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Gossen Co. v. National Labor Relations Board

decided: October 18, 1983.


Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.

Cummings, Chief Judge, Fairchild, Senior Circuit Judge, and Brown, Senior District Judge.*fn*

Author: Fairchild

FAIRCHILD, Senior Circuit Judge.

Gossen Company maintains establishments in Milwaukee and Glendale, Wisconsin, where it produces plastic moldings. In 1978 and 1979 there were efforts to organize the Company's production, maintenance and warehouse employees. The union lost an election in March, 1978. In March, 1979 a new campaign began, and an election was held June 14 and 15, 1979. There were 70 votes against the union, 69 in favor, and three challenged ballots.

The unfair labor practices alleged in the proceeding arose during and shortly after the 1979 campaign. A number of allegations were dismissed by the ALJ. He found, however, that the Company had engaged in unfair labor practices by announcing a suspension of its merit evaluation and wage increase system and by discriminatory discharges of four employees and warnings of two. The Board additionally found certain conversations to have been coercive and therefore unfair labor practices under § 8(a)(1) of the National Labor Relations Act, 29 U.S.C. § 158(a)(1) (1976). See Gossen Company, 254 N.L.R.B. 339 (1981).

The Company vigorously expressed views in opposition to the selection of the union as representative. It was not found to have exceeded its rights in such expression, but its active efforts at persuasion are part of the background of the proceeding.

I. Suspension of Merit Wage Increases

The Company had a policy of reviewing the performance of employees and granting merit increases. The ALJ found that

merit increases are based upon subjective periodic evaluations of employee performance and upon economic conditions. . . . In practice, it appears merit increases were granted at generally regular intervals within the first 90 days of employment. Thereafter, there was no regularity to such increases. . . . I find the merit wage increase system remained an active program systematically, albeit not with regularity, applied to reward worthy employees for good job performance.

Thus there was regular review during an employee's first 90 days, although the amount of increase was discretionary. After the first 90 days both the timing of the review and the amount of increase were discretionary.

Merit increases, as well as across the board increases, were suspended during the organizing campaign. In response to questions about raises, management people answered to the effect that wages were frozen during the union campaign, and in several instances explained that increases could be considered bribery.

The ALJ found that suspension of the merit review system and blaming the union for the suspension constituted an unfair labor practice. The Company was ordered to reinstate its system and implement it retroactively to March, 1979.

It is recognized that an employer's change in the status quo during an organization campaign, either favorably or unfavorably to employees, may constitute an interference with exercise of protected rights. The problem here is the content of the status quo.

The Board argues that the Company had established a pattern of merit wage increases such that

increases at approximately the times and in approximately the amounts suggested by past practice would be expected by employees and would be viewed as "business as usual" rather than an inducement to abandon the union. Conversely, the failure to pay any wage increases whatsoever would be unexpected and would likely be viewed as a deviation from past practice attributable to the union.

The Company points to the risk that a wage increase while an election is pending may be found by the Board to have been granted for the purpose of inducing recipients to vote against the union. The risk is minimal where the employer can show the increase was an implementation of an established practice. But the more highly discretionary the past actions, the more difficult it becomes to establish a pattern, and to demonstrate that there has been no change from the status quo.

The Fifth Circuit dealt with a problem in this area in N.L.R.B. v. Dothan Eagle, Inc., 434 F.2d 93 (5th Cir. 1970). The court said,

The cases make it crystal clear that the vice involved in both the unlawful increase situation and the unlawful refusal to increase situation is that the employer has changed the existing conditions of employment. It is this change which is ...

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