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Costich v. National Labor Relations Board

decided: January 8, 1980.


Petition by employers seeking reversal and denial of enforcement of an order of the National Labor Relations Board which found that employers had violated section 8(a)(3) and (1) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(3), (1) by making contributions to pension fund on behalf of casual employees who were union members but not on behalf of non-union casual employees. The Board cross-applies for enforcement of the order. Petition granted. Enforcement denied.

Before Feinberg and Mansfield, Circuit Judges, and Mishler,*fn* District Judge.

Author: Mishler

Petitioners, four employers who are members of the Rochester Truckmen's and Workmen's Association (the "Association"), petition this court pursuant to section 10(f) of the National Labor Relations Act, (the "Act"), 29 U.S.C. § 160(f), to reverse and deny enforcement of an order of the National Labor Relations Board dated June 26, 1979.*fn1 The Board has filed a cross-application seeking enforcement of that order, which directed the petitioners to cease and desist from engaging in conduct which the Board determined constituted an unfair labor practice, violative of sections 8(a)(3) and (1) of the Act, 29 U.S.C. §§ 158(a)(3), (1).*fn2 Specifically, the Board found that petitioners had made contributions to the New York State Teamsters Conference Pension and Retirement Fund (the "Fund") on behalf of casual employees who were members of the Chauffeurs, Teamsters and Helpers, Local Union No. 118 (the "union"), but had failed to make such contributions on behalf of non-union casual employees. In the view of the Board, such conduct constituted "discrimination with respect to terms of employment" which "inherently encouraged union membership and violated Section 8(a)(3) of the Act."*fn3 Because we believe that the record does not support the conclusion that the petitioners' conduct encouraged union membership, we grant their petition.


The pertinent facts are not in dispute. Petitioners, together with other members of the Association, are engaged in the business of moving and storing household goods in the Rochester, New York area. For approximately the last 25 years, the Association has bargained on behalf of its members with the union, the exclusive bargaining agent of truck drivers, helpers and other workers in the employ of Association members who are described in Article 1 of the current collective bargaining agreement. Critical to our inquiry is the fact that that agreement, effective from April 16, 1977 to April 15, 1980, contains in Article 2 a union security clause, requiring that all employees in the bargaining unit join the union after 30 days of employment. The agreement also provides, in Article 23, that the employer will contribute certain specified amounts to the fund on behalf of "any and all of his employees covered by (the) Agreement." These amounts are based on the number of hours an employee works, but in no event may an employer contribute for more than 40 hours worked per week. Article 23 goes on to state that the "Fund shall be open to participation by any group of members belonging to a participating Local and any or all other employees of a participating Employer not members of the Union." Pursuant to the terms of the Pension Plan administered by the Fund, participating employees become eligible for normal pension benefits after the age of 60 if they have accumulated at least 15 years of credited service.*fn4

When the need arises, petitioners hire casual employees. According to the terms of the collective bargaining agreement, a "casual employee is one hired to cover jobs caused by vacation, sickness, absenteeism and leaves of absence . . . ." Article 2, Section 2. These employees both union and non-union have performed the same work and received the same wages as regular employees. However, as a practice, contributions have been made to the Fund only on behalf of those casual employees who were union members.

Apparently neither the union nor the non-union casual employees have ever objected to this longstanding practice. However, in 1977 the Fund notified the petitioners and other members of the Association that it believed that under the collective bargaining agreement the employers were required to make pension payments on behalf of non-union casuals. The Association members then brought suit against the Fund in New York State Supreme Court, Monroe County, seeking judgment declaring that the collective bargaining agreement did not impose such an obligation. On August 2, 1978, Justice Robert H. Wagner of that court issued a written decision in which he found that "pursuant to the terms of the . . . Agreement (the employers) are obligated to make pension contributions on behalf of union employees only." Boulter Carting Co., Inc. v. DePerno, No. 925/78 (Sup.Ct. Monroe Co. Aug. 2, 1978).

Prior to that decision, on April 19, 1978, the Fund filed with the Board the unfair labor practice charges which are at issue here. The Board's complaint, issued on June 16, 1978, recited that "from on or about October 19, 1977 and continuing to date" the employers*fn5 had made contributions to the Fund only on behalf of union casuals, and that by doing so they had violated § 8(a) (3) of the Act.*fn6

A hearing was held before Administrative Law Judge David S. Davidson on September 28 and 29, 1978. The only evidence introduced by the General Counsel against the petitioners were stipulations that from October 19, 1977 to the date of the hearing: (a) Petitioner Costich had employed 27 casual employees, one of whom was a union member. Costich made contributions to the Fund only on behalf of the union member; (b) Petitioner East End had employed 39 casual employees, seven of whom were union members. East End made contributions to the Fund only on behalf of those seven; (c) Petitioner Renner had employed 15 casual employees, one of whom was a union member. Contributions to the Fund were made only on his behalf; and (d) Petitioner Service Storage had employed 37 casual employees, eight of whom were union members. Contributions to the Fund were made only on their behalf.

Officers of the employers then testified. As is pertinent here,*fn7 their testimony indicated that casual employees were hired for time periods ranging from "four hours to a couple of days." The casuals were hired in a number of ways. Sometimes, employers would seek employees through the New York State Department of Labor. On occasion, individuals appeared at the employers' establishments seeking work. At other times, an employer would contact individuals from a list kept of those who had previously worked as a casual for that employer. One employer testified that he hired off-duty firemen. The employers further testified that they made payments to the Fund on behalf of union casuals because they believed apparently by reason of the union security clause that these casuals had greater experience than non-union employees. Significantly, notwithstanding the fact that they desired to hire experienced casuals, the employers did not ask prospective workers whether they belonged to the union. They learned for the first time whether an employee was a union member when, after he finished working and was about to be paid, the inquiry was made of the employee so that a determination could be made whether to make a contribution on his behalf. Testimony was also elicited that the employers did not advise non-union casuals that payments to the Fund were being made solely on behalf of union members. Three of the petitioners did state, however, that every month, pursuant to an agreement with the Fund, they posted in a prominent place a form reflecting contributions made to the Fund in that month; the fourth stated that the report was shown to the shop steward. Finally, the employers testified that they never intended to violate the Act or to encourage non-union members to join the union, and that by virtue of the state court decision they believed their conduct was lawful.

As a rebuttal witness, the General Counsel called the Administrator of the Fund. He testified that in order for an employee to obtain one year's credit towards pension benefits, an employer must make contributions for each of one thousand hours worked by that employee. Thus, if contributions are made for each of one hundred hours worked by an employee, that employee acquires one-tenth of a year's credit.*fn8 As noted above, however, there is a limitation to this procedure since the collective bargaining agreement fixes a maximum contribution based on forty hours worked per week.

Based on the testimony and the documentary evidence, the ALJ found that the petitioners had violated the Act. First, he determined that the state court had erroneously interpreted the collective bargaining agreement and that it did, in fact, require the payment of Fund contributions on behalf of both union and non-union members. He further found that casual employees were members of the bargaining unit covered by the agreement and that the agreement thus obligated the employers to make Fund contributions on those employees' behalf.

The ALJ then held that the petitioners' practice constituted discrimination in regard to terms or conditions of employment, rejecting the employers' argument that their practice would not cause the non-union casuals to lose pension benefits since they would never acquire the 15 years of credited service time required to become eligible for benefits. In his view, this contention, "premised on the assumption that non-member casuals will never become regular employees," was unsound since the very terms of the collective bargaining agreement "contemplate that casual employees may become regular employees. . . ."*fn9 Moreover, the ALJ observed that "many employees may never accumulate 15 credited years" but that the employers were nonetheless obligated to make contributions on their behalf. Most importantly, "to the non-member casual who ultimately becomes a regular employee, (the) failure to make payment to the Fund while he is not a member may result in his being required ultimately to work longer than a member casual to become eligible for a pension."

For similar reasons, the ALJ rejected the claim that since non-member casuals were required by virtue of the union security clause to join the union 30 days after the start of employment, "any discrimination (was) De minimis because it result(ed) in at most loss of one-tenth of a credit for failure to contribute on behalf of an employee for the first 30 days of his employment." The ALJ reasoned that "the ...

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