Opinion ID: 2797368
Heading Depth: 3
Heading Rank: 1

Heading: Benefit Withholding

Text: Woodcrest was found to have violated § 8(a)(1) and (a)(3) of the NLRA by withholding benefits from employees 7 eligible to vote in the Union election. Section 8(a)(1) establishes that it is “an unfair labor practice for an employer . . . to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title.” 29 U.S.C. § 158(a)(1). Section 8(a)(3) establishes that 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.” Id. § 158(a)(3).
The parties stipulated before the ALJ as to the evidence relevant to the benefit withholding issue. HealthBridge Management, LLC (“HealthBridge”) manages Woodcrest, along with three other health care centers. The four health care centers provide a common health insurance plan for their employees. Effective January 1, 2012, that plan underwent changes resulting in reduced benefits and increased costs for employees. HealthBridge received numerous complaints about these changes and decided to adopt certain improvements to the health insurance plan, as well as to reduce employee premiums. Four days before the Union election, on March 5, 2012, Woodcrest’s administrator directed the distribution of a memorandum to all Woodcrest employees, except those eligible to vote in the March 9 election. The memorandum announced that improvements would be made to the health insurance plan for employees not eligible to vote in the upcoming election and that the changes would be retroactive to January 1, 2012. 8 Election-eligible employees discovered that their coworkers were receiving these improvements, and they inquired, shortly after the election, as to their eligibility for these benefits. Woodcrest told the election-eligible employees that “we cannot negotiate your contract, your benefits, your insurance because right now you are in the critical period with the Union” and “we cannot discuss this matter at this time.” (J.A. 384-85.) The ALJ found that “[t]he evidence establishes [Woodcrest] took the action it did, toward certain employees, because they were not involved in a representation campaign and failed to take action toward other of its employees specifically because they were involved in such a campaign.” (J.A. 386.) Because Woodcrest would have granted the improvements to the election-eligible employees but for the election, the ALJ found that Woodcrest’s conduct violated § 8(a)(1) and (a)(3) of the NLRA. However, the ALJ did not make any finding as to Woodcrest’s motivation or its justification for its actions. The ALJ explained that, “[a]s a general rule, an employer, in deciding whether to grant benefits while a representation election is pending, should decide that question as it would if a union was not in the picture.” (Id.) He noted that the Board’s jurisprudence had created a safe harbor in these situations whereby an employer may “postpone such a wage or benefit adjustment so long as it [makes] clear to employees that the adjustment would occur whether or not they select a union, and that the sole purpose of the adjustment’s postponement is to avoid the appearance of influencing the election[’s] outcome.” (Id. (first alteration in original) (quoting Retlaw Broad. Co., 302 N.L.R.B. 381, 382 9 (1991)) (internal quotation marks omitted).) Woodcrest did not follow the course set forth in the safe harbor, which, the ALJ reasoned, left “its unit employees with a clear impression they were deprived of these system wide benefits because of their section 7 rights.”2 (Id.) In effect, the safe harbor was treated as a sword: Woodcrest violated the NLRA because it did not comply with the safe harbor. The Board, on appeal, “affirm[ed] the [ALJ’s] findings, for the reasons set forth in his decision, that [Woodcrest] violated Section 8(a)(1) and (3) of the Act by announcing and implementing a reduction in healthcare premiums and copays for all employees except those who were eligible to vote in the representation election.” (J.A. 18.) The Board provided no discussion of its own regarding the relevant law.3 2 The ALJ’s remedy for this violation was for Woodcrest: (1) to cease and desist from “[i]mplementing reductions in healthcare premiums and copays that specifically excludes employees eligible to vote in the representation election”; (2) to affirmatively “[i]mplement the changed healthcare benefits for the unit employees effective January 1, 2012, and make whole its unit employees for losses they may have suffered as a result,” which includes “out-of-pocket losses, if any, suffered by any unit employee that had to drop health coverage because of the failure of [Woodcrest] to provide the new reduced premiums and copays,” and interest; and (3) to post a notice that describes Woodcrest’s obligations under the NLRA. (J.A. 387-90.) 3 The Board’s only modification to the relief awarded by the ALJ was to require Woodcrest “to compensate employees for the adverse tax consequences, if any, of receiving lump-sum backpay awards and to file a report with the Social Security 10
Section 8(a)(3) makes it “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.” Id. § 158(a)(3) (emphasis added). Thus, to find a § 8(a)(3) violation, consideration must be given to the employer’s motive. The Supreme Court has held, time and again, that a violation of § 8(a)(3) normally turns on an employer’s antiunion purpose or motive. “That Congress intended the employer’s purpose in discriminating to be controlling is clear.” Radio Officers’ Union of Commercial Telegraphers Union, A.F.L. v. NLRB, 347 U.S. 17, 44 (1954) (emphasis added); see also Am. Ship Bldg. Co. v. NLRB, 380 U.S. 300, 311 (1965) (“It has long been established that a finding of violation under this section will normally turn on the employer’s motivation.”); NLRB v. Brown, 380 U.S. 278, 287 (1965) (“We have determined that the ‘real motive’ of the employer in an alleged § 8(a)(3) violation is decisive . . . .” (quoting Associated Press v. NLRB, 301 U.S. 103, 132 (1937))). Congress’s intent is clear both in the plain text of the statute and in the legislative history. See, e.g., NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 33 (1967) (“The statutory language ‘discrimination . . . to . . . discourage’ means that the finding of a violation normally turns on whether the discriminatory conduct was motivated by an antiunion purpose.” (alterations in original) (quoting 29 Administration allocating the backpay awards to the appropriate calendar quarters for each employee.” (J.A. 18 n.3.) 11 U.S.C. § 158(a)(3))); Radio Officers’ Union, 347 U.S. at 44 (describing the NLRA’s legislative history).4 However, under certain circumstances, actual proof of an improper antiunion motive has been held to be unnecessary. Specifically, “two categories of § 8(a)(3) violations . . . do not require proof of motive.” NLRB v. Hudson Transit Lines, Inc., 429 F.2d 1223, 1229 (3d Cir. 1970) (emphasis added). “First, if an employer’s conduct is ‘inherently destructive’ of important employee rights, no proof of anti-union motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that his conduct was motivated by business considerations.” Id. at 1227-28. “Second, if the employer’s conduct could have adversely affected employee rights to some extent[,] the employer must establish that he was motivated by legitimate objectives,” and, if he does not, “the conduct constitutes an unfair labor practice ‘without reference to intent.’” Id. at 1228 (quoting NLRB v. Fleetwood Trailer Co., 389 U.S. 375, 380 (1967)). If the employer does proffer a substantial and legitimate business justification for the different treatment, however, it can be overcome by proof of antiunion motive, notwithstanding an otherwise legitimate justification. 4 An antiunion motivation must be found for a § 8(a)(1) violation in the benefits context. See NLRB v. Hudson Transit Lines, Inc., 429 F.2d 1223, 1227 n.8 (3d Cir. 1970) (“In certain limited factual situations, such as the promise of benefits by an employer before a representation election, a showing of improper motivation has been required to establish a violation of § 8(a)(1).”). 12 In Great Dane, the Supreme Court provided a thorough explanation of how the Board should analyze an alleged violation of § 8(a)(3). 388 U.S. at 33-34. As a threshold matter, it must make a finding as to whether the employer engaged in one of two kinds of “discriminatory conduct which could have adversely affected employee rights to some extent.” Id. at 34. That is, first, if the Board finds the employer’s conduct to be “‘inherently destructive’ of important employee rights,” then the Board may presume an unlawful motive. Id. The employer then would have the opportunity to demonstrate “counter explanations” for its conduct, although the Board “may nevertheless draw an inference of improper motive from the conduct itself” and find an unfair labor practice, if doing so would “strike the proper balance between the asserted business justifications and the invasion of employee rights in light of the Act and its policy.” Id. at 33-34. Second, if the Board finds instead that the employer’s conduct fell short of the “inherently destructive” category—i.e., “the adverse effect of the discriminatory conduct on employee rights is ‘comparatively slight’”—then the burden shifts to the employer to “come forward with evidence of legitimate and substantial business justifications for the conduct.” Id. at 34. If it does not do so, it will be found to have violated § 8(a)(3). Id. However, if the employer meets this burden, then the burden shifts back to the charging party or the NLRB to present “specific evidence” of the employer’s intent to discourage Union membership. Id.; see also Brown, 380 U.S. at 287 (describing when “specific evidence of intent to discourage union membership is necessary to establish a violation of § 8(a)(3)”). 13 We are at a loss as to why the Board’s operative test— tailored to the safe harbor—failed to address any of these issues. The Board’s failure to make a finding as to the nature of the effect on employee rights or the reason for, or purpose of, Woodcrest’s different treatment of the election-eligible employees cannot be reconciled with what the Supreme Court has instructed the ALJ and the Board to do. Instead, the Board treated the § 8(a)(3) (and § 8(a)(1)) inquiry as a “but for” test—i.e., asking only whether the employees would have received benefits but for the Union’s presence—rather than considering the nature of the discrimination or the employer’s purpose. See, e.g., McCormick Longmeadow Stone Co., 158 N.L.R.B. 1237, 1243 (1966) (“[I]n withholding the wage increase because of the Union’s failure to waive its right to file a charge, the Company deprived them of benefits they would have enjoyed but for their resort to self-organization. This . . . violates Section 8(a)(1) . . . and hence violates Section 8(a)(3).”); see also Noah’s Bay Area Bagels, LLC, 331 N.L.R.B. 188, 203 (2000); Honolulu Sporting Goods Co., Ltd., 239 N.L.R.B. 1277, 1295 (1979). This test is inconsistent with what the Board was required to do, and the record was not developed regarding the issues that should have been determinative.5 5 We know that Woodcrest separated out the election-eligible employees for different treatment because it was election time. However, the Board made no attempt to determine the reason Woodcrest decided to award benefits to some employees at the time and in the manner that it did. Woodcrest’s argument that it did not have an antiunion motivation would be exceedingly weak if all it could say was that it was following faulty legal advice. While Woodcrest may have felt constrained by the election, its difficulty 14 Given that we are specifically disapproving of the reasoning that the Board has repeatedly relied on in finding benefit discrimination to violate § 8(a)(3) (and § 8(a)(1)), we will remand for the Board to consider these issues in the first instance. See United Dairy Farmers Coop. Ass’n v. NLRB, 633 F.2d 1054, 1069 (3d Cir. 1980). Remand is appropriate because we are requiring the Board to modify its longstanding mode of analysis in order to comply with the Supreme Court’s equally longstanding precedent to the contrary. See United States v. Kikumura, 918 F.2d 1084, 1103 n.23 (3d Cir. 1990), overruled on other grounds by United States v. Fisher, 502 F.3d 293 (3d Cir. 2007).