letter to the respondent stating that its pension fund contributions for
“July” were deficient. The fund sent similar letters notifying the respondent of pension 35
underpayments the following months. After receiving no response to the “short notice” letters, a
fund representative contacted an agent of respondent in May or June 1995 to discuss the
shortages. The fund representative was told the respondent was refusing to make pension
contributions for its LPNs until further notice. The respondent employer representative stated
he had filed some sort of petition regarding the LPNs which precipitated this action. Thereafter, 40
the Respondent ceased all pension contributions for months since June 1995. There in
reversing the judge and in finding Section 10(b) did not serve as a bar to the charge the Board
took into account the volume of incorrect pension payments the union’s pension fund received,
the history between the parties, and stated “an unfair labor practice charge will not be time-
barred if the ‘delay in filing is a consequence of conflicting signals or otherwise ambiguous 45
conduct by the other party.’ Based on the totality of the evidence, we conclude that the situation
here was, at the least, sufficiently ambiguous as to whether the Union had “clear and
unequivocal notice...” Id. at 694.
An employee's knowledge of the occurrence of an unfair labor practice is not 50
automatically imputed to the employee's labor organization. See, Stone Boat Yard v. NLRB, 715
JD–59–15
17
F.2d 441, 445 (9th Cir.1983) (concluding that knowledge possessed by union members was not
attributable to union because there was no evidence in the record that the members were
agents of the union). The knowledge of bargaining unit employees concerning their terms and
conditions of employment being imputed to their bargaining representative for purposes of
determining when the 10(b) limitations period commences depends on the factual context. See, 5
Michael Konig, 318 NLRB 337, 339 (1995). In The Courier-Journal, 342 NLRB 1093, 1103
(2004), the Board affirmed the following:
It is appropriate given the factual context here to impute Heine's knowledge to the Union.
Heine was not merely an employee. He was a steward and had been a member of the 10
pressroom department bargaining committee for a year at the time of the July 1, 2001,
changes. He attended all of the pressroom department bargaining sessions for a new
contract. In Baytown Sun, 255 NLRB 154, 160 (1981), a union steward's knowledge
was imputed to the union for purposes of determining whether the charge was timely
where the steward was closely tied to the union, was a member of the union's 15
negotiating committee, and had attended all of the negotiating sessions between the
employer and the union. [FN14] Given the factual context in this case, I conclude that,
as with the steward in Baytown Sun, supra, Heine's pre-September 15 knowledge of the
July 1 increases should be imputed to the Union.
* * *20
I have considered the decision in Catalina Pacific Concrete Co., 330 NLRB 144 (1999),
which the General Counsel cites in its brief. In that case the Board concluded that notice
to a “nominal” steward who had crossed the union picket line and was working during a
strike, and who the employer itself claimed was a statutory supervisor, was not adequate
to initiate the limitations period. Id. at 144, 149. The Board explained that despite such 25
individual's “nominal status as a steward, the [employer] could hardly have reasonably
believed that notice of unilateral changes to someone it was claiming as one of its
supervisor[s] was an acceptable method of communicating with the Union about those
changes.” Id. at 144. In the instant case, Heine was not only a steward, but a member of
the negotiating committee who had participated in all the bargaining sessions for a 30
successor to the press-room department agreement that expired on August 7, 2000. His
status as a union official was not “nominal,” but, as in Baytown Sun, supra, very real.
In Brimar Corp., 334 NLRB 1035, 1037 fn. 1(2001), the Board majority stated:
35
We agree with the judge that Sec. 10(b) of the Act does not bar the complaint's
allegations. We adopt the judge's finding that Union Steward Robbie McCaskill's
November 1996 knowledge of the Respondent's newly implemented “Workstation Form”
is not imputed to the Union for the purpose of triggering the 6-month period prescribed in
Sec. 10(b) of the Act for the timely filing of unfair labor practice charges. In doing so, we 40
agree with the judge's finding that McCaskill, although a steward, had no role in matters
relating to bargaining, and the Respondent had no reason to believe otherwise. See
Catalina Pacific Concrete Co., 330 NLRB 144 (1999); cf. Baytown Sun, 255 NLRB 154,
160 (1981) (union steward's knowledge imputed to union for purposes of determining the
charge was not timely filed under Sec. 10(b) where the steward in question was found to 45
be more than a steward in that she was closely tied to the union, she was a member of
the Union's negotiating committee, and had attended all of the 25 or 30 negotiating
sessions between the respondent and the union.)
In the present case, there is no contention or evidence that the Union was provided with 50
actual notice by Paragon of the changes in working conditions the parties stipulated took place
JD–59–15
18
on September 1, 2013. In fact, Paragon submitted a regional director dismissal letter in another
case arguing its procedures pertaining to its being a successor have been approved by this
agency. First, obviously a regional office dismissal letter is not a Board determination and is
certainly not binding on me as the facts of the investigative file in that instance were not litigated
before me. Perhaps, more instructive was the Regional Director’s determination that Paragon 5
had specifically notified the union, on multiple occasions, prior to taken operational control that it
intended to enter into negotiations for a new CBA rather than adopt the existing agreement.
There is no contention that such notice was provided to the Union by the Respondent in the
present case.
10
Gaby Fraser works for the Union as director of operations. She is the only paid
employee of the Union. Fraser’s duties include communications with employers, grievance
handling at certain levels of the grievance procedure, serving as the Union’s chief negotiator,
running the day to day operations of the Union, and filing unfair labor practice charges. She
testified the Union is certified or recognized as a collective bargaining representative for 19 15
bargaining units covering between 1200 to 1500 employees. Fraser testified the Union has shop
stewards at around 75 percent of its sites, and the stewards report to Fraser. Fraser testified
that while the stewards can file Board charges, that is normally her function. Fraser testified
when Paragon took over the contract the officers who were shop stewards at Knight at the FEMA
location were let go. Fraser testified she did not have any connection to FEMA.20
Fraser credibly testified she first received copies of the Paragon offer letter to employees
at FEMA in the early spring of 2014. Fraser testified she learned Paragon was not offering the
employees’ health and welfare fringe benefit as a wage through phone calls she received in
early March 2014 from security officers working at the FEMA site. Fraser described a 25
conversation concerning breaks, pension, and health and welfare with an officer from the FEMA
site. Fraser testified that, during the call, the officer stated they do not get health and welfare in
their pay anymore. Fraser asked why the officer did not tell Fraser, and was told there was
nothing Fraser could have done about it. Fraser testified the employee stated they do not get
pension either and she mentioned breaks. Following this conversation, Fraser called some 30
other officers, and she testified she checked with the two former shop stewards who used to
work at the FEMA location and they confirmed it. Fraser testified the officers were not receiving
the breaks they used to receive. Fraser testified they used to have two 15 minute and one 30
minute paid break. She testified now they were saying they were sometimes getting a 15 or a
30 minute break for the entire day or nothing for the entire day. In her pre-hearing affidavit, 35
Fraser listed a series of changes that took place in working conditions at FEMA under Paragon.
Item 1 was listed as, "reduced and/or cancelled employee breaks." Item 6 was listed as “health
and welfare and pension monies being diverted to the company plan.” Fraser’s affidavit
states, "I first learned of change 1 and 6 on March 7 or 21, 2014, during a site visit that I will
talk about later in my affidavit.” While at the trial, Fraser testified she learned of these changes 40
during phone calls with officers, and in her affidavit she recalled it was through a site visit, I have
credited her testimony that she first learned of these changes in March 2014, and she attempted
to verify the changes through follow up contacts as she described in her testimony at the trial.
Fraser testified she learned in April 2014 that full time status had changed at FEMA from 45
32 hours to 40 hours when Paragon took over. Fraser testified when she was talking to one of
the officers at FEMA about anniversaries she learned Paragon paid off the officers at the Cohen
Building, but they did not pay off at GSA or at FEMA concerning sick leave and vacation. Fraser
testified when she was talking to the FEMA officer she was told some of the officers got paid
and some did not based on full and part-time status. Fraser testified Paragon changed full-time 50
to 40 hours, and officers who used to work 36 and 37 hours were now being prorated for
JD–59–15
19
vacation and sick leave because they were no longer considered full-time. She testified under
the Knight CBA 32 hours was considered full-time. Fraser testified from what she understood
this happened late February or early March when the officers were paid out. In her pre-hearing
affidavit, Fraser stated she learned Paragon changed the rate of vacation accrual and
anniversary dates; that sick leave was not paid out, and that Paragon changed the definition of full-5
time status from 32 hours to 40 hours, around the first or second week of April 2014, during a
conversation with one of the FEMA shop stewards.8
Fraser testified she learned the FEMA employees were no longer receiving a uniform
allowance by talking to a Board agent in May 2014, at which point Fraser called some FEMA 10
officers to verify. Similarly, in her pre-hearing affidavit, Fraser testified she learned of Paragon’s
change with respect to a uniform allowance during a conversation with a Board agent on around
May 19, 2014.
Birdsong’s testimony reveals that errors in Paragon’s offer letter to employees about 15
wage rates spawned multiple questions by officers to Waddell at the job fair and orientation
about the wage rates Paragon was offering, to which Waddell responded Paragon would honor
the CBA concerning wage rates. While Birdsong admitted at points in his testimony that
Waddell did not state Paragon would honor the Knight CBA as to all benefits, I find Waddell’s
responses created further confusion amongst applicants as to what would actually change. 20
Birdsong testified their hourly rate of pay with Knight did not change after they were hired by
Paragon. Birdsong testified the health and welfare contribution being received as wages
changed, but they employees already knew that. Birdsong testified the employees had no clue
breaks were going to change. Birdsong testified that where it states in the offer letter that,
"Breaks will be provided in accordance with company policy," did not signify to him there was 25
going to be a change because Paragon’s break policy could have been the same as that with
Knight. Moreover, while Paragon may have had to adjust scheduling employees break times
and shifts, it should have known before the employees were hired that it was no longer going to
pay them for their 30 minute lunch break, yet they were never directly informed of this before
they started working. In fact, Paragon’s supervisors were not even clear on this change 30
because as per Baker’s testimony at least through the first pay check, some of the supervisors
were entering payroll information causing employees to be paid for their 30 minute lunch break
which was only subsequently corrected by Paragon. Birdsong testified the first paycheck he
received from Paragon the hours he was paid included the time he spent on his lunch break. He
testified that in subsequent checks the hours did not match up. Birdsong testified that it was a 35
couple of months after he started with Paragon that he realized he was not being paid for his
lunch breaks by Paragon. Birdsong testified by calculating the hours in his check and the
amount of pay that for around the first 2 months he was being paid 40 hours and therefore he
was being paid for his lunch break. He testified this changed around 2 months after Paragon
came in and the supervisors announced the employees would no longer be paid for their lunch 40
break. He testified when the supervisors announced the change the employees had to start
signing in for their breaks. No hard evidence was placed on the record either by Paragon or the
General Counsel as to when the Paragon employees stopped being paid for their 30 minute
lunch break, and Birdsong and Baker’s recollections differed as to how quickly this happened.
Regardless, Paragon never directly informed employees prior to their being hired that they 45

8 Fraser’s testimony concerning the status of the shop stewards at the trial and in her
affidavit is somewhat murky. The employees serving as stewards were not identified, and while
Fraser testified Paragon did not retain them, she claimed to have had post transition
conversations with the stewards following the Paragon takeover both in her affidavit and in her
testimony at the trial.
JD–59–15
20
would not be paid for their lunch break, and its continuing to do pay them for those breaks for
whatever period after they were hired, along with errors in their offer letter and representations
about those errors created confusion to employees based on Paragon’s actions as to what
benefits they were being offered.
5
Birdsong testified he learned he was no longer receiving a uniform allowance when the
employees looked at their first pay checks from Paragon. For Knight, there was a line item on
the check for uniform allowance, which was absent from the checks from Paragon. Birdsong
testified that, prior to September 1, no one from Paragon told him the hourly uniform allowance
was going to be discontinued. Birdsong later testified that by the first two checks they received 10
they figured out they were not receiving a uniform allowance, and he testified that was about a
month or so. While Paragon’s handbook discussed the differences in Paragon’s policy between
wash and wear uniforms and those that had to be dry cleaned, this was a multipage document
and was not tendered to employees until close to two months after they were required to submit
acceptance of Paragon’s offer of employment, and only about a week before they were to start 15
their employment with Paragon. Even at the August 24 orientation meeting if the employees
were aware enough to notice from the multipage handbook that no uniform allowance was to be
paid for wash and wear uniforms, there is no showing that they were told at that time that those
were the type of uniforms they would be receiving.
20
Birdsong testified he learned Paragon had increased the hourly threshold for full time
status from 32 to 40 hours much later down the road. He testified it was over a year. Birdsong
testified this had a tremendous effect because it would impact their personal leave and vacation
pay. It would also affect the rate of pay they were receiving to go into their 401(k). He testified
a full time employee gets the full vacation benefit, a part time receives a pro-rated benefit. 25
Fraser testified that it was reported to her in April 2014, that some employees received prorated
pay for sick leave and vacation because Paragon had changed full time status to 40 hours.
Paragon had reported to employees in their June 29 offer letter that full time employees would
be receiving vacation pay, and it also reported a certain amount of paid sick leave based on
some unspecified regulations. It was not until August 24, at the orientation meeting that 30
Paragon gave out its handbook, which contained a statement that full time employees were
those who worked 40 hours. The handbook did not explicitly tie this statement to vacation pay
or sick leave, and the separation of time in the two documents reveals that Paragon was rolling
out benefit information sporadically in an unclear and confusing way.
35
The parties stipulated that Paragon and the Union reached a CBA on or about August
15, 2014. Thus, Paragon would have had access to the role stewards and or any other
employees played in those negotiations. Paragon has not established there were job stewards
at FEMA during the Section 10(b) period, nor has it established that any employee had a
significant status pertaining to negotiations or connection to the Union to impute employee 40
knowledge of benefit changes to the Union. See, Brimar Corp., 334 NLRB 1035, 1037 fn
1(2001). Moreover, the manner in which Paragon announced and rolled out its benefit package
to employees engendered confusion as to those benefits, and in the circumstances here I do not
find that Fraser failed to exercise reasonable diligence based on the reports she received in the
timing of her filing of the initial and amended unfair labor practice charge. Duke University, 315 45
NLRB 1291, 1292 (1995). Accordingly, I do not find Respondent has established its Section
10(b) defense.
Cases such as R.J.E. Leasing Corp., 262 NLRB 373, 381-382 (1982), cited by Paragon
are not persuasive here. There, an employee filed a Section 8(a)(2) charge against an 50
employer for entering a pre-hire agreement with a union. There was no union charging party as
JD–59–15
21
there is here. The judge with Board approval rejected the employer’s Section 10(b) defense
stating the time period did not begin to run until the employees knew of the pre-hire agreement.
An employee was the charging party and the issue of whether an employee’s knowledge of
events should be imputed to a union was not addressed because there was no charging party
union. Similarly, I did not find cases such as NLRB v. Triple C Maintenance, Inc., 219 F.3d 1147 5
(10th Cir. 2000) and Texas World Serv. Co., 928 F.2d 1426 (5th Cir. 1991), cited by Paragon to
be on point to the issues presented here. I also do not find Paragon’s reliance on Moeller Bros.
Body Shop, 306 NLRB 191 (1992); and Mathews-Carlson Body Works, Inc., 325 NLRB 661
(1998) to warrant a finding that the Union did not act with reasonable diligence in monitoring
Respondent’s actions at FEMA. Those cases both involved ongoing bargaining relationships 10
were the respondent employers over a period of years were underreporting the number of
alleged bargaining unit members and failing to make fund payments on behalf of those non
reported. In Mathews it was noted that the size of the work force was in plain view of one of the
union officials outside the 10(b) period when he had visited the site; and in Moeller it was noted
the union failed to enforce certain contract provisions over a number of years that would have 15
disclosed the respondent employer’s failures, that the union never appointed a job steward, and
it made very infrequent visits to the employers over a described 5 year period. Here, Fraser
testified the Union had shop stewards with the predecessor employer which were not retained
by Respondent. She is the only paid employee of a union representing 19 bargaining units
covering between 1200 to 1500 employees. Respondent took over the contract on September 20
1, 2013. Fraser testified she received reports of unilateral changes beginning in March 2014, at
which time she began to investigate the validity of those reports. Overtime, additional changes
were reported to her. Fraser filed the initial charge in this matter April 24, 2014, and in view of
the Union’s resources I have concluded the Union exercised sufficient diligence to defeat
Respondent’s Section 10(b) defense. This is particularly so, when Respondent a large company 25
had in a copy of the Knight CBA and could have notified the Union in writing at September 1,
2013, or earlier that did not plan to honor the Knight contract, and more specifically could have
informed the Union of the changes it intended to make.
2. Respondent is a Perfectly Clear Successor 30
under the Board’s Spruce Up Analysis.
The General Counsel proffers in essence two theories. One that the Respondent
became a perfectly clear successor under the Board’s analysis in Spruce Up Corp., 209 NLRB
194, 195 (1974), enfd. 529 F.2d 516 (4th Cir. 1975). The General Counsel argues in the 35
alternative that the Board should be overturn Spruce Up as it is inconsistent with the language in
the Court’s decision in NLRB v. Burns Security Services, 406 U.S. 272, 294-295 (1972). It is
asserted that Respondent is a perfectly clear successor under the much less restrictive
language in the Court’s Burns decision. Since I am constrained to follow current Board law, I
have explored and determined that Respondent is a perfectly clear successor under the Board’s 40
Spruce Up analysis for the reasons set forth below.
A statutory successor is not bound by the substantive terms of the predecessor's
collective bargaining agreement and is ordinarily free to set initial terms and conditions of
employment. NLRB v. Burns Services Inc., 406 US 272, 280, 281 (1972). While the Court in 45
Burns held that a successor employer is generally free to set the initial terms, it also held that
“there will be instances where it is perfectly clear the new employer plans to retain all of the
employees in the unit in which it will be appropriate to have the employer initially consult with
the employees' bargaining representative before it fixes terms.” The Board interpreted the
“perfectly clear” exception in Spruce Up, 209 NLRB 194 (1974), enfd. per curium 529 F.2d 516 50
(4th Cir. 1975). There, the Board concluded that the “perfectly clear” exception and the
JD–59–15
22
consequent forfeiture of the right to set initial terms should be restricted to circumstances, where
the new employer has either actively or by tacit inference misled employees into believing that
they would all be retained without change in their wages, hours or conditions of employment or
at least to circumstances, where the new employer has failed to clearly announce its intent to
establish a new set of conditions prior to inviting former employees to accept employment. Id. 5
195.
In International Ass'n of Machinists and Aerospace Workers, AFL-CIO v. NLRB, 595 F.2d
664, 674-676 (D.C. Cir. 1978), the court stated as to the Board’s Spruce Up decision that:
10
Even when Burns is read, as the Board does, to limit compulsory initial-terms
bargaining to situations wherein the successor has indicated that incumbents will be
retained and has not concurrently announced downward changes in employment terms,
predecessor-employees are afforded an important measure of protection. Once the duty
to bargain has thus attached, the successor is obliged to consult the incumbent union 15
before institution of less satisfactory terms. That is significant because unconditional
retention-announcements engender expectations, oft times critical to employees, that
prevailing employment arrangements will remain essentially unaltered. Even when
incumbents are not affirmatively led to believe that existing terms will be continued,[FN48]
unless they are apprised promptly of impending reductions in wages or benefits, they 20
may well forego the reshaping of personal affairs that necessarily would have occurred
but for anticipation that successor conditions will be comparable to those in force.
The Board was hardly at liberty to ignore these concerns, and its construction of
Burns is responsive to them. On the one hand, incumbents informed of the availability of
employment with the successor entity but contemporaneously notified of substantial 25
changes in the conditions thereof are not lulled into a false sense of security. When, on
the other hand, the announcement of job-availability is unaccompanied by any such
warning, incumbents may resolve to cast their lot with the successor, secure in the
knowledge that they can invoke the aegis of collective bargaining should alterations in
the terms of the employment be proposed. [FN49]30
FN49. When the employment offer and a subsequent announcement of changed terms
both occur prior to actual hiring, the announcement could deter some employees
from accepting, notwithstanding that it is made some time after the successor first
makes known his plan to retain incumbents. If, for example, the successor indicates
that he intends to reemploy his predecessor's workforce a month hence, and when 35
employees arrive to submit applications two weeks later he informs them that
substantially different terms will be instituted, some incumbents may decide to look
for work elsewhere. Nevertheless, a duty to bargain with respect to the proposed
changes could possibly be properly imposed on either of two grounds. For lack of
sufficient time to rearrange their affairs, incumbents might be forced to continue in the 40
jobs they held under the successor employer, notwithstanding notice of diminished
terms, and perpetuation of the workforce and as well the representational status of
the incumbent union may be assured. Even were that less plain, a bargaining
obligation may be essential to protect the employees from imposition resulting from
lack of prompt notice. Thus a prospective employment relationship may be 45
presumed when a successor has boldly declared an intention to retain incumbents
but has not concurrently proposed substantially reduced benefits. And such an
inference may be left undisturbed by revelation of employment terms after the
employer's initial announcement but before actual hiring commences. The successor
would have no legitimate complaint about mandatory bargaining in such 50
circumstances because its necessity is a product of his own misleading conduct.
JD–59–15
23
In Hilton's Environmental, Inc., 320 NLRB 437, 438 (1995), the Board in applying the
“perfectly clear” caveat articulated in Burns as explained in Spruce Up stated:
Applying these principles to the facts of this case, we find that the “perfectly clear” 5
caveat is applicable in this case. Thus, as discussed above, the Respondent had
solicited applications from the employees on September 8, and had assured them the
following day that all would be hired unless some problem arose as a result of
information disclosed on their applications or in the interview process. Contrary to the
Respondent, there was no clear announcement at this time that it intended to establish 10
new terms and conditions of employment. See Fremont Ford, 289 NLRB 1290 (1988)
(employer told union it had doubts about retention of only a few unit employees;
employer's stated desire to change seniority and institute a flat rate insufficient to
indicate intent to establish new employment conditions).
To the contrary, the Respondent's entire course of dealing with the employees, 15
including accepting the December 1991 letters of intent that stated that the employees
would work for the Respondent at the contractual wage rate, and the Army's having
advised the Union, prior to the September 8 solicitation of applications, that the
Respondent's contract with the Army was subject to the Service Contract Act and that
the Son's collective-bargaining agreement would therefore be incorporated into the 20
contract, all indicated that the Respondent did not intend to establish new terms and
conditions of employment. See Canteen Co., above; Weco Cleaning, above; Fremont
Ford, above. Accordingly, we find that the Respondent violated Section 8(a)(5) by
unilaterally changing existing terms and conditions of employment. [FN10]
25
In Canteen Co., 317 NLRB 1052 (1995), enfd. 103 F.3d 1355 (7th Cir. 1997), the new
company, prior to assuming control of operations on July 1, 1992, personally contacted the
predecessor employees to say it wanted them to apply for employment. It was noted the
respondent also had several discussions with the union representing the predecessor's
employees in June concerning its desire to establish a new job classification. The parties 30
discussed the sample contract they would use to begin negotiations for a new collective-
bargaining agreement. On June 22, the respondent told the union that it wanted the
predecessor's employees to serve a probationary period and the union agreed. On that date,
the parties agreed to meet on June 30 to negotiate a collective-bargaining agreement. In its
discussions with the union, the respondent did not mention anything about making any changes 35
in the initial terms and conditions and the Board, stated:
We agree with the judge that the Respondent violated Section 8(a)(5) of the Act
when, on or after June 23, the Respondent told three of the four predecessor employees
that they could continue working the food services operation, but at significantly reduced 40
wages. Specifically, we find that by June 22, when the Respondent expressed to the
Union its desire to have the predecessor employees serve a probationary period, the
Respondent had effectively and clearly communicated to the Union its plan to retain the
predecessor employees. Therefore, as it was “perfectly clear” on June 22 that the
Respondent planned to retain the predecessor employees, the Respondent was not 45
entitled to unilaterally implement new wage rates thereafter.
Our colleagues in dissent contend that the “perfectly clear” caveat in Burns, as
interpreted in Spruce Up, should apply only when the new employer has failed to
announce initial employment terms prior to, or simultaneously with, the extension of
unconditional offers of hire to the predecessor employees. None of the cases cited in 50
the dissent, including Burns and Spruce Up, expressly limit the caveat to such a late
JD–59–15
24
point in the transition from one employer to another. To the contrary, the judge correctly
cited Roman Catholic Diocese of Brooklyn, 222 NLRB 1052 (1976), enf. denied in
relevant part sub nom. Nazareth Regional High School v. NLRB, 549 F.2d 873 (2d Cir.
1977), as a controlling example of the imposition of an obligation to bargain about initial
terms of employment prior to the new employer's extension of formal offers of 5
employment to the predecessor's employees.
The facts and the Board's findings in Hilton Environmental, supra, and Canteen Co.,
supra, demonstrate that an actual offer of employment is not required to establish the “perfectly
clear” successor's obligation to bargain.9 Rather, it has an obligation to bargain over initial 10
terms of employment when it displays an intent to employ the predecessor's employees without
making it clear to those employees their employment will be on terms different from those in
place with the predecessor employer. See also, Elf Atochem North America, Inc., 339 NLRB
796, 808 (2003); DuPont Dow Elastomers, LLC, 332 NLRB 1071, 1073-1074, 1074 fn. 7 (2000),
enfd. 296 F.3d 495 (6th Cir. 2002) (perfectly clear successor found where the unions were 15
informed that although the successor employer would not honor the predecessors CBA’s it
would maintain employees’ wages and benefits under those contracts); Helnick Corp, 301
NLRB 128, 134 (1991); Turnbull Enterprises, 259 NLRB 934, 938-940 (1982); and CME, Inc.,
225 NLRB 514 (1976).10
20
Similarly, in Cadillac Asphalt Paving, 349 NLRB 6, 10-11 (2007) the Board stated:
The record clearly establishes that Respondent LLC is a “perfectly clear” successor
to Respondent Paving. On July 1, LLC assumed control of Paving's operations. On July
7, LLC President Rickard announced the joint venture in a meeting with Paving's entire 25
work force. After Rickard spoke, MPMC Safety Director Marlene Van Patton asked all
the employees to complete job applications and W-4 forms to update LLC's records.
The employees, including the drivers, completed and submitted their applications that
day. After completing his paper-work, driver Steve Pierce asked LLC General Manager
Sandell, who was also present at the meeting, about LLC's 401(k) plan. Sandell 30
responded that LLC did not have a 401(k) plan for hourly employees. Aside from the
401 (k) remark, LLC did not announce any changes to the employees' terms and
conditions of employment at this meeting. The following day, July 8, the employees
returned to work without any changes in operations or duties.
Although not mentioned by the judge in his decision, LLC's hiring process entailed no 35
further measures. Unit driver Pierce testified that LLC did not conduct job interviews.
There is no evidence that LLC sought additional applicants from any source other than
Paving's work force.

9 In enforcing the Board’s order in Canteen, the court stated, “In this case, Canteen instituted
unilateral changes in the initial terms of employment by offering drastically reduced rates of pay
to the predecessor's experienced employees without prior negotiation. The employees' refusal
to accept employment was found by the ALJ and the Board to be a constructive denial of
employment. We agree that Canteen's conduct was “inherently destructive” of the rights of
those employees. As a result, Canteen had the burden of justifying its actions. See, Canteen
Corp. v. NLRB, 103 F.3d 1355, 1366 (7th Cir. 1997).
10 In C.M.E., Inc., at 514-515, the Board held the respondent made it “perfectly clear” that it
planned to retain all or substantially all of the employees in the unit as of February 25, and the
obligation to bargain, including the setting or altering of initial terms of employment, commenced
on that date rather than May 6, when the union subsequently made a formal request for
recognition and bargaining.
JD–59–15
25
As noted above, at no time before or during the July 7 meeting did LLC mention
changes to the employees' negotiated wages, benefits, or other terms and conditions of
employment. In fact, prior to this meeting, when employee and Teamsters steward
Pierce asked LLC agent Fred Aiken about the Respondents' plans for the Teamsters,
Aiken assured Pierce that everything would remain the same. As a result, the drivers 5
reasonably assumed that their terms and conditions of employment would remain the
same when LLC took over Paving's operations. Nothing said at the July 7 meeting
dispelled their assumption.[FN31]
Thus, by offering job applications and W-4 forms to Paving's employees on July 7,
LLC invited the employees to accept employment without announcing its intention to set 10
initial terms and conditions of employment. In these circumstances, we find, in
agreement with the judge, that Respondent LLC is a “perfectly clear” successor to
Respondent Paving and that Respondent LLC violated Section 8(a)(5) and (1) of the Act
by refusing to recognize and bargain with the Teamsters and by failing to continue the
terms and conditions maintained by Paving at the time of succession, i.e., the health and 15
welfare and pension fund contributions in accord with terms of the expired 1998-2003
MRBA labor agreement.[FN32]
FN32. See Elf Atochem North America, Inc., 339 NLRB 796 (2003); Helnick
Corp., 301 NLRB 128 fn. 1 (1991). We do not adopt the judge's finding that LLC
violated Sec. 8(d), which provides, in relevant part, that “where there is in effect a 20
collective-bargaining contract … no party to such contract shall terminate or
modify such contract.” Because LLC, as a successor, has no prior agreement
with the Teamsters, it could not violate Sec. 8(d) by implementing terms and
conditions of employment that varied from the predecessor's collective-
bargaining agreement. See U.S. Generating Co., 341 NLRB 1127, 1135(2004).25
In the present case, in June 2013, the FPS awarded Paragon a federal contract to
provide guard services at the FEMA building in Washington, D.C., among other locations.
Paragon was scheduled to take over operational control of the guard services at FEMA building
effective September 1 replacing Knight, which had an existing CBA with the Union covering 30
security officers working at the FEMA building and another facility effective for the period
October 1, 2012 through September 30, 2015.
Baker, Paragon’s vice president of operations, testified Paragon provides armed force
protection to the federal government and the scope of Paragon’s operations in the United 35
States is 42 of the 50 states and many of the territories. Baker testified, if the predecessor
contractor has a CBA, Paragon is bound by the wages and fringe benefits of that contract. He
testified whatever the employees are making per hour, the health and welfare, vacation, vesting
is all predetermined and is owed to the employees. Baker testified Paragon has to ensure when
they go into a new contract that they are paying at least those collectively bargained minimums 40
because those wages become the wage determination for the applicable contract and this is
made clear by the contracting officers when they put out the solicitations on behalf of the federal
agencies. Baker testified when they are interested in bidding for a contract most times Paragon
receives a copy of the predecessor’s CBA. Baker testified he reviews the predecessor’s CBA
wage appendices because that is what Paragon is required to meet, and that is how they 45
determine what to put in the offer letter for wages. Baker testified, concerning the FEMA
contract, Baker was responsible for ensuring they had enough people recruited, hired, trained,
qualified, and ready to work on day one. Baker testified Paragon used Knight’s CBA at the
FEMA building to price out what Paragon was legally obligated to pay in terms of wages and
fringe benefits. Baker testified there have been over 30 contract transitions to Paragon since the 50
president’s executive order pertaining to the right of first refusal of a job offer to the predecessor
JD–59–15
26
contractor’s employees, with at least 15 in 2014. Baker testified there were two occasions in
2014 where less than 50 percent of the predecessor’s employees came to Paragon on federal
contracts. He testified he did not recall it happening in 2013. Baker testified the vast majority of
contracts in the last 2 years more than 50 percent of the predecessor’s employees have been
hired by Paragon making it through the vetting process and beginning work. 5
The parties stipulated that shortly after the FEMA Building federal contract was awarded
to Paragon in June, Paragon arranged for a memorandum to be posted at the FEMA Building for
incumbent Knight PSOs advising them Paragon was awarded the federal contract to begin
providing guard services effective September 1, 2013 and inviting the incumbent PSOs to attend 10
a job fair on June 29, 2013 at the Marriott hotel in Greenbelt, Maryland. The memorandum
included the following:
Paragon Systems is currently accepting applications from incumbent security officers.
To be considered for employment, all candidates must complete all parts of the Paragon 15
applications process.
Applicants shall go to (listed website) or the company website (listed website) under
careers and complete an online application.
The memorandum stated applicants must bring the following documents (the original and a 20
copy) to the job fair. The documents listed included a driver’s license or state ID, social security
card, birth certificate, and high school diploma, transcript or GED certificate. The memo stated:
Offers of employment are contingent upon successfully passing all pre-employment
requirements, attending all scheduled training and passing all contract-required 25
performance standards. A Medical exam, including a Fit Test and a drug screen is also
required.
Applicants will also be asked to provide availability times in order for the medical exam
and the fit test to be scheduled.
30
Then Knight employee Birdsong learned Paragon was taking over the contract from
Knight in the spring of 2013, through word of mouth, and he saw the memo from Paragon
posted in the control room which announced Paragon’s June 29 job fair. Birdsong estimated
he saw the memo posted about a month before the job fair. Birdsong applied for employment
with Paragon online as instructed by Paragon’s job fair memo. Birdsong completed the online 35
application in advance of the job fair. Birdsong received an email confirming he had submitted
the application. Birdsong testified the online job application did not indicate anything was going
to change concerning his working conditions. He testified the application said nothing about: the
uniform allowance, paid or unpaid breaks, the length of breaks, how he would receive his health
and welfare or pension contribution. It did not say how many hours were needed to be a full-40
time employee. Birdsong testified that at the time he applied he did not receive an employee
handbook. He testified the email confirmation for the application did not contain any information
regarding these matters. However, the application stated:
If hired, I agree and understand that I will conform with the policies practices and 45
procedures of Paragon. I further agree that my employment is “at-will” This means that
either Paragon or I may terminate the employment relationship at any time, with or
without notice, and with or without cause. I understand that Paragon retains the right to
establish compensation benefits and working conditions for all of its employees.
Accordingly, I understand and agree that Paragon retains the sole right to modify my 50
compensation and benefits, position, duties, and other terms and conditions of
JD–59–15
27
employment, including the right to impose disciplinary action that Paragon, at its sole
discretion, determines to be appropriate. No employee or representative of Paragon,
other than the President of Paragon, Inc., has the authority to alter the at will nature of
my employment relationship, or make any agreement inconsistent to the foregoing.
5
Birdsong attended the June 29 job fair at the Greenbelt, Marriott. Birdsong testified that,
upon arriving at the job fair, he went to a desk and signed in and then he received a packet to
be filled out. Birdsong testified he was directed to go inside the room where he completed his
paperwork, which took about 20 minutes. He testified the packet contained tax forms, a direct
deposit form, an offer letter, some EEO policy papers, and things of that nature. Birdsong 10
testified there was a uniform sizing document in the packet. The offer letter in Birdsong’s packet
was dated June 29, and has his name on it. The offer letter stated, in part, “On behalf of
Paragon Systems, I would like to extend to you a contingent offer of employment to serve as a
Security Officer …”. “Effective date of this offer is September 1, 2013.” The offer letter,
including listing certain terms of employment, stated “Employment is contingent upon 15
successfully passing all pre-employment requirements (including pre-employment interviews),
attending all scheduled training, weapons qualification, and passing all contract-required
performance standards including the physical exam with a physical abilities test. A pre-
employment drug screen is also required.” The offer letters distributed by Paragon on June 29,
contained the same information to all of the Knight employees who received one. Birdsong 20
testified he read and signed the offer letter and turned it in to Paragon officials on June 29.
Birdsong testified that when they completed filling out their hiring packets received on
June 29 at the Marriott, the officers waited to be called up front. Then Birdsong met with a
man at the table and Birdsong provided him with his hiring packet, social security 25
card, birth certif icate, driver’s license, and a blank voided check for them to make
direct deposits of his pay. Birdsong testified he submitted qualifications including
certificates of training that he had. Birdsong testified he met with the person at the table for
about 20 to 25 minutes, and then he left. Birdsong testified that he was told at the table there
would be an orientation soon, and it would be announced. Birdsong testified the man at the 30
table did not ask him any questions about his professional or educational background. He did
not inquire why Birdsong was interested in working at Paragon. Birdsong testified when he left
the Greenbelt Marriott on June 29, he was under the impression he had been hired. This was
because he had signed the offer letter as instructed, and they said based on what was in his
packet he had everything and he was good to go.35
Similarly, Baker testified when someone comes to a job fair if they are an incumbent
they check in and if they have applied in Paragon’s system it is likely Paragon has an application
and a packet for them which includes a contingent offer letter. He testified Paragon will ask them
for their paper work. Baker testified for the incumbent workforce Paragon has their credentials 40
and knows they are an officer in good standing on the current contract. For the incumbent
officer, they come in and receive their packet with their offer letter, benefit paperwork, the I-9
form, direct deposit forms, benefits explanation forms, and all of the information needed to be
put into Paragon’s system. Baker testified the offer letter is on top in the file and the first thing
the incumbent sees. Baker testified this is the procedure for all job fairs.45
Baker testified that, after the job fair is completed, then the predecessor’s incumbents
have to qualify for the new contract. To qualify, they have to go through use of force
training with Paragon, which pertains to the use of their firearm. He testified, if they had OC
training or if they had baton certification which is expired, they have to go through that use of50
force training with Paragon. Baker testified Paragon does its own use of force training.
JD–59–15
28
He testified they have to go for new medical testing. He testified the medical requirements from
the old contract to the new one had changed at FEMA. The new one required a seven-panel
urinalysis as opposed to a five panel. They also had to be sized for uniforms and for body
armor, which was a new requirement. Then they are sent for the fit testing which is not only
the medical testing, but also a cardiovascular test. 5
Baker testified Paragon wants the officers to complete the applications before coming to
the job fair because, “We can't issue contingent offers of employment until you've applied,
officially applied with the company unless you express interest, and everybody who works
for Paragon from top to bottom has to apply online through our HMS system before being10
considered for positions.” He testified Paragon wants people to apply in advance of the job fair
to know who is coming to the fair, and how much support personnel Paragon will need at the
meeting. Baker testified Paragon’s job fair memo asks people to bring certain documents.
Baker testified they present themselves with their social security card, they fill out I-9s, and
they provide their driver's license data. Baker testified the job fair announcement memo 15
states offers of employment are contingent upon successful passing of all the pre-employment
requirements. Baker testified contingent means, “we're giving you an offer, but it's not a
guarantee of employment on September 1st. That's just the first part of the process. We're
giving you a contingent offer of employment meaning if you meet all the terms and conditions, if
you accept our employment, and if you qualify with all the bona fides that I explained earlier for 20
your training, your medical certifications, et cetera, then essentially you'll have a place to work
on 1 September.” Baker testified the job fair memo is not an offer of employment. He testified
“an offer of employment is an offer letter. This is just how to go and apply for a job with us.”
The General Counsel argues that Paragon’s early June memo announcing the job fair 25
was an invitation for incumbent employees to apply for continued employment at the FEMA
buildings and constituted or was tantamount to an invitation to accept employment under Spruce
Up. The General Counsel contends that because Paragon failed to announce its intent to
establish new terms and conditions before it issued this memo and made applications available,
it was a “perfectly clear successor, and it violated Section 8(a)(5) by subsequently making all of 30
the alleged unilateral changes to employees terms and conditions of employment. In support of
this contention the General Counsel notes that the June memo invited the Knight employees to
apply, told them how to apply, and directed them to bring documents including an original and
copy of their driver’s license, birth certificate, Social Security card, and high school diploma to a
scheduled job fair. It is pointed out that nothing in the memo indicated Paragon would be setting 35
terms different than those contained in the Knight CBA. It is asserted that the documents
requested most often are tendered after an employment decision is made. The General
Counsel argues that Paragon’s employment application also failed to announce its intention to
set different terms of employment. The General Counsel argues, in the circumstances, here
that the fact Paragon had not extended formal offers of employment at the time it issued the job 40
fair member does not negate a finding of a perfectly clear successor. It is asserted that is
particularly so here where Paragon was legally obligated to offer employment to its
predecessor’s employees under the president’s executive order.
For the reasons state above as advanced by the General Counsel I find that Paragon 45
was a perfectly clear successor to Knight at the time it posted its job fair memo, solicited
incumbent employees to apply, and requested them to bring the above listed employment
related documents to what it described as a job fair. As Baker’s testimony revealed the on line
application was needed to input Knight’s employees into Paragon’s system and the completion
of that application was sufficient for Paragon to generate an offer letter for each Knight 50
employee who applied, and then at the meeting they were asked to sign additional employment
JD–59–15
29
related forms, and provide information for them to be fitted for body armor and uniform sizing.
Since the completion of the online application was sufficient to generate an offer letter, it clear
that Paragon had exhibited a fixed intent to hire the employees who applied, as it was required
to do by the President’s executive order. This conclusion is bolstered by Birdsong’s credited
testimony that he was not interviewed by Paragon’s officials for the position aside from their 5
determining his employment related documents were in order. As well as Baker’s testimony that
he was responsible to have the project fully staffed by the September 1 start date.
Thus, I find that at the time Paragon solicited applications in the circumstances here it
established itself as a perfectly clear successor, and by its failure to clearly announce that it 10
intended to establish a new set of working conditions at the time it invited employees to apply,
and thereafter unilaterally changing those conditions it violated Section 8(a)(5) and (1) of the
Act. See, Hilton's Environmental, Inc., 320 NLRB 437, 438 (1995); Canteen Co., 317 NLRB
1052 (1995), enfd. 103 F.3d 1355 (7th Cir. 1997); Fremont Ford, 289 NLRB 1290, 1296-97
(1988); Elf Atochem North America, Inc., 339 NLRB 796, 808 (2003); DuPont Dow Elastomers, 15
LLC, 332 NLRB 1071, 1073-1074 (2000); Helnick Corp, 301 NLRB 128, 134 (1991); Turnbull
Enterprises, 259 NLRB 934, 938-940 (1982); and CME, Inc., 225 NLRB 514 (1976). I do not
find that Paragon would logically expect a majority Knight’s work force which were staffing the
federal building would have failed to pass the necessary exams and medical requirements to
retain their positions with Paragon. See, Road & Rail Services, Inc., 348 NLRB 1160, 1169-20
1170 (2006). This is confirmed by Baker’s testimony that in the vast majority of its contracts it
hires a majority of the predecessors work force.
Moreover, the equities here way heavily in favor of finding a perfectly clear successor,
given the back drop of the executive order according these employees a right of first refusal to a 25
position with Paragon concerning their prior positions with Knight at the FEMA location. First,
Respondent posted its job fair memo in early June inviting them to a job fair on June 29, and
instructing them to fill out an on line application in advance of the job fair and to bring several
employment related documents generally tendered to a new employer. The job fair memo gave
no indication that the employees benefits at Paragon would change from those at Knight. 30
Moreover, while Brady’s testimony indicated that in the large majority of instances Paragon
retained a majority of the predecessor’s employees, no notice was provided to the Union that
Paragon intended to change these employees benefits. These actions by Paragon had several
adverse effects on the Knight employees. First, the time spent time filling out applications and
traveling to the job fair without warning that their benefits would change. Second, they could 35
have been misled to delaying seeking alternate employment which they may have done had
they been provided with that information at the outset including the particulars of the benefit
changes. See, International Ass'n of Machinists and Aerospace Workers, AFL-CIO v. NLRB,
595 F.2d 664, 674-675 fn. 49 (D.C. Cir. 1978), where the court stated “Even when Burns is
read, as the Board does, to limit compulsory initial-terms bargaining to situations wherein the 40
successor has indicated that incumbents will be retained and has not concurrently announced
downward changes in employment terms, predecessor-employees are afforded an important
measure of protection. Once the duty to bargain has thus attached, the successor is obliged to
consult the incumbent union before institution of less satisfactory terms. That is significant
because unconditional retention-announcements engender expectations, oft times critical to 45
employees, that prevailing employment arrangements will remain essentially unaltered. Even
when incumbents are not affirmatively led to believe that existing terms will be continued, unless
they are apprised promptly of impending reductions in wages or benefits, they may well forego
the reshaping of personal affairs that necessarily would have occurred but for anticipation that
successor conditions will be comparable to those in force.” There the court noted even when 50
the employment offer and subsequent announcement of changed terms both occur before the
JD–59–15
30
actual hiring, a duty to bargain with respect to the proposed changes could possibly be imposed
on either of two grounds; for lack of sufficient time to rearrange their affairs, incumbents might
be forced to continue in the jobs they held under the successor employer, notwithstanding
notice of diminished terms, and even were that less plain, a bargaining obligation may be
essential to protect the employees from imposition resulting from lack of prompt notice. “Thus a 5
prospective employment relationship may be presumed when a successor has boldly declared
an intention to retain incumbents but has not concurrently proposed substantially reduced
benefits. And such an inference may be left undisturbed by revelation of employment terms
after the employer's initial announcement but before actual hiring commences. The successor
would have no legitimate complaint about mandatory bargaining in such circumstances because 10
its necessity is a product of his own misleading conduct.”
I also find that while, as set forth above, Respondent’s bargaining obligation accrued
when it solicited the predecessor employees to apply, that under Board law statements in the
Respondent’s employment applications that they would be hired as at will employees and 15
wherein Respondent it reserved unto itself the right to change benefits, but did not state it would
do so, or list any specific benefit changes also amounted to a failure to give the applicants
sufficient information to alter Respondent’s status as a perfectly clear successor.11 See, Windsor
Convalescent Center of North Long Beach, 351 NLRB 975, 980-981 (2007), enf. denied in
relevant part, 570 F.3d 354 (D.C. Cir. 2009),12 where the Board majority found that even 20
assuming the respondent informed applicants that they would only be employed on a temporary
basis, that as a result they were not eligible for certain benefits, and that other terms and
conditions would be set forth in personnel policies in a subsequently issued handbook the Board
found the respondent was nevertheless a perfectly clear successor because the respondent
failed announce its intent to establish a new set of conditions prior to inviting the employees to 25
accept employment. In Windsor Convalescent Center of North Long Beach, at 981, the Board
majority stated, “there is no evidence that the Respondent, prior to the takeover, informed
Candlewood employees that those who were retained would be working under different core
terms and conditions of employment. On this record, we find that the Respondent ‘failed to
clearly announce its intent to establish a new set of conditions prior to inviting former 30
[Candlewood] employees to accept employment.’” See also, Canteen Co., 317 NLRB 1052
(1995), enfd. 103 F.3d 1355 (7th Cir. 1997), where the Board found an employer to be a
perfectly clear successor, although it had informed the union that it wanted the predecessor’s
employees to serve a probationary period. It is commonly known that employees serving a
probationary period are considered to be akin to employees at will during that period.35
The court in S & F Market Street Healthcare LLC v. NLRB, 570 F.3d 354, 359-362 (D.C.
Cir. 2009),13 in reversing the Board in Windsor Convalescent, supra and concluding that the

11 I make this finding only should a reviewing authority disagree with my prior analysis,
because I have previously found Respondent’s bargaining obligation affixed when it solicited the
employees to apply, and for the reasons stated subsequent conduct would not alter that
obligation.
12 The Board majority Paragon Systems, Inc., 362 NLRB No. 166 slip op. at 3 fns. 6, 7
(2015), distinguished but did not overrule Windsor Convalescent Center of North Long Beach,
supra. In Paragon, supra, the Board pointed out that in Windsor the Board had found the
respondent to be a “perfectly clear” successor, which as pointed out by the ALJ in Paragon was
not being alleged against Paragon in that litigation. See, Paragon at pages 6 to 7. Since the
General Counsel has taken the position that Paragon is a perfectly clear successor in the
current case a separate set of issues and parameters are raised here.
13 While the court in S & F Market Street Healthcare LLC reversed the Board’s perfectly
JD–59–15
31
respondent employer was not a perfectly clear successor, stated as follows:
On the undisputed facts of this case, no employee could have failed to understand that
significant changes were afoot. The cover letter attached to each job application foretold
“significant operational changes,” identified various pre-employment checks and tests to 5
be passed, and explained that any employment offered would be both temporary and at
will. The Board discounted the cover letter on the ground that it “lacked any mention of
intended changes to employees' terms and conditions of employment.” Id. at 981. Yet
under Candlewood's collective-bargaining agreements with the Union, as any employee
would know, each employee with 90 days on the job had vested “seniority rights” and 10
could not be terminated except for cause, which the Union could contest through the
negotiated grievance and arbitration procedure. By announcing that any employment
with S & F would be at will, therefore, S & F was announcing a very significant change in
the terms and conditions of employment-both for those who had been employed by
Candlewood for 90 days or more and for those who expected to be. In addition, by 15
requiring its new employees to agree to its own alternative dispute resolution policy, S &
F made it clear the grievance mechanism the Union had negotiated with Candlewood
would not be available.
***
Nevertheless, the Board concluded “there is no evidence that [S & F], prior to the 20
takeover, informed Candlewood employees that those who were retained would be
working under different core terms and conditions of employment.” 351 N.L.R.B. at 981.
We see two errors of law in this restatement of the “perfectly clear” standard.
First, the focus upon “core” terms and conditions misstates the rule, which is that the
successor employer must simply convey its intention to set its own terms and conditions 25
rather than adopt those of the previous employer. Granting that a trivial change in
employment conditions may not suffice, there is no requirement in Burns or Spruce Up
that the intended change(s) involve “core” terms. Whatever that term may mean,
however, it surely includes instituting at-will employment and eliminating the negotiated
grievance and arbitration procedure.30
Second, the Board's holding achieves precisely what Burns and Spruce Up sought to
avoid. In those cases the Supreme Court and the Board respectively started from the
presumption that a successor employer may set its own terms and conditions of
employment and reserved the “perfectly clear” exception for cases in which employees
had been misled into believing their terms and conditions would continue unchanged. 35
See Burns, 406 U.S. at 294-95, 92 S.Ct. 1571; Spruce Up, 209 N.L.R.B. at 19. In this
case, the Board presumed the predecessor's terms and conditions must remain in effect
unless the successor employer specifically announces it will change “core” terms and
conditions. Thus does the exception in Burns swallow the rule in Burns. Under the
proper standard, S & F clearly comes within the protection of the rule rather than the 40
straightjacket of the exception: It was never “perfectly clear that the new employer
plan[ned] to retain all of the employees in the unit,” Burns, 406 U.S. at 294-95, 92 S.Ct.
1571, let alone that it did so “with no notice that they would be expected to work under
new and different terms,” Spruce Up, 209 N.L.R.B. at 195 n. 7. On the contrary, the
Company announced it would retain only those who met certain preemployment tests 45
and stated its intent to set new initial terms and conditions of employment.

clear successor finding in Windsor Convalescent Center of North Long Beach, and disagreed
with the Board’s “core terms and conditions” requirement, I am required to follow Board
precedent, not reversed by the Supreme Court. See, Waco, Inc., 273 NLRB 746, 749 fn. 14
(1984).
JD–59–15
32
Since I find that Paragon’s bargaining obligation with the Union attached at the time
Paragon solicited the predecessor employees to apply; which predates the time of the
employees’ actual applications and any statements contained therein, this case is
distinguishable from the court’s decision in S & F Market Street Healthcare LLC v. NLRB, 570 5
F.3d 354 (D.C. Cir. 2009). However, this case is also distinguishable from S & F Market in other
significant ways. There, as reported by the court, the respondent employer purchased the
predecessor, and prior to assuming control concluded it would need to increase the level of care
and replace the staff. It then decided closer to its July 1 takeover that it could not replace the
entire staff because doing so would be too disruptive to the residents. Rather, it decided to hire 10
some of the predecessor’s employees for up to 90 days, while it continued to recruit new
employees. When in June it had applications distributed to existing staff it included a cover
sheet stating that it intended to implement significant operational changes and current
employees must submit the attached application for employment. It advised that only
employees who meet the company’s operational needs will be interviewed and any offer of 15
employment will be contingent on your passing a pre-employment physical, drug test and
acceptable reference and background checks. The court noted the job application itself
required the applicant to affirm their understanding that passing the tests and checks was a
condition of employment, that any employment would be at will, and that S & F could change
benefits, policies at any time. During subsequent interviews at the end of June, each employee 20
who submitted an application was interviewed; and each applicant was informed their
employment would be temporary and would last no more than 90 days. The employees who
were accepted were sent a letter dated June 30, stating it was an offer of temporary
employment; that as a temporary employee they were not eligible for company benefits, and
that other terms of your employment will be set forth in the respondents’ personnel policies and 25
its employee handbook. It stated their employment was at will and would end no later than the
expiration of the 90 day period, unless they were selected for regular employment. Those hired
also had to sign an agreement to be bound by an alternative dispute resolution policy. Within
the first 3 months of operation the successor had replaced a majority of those hired from the
predecessor’s staff with new employees.30
In the current case, Paragon’s intent to hire and retain the predecessor employees is
clear, as it was required to offer employment to those employees under the existing executive
order. There is no claim that this was done on a temporary basis, or that the employees were
informed of such. In fact, all the employees had to do was apply on line which engendered 35
their being given an offer letter at the June 29 job fair, and I have concluded that the offer letter
was proffered with no substantive job interview other than their submitting the requisite paper
work at the job fair. Along these lines, it was the purpose of the executive order that “the
Federal Government's procurement interests in economy and efficiency are served when the
successor contractor hires the predecessor's employees. A carryover workforce minimizes 40
disruption in the delivery of services during a period of transition between contractors and
provides the Federal Government the benefit of an experienced and trained workforce that is
familiar with the Federal Government's personnel, facilities, and requirements.” In this regard,
Baker testified when someone comes to a job fair if they are an incumbent they check in and if
they have applied in Paragon’s system it is likely Paragon has an application and a packet for45
them which includes a contingent offer letter. He testified Paragon will ask them for their paper
work. Baker testified for the incumbent workforce, Paragon has their credentials and knows to
that point they are an officer in good standing on the current contract. Baker testified that at
the job fair once they were done filling o u t t h e i n f o r m a t i o n , they were called up to have
the paperwork reviewed and went through the interview process with attending Paragon 50
representatives. Baker testified when they turned in the paper work they had to complete their
JD–59–15
33
uniform size survey and give Paragon their measurements. Baker testified Paragon had
people with a tape there who would d id a f i t t ing for the of f icers ’ body armor. Baker
testified they were told they would be instructed a s t o when the next range dates would
be, when the training dates would be, and this would be communicated through their site
manager. There was no contention that any of the predecessor employees who applied had 5
their applications rejected at the job fair. This, along with job fair announcement requiring the
incumbent applicants to bring several employment related documents to the job reveals
Respondent had a fixed intent prior to their arrival to offer them positions, as it was required to
do under the executive order.
10
Baker testified that, after the job fair is completed, the predecessor’s incumbents have to
qualify for the new contract. To qualify, they have to go through use of force training with
Paragon, which pertains to the use of their firearm. He testified, if they had OC training or if
they had baton certification which is expired, they have to go through that use of force training
with Paragon. Baker testified they have to go for new medical testing. He testified the medical 15
requirements from the old contract to the new one had changed at FEMA in that the applicants
were now required to pass a seven-panel urinalysis as opposed to a five panel. Thus, Baker’s
testimony reveals these employees had to meet similar requirements in terms of training and
testing to be employed by the predecessor employer; and that Respondent’s testing and
examination requirements were essentially status quo requirements which would not signal to20
these employees that Respondent was going to change their wages and benefits. In this
regard, Baker testified that for the vast majority of these contracts Respondent hires over 50% of
the predecessor employees, and that 90% of Respondent’s employees are union represented.
There was no claim that a significant number of the predecessor’s employees here failed
Respondent’s testing requirements, or in fact that any of them did so. This point is somewhat 25
conceded in Respondent’s brief because they contend they did not offer the incumbent PSOs
employment until Respondents gave them their offer letters. However, those offer letters were
contingent on passing Respondent’s testing requirements. Thus, unlike S & F Market, I have
concluded based on the cases cited and for the reasons mentioned that Respondent’s
bargaining obligation with the Union attached when Respondent solicited the predecessor 30
employees to apply, which predated their applications. Moreover, I find the terms set forth in the
applications when subsequently reviewed did not signal to these employees that Respondent
intended to change their wages, hours, and benefits.
The court noted in S & F Market that the Board did not explain its “core terms and 35
conditions of employment” reference in Windsor Convalescent Center and for the reasons
stated by the court drew a different result than that reached by the Board. While I cannot speak
for the Board, I note that in Litton Financial Printing Div., a Div. of Litton Business Systems, Inc.
v. NLRB, 501 U.S. 190, 198-201 (1991), the Court held that a post contract layoff dispute not
arising under the terms of the contract was not arbitrable, under the expired arbitration clause. 40
In this regard, the Court stated that:
The Board has determined, with our acceptance, that an employer commits an unfair
labor practice if, without bargaining to impasse, it effects a unilateral change of an existing
term or condition of employment. See NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 45
L.Ed.2d 230 (1962). In Katz the union was newly certified and the parties had yet to
reach an initial agreement. The Katz doctrine has been extended as well to cases where,
as here, an existing agreement has expired and negotiations on a new one have yet to be
completed. See, e.g., Laborers Health and Welfare Trust Fund v. Advanced Lightweight
Concrete Co., 484 U.S. 539, 544, n. 6, 108 S.Ct. 830, 833, n. 6, 98 L.Ed.2d 936 (1988).50
JD–59–15
34
Numerous terms and conditions of employment have been held to be the subject of
mandatory bargaining under the NLRA. See generally 1 C. Morris, The Developing Labor
Law 772–844 (2d ed. 1983).
***
In Hilton–Davis Chemical Co., 185 N.L.R.B. 241 (1970), the Board determined that 5
arbitration clauses are excluded from the prohibition on unilateral changes, reasoning that
the commitment to arbitrate is a “voluntary surrender of the right of final decision which
Congress ... reserved to [the] parties.... [A]rbitration is, at bottom, a consensual surrender
of the economic power which the parties are otherwise free to utilize.” Id., at 242. The
Board further relied upon our statements acknowledging the basic federal labor policy that 10
“arbitration is a matter of contract and a party cannot be required to submit to arbitration
any dispute which he has not agreed so to submit.” Steelworkers v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960). See
also 29 U.S.C. § 173(d) (phrased in terms of parties' agreed-upon method of dispute
resolution under an existing bargaining agreement). Since Hilton–Davis, the Board has 15
adhered to the view that an arbitration clause does not, by operation of the NLRA as
interpreted in Katz, continue in effect after expiration of a collective-bargaining agreement.
***
We think the Board's decision in Hilton–Davis Chemical Co. is both rational and
consistent with the Act. The rule is grounded in the strong statutory principle, found in 20
both the language of the NLRA and its drafting history, of consensual rather than
compulsory arbitration. See Indiana & Michigan, supra, at 57–58; Hilton–Davis Chemical
Co., supra. The rule conforms with our statement that “[n]o obligation to arbitrate a labor
dispute arises solely by operation of law. The law compels a party to submit his
grievance to arbitration only if he has contracted to do so.” Gateway Coal Co. v. Mine 25
Workers, 414 U.S. 368, 374, 94 S.Ct. 629, 635, 38 L.Ed.2d 583 (1974). We reaffirm
today that under the NLRA arbitration is a matter of consent, and that it will not be
imposed upon parties beyond the scope of their agreement.
In Finley Hospital, 359 NLRB No. 9, slip op. at 2-3 (2012), the Board majority stated:30
The declared policy of the Act, as stated in Section 1, is to “encourage [e] the practice
and procedure of collective bargaining” and to protect the “full freedom” of workers in the
selection of bargaining representatives of their own choice. Section 8(a)(5) makes it an
unfair labor practice for an employer “to refuse to bargain collectively with the 35
representatives of his employees.” Because it is critically important that collective
bargaining be meaningful, it has long been established that an employer violates Section
8(a)(5) when it unilaterally changes represented employees' wages, hours, and other
terms and conditions of employment without providing their bargaining representative
prior notice and a meaningful opportunity to bargain about the changes. NLRB v. Katz, 40
369 U.S. 736, 742-743 (1962). Under this rule, an employer's obligation to refrain from
unilaterally changing these mandatory subjects of bargaining applies both where a union
is newly certified and the parties have yet to reach an initial agreement, as in Katz, and
where the parties' existing agreement has expired and negotiations have yet to result in
a subsequent agreement, as in this case. Litton Financial Printing Division v. NLRB, 50145
U.S. 190, 198 (1991). In the latter circumstances, an employer must continue in effect
contractually established terms and conditions of employment that are mandatory
subjects of bargaining, until the parties either negotiate a new agreement or bargain to a
lawful impasse. Id . at 198-199.
50
The Supreme Court's decision in NLRB v. Noel Canning, 134 S.Ct. 2550 (2014),
JD–59–15
35
rendered the Board's decision in Finley Hospital, 359 NLRB No. 9, slip op. at 2-3 (2012) invalid.
However, in Finley Hospital, 362 NLRB No. 102 (2015), a Board majority subsequently affirmed
the ruling finding an unlawful unilateral change concerning the discontinuance of a contractually
established wage increase following the expiration of the collective-bargaining agreement. The
Board stated, “even without a contractual obligation, the employer still has a duty to bargain 5
under Section 8(a)(5). That duty requires that the employer not make changes to existing terms
and conditions of employment without satisfying its statutory bargaining obligation. Changes
may be made if the employer notifies the union and bargains new terms--or if the parties
bargain and reach a lawful impasse. See, e.g., Des Moines Register & Tribune Co., 339 NLRB
1035, 1036-1038 fn. 6 (2003), review denied 381 F.3d 767 (8th Cir. 2004). When the employer 10
ignores its statutory duty to bargain and makes changes unilaterally, it is bypassing the union
and depriving its employees of their right to be represented in bargaining over their terms and
conditions of employment.”
As noted from the above discourse, unless certain circumstances exist from an expired 15
CBA, or the dispute arose under the prior contract, arbitration does not survive the expired CBA
during contractual hiatus periods. Ergo discipline taking place following the expiration of a CBA
would not ordinarily be arbitrable, bringing that type of discipline more akin to termination at will;
and differentiating it from the core conditions of employment such as wages, hours, and fringe
benefits for which it is commonly known must be bargained to impasse with a newly certified 20
union or following the expiration of a CBA before an employer can make changes to those
aspects of employees working conditions. Given this differentiation by the Court and the Board,
the average employee might not so readily conclude that a successor employer by merely
stating their employment would be at will standing alone would signify to that employee that the
successor employer was planning to make changes to their wages, hours or working conditions 25
when they were hired.14 In fact, to accept such a stance would allow every “perfectly clear”
successor to eviscerate its bargaining obligation set forth by the Court in Burns by the use of
two words, “at will.” The Board in Sahara Las Vegas Corp., 284 NLRB 337, 343 (1987), enfd.
886 F.2d 1320 (9th Cir. 1989), rejected a similar attempt by a successor employer when it
attempted to label the predecessor workforce it hired as probationary employees in an effort to 30
delay its bargaining obligation. There, the ALJ stated, with Board approval, that:
the Respondent has shown no special circumstances here warranting the
postponement of that obligation. The probationary period imposed by the Respondent
comes across on this record as little other than a meaningless device having no 35
discernible impact on employee tenure or the Respondent's staffing plans which, for all
that's shown here, were complete as of August 20. For this reason, I am at a complete
loss to comprehend what policy under the Act would be served to accord the sweeping
effect the Respondent desires here to the probationary period. Indeed, the
Respondent's argument on this point is so lacking in merit when weighed against the 40
existing case law that I am compelled to look elsewhere for an explanation of its refusal
to adhere to its legal obligations. That explanation is, in my judgment, fully explained in
Lewis' testimony, noted above, the essence of which is that the Respondent intended to
retain complete unilateral control over its casino employees consistent with the historical
pattern of this industry in Las Vegas.45

14 Of course, it is even an open question as to whether an employer with an obligation to
recognize and bargain with a union, even absent a collective-bargaining agreement, could
terminate an employee “at will” that is without prior consultation with the employee’s collective-
bargaining representative. See, Alan Richey, Inc., 359 NLRB No. 40 (2012), rendered invalid by
the Court’s decision in NLRB v. Noel Canning, 134 S.C. 2550 (2014).
JD–59–15
36
While the Respondent here labeled the employees as “at will” in its employment
application, I find from the beginning Respondent intended to hire these skilled and trained
employees, did hire them, and as the record shows retained the majority of them at the time
they were hired. I find that the use of “at will” and similar terminology in Respondent’s5
employment application as was the case in Sahara Las Vegas Corp, would be little more than a
device to enable sophisticated employers to terminate their initial bargaining obligation as
“perfectly clear” successor employers, as had been Respondents’ practice when they had taken
over other prior government contracts.15
10
Moreover, the Court stated in NLRB v. Burns Services Inc., 406 US 272, 280, 281
(1972), that “It does not follow, however, from Burns' duty to bargain that it was bound to
observe the substantive terms of the collective-bargaining contract the union had negotiated
with Wackenhut and to which Burns had in no way agreed.” However, the Court went on to
state, “there will be instances in which it is perfectly clear that the new employer plans to retain 15
all of the employees in the unit and in which it will be appropriate to have him initially consult
with the employees' bargaining representative before he fixes terms.” The reduction in wages
and benefits was impliedly viewed differently by the Court then the requirement that a successor
be strictly bound by the predecessor’s CBA, or the grievance-arbitration procedure contained
therein. See also, DuPont Dow Elastomers, LLC, 332 NLRB 1071, 1073-1074, 1074 fn. 7 20
(2000), enfd. 296 F.3d 495 (6th Cir. 2002), where a perfectly clear successor was found where
the unions there were informed that although the successor employer would not honor the
predecessors CBA’s it would maintain employees’ wages and benefits under those contracts.
In Bellingham Frozen Foods, Inc., 626 F.2d 674, 678-679, fn.1 (9th Cir. 1980), the court stated
“When it is ‘perfectly clear’ that the employer intends to hire a majority of his workforce in a unit 25
represented by a union from the ranks of his predecessor, his duty to bargain commences
immediately.” However, citing Burns, the court stated the obligation is to recognize and bargain
with the union, but it is not bound to the substantive terms of the predecessor’s CBA not agreed
to or assumed by it. Similarly, in Cadillac Asphalt Paving, 349 NLRB 6, 10-11 fn. 32 (2007), the
Board found the respondent was a perfectly clear successor that violated Section 8(a)(5) and 30
(1) of the Act by refusing to recognize and bargain with the union and by failing to continue the
terms and conditions maintained by the predecessor at the time of succession, i.e., the health
and welfare and pension fund contributions in accord with terms of the expired 1998-2003
MRBA labor agreement, but that the respondent did not violate Section 8(d) of the Act by
implementing terms and conditions of employment that varied from the predecessor's collective-35
bargaining agreement. In this regard, the Board has found a successor employer to be a
perfectly clear successor, although it had informed the union there that it wanted the
predecessor’s employees to serve a probationary period. See, Canteen Co., supra. Thus, it
would not seem informing employees their employment would be at will would necessarily
constitute a signal to those employees that an employer intended to change their wages, hours, 40
and fringe benefits.
While I find Paragon’s bargaining obligation with the Union attached at the time they
solicited the predecessor employees to apply; which predates the time of the employees’ actual

15 For example, Paragon’s reference in its employment application that “No employee or
representative of Paragon, other than the President of Paragon, Inc. has the authority to alter
the at will nature of my employment relationship, or make any agreement inconsistent to the
foregoing,” can be construed as a response to offset a possible fact pattern as set forth by the
court in S & F Market Street Healthcare LLC v. NLRB, supra., where there were alleged
statements by supervisors offsetting the successor employer’s employment related documents.
JD–59–15
37
applications, I also find the applications themselves further confirmed the Respondents intent to
hire and did not specifically apprise the employees that there would be a change or reduction in
wages or benefits. In reaching this conclusion, I have considered the fact that the application
stated the applicants employment would be “at-will” and that Paragon retained the right to
establish compensation, benefits and working conditions for all of its employees; and the right to 5
modify my compensation and benefits, position, duties, and other terms and conditions of
employment, including the right to impose disciplinary action that Paragon, at its sole discretion,
determines to be appropriate. It also stated that “No employee or representative of Paragon,
other than the President of Paragon, Inc. has the authority to alter the at will nature of my
employment relationship, or make any agreement inconsistent to the foregoing.” While the 10
Paragon application stated that Paragon retained the right to establish compensation and
benefits, it did not state Paragon planned to exercise that right, nor apprise employees of what
changes, if any, Paragon intended to make.16
In this regard, Birdsong credibly testified the online job application did not indicate 15
anything was going to change concerning his working conditions. He testified the application
said nothing about: the uniform allowance, paid or unpaid breaks, the length of breaks, how he
would receive his health and welfare or pension contribution. It did not say how many hours
were needed to be a full-time employee. Birdsong testified that at the time he applied he did not
receive an employee handbook. He testified the email confirmation for the application did not 20
contain any information regarding these matters. Birdsong’s testimony is supported by the fact
that there is no claim by Birdsong or Baker that the “at will” reference drew any questions by any
employees to Respondent’s officials. Yet, at the June 29 job fair when the employees received
an offer letter which reported an incorrect pay rate, Birdsong testified the officers wanted to

16 While in Paragon Systems, Inc., 362 NLRB No. 166 (2015), the Board majority accepted
language similar to the language in the Paragon’s application there are differences here. First,
Paragon Systems, Inc., did not involve the issue of whether Paragon was a perfectly clear
successor, as is raised in the current case. Moreover, although I have found Respondent’s
perfectly clear successor status was perfected prior to the predecessor employees receiving
their offer letters, the June 29 offer letters stated, “Shift schedules will be determined in
accordance with the operation need of the contract with consideration given to employee
seniority. Breaks will be provided in accordance with Company policy and in compliance with
any applicable State and Federal law requirements and subject to the operational needs of the
contract.” While, some may say the employees should have been be able to predict in advance
from this ambiguous language that Respondent was going to cease paying the employees for
their theretofore compensated 30 minute lunch break as the Board majority found with respect
to guard mount breaks in Paragon Systems, the facts are different here because not all of
Respondent’s supervisory staff had same ability to divine such a policy change. In this regard,
Birdsong testified when Paragon took over operations on September 1, his breaks did not
change initially. He testified the break structure changed around a month after Paragon took
over, and he was paid for his 30 minute lunch break by Paragon until that time. Even Baker
admitted some employees continued to be paid for their 30 minute lunch break after the
transition to Paragon, explaining some supervisors continued to put them in for the breaks,
although he claimed this was for a shorter period for which Birdsong testified. While the
actual records were not placed in evidence, it is more likely Birdsong gave the more accurate
account since the change directly affected his earnings. Thus, the Board has more
information here that not only was there credible testimony from an employee that he did not
expect benefit changes from Respondent’s statements, Respondents actions in continuing to
pay some of the employees for these breaks reveal some of its supervisory staff drew the same
conclusions as did the employee.
JD–59–15
38
know whether Paragon was going to honor their CBA because their pay was higher than that in
the surrounding areas. Birdsong testified that he as well as others asked this question stating
this was the main concern. Similarly, Birdsong testified that at the August 24 orientation,
questions continued as to whether Paragon was going to pay them the same pay they had been
receiving with the prior company because they had a CBA in place, and they wanted to know if 5
Paragon would honor the CBA and pay them their rate of pay because when they signed the
offer letter it was lower, and the employees were concerned Paragon was going to drop their
pay. Birdsong testified Waddell also talked about vacation pay, and he was asked questions
about health and welfare. Waddell was asked if they were going to be receiving their health and
welfare as a wage and he said no. Waddell said it would be going to the benefit plan. During 10
the orientation Waddell also said they would no longer be receiving the pension contribution as
a wage that it would go into the 401(k) plan. Thus, the ambiguous language in the application
drew no questions about benefit changes, signifying that the employees did not understand the
application language to be a notice of change of benefits, or it surely would have caused them
to raise questions to management as to what those benefit changes would be. Rather, it was 15
only after Respondent announced specific benefit changes in its June 29 offer letter did
employees raised questions about the announced changes. Significantly, the employees did
not question Respondent’s officials at that time about any changes that were not specifically
announced. Confirming Birdsong’s testimony that he did not expect such changes and only
learned of them after he began working for Respondent.20
Here, the equities also favor the Union’s claim. The record reveals that during its June
29 job fair Paragon passed out of letters to incumbent employees stating employees were being
extended a contingent offer of employment with an effective date of September 1. Included in
the letter was the statement, “Shift schedules will be determined in accordance with the 25
operational needs of the contract. Breaks will be provided in accordance with Company policy
and in compliance with any applicable State and Federal law requirements and subject to the
operational needs of the contract.” Birdsong credibly testified the employees had no clue from
this language that breaks were going to change. Birdsong credibly testified that where it states
in the offer letter that, "Breaks will be provided in accordance with company policy," did not 30
signify to him there was going to be a change because Paragon’s break policy could have been
the same as that with Knight. Birdsong’s testimony is buttressed by Brady’s admission that
some of the supervisors at Paragon did not know that employees were not to be paid for their
lunch breaks until after Paragon began operations. So while working for Knight the officers
would receive 40 hours pay when their shift was scheduled for 40 hours, for Paragon they only 35
received 37 and ½ hours pay for the same 40 hours. While Paragon’s June 29 offer letter
detailed vacations for what it said were full time employees, it did not define what a full time
employee was at the time. Moreover, the definition of full time employee in the Knight CBA was
someone working 32 hours per week. It was not until August 24, at an orientation meeting that
the employees received a hard copy of Paragon’s multi page handbook which contained an 40
isolated statement that full time employees were those working a 40 hour week. Yet, in order to
qualify for employment with Paragon, its June 29 offer letter stated the officers had to accept
Paragon’s offer by July 6. Thus, the employees prior to being required to accept Paragon’s offer
were not told what the true changes to their vacations would be, or even what vacations or sick
leave were to be accorded those considered part time. This conclusion is bolstered by Birdsong 45
and Fraser’s credited testimony that the employees did not detect their diminished vacation and
sick leave until months after they began employment with Paragon. The same can be said
about Paragon’s termination of Knight’s dry cleaning allowance for employees uniforms which
was only vaguely disclosed to the officers on August 24 when they first received a hard copy of
Paragon’s handbook. Here again, there was more ambiguity as the handbook did not tell them 50
specifically they would not be getting the allowance, because even if they read and understood
JD–59–15
39
the handbook provision, there is no contention at that time whether they were told the types of
uniforms they would be receiving as it pertained to the handbook explanation. Thus, Paragon
misstated benefits i.e. wage rates, health and welfare, and pension in its offer letter, and gave
information as to benefit cuts over time in a piece meal fashion to employees. Since Paragon
had a copy of the Knight CBA prior to its June job fair posting, I can only conclude that the way it 5
notified and obfuscated its benefit package to employees was done intentionally to giving them
a false sense of security as to their terms and conditions of employment should they work for
Paragon.17 I find this was done to help persuade the employees to accept employment to allow
Paragon to meet its staffing goals, which also supports my conclusion that Paragon should be
found to be a perfectly clear successor and that it has violated Section 8(a)(5) and (1) of the Act 10
by the unilateral changes allege in the complaint.
I have rejected Respondent’s contention in its brief that its June 29 job fair memo was
merely an invitation for employees to submit applications that under Spruce Up the time when a
successor employer must announce an intent to change terms and condition of employment is 15
prior to or simultaneously with an invitation of the prior work force to accept employment. It
asserts in the present case the easily identifiable point at which Paragon offered employment to
the incumbent employees was June 29, when they received their personalized offer letters at
the job fair meeting. For the reasons stated and the case law cited, I find Respondent’s
bargaining obligation attached in early June with the publication of its job fair memo. Since I 20
find the bargaining obligation attached with the job fair memo, my conclusions render a nullity
Respondent’s contention that its June offer letter unambiguously announces that things were
going to be different than under what took place with Knight. I also do not find that cases such
as Ridgewell’s, Inc., 334 NLRB 37 (2001), enfd. 38 Fed Appx. 29 (D.C. Cir. 2002), support
Paragon’s position here. In Ridgewell’s the respondent employer met with a union prior to the 25
employer even obtaining the applicable subcontract, and informed the union that it would use
the predecessors employees as independent contractors, and the Board held that was sufficient
to place the union on notice that those employees would not be hired under the terms of the
predecessors CBA. That is different than the circumstances here where Paragon made no such
announcement to the union but through a general announcement solicited all of the 30
predecessors employees to apply, was legally obligated to offer them employment, and by that
solicitation I have concluded demonstrated a fixed intent to employ them without announcing it
would have changed the terms of their employment. Similarly, in Resco Products, Inc., 331
NLRB 1546 (2000), the successor employer’s first contact with the predecessors employees
included an offer of employment including terms different than that for which they worked under 35
the predecessor. In the instant case, Paragon’s first contact with Knight’s employees was its job
fair memo in which it solicited their employment applications but failed to inform them of any
differing terms.
Here, Paragon in early June published a job fair memo inviting employees to apply for 40
work on line, and asked them to attend a job fair on June 29, notifying them they were to bring
certain employment related documents, and their duplicates. Yet, prior to this announcement,
Paragon had had in its possession a copy of Knight’s CBA, but it failed to inform the employees
or their union that Paragon intended to make changes in that CBA if they accepted employment
with Paragon. At the June 29, job fair Paragon provided employees with a “contingent” offer 45
letter, which it allowed the employees to sign and tender to Paragon on that date, which
Birdsong did, which also gave them a deadline of July 6, to tender acceptance of that offer

17 See, Paragon Systems, Inc., 362 NLRB No. 182 (2015), where Paragon was recently found
to have violated the Act by its discharge of three employees due to their union activities.
JD–59–15
40
letter. The offer letter did inform employees that they were to be considered at will employees,
that they would no longer be allowed to retain health and welfare, and pension benefits as pay,
but that it would be deposited into their 401(k) plans. The offer letter set forth annual leave for
full time employees, but failed to disclose a full time employee was required to work 40 hours
instead of 32 hours; failed to inform them what the benefits for sick leave and annual leave 5
would be for part time employees, failed to explain that they would no longer be getting a
uniform allowance, and that they would no longer be paid for their 30 minute lunch break.
Differences which could have been easily gleaned by Paragon from Knight’s CBA. Moreover,
the offer letter misstated the wages, health and welfare, and pension benefits Paragon was
obligated to provide thereby creating a lot of questions amongst employees, and leading to 10
confusion as to what Paragon was actually offering due to vague assurances made by Waddell
on June 29 that Paragon would honor certain aspects of Knight’s CBA in response to the
multitude of employee questions raised on June 29, in response to Paragon’s inaccurate offer
letter. Any confusing engendered by Paragon’s misstating such basic benefits as wages, health
and welfare, and pension rates in its offer letter should inure to Paragon and not the employees. 15
This does not appear to be the type of timely notice of a reduction in wages and benefits to
employees for informed choices that the court was contemplating in International Ass'n of
Machinists and Aerospace Workers, AFL-CIO v. NLRB, 595 F.2d 664, 674-676 (D.C. Cir. 1978).
The predecessor contract reveals as of September 2013, someone classified as a guard 20
was receiving $26.80 per hour; a $.65 hourly uniform allowance; and $6.00 per hour for health
and welfare; and $1.19 per hour pension each of which they had the opportunity to opt to
receive as directly paid to them as part of their paycheck. Based on 40 hours total their gross
pay came to $1072 pay; $26 uniform allowance; $240 health and welfare; and $47.60 pension
for the potential of receiving $1385.60 gross pay for a 40 hour week. Following Respondent’s 25
takeover this same employee lost their 30 minute paid lunch break equivalent to a loss of 2.5
hours of pay per week, lost the option of retaining their health and welfare and pension as part
of their pay check and lost their uniform allowance allowing them only $1005 gross pay based
on a 40 hour week. Thus, Respondent effectively reduced their option of gross weekly pay by
$380.60 per week, or a cut of 27% in gross pay. The Respondent did this by bypassing the 30
Union; and dribbling out information to the employees in an ambiguous and incomplete fashion.
While Respondent was required to contribute the health and welfare money and pension to a
designated 401(k) for each employee depending on the employees circumstances as per health
insurance, there was no showing if there was any vesting requirement for the 401(k)
contributions; or what penalties the employees would have to overcome to get access to the 35
money. Moreover, this was an immediate hit to the employees available gross income.
It can be argued that the employee no longer had to accrue dry cleaning expenses for
wash and wear uniforms. On the other hand, this assumes the employees had free access to a
washer/dryer on their premises. Rather, they may still have had cleaning costs for which they 40
were no longer compensated as well as time for cleaning the uniforms. They could have also
have found ways to dry clean the uniforms without spending the whole prior allowance.
Regardless, their disposable gross income was substantially reduced when Respondents took
over based on ambiguous and piece meal information given to the employees.
45
In sum, I find Respondent became a perfectly clear successors under Spruce Up,
through its early June memo announcing the June 29 job fair requesting the predecessor
employees to apply, that they fill out an online application, and bring certain enumerated
employment related documents to said job fair. I find, at the same time, Respondent failed to
timely inform the applicants their wages and benefits would change. Thus, by thereafter failing 50
to reach out and consult with the Union as to the substantial changes in wages and benefits
JD–59–15
41
Respondent intended to implement, and by providing piecemeal information directly to the
employees about those changes the Respondent has engaged in unilateral changes and
bypassed and undermined the Union in violation of Section 8(a)(5) and (1) of the Act.
2.The General Counsel’s Request that the Board Reverse Spruce Up5
The General Counsel contends the Board’s decision in Spruce Up Corp., 209 NLRB
194, 195 (1974), enfd. 529 F.2d 516 (4th Cir. 1975), should be overturned as it is inconsistent
with the language in the Court’s decision in NLRB v. Burns Security Services, 406 U.S. 272,
294-295 (1972). The General Counsel requests that I issue an order urging the Board to revisit 10
and overturn Spruce Up, and that Respondent be found to be “perfectly clear” successor as
contemplated by Burns because the evidence establishes Respondent intended to both retain
the predecessor’s employees and was required to offer them employment. It is argued
Respondent planned to retain the predecessors’ work force and thus it should be found to be
“perfectly clear” successor as defined by the Court in Burns. It is contended Respondent’s 15
bargaining obligation attached upon determining it would enter the service contract and rely
predominantly on their predecessors’ work force to meet its staffing needs, due to its obligation
to offer incumbent employees a right of first refusal under Executive Order 13495. It is
contended that, at that point, Respondent was obligated to notify the Union of its intention to
change working conditions, and thereafter give the Union an opportunity to bargain. It is 20
asserted that because Respondent intended to hire predecessor’s work force in compliance with
the Executive Order it is a “perfectly clear” successor under Burns and violated section 8(a)(5)
and (1) of the Act by failing to consult with the Union before fixing initial terms.
The General Counsel has as early as 2003 recommended the Board reverse its Spruce 25
Up holding as reflected in Elf Atochem North America, Inc., 339 NLRB 796, 803 (2003). The
Board elected not to address the arguments made at that time. It appears the Board may now
want to address the General Counsel’s arguments because the disagreement between the two
branches of the Agency, as it did here, helped to foster this litigation because the parties did not
have clear guidelines with which to reach a resolution of their dispute. In Elf Atochem North 30
America, Inc., it was noted at 803 that the General Counsel asserted the Board should reverse
Spruce Up and find an obligation to bargain exists over initial terms of employment whenever a
successor plans to retain the existing workforce without regard to whether changes in
employment conditions are contemplated or when they are announced. The General Counsel
there cited NLRB v. Advanced Stretchforming, Inc., 208 F.3d 801, 807-811 (9th Cir. 2000); 35
Chairman Gould's concurring opinion in Canteen Co., 317 NLRB 1052, 1054-1055 (1995), enfd.
103 F.3d 1355 (7th Cir. 1997), and the dissenting opinions of Board Members Fanning and
Penello in the Spruce Up decision as support for the position that the case be reversed.
I find it unnecessary to recommend to the Board that Spruce Up be reversed as the 40
General Counsel requests. This is a policy matter reserved to the Board. I will, however,
provide the Board with an analysis of existing case law to the extent it might prove useful.18

18 I recently provided a similar analysis in another case involving this Respondent. See,
American Eagle Protective Services Corporation and Paragon Systems, Inc., Joint Employers,
JD-55-15 (September 22, 2015). I in large part repeat it here because the same issue is raised,
and to allow clarity to the extent a party desires to file exceptions to; and/or agree with my
analysis as it relates to the current case. I am aware that recently in GVS Properties, LLC, 362
NLRB No. 194 (2015), the Board cited the Spruce Up decision with approval. However, that
case does not appear to include, as here, a contention by the General Counsel that Spruce Up
be reversed.
JD–59–15
42
Some 13 years after the Board’s Spruce Up decision, in Fall River Dyeing & Finishing Corp. v.
NLRB, 482 U.S. 27, 39-40 (1987), the Court stated:
During a transition between employers, a union is in a peculiarly vulnerable position. It
has no formal and established bargaining relationship with the new employer, is uncertain 5
about the new employer's plans, and cannot be sure if or when the new employer must
bargain with it. While being concerned with the future of its members with the new
employer, the union also must protect whatever rights still exist for its members under the
collective-bargaining agreement with the predecessor employer.FN6 Accordingly, during
this unsettling transition period, the union needs the presumptions of majority status to 10
which it is entitled to safeguard its members' rights and to develop a relationship with the
successor.
The position of the employees also supports the application of the presumptions in the
successorship situation. If the employees find themselves in a new enterprise that
substantially resembles the old, but without their chosen bargaining representative, they 15
may well feel that their choice of a union is subject to the vagaries of an enterprise's
transformation. This feeling is not conducive to industrial peace. In addition, after being
hired by a new company following a layoff from the old, employees initially will be
concerned primarily with maintaining their new jobs. In fact, they might be inclined to
shun support for their former union, especially if they believe that such support will 20
jeopardize their jobs with the successor or if they are inclined to blame the union for their
layoff and problems associated with it.FN7 Without the presumptions of majority support
and with the wide variety of corporate transformations possible, an employer could use a
successor enterprise as a way of getting rid of a labor contract and of exploiting the
employees' hesitant attitude towards the union to eliminate its continuing presence.25
The Board and courts have also long held that by dealing directly with bargaining unit
employees an employer unlawfully bypasses a union and in doing so undermines its
representation status in the bargaining unit. See Medo Photo Supply Co. v NLRB, 321 U.S.
678, 683 (1944); Georgia Power Co., 342 NLRB 199 (2004), enfd. 427 F.3d 1354 (11th Cir. 30
2005); and Ken's Building Supplies, 142 NLRB 235 (1963), enfd. 333 F.2d 84 (6th Cir. 1964). In
Medo Photo Supply Co. v. NLRB, supra, at 683-685, the Court stated:
The National Labor Relations Act makes it the duty of the employer to bargain
collectively with the chosen representatives of his employees. The obligation being 35
exclusive, see s 9(a) of the Act, 29 U.S.C. s 159(a), 29 U.S.C.A. s 159(a), it exacts ‘the
negative duty to treat with no other.’ National Labor Relations Board v. Jones & Laughlin,
301 U.S. 1, 44, 57 S.Ct. 615, 628, 81 L.Ed. 893, 108 A.L.R. 1352; and see Virginian
Railway Co. v. System Federation, 300 U.S. 515, 548, 549, 57 S.Ct. 592, 599, 600, 81
L.Ed. 789. Petitioner, by ignoring the union as the employees' exclusive bargaining 40
representative, by negotiating with its employees concerning wages at a time when wage
negotiations with the union were pending, and by inducing its employees to abandon the
union by promising them higher wages, violated s 8(1) of the Act, which forbids
interference with the right of employees to bargain collectively through representatives of
their own choice.45
That it is a violation of the essential principle of collective bargaining and an
infringement of the Act for the employer to disregard the bargaining representative by
negotiating with individual employees, whether a majority or a majority, with respect to
wages, hours and working conditions was recognized by this Court in J.I. Case Co. v.
Labor Board, 321 U.S. 332, 64 S.Ct. 576; cf. Order of Railroad Telegraphers v. Railway 50
Express Agency, Inc., 321 U.S. 342, 64 S.Ct. 582; see also National Licorice Co. v. Labor
JD–59–15
43
Board, 309 U.S. 350, 359-361, 60 S.Ct. 569, 575, 576, 84 L.Ed. 799. The statute
guarantees to all employees the right to bargain collectively through their chosen
representatives. Bargaining carried on by the employer directly with the employees,
whether a minority or majority, who have not revoked their designation of a bargaining
agent, would be subversive of the mode of collective bargaining which the statute has 5
ordained, as the Board, the expert body in this field, has found. Such conduct is therefore
an interference with the rights guaranteed by s 7 and a violation of s 8(1) of the Act.FN2
There is no necessity for us to determine the extent to which or the periods for which the
employees, having designated a bargaining representative, may be foreclosed from
revoking their designation, if at all, or the formalities, if any, necessary for such a 10
revocation. Compare National Labor Relations Board v. Century Oxford Mfg. Co., 2 Cir.,
140 F.2d 541. But orderly collective bargaining requires that the employer be not
permitted to go behind the designated representatives, in order to bargain with the
employees themselves, prior to such a revocation.
15
In Fall River Dyeing & Finishing Corp. v. NLRB, supra at 42, the Court stated the following
pertaining to Board action in successorship cases:
We turn now to the three rules, as well as to their application to the facts of this case,
that the Board has adopted for the successorship situation. The Board, of course, is 20
given considerable authority to interpret the provisions of the NLRA. See NLRB v.
Financial Institution Employees, 475 U.S. 192, 202, 106 S.Ct. 1007, 1012, 89 L.Ed.2d 151
(1986). If the Board adopts a rule that is rational and consistent with the Act, see ibid.,
then the rule is entitled to deference from the courts. Moreover, if the Board's application
of such a rational rule is supported by substantial evidence on the record, courts should 25
enforce the Board's order. See Beth Israel Hospital v. NLRB, 437 U.S. 483, 501, 98 S.Ct.
2463, 2473, 57 L.Ed.2d 370 (1978); Universal Camera Corp. v. NLRB, 340 U.S. 474, 488,
71 S.Ct. 456, 464, 95 L.Ed. 456 (1951). These principles also guide our review of the
Board's action in a successorship case. See, e.g., Golden State Bottling Co. v. NLRB,
414 U.S., at 181, 94 S.Ct., at 423.30
As well documented in this decision, and in many others, in NLRB v. Burns Services Inc.,
406 US 272, 281-282 (1972), the Court stated “Although a successor employer is ordinarily free
to set initial terms on which it will hire the employees of a predecessor, there will be instances in
which it is perfectly clear that the new employer plans to retain all of the employees in the unit 35
and in which it will be appropriate to have him initially consult with the employees' bargaining
representative before he fixes terms.”
In Spruce Up Corporation, supra at 195, the Board majority stated:
40
Although, at the February meeting, Fowler expressed a general willingness to hire the
barbers employed by the former employer, he at the same time indicated that he was
going to be paying different commission rates. Fowler thereby made it clear from the
outset that he intended to set his own initial terms, and that whether or not he would in
fact retain the incumbent barbers would depend upon their willingness to accept those 45
terms. When an employer who has not yet commenced operations announces new terms
prior to or simultaneously with his invitation to the previous work force to accept
employment under those terms, we do not think it can fairly be said that the new employer
“plans to retain all of the employees in the unit,” as that phrase was intended by the
Supreme Court. The possibility that the old employees may not enter into an employment 50
relationship with the new employer is a real one, as illustrated by the present facts. Many
JD–59–15
44
of the former employees here did not desire to be employed by the new employer under
the terms set by him-a fact which will often be operative, and which any new employer
must realistically anticipate. Since that is so, it is surely not “perfectly clear” to either the
employer or to us that he can “plan to retain all of the employees in the unit” under such a
set of facts.5
We concede that the precise meaning and application of the Court's caveat is not
easy to discern. But any interpretation contrary to that which we are adopting here would
be subject to abuse, and would, we believe, encourage employer action contrary to the
purposes of this Act and lead to results which we feel sure the Court did not intend to flow
from its decision in Burns. For an employer desirous of availing himself of the Burns right 10
to set initial terms would, under any contrary interpretation, have to refrain from
commenting favorably at all upon employment prospects of old employees for fear he
would thereby forfeit his right to unilaterally set initial terms, a right to which the Supreme
Court attaches great importance in Burns. And indeed, the more cautious employer
would probably be well advised not to offer employment to at least some of the old work 15
force under such a decisional precedent. We do not wish-nor do we believe the Court
wished-to discourage continuity in employment relationships for such legalistic and
artificial considerations. We believe the caveat in Burns, therefore, should be restricted to
circumstances in which the new employer has either actively or, by tacit inference, misled
employees into believing they would all be retained without change in their wages, hours, 20
or conditions of employment,[FN7] or at least to circumstances where the new employer,
unlike the Respondent here, has failed to clearly announce its intent to establish a new
set of conditions prior to inviting former employees to accept employment.
The principles set forth by the majority in Spruce Up do not translate easily to the 25
circumstances here, which could not have been foreseen by the majority at the time Spruce Up
issued. First, the respondent in Spruce Up informed the union there on February 6, that “all the
barbers who are working will work.” However, the union was also informed at that time what the
respondent planned to pay the barbers. The new commission rates were unsatisfactory to the
many of the barbers leading to a strike. Thus, during the first meeting the employer clearly 30
indicated it was altering a core term of employment; and it let the union know the new rate. It
did not make the type of ambiguous statement the progeny of Spruce Up has morphed into as
sufficient to deprive employees bargaining rights such as “at will”; or the statements put forth
here such as we reserve the right to change working conditions without specifying the change,
or even that there definitely would be a change. 35
Secondly, the Board majority’s concern that to retain the right to set initial conditions an
employer would have to “refrain from commenting favorably at all upon employment prospects
of old employees for fear he would thereby forfeit his right to unilaterally set initial terms,” is
inapplicable to the current category of employees, because the Executive Order gives them the 40
right of first refusal to their current positions so whether the Respondent comments favorably
about their retention or not has nothing to do with the continuity of their employment
relationship. Thus, the underpinning of the majority of the Spruce Up rationale is not applicable
here. It surely, cannot outweigh the fact as enunciated by the Court that failure to recognize a
union during a successorship transition serves to undermine the union; which is further 45
compounded when while stripping the employees of representation during this transition period,
the successor employer is encouraged to engage in direct dealing with those employees,
although it plans to hire, or is required to hire those employees thereby subsequently being
required to recognize and bargain with the union. See the Courts pronouncements in Fall River
Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 39-40, (1987); Medo Photo Supply Co. v. 50
NLRB, supra, at 683-685; and Burns itself stating, “there will be instances in which it is perfectly
JD–59–15
45
clear that the new employer plans to retain all of the employees in the unit and in which it will be
appropriate to have him initially consult with the employees' bargaining representative before he
fixes terms.” The Court added no qualification to that requirement, and even in circumstances
when a successor employer is forthright in detailing early on its plans to alter the predecessor’s
benefits, its discussing those planned changes with the union in place with a give and take may 5
in fact help it to maintain its plans to keep the predecessors staff through the ameliorative
effects of collective bargaining. As detailed by the dissent in Spruce Up such a process does
not prevent an employer from bargaining to a lawful impasse to place its initial terms in effect,
but the employees will be given a fair option of knowing the specifics of the employer’s offer in
advance, and be more secure in the fact that they have not been stripped of union 10
representation in the process.
With respect to this class of government contract employers they are required to set
wages and benefits in part based on the predecessor’s CBA under the SCA; and give a right of
first refusal to those employees under the Executive Order. As set forth above, the main 15
concern of the Spruce Up majority that requiring successors to bargain during the transition
period when their plans entail hiring a majority of the predecessor’s, may make them not
comment favorably about those employees hiring prospects is not relevant as the employees
here are already assured a job offer. Moreover, the current Spruce Up standard potentially
strips away bargaining rights for large groups of employees during a sensitive period for a union 20
as well as those employees, as the evidence reveals that Respondent is a nationwide employer.
In this instance, the single contract with FEMA involved guards employed at multiple buildings
and those within the bargaining unit involved a fairly significant number of bargaining unit
employees. Baker’s testimony revealed Respondent’s operations are in 42 of the 50 states in
the United States and many of the territories including Saipan, American Samoa and Guam. 25
Baker testified Respondent has taken over more than 50 contracts since he arrived there in
2008. Baker testified that with the vast majority of contracts in the last 2 years more than 50
percent of the predecessor’s employees have been hired by Paragon making it through the vetting
process and beginning work. For the reasons set forth above, the underpinnings of the majority’s
rationale in Spruce Up do not appear to apply to this group of employers; and there appears no 30
basis to undermine the Union here; and in similar circumstances to strip employees of their right
representation when the successor is required proffer them an offer of employment.
However, the Spruce Up majority’s concerns also can be questioned concerning
employers in general. The Board majority surmised that employers who might want to preserve 35
their Burns right to set initial terms would “have to refrain from commenting favorably at all upon
employment prospects of old employees for fear he would thereby forfeit his right to unilaterally
set initial terms.” This conclusion seems to be somewhat undermined by the fact if it is in the
employer’s interest to keep predecessors work force in tact due to their skills, training, expertise,
knowledge of the operation, client goodwill, lack of availability of adequate substitutes, time 40
targets in resuming or maintaining operations, or any number of a variety of factors that would
come into play in such a decision it would appear the employer would have to let the employees
know about it sooner than later to retain their services. The Spruce Up majority also went on to
state, “And indeed, the more cautious employer would probably be well advised not to offer
employment to at least some of the old work force under such a decisional precedent.” 45
However, the failure to offer predecessor employees employment to avoid a statutory bargaining
obligation is a violation of Section 8(a)(3) and (1) of the Act. It seems to be a slender reed to
eviscerate employees important representation rights because an employer may be tempted to
violate the Act in another fashion. This can be construed as giving an employer a pass on its
obligations under Section 8(a)(5); so it will not be tempted to violate Section 8(a)(3) of the Act. 50
The Board is capable of upholding the rights incorporated in both sections of the Act; does not
JD–59–15
46
have to sacrifice one at the expense of the other; and it is likely that the vast majority of
employers will voluntarily comply if those rights are clearly delineated in cases of this context.
Member Fanning took the view in his dissent in Spruce Up that, “The fact that some
employees may refuse the offer of employment has nothing to do with the ‘plans’ or intent of the 5
offering employer.” It was stated, “Nor can there be any economic injury to the successor in
bargaining in good faith prior to the commencement of operations, for, assuming good-faith
bargaining on his part, if the union cannot persuade him that other terms are more equitable, he
is perfectly free to impose those terms as the opening terms and conditions of employment
upon the commencement of operations.” It was pointed out, “The majority's contrary 10
construction of this aspect of the Burns decision leads to the anomalous, if not absurd, result
that a bargaining obligation over the establishment of the successor's initial terms and
conditions of employment arises when the successor plans to retain the former employees at
the terms their union had already established through collective bargaining with the predecessor
employer but not when he plans to retain them at terms different from those previously 15
established. The majority would bring to bear ‘the mediatory influence of negotiation’[FN38] where
there is no controversy, but deny its appropriate use where there is controversy. They thus turn
the Act on its head, and to no useful end.” Spruce Up, supra at 205-206.
Similarly, Member Penello pointed out that in Burns “The Court there said nothing about 20
a conditional intent to hire.” In agreement with Member Fanning, he stated, “The majority are
attempting to revise substantially what the Court said, for their view would, in effect, abrogate
the exception, as the only case when a violation would occur under their test would be the
unlikely situation where a successor says he will continue the employees under the exact terms
and conditions as existed before the takeover. If he says that he ‘plans’ to alter the status quo 25
in any way, while at the same time indicating a desire to retain the old employees, they would
find this amounts to a conditional intent to hire. I cannot accept that the Supreme Court would
announce a rule of law that is so restrictive as to amount to a nullity.” It was stated as to the
successor’s obligation to consult with the employees bargaining representative before he fixes
terms “I regard this duty as merely an obligation to refrain from dealing with the unit employees 30
individually concerning their future working conditions until it has notified the union and
bargained to an impasse. Having thus negotiated with the union, the successor is then free to
fix his terms whether the union agrees or not. In my view this is not too heavy a burden to put
on any employer in order to protect the employees' Section 7 rights ‘to bargain collectively
through representatives of their own choosing’ with respect to matters affecting the employees' 35
interests.” Id. 207-208.
In Canteen Co. supra at 1054-1055, Chairman Gould stated, in a concurring opinion that
“I write separately, however, to express my opinion that the Spruce Up standard represents an
unduly restrictive reading of the Supreme Court's definition of circumstances in which a 40
successor employer must bargain about initial terms and conditions of employment.” The
chairman stated, “I question the validity of Spruce Up and believe that it grafts on an additional
requirement for finding a ‘perfectly clear’ successor which is neither warranted nor intended by
the Supreme Court in Burns. The Supreme Court stated that the test was only whether ‘the new
employer plans to retain all of the employees in the unit’ for the new employer to be a ‘perfectly 45
clear’ successor.” The Chairman agreed with Member Fanning and Penello’s prior dissents,
stating:
The fact is that in many, if not most, business rearrangements, the successor employer
perceives a need for change or greater flexibility in the employment relationship. This is 50
the essential dynamic involved in the instant case as well as countless others. To
JD–59–15
47
eliminate instances where employers express an intent to provide changed employment
conditions from the obligation to negotiate under the “perfectly clear” standard
announced in Burns would both render the holding on this point meaningless and also
disregard the careful balance between competing interests articulated by the Court in
both Burns and Fall River Dyeing.5
In International Ass'n of Machinists and Aerospace Workers, AFL-CIO v. NLRB, 595
F.2d 664, 674-675 (D.C. Cir. 1978), the court similarly stated pertaining to the effect of the
Board majority’s Spruce Up doctrine that “To be sure, in view of the substantial harmony
existent in the parties' positions, only minor adjustments in initial terms may then remain to be 10
negotiated, and it must be acknowledged that compulsory bargaining usually yields greater
returns when labor-management differences are of more appreciable magnitude.” Thus, the
court acknowledged the limited nature of the bargaining remaining under Spruce Up decision as
pointed out by Members Fanning, Penello; and Chairman Gould. The court, however, went on
to state in affirming the Board majority’s Spruce Up analysis that in basic fairness to employees15
that unless incumbent employees “are apprised promptly of impending reductions in wages or
benefits, they may well forego the reshaping of personal affairs that necessarily would have
occurred but for anticipation that successor conditions will be comparable to those in force.”
Here, the executive order required Respondent to accord incumbents first refusal for 20
their positions; the SCA required the Respondent be presented with the predecessor’s CBA and
for Respondent to analyze that CBA to make sure it complied with the SCA in according the
incumbent employees lawfully required wages and benefits. In early June a job fair notice was
posted announcing a June 29 job fair off the work site to be conducted by Paragon. As
announced in the early June job fair memo, the employees who elected to attend the June 29 25
job fair were required to fill out an on line application in advance of the job fair, which stated they
were to be hired as employees at will, and that Paragon retained the right to change existing
terms and conditions of employment. They were not told that Paragon actually intended to
make changes to core terms of employment, or if so, what those changes would be. They were
told to bring a substantial amount of documentation with them to the job fair in the job fair 30
announcement, and that they would have to meet certain employment related requirements,
most of which they had met to be hired and retain employment with the predecessor contractor.
For those who attended the June 29 job fair, they were given a contingent offer letter, which
indicated they would lose the ability to retain health and welfare and pension contributions as a
form of wages; but they were not told specifically that they would no longer be paid for their 30 35
minute lunch break, or that they would lose their uniform allowance, or that there would be a
requirement that they work 40 hours a week to be considered a full time employee, instead of
32 as had been the then current requirement. Moreover, their wage rates, health and welfare
rates, and pension rates were misstated in the offer letter leading confusion as to its terms by
the recipients. As I have found above, information continued to be presented to them thereafter 40
in a piecemeal fashion concerning substantive wage and benefit changes some of it being
gleaned after they started their new jobs.
It is likely, that anyone reading this decision, if they are changing jobs, would want to
have a clear presentation from their prospective employer specifically what their new wages and 45
fringe benefits would be, to make a reasoned decision with their families and in a timely enough
fashion to preserve their options of seeking alternative employment if the new wage and benefit
package proved unsatisfactory. Here, the employees were instead presented with legal
constructs, for which legal minds debate the significance, and then siphoned out information in a
manner in which the Respondent determined would arguably meet the Board’s standards in 50
order to dilute the effect of Respondent’s planned substantial changes and undercut the ability
JD–59–15
48
of the employees to seek alternate employment. At the same time the employees were stripped
of union representation during this transition period.
I would note that in Burns, the Court stated, “there will be instances in which it is
perfectly clear that the new employer plans to retain all of the employees in the unit and in which 5
it will be appropriate to have him initially consult with the employees' bargaining representative
before he fixes terms.” The affirmative duty to consult was placed on the employer, for it is the
employer that knows its plans as to employee retention and changes of benefits. Here, there
was no demand by the Union to bargain over the initial terms of employment prior to
Respondent beginning operations. However, the Respondent has not raised lack of such a 10
demand as a defense in their answer, at the trial, or in their post-hearing brief. Had it been
raised, I would have recommended its rejection, because the Court’s pronouncement places an
affirmative duty on the employer to consult with the union. Along these lines, this is similar to
direct dealing when an employer unlawfully by passes a union concerning changes to terms of
employment and deals directly with employees. It appears, under the Court’s intent under 15
Burns a perfectly clear successor would be required to inform the union specifically what
changes in the current benefits it intends to make, in a timely fashion, and then bargain with the
union to impasse before implementing those changes. Under the current Spruce Up rationale
when employers intend or are required to hire the predecessor’s work force, employees can be
both denied union representation at a vulnerable period, and as well of the specifics of their new 20
employment arrangement so they cannot make informed judgments as to their future. It would
seem that both of these ends would serve to undermine a sitting union in the eyes of
employees, and the bargaining process in general.
CONCLUSIONS OF LAW25
1. Respondent, Paragon Systems, Inc. (Paragon) is an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7) of the Act.
2. The National Association of Special Police and Security Officers (the Union) is a
labor organization within the meaning of Section 2(5) of the Act.30
3. At all material times, the following described unit has been an appropriate unit for
the purposes of collective-bargaining within the meaning of Section 9(b) of the Act:
All full-time and regular part-time Protective Service Officers employed by the
Employer at the Federal Emergency Management Agency, 500 C Street, SW 35
and 1201 Maryland Avenue, SW, Washington, DC; excluding temporary
personnel as defined in Section 1.4 of the collective-bargaining agreement,
office clericals, managerial personnel, project managers, supervisors as defined
by the National Labor Relations Act, and all other personnel including
sergeants, lieutenants, captains, site managers, o f f i c e r s a n d 40
d i r e c t o r s o f t h e E m p l o y e r , a s s i s t a n t p r o j e c t
m a n a g e r s , c o n f i d e n t i a l e m p l o y e e s , a n d n o n - g u a r d
e m p l o y e e s .
4. At all material times, the Union has been, and is now, the exclusive representative for 45
the employees in the bargaining unit described above in paragraph 3 (the unit employees) for
the purposes of collective-bargaining within the meaning of Section 9(a) of the Act.
5. Respondent, a perfectly clear successor employer, during the period of September 1,
2013 through August 14, 2014, violated Section 8(a)(5) and (1) of the Act by failing to follow
certain terms and conditions of employment and related past practices set forth in the50
collective-bargaining agreement between Knight Protective Services, Inc. and the Union for
JD–59–15
49
the unit employees, by unilaterally changing the following terms and conditions of
employment without providing the Union with notice and an opportunity to bargain: (a)
eliminating a paid 30-minute employee lunch break; (b) eliminating an hourly uniform
allowance; (c) redefining the threshold for full-time employment status from 32 hours per week
to 40 hours per week; (d) discontinuing the employee option to receive the hourly health and5
welfare benefit as a wage in the employee’s paycheck; and (e) discontinuing the employee
option to receive the pension benefit as a wage in the employee’s paycheck.
6. The unfair labor practices described above constitute unfair labor practices having an
effect on commerce within the meaning of Section 2(6) and (7) of the Act.
10
The Remedy
Having found Respondent has engaged in conduct violating Section 8(a)(5) and (1) of
the Act, it is ordered to cease and desist therefrom, and to take the following affirmative action
deemed necessary to effectuate the policies of the Act. 15
Respondent is ordered to recognize and, on request, bargain with the Union as the
exclusive collective-bargaining representative of its employees in the unit found here to be
appropriate. The parties voluntarily reached a new collective-bargaining agreement effective
August 15, 2014. Thus, I find Respondent liable to employees and employees should be made 20
whole for losses resulting from the unilateral changes found here for the period September 1,
2013 through August 14, 2014, the day before the effective date of the new CBA. See Elf
Atochem, Inc., 339 NLRB 796, 796 fn. 4 (2003). Since the parties reached a new collective-
bargaining agreement, the General Counsel is not seeking a remedy where the Respondent is
required to rescind any of the unilateral changes. Thus, employees affected by Respondent’s 25
unilateral changes, should be made whole for losses incurred during the period of September 1,
2013 through and including August 14, 2014, as a result of those unlawful changes, and
Respondent should be ordered to make unit employees whole for such losses plus interest at
the rate prescribed in New Horizons for the Retarded, 283 NLRB 1173 (1987), compounded
daily as prescribed in Kentucky River Medical Center, 356 NLRB No. 8 (2010). Respondent30
shall then, for each affected employee, file a report with the Social Security Administration
allocating backpay to the appropriate calendar quarter, and shall compensate each affected
employee for the adverse tax consequences, if any, of receiving one or more lump-sum
backpay award covering periods for longer than one year. Don Chavas, LLC d/b/a Tortillas Don
Chavas, 361 NLRB No. 10 (2014). Included in this recommended remedy is the requirement 35
that, upon request of the Union on behalf of any particular affected employees, employees shall
receive, as a lump-sum payment, the total amount of health and welfare contributions and/or
pension contributions made on the employees’ behalf by Respondent to each employee’s
401(k) account between September 1, 2013 through and including August 14, 2014.
Respondent shall bear all costs, fees, and tax consequences for withdrawal of said monies from40
employees’ 401(k) accounts.
On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended19
45

19 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 purposes.
JD–59–15
50
ORDER
It is hereby ordered that Respondent Paragon Systems, Inc., its officers, agents,
successors, and assigns, shall
5
1. Cease and desist from
a. Refusing to bargain in good faith with The National Association of Special
Police and Security Officers (the Union) concerning the rates of pay, wages, hours, and
working conditions of employees in the following appropriate unit:
10
All full-time and regular part-time Protective Service Officers employed by
the Employer at the Federal Emergency Management Agency, 500 C
Street, SW and 1201 Maryland Avenue, SW, Washington, DC; excluding
temporary personnel as defined in Section 1.4 of the collective-bargaining
agreement, office clericals, managerial personnel, project managers, 15
supervisors as defined by the National Labor Relations Act, and all other
personnel including sergeants, lieutenants, captains, site managers,
o f f i c e r s a n d d i r e c t o r s o f t h e E m p l o y e r , a s s i s t a n t
p r o j e c t m a n a g e r s , c o n f i d e n t i a l e m p l o y e e s , a n d
n o n - g u a r d e m p l o y e e s .20
b. Unilaterally changing terms and conditions of employment established by
the p redecesso r emp loye r ’ s collective-bargaining agreement and practices
related thereto in effect during the period of October 1, 2012 through September 30,
2015.25
c. In any like or related manner interfering with, restraining, or coercing
employees in the exercise of the rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to effectuate the policies of the Act.
a. On request, bargain collectively and in good faith concerning wages,30
hours, and other terms and conditions of employment with the Union as the exclusive
representative of employees in the above-described unit.
b. On the request of the Union on behalf of any or all affected employees,
pay the employees, as a lump-sum payment, the total amount of health and welfare
a n d / o r p e n s i o n contributions made on the employees’ behalf by Respondent to 35
the employee’s 401(k) account between and including September 1, 2013 and August
14, 2014. Respondent shall pay all costs, fees, and tax consequences associated with
the withdrawal of these monies from employees’ 401(k) accounts.
c. Make employees, in the above-described unit, whole for any losses they
may have suffered as a result of the unilateral changes in their terms and conditions of40
employment during the period from September 1, 2013 and through and including August
14, 2014, in the manner set forth in the remedy section of this decision.
d. Preserve and, within 14 days of a request, or such additional time as the
Regional Director may allow for good cause shown, provide at a reasonable place
designated by the Board or its agents, all payroll records, social security payment records45
and reports, and all other records, including an electronic copy of such records if stored in
electronic form, necessary to analyze the amount of backpay due under the terms of this
Order.
e. Within 14 days after service by the Region, post at their operations 500 C
Street, SW and 1201 Maryland Avenue, SW, Washington, D.C. copies of the attached 50
JD–59–15
51
notice marked “Appendix.”20 Copies of the notice, on forms provided by the Regional
Director for Region 5, after being signed by the Respondent’ authorized representatives,
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 Respondent to ensure that 5
the notices are not altered, defaced, or covered by any other material. In addition to
physical posting of paper notices, notices shall be distributed electronically, such as by
email, posting on an intranet or an internet site, and/or other electronic means, if the
Respondent customarily communicates with its employees by such means. In the event
that, during the pendency of these proceedings, the Respondent goes out of business or is 10
displaced as the security guard contractor or subcontractor at the facilities involved in this
proceeding, the Respondent shall duplicate and mail, at its own expense, a copy of the
notice to all current employees and former ba rga in i ng un i t employees employed by
the Respondent at any time since September 1, 2013.
f. Notify the Regional Director, in writing, within 20 days from the date of 15
this Order what steps Respondents have taken to comply.
Dated, Washington, D.C. September 30, 2015.
20

Eric M. Fine
Administrative Law Judge

20 If this Order is enforced by a Judgment of the United States Court of Appeals, the words
in the notice reading “POSTED BY ORDER OF THE NATIONAL 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.”
JD–59–15
APPENDIX
NOTICE TO EMPLOYEES
Posted by Order of the
National Labor Relations Board
An Agency of the United States Government
FEDERAL LAW GIVES YOU THE RIGHT TO:
 Form, join, or assist a union;
 Choose a representative to bargain with us on your behalf;
 Act together with other employees for your benefit and protection;
 Choose not to engage in any of these protected activities.
The National Labor Relations Board has found that we violated the National Labor Relations Act
and has ordered us to post and abide by this notice.
WE WILL NOT refuse to bargain collectively with The National Association of Special Police
and Security Officers (the Union) as the exclusive bargaining representatives of employees
in the following unit:
All full-time and regular part-time Protective Service Officers employed by
the Employer at the Federal Emergency Management Agency, 500 C
Street, SW and 1201 Maryland Avenue, SW, Washington, DC; excluding
temporary personnel as defined in Section 1.4 of the collective-bargaining
agreement, office clericals, managerial personnel, project managers,
supervisors as defined by the National Labor Relations Act, and all other
personnel including sergeants, lieutenants, captains, site managers,
o f f i c e r s a n d d i r e c t o r s o f t h e E m p l o y e r , a s s i s t a n t
p r o j e c t m a n a g e r s , c o n f i d e n t i a l e m p l o y e e s , a n d
n o n - g u a r d e m p l o y e e s .
WE WILL NOT unilaterally change terms and conditions of employment established by t h e
collective-bargaining agreement and practices in effect related to that agreement between the
Union and our predecessor.
WE WILL, on request, bargain with the Union as the exclusive bargaining representative of
the above-described bargaining unit.
1. WE WILL, make whole employees in the above-described unit for any losses suffered
between September 1, 2013 and through and including August 14, 2014, as a result of our
unilateral changes in their terms and conditions of employment, plus interest, as required in
the remedy section of the Board’s decision, including our during this time period: (a)
eliminating a paid 30-minute employee lunch break; (b) eliminating the hourly uniform
allowance; (c) redefining the threshold for full-time employment status from 32 hours per
week to 40 hours per week; (d) discontinuing the employee option to receive the hourly health
and welfare benefit as a wage in the employee’s paycheck; and (e) discontinuing the
employee option to receive the pension benefit as a wage in the employee’s paycheck.
JD–59–15
WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees
in the exercise of their rights guaranteed in Section 7 of the Act.
PARAGON SYSTEMS, INC.,
(Employer)
Dated ____________________ By _______________________________________________
(Representative Paragon Systems, Inc.,) (Title)
The National Labor Relations Board is an independent Federal agency created in 1935 to enforce the National Labor
Relations Act. It conducts secret-ballot elections to determine whether employees want union representation and it
investigates and remedies unfair labor practices by employers and unions. To find out more about your rights under
the Act and how to file a charge or election petition, you may speak confidentially to any agent with the Board’s
Regional Office set forth below. You may also obtain information from the Board’s website: www.nlrb.gov.
Bank of America Center, Tower II, 100 S. Charles Street, Ste 600, Baltimore, MD 21201-2700
(410) 962-2822, Hours: 8:15 a.m. to 4:45 p.m.
The Administrative Law Judge’s decision can be found at www.nlrb.gov/case/05-CA- 127523 or by using
the QR code below. Alternatively, you can obtain a copy of the decision from the Executive Secretary,
National Labor Relations Board, 1015 Half Street, S.E., Washington, D.C. 20570, or by calling (202) 273-
1940.
THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED BY ANYONE
THIS NOTICE MUST REMAIN POSTED FOR 60 CONSECUTIVE DAYS FROM THE DATE OF POSTING AND MUST NOT BE
ALTERED, DEFACED, OR COVERED BY ANY OTHER MATERIAL. ANY QUESTIONS CONCERNING THIS NOTICE OR
COMPLIANCE WITH ITS PROVISIONS MAY BE DIRECTED TO THE ABOVE REGIONAL OFFICE’S
COMPLIANCE OFFICER, (410) 962-2880.