ON PETITION FOR REVIEW AND CROSS-APPLICATION FOR ENFORCEMENT OF AN ORDER OF THE NATIONAL LABOR RELATIONS BOARD (Board Case No. 6-CA-10781)
Before Adams and Sloviter, Circuit Judges, and Brotman, District Judge.*fn*
This matter is before us on cross-petitions for review filed by the Union and employer and the NLRB's cross-application for enforcement. It arises from the employer's action in terminating payment of sickness and accident (hereafter "S and A") benefits to disabled employees during a strike by the bargaining unit of which they were members. The National Labor Relations Board found that the employer's action constituted an unfair labor practice and ordered that the employer make such retroactive payments to each employee disabled as of the beginning of the strike for the period until that employee actively participated in strike activity or showed public support for the strike. We find substantial evidence in the record to support the finding of the Board that the employer committed an unfair labor practice in terminating S and A benefits to employees when the strike began. We cannot, however, approve the Board's order insofar as it permits payments to be halted to disabled employees on the basis of public support of the strike, and to that extent grant review and modify the Board's order.
On October 31, 1977 the collective bargaining agreement between Local 1020 of the UAW (the Union) and the E. L. Wiegand Division, Emerson Electric Company ("the employer" or Wiegand) expired. As of that date, 23 of the unit's approximately 1100 employees were receiving S and A payments from the employer under a plan established by the 1971-1974 and the 1974-1977 collective bargaining agreements.*fn1 The plan provided for payments by the employer to disabled hourly employees of sixty percent of the employee's average weekly wages for up to thirty-nine weeks of disability, the length of time of such payments dependent on seniority. "Disability" was defined by reference to a written benefits policy as meaning that the employee is "prevented, solely because of injury or disease from engaging in his regular or customary occupation and is performing no work of any kind for compensation "
Negotiations begun in the fall of 1977 were unsuccessful, and the Union called a strike to commence on November 1. During a negotiation session on the afternoon of October 31, the Union requested that the employer continue to pay premiums for hospitalization, insurance and major medical on behalf of striking union members, with the understanding that the Union would reimburse the employer for those premiums. That evening, in the final bargaining session, the employer proposed that it pay and be reimbursed for these premiums and for continued S and A payments to employees then on sick leave. The S and A payments had not previously been raised in the negotiations. The Union asserted that employees on sick leave were not participants in a strike and that the employer had a legal obligation to continue making such payments. The employer responded that S and A payments would be halted "if (the Union) went out on strike."
On November 1, 1980 the Union went out on strike and the employer immediately halted all disability payments. The strike was 100% effective. During the strike's four month duration, the circumstances with respect to the 23 disabled employees varied. Several of the disabled employees contacted the employer to inform it that they were still disabled and not participating in the strike. Seven of the disabled employees sent medical certification to the employer that they were recovered and able to return to work. At least one of those employees obtained certification of his ability to return to work and later was seen on the picket line. Other employees who were disabled as of October 31, 1977 but able to work at the conclusion of the strike were identified as on the picket line or otherwise engaged in strike activity.*fn2 At least one employee was in the hospital before the strike began and remained there for a substantial time after the strike ended.
After the disabled employees were without S and A payments for six weeks, the Union modified its policy not to pay strike assistance to employees on sick leave. It announced that it would extend strike assistance to them to alleviate the hardship caused by the employer's action in terminating benefits, contingent on reimbursement by the employees from any later Board award against Wiegand. The Union then filed charges with the Board, and the General Counsel of the Board filed the complaint which led to these proceedings.
The strike continued until February 28, 1978. As part of the strike settlement, the parties agreed that "all pending grievances, charges, civil and/or criminal proceedings arising out of or in relation to actions taken or occurring during the strike shall be withdrawn with prejudice or the parties shall cause them to be so withdrawn." When the strikers returned to work, the employer resumed payment of S and A benefits to those employees who were still disabled.
The administrative law judge concluded that the employer committed an unfair labor practice within the meaning of sections 8(a)(1) and (3) of the Act by withholding payment of S and A benefits from disabled employees. The administrative law judge reasoned that these disabled employees were not in a position to choose to withhold labor on the day the strike began; only when they were again able to work did they have the choice and could they become strikers. Each disabled employee was therefore entitled to S and A payments from the date on which the strike began to the date on which he or she was well enough to return to work. The administrative law judge also refused to dismiss the complaint notwithstanding the provision in the strike settlement agreement stipulating that all grievances, charges, and proceedings would be withdrawn. He relied on section 10(a) of the Act and cases interpreting it which held that the parties cannot divest the Board of jurisdiction over unfair labor practices by private agreements.
The Board affirmed the rulings, findings and conclusions of the administrative law judge and adopted his recommendations except with regard to the remedy ordered. The Board stated that, "For all practical purposes, any employee, disabled or sound, who affirmatively demonstrates his support of the strike by picketing or otherwise showing public support for the strike, has enmeshed himself in the ongoing strike activity to such an extent as to terminate his right to continued disability benefits." 246 N.L.R.B. No. 162, slip op. at 4, 246 N.L.R.B. 1143, 103 L.R.R.M. 1073, 1074, (1979-80) N.L.R.B. Dec. (CCH) P 16,619 at 31,033 (1979). Therefore, the Board determined that payments should end either on the date on which an employee was well enough to work, or when the employee had actively participated in strike activity or shown public support for the strike, whichever was earlier.
The employer petitions for review and contends that the Board erred in refusing to dismiss the complaint, that the Board lacked substantial evidence for its finding of an unfair labor practice, and that it abused its discretion in overruling a prior decision with retroactive effect. The Union petitions for review on the ground that the Board improperly declined to order payments for the periods after employees showed public support for the strike but before they were well enough to work. The Board requests enforcement.
As an initial matter we must consider whether the Board properly denied the employer's motion to dismiss the unfair labor practice charges on the basis of the strike settlement agreement in which the Union agreed to the withdrawal of all charges relating to the strike. Assuming arguendo that the employer correctly construes the agreement, its operation is subject to section 10(a) of the National Labor Relations Act which provides that the Board's power to remedy unfair labor practices shall not be affected "by any other means of adjustment that has been or may be established by agreement, law, or otherwise " 29 U.S.C. § 160(a) (1976).
By well established principle, private contracts may not be used to legitimate unfair labor practices nor to divest the Board of jurisdiction over such practices. NLRB v. C & C Plywood Corp., 385 U.S. 421, 87 S. Ct. 559, 17 L. Ed. 2d 486 (1967); J. I. Case Co. v. NLRB, 321 U.S. 332, 64 S. Ct. 576, 88 L. Ed. 762 (1944). In J. I. Case Co., the Supreme Court affirmed that the Board acts as a public body charged in the public interest with the duty of preventing unfair labor practices, and stated, "wherever private contracts conflict with its functions, they obviously must yield or the Act would be reduced to a futility." Id. at 337, 64 S. Ct. at 580. In International Union of Electrical, Radio and Machine Workers, Local 613 v. NLRB, 328 F.2d 723 (3d Cir. 1964), this court rejected the company's argument that a term in its post-strike collective bargaining agreement restricted the Board's power to enter prospective relief only and divested it of power to enter an order of reinstatement with back pay. We held that the power of reinstatement with back pay was exercised in vindication of the public policy encompassed by the Act, and thus "the rights of discriminatorily discharged employees under the statute are not subject to private adjustment. Such an adjustment, if made, cannot bar the Board's exercise of its statutory authority." Id. at 727. See also Lodge 743, International Association of Machinists v. United Aircraft Corp., 337 F.2d 5, 8-9 (2d Cir. 1964), cert. denied, 380 U.S. 908, 85 S. Ct. 893, 13 L. Ed. 2d 797 (1965).
The policy reflected in the precedent and expressed in section 10(a) prevents a party from engaging in unfair labor practices that may coerce a favorable labor agreement and then insulating itself from Board sanctions by exculpatory provisions in that agreement. The Board properly refused to dismiss the complaint and proceeded to the merits, as we also do.
The first issue on the merits of this appeal is whether substantial evidence supports the Board's conclusion that the employer, Wiegand, committed an unfair labor practice. The Board's conclusion that an unfair labor practice occurred is based on two findings. First, it found that the disability payments were accrued benefits rather than current wages. Second, it found that these benefits were cut off by Wiegand with the intention of coercing and restraining protected union activity with respect to the strike through the imposition of a sanction against certain employees if other employees engaged in strike activity.
The parties agree that these findings, if correct, would support a conclusion that an unfair labor practice was committed. The Supreme Court held in NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 87 S. Ct. 1792, 18 L. Ed. 2d 1027 (1967), that a refusal to pay accrued vacation benefits to those participating in an economic strike was an unfair labor practice, even absent proof of an improper motivation by the employer. The Court found two principles controlling:
First, if it can reasonably be concluded that the employer's discriminatory conduct was "inherently destructive" of 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 ...