Opinion ID: 724976
Heading Depth: 2
Heading Rank: 1

Heading: Settled Practice

Text: 9 Section 8(a)(5) of the Act provides that [i]t shall be an unfair labor practice for an employer ... to refuse to bargain collectively with the representatives of his employees, 29 U.S.C. § 158(a)(5); and section 8(d) identifies the subject matters of such bargaining as including wages, hours, and other terms and conditions of employment. Id. § 8(d). An employer violates the Act when it unilaterally alters wages or other terms or conditions of employment without first negotiating with the union representing the employees. NLRB v. Katz, 369 U.S. 736, 743, 82 S.Ct. 1107, 1111, 8 L.Ed.2d 230 (1962). Here, it is undisputed that the Company did not bargain with the Union when it refused to grant wage increases in 1988. Thus, the critical inquiry is whether these increases were granted pursuant to Acme's terms and conditions of employment. 10 The 1980-1987 wage increases fall within the ambit of section 8(a)(5)  'if they are of such a fixed nature and have been paid over a sufficient length of time to have become a reasonable expectation of the employees and, therefore, part of their anticipated remuneration.'  Phelps Dodge Mining Co., Tyrone Branch v. NLRB, 22 F.3d 1493, 1496 (10th Cir.1994) (quoting NLRB v. Nello Pistoresi & Son, Inc., 500 F.2d 399, 400 (9th Cir.1974)). On the other hand, if an employer retain[s] total discretion to grant [wage] increases based on any factors it cho[oses], we doubt that discontinuing the policy [will result] in a violation of section 8(a)(5). Daily News of Los Angeles v. NLRB, 73 F.3d 406, 412 n. 3 (D.C.Cir.1996). Indeed, wage increases that are fixed as to timing but discretionary in amount do not become part of the employees' reasonable expectations and thus are not considered 'terms and conditions' of employment. Phelps Dodge, 22 F.3d at 1496. See also Daily News, 73 F.3d at 412 n. 3 (we do not believe that fixed timing alone would be sufficient to bring the program under Katz). 11 In its Initial Decision, the Board adopted the finding of the administrative law judge (ALJ) that the wage increases awarded Acme's employees were sufficiently regular in timing and amount to constitute a settled practice within the ambit of section 8(a)(5). 309 N.L.R.B. at 1160. The ALJ acknowledged, however, that the case approache[d] the borderline between a settled practice and a sporadic one. Id. The Company maintained before the Board, and continues to maintain, that the wage increases were not automatic, but discretionary, as evidenced by their varying dates and amounts. 12 In Acme, we found it impossible to resolve this dispute. The Board, we stated, has not demonstrated a comprehensible standard for deciding whether a pattern of increases is sufficiently consistent in timing and/or amount to constitute a settled practice. 26 F.3d at 166. Observing that its precedent on this issue was all over the map, we remanded to allow the Board to craft a rule that set the parameters governing when the frequency and the amount of wage increases is sufficiently consistent to constitute a settled practice under § 8(a)(5). Id. We noted that any reasonable rule adopted by the Board would, under the familiar principles of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984), be afforded deference. We now review the Board's Supplemental Decision to determine whether it has complied with our instruction to formulate a satisfactory standard. 13 In the introductory section of the Supplemental Decision, the Board quotes that section of our Acme opinion in which we noted that the Board had failed to establish a rule. 317 N.L.R.B. at 1353. A four-paragraph Discussion follows. The first paragraph notes that the Union was certified in 1987 and that the Company then refused to bargain with it; the second and third paragraphs list the dates and amounts of the Company's wage increases. Id. at 1354. The final paragraph begins with the observation that the increases occurred at relatively regular intervals, particularly during the five-year period immediately preceding the Union election. Id. at 1354. The Board concludes that 14 the limited discretionary aspects of the [Company's] practice with respect to timing and amounts were not sufficient to preclude a finding that the across-the-board increases had become a term and condition of employment. In these circumstances, the unilateral refusal to continue the practice was unlawful under Section 8(a)(5). 15 Id. 16 The Board apparently thought it sufficient to summarize the dates and amounts of the wage increases, note their approximate regularity, and conclude that the increases constituted an established practice. When viewed from one perspective, there is no question that the Company's wage increases were somewhat regular: they usually occurred at intervals of from six to seven-and-a-half months, and they generally fell between 20 and 30 cents an hour. When viewed from another perspective, however, the increases appear somewhat irregular: one year there were three raises, in another, just one; the across-the-board hourly raises ranged from a high of 30 cents to a low of 15 cents. 17 The difficulty we noted in Acme is that the Board's perspective seems to shift from case to case. Predicting whether the Board will view a pattern of wage increases as established or discretionary has proven difficult not only for employers and employees, but for the Board's own ALJs as well. In many of the Board decisions cited in Acme, the Board overruled the ALJ's findings that an employer's wage increases were sufficiently regular to constitute an established practice. See Orval Kent Food Co., 278 N.L.R.B. 402, 403, 1986 WL 54103 (1986); Ithaca Journal-News, Inc., 259 N.L.R.B. 394, 394-96, 1981 WL 21026 (1981); Great Atlantic & Pacific Tea Co., 192 N.L.R.B. 645, 645-46 (1971). It was precisely to allow the Board to illuminate the borderline between a settled practice and a discretionary one that we remanded the issue in Acme. 18 Where, then, is the rule that we requested of remand? At oral argument, counsel for the Board was unable to identify a single sentence in the Supplemental Decision that was responsive to our instruction in Acme. The Board contends that it should not be faulted for failing to provide a numerical or other bright-line test to determine when a pattern of general raises exhibits sufficient attributes of duration and regularity to be deemed a term of employment. Brief for Respondent at 18. It fails to explain, however, why this particular pattern should constitute a settled employment practice while others that are difficult to distinguish from this one do not. 19 We did not expect the Board to state with mathematical precision when a pattern of wage increases is sufficiently regular to constitute a settled practice; we simply asked the Board to set the parameters. The rule we envisaged might have identified the various criteria that are to be taken into consideration and the appropriate weight to be accorded each. Had the Board been unable to comply with our request and explained, on remand, that it had found it impossible to establish a workable rule, given the numerous and imponderable variables to be weighed, we might have been satisfied. The Board, however, not only failed to formulate a rule, it failed even to explain why it was unable to do so--if that indeed was the case. 20 Taking a different tack, the Board argues that the result here may well be compelled by this Court's decision in Daily News. Brief for Respondent at 14. We are unpersuaded by this argument. In Daily News, in which we found the existence of a settled pattern, the employer granted wage increases on or about the employee's date of hire or last promotion. 73 F.3d at 408. We observed that the sole criterion for determining the amount of the increases was merit, id., and that the employer was constrained both by the established procedures for evaluating employees and by the fixed criteria for making each individual merit decision, id. at 412. Here, the timing of the increases, while somewhat regular, was by no means fixed; and, what is more important, there is no evidence that the Company had constrained itself by established procedures or fixed criteria for establishing the amounts of the increases.