Opinion ID: 367068
Heading Depth: 1
Heading Rank: 2

Heading: The Vacation Pay Violation

Text: 24 The facts are not in dispute. The collective bargaining agreement between the Company and the Union, with an expiration date of September 30, 1976, contained the following vacation provisions: ARTICLE XXIII Vacations Section 1 25 Annual vacations with pay will be granted to employees as follows: 26 (a) Each employee with one (1) year of continuous employment or more immediately preceding June 1 of the current year will be granted two (2) week's vacation with pay. 27 (b) Any employee having less than one (1) full year, but more than six (6) months of continuous employment immediately preceding June 1 of the current year will be granted one (1) week's vacation with pay. 28 (c) Each employee with eight (8) years or more of continuous employment by December 31 of the current year will be granted three (3) weeks vacation with pay. Section 3 29 Except where the Company and union determine otherwise in individual cases, employees shall not be paid vacation pay in lieu of vacation. Section 6 30 (a) Except when the Company closes for the vacation period, the Company will permit employees to take vacations between June 1 and December 15 when so to do will not create an abnormal financial burden upon the Company or render the operation of the plant unduly hazardous or difficult. 31 (b) When the Company closes for the vacation period, the vacation period will be between June 15 and Labor Day (emphasis added). 32 The parties stipulated that all vacations accrued as of June 1, 1976. Union President Collette 3 and employee Sam Bland had the requisite seniority to be entitled to a third week of vacation, and each informed the foreman that he intended to take his third week of vacation during the first week in October. Bland received his vacation pay along with his regular wages on the payday preceding his vacation, which was September 29. On October 1, 1976, with the expiration of the contract, the strike began and continued until January 30, 1977. Collette requested his vacation pay on October 7, 1976, but was informed by the personnel services manager that the Company would not pay vacation compensation to strikers. 4 Borden paid the accrued vacation benefits on December 26, 1976. 33 The issue is whether the Company committed an unfair labor practice by withholding employees' accrued vacation pay because of their strike activity until after the contractual vacation period had expired. Borden argues that it did not commit an unfair labor practice because, under the terms of the contract, employees shall not be paid vacation pay in lieu of vacation and the contractual vacation period did not expire until December 15, 1976. This argument carried the day with the ALJ who relied solely on G. C. Murphy & Co., 207 N.L.R.B. 579 (1973). In Murphy, which contained a provision forbidding payment of vacation pay in lieu of vacation, the collective bargaining agreement also contained a provision preventing employees from taking vacation time as a credit against time lost for any other reason. The Board in Murphy found that the latter provision explicitly conferred upon the employer the right to determine the purposes to which vacation time could be put and concluded that, absent evidence that the provision had been applied discriminatorily, the employer was free to use this provision to deny vacation pay to employees who were out on strike. 34 The Board, with one member dissenting, reversed the ALJ and held that G. C. Murphy Co. was not controlling. 5 But for the strike, the Board found the employees would have received their vacation benefits when due. It, therefore, reasoned that vacation pay was due and owing when the employees made their requests. The Board rejected the Company's assertion that it was acting pursuant to a contractual obligation or any other legitimate business interest in denying the payments. It found that there was no evidence to support this position. In summary, the Board stated: Accordingly, we conclude that the denial of accrued vacation benefits solely because employees were engaged in protected strike activity was inherently destructive of employee rights and, therefore, violative of Section 8(a)(3) and (1) of the Act. 35 Under section 8(a)(3) of the Act, it is an unfair labor practice for an employer by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization. In NLRB v. Erie Resistor Corp., 373 U.S. 221, 233, 83 S.Ct. 1139, 10 L.Ed.2d 308 (1963), the Supreme Court held that discouraging membership in a labor organization under section 8(a)(3) includes discouraging participation in concerted activities, such as a legitimate strike. The Court elucidated the standard of proof necessary where a section 8(a)(3) violation has been charged in NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 87 S.Ct. 1792, 18 L.Ed.2d 1027 (1967). In Great Dane, the employer refused to pay vacation benefits to strikers, but paid them to nonstrikers. The Court held that this was discrimination in its simplest form. The standard of proof is: 36 First, if it can reasonably be concluded that the employer's discriminatory conduct was inherently destructive of the important employee rights, no proof of an antiunion motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that the conduct was motivated by business considerations. Second, if the adverse effect of the discriminatory conduct on employee rights is comparatively slight, an antiunion motivation must be proved to sustain the charge If the employer has come forward with evidence of legitimate and substantial business justifications for the conduct. Thus, in either situation, once it has been proved that the employer engaged in discriminatory conduct which could have adversely affected employee rights to Some extent, the burden is upon the employer to establish that he was motivated by legitimate objectives since proof of motivation is most accessible to him (emphasis in original). 37 Id. at 34, 87 S.Ct. at 1798. The ALJ and Borden distinguish Great Dane on the ground that, here, there was no evidence that the Company discriminated between striking and nonstriking employees. While it is true that the employer in Great Dane was overt in his antiunion conduct, this is not dispositive. Great Dane, and indeed the Act, speaks to discrimination on the basis of union activity. The fact that an employer stigmatizes striking employees while leaving nonstrikers untouched may be an indication of the employer's hostility toward the Union, but such disparity of treatment is not necessary to find a section 8(a)(3) and (1) violation. As the court stated in NLRB v. Jemco, Inc., 465 F.2d 1148, 1152 (6th Cir. 1972), Cert. denied, 409 U.S. 1109, 93 S.Ct. 911, 34 L.Ed.2d 690 (1973): 38 Although we are not referred to, nor do we find, any cases involving Section 8(a)(3) discrimination where all employees alike were denied an employment benefit, we do not believe that unequal treatment of different classes of employees is a prerequisite to finding a Section 8(a)(3) violation where all employees engaged in a concerted activity. (footnote omitted) The interpretation of Section 8(a)(3) which the Company urges us to adopt would lead to the somewhat absurd result that an employer could never be found in violation of that Section so long as he was careful to treat all employees alike, no matter how destructive of employee rights his conduct may be. The Section 8(a)(3) discrimination in the present case lies in the employment benefit afforded to all employees prior to their engaging in a concerted activity and the benefit which was denied to all employees after they engaged in such an activity. 39 Similarly, in Allied Industrial Workers v. NLRB, 155 U.S.App.D.C. 112, 476 F.2d 868 (1973), the court rejected an argument akin to the one advanced here by the Company, A practice applied uniformly to all employees may be discriminatory and violate the Act just as a discriminatory practice may be held to be perfectly innocuous. Id. 155 U.S.App.D.C. at 121, 476 F.2d at 877. See also Texaco, Inc., 179 N.L.R.B. 989, 993 (1969). 40 The Board concluded that Borden's refusal to pay the vacation benefits to strikers when requested resulted in inhibition of the employees' free exercise of their fundamental right to strike. This conduct was found by the Board to be inherently destructive of employee rights. The Board, therefore, relying on Great Dane Trailers, Inc., supra, 388 U.S. 26, 87 S.Ct. 1792, 18 L.Ed.2d 1027, concluded that it was not necessary to consider evidence on antiunion motivation, and found that Borden violated section 8(a)(3) and (1). We disagree. 41 According to the teaching of Great Dane, supra, 388 U.S. at 34, 87 S.Ct. 1792, where the employer's conduct is inherently destructive of employee rights, the Board can find an unfair labor practice, even in the face of an employer's evidence that it was motivated by business considerations and absent a showing of antiunion motivation. However, where the effect of the employer's discriminatory conduct is comparatively slight, and where the employer offers legitimate and substantial business justifications for the conduct, then the Board must prove antiunion motivation. In Great Dane, the Court, quoting NLRB v. Erie Resistor Corp., supra, 373 U.S. at 228, 231, 83 S.Ct. 1139, stated that conduct is inherently destructive if it carries with it 'unavoidable consequences which the employer not only foresaw but which he must have intended' and thus bears 'its own indicia of intent.'  Id., 388 U.S. at 33, 87 S.Ct. at 1797. The Court did not reach a determination of whether the employer's discriminatory treatment of strikers was inherently destructive or comparatively slight because the employer offered No justification for its behavior. Where such a determination has been necessary, as for example in Portland Williamette Co. v. NLRB, 534 F.2d 1331 (9th Cir. 1976), the court looked to see whether the conduct had far reaching effects which could hinder future bargaining or whether the conduct discriminated solely upon the basis of participation in strikes or union activity. Id. at 1334. We do not view Borden's delayed payment of vacation benefits as conduct which bears its own indicia of intent carrying with it unavoidable consequences which the employer must have intended. This was, after all, a delay in vacation payments, not a refusal to pay at all. 42 Borden did come forward with evidence of a business justification for its conduct, namely, the terms of the collective bargaining agreement and past practice. The Board found this reason invalid because its interpretation of the contract differed from that of Borden's. This, however, is not a question of contract interpretation. The Board had a duty to determine whether Borden was motivated by its reliance on the collective bargaining agreement or by antiunion animus when it withheld the accrued vacation benefits. We caution the Board that it is neither our function nor the Board's to second-guess business decisions. The Act was not intended to guarantee that business decisions be Sound, only that they not be the product of antiunion motivation (emphasis in original). Liberty Mutual Insurance Co. v. NLRB, 592 F.2d 595, 603 (1st Cir. 1979), quoting from Stone & Webster Engineering Corp. v. NLRB, 536 F.2d 461, 467 (1st Cir. 1976). See NLRB v. Eastern Smelting & Refining Corp., 598 F.2d 666 at 670, 673 (1st Cir. 1979). 43 We remand in order that the Board may assess whether Borden came forward with a legitimate and substantial business justification for its conduct and, if so, whether the purported justification was pretextual. If Borden can demonstrate a substantial non-pretextual reason to justify its conduct, then the Board has the burden of establishing that Borden would not have withheld vacation benefits but for improper motivation. Eastern Smelting, supra, at 671. 44 Enforcement of the Board's order is granted insofar as it relates to the section 8(a)(5) violation. The portion of the order relative to the section 8(a)(3) and (1) violation is vacated and the case remanded for further proceedings consistent with this opinion.