Opinion ID: 2994613
Heading Depth: 2
Heading Rank: 1

Heading: Across-the-Board Wage Increase

Text: The Board found that ACE/CO violated sections 8(a)(3) and 8(a)(1) by failing to grant an across-the-board wage increase in early 1995 and by communicating to the employees throughout that year that the Union was responsible for their failure to receive a raise. ACE/CO argues that the evidence did not show that it had a regular practice of giving an across-the-board raise, and that the real reason none was given in 1995 had nothing to do with the Union. Instead, it claims that it was in the process of revamping its entire compensation system in order to respond to the pressures of competition within the automobile and automotive parts industry, from one that used across-the-board measures to one that was entirely based on factors such as merit and training. The ALJ found that the facts supported the Board’s allegations, and that whatever ACE/CO had begun to do with alternative compensation systems was still merely supplementary to, rather than in lieu of, its across-the-board raises. Section 8(a)(3) of the Act prohibits an employer from discriminating with regard to terms or conditions of employment in an attempt to encourage or discourage membership in any labor organization. 29 U.S.C. sec. 158(a)(3). Section 8(a)(1) makes it an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of their statutory rights, including especially their section 7 rights to organize. 29 U.S.C. sec. 158(a)(1). An employer violates both sections of the Act if it departs from an established practice of granting wage increases because of a union organizing campaign or other union activity. See, e.g., NLRB v. Shelby Memorial Hosp. Ass’n, 1 F.3d 550, 557- 58 (7th Cir. 1993); NLRB v. Don’s Olney Foods, Inc., 870 F.2d 1279, 1285 (7th Cir. 1989). A critical factual question underlies this part of the Board’s case: did ACE/CO have an established practice of granting annual across- the-board wage increases at the time the Union began its organizing campaign in late 1994? Both the ALJ and the Board found as a fact that it did, and so the question for us is whether that finding is supported by substantial evidence. Once we have resolved that point, the rest of this part of the case falls in place. ACE/CO’s position is that it was between a rock and a hard place during the campaign: if it granted the wage increase, it would violate section 8(a)(1) by giving an impermissible benefit, see Mercury Indus., Inc., 242 NLRB 90 (1979); if it did not, it would find itself where it does today. The dilemma was real, however, only if there was no established practice. If there was, then the law is clear that the employer is safe if it makes no changes (either positive or adverse) during the course of a campaign. See Shelby Memorial, 1 F.3d at 558; Don’s Olney Foods, 870 F.2d at 1285. With respect to that factual issue, the ALJ decided to begin his consideration of ACE/CO’s practice in 1989, the first year after the collective bargaining relationship with the earlier union had terminated. In February 1989, the company announced that its hourly employees would receive a 10-cent per hour wage increase effective February 13, 1989, and an additional five-cent per hour increase effective August 14, 1989. Individual incentive rates would be adjusted proportionately, and the merit pay system would remain unchanged. The next year, the company announced on February 5, 1990, that a 15- cent per hour across-the-board wage increase would take effect on February 12, 1990, and that the utility rate for all employees would increase by five cents per hour on August 13, 1990. In 1991, there was no general wage increase, but in 1992, on February 7, ACE/CO announced an increase effective February 17 in the utility rate of 20 cents per hour, and it added that shop employees would receive an additional five cents per hour effective August 17, 1992. On February 8, 1993, the company announced an increase in the utility rate of 20 cents per hour, effective February 15; shop hourly employees received an additional five cents per hour effective August 16, 1993. The pattern continued in 1994: on February 14, ACE/CO announced an increase in the utility rate of 20 cents per hour effective February 21, and an extra five cents per hour for the shop employees effective August 15, 1994. In each of those years, ACE/CO had followed a similar procedure for deciding whether to offer increased wages and how much to offer. It relied principally on three sources of information: the increase in the cost of living, if any, over the preceding 12 months; conversations with other foundries in the area to see if they were granting wage increases; and reports in general business publications. Its goal was to keep its wages at a competitive level. It was against this backdrop that the ALJ evaluated what happened in 1995. As noted above, some time in the middle of 1994, the Union began its organizing drive at ACE/CO’s facility. In mid-October 1994, company representatives met with new employees, in part to discuss the Union’s organizing effort. At that time, they assured the group that each year the company: reviews what is happening in the Milwaukee market place with wages and benefits. It looks at the year’s performance for the Company, and then decides what type of wage and benefit adjustment can be made. An announcement is usually made in January of each year. That’s what happens each year--when there is no union. Aluminum Casting, 2000 WL 678727, at . During a meeting in November 1994, company officials again told the employees that annual wage and benefit reviews occurred each year in November and December, that the company was then in the process of conducting that review, that it would decide what changes to recommend, that the announcement of the change would be made in January, and that the change would take effect in February. Yet another reiteration of this message occurred at a December 7 meeting of the employees. In response to employees’ questions regarding when they would get their next pay adjustment, company representatives answered as follows: In addition to merit increases [the company] surveys in January the wages of comparable companies in the Milwaukee area in order to provide pay adjustments to remain competitive. This is particularly important in a tight job market as currently exists in the Milwaukee area. Our past and present practice is to conduct the survey in the Fall, to announce the increase in late December of [sic] early January, and to put the increase into effect in February. Obviously if a union comes in, wages would be subject to the process of bargaining and wage programs could not be changed up or down during that process. The law does not provide time guidelines as to how long negotiations could last. That could take months or years. Id. A number of additional statements along these lines were also made. In our view, these statements provided ample evidentiary support for the ALJ’s finding, affirmed by the Board, that ACE/CO indeed had a regular practice of giving annual across-the- board wage increases when economic circumstances warranted; the evidence showed that ACE/CO usually concluded that circumstances did warrant an increase (before the contested 1995 decision, it reached this conclusion in every year except 1991). It is also notable that the company continuously reaffirmed its normal practice to the employees throughout the election campaign. It did not develop any reluctance to give an across-the-board increase until after it learned the results of the January 5-6, 1995, election. The Board was entitled to conclude that ACE/CO’s current explanation for the decision not to give an early 1995 general wage adjustment--its desire to abandon across-the-board measures in favor of a purely merit and incentive-based system--was an afterthought, at least as applied to 1995. Given the fact that ACE/CO had an established practice, its arguments that it was caught in a no-win situation cannot prevail. Indeed, it is when an employer during an organizing campaign departs from its usual practice of granting benefits that it creates trouble for itself. In that situation, the Board is entitled to infer an intent to influence the upcoming election and conclude that the employer’s conduct violated the Act. See, e.g., Shelby Memorial, 1 F.3d at 557; Don’s Olney Foods, 870 F.2d at 1285. As we said in Don’s Olney Foods: [i]n order not to unfairly influence a union election, the employer must maintain the pre- union status quo respecting employee benefits, viewed dynamically; that is, expectations of upcoming benefits created by the employer either by promises or through a regular pattern of granting benefits cannot be disappointed without proof of a union-neutral justification. 870 F.2d at 1285. The Board here was not persuaded by ACE/CO’s efforts to show that kind of union-neutral justification in its alleged transition to a different philosophy of compensation or its alleged effort to preserve an influence-free election environment. Immediately after the election, ACE/CO issued a statement to the employees on January 9 announcing that its failure to grant the annual wage increase was not because of the election, but instead because the company wanted to preserve the laboratory conditions needed for a fair election. In February 1995, it similarly said that it was postponing any wage increase until the election was certified, again noting that it did not wish to interfere with employee free choice. (Obviously this would not have interfered with anyone’s free choice in the already-completed January 1995 election; it had to be a forward-looking statement that anticipated success in setting that election aside and conducting a new one--a step that had not yet occurred.) Other statements like this were made throughout the spring, but the one that had the greatest impact on the ALJ appeared in a leaflet distributed on June 27, 1995, after the January election had been set aside. The leaflet was entitled One Year Later, and it contained the following passage: Just about a year ago, the UE started its effort to get into our plant and your pockets. Remember the big promises of $1.00 an hour increases, new benefits and quick successes? Since then, there have been no increases in wages except for those under plans started by [the company] before the Union. No changes in benefits have occurred. The NLRB has just concluded four months of hearings concerning election objections. However, the legal proceedings may go on for many more months and possibly even years. We have had employees threatening other employees, employees filing charges and lawsuits against other employees. Instead of trying to bring us together, the UE has turned group against group, employee against employee. In the one-year period before the UE stuck its nose in, you had a wage increase, a new pay for knowledge program, and benefit changes. Ask yourself--weren’t we all a lot better off? Aluminum Casting, 1999 WL 220279, at . Both the ALJ and the Board regarded the statements made during the spring and early summer of 1995, culminating in the June 27 leaflet, as evidence that ACE/CO was unlawfully attempting to blame the Union for the fact that there was no 1995 across-the-board wage increase. Furthermore, the ALJ noted, there were no across-the-board wage increases for any years following 1995, for the same reason. Id. An employer may deviate from its normal practice of granting wage increases during an organizing campaign when it advises its employees that an expected raise is to be deferred pending the outcome of the election, to avoid the appearance of election interference. See Parma Indus., Inc., 292 NLRB 90, 91 (1988). But in those situations, the employer must also take care to convey the message that the adjustment will be awarded whether or not the employees select a union. Shelby Memorial, 1 F.3d at 558. Not only did ACE/CO fail to communicate that message (just like the employer in Shelby), but it went further and attempted to blame the union for the lack of the across-the-board benefit. Or, to put the same point more accurately, the ALJ and the Board were entitled so to construe the evidence before them, including the leaflet and the other statements made throughout the spring of 1995. Finally, the ALJ and the Board concluded that at least as of 1995, the merit and incentive programs were still complementary to the across- the-board adjustments, and they were not perfect substitutes for the established system. They were impressed by the fact that in all of its explanations for its failure to adjust the wages, ACE/CO never once mentioned the development of an alternative system; instead, it just blamed the union. In fact, in meetings held in November 1994 and December 1994, it discussed both its expanded training and development programs and its intention to give the annual wage increase. Based on this record, the Board was entitled to conclude that ACE/CO’s decision in early 1995, just after the Union had won the initial election, not to give an annual across-the-board wage adjustment, violated sections 8(a)(3) and 8(a)(1) of the Act. We therefore enforce that part of the Board’s order and move on to the company’s other challenges.